Thomson Reuters Reports Third-Quarter 2015 Results

Third-quarter performance consistent with full-year expectations

NEW YORK, Oct. 23, 2015 /CNW/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the third quarter ended September 30, 2015. The company also reaffirmed its full-year 2015 outlook.

  • Reported revenues were down 4% as the negative impact of foreign currency reduced revenues by 5%
    • Revenues before currency grew 1%
      • Financial & Risk's organic revenues were unchanged from the prior-year period
      • Legal, Tax & Accounting and Intellectual Property & Science's revenues grew 3% in aggregate
  • Financial & Risk net sales were positive for the sixth consecutive quarter
  • Adjusted EBITDA grew 2% to $838 million
    • The margin increased to 28.1% vs. 26.5% in the prior-year period, up 160 basis points
    • Excluding the impact of currency, adjusted EBITDA grew 7% and the margin was 160 basis points higher than the prior-year period
  • Underlying operating profit increased 7% to $565 million
    • The margin increased to 19.0% vs. 17.1% in the prior-year period, up 190 basis points
    • Excluding the impact of currency, underlying operating profit grew 13% and the margin was 200 basis points higher than the prior-year period
  • Free cash flow increased 25% to $1.1 billion for the first nine months of the year
  • Adjusted EPS was up 16% to $0.52 vs. $0.45 in the prior-year period
    • Excluding the impact of currency, adjusted EPS was up 24% or $0.11 better than the prior-year period
  • Returned $1.25 billion to shareholders through the repurchase of 31.7 million shares in the first nine months of the year

"I am pleased to report another quarter of steady progress," said James C. Smith, president and chief executive officer of Thomson Reuters. "I am encouraged by the way we continue to execute against our key priorities, by the progress towards our financial targets and especially by the underlying performance of our subscription revenues."

Consolidated Financial Highlights – Third Quarter


Three Months Ended September 30,

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






IFRS Financial Measures

2015

2014

Change


Revenues

$2,979

$3,107

-4%


Operating profit

$419

$466

-10%


Diluted earnings per share (EPS)

$0.36

$0.28

29%


Cash flow from operations

$665

$585

14%



The decrease in operating profit was primarily due to lower favorable fair value adjustments largely associated with foreign currency embedded
derivatives in certain customer contracts. The increase in diluted EPS resulted from lower finance costs associated with foreign currency
fluctuations, which more than offset the decrease in operating profit.


Non-IFRS Financial Measures (1)

2015

2014

Change

Change  Before
Currency

Revenues from ongoing businesses

$2,979

$3,107

-4%

1%

Adjusted EBITDA

$838

$822

2%

7%

Adjusted EBITDA margin

28.1%

26.5%

160bp

160bp

Underlying operating profit

$565

$530

7%

13%

Underlying operating profit margin

19.0%

17.1%

190bp

200bp

Adjusted earnings per share (adjusted EPS)

$0.52

$0.45

16%

24%

Free cash flow

$449

$358

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 1% (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 increased 2% from the prior-year period and the margin increased 160 basis points to 28.1%. Excluding the impact of currency in the quarter, adjusted EBITDA increased 7% and the margin was 160 basis points higher than the prior-year period.


 - Underlying operating profit increased 7% from the prior-year period and the margin increased 190 basis points to 19.0%. Excluding the impact of currency, underlying operating profit increased 13% and the margin was 200 basis points higher than the prior-year period.


 - Adjusted EPS was $0.52, up $0.07 from the prior-year period despite foreign currency having had a $0.04 negative impact.

