Thomson Reuters Reports Third-Quarter 2016 Results

TORONTO, Nov. 1, 2016 /CNW/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the third quarter ended September 30, 2016.

"It is encouraging to see our continued progress flow through in the third-quarter numbers," said Jim Smith, president and chief executive officer of Thomson Reuters.  "Our core subscription businesses are moving in the right direction, our cost controls are working and we are increasingly confident in our execution capability.  That is why we are going to pick up the pace of our transformation efforts."

Consolidated Financial Highlights - Third Quarter
(All amounts are from continuing operations, except cash flow measures)

IFRS Financial Measures


Three Months Ended September 30, 

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

IFRS Financial Measures

2016

2015(1)

Change



Revenues

$2,744

$2,747

0%



Operating profit

$385

$386

0%



Diluted EPS

$0.34

$0.32

6%



Cash flow from operations (includes discontinued operations)

$758

$680

11%










 

  • Revenues were essentially unchanged as growth in subscription revenues was offset by the impact of foreign currency and a decline in low margin recoveries revenues
  • Operating profit was essentially unchanged as higher subscription revenues were offset by the impact of foreign currency, which included unfavorable fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts
  • Diluted EPS increased 6% to $0.34, with the increase driven by the benefit of lower common shares outstanding
  • Cash flow from operations, which includes discontinued operations, increased 11% to $758 million, primarily due to favorable timing of working capital

 

Non-IFRS Financial Measures (2) 


2016

2015(1)

Change

Change Before
Currency

Revenues

$2,744

$2,747

0%

1%

Adjusted EBITDA

$814

$782

4%

2%

Adjusted EBITDA margin

29.7%

28.5%

120bp

20bp

Underlying operating profit

$559

$524

7%

3%

Underlying operating profit margin

20.4%

19.1%

130bp

30bp

Adjusted EPS

$0.54

$0.45

20%

13%

Free cash flow (includes discontinued operations)

$519

$449

16%


 

(1) Unless otherwise indicated, results exclude the Intellectual Property & Science (IP & Science) business, which was sold in October 2016. IP & Science was classified as a discontinued operation for 2016 reporting purposes through the closing date of sale. 2015 amounts (except cash flow measures) are restated to conform to the current year's presentation.

(2) In addition to results reported in accordance with International Financial Reporting Standards (IFRS), the company uses certain non-IFRS financial measures as supplemental indicators of its operating performance and financial position. 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 were unchanged. Before currency, revenues increased 1%
    • Excluding recoveries, revenues increased 2% (before currency)
  • Adjusted EBITDA increased 4% to $814 million, and the margin increased 120 basis points to 29.7% from 28.5% in the prior-year period. Excluding currency, the margin increased 20 basis points
  • Underlying operating profit increased 7% to $559 million, and the margin increased 130 basis points to 20.4% from 19.1% in the prior-year period. Excluding currency, the margin increased 30 basis points
  • Adjusted EPS increased 20% to $0.54, an increase of $0.09 per share. Currency had a $0.03 favorable impact

Planned Charge in Fourth-Quarter 2016 and Updated Full-Year 2016 Outlook

  • Thomson Reuters today announced that it plans to record a charge of approximately $200 million to $250 million to be incurred in the fourth quarter of 2016. This charge is intended to accelerate the pace of the company's Transformation program by further simplifying and streamlining the business.  The majority of the charges will be taken in Financial & Risk and the Enterprise, Technology & Operations Group that was created in January 2016. The resulting run-rate cash savings in 2017 are estimated to be of a similar magnitude to the planned charge, with some of the savings to be reinvested in the business.
  • The company updated its 2016 full-year outlook to reflect the planned charge, as outlined in the Business Outlook section of this news release.

Sale of IP & Science Business

The IP & Science business was sold for $3.55 billion in cash on October 3, 2016. The net proceeds from the sale will be approximately $3.2 billion. The company utilized $1.7 billion of the proceeds to repay commercial paper during October and it plans to use the remaining proceeds primarily to buy back shares under its current $1.5 billion share repurchase program, further pay down debt and for reinvestment in the business.

