Thomson Reuters Reports Full-Year and Fourth-Quarter 2014 Results

NEW YORK, Feb. 11, 2015 /CNW/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the full year and fourth quarter ended December 31, 2014. The company achieved its 2014 Outlook and today provided a business outlook for 2015. Increases in earnings and profitability in both periods reflect lower charges (described below) than in the prior-year periods.

  • Revenues grew 1% for the full year and the fourth quarter, before currency
    • Organic revenue flat for the full year and up 1% in the fourth quarter
  • Financial & Risk net sales were positive for both the full year and the fourth quarter
    • First year of positive net sales since 2008
  • Adjusted EBITDA increased 8% for the full year and was up 30% for the fourth quarter
    • The margin for the full year was 26.3% vs. 24.5% in the prior year
  • Underlying operating profit increased 14% for the full year and was up 65% for the fourth quarter
    • The margin for the full year was 17.0% vs. 15.0% in the prior year
  • Full-year adjusted EPS was $1.85 vs. $1.54 in 2013 and fourth-quarter adjusted EPS was $0.43 vs. $0.21 in the prior-year period
    • Excluding charges from both periods, adjusted EPS was $2.00 for the full year and $0.53 for the fourth quarter
    • Foreign currency had a $0.02 negative impact on adjusted EPS for the full year and fourth quarter
  • Board approves $0.02 annual dividend increase to $1.34 per share, representing the 22nd consecutive annual increase

"2014 was a year of solid progress with good execution across the company, and marks the third consecutive year when we have met, or exceeded, our financial outlook," said James C. Smith, chief executive officer of Thomson Reuters. "Our Financial business recorded its first year of positive net sales since 2008, and our Professional businesses continued to build from a solid foundation and take advantage of attractive growth opportunities. I am pleased to say that we expect to return to organic revenue growth and achieve greater profitability in 2015."

Consolidated Financial Highlights - Full-Year 2014





Twelve Months Ended December 31,


(Millions of U.S. dollars, except EPS and margins)

IFRS Financial Measures

2014

2013

Change


Revenues

$12,607

$12,702

-1%


Operating profit

$2,545

$1,516

68%


Diluted earnings per share (EPS)

$2.35

$0.16

nm (1)


Cash flow from operations

$2,366

$2,103

13%







In 2014, operating profit and diluted EPS included a $931 million gain realized in connection with the release of accumulated foreign currency translation adjustments from shareholders' equity that were triggered by a reduction in the number of subsidiaries in the company's legal organizational structure. In 2013, the company's diluted EPS included tax charges of $836 million related to the consolidation of technology and content assets. These amounts were both related to the company's simplification initiatives.

 

Non-IFRS Financial Measures (2)

2014

2013

Change


Revenues from ongoing businesses

$12,605

$12,543

0%


Revenue growth before currency



1%


Adjusted EBITDA

$3,313

$3,070

8%


Adjusted EBITDA margin

26.3%

24.5%

180bp


Underlying operating profit

$2,138

$1,881

14%


Underlying operating profit margin

17.0%

15.0%

200bp


Adjusted earnings per share (EPS)

$1.85

$1.54

20%


Free cash flow

$1,445

$1,163

24%







(1) nm - not meaningful

(2) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes to the appended tables.

 

  • Revenues from ongoing businesses were $12.6 billion, a 1% increase before currency.
  • Adjusted EBITDA increased 8% and the margin was 26.3% vs. 24.5% in the prior year. The increase was primarily due to lower charges compared to the prior year. Charges for 2014 were $135 million vs. $357 million in 2013.
    • Excluding charges from both periods, adjusted EBITDA was up 1% and the related margin was 27.4% vs. 27.3% in the prior year.
  • Underlying operating profit increased 14% and the margin was 17.0% vs. 15.0% in the prior year. The increase was also primarily due to lower charges in 2014.
    • Excluding charges from both periods, underlying operating profit increased 1% and the related margin was 18.0%, unchanged from the prior year.
  • Adjusted EPS was $1.85 compared to $1.54 in the prior year. 
    • Excluding charges from both periods, adjusted EPS was $2.00 vs. $1.93 in the prior year.
  • Free cash flow was $1.4 billion vs. $1.2 billion in the prior year. The increase reflected a significant pension contribution in 2013, partially offset by higher severance payments in 2014.