Third-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 were unchanged compared to the prior-year period. Revenue growth exceeded 2% before the impact of lower recoveries revenues and pricing adjustments related to the migration of remaining legacy foreign exchange and buy-side customers onto Financial & Risk's unified platform.
    • Recurring revenues (77% of the segment's revenues) increased 1% as an annual price increase and the impact of positive net sales more than offset the price adjustments related to the legacy product migration described above.
    • Transactions-related revenues (13% of the segment's revenues) were unchanged.
    • Recoveries revenues (10% of the segment's revenues) were down 7% and are low-margin revenues. Recoveries revenues are expected to continue to decline in the fourth quarter and throughout 2016 as more third-party partners move to direct billing with our customers.
  • By geography, revenues in the Americas and Asia were up 2%, while revenues in Europe, Middle East and Africa (EMEA) were down 2%.
  • Net sales were positive overall and were positive in all regions, except for EMEA. This marked the sixth consecutive quarter of positive net sales. However, net sales were lower than the third quarter of last year due to a difficult quarterly comparison, as the third quarter of 2014 was the strongest net sales quarter of the year.
  • EBITDA increased 3% primarily due to savings related to efficiency initiatives, which were partially offset by the impact of foreign currency.
    • The margin was 27.7%, up 260 basis points from the prior-year period due to efficiency initiatives undertaken in 2014.
    • Excluding the impact of currency from both periods and the impact of $18 million of charges taken by the company in the third quarter of 2014, the margin was up 260 basis points to 28.8% compared to the prior-year period.
    • Foreign currency had a 110 basis point negative impact on the margin.
  • Operating profit increased 8% compared to the prior-year period, primarily due to the same factors that impacted EBITDA.
    • The margin was 17.9%, up 240 basis points from the prior-year period.
    • Before currency and one-time charges, the margin was up 280 basis points from the prior-year period.
    • Foreign currency had a 150 basis point negative impact on the margin.

Legal

  • Revenues increased 1%. Excluding US print, revenues grew 3%.
  • Solutions businesses (46% of the segment's revenues) grew 4%, slightly lower than the first half of the year due to timing factors. Revenue growth was driven by Elite, Serengeti, Pangea3 legal managed services, and the Investigations and Public Records business. Solutions businesses represent all of Legal's revenues excluding US print and US online legal information.
  • US online legal information (40% of the segment's revenues) grew 2%, reflecting growth for the third consecutive quarter.
  • US print (14% of the segment's revenues) declined 8%, as expected.
  • EBITDA was unchanged and the margin increased 90 basis points to 38.8% compared to 37.9% in the prior-year period. Excluding the benefit of currency, the margin increased 30 basis points.
  • Operating profit increased 4% and the margin increased 200 basis points to 31.7% compared to 29.7% in the prior-year period. Excluding the benefit of currency, the margin increased 130 basis points due to lower depreciation and amortization expense.

Tax & Accounting

  • Revenues increased 8% driven by the Corporate, Professional and Knowledge Solutions businesses, partially offset by a decline in the Government business. Recurring revenues were up 9% organically.
  • EBITDA increased 10% and the margin increased 180 basis points to 25.7% compared to 23.9% in the prior-year period. Excluding the benefit of currency, the margin was up 110 basis points.
  • Operating profit increased 16% and the margin increased 200 basis points to 16.3% compared to 14.3% in the prior-year period. Excluding the benefit of currency, the margin was up 120 basis points.
  • 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 2% as subscription revenue (approximately 80% of the segment's revenues) growth of 4% was partially offset by a 7% decline in transactions revenues as fewer one-time deals affected the growth rate in the quarter.
  • Both EBITDA and operating profit margins were affected by the 7% decline in transactions revenues, which are highly profitable.
    • EBITDA was relatively unchanged with a margin of 30.9% compared to 30.6% in the prior-year period. Excluding the benefit of currency, the margin declined 90 basis points compared to the prior-year period
    • Operating profit decreased 2% with a margin of 21.5% compared to 21.8% in the prior-year period. Excluding the benefit of currency, the margin declined 120 basis points compared to 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 $74 million, up 3% compared to the prior-year period.
  • Corporate & Other costs were $74 million compared to $73 million in the prior-year period.

