1. PRIOR YEAR ADJUSTMENT

In 1997 the UK Accounting Standards Board issued Financial Reporting Standard 10 Goodwill and Intangible Assets. Reuters has implemented this Standard which requires purchased goodwill and intangible assets to be capitalised and amortised through the profit and loss account over their useful economic lives. All goodwill previously eliminated against reserves has been reinstated as an asset on the balance sheet by way of a prior year adjustment and cumulative amortisation as at 31 December 1994 has been written-off against brought forward profit and loss account reserves at that date. Goodwill capitalisation includes £48 million arising on the acquisition of Rich Inc., in 1985 which was not previously eliminated against reserves but was accounted for as a merger. Previously reported profit after taxation attributable to shareholders in 1996 and 1995 has been reduced by £49 million and £41 million respectively. This change in accounting policy has had no impact on net funds.