Thomson Reuters Reports Second-Quarter 2015 Results

Second-quarter performance consistent with full-year expectations

NEW YORK, July 29, 2015 /CNW/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the second quarter ended June 30, 2015. The company also re-affirmed its full-year 2015 outlook.

  • Reported revenues were down 4% as the negative impact of foreign currency reduced revenues by 6%
    • Revenues grew 2% before currency
    • Organic revenues grew 2%
      • Financial & Risk's organic revenues grew 1%
      • Legal's organic revenues increased 2%
  • Financial & Risk net sales were positive in all regions; net sales were positive for the fifth consecutive quarter
  • Adjusted EBITDA decreased 2% to $856 million
    • The margin increased to 28.2% vs. 27.8% in the prior-year period
    • Excluding the impact of currency, adjusted EBITDA grew 3% and the margin was 50 basis points higher than the prior-year period
  • Underlying operating profit decreased 1% to $576 million
    • The margin increased to 19.0% vs. 18.4% in the prior-year period
    • Excluding the impact of currency, underlying operating profit grew 7% and the margin was 100 basis points higher than the prior-year period
  • Adjusted EPS was $0.52, versus $0.51 from the prior-year period
    • Excluding the impact of currency, adjusted EPS was $0.07 better than the prior-year period

"Today's results reflect the growing momentum within our business," said James C. Smith, president and chief executive officer of Thomson Reuters. "Our results are in line with our full-year expectations, and on a pre-currency basis, each of our four operating units reported growth for the first time in more than three years. We are entering the second half of 2015 from a position of strength and will continue to prioritize resources behind our highest growth opportunities."

Consolidated Financial Highlights – Second Quarter



Three Months Ended June 30, 

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



IFRS Financial Measures

2015

2014

Change


Revenues

$3,038

$3,159

-4%


Operating profit

$405

$381

6%


Diluted earnings per share (EPS)

$0.33

$0.31

6%


Cash flow from operations

$931

$876

6%







Non-IFRS Financial Measures (1)

2015

2014

Change

Change  Before
Currency

Revenues from ongoing businesses

$3,038

$3,158

-4%

2%

Adjusted EBITDA

$856

$877

-2%

3%

Adjusted EBITDA margin

28.2%

27.8%

40bp

50bp

Underlying operating profit

$576

$581

-1%

7%

Underlying operating profit margin

19.0%

18.4%

60bp

100bp

Adjusted earnings per share (adjusted EPS)

$0.52

$0.51

2%

14%

Free cash flow

$709

$652

9%


(1)     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 increased 2% (before currency) from the prior-year period driven by the Legal, Tax & Accounting and Intellectual Property & Science businesses, which grew 2% in aggregate, and by the Financial & Risk business, which grew 1%.
  • Adjusted EBITDA decreased 2% from the prior-year period and the margin increased 40 basis points to 28.2%. Excluding the impact of currency in the quarter, the 2015 margin was 50 basis points higher than the prior-year period. However, the margin was impacted by the timing of annual salary increases for employees that came into effect in the second quarter of this year compared to the third quarter of last year.
  • Underlying operating profit decreased 1% from the prior-year period and the margin increased 60 basis points to 19.0%. Excluding the impact of currency, the 2015 margin was 100 basis points higher than the prior-year period.
  • Adjusted EPS was $0.52, up $0.01 from the prior-year period despite foreign currency having had a $0.06 negative impact.

Second-Quarter Business Segment Highlights

Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency (constant currency) as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Financial & Risk