Consolidated Financial Highlights – Nine Months


Nine Months Ended September 30,

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






IFRS Financial Measures

2015

2014

Change


Revenues

$9,061

$9,396

-4%


Operating profit

$1,231

$1,206

2%


Diluted earnings per share (EPS)

$1.07

$0.93

15%


Cash flow from operations

$1,833

$1,574

16%







Non-IFRS Financial Measures (1)

2015

2014

Change

Change  Before
Currency

Revenues from ongoing businesses

$9,061

$9,394

-4%

1%

Adjusted EBITDA

$2,497

$2,519

-1%

5%

Adjusted EBITDA margin

27.6%

26.8%

80bp

80bp

Underlying operating profit

$1,656

$1,639

1%

8%

Underlying operating profit margin

18.3%

17.4%

90bp

120bp

Adjusted earnings per share (adjusted EPS)

$1.48

$1.41

5%

16%

Free cash flow

$1,093

$875

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 1% (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 1% from the prior-year period and the margin increased 80 basis points to 27.6%. Excluding the impact of currency, adjusted EBITDA increased 5% and the margin was 80 basis points higher than the prior-year period.
  • Underlying operating profit increased 1% from the prior-year period and the margin increased 90 basis points to 18.3%. Excluding the impact of currency, underlying operating profit increased 8% and the margin was 120 basis points higher than the prior-year period.
  • Adjusted EPS was $1.48 compared to $1.41 in the prior-year period.
    • Excluding the impact of currency, adjusted EPS was up 16%, $0.22 better than the prior-year period.
    • Currency had a negative impact of $0.15 on adjusted EPS.
  • Free cash flow for the first nine months of the year was $1.1 billion compared to $875 million in the prior-year period, primarily due to lower severance payments than in the prior-year period.

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 December 15, 2015 to common shareholders of record as of November 19, 2015.

From January 1, 2015 through September 30, 2015, the company repurchased approximately 31.7 million shares at a cost of approximately $1.25 billion. Of this amount, 14.4 million shares were repurchased in the third quarter at a cost of approximately $550 million.

Under the current $1.0 billion share repurchase program announced in May 2015, the company has returned approximately $650 million to shareholders through the repurchase of approximately 16.9 million shares.

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

INVESTORS

David Crundwell

Frank J. Golden

Senior Vice President, 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 third-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








September 30,


Change




2015

2014


Total

Before
Currency (5)

Organic


Revenues









Financial & Risk


$1,517

$1,628


-7%

0%

0%


Legal


837

854


-2%

1%

1%


Tax & Accounting


307

301


2%

8%

8%


Intellectual Property & Science


246

248


-1%

2%

2%


Corporate & Other (includes Reuters News)


74

79


-6%

3%

3%


Eliminations


(2)

(3)






Revenues from ongoing businesses (1)


2,979

3,107


-4%

1%

1%


Other Businesses (2)


-

-






Revenues


$2,979

$3,107


-4%


























Margin

Adjusted EBITDA (3)





Change

2015

2014

Change

Financial & Risk


$420

$408


3%

27.7%

25.1%

260bp

Legal


325

324


0%

38.8%

37.9%

90bp

Tax & Accounting


79

72


10%

25.7%

23.9%

180bp

Intellectual Property & Science


76

76


0%

30.9%

30.6%

30bp

Corporate & Other (includes Reuters News)


(62)

(58)






Adjusted EBITDA


$838

$822


2%

28.1%

26.5%

160bp










Underlying Operating Profit (4) 









Financial & Risk


$271

$252


8%

17.9%

15.5%

240bp

Legal


265

254


4%

31.7%

29.7%

200bp

Tax & Accounting


50

43


16%

16.3%

14.3%

200bp

Intellectual Property & Science


53

54


-2%

21.5%

21.8%

-30bp

Corporate & Other (includes Reuters News)


(74)

(73)






Underlying operating profit


$565

$530


7%

19.0%

17.1%

190bp


Refer to page 12 for explanation of footnotes.