Full-Year Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Financial & Risk

  • Revenues were down 2% (down 3% organic) primarily due to the impact of negative net sales in 2013 and a 5% organic decline in transactions-related revenues. Recoveries revenues increased 1%.
    • Recurring revenues decreased 2% (down 3% organic) primarily due to the impact of negative net sales in 2013.
    • Transactions-related revenues were flat (down 5% organic) due to lower trading volumes in fixed income and foreign exchange markets.
  • By geography, revenues in Europe, Middle East and Africa (EMEA) were down 3%, revenues in the Americas were flat (down 2% organic) and revenues in Asia were flat (down 1% organic).
  • Net sales were positive for the full year, and were positive in the Americas and Asia but negative in EMEA.
  • EBITDA increased 9% primarily due to savings related to simplification programs and lower charges of $130 million compared to $245 million in the prior year. The margin was 24.3% vs. 21.9% in the prior year.
    • Excluding charges from both periods, the margin was 26.3%, up 70 basis points from the prior year.
    • Excluding charges from both periods and the negative impact of foreign currency, the margin was 26.7%, up 100 basis points from the prior year.
  • Operating profit increased 17%, primarily due to savings related to simplification programs and lower charges. The margin was 14.5% compared to 12.3% in the prior year.
    • Excluding charges from both periods, the margin was 16.5%, up 50 basis points from the prior year.
    • Excluding charges from both periods and the negative impact of foreign currency, the margin was 16.9%, up 80 basis points from the prior year.

Legal

  • Revenues increased 2% (1% organic). Excluding US print, revenues grew 3% (2% organic). Recurring revenues were up 4% (3% organic).
  • Solutions businesses (46% of Legal revenues) grew 7% (6% organic), driven by strong growth across the solutions offerings. Solutions businesses represent all of Legal's revenue excluding US print and US online legal information.
  • US online legal information (38% of Legal revenues) declined 1%.
  • US print (16% of Legal revenues) declined 7%.
  • EBITDA increased 4%. The margin was 36.6% compared to 35.6% in the prior year.
    • Excluding 2013 charges, the prior-year margin was 37.0%.
  • Operating profit increased 6% with a margin of 28.4% vs. 26.9% in the prior year.
    • Excluding 2013 charges, the prior-year margin was 28.3%.

Tax & Accounting

  • Revenues increased 12% (9% organic) with growth across each segment led by the Corporate and Professional businesses. Recurring revenues were up 12% (8% organic).
  • EBITDA increased 10% and the margin was 30.4%, unchanged from the prior year. Improvement resulting from lower charges than the prior year was offset by reinvestment in the business.
  • Operating profit increased 15% and the margin was 21.5% compared to 20.7% in the prior year.

Intellectual Property & Science

  • Revenues increased 3% (2% organic) driven by recurring revenue growth of 7% (77% of revenues), partially offset by a 6% decline in transactions-related revenues (23% of revenues).
  • EBITDA increased 8% with a margin of 32.4% compared to 31.0% in the prior year. The EBITDA margin increase was primarily due to lower charges than the prior year.
  • Operating profit increased 6% with a margin of 23.6% compared to 22.9% in the prior year. The operating profit margin increase was a result of lower charges than the prior year.

Corporate & Other (Including Reuters News)

  • Reuters News revenues were $319 million, down 1% from 2013.
  • Corporate & Other costs were $305 million compared to $320 million in 2013.

Consolidated Financial Highlights – Fourth-Quarter 2014




Three Months Ended December 31,


(Millions of U.S. dollars, except EPS and margins)



IFRS Financial Measures

2014

2013

Change


Revenues

$3,211

$3,278

-2%


Operating profit

$1,339

$213

529%


Diluted earnings (loss) per share (EPS)

$1.43

($0.43)

nm(1)


Cash flow from operations

$792

$407

95%



In 2014, operating profit and diluted EPS included a $931 million gain realized in connection with the release of accumulated foreign currency translation adjustments from shareholders' equity that were triggered by a reduction in the number of subsidiaries in the company's legal organizational structure. In 2013, the company's diluted EPS included a tax charge of $425 million related to the consolidation of technology and content assets. These amounts were both related to the company's simplification initiatives. The increase in cash flow from operations reflected a fourth quarter 2013 pension contribution of $500 million.