  • Revenues increased 1% (all organic). This represented the segment's best performance and first quarter of organic revenue growth since the fourth quarter of 2011.
    • Recurring revenues (76% of the segment's revenues) increased 1% (all organic) due to an annual price increase and the impact of the positive net sales trend more than offsetting the lower price realization resulting from the migration of some foreign exchange and buy-side customers to new products on Financial & Risk's unified platform. 
    • Transactions revenues (13% of the segment's revenues) were up 3% due to increased fixed income revenues and growth in the BETA Systems transaction business.
    • Recoveries revenues (11% of the segment's revenues) were down 1% and are low-margin revenues. As some third-party clients move to direct billing with customers, recoveries revenues are expected to continue to decline over the balance of the year.
  • By geography, revenues in the Americas and Asia were each up 1% and revenues in Europe, Middle East and Africa (EMEA) were flat.
  • Net sales were positive overall for the fifth consecutive quarter and were positive in all regions.  Net sales have now improved in 10 of the last 11 quarters.
  • EBITDA increased 1% primarily due to savings related to efficiency initiatives and increased revenues, which were largely offset by the impact of foreign currency.
    • The margin was 27.7%, up 200 basis points from the prior-year period.  Excluding the impact of currency from both periods and the impact of $30 million of charges taken by the company in the second quarter of 2014, EBITDA increased 5% and the margin was up 110 basis points to 28.7%. The margin was negatively impacted by the timing of annual salary increases.
    • Foreign currency had a 100 basis point negative impact on the margin.
  • Operating profit increased 3% compared to the prior-year period, primarily due to the same factors noted above.
    • The margin was 17.7%, up 160 basis points from the prior-year period. 
    • Foreign currency had a 150 basis point negative impact on the margin.

Legal

  • Revenues increased 2% (all organic). Excluding US print, revenues grew 3%.
  • Solutions businesses (45% of the segment's revenues) grew 5% (all organic), driven by strong growth from the legal enterprise solutions business including Elite and Serengeti, Pangea3 legal managed services and the Investigations and Public Records business. Solutions businesses represent all of Legal's revenue excluding US print and US online legal information.
  • US online legal information (39% of the segment's revenues) grew slightly for the second consecutive quarter.
  • US print (16% of the segment's revenues) declined 5%, as expected.
  • EBITDA decreased 5% and the margin was 37.4% compared to 38.9% in the prior-year period. The margin was negatively impacted by the timing of annual salary increases.
  • Operating profit decreased 4% with a margin of 29.9% compared to 30.7% in the prior-year period. The margin was impacted by the same factors noted above.

Tax & Accounting

  • Revenues increased 6% (5% organic) driven by the Corporate, Professional and Knowledge Solutions businesses, partially offset by a decline in the Government business. Recurring revenues were up 7% organically.
  • EBITDA decreased 8% and the margin was 27.5% compared to 30.2% in the prior-year period. The EBITDA margin decrease was primarily related to the decline in Government business revenues and the timing of annual salary increases.
  • Operating profit decreased 3% and the margin was 19.3% compared to 20.1% in the prior-year period. The margin decrease was a result of the same factors that impacted the EBITDA margin.
  • 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 were up 1% as subscription revenue (approximately 75% of the segment's revenues) growth of 4% was offset by an 8% decline in transactions revenues as fewer one-time deals affected the growth rate in the quarter.
  • EBITDA decreased 5% with a margin of 32.7% compared to 33.9% in the prior-year period. The EBITDA margin decline was primarily due to the timing of annual salary increases.
  • Operating profit decreased 6% with a margin of 23.4% compared to 24.7% in the prior-year period. The operating profit margin decrease was due to the same items that impacted the EBITDA margin.
  • 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 $74 million, up 1% compared to the prior-year period.
  • Corporate & Other costs were $70 million compared to $73 million in the prior-year period.

 

Consolidated Financial Highlights – Six Months



Six Months Ended June 30,  

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

IFRS Financial Measures

2015

2014

Change


Revenues

$6,082

$6,289

-3%


Operating profit

$812

$740

10%


Diluted earnings per share (EPS)

$0.71

$0.65

9%


Cash flow from operations

$1,168

$989

18%







Non-IFRS Financial Measures(1)

2015

2014

Change

Change  Before
Currency

Revenues from ongoing businesses

$6,082

$6,287

-3%

2%

Adjusted EBITDA

$1,659

$1,697

-2%

4%

Adjusted EBITDA margin

27.3%

27.0%

30bp

50bp

Underlying operating profit

$1,091

$1,109

-2%

6%

Underlying operating profit margin

17.9%

17.6%

30bp

80bp

Adjusted earnings per share (adjusted EPS)

$0.96

$0.97

-1%

10%

Free cash flow

$644

$517

25%


(1)  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 increased 2% (before currency) from the prior-year period driven by the Legal, Tax & Accounting and Intellectual Property & Science businesses, which grew 3% in aggregate.
  • Adjusted EBITDA decreased 2% from the prior-year period and the margin increased 30 basis points to 27.3%. Excluding the impact of currency, the 2015 margin was 50 basis points higher than the prior-year period.
  • Underlying operating profit decreased 2% from the prior-year period and the margin increased 30 basis points to 17.9%. Excluding the impact of currency, the 2015 margin was 80 basis points higher than the prior-year period.
  • Adjusted EPS was $0.96 compared to $0.97 in the prior-year period. Foreign currency had an $0.11 negative impact.
  • Free cash flow for the first six months of the year was $644 million compared to $517 million in the prior-year period primarily due to lower severance payments.