Highlights by Business Unit

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%. Revenues grew approximately 2% excluding the impact of some temporary items, primarily the impact of lower recoveries revenues and commercial pricing adjustments related to the migration of certain customers to new platforms.
    • Recurring revenues (77% of the segment's revenues in the quarter) were up 2%, primarily due to the impact of an annual price increase and a positive net sales trend, partly offset by lower revenues resulting from the pricing adjustments referred to above and macro-economic conditions impacting large European banks and banks in several emerging markets.
    • Transactions revenues (15% of the segment's revenues in the quarter) were up 4% due to increased revenue from Tradeweb, BETA brokerage processing and transactional revenues from the Risk business. This increase was offset by the impact of lower foreign exchange trading volumes.
    • Low-margin recoveries revenues (8% of the segment's revenues in the quarter) decreased 12% as some third-party partners continue to move to direct billing with their customers. The rate of decline in these revenues is expected to lessen again in the fourth quarter.
      • Recoveries represent revenues for content or services provided by third parties and distributed through Financial & Risk's platform. Reductions in recoveries revenue have no impact on the unit's EBITDA or operating profit.
  • By geography, revenues in the Americas were up 3% (up 4% excluding recoveries). Revenues in Europe, Middle East and Africa (EMEA) were unchanged (up 2% excluding recoveries). Revenues in Asia were unchanged (up 1% excluding recoveries).
  • EBITDA increased 10% to $460 million and the margin increased 260 basis points to 30.3% from 27.7% in the prior-year period. Excluding the impact of currency, the margin increased 160 basis points. The increase in the margin was primarily due to higher revenues and savings related to efficiency initiatives and platform closures in 2015.
  • Operating profit increased 15% to $313 million and the margin increased 270 basis points to 20.6% from 17.9% in the prior-year period. Excluding the impact of currency, the margin increased 160 basis points. The operating profit margin improvement reflected the same factors that impacted EBITDA.
  • Net sales were positive in all regions, marking the tenth consecutive quarter of positive total net sales.

Legal

  • Revenues were unchanged from the prior-year period. Excluding US print, revenues grew 1%.
    • Solutions businesses (45% of the segment's revenues in the quarter) grew 1%. Solutions subscription revenue growth of 5% was offset by a 9% reduction in transactional revenues. 
    • US Online Legal Information (42% of the segment's revenues in the quarter) grew 2%, marking the seventh consecutive quarter of growth.
    • US Print (13% of the segment's revenues in the quarter) declined 8%.
  • Subscription revenues (75% of the segment's revenues in the quarter) grew 3%. However, transactional revenues (12% of the segment's revenues in the quarter) declined 8% due to lower Legal Managed Services and Elite transactional revenues.
  • EBITDA declined 2% to $328 million and the margin increased 10 basis points to 39.3% from 39.2% in the prior-year period. Excluding the impact of currency, the margin declined 30 basis points.
  • Operating profit decreased 3% to $264 million and the margin decreased 20 basis points to 31.6% from 31.8% in the prior-year period. Excluding the impact of currency, the margin declined 40 basis points.  

Tax & Accounting

  • Revenues increased 6%, driven by the Corporate, Professional and Knowledge Solutions businesses, partially offset by a decline in the Government business. Recurring revenues (90% of the segment's revenues in the quarter) increased 11%.
  • EBITDA increased 10% to $87 million and the margin increased 120 basis points to 26.9% from 25.7% in the prior-year period. Excluding the impact of currency, the margin increased 70 basis points.
  • Operating profit increased 18% to $59 million and the margin increased 200 basis points to 18.3% from 16.3% in the prior-year period. Excluding the impact of currency, the margin increased 120 basis points.
  • 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.

Corporate & Other (Including Reuters News)

  • Reuters News revenues were $73 million, down 1% compared to the prior-year period.
  • Corporate & Other costs were $77 million compared to $68 million in the prior-year period.