 

Non-IFRS Financial Measures (2)

2014

2013

Change


Revenues from ongoing businesses

$3,211

$3,265

-2%


Revenue growth before currency



1%


Adjusted EBITDA

$794

$610

30%


Adjusted EBITDA margin

24.7%

18.7%

600bp


Underlying operating profit

$499

$302

65%


Underlying operating profit margin

15.5%

9.2%

630bp


Adjusted earnings per share (EPS)

$0.43

$0.21

105%


Free cash flow

$570

$187

205%







 

  • Revenues from ongoing businesses were $3.2 billion, a 1% increase before currency, reflecting 4% combined growth from the company's Legal, Tax & Accounting and Intellectual Property & Science businesses, which was offset by a 1% decline in Financial & Risk.
  • Adjusted EBITDA increased 30%, and the margin was 24.7% vs. 18.7% in the prior-year period, primarily due to savings related to simplification programs and lower charges.
    • Excluding charges from both periods, adjusted EBITDA was unchanged and the margin was 27.1%, up 50 basis points from the prior-year period.
  • Underlying operating profit increased 65%, and the margin was 15.5% vs. 9.2% in the prior-year period, primarily due to savings related to simplification programs and lower charges.
    • Excluding charges from both periods, underlying operating profit was unchanged and the margin was 17.9%, up 20 basis points from the prior-year period.
  • Adjusted EPS was $0.43 compared to $0.21 in the prior-year period with foreign currency having had a $0.02 negative impact on EPS in the quarter.
    • Excluding charges from both periods, EPS was $0.53, up 8% from the prior-year period.





(1) nm - not meaningful

(2) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes to the appended tables.

Fourth-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Financial & Risk

  • Revenues were down 1% (down 2% organic) primarily due to lower price realization resulting from the migration of some legacy foreign exchange and buy-side products to the Unified Platform. Recoveries revenues increased 5%.
    • Recurring revenues decreased 2% (down 3% organic) due to the lower price realization described above.
    • Transactions-related revenues were flat (down 3% organic) with increased trading volumes in foreign exchange markets offset by a decline in fixed income revenues.
  • By geography, revenues in EMEA were down 2%, revenues in the Americas were flat and revenues in Asia were down 2%. 
  • Net sales were positive for the quarter, and were positive in the Americas and Asia but negative in EMEA.
  • EBITDA increased 47% primarily due to savings from simplification programs and lower charges ($70 million) compared to the prior-year period ($172 million). The margin was 22.4% vs. 14.6% in the prior-year period.
    • Excluding charges from both periods, the margin was 26.8%, up 190 basis points from the prior-year period.
    • Excluding charges from both periods and the negative impact of foreign currency, the margin was 27.3%, up 250 basis points from the prior-year period.
  • Operating profit increased by $112 million primarily due to savings related to simplification programs and lower charges. The margin was 12.1% compared to 4.8% in the prior-year period.
    • Excluding charges from both periods, the margin was 16.5%, up 100 basis points from the prior-year period.
    • Excluding charges from both periods and the negative impact of foreign currency, the margin was 17.3%, up 190 basis points from the prior-year period.

Legal

  • Revenues increased 2%. Excluding US print, revenues grew 4% (all organic), the fourth sequential quarter of improving organic revenue growth.
  • Solutions businesses (46% of Legal revenues) grew 8% (7% organic), driven by strong growth from Serengeti, Practical Law and Pangea3. Solutions businesses represent all of Legal's revenue excluding US print and US online legal information.
  • US online legal information (38% of Legal revenues) was flat.
  • US print (16% of Legal revenues) declined 6%.
  • EBITDA increased 10% due to lower charges than in the prior-year period. The margin was 34.3% compared to 31.3% in the prior-year period.
    • Excluding charges from the prior-year period, the 2013 margin was 35.6%.
  • Operating profit increased 15% with a margin of 26.1% vs. 22.9% in the prior-year period.
    • Excluding charges from the prior-year period, the 2013 margin was 27.2%.

Tax & Accounting

  • Revenues increased 10% (7% organic) driven primarily by the performance of the Corporate and Professional businesses.
  • EBITDA increased 4% and the margin was 33.2% compared to 34.5% in the prior-year period. The EBITDA margin decline was primarily related to organic reinvestment in the business.
  • Operating profit increased 6% and the margin was 25.9% compared to 26.4% in the prior-year period.
  • Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Tax & Accounting business. Full-year margins are more reflective of the segment's underlying performance.

