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Press release from CNW Group

Thomson Reuters Reports Second-Quarter 2013 Results

Tuesday, July 30, 2013

Thomson Reuters Reports Second-Quarter 2013 Results

07:02 EDT Tuesday, July 30, 2013

- Revenues grew 2% before currency

- Adjusted EBITDA grew 3% to $858 million with a margin of 27.6%, up 40 basis points

- Underlying operating profit up slightly to $569 million with a margin of 18.3%, down 10 basis points

- Adjusted earnings per share were $0.48, unchanged from the prior-year period

- 2013 Outlook affirmed

NEW YORK, July 30, 2013 /CNW/ - Thomson Reuters (TSX / NYSE: TRI) today reported results for the second quarter ended June 30, 2013. Revenues from ongoing businesses grew 2% (before currency) from the prior-year period to $3.1 billion. Adjusted EBITDA increased 3% from the prior-year period and the corresponding margin was 27.6% versus 27.2% for the second quarter of 2012. Underlying operating profit was up slightly and the corresponding margin was 18.3% versus 18.4% in the prior-year period.

(Logo: http://photos.prnewswire.com/prnh/20130208/MM57185LOGO )

Second-quarter adjusted earnings per share (EPS) were $0.48, unchanged from the prior-year period.

"Our second-quarter performance was consistent with our full-year expectations," said James C. Smith, chief executive officer of Thomson Reuters. "I am pleased with the progress we continue to make despite challenging market conditions, particularly in the banking and legal sectors.

"We continue to make consistent, tangible progress across the business and we expect the company's performance in the second half of the year will be better than the first half."

Consolidated Financial Highlights


Three Months Ended June 30,

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

IFRS Financial Measures

2013

2012

Change


Revenues

$3,163

$3,272

-3%


Operating profit

$597

$1,297

-54%


Diluted earnings per share (EPS)

$0.30

$1.08

-72%


Cash flow from operations

$904

$855

6%


The declines in operating profit and diluted earnings per share were primarily due to significantly higher prior-year gains related to divestitures, which were $789 million in the second quarter of 2012 versus $142 million in the second quarter of 2013. Second-quarter 2012 divestitures included the company's Healthcare business and second-quarter 2013 divestitures included the company's Corporate Services business. Additionally, in the second quarter of 2013, the company recorded a $161 million tax charge reflecting its continued efforts to achieve greater efficiencies through simplification and consolidation of its technology and content assets.


Three Months Ended June 30,

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

Non-IFRS Financial Measures (1)

2013

2012

Change

Change Before
Currency

Revenues from ongoing businesses

$3,108

$3,074

1%

2%

Adjusted EBITDA

$858

$836

3%

3%

Adjusted EBITDA margin

27.6%

27.2%

40bp

20bp

Underlying operating profit

$569

$567

0%

2%

Underlying operating profit margin

18.3%

18.4%

-10bp

-10bp

Adjusted earnings per share (EPS)

$0.48

$0.48

0%


Free cash flow

$732

$657

11%


Free cash flow from ongoing businesses

$683

$598

14%


  • Revenues from ongoing businesses were $3.1 billion, a 2% increase before currency.
  • Adjusted EBITDA increased 3% and the corresponding margin was 27.6% versus 27.2% in the prior-year period.
  • Underlying operating profit was up slightly and the corresponding margin was 18.3% versus 18.4% in the prior-year period. A $20 million increase in depreciation and amortization expense had a 50 basis point impact on the margin.
  • Adjusted EPS was $0.48, unchanged from the prior-year period. Higher depreciation and amortization and interest expenses were offset by an improvement in EBITDA and a lower effective tax rate.

(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.