Consolidated Financial Highlights - Nine Months
(All amounts are from continuing operations, except cash flow measures)

IFRS Financial Measures


Nine Months Ended September 30, 

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


2016

2015(1)

Change



Revenues

$8,306

$8,370

-1%



Operating profit

$1,096

$1,093

0%



Diluted EPS

$0.99

$0.91

9%



Cash flow from operations (includes discontinued operations)

$1,986

$1,875

6%










 

  • Revenues declined 1% as higher subscription revenues were more than offset by the impact of foreign currency and a decline in low margin recoveries revenues
  • Operating profit was essentially unchanged as higher subscription revenues were offset by the impact of foreign currency, which included unfavorable fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts
  • Diluted EPS increased 9% to $0.99, primarily due to lower tax expense as well as the benefit of lower common shares outstanding
  • Cash flow from operations, which includes discontinued operations, increased 6% due to higher operating profit before the impact of non-cash items such as depreciation, amortization and fair value adjustments

 

Non-IFRS Financial Measures (2)


2016

2015(1)

Change

Change Before
Currency

Revenues

$8,306

$8,370

-1%

1%

Adjusted EBITDA

$2,319

$2,287

1%

0%

Adjusted EBITDA margin

27.9%

27.3%

60bp

-10bp

Underlying operating profit

$1,562

$1,495

4%

2%

Underlying operating profit margin

18.8%

17.9%

90bp

30bp

Adjusted EPS

$1.47

$1.24

19%

15%

Free cash flow (includes discontinued operations)

$1,267

$1,093

16%


 

(1) Unless otherwise indicated, results exclude the IP & Science business, which was sold in October 2016. IP & Science was classified as a discontinued operation for 2016 reporting purposes through the closing date of sale. 2015 amounts (except cash flow measures) are restated to conform to the current period's presentation.

(2) In addition to results reported in accordance with IFRS, the company uses certain non-IFRS financial measures as supplemental indicators of its operating performance and financial position. 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 declined 1%. Before currency, revenues increased 1%. Excluding recoveries, revenues increased 2% (before currency)
  • Adjusted EBITDA increased 1% to $2.3 billion, and the margin increased 60 basis points to 27.9% from 27.3% in the prior-year period. Excluding the impact of currency, the margin was down 10 basis points from the prior-year period
  • Underlying operating profit increased 4% to $1.6 billion, and the margin increased 90 basis points to 18.8% from 17.9% in the prior-year period. Excluding the impact of currency, the margin increased 30 basis points
  • Adjusted EPS increased 19% to $1.47, an increase of $0.23 per share. Currency had a $0.04 favorable impact
  • Free cash flow for the first nine months of the year increased 16% to $1.3 billion compared to $1.1 billion in the prior-year period

Business Outlook (Before Currency) 

Thomson Reuters updated its full-year business outlook for 2016 to reflect the planned fourth-quarter charge discussed earlier in this news release.

The company's 2016 Outlook assumes constant currency rates compared to 2015 and all metrics below (except for free cash flow) exclude the IP & Science business, which was classified as a discontinued operation for 2016 reporting purposes through the closing date. The 2016 Outlook is based on the expected performance of the company's remaining businesses and does not factor in the impact of any other acquisitions or divestitures that may occur during the year.

For the full-year 2016, the company expects:

  • Low single-digit revenue growth
    • 2% to 3% revenue growth excluding Financial & Risk's recoveries revenues, which are low margin revenues and are expected to decline as partners move to direct billing with their customers
  • Adjusted EBITDA margin to range between 25.0% to 26.0% - Including planned charge
    • Adjusted EBITDA margin to range between 27.3% and 28.3% - Excluding planned charge
  • Underlying operating profit margin to range between 16.0% to 17.0% - Including planned charge
    • Underlying operating profit margin to range between 18.4% and 19.4% - Excluding planned charge
  • Free cash flow to range between $1.7 billion and $1.9 billion in 2016 (most of cash impact from planned charge to be incurred in 2017)

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 2016, the Thomson Reuters board of directors approved a $0.02 per share annualized increase in the dividend to $1.36 per common share. A quarterly dividend of $0.34 per share is payable on December 15, 2016 to common shareholders of record as of November 17, 2016.