          

Thomson Reuters Corporation

Business Segment Information

(millions of U.S. dollars)

(unaudited)




Nine Months Ended








September 30,


Change




2015

2014


Total

Before
Currency (5)

Organic


Revenues









Financial & Risk


$4,621

$4,941


-6%

0%

0%


Legal


2,487

2,507


-1%

2%

2%


Tax & Accounting


1,007

973


3%

8%

7%


Intellectual Property & Science


731

742


-1%

1%

1%


Corporate & Other (includes Reuters News)


222

240


-8%

2%

2%


Eliminations


(7)

(9)






Revenues from ongoing businesses (1)


9,061

9,394


-4%

1%

1%


Other Businesses (2)


-

2






Revenues


$9,061

$9,396


-4%




























Margin

Adjusted EBITDA (3)





Change

2015

2014

Change

Financial & Risk


$1,251

$1,233


1%

27.1%

25.0%

210bp

Legal


918

939


-2%

36.9%

37.5%

-60bp

Tax & Accounting


295

285


4%

29.3%

29.3%

0bp

Intellectual Property & Science


217

233


-7%

29.7%

31.4%

-170bp

Corporate & Other (includes Reuters News)


(184)

(171)






Adjusted EBITDA


$2,497

$2,519


-1%

27.6%

26.8%

80bp










Underlying Operating Profit (4) 









Financial & Risk


$786

$758


4%

17.0%

15.3%

170bp

Legal


729

730


0%

29.3%

29.1%

20bp

Tax & Accounting


211

192


10%

21.0%

19.7%

130bp

Intellectual Property & Science


149

167


-11%

20.4%

22.5%

-210bp

Corporate & Other (includes Reuters News)


(219)

(208)






Underlying operating profit


$1,656

$1,639


1%

18.3%

17.4%

90bp


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



Nine Months Ended


September 30,



September 30,



2015

2014

Change


2015

2014

Change









Operating profit

$419

$466

-10%


$1,231

$1,206

2%

Adjustments to remove:








     Amortization of other identifiable intangible assets

144

160



440

488


     Fair value adjustments

(8)

(88)



(2)

(53)


     Other operating losses (gains), net

10

(9)



(13)

(4)


     Operating loss from Other Businesses (2)

-

1



-

2


Underlying operating profit

$565

$530

7%


$1,656

$1,639

1%

Remove: depreciation and amortization of computer

   software (excluding Other Businesses (2))

273

292



841

880


Adjusted EBITDA

$838

$822

2%


$2,497

$2,519

-1%









Underlying operating profit margin (4)

19.0%

17.1%

190bp


18.3%

17.4%

90bp

Adjusted EBITDA margin (3)

28.1%

26.5%

160bp


27.6%

26.8%

80bp










       

Thomson Reuters Corporation

Reconciliation of Net Earnings to Adjusted EBITDA (3)

(millions of U.S. dollars)

(unaudited)



Three Months Ended



Nine Months Ended


September 30,



September 30,



2015

2014

Change


2015

2014

Change









Net earnings

$293

$250

17%


$894

$802

11%

Adjustments to remove:








Tax expense

11

26



53

53


Other finance costs (income)

14

82



(23)

25


Net interest expense

102

110



314

329


Amortization of other identifiable intangible assets

144

160



440

488


Amortization of computer software

186

195



572

586


Depreciation

87

97



269

294


EBITDA

$837

$920



$2,519

$2,577


Adjustments to remove:








Share of post-tax earnings in equity method 

   investments

(1)

(2)



(7)

(3)


Other operating losses (gains), net

10

(9)



(13)

(4)


Fair value adjustments

(8)

(88)



(2)

(53)


EBITDA from Other Businesses (2)

-

1



-

2


Adjusted EBITDA

$838

$822

2%


$2,497

$2,519

-1%


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

September 30, 2015


Three Months Ended

September 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

$271

$149

$420


$252

$156

$408

Legal

265

60

325


254

70

324

Tax & Accounting

50

29

79


43

29

72

Intellectual Property & Science

53

23

76


54

22

76

Corporate & Other (includes Reuters News)

(74)

12

(62)


(73)

15

(58)


$565

$273

$838


$530

$292

$822





Nine Months Ended

September 30, 2015


Nine Months Ended

September 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

$786

$465

$1,251


$758

$475

$1,233

Legal

729

189

918


730

209

939

Tax & Accounting

211

84

295


192

93

285

Intellectual Property & Science

149

68

217


167

66

233

Corporate & Other (includes Reuters News)