Business Outlook (Before Currency)

Thomson Reuters today re-affirmed its full-year business outlook for 2015, which was previously communicated in February 2015. The company's 2015 outlook assumes constant currency rates compared to 2014 and is based on the expected performance of the company's existing businesses and does not factor in the impact of any acquisitions or divestitures that may occur during the year. In light of the increased volatility recently seen in the foreign currency markets, the company continues to believe that currency is likely to have a higher-than-usual impact on its results in 2015.

The company continues to expect:

  • 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 information in this section is forward-looking and should be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks."

Dividend and Share Repurchases

In February 2015, Thomson Reuters 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 September 15, 2015 to common shareholders of record as of August 20, 2015.

In the second quarter of 2015, the company returned approximately $348 million to shareholders through the repurchase of approximately 8.5 million shares.

From January 1, 2015 through June 30, 2015, the company repurchased approximately 17.3 million shares at a cost of approximately $696 million.

The $1.0 billion share buyback program announced in July 2014 was completed in the second quarter of 2015. In May 2015, the company announced a third $1.0 billion share buyback program. The company has repurchased approximately 2.6 million shares at a cost of approximately $101 million under the new buyback program through June 30, 2015.

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, such as revenues from ongoing businesses, adjusted EBITDA and the related margin, underlying operating profit and the related margin, free cash flow, adjusted EPS, and selected measures before the impact of foreign currency. 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, 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; failures or disruptions of telecommunications, network systems or the Internet; fraudulent or unpermitted data access or other cyber-security or privacy breaches; increased accessibility to free or relatively inexpensive information sources; 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; tax matters, including changes to tax laws, regulations and treaties; fluctuations in foreign currency exchange and interest rates; 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; 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

David Crundwell

Corporate Affairs

+1 646 223 5285

david.crundwell@thomsonreuters.com

INVESTORS

Frank J. Golden

Senior Vice President, Investor Relations

+1 646 223 5288

frank.golden@thomsonreuters.com

Thomson Reuters will webcast a discussion of its second-quarter 2015 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)








Three Months Ended





June 30,


Change



2015

2014


Total

Before
Currency (5)

Organic

Revenues








Financial & Risk


$1,552

$1,655


-6%

1%

1%

Legal


840

850


-1%

2%

2%

Tax & Accounting


327

324


1%

6%

5%

Intellectual Property & Science


248

251


-1%

1%

1%

Corporate & Other (includes Reuters News)


74

82


-10%

1%

1%

Eliminations


(3)

(4)





Revenues from ongoing businesses (1)


3,038

3,158


-4%

2%

2%

Other Businesses (2)


-

1





Revenues


$3,038

$3,159


-4%



 







Margin

Adjusted EBITDA (3)





Change

2015

2014

Change

Financial & Risk


$430

$426


1%

27.7%

25.7%

200bp

Legal


314

331


-5%

37.4%

38.9%

-150bp

Tax & Accounting


90

98


-8%

27.5%

30.2%

-270bp

Intellectual Property & Science


81

85


-5%

32.7%

33.9%

-120bp

Corporate & Other (includes Reuters News)


(59)

(63)






Adjusted EBITDA


$856

$877


-2%

28.2%

27.8%

40bp










Underlying Operating Profit (4) 









Financial & Risk


$274

$266


3%

17.7%

16.1%

160bp

Legal


251

261


-4%

29.9%

30.7%

-80bp

Tax & Accounting


63

65


-3%

19.3%

20.1%

-80bp

Intellectual Property & Science


58

62


-6%

23.4%

24.7%

-130bp

Corporate & Other (includes Reuters News)


(70)

(73)






Underlying operating profit


$576

$581


-1%

19.0%

18.4%

60bp

Refer to page 12 for explanation of footnotes.

Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)




Six Months Ended





June 30,


Change



2015

2014


Total

Before
Currency (5)

Organic

Revenues








Financial & Risk


$3,104

$3,313


-6%

0%

0%

Legal


1,650

1,653


0%

2%

2%

Tax & Accounting


700

672


4%

8%

6%

Intellectual Property & Science


485

494


-2%

1%

1%

Corporate & Other (includes Reuters News)


148

161


-8%

1%

1%

Eliminations


(5)

(6)





Revenues from ongoing businesses (1)


6,082

6,287


-3%

2%

1%

Other Businesses (2)


-

2





Revenues


$6,082

$6,289


-3%


 







Margin

Adjusted EBITDA (3)





Change

2015

2014

Change

Financial & Risk


$831

$825


1%

26.8%

24.9%

190bp

Legal


593

615


-4%

35.9%

37.2%

-130bp

Tax & Accounting


216

213


1%

30.9%

31.7%

-80bp

Intellectual Property & Science


141

157


-10%

29.1%

31.8%

-270bp

Corporate & Other (includes Reuters News)


(122)

(113)






Adjusted EBITDA


$1,659

$1,697


-2%

27.3%

27.0%

30bp










Underlying Operating Profit (4) 









Financial & Risk


$515

$506


2%

16.6%

15.3%

130bp

Legal


464

476


-3%

28.1%

28.8%

-70bp

Tax & Accounting


161

149


8%

23.0%

22.2%

80bp

Intellectual Property & Science


96

113


-15%

19.8%

22.9%

-310bp

Corporate & Other (includes Reuters News)


(145)

(135)






Underlying operating profit


$1,091

$1,109


-2%

17.9%

17.6%

30bp

Refer to page 12 for explanation of footnotes.

Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)



Three Months Ended



Six Months Ended


June 30,



June 30,



2015

2014

Change


2015

2014

Change









Operating profit

$405

$381

6%


$812

$740

10%

Adjustments to remove:








     Amortization of other identifiable intangible assets

147

165



296

328


     Fair value adjustments

59

33



6

35


     Other operating (gains) losses, net

(35)

2



(23)

5


     Operating loss from Other Businesses (2)

-

-



-

1


Underlying operating profit

$576

$581

-1%


$1,091

$1,109

-2%

Remove: depreciation and amortization of computer
      
software (excluding Other Businesses (2))

280

296



568

588


Adjusted EBITDA

$856

$877

-2%


$1,659

$1,697

-2%









Underlying operating profit margin (4)

19.0%

18.4%

60bp


17.9%

17.6%

30bp

Adjusted EBITDA margin (3)

28.2%

27.8%

40bp


27.3%

27.0%

30bp

 

Thomson Reuters Corporation
Reconciliation of Net Earnings to Adjusted EBITDA (3)
 (millions of U.S. dollars)
(unaudited)



Three Months Ended



Six Months Ended


June 30,



June 30,



2015

2014

Change


2015

2014

Change









Net earnings

$281

$260

8%


$601

$552

9%

Adjustments to remove:








Tax expense

14

40



42

27


Other finance costs (income)

5

(29)



(37)

(57)


Net interest expense

107

111



212

219


Amortization of other identifiable intangible assets

147

165



296

328


Amortization of computer software

193

197



386

391


Depreciation

87

99



182

197


EBITDA

$834

$843



$1,682

$1,657


Adjustments to remove:








Share of post-tax earnings in equity method investments

(2)

(1)



(6)

(1)


Other operating (gains) losses, net

(35)

2



(23)

5


Fair value adjustments

59

33



6

35


EBITDA from Other Businesses (2)

-

-



-

1


Adjusted EBITDA

$856

$877

-2%


$1,659

$1,697

-2%

Refer to page 12 for explanation of footnotes.

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

June 30, 2015


Three Months Ended

June 30,  2014


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

$274

$156

$430


$266

$160

$426

Legal

251

63

314


261

70

331

Tax & Accounting

63

27

90


65

33

98

Intellectual Property & Science

58

23

81


62

23

85

Corporate & Other (includes Reuters News)

(70)

11

(59)


(73)

10

(63)


$576

$280

$856


$581

$296

$877

 


Six Months Ended

June 30, 2015


Six Months Ended

June 30, 2014


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

$515

$316

$831


$506

$319

$825

Legal

464

129

593


476

139

615

Tax & Accounting

161

55

216


149

64

213

Intellectual Property & Science

96

45

141


113

44

157

Corporate & Other (includes Reuters News)

(145)

23

(122)


(135)

22

(113)


$1,091

$568

$1,659


$1,109

$588

$1,697

** Excludes Other Businesses (2)

Refer to page 12 for explanation of footnotes.

Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA (5), Underlying Operating Profit (5) and the Related Margins, and
Adjusted Earnings Per Share (EPS) (5) Excluding the Effects of Foreign Currency
(millions of U.S. dollars, except for per share data and margins)
(unaudited)



Three Months Ended June 30,




% Change




BP Change


2015

2014


Total

Foreign
Currency

Before
Currency


2015
Margin

2014
Margin

Total

Foreign
Currency

Before
Currency

Adjusted EBITDA

$856

$877


-2%

-5%

3%


28.2%

27.8%

40bp

-10bp

50bp

Underlying operating profit

$576

$581


-1%

-8%

7%


19.0%

18.4%

60bp

-40bp

100bp

Adjusted EPS

$0.52

$0.51


2%

-12%

14%


n/a

n/a

n/a

n/a

n/a




Six Months Ended June 30,




% Change



BP Change


2015

2014


Total

Foreign
Currency

Before
Currency


2015
Margin

2014
Margin

Total

Foreign
Currency

Before
Currency

Adjusted EBITDA

$1,659

$1,697


-2%

-6%

4%


27.3%

27.0%

30bp

-20bp

50bp

Underlying operating profit

$1,091

$1,109


-2%

-8%

6%


17.9%

17.6%

30bp

-50bp

80bp

Adjusted EPS

$0.96

$0.97


-1%

-11%

10%


n/a

n/a

n/a

n/a

n/a

n/a – not applicable

Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
 to Adjusted Earnings (6)
(millions of U.S. dollars, except as otherwise indicated and except for per share data)
(unaudited)



Three Months Ended


Six Months Ended


June 30,


June 30,


2015

2014


2015

2014

Earnings attributable to common shareholders

$262

$249


$567

$531

Adjustments to remove:






Operating loss from Other Businesses (2)

-

-


-

1

Fair value adjustments

59

33


6

35

Other operating (gains) losses, net

(35)

2


(23)

5

Other finance costs (income)

5

(29)


(37)

(57)

Share of post-tax earnings in equity method  investments

(2)

(1)


(6)

(1)

        Tax on above items

(11)

(4)


3

(4)

Tax items impacting comparability

4

14


(2)

-

Amortization of other identifiable intangible assets

147

165


296

328

Interim period effective tax rate normalization (7)

2

7


3

(5)

Tax charge amortization (8)

(21)

(21)


(43)

(43)

Dividends declared on preference shares

-

-


(1)

(1)

Adjusted earnings

$410

$415


$763

$789

Adjusted earnings per share

$0.52

$0.51


$0.96

$0.97







Diluted weighted-average common shares (millions)

788.9

813.4


793.2

817.3

Refer to page 12 for explanation of footnotes.

Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow from Ongoing Businesses (9)
(millions of U.S. dollars)
(unaudited)



Three Months Ended

Six Months Ended

June 30,

June 30,


2015

2014

2015

2014

Net cash provided by operating activities

$931

$876

$1,168

$989

Capital expenditures, less proceeds from disposals

(223)

(225)

(526)

(473)

Other investing activities

1

1

3

2

Dividends paid on preference shares

-

-

(1)

(1)

Free cash flow

709

652

644

517

Remove: Other Businesses (2)

-

1

-

1

Free cash flow from ongoing businesses

$709

$653

$644

$518

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.

(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)     The changes in revenues from ongoing businesses, adjusted EBITDA and underlying operating profit and the related margins, and adjusted earnings per share before currency (at constant currency or excluding the effects of currency) are determined by converting the current and prior period's local currency equivalent using the same exchange rates.

(6)     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.

(7)     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.

(8)     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.