From January 1, 2016 through September 30, 2016, the company repurchased approximately 31.2 million shares at a cost of $1.2 billion. Of this amount, 13.2 million shares were repurchased in the third quarter at a cost of $542 million. Under the current $1.5 billion share repurchase program announced in February 2016, the company has repurchased approximately 26.4 million shares at a cost of about $1.1 billion through September 30, 2016.

Thomson Reuters

Thomson Reuters is the world's leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. The business has operated in more than 100 countries for more than 100 years. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, visit 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 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.

As previously disclosed in July 2016, the company redefined adjusted earnings and adjusted EPS in relation to certain tax computations to better align with current market practices and to reflect guidance issued earlier this year by the U.S. Securities and Exchange Commission. These changes were effective for the third quarter and have not impacted the company's reporting of revenues, adjusted EBITDA, underlying operating profit or free cash flow.

The company's outlook contains various non-IFRS financial measures. For outlook purposes only, the company is unable to reconcile these non-IFRS measures to the most comparable IFRS measures because it cannot predict, with reasonable certainty, the 2016 impact of changes in foreign exchange rates or the company's share price which impact (i) the translation of its results reported at average foreign currency rates for the year, (ii) fair value adjustments associated with foreign currency derivatives  embedded in certain customer contracts, (iii) the valuation of certain share-based awards and (iv) other finance income or expense related to foreign exchange contracts and intercompany financing arrangements. Additionally, the company cannot reasonably predict the occurrence or amount of other operating gains and losses, which generally arise from business transactions that it does not anticipate.

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 "2016 Business Outlook (Before Currency)" section, Mr. Smith's comments and statements regarding the planned fourth-quarter charge and expected run-rate savings resulting from the  charge, 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 2016. 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 2016 Business Outlook is based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, GDP growth in most of the countries where Thomson Reuters operates and a continued increase in the number of professionals around the world and their demand for high quality information and workflow solutions. Internal financial and operational assumptions include, but are not limited to, the successful execution of sales initiatives, ongoing product release programs, our 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

Senior Vice President, Corporate Affairs

+1 646 223 5285

david.crundwell@tr.com

 

INVESTORS

Frank J. Golden

Senior Vice President, Investor Relations

+1 646 223 5288

frank.golden@tr.com

Thomson Reuters will webcast a discussion of its third-quarter 2016 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
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)






Three Months Ended


Nine Months Ended


September 30,


September 30,


2016

2015(1)


2016

2015(1)

CONTINUING OPERATIONS






Revenues

$2,744

$2,747


$8,306

$8,370

Operating expenses

(1,964)

(1,958)


(6,064)

(6,083)

Depreciation

(78)

(85)


(239)

(263)

Amortization of computer software

(177)

(173)


(518)

(529)

Amortization of other identifiable intangible assets

(128)

(135)


(388)

(415)

Other operating (losses) gains, net

(12)

(10)


(1)

13

Operating profit

385

386


1,096

1,093

Finance costs, net:






     Net interest expense

(108)

(102)


(304)

(314)

     Other finance (costs) income

(3)

(15)


(28)

24

Income before tax and equity method investments

274

269


764

803

Share of post-tax earnings in equity method investments

2

1


2

8

Tax (expense) benefit

(8)

(7)


16

(42)

Earnings from continuing operations

268

263


782

769

Earnings from discontinued operations, net of tax

18

30


126

125

Net earnings

$286

$293


$908

$894







Earnings attributable to:






Common shareholders

273

280


872

847

Non-controlling interests

13

13


36

47







Earnings per share:






Basic earnings per share:






   From continuing operations

$0.34

$0.32


$0.99

$0.92

   From discontinued operations

0.03

0.04


0.17

0.16

Basic earnings per share

$0.37

$0.36


$1.16

$1.08







Diluted earnings per share:






   From continuing operations

$0.34

$0.32


$0.99

$0.91

   From discontinued operations

0.02

0.04


0.16

0.16

Diluted earnings per share

$0.36

$0.36


$1.15

$1.07







Basic weighted-average common shares

743,939,102

778,334,806


752,226,485

785,932,003

Diluted weighted-average common shares

745,772,211

781,170,075


753,916,599

788,797,817

(1)       Prior-year period amounts have been restated to reflect the current presentation.