Intellectual Property & Science

  • Revenues decreased 1% (down 1% organic) with subscription revenue growth of 6% (75% of revenues) offset by a 17% decline in transactions-related revenues (25% of revenues) compared to 16% transactions-related revenue growth achieved in the fourth quarter of 2013, making for a difficult comparison.
  • EBITDA increased 27% with a margin of 35.3% compared to 27.3% in the prior-year period. The EBITDA margin improvement primarily reflected lower charges than in the prior-year period.
  • Operating profit increased 33% with a margin of 26.8% compared to 19.6% in the prior-year period. The operating profit margin increase primarily reflected lower charges than in the prior-year period.
  • Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Intellectual Property & Science business. Full-year margins are more reflective of the segment's underlying performance.

Corporate & Other (Including Reuters News)

  • Reuters News revenues were $79 million, unchanged from the prior-year period.
  • Corporate & Other costs were $97 million compared to $129 million in the prior-year period.

Business Outlook (Before Currency)

Thomson Reuters today issued its business outlook for 2015. The company expects:

  • Positive organic revenue growth;
  • Adjusted EBITDA margin to range between 27.5% and 28.5%;
  • Underlying operating profit margin to range between 18.5% and 19.5%; and
  • Free cash flow to range between $1.550 billion and $1.750 billion in 2015.

The company's 2015 Outlook assumes a constant currency basis with no further acquisitions or divestitures. In light of the increased volatility we have recently seen in the foreign exchange markets, currency is likely to have a higher-than-usual impact on our results in 2015.

Dividend and Share Repurchases

The board of directors approved a $0.02 per share annualized increase in the dividend to $1.34 per share. A quarterly dividend of $0.335 per share is payable on March 16, 2015 to common shareholders of record as of February 23, 2015. This dividend increase marks the 22nd consecutive annual dividend increase by the company.

In the fourth quarter of 2014, the company returned approximately $297 million to shareholders through the repurchase of approximately 7.8 million shares under its current $1.0 billion share buyback program announced in July 2014. The company has repurchased 36.2 million shares at a cost of approximately $1.3 billion since it announced its first $1.0 billion share buyback program in October 2013.

Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world's most trusted news organization. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, go to www.thomsonreuters.com.

NON-IFRS FINANCIAL MEASURES

Thomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

This news release includes certain non-IFRS financial measures. Thomson Reuters uses these non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These measures do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the appended tables.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS

Certain statements in this news release, including, but not limited to, statements in the "Business Outlook (Before Currency)" section and Mr. Smith's comments, are forward-looking.  As a result, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. There is no assurance that the events described in any forward-looking statement will materialize. A business outlook is provided for the purpose of presenting information about current expectations for 2015. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements which reflect expectations only as of the date of this news release. Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.

The company's 2015 business outlook is based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, GDP growth in the countries where Thomson Reuters operates. Internal financial and operational assumptions include, but are not limited to, continuing operational improvement in the Financial & Risk business and the successful execution of new sales initiatives, ongoing product release programs, globalization strategy and other growth and efficiency initiatives.

Some of the material risk factors that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements in this news release include, but are not limited to, foreign currency movements, changes in the general economy; actions of competitors; failure to develop new products, services, applications and functionalities to meet customers' needs, attract new customers or expand into new geographic markets and identify areas of higher growth; increased accessibility to free or relatively inexpensive information sources; failures or disruptions of network systems or the Internet; failure to maintain a high renewal rate for subscription-based services; dependency on third parties for data, information and other services; changes to law and regulations, including the impact of the Dodd-Frank legislation and similar financial services laws around the world; failure to adapt to recent organizational changes and effectively implement strategic initiatives; failure to recruit, motivate and retain high quality management and key employees; failure to meet the challenges involved in operating globally; failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or dispositions; failure to protect the brands and reputation of Thomson Reuters; impairment of goodwill and identifiable intangible assets; inadequate protection of intellectual property rights; threat of legal actions and claims; risk of antitrust/competition-related claims or investigations; downgrading of credit ratings and adverse conditions in the credit markets; fluctuations in foreign currency exchange and interest rates; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; and actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company Limited.

These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual and quarterly reports are also available in the "Investor Relations" section of www.thomsonreuters.com.

CONTACTS




MEDIA

INVESTORS

David Crundwell

Frank J. Golden

Corporate Affairs

Senior Vice President, Investor Relations

+1 646 223 5285

+1 646 223 5288

david.crundwell@thomsonreuters.com 

frank.golden@thomsonreuters.com

Thomson Reuters will webcast a discussion of its full-year and fourth-quarter 2014 results today beginning at 8:30 a.m. Eastern Time (ET).  You can access the webcast by visiting the "Investor Relations" section of www.thomsonreuters.com.  An archive of the webcast will be available following the presentation.