Second-Quarter Business Segment Highlights

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

Financial & Risk

  • Revenues were down 1% as growth of 13% in Governance, Risk & Compliance and strength across the transaction-based businesses was offset by declining subscription revenues driven by the impact of negative net sales over the past 12 months. Organic revenues declined 3%.
  • Recurring subscription-related revenues decreased 3% due to negative net sales over the past 12 months. Transactions-related revenues increased 22% (5% organic) primarily due to the acquisition of FXall and growth at Tradeweb. Recoveries revenues were down 4% and Outright revenues increased 2% (down 3% organic).
  • By geography, revenues in Europe, Middle East and Africa (EMEA) were down 4%, revenues in the Americas were up 3% (down 2% organic), while revenues in Asia declined 2%.
  • EBITDA was $420 million, unchanged from the prior-year period, with the related margin up 40 basis points to 25.3%, due to cost savings initiatives.
  • Operating profit was $260 million, down 5%, with a related margin of 15.7%. Operating profit margin decreased 40 basis points due to higher depreciation and amortization expense ($12 million).
  • Eikon desktops totaled approximately 61,000 at the end of the second quarter, up 30% from March 31, 2013.

Trading

  • Revenues decreased 6% with growth in Elektron Managed Services offset by legacy desktop cancellations primarily in Equities and Fixed Income.
  • Recoveries revenues were down 5%.

Investors

  • Revenues declined 1% versus the prior-year period. Enterprise Content revenues increased 9% offset by a 4% decline in Investment Management revenues. Banking & Research and Wealth Management revenues were essentially unchanged.

Marketplaces

  • Revenues increased 6% (down 1% organic) driven by the acquisition of FXall and growth of 5% at Tradeweb.

Governance, Risk & Compliance

  • Revenues grew 13% to $59 million due to strong sales growth and continued strong demand.

Legal

  • Revenues increased 5% (1% organic). US Law Firm Solutions increased 1% as a 7% increase in Business of Law (FindLaw and Elite) was offset in part by a 1% decline in research-related revenues. Corporate, Government & Academic revenues decreased 1% as a result of continued cost pressures at the federal, state and local levels. Global businesses grew 23% (4% organic) driven by the recent acquisition of Practical Law Company (PLC) in the first quarter of 2013.
  • US print revenues declined 7% as firms continued to reduce discretionary spending. Excluding US print, revenues grew 8% (2% organic).
  • EBITDA increased 2% and the corresponding margin was 38.5% compared to 39.3% in the prior-year period. The decrease was due to the decline in revenues from the highly profitable print and research-related businesses and the acquisition of PLC.
  • Operating profit was up 2% and the corresponding margin was 30.1% compared to 30.9% in the prior-year period. The decline in the margin reflected the same items that impacted EBITDA margin performance.
  • 80% of Westlaw revenue has been converted to WestlawNext as of the end of the second quarter.

Tax & Accounting

  • Revenues increased 7% (3% organic) driven by continued growth in subscription revenues and strong performance across all of the business segments except Government (5% of total Tax & Accounting revenues).
  • EBITDA increased 10% and the related margin grew 130 basis points to 30.2%. Margin expansion was driven by flow-through of higher revenues.
  • Operating profit increased 12% and the related margin increased 110 basis points to 19.8%.
  • 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 increased 9% (down 1% organic). Growth was driven by the MarkMonitor acquisition. Organic revenue was negatively impacted by softness in transactional revenues and the timing of revenues within the Life Sciences business, which are expected to be stronger in the second half of the year.
  • EBITDA margin was 33.8%, a decline of 90 basis points, primarily due to the dilutive impact of the MarkMonitor acquisition and timing of revenues.
  • Operating profit was flat with the corresponding margin declining by 210 basis points reflecting 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.