 

 

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



September 30,


December 31,

2016


2015(1)

Assets




Cash and cash equivalents

$831


$966

Trade and other receivables

1,403


1,755

Other financial assets

125


176

Prepaid expenses and other current assets

668


683

   Current assets excluding assets held for sale

3,027


3,580

Assets held for sale

1,674


-

Current assets

4,701


3,580





Computer hardware and other property, net

943


1,067

Computer software, net

1,399


1,486

Other identifiable intangible assets, net

5,862


6,417

Goodwill

14,795


15,878

Other financial assets

109


116

Other non-current assets

555


544

Deferred tax

49


47

Total assets

$28,413


$29,135





Liabilities and equity




Liabilities




Current indebtedness

$2,855


$1,595

Payables, accruals and provisions

2,128


2,278

Deferred revenue

896


1,319

Other financial liabilities

193


238

   Current liabilities excluding liabilities associated with assets held for sale

6,072


5,430

Liabilities associated with assets held for sale

474


-

Current liabilities

6,546


5,430





Long-term indebtedness

6,307


6,829

Provisions and other non-current liabilities

2,404


2,124

Other financial liabilities

344


387

Deferred tax

982


1,265

Total liabilities

16,583


16,035





Equity




Capital

9,627


9,852

Retained earnings

5,599


6,458

Accumulated other comprehensive loss

(3,878)


(3,697)

Total shareholders' equity

11,348


12,613

Non-controlling interests

482


487

Total equity

11,830


13,100

Total liabilities and equity

$28,413


$29,135

(1)       Prior-year period amounts have been restated to reflect the current presentation.

 

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






Three Months Ended

September 30,


Nine Months Ended

September 30,


2016

2015(1)


2016

2015(1)

Cash provided by (used in):






Operating activities






Earnings from continuing operations

$268

$263


$782

$769

Adjustments for:






Depreciation

78

85


239

263

Amortization of computer software

177

173


518

529

Amortization of other identifiable intangible assets

128

135


388

415

Net (gains) losses on disposals of businesses and investments

(2)

1


(4)

(24)

Deferred tax

(46)

(43)


(130)

(108)

Other

129

88


354

184

Changes in working capital and other items 

37

(35)


(344)

(401)

Operating cash flows from continuing operations

769

667


1,803

1,627

Operating cash flows from discontinued operations

(11)

13


183

248

Net cash provided by operating activities

758

680


1,986

1,875







Investing activities






Acquisitions, net of cash acquired

-

(2)


(111)

(17)

Proceeds from disposals of businesses and

   investments, net of taxes paid

3

-


4

75

Capital expenditures, less proceeds from disposals 

(213)

(203)


(658)

(703)

Other investing activities

3

2


23

5

Investing cash flows from continuing operations

(207)

(203)


(742)

(640)

Investing cash flows from discontinued operations

(13)

(14)


(38)

(40)

Net cash used in investing activities

(220)

(217)


(780)

(680)







Financing activities






Proceeds from debt

-

4


498

4

Repayments of debt

-

(593)


(503)

(593)

Net borrowings under short-term loan facilities

398

529


702

1,099

Repurchases of common shares

(542)

(554)


(1,232)

(1,250)

Dividends paid on preference shares

(1)

(1)


(2)

(2)

Dividends paid on common shares

(243)

(253)


(740)

(765)

Dividends paid to non-controlling interests

(15)

(15)


(44)

(42)

Other financing activities

9

11


22

63

Net cash used in financing activities

(394)

(872)


(1,299)

(1,486)

Increase (decrease)in cash and bank overdrafts

144

(409)


(93)

(291)

Translation adjustments

(2)

(10)


(3)

(19)

Cash and bank overdrafts at beginning of period

684

1,124


922

1,015

Cash and bank overdrafts at end of period

$826

$705


$826

$705







Cash and bank overdrafts at end of period comprised of:






Cash and cash equivalents

$831

$900


$831

$900

Bank overdrafts

(5)

(195)


(5)

(195)


$826

$705


$826

$705

(1)       Prior-year period amounts have been restated to reflect the current presentation.

