RTR 2004-07-01 2004-12-31 RTR 2004-01-01 RTR 2005-01-01 RTR 2005-01-01 2005-06-30 RTR 2004-01-01 2004-12-31 RTR 2004-01-01 2004-06-30 RTR 2004-06-30 RTR 2004-12-31 RTR 2005-06-30 iso4217:GBP xbrli:shares iso4217:GBP 789000000 1535000000 1757000000 951000000 859000000 1020000000 2715000000 2540000000 2777000000 -122000000 -225000000 23000000 0.213 0.258 0.09 0.2 0.252 0.085 622000000 605000000 605000000 513000000 847000000 -54000000 -86000000 123000000 -1092000000 -2191000000 -1057000000 0.207 0.251 0.087 0.195 0.246 0.082 -9000000 -33000000 32000000 637000000 514000000 522000000 861000000 713000000 713000000 498000000 722000000 -5000000 -67000000 -59000000 -10000000 -28000000 -24000000 95000000 190000000 110000000 298000000 305000000 74000000 -20000000 -39000000 -28000000 -906000000 -1243000000 -1552000000 -379000000 -47000000 -569000000 -537000000 -503000000 -1854000000 -1827000000 -2055000000 224000000 199000000 200000000 861000000 713000000 722000000 -127000000 -466000000 -52000000 418000000 353000000 -29000000 52000000 238000000 66000000 -5000000 -67000000 -59000000 334000000 92000000 17000000 975000000 146000000 79000000 -107000000 5000000 21000000 42000000 28000000 -1671000000 -1745000000 -1723000000 -86000000 -140000000 -86000000 -11000000 -30000000 -13000000 -14000000 -28000000 -4000000 -1000000 -1000000 -1000000 -9000000 -40000000 -86000000 -47000000 -112000000 -86000000 13000000 25000000 67000000 425000000 438000000 77000000 49000000 66000000 2000000 2000000 5000000 2000000 -13000000 -43000000 5000000 9000000 19000000 10000000 2000000 6000000 6000000 303000000 372000000 133000000 280000000 353000000 119000000 298000000 361000000 126000000 5000000 11000000 7000000 300000000 392000000 147000000 23000000 19000000 14000000 1847000000 1804000000 1794000000 1166000000 2339000000 1139000000 359000000 359000000 358000000 8000000 11000000 2000000 102000000 96000000 93000000 145000000 327000000 69000000 -78000000 -35000000 -5000000 352000000 -28000000 54000000 -18000000 120000000 -37000000 All actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recognised immediately in the statement of recognised income and expense. The consolidated financial statements include the financial statements of Reuters Group PLC and its subsidiaries and Reuters Group's share of the post-acquisition results of joint ventures and associates. Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date on which control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The excess of the cost of an acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. All intra-group transactions are eliminated as part of the consolidation process. In preparing the Group financial statements, accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Associates and joint ventures Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Joint ventures are all entities over which the Group has joint control with one or more other entities outside the Group. Investments in associates and joint ventures are accounted for by the equity method of accounting and are initially recognised at cost. The Group's investment in associates and joint ventures includes goodwill identified on acquisition plus the Group's share of post-acquisition reserves. The Group's share of post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. When the Group's share of losses of an associate or joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the associate or joint venture. Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group's interest. For Group reporting purposes, the results of associates and joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Group. For defined benefit pension plans, the cost of providing benefits is determined using the Projected Unit Credit Method and is charged to the income statement so as to spread the service cost over the service lives of the employees. An interest cost representing the unwinding of the discount rate on the scheme liabilities, net of the expected return on scheme assets, is charged to the income statement. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of the plan assets. The defined benefit obligation is calculated annually by independent actuaries. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in a currency in which the benefits will be paid and that have terms of maturity approximating to the terms of the relevant pension liability. Payments to defined contribution pension plans are charged as an expense to the income statement as incurred when the related employee service is rendered. The Group has no further legal or constructive payment obligations once the contributions have been made. Reuters (www.reuters.com), the global information company, provides indispensable information tailored for professionals in the financial services, media and corporate markets. Its trusted information drives decision making across the globe based on a reputation for speed, accuracy and independence. Reuters has 15,300 staff in 91 countries, including staff from the acquisition of Moneyline Telerate (MLT) in June 2005. It also includes 2,300 editorial staff in 196 bureaux serving 129 countries, making Reuters the world's largest international multimedia news agency. In the 2004 Annual Report and Form 20-F, Reuters Group revenues were £2.9 billion. In this release, Instinet Group is now been treated as a discontinued operation. Amounts included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in pounds sterling, Reuters Group's functional and presentation currency. Transactions in foreign currencies are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow and investment hedges. Translation differences on non-monetary items, such as investments held to maturity, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as available-for-sale financial assets and investments, are included in the fair value reserve in equity. The results and financial position of all Group companies that have a functional currency other than sterling are translated as follows: assets and liabilities are translated at the closing rate at the date of the balance sheet. income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, in which case income and expenses are translated at the dates of the transactions); and all resulting differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments are taken to equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Six months to 30 June 2005 Group companies operate defined contribution and defined benefit pension plans and provide post-retirement medical benefits. Revenue represents the turnover, net of discounts, derived from services provided to subscribers and sales of products applicable to the period. Revenue from sales of subscription-based real-time and historical information services is recognised rateably over the term of the subscription. Revenue from contracts for the outright sale of systems-based product solutions, which include the sale of fully developed software licences, is recognised at the time of client acceptance. Long-term contracts are accounted for in accordance with the contractual terms either on a percentage of completion basis or on a time and materials as incurred basis. Revenue from associated maintenance and support services is recognised rateably over the term of the maintenance contract. Where contracts allow Reuters to recharge costs from communications suppliers and exchanges onwards to subscribers, this income is recognised as revenue. Transaction products usage revenue is accounted for on a trade date basis. Interest income is accrued on a time basis, by reference to the amount outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying value. Securities transactions between Instinet Group counterparties which pass through Instinet Group and in its role as agency brokers, are recorded on a settlement date basis and, therefore, are only reflected in the balance sheet if there is a failure to settle. Revenues and related expenses arising from such securities transactions are accrued from the date of the transaction. Share of post-tax profits from associates and joint ventures includes a tax charge of £2 million (June 2004: £2 million, December 2004: £3 million) The transitional adjustment on the balance sheet at 1 January 2005 primarily comprises recognition of the fair value of the Group's investments in SAVVIS (£45 million gain) and TSI (£86 million gain), offset by initial recognition of embedded derivatives (£14 million loss).