Consolidated Financial Highlights – Six Months


Six Months Ended June 30,

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

IFRS Financial Measures

2013

2012

Change


Revenues

$6,338

$6,587

-4%


Operating profit

$987

$1,661

-41%


Diluted earnings per share (EPS)

$0.26

$1.44

-82%


Cash flow from operations

$1,020

$1,122

-9%


The declines in operating profit and diluted earnings per share were primarily due to significantly higher prior-year gains related to divestitures, which were $826 million in the first half of 2012 versus $156 million in the first half of 2013. First-half 2012 divestitures included the company's Healthcare business and first-half 2013 divestitures included the company's Corporate Services business. Additionally, in the first six months of 2013, the company recorded a $396 million tax charge reflecting its continued efforts to achieve greater efficiencies through simplification and consolidation of its technology and content assets.


Six Months Ended June 30,

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

Non-IFRS Financial Measures (1)

2013

2012

Change

Change Before
Currency

Revenues from ongoing businesses

$6,205

$6,146

1%

2%

Adjusted EBITDA

$1,615

$1,608

0%

2%

Adjusted EBITDA margin

26.0%

26.2%

-20bp

10bp

Underlying operating profit

$1,031

$1,064

-3%

-1%

Underlying operating profit margin

16.6%

17.3%

-70bp

-40bp

Adjusted earnings per share (EPS)

$0.86

$0.87

-1%


Free cash flow

$501

$653

-23%


Free cash flow from ongoing businesses

$459

$540

-15%


  • Revenues from ongoing businesses were $6.2 billion, a 2% increase before currency.
  • Adjusted EBITDA was up slightly and the corresponding margin was 26.0% versus 26.2% in the prior-year period as higher revenues and cost savings initiatives across the company helped to offset $87 million of severance costs (versus $43 million in the first half of 2012).
  • Underlying operating profit was down 3% and the corresponding margin was 16.6% versus 17.3% in the prior-year period due mainly to severance costs and an increase in depreciation and amortization of $40 million. Excluding the impact of severance, underlying operating profit would have grown by 1% with the related margin unchanged at 18.0% compared to the prior-year period.
  • Adjusted EPS was $0.86 compared to $0.87 in the prior-year period. The decrease was primarily due to higher severance costs somewhat offset by a lower effective tax rate. Excluding the impact of severance in both periods, adjusted EPS would have increased by $0.04.
  • Free cash flow was $501 million versus $653 million in the prior-year period. The decline was primarily due to timing of higher capital expenditures, loss of free cash flow from disposals and working capital requirements. For the full year, the company continues to expect to achieve free cash flow between $1.7 billion and $1.8 billion.

Corporate & Other (Including Reuters News)

Reuters News revenues for the second quarter were $82 million, up 2% from the prior-year period. Corporate & Other costs for the quarter were $62 million, down 7% compared to $67 million in the prior-year period.

Business Outlook (Before Currency)

Thomson Reuters today reaffirmed its business outlook for 2013. The company expects:

  • revenues to grow low single digits;
  • adjusted EBITDA margin to range between 26% and 27%;
  • underlying operating profit margin to range between 16.5% and 17.5%; and
  • free cash flow to range between $1.7 billion and $1.8 billion in 2013.

The company's 2013 Outlook includes the impact of an expected $100 million of severance expense in 2013, $87 million of which was incurred in the first half of the year. The Outlook is based on expectations including adjustments for two new accounting pronouncements as well as the reclassification of certain businesses into disposals. To facilitate comparison with the company's 2013 Outlook, revised 2012 actual results prepared on a comparable basis to that used in 2013 are available in the "Investor Relations" section of www.thomsonreuters.com.

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." Actual full-year results for 2013 could differ materially from current expectations.

Dividend and Share Repurchases

As previously announced in February 2013, Thomson Reuters increased its 2013 annual dividend by $0.02 per share to $1.30 per share. A quarterly dividend of $0.325 per share is payable on September 16, 2013 to common shareholders of record as of August 22, 2013.

The company has not repurchased any shares year-to-date. In May 2013, the company renewed its Normal Course Issuer Bid (NCIB) under which it may repurchase up to 15 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. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs approximately 60,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, go to www.thomsonreuters.com.