 

 

Thomson Reuters Corporation
Reconciliation of Changes in Revenues, Adjusted EBITDA, Underlying Operating Profit and the Related Margins
Excluding the Effects of Foreign Currency by Business Segment 
 (millions of U.S. dollars, except for margins)
(unaudited)








Three Months Ended





September 30,


Change



2016

  2015(1)


Total

Foreign  Currency (4)

Before

Currency (4)

Revenues








Financial & Risk


$1,516

$1,517


0%

-1%

1%

Legal


835

851


-2%

-2%

0%

Tax & Accounting


323

307


5%

-1%

6%

Corporate & Other (includes Reuters News)


73

74


-1%

0%

-1%

Eliminations


(3)

(2)





Revenues


$2,744

$2,747


0%

-1%

1%













Change






Total

Foreign
Currency
(4)

Before 

Currency (4)

Adjusted EBITDA (2)








Financial & Risk


$460

$420


10%

3%

7%

Legal


328

334


-2%

-1%

-1%

Tax & Accounting


87

79


10%

1%

9%

Corporate & Other (includes Reuters News)


(61)

(51)


n/a

n/a

n/a

Adjusted EBITDA


$814

$782


4%

2%

2%









Adjusted EBITDA Margin (2)








Financial & Risk


30.3%

27.7%


260bp

100bp

160bp

Legal


39.3%

39.2%


10bp

40bp

-30bp

Tax & Accounting


26.9%

25.7%


120bp

50bp

70bp

Corporate & Other (includes Reuters News)


n/a

n/a


n/a

n/a

n/a

Adjusted EBITDA margin


29.7%

28.5%


120bp

100bp

20bp














Change






Total

Foreign  

Currency (4)

Before 

Currency (4)

Underlying Operating Profit (3) 








Financial & Risk


$313

$271


15%

5%

10%

Legal


264

271


-3%

-2%

-1%

Tax & Accounting


59

50


18%

4%

14%

Corporate & Other (includes Reuters News)


(77)

(68)


n/a

n/a

n/a

Underlying operating profit


$559

$524


7%

4%

3%









Underlying Operating Profit Margin (3)








Financial & Risk


20.6%

17.9%


270bp

110bp

160bp

Legal


31.6%

31.8%


-20bp

20bp

-40bp

Tax & Accounting


18.3%

16.3%


200bp

80bp

120bp

Corporate & Other (includes Reuters News)


n/a

n/a


n/a

n/a

n/a

Underlying operating profit margin


20.4%

19.1%


130bp

100bp

30bp









n/a - not applicable

Refer to page 16 for footnotes.

 

 

Thomson Reuters Corporation
Reconciliation of Changes in Revenues, Adjusted EBITDA, Underlying Operating Profit and the Related Margins
Excluding the Effects of Foreign Currency by Business Segment 
 (millions of U.S. dollars, except for margins)
(unaudited)









Nine Months Ended






September 30,


Change



2016

  2015(1)


Total

Foreign  Currency (4)

Before

Currency (4)

Revenues








Financial & Risk


$4,549

$4,621


-2%

-2%

0%

Legal


2,503

2,527


-1%

-2%

1%

Tax & Accounting


1,036

1,007


3%

-2%

5%

Corporate & Other (includes Reuters News)


227

222


2%

-1%

3%

Eliminations


(9)

(7)





Revenues


$8,306

$8,370


-1%

-2%

1%























Change






Total

Foreign  

Currency (4)

Before Currency (4)

Adjusted EBITDA (2)








Financial & Risk


$1,340

$1,251


7%

1%

6%

Legal


936

941


-1%

-1%

0%

Tax & Accounting


283

295


-4%

1%

-5%

Corporate & Other (includes Reuters News)