(219)

35

(184)


(208)

37

(171)


$1,656

$841

$2,497


$1,639

$880

$2,519


_________________________

** 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 amounts, and margins)

(unaudited)



Three Months Ended September 30,





% Change




BP Change


2015

2014


Total

Foreign Currency

Before Currency


2015 Margin

2014 Margin

Total

Foreign Currency

Before Currency

Adjusted EBITDA

$838

$822


2%

(5%)

7%


28.1%

26.5%

160bp

0bp

160bp

Underlying operating profit

$565

$530


7%

(6%)

13%


19.0%

17.1%

190bp

(10)bp

200bp

Adjusted EPS

$0.52

$0.45


16%

(8%)

24%


n/a

n/a

n/a

n/a

n/a





Nine Months Ended September 30,




% Change




BP Change


2015

2014


Total

Foreign Currency

Before Currency


2015 Margin

2014 Margin

Total

Foreign Currency

Before Currency

Adjusted EBITDA

$2,497

$2,519


(1%)

(6%)

5%


27.6%

26.8%

80bp

0bp

80bp

Underlying operating profit

$1,656

$1,639


1%

(7%)

8%


18.3%

17.4%

90bp

(30)bp

120bp

Adjusted EPS

$1.48

$1.41


5%

(11%)

16%


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 for share and per share data)

(unaudited)



Three Months Ended


Nine Months Ended


September 30,


September 30,


2015

2014


2015

2014

Earnings attributable to common shareholders

$280

$231


$847

$762

Adjustments to remove:






Operating loss from Other Businesses (2)

-

1


-

2

Fair value adjustments

(8)

(88)


(2)

(53)

Other operating losses (gains), net

10

(9)


(13)

(4)

Other finance costs (income)

14

82


(23)

25

Share of post-tax earnings in equity method  investments

(1)

(2)


(7)

(3)

Tax on above items

(5)

14


(2)

10

 Tax items impacting comparability

3

(10)


1

(10)

 Amortization of other identifiable intangible assets

144

160


440

488

Interim period effective tax rate normalization (7)

(9)

5


(6)

-

Tax charge amortization (8)

(22)

(22)


(65)

(65)

Dividends declared on preference shares

(1)

(1)


(2)

(2)

Adjusted earnings

$405

$361


$1,168

$1,150

Adjusted earnings per share

$0.52

$0.45


$1.48

$1.41







Diluted weighted-average common shares (millions)

781.2

807.6


788.8

814.0


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

Nine Months Ended

September 30,

September 30,


2015

2014

2015

2014

Net cash provided by operating activities

$665

$585

$1,833

$1,574

Capital expenditures, less proceeds from disposals

(217)

(231)

(743)

(704)

Other investing activities

2

5

5

7

Dividends paid on preference shares

(1)

(1)

(2)

(2)

Free cash flow

449

358

1,093

875

Remove: Other Businesses (2)

-

(2)

-

(1)

Free cash flow from ongoing businesses

$449

$356

$1,093

$874

         

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 and other investing activities less capital expenditures 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


Nine Months Ended


September 30,


September 30,


2015

2014


2015

2014







Revenues

$2,979

$3,107


$9,061

$9,396

Operating expenses

(2,133)

(2,198)


(6,562)

(6,826)

Depreciation

(87)

(97)


(269)

(294)

Amortization of computer software

(186)

(195)


(572)

(586)

Amortization of other identifiable intangible assets

(144)

(160)


(440)

(488)

Other operating (losses) gains, net

(10)

9


13

4

Operating profit

419

466


1,231

1,206

Finance costs, net:






     Net interest expense

(102)

(110)


(314)

(329)

     Other finance (costs) income

(14)

(82)


23

(25)

Income before tax and equity method investments

303

274


940

852

Share of post-tax earnings in equity method investments

1

2


7

3

Tax expense

(11)

(26)


(53)

(53)

Net earnings

$293

$250


$894

$802







Earnings attributable to:






Common shareholders

280

231


847

762

Non-controlling interests

13

19


47

40







Basic earnings per share

$0.36

$0.29


$1.08

$0.94

Diluted earnings per share

$0.36

$0.28


$1.07

$0.93







Basic weighted-average common shares

778,334,806

804,034,944


785,932,003

810,582,179

Diluted weighted-average common shares

781,170,075

807,567,416


788,797,817

813,987,831

        

Thomson Reuters Corporation

Consolidated Statement of Financial Position

(millions of U.S. dollars)

(unaudited)



September 30,


December 31,

2015


2014

Assets




Cash and cash equivalents

$710


$1,018

Trade and other receivables

1,633


1,810

Other financial assets

159


161

Prepaid expenses and other current assets

726


657

Current assets

3,228


3,646





Computer hardware and other property, net

1,047


1,182

Computer software, net

1,481


1,529

Other identifiable intangible assets, net

6,579


7,124

Goodwill

16,006


16,403

Other financial assets

123


127

Other non-current assets

537


536

Deferred tax

47


50

Total assets

$29,048


$30,597





Liabilities and equity




Liabilities




Current indebtedness

$1,619


$534

Payables, accruals and provisions

2,079


2,443

Deferred revenue

1,228


1,355

Other financial liabilities

69


265

Current liabilities

4,995


4,597





Long-term indebtedness

6,874


7,576

Provisions and other non-current liabilities

2,246


2,171

Other financial liabilities

368


161

Deferred tax

1,294


1,433

Total liabilities

15,777


15,938





Equity




Capital

9,918


10,157

Retained earnings

6,421


7,168

Accumulated other comprehensive loss

(3,557)


(3,147)

Total shareholders' equity

12,782


14,178

Non-controlling interests

489


481

Total equity

13,271


14,659

Total liabilities and equity

$29,048


$30,597

        

Thomson Reuters Corporation

Consolidated Statement of Cash Flow

(millions of U.S. dollars)

(unaudited)







Three Months Ended

September 30,


Nine Months Ended

September 30,


2015

2014


2015

2014

Cash provided by (used in):






Operating activities






Net earnings

$293

$250


$894

$802

Adjustments for:






Depreciation

87

97


269

294

Amortization of computer software

186

195


572

586

Amortization of other identifiable intangible assets

144

160


440

488

Net losses (gains) on disposals of businesses and investments

1

(2)


(24)

(1)

Deferred tax

(43)

(112)


(109)

(187)

Other

89

37


191

148

Changes in working capital and other items 

(92)

(40)


(400)

(556)

Net cash provided by operating activities

665

585


1,833

1,574







Investing activities






Acquisitions, net of cash acquired

(2)

(28)


(17)

(165)

Proceeds from disposals of businesses and investments,  

   net of taxes paid

-

2


75

14

Capital expenditures, less proceeds from disposals 

(217)

(231)


(743)

(704)

Other investing activities

2

5


5

7

Net cash used in investing activities

(217)

(252)


(680)

(848)







Financing activities






Proceeds from debt

4

997


4

997

Repayments of debt

(593)

-


(593)

-

Net borrowings under short-term loan facilities

529

-


1,099

-

Repurchases of common shares

(554)

(109)


(1,250)

(726)

Dividends paid on preference shares

(1)

(1)


(2)

(2)

Dividends paid on common shares

(253)

(258)


(765)

(778)

Other financing activities

11

19


63

148

Net cash (used in) provided by financing activities

(857)

648


(1,444)

(361)

(Decrease) increase in cash and bank overdrafts

(409)

981


(291)

365

Translation adjustments

(10)

(17)


(19)

(14)

Cash and bank overdrafts at beginning of period

1,124

699


1,015

1,312

Cash and bank overdrafts at end of period

$705

$1,663


$705

$1,663







Cash and bank overdrafts at end of period comprised of:






Cash and cash equivalents

$710

$1,686


$710

$1,686

Bank overdrafts

(5)

(23)


(5)

(23)


$705

$1,663


$705

$1,663

  

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SOURCE Thomson Reuters


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