NON-IFRS FINANCIAL MEASURES

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

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

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

Certain statements in this news release, including, but not limited to, statements regarding 2013 expectations in the "Business Outlook (Before Currency)" section, Mr. Smith's comments on the first page of the news release (in particular, those about the company's expected performance in the second half of the year) and the company's expectations that its Intellectual Property & Science segment's Life Sciences business revenues will be stronger in the second half of the year, are forward-looking. The word "expect" and similar expressions identify forward-looking statements. These forward-looking statements are based on certain assumptions and reflect the company's current expectations. 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 2013. 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 2013 business outlook and other forward-looking statements are based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, positive GDP growth in the countries where Thomson Reuters operates led by rapidly developing economies and a continued increase in the number of professionals around the world and their demand for high quality information and services. Internal financial and operational assumptions include, but are not limited to, continuing operational improvement in the Financial & Risk business and the successful execution of the company's ongoing product release programs, globalization strategy, other growth initiatives and efficiency initiatives. Information about material assumptions and material risks related to the company's 2013 business outlook is also included in the "Outlook" section of its first-quarter 2013 management's discussion and analysis, which has been filed with the Canadian securities regulatory authorities and furnished to the U.S. Securities and Exchange Commission. Additional information about these material assumptions and material risks will also be set forth in the "Outlook" section of its second-quarter 2013 management's discussion and analysis, which will be filed with the Canadian securities regulatory authorities and furnished to the U.S. Securities and Exchange Commission in August 2013.

Some of the other 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; increased accessibility to free or relatively inexpensive information sources; failures or disruptions of network systems or the Internet; failure to maintain a high renewal rate for subscription-based services; dependency on third parties for data, information and other services; changes to law and regulations, including the impact of the Dodd-Frank legislation and similar financial services laws around the world; failure to adapt to recent organizational changes; 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; additional impairment of goodwill and identifiable intangible assets; inadequate protection of intellectual property rights; threat of legal actions and claims; risk of antitrust/competition-related claims or investigations; downgrading of credit ratings and adverse conditions in the credit markets; fluctuations in foreign currency exchange and interest rates; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; and actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company Limited. These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual and quarterly reports are also available in the "Investor Relations" section of www.thomsonreuters.com. Information on the company's website is not part of this news release.

CONTACT


MEDIA

David Crundwell

Head of 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 2013 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). 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







2013

2012 (1)


Total

Before
Currency

Organic





Revenues












Trading


$616

$662


-7%

-6%

-6%





Investors


534

545


-2%

-1%

-2%





Marketplaces


451

434


4%

6%

-1%





Governance, Risk & Compliance


59

52


13%

13%

11%





Financial & Risk


1,660

1,693


-2%

-1%

-3%





Legal


846

812


4%

5%

1%





Tax & Accounting


288

273


5%

7%

3%





Intellectual Property & Science


234

216


8%

9%

-1%





Corporate & Other (includes Reuters News)


82

83


-1%

2%

2%





Eliminations


(2)

(3)









Revenues from ongoing businesses (2)


3,108

3,074


1%

2%

-1%





Other Businesses (3)


55

198









Revenues


$3,163

$3,272


-3%






























Change


Margin


Adjusted EBITDA (4)





Total

Before
Currency


2013

2012

Change


Financial & Risk


$420

$421


0%

1%


25.3%

24.9%

40bp


Legal


326

319


2%

2%


38.5%

39.3%

-80bp


Tax & Accounting


87

79


10%

11%


30.2%

28.9%

130bp


Intellectual Property & Science


79

75


5%

7%


33.8%

34.7%

-90bp


Corporate & Other (includes Reuters News)


(54)

(58)









Adjusted EBITDA


$858

$836


3%

3%


27.6%

27.2%

40bp














Underlying Operating Profit (5)












Financial & Risk


$260

$273


-5%

-2%


15.7%

16.1%

-40bp


Legal


255

251


2%

2%


30.1%

30.9%

-80bp


Tax & Accounting