Thomson Reuters Corporation




Business Segment Information




(millions of U.S. dollars)




(unaudited)









Twelve Months Ended






December 31,


Change




2014

2013


Total

Before Currency

Organic


Revenues









Financial & Risk


$6,538

$6,648


-2%

-2%

-3%


Legal


3,379

3,351


1%

2%

1%


Tax & Accounting


1,370

1,243


10%

12%

9%


Intellectual Property & Science


1,011

982


3%

3%

2%


Corporate & Other (includes Reuters News)


319

331


-4%

-1%

-1%


Eliminations


(12)

(12)






Revenues from ongoing businesses (1)


12,605

12,543


0%

1%

0%


Other Businesses (2)


2

159






Revenues


$12,607

$12,702


-1%



























Margin


Adjusted EBITDA (3)





Change

2014

2013

Change

Financial & Risk


$1,591

$1,457


9%

24.3%

21.9%

240bp

Legal


1,238

1,194


4%

36.6%

35.6%

100bp

Tax & Accounting


417

378


10%

30.4%

30.4%

0bp

Intellectual Property & Science


328

304


8%

32.4%

31.0%

140bp

Corporate & Other (includes Reuters News)


(261)

(263)






Adjusted EBITDA


$3,313

$3,070


8%

26.3%

24.5%

180bp










Underlying Operating Profit (4) 









Financial & Risk


$951

$816


17%

14.5%

12.3%

220bp

Legal


958

903


6%

28.4%

26.9%

150bp

Tax & Accounting


295

257


15%

21.5%

20.7%

80bp

Intellectual Property & Science


239

225


6%

23.6%

22.9%

70bp

Corporate & Other (includes Reuters News)


(305)

(320)






Underlying operating profit


$2,138

$1,881


14%

17.0%

15.0%

200bp

 


Thomson Reuters Corporation




Business Segment Information




(millions of U.S. dollars)




(unaudited)











Three Months Ended






December 31,


Change




2014

2013


Total

Before Currency

Organic


Revenues









Financial & Risk


$1,597

$1,673


-5%

-1%

-2%


Legal


872

868


0%

2%

2%


Tax & Accounting


397

368


8%

10%

7%


Intellectual Property & Science


269

275


-2%

-1%

-1%


Corporate & Other (includes Reuters News)


79

86


-8%

0%

0%


Eliminations


(3)

(5)






Revenues from ongoing businesses (1)


3,211

3,265


-2%

1%

1%


Other Businesses (2)


-

13






Revenues


$3,211

$3,278


-2%































Margin

Adjusted EBITDA (3)





Change

2014

2013

Change

Financial & Risk


$358

$244


47%

22.4%

14.6%

780bp

Legal


299

272


10%

34.3%

31.3%

300bp

Tax & Accounting


132

127


4%

33.2%

34.5%

-130bp

Intellectual Property & Science


95

75


27%

35.3%

27.3%

800bp

Corporate & Other (includes Reuters News)


(90)

(108)






Adjusted EBITDA


$794

$610


30%

24.7%

18.7%

600bp










Underlying Operating Profit (4) 









Financial & Risk


$193

$81


138%

12.1%

4.8%

730bp

Legal


228

199


15%

26.1%

22.9%

320bp

Tax & Accounting


103

97


6%

25.9%

26.4%

-50bp

Intellectual Property & Science


72

54


33%

26.8%

19.6%

720bp

Corporate & Other (includes Reuters News)


(97)

(129)






Underlying operating profit


$499

$302


65%

15.5%

9.2%

630bp

 

 

Thomson Reuters Corporation

Reconciliation of Operating Profit to Adjusted EBITDA (3)

(millions of U.S. dollars)

(unaudited)



Three Months Ended



Twelve Months Ended


December 31,



December 31,



2014

2013

Change


2014

2013

Change









Operating profit

$1,339

$213

529%


$2,545

$1,516

68%

Adjustments to remove:








     Amortization of other identifiable intangible assets

159

159



647

641


     Fair value adjustments

(38)

7



(91)

(14)


     Other operating gains, net

(965)

(74)



(969)

(198)


     Operating loss (profit) from Other Businesses (2)

4

(3)



6

(64)


Underlying operating profit

$499

$302

65%


$2,138

$1,881

14%

Remove: depreciation and amortization of computer








software (excluding Other Businesses (2))

