REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999

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Notes on the consolidated cash flow statement9. Net cash inflow from operating activitiesOperating profit is reconciled to net cash inflow from operating activities as follows:1999 1998 1997£M £M £MOperating profit 549 550 541Depreciation 310 331 312Goodwill amortisation 47 46 51Decrease in stocks 1 3 10Increase in debtors (236) (103) (73)Increase in creditors 112 171 81Profit on disposal of subsidiaries – (5) –Loss on disposal of fixed assets 12 3 10Amortisation of interests in own shares 18 3 4Miscellaneous, principally translation differences 8 (1) –Net cash inflow from operating activities 821 998 93610. Analysis of cash flows for headings netted in the cash flow statement1999 1998 1997Acquisitions and disposals (including joint ventures and associates) £M £M £MCash consideration:Subsidiary undertakings (see note 32) (31) (90) (17)Joint ventures (see note 32) (3) – –Associated undertakings (see note 32) (3) (46) (3)Deferred payments for acquisitions in prior years (1) (7) (3)(38) (143) (23)Less cash acquired 4 1 1(34) (142) (22)Cash received from disposals:Subsidiary undertakings 7 4 –(27) (138) (22)Management of liquid resources:Increase in term deposits (3,920) (7,145) (5,826)Decrease in term deposits 4,277 7,250 5,739Purchase of certificates of deposit (226) (580) (842)Sale of certificates of deposit 352 597 940Purchase of listed/unlisted securities (360) (465) (771)Sale of listed/unlisted securities 353 656 505476 313 (255)Financing(Decrease)/increase in short-term borrowings (799) 986 (12)Increase/(decrease) in long-term borrowings 257 (14) (3)(542) 972 (15)52 Reuters Group PLC Annual Report 1999
11. Analysis of net fundsBANK/OTHERBORROWINGSFALLING FALLINGCASH AT TOTAL DUE DUE AFTERBANK AND CASH AND SHORT-TERM WITHIN MORE THANIN HAND OVERDRAFTS OVERDRAFTS INVESTMENTS ONE YEAR ONE YEAR TOTAL£M £M £M £M £M £M £M31 December 1997 81 (42) 39 1,275 (6) (18) 1,290Cash flow (38) 30 (8) (313) (986) 14 (1,293)Exchange movements 1 (1) – – – – –31 December 1998 44 (13) 31 962 (992) (4) (3)Cash flow 77 (102) (25) (476) 799 (257) 41Exchange movements (2) 1 (1) 4 – – 331 December 1999 119 (114) 5 490 (193) (261) 4112. Derivatives and other financial instrumentsA substantial portion of Reuters revenue is receivable in foreign currencies and committed under one- and two-year contracts with terms of payment up to sixmonths in advance. As such, Reuters is subject to currency exposure from committed revenue. In addition, Reuters is subject to interest rate risk from borrowingsand the investment of cash balances. Reuters seeks to limit these risks by entering into a mix of derivative financial instruments which include forward contracts,options (including cylinders), swaps and forward rate agreements. A more detailed discussion on Reuters Treasury Management can be found in the operating andfinancial review (see pages 39–40).If the derivative financial instruments were considered separately from the underlying future revenue and interest income, Reuters would be subject to market riskon these financial instruments from fluctuations in currency and interest rates. Reuters only enters into such derivative financial instruments to hedge (or reduce) theunderlying exposure described above. There is, therefore, no net market risk on such derivative financial instruments and only a credit risk from the potential nonperformanceby counterparties. The amount of this credit risk is generally restricted to any hedging gain and not the principal amount hedged.Derivative instruments held at 31 December were:1999 1998 1997GROSS GROSS GROSSCONTRACT CARRYING FAIR CONTRACT CARRYING FAIR CONTRACT CARRYING FAIRAMOUNTS VALUE VALUE AMOUNTS VALUE VALUE AMOUNTS VALUE VALUE£M £M £M £M £M £M £M £M £MCurrency managementForeign exchangeforward contracts:Contracts in profit 159 – 8 97 – 5 324 – 39Contracts in loss 131 – (11) 257 – (10) 59 – –Foreign currency options:Contracts in profit 234 – 8 205 – 2 53 2 2Contracts in loss 234 – (1) 194 – (3) – – –758 – 4 753 – (6) 436 2 41Interest rate managementInterest rate swaps 254 – (17) 100 – (1) 140 1 3Interest rate collars 100 – – – – – – – –Forward rate agreements 235 – – – – – 50 – –589 – (17) 100 – (1) 190 1 3Carrying values are amounts recorded in the balance sheet and comprise deferred option premia, which are recognised over the period to which the option relates,and certain locked in profits on swap contracts which have been recognised for accounting purposes but where settlement in cash has not yet occurred. Fair valuesrepresent the mark to market value of contracts at the balance sheet date.The foreign exchange forward contracts are held 33% in continental European currencies (1998 – 52%, 1997 – 56%). The remaining contracts were principally inJapanese yen and US dollars.Foreign exchange forward contracts and options mature at dates up to 23 months from the balance sheet date. Interest forward rate agreements, swaps and optionscommence and mature at various dates through to November 2004.The fair value of foreign currency and interest rate management instruments is estimated on the basis of market quotes, discounted to current value using marketquotedinterest rates.Reuters Group PLC Annual Report 1999 53
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REUTERS GROUP PLC ANNUAL REPORT AND
Page 3 and 4: 2 Financial highlights3 Five year s
Page 6 and 7: From the Chairman.Theus now is Inte
Page 8 and 9: Reuters, wherChief Executive Peter
Page 10 and 11: Peter Job talks about theprojection
Page 12 and 13: TO FIND OUT MORE VISITwww.reuters.c
Page 18 and 19: Board of Directors1 2 34 567 8Non-e
Page 20: Financial Review and Statements Con
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Page 31 and 32: Vested options on Reuters Group PLC
Page 33 and 34: Statement of directors’ responsib
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Page 37 and 38: growth of 6% at comparable rates. I
Page 39 and 40: OtherYear to 31 December£m 1999 19
Page 41 and 42: ownership trust compared with £7 m
Page 43 and 44: market value of the Greenhouse Fund
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Page 59 and 60: Reconciliation of movements in shar
Page 61 and 62: 15. Tangible assetsOFFICECOMPUTER E
Page 63 and 64: 17. Stocks1999 1998 1997£M £M £M
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Page 67 and 68: 26. Capital and reservesPROFIT ANDC
Page 69 and 70: 29. Employee share option plansReut
Page 71 and 72: 32. Acquisitions and disposalsDurin
Page 73 and 74: Balance sheet of Reuters Group PLC
Page 75 and 76: Accounting policiesAccounting basis
Page 77 and 78: Summary of differences between UK a
Page 79 and 80: 38. Adjustments to shareholders’
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Page 94: www.reuters.com/ REUTERS GROUP PLC
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REUTERS GROUP PLC ANNUAL REPORT AND ACCOUNTS 1999

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