(9)     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


Six Months Ended


June 30,


June 30,


2015

2014


2015

2014







Revenues

$3,038

$3,159


$6,082

$6,289

Operating expenses

(2,241)

(2,315)


(4,429)

(4,628)

Depreciation

(87)

(99)


(182)

(197)

Amortization of computer software

(193)

(197)


(386)

(391)

Amortization of other identifiable intangible assets

(147)

(165)


(296)

(328)

Other operating gains (losses), net

35

(2)


23

(5)

Operating profit

405

381


812

740

Finance costs, net:






     Net interest expense

(107)

(111)


(212)

(219)

     Other finance (costs) income

(5)

29


37

57

Income before tax and equity method investments

293

299


637

578

Share of post-tax earnings in equity method investments

2

1


6

1

Tax expense

(14)

(40)


(42)

(27)

Net earnings

$281

$260


$601

$552







Earnings attributable to:






Common shareholders

262

249


567

531

Non-controlling interests

19

11


34

21







Basic earnings per share

$0.33

$0.31


$0.72

$0.65

Diluted earnings per share

$0.33

$0.31


$0.71

$0.65







Basic weighted-average common shares

785,441,698

809,941,274


789,793,561

813,910,056

Diluted weighted-average common shares

788,852,919

813,363,597


793,192,368

817,255,753

 

Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)



June 30,


December 31,

2015


2014

Assets




Cash and cash equivalents

$1,127


$1,018

Trade and other receivables

1,693


1,810

Other financial assets

172


161

Prepaid expenses and other current assets

741


657

Current assets

3,733


3,646





Computer hardware and other property, net

1,095


1,182

Computer software, net

1,492


1,529

Other identifiable intangible assets, net

6,776


7,124

Goodwill

16,209


16,403

Other financial assets

122


127

Other non-current assets

541


536

Deferred tax

49


50

Total assets

$30,017


$30,597





Liabilities and equity




Liabilities




Current indebtedness

$1,564


$534

Payables, accruals and provisions

2,038


2,443

Deferred revenue

1,383


1,355

Other financial liabilities

244


265

Current liabilities

5,229


4,597





Long-term indebtedness

6,971


7,576

Provisions and other non-current liabilities

2,107


2,171

Other financial liabilities

235


161

Deferred tax

1,390


1,433

Total liabilities

15,932


15,938





Equity




Capital

10,057


10,157

Retained earnings

6,816


7,168

Accumulated other comprehensive loss

(3,277)


(3,147)

Total shareholders' equity

13,596


14,178

Non-controlling interests

489


481

Total equity

14,085


14,659

Total liabilities and equity

$30,017


$30,597

 

Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)







Three Months Ended

June 30,


Six Months Ended

June 30,


2015

2014


2015

2014

Cash provided by (used in):






Operating activities






Net earnings

$281

$260


$601

$552

Adjustments for:






Depreciation

87

99


182

197

Amortization of computer software

193

197


386

391

Amortization of other identifiable intangible assets

147

165


296

328

Net (gains) losses on disposals of businesses and investments

(25)

-


(25)

1

Deferred tax

(39)

(35)


(66)

(75)

Other

116

77


102

111

Changes in working capital and other items 

171

113


(308)

(516)

Net cash provided by operating activities

931

876


1,168

989







Investing activities






Acquisitions, net of cash acquired

(7)

(137)


(15)

(137)

Proceeds from disposals of businesses and investments,  

   net of taxes paid

75

12


75

12

Capital expenditures, less proceeds from disposals 

(223)

(225)


(526)

(473)

Other investing activities

1

1


3

2

Net cash used in investing activities

(154)

(349)


(463)

(596)







Financing activities






Net borrowings under short-term loan facilities

170

-


570

-

Repurchases of common shares

(348)

(353)


(696)

(617)

Dividends paid on preference shares

-

-


(1)

(1)

Dividends paid on common shares

(254)

(258)


(512)

(520)

Other financing activities

11

125


52

129

Net cash used in financing activities

(421)

(486)


(587)

(1,009)

Increase (decrease) in cash and bank overdrafts

356

41


118

(616)

Translation adjustments

3

3


(9)

3

Cash and bank overdrafts at beginning of period

765

655


1,015

1,312

Cash and bank overdrafts at end of period

$1,124

$699


$1,124

$699







Cash and bank overdrafts at end of period comprised of:






Cash and cash equivalents

$1,127

$704


$1,127

$704

Bank overdrafts

(3)

(5)


(3)

(5)


$1,124

$699


$1,124

$699

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SOURCE Thomson Reuters


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