295

308



1,175

1,189


Adjusted EBITDA

$794

$610

30%


$3,313

$3,070

8%









Underlying operating profit margin (4)

15.5%

9.2%

630bp


17.0%

15.0%

200bp

Adjusted EBITDA margin (3)

24.7%

18.7%

600bp


26.3%

24.5%

180bp










 

Thomson Reuters Corporation

Reconciliation of Earnings (Loss) from Continuing Operations to Adjusted EBITDA (3)

(millions of U.S. dollars)

(unaudited)



Three Months Ended



Twelve Months Ended


December 31,



December 31,



2014

2013

Change


2014

2013

Change









Earnings (loss) from continuing operations

$1,157

($347)

nm


$1,959

$175

nm

Adjustments to remove:








Tax expense

9

425



62

848


Other finance costs

60

19



85

53


Net interest expense

113

112



442

460


Amortization of other identifiable intangible assets

159

159



647

641


Amortization of computer software

192

202



778

773


Depreciation

103

106



397

416


EBITDA

$1,793

$676



$4,370

$3,366


Adjustments to remove:








Share of post-tax losses (earnings) in equity








          method investments

-

4



(3)

(20)


Other operating gains, net

(965)

(74)



(969)

(198)


Fair value adjustments

(38)

7



(91)

(14)


EBITDA from Other Businesses (2)

4

(3)



6

(64)


Adjusted EBITDA

$794

$610

30%


$3,313

$3,070

8%

 

 

Thomson Reuters Corporation

Reconciliation of Underlying Operating Profit (4) to Adjusted EBITDA (3) by Business Segment

(millions of U.S. dollars)

(unaudited)



Three Months Ended

December 31, 2014


Three Months Ended

December 31, 2013


Underlying

Operating Profit

Add:
Depreciation 
and
Amortization
of Computer
Software
  ** 

Adjusted

EBITDA


Underlying

 Operating Profit

Add:

Depreciation and Amortization of Computer Software ** 

Adjusted

EBITDA









Financial & Risk

$193

$165

$358


$81

$163

$244

Legal

228

71

299


199

73

272

Tax & Accounting

103

29

132


97

30

127

Intellectual Property & Science

72

23

95


54

21

75

Corporate & Other (includes Reuters News)

(97)

7

(90)


(129)

21

(108)


$499

$295

$794


$302

$308

$610

 

 


Twelve Months Ended

December 31, 2014


Twelve Months Ended

December 31, 2013


Underlying

Operating Profit

Add:

Depreciation

and

Amortization

of Computer
Software
  ** 

Adjusted

EBITDA


Underlying

 Operating Profit

Add:

Depreciation and Amortization of Computer Software ** 

Adjusted

EBITDA









Financial & Risk

$951

$640

$1,591


$816

$641

$1,457

Legal

958

280

1,238


903

291

1,194

Tax & Accounting

295

122

417


257

121

378

Intellectual Property & Science

239

89

328


225

79

304

Corporate & Other (includes Reuters News)

(305)

44

(261)


(320)

57

(263)


$2,138

$1,175

$3,313


$1,881

$1,189

$3,070





















** Excludes Other Businesses (2)









 

 

Thomson Reuters Corporation

Reconciliation of Earnings (Loss) Attributable to Common Shareholders

to Adjusted Earnings (5)

(millions of U.S. dollars, except as otherwise indicated and except for per share data)

(unaudited)



Three Months Ended


Twelve Months Ended


December 31,


December 31,


2014

2013


2014

2013

Earnings (loss) attributable to common shareholders

$1,147

($351)


$1,909

$137

Adjustments to remove:






Operating loss (profit) from Other Businesses (2)

4

(3)


6

(64)

Fair value adjustments

(38)

7


(91)

(14)

Other operating gains, net

(965)

(74)


(969)

(198)

Other finance costs

60

19


85

53

Share of post-tax losses (earnings) in equity






          method investments

-

4


(3)

(20)

Tax on above items

2

24


12

64

Tax items impacting comparability

-

406


(10)

773

Amortization of other identifiable intangible assets

159

159


647

641

Discontinued operations

-

(4)


-

(10)

Interim period effective tax rate normalization (6)

-

(3)


-

-

Tax charge amortization (7)

(21)

(13)


(86)

(76)

Dividends declared on preference shares

(1)

(1)


(3)

(3)

Adjusted earnings

$347

$170


$1,497

$1,283

Adjusted earnings per share

$0.43

$0.21


$1.85

$1.54







Diluted weighted-average common shares (millions)