(240)

(200)


n/a

n/a

n/a

Adjusted EBITDA


$2,319

$2,287


1%

1%

0%










Adjusted EBITDA Margin (2)









Financial & Risk


29.5%

27.1%


240bp

80bp

160bp

Legal


37.4%

37.2%


20bp

50bp

-30bp

Tax & Accounting


27.3%

29.3%


-200bp

100bp

-300bp

Corporate & Other (includes Reuters News)


n/a

n/a


n/a

n/a

n/a

Adjusted EBITDA margin


27.9%

27.3%


60bp

70bp

-10bp














Change






Total

Foreign  

Currency (4)

Before Currency (4)

Underlying Operating Profit (3) 








Financial & Risk


$905

$786


15%

2%

13%

Legal


749

749


0%

0%

0%

Tax & Accounting


197

211


-7%

2%

-9%

Corporate & Other (includes Reuters News)


(289)

(251)


n/a

n/a

n/a

Underlying operating profit


$1,562

$1,495


4%

2%

2%









Underlying Operating Profit Margin (3)








Financial & Risk


19.9%

17.0%


290bp

70bp

220bp

Legal


29.9%

29.6%


30bp

40bp

-10bp

Tax & Accounting


19.0%

21.0%


-200bp

80bp

-280bp

Corporate & Other (includes Reuters News)


n/a

n/a


n/a

n/a

n/a

Underlying operating profit margin


18.8%

17.9%


90bp

60bp

30bp

n/a - not applicable

Refer to page 16 for footnotes.

 

 

Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA (2)
(millions of U.S. dollars)
(unaudited)


Three Months Ended



Nine Months Ended


September 30,



September 30,



2016

       2015(1)

Change


2016

       2015(1)

Change









Operating profit

$385

$386

0%


$1,096

$1,093

0%

Adjustments to remove:








     Amortization of other identifiable intangible assets

128

135



388

415


     Fair value adjustments

34

(7)



77

-


     Other operating losses (gains), net

12

10



1

(13)


Underlying operating profit

$559

$524

7%


$1,562

$1,495

4%

Remove: depreciation and amortization of computer

   software

255

258



757

792


Adjusted EBITDA

$814

$782

4%


$2,319

$2,287

1%









Underlying operating profit margin (3)

20.4%

19.1%

130bp


18.8%

17.9%

90bp

Adjusted EBITDA margin (2)

29.7%

28.5%

120bp


27.9%

27.3%

60bp










 

 

 

Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (2)
 (millions of U.S. dollars)
(unaudited)



Three Months Ended



Nine Months Ended


September 30,



September 30,



2016

       2015(1)

Change


2016

       2015(1)

Change









Earnings from continuing operations

$268

$263

2%


$782

$769

2%

Adjustments to remove:








Tax expense (benefit)

8

7



(16)

42


Other finance costs (income)

3

15



28

(24)


Net interest expense

108

102



304

314


Amortization of other identifiable intangible assets

128

135



388

415


Amortization of computer software

177

173



518

529


Depreciation

78

85



239

263


EBITDA

$770

$780



$2,243

$2,308


Adjustments to remove:








Share of post-tax earnings in equity method 

   investments

(2)

(1)



(2)

(8)


Other operating losses (gains), net

12

10



1

(13)


Fair value adjustments

34

(7)



77

-


Adjusted EBITDA

$814

$782

4%


$2,319

$2,287

1%

Refer to page 16 for footnotes.

 

 

Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit (3) to Adjusted EBITDA (2) by Business Segment
(millions of U.S. dollars)
(unaudited)






Three Months Ended

September 30, 2016


Three Months Ended

September 30, 2015(1)


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

$313

$147

$460


$271

$149

$420

Legal

264

64

328


271

63

334

Tax & Accounting

59

28

87


50

29

79

Corporate & Other (includes Reuters News)

(77)

16

(61)


(68)

17

(51)


$559

$255

$814


$524

$258

$782

 

 


Nine Months Ended

September 30, 2016


Nine Months Ended

September 30, 2015(1)


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

$905

$435

$1,340


$786

$465

$1,251

Legal

749

187

936


749

192

941

Tax & Accounting

197

86

283


211

84

295

Corporate & Other (includes Reuters News)

(289)

49

(240)


(251)

51

(200)


$1,562

$757

$2,319


$1,495

$792

$2,287

Refer to page 16 for footnotes.

 

 

Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders to Adjusted Earnings (5)
(millions of U.S. dollars, except for share and per share data)
(unaudited)






Three Months Ended

September 30,


Nine Months Ended

September 30,




2016

2015(1)

Change


2016

2015(1)

Change

Earnings attributable to common shareholders

$273

$280

-3%


$872

$847

3%

Adjustments to remove:








Fair value adjustments

34

(7)



77

-


Amortization of other identifiable intangible assets

128

135



388

415


Other operating losses (gains), net

12

10



1

(13)


Other finance costs (income)

3

15



28

(24)


Share of post-tax earnings in equity method investments

(2)

(1)



(2)

(8)


Tax on above items

(46)

(39)



(138)

(108)


Tax items impacting comparability

7

3



13

1


Earnings from discontinued operations, net of tax

(18)

(30)



(126)

(125)


Interim period effective tax rate normalization (6)

13

(13)



-

(8)


Dividends declared on preference shares

(1)

(1)



(2)

(2)


Adjusted earnings

$403

$352

14%


$1,111

$975

14%

Adjusted earnings per share

$0.54

$0.45

20%


$1.47

$1.24

19%

Foreign currency(4)



7%




4%

Before currency(4)



13%




15%









Diluted weighted-average common shares (millions)

745.8

781.2



753.9

788.8


 

 

Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (7)
(millions of U.S. dollars)
(unaudited)



Three Months Ended

Nine Months Ended

September 30,

September 30,


2016

2015(1)

2016

2015(1)

Net cash provided by operating activities

$758

$680

$1,986

$1,875

Capital expenditures, less proceeds from disposals

(213)

(203)

(658)

(703)

Other investing activities

3

2

23

5

Dividends paid on preference shares

(1)

(1)

(2)

(2)

Dividends paid to non-controlling interests

(15)

(15)

(44)

(42)

Capital expenditures from discontinued operations

(13)

(14)

(38)

(40)

Free cash flow

$519

$449

$1,267

$1,093

Refer to page 16 for footnotes.

Footnotes

(1)       Prior-year period amounts have been restated to reflect the reclassification of the Intellectual Property & Science segment as a discontinued operation through the closing date of the sale

(2)       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. Thomson Reuters uses adjusted EBITDA as it provides a measure commonly reported and widely used by investors as an indicator of a company's operating performance and as a valuation metric. Additionally, this measure is used by Thomson Reuters and investors to assess a company's ability to incur and service debt.

(3)       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. Thomson Reuters uses underlying operating profit as it provides a basis to evaluate operating profitability and performance trends, excluding the impact of items which distort the performance of the company's operations.

(4)       The changes in revenues, 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-year period's local currency equivalent using the same exchange rates.

(5)       Adjusted earnings and adjusted earnings per share (EPS) include dividends declared on preference shares but exclude the post-tax impacts of fair value adjustments, amortization of other identifiable intangible assets, other operating (gains) and losses, certain impairment charges, other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method investments, discontinued operations and other items affecting comparability. Thomson Reuters calculates the post-tax amount of each item excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item. Adjusted earnings per share is calculated using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to shareholders. Thomson Reuters uses adjusted earnings and adjusted EPS as they provide a more comparable basis to analyze earnings and they are also measures commonly used by shareholders to measure the company's performance.

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

(7)       Free cash flow (includes free cash flow from continuing and discontinued operations) is net cash provided by operating activities, and other investing activities less capital expenditures, dividends paid on the company's preference shares, and dividends paid to non-controlling interests. Thomson Reuters uses free cash flow as it helps assess the company's ability, over the long term, to create value for its shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions. 

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SOURCE Thomson Reuters


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