803.2

828.6


810.9

831.0

 

 

Thomson Reuters Corporation

Reconciliation of Net Cash Provided by Operating Activities

to Free Cash Flow from Ongoing Businesses (8)

(millions of U.S. dollars)

(unaudited)



Three Months Ended

Twelve Months Ended

December 31,

December 31,


2014

2013

2014

2013

Net cash provided by operating activities

$792

$407

$2,366

$2,103

Capital expenditures, less proceeds from disposals

(264)

(253)

(968)

(1,004)

Other investing activities

43

34

50

67

Dividends paid on preference shares

(1)

(1)

(3)

(3)

Free cash flow

570

187

1,445

1,163

Remove: Other Businesses (2)

3

11

2

(65)

Free cash flow from ongoing businesses

$573

$198

$1,447

$1,098

 

Footnotes

(1) Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other (which includes Reuters News) less eliminations. Other Businesses (see note (2) below) are excluded.

(2) Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification.

(millions of U.S. dollars)

Three Months Ended


Twelve Months Ended


December 31,


December 31,

Other Businesses

2014

2013


2014

2013







Revenues

-

$13


$2

$159







Operating (loss) profit

($4)

$3


($6)

$64

Depreciation and amortization of computer software

-

-


-

-

EBITDA

($4)

$3


($6)

$64

(3)     Thomson Reuters defines adjusted EBITDA as underlying operating profit excluding the related depreciation and amortization of computer software. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues from ongoing businesses.

(4)     Underlying operating profit is operating profit from reportable segments and Corporate & Other (includes Reuters News). Underlying operating profit margin is the underlying operating profit expressed as a percentage of revenues from ongoing businesses.

(5)     Adjusted earnings and adjusted earnings per share include dividends declared on preference shares and amortization of the 2013 tax charges associated with the consolidation of technology and content assets but exclude the pre-tax impacts of amortization of other identifiable intangible assets as well as the post-tax impacts of fair value adjustments, other operating (gains) and losses, certain impairment charges, the results of Other Businesses (see note (2) above), other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method investments, discontinued operations and other items affecting comparability. Adjusted earnings per share is calculated using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to shareholders.

Because Thomson Reuters reported a net loss from continuing operations under IFRS for the three months ended December 31, 2013, the weighted-average number of common shares used for basic and diluted loss per share is the same, as the effect of stock options and other equity incentive awards would reduce the loss per share, and therefore be anti-dilutive. Since our non-IFRS measure "adjusted earnings" is a profit, potential common shares are included, as they lower adjusted EPS and are therefore dilutive.

The following table reconciles IFRS and non-IFRS common share information:

(weighted-average common shares)

Three Months Ended
December 31, 2013



IFRS: Basic and Diluted

825,270,499

Effect of stock options and other equity incentive awards

3,355,232

Non- IFRS Diluted

828,625,731

(6)    Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters operates. The adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.

(7)    Reflects amortization of the 2013 tax charges associated with the consolidation of the ownership and management of technology and content assets. For the non-IFRS measure, the majority of the charges are amortized over seven years, the period over which the tax is expected to be paid.

(8)    Free cash flow is net cash provided by operating activities less capital expenditures, other investing activities and dividends paid on the company's preference shares. Other Businesses (see note (2) above) are also removed to arrive at free cash flow from ongoing businesses.

 

Thomson Reuters Corporation

Consolidated Income Statement

(millions of U.S. dollars, except per share data)

(unaudited)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2014

2013


2014

2013







Revenues

$3,211

$3,278


$12,607

$12,702

Operating expenses

(2,383)

(2,672)


(9,209)

(9,554)

Depreciation

(103)

(106)


(397)

(416)

Amortization of computer software

(192)

(202)


(778)

(773)

Amortization of other identifiable intangible assets

(159)

(159)


(647)

(641)

Other operating gains, net

965

74


969

198

Operating profit

1,339

213


2,545

1,516

Finance costs, net:






     Net interest expense

(113)

(112)


(442)

(460)

     Other finance costs

(60)

(19)


(85)

(53)

Income before tax and equity method investments

1,166

82


2,018

1,003

Share of post-tax (losses) earnings in equity 






     method investments

-

(4)


3

20

Tax expense

(9)

(425)


(62)

(848)

Earnings (loss) from continuing operations

1,157

(347)


1,959

175

Earnings from discontinued operations, net of tax

-

4


-

10

Net earnings (loss)

$1,157

($343)


$1,959

$185







Earnings (loss) attributable to:






Common shareholders

1,147

(351)


1,909

137

Non-controlling interests

10

8


50

48







Basic earnings (loss) per share

$1.43

($0.43)


$2.36

$0.16

Diluted earnings (loss) per share

$1.43

($0.43)


$2.35

$0.16







Basic weighted-average common shares

799,929,289

825,270,499


807,897,067

828,235,931

Diluted weighted-average common shares

803,207,856

825,270,499


810,930,098

830,984,677

 

Thomson Reuters Corporation

Consolidated Statement of Financial Position

(millions of U.S. dollars)

(unaudited)






December 31,


December 31,

2014


2013

Assets




Cash and cash equivalents

$1,018


$1,316

Trade and other receivables

1,810


1,751

Other financial assets

161


183

Prepaid expenses and other current assets

657


650

Current assets

3,646


3,900





Computer hardware and other property, net

1,182


1,291

Computer software, net

1,529


1,622

Other identifiable intangible assets, net

7,124


7,890

Goodwill

16,403


16,871

Other financial assets

127


192

Other non-current assets

536


583

Deferred tax

50


90

Total assets

$30,597


$32,439





Liabilities and equity




Liabilities




Current indebtedness

$534


$596

Payables, accruals and provisions

2,443


2,624

Deferred revenue

1,355


1,348

Other financial liabilities

265


193

Current liabilities

4,597


4,761





Long-term indebtedness

7,576


7,470

Provisions and other non-current liabilities

2,171


1,759

Other financial liabilities

161


102

Deferred tax

1,433


1,917

Total liabilities

15,938


16,009





Equity




Capital

10,157


10,347

Retained earnings

7,168


7,303

Accumulated other comprehensive loss

(3,147)


(1,614)

Total shareholders' equity

14,178


16,036

Non-controlling interests

481


394

Total equity

14,659


16,430

Total liabilities and equity

$30,597


$32,439

 

 

Thomson Reuters Corporation

Consolidated Statement of Cash Flow

(millions of U.S. dollars)

(unaudited)







Three Months Ended

December 31,


Twelve Months Ended

December 31,



2014

2013


2014

2013

Cash provided by (used in):







Operating activities







Net earnings (loss)

$1,157

($343)


$1,959

$185

Adjustments for:






Depreciation

103

106


397

416

Amortization of computer software

192

202


778

773

Amortization of other identifiable intangible assets

159

159


647

641

Net gains on disposals of businesses and investments

(8)

(38)


(9)

(195)

Release of accumulated foreign currency translation adjustments

(931)

-


(931)

-

Deferred tax

(86)

138


(273)

434

Other

82

77


230

289

Pension contributions

-

(500)


-

(500)

Changes in working capital and other items 

124

606


(432)

60

Net cash provided by operating activities

792

407


2,366

2,103







Investing activities






Acquisitions, net of cash acquired

(2)

(254)


(167)

(1,241)

Proceeds from disposals of businesses and  investments,

   net of taxes paid

-

195


14

550

Capital expenditures, less proceeds from disposals 

(264)

(253)


(968)

(1,004)

Other investing activities

43

34


50

67

Investing cash flows from continuing operations

(223)

(278)


(1,071)

(1,628)

Investing cash flows from discontinued operations

-

(4)


-

6

Net cash used in investing activities

(223)

(282)


(1,071)

(1,622)







Financing activities






Proceeds from debt

483

1,974


1,480

3,268

Repayments of debt

(1,120)

(800)


(1,120)

(2,240)

Repurchases of common shares

(297)

(300)


(1,023)

(400)

Dividends paid on preference shares

(1)

(1)


(3)

(3)

Dividends paid on common shares

(255)

(260)


(1,033)

(1,038)

Other financing activities

(19)

(23)


129

(19)

Net cash (used in) provided by financing activities

(1,209)

590


(1,570)

(432)

(Decrease) increase in cash and bank overdrafts

(640)

715


(275)

49

Translation adjustments

(8)

(1)


(22)

(13)

Cash and bank overdrafts at beginning of period

1,663

598


1,312

1,276

Cash and bank overdrafts at end of period

1,015

1,312


1,015

1,312







Cash and bank overdrafts at end of period comprised of:






Cash and cash equivalents

1,018

1,316


1,018

1,316

Bank overdrafts

(3)

(4)


(3)

(4)


$1,015

$1,312


$1,015

$1,312













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SOURCE Thomson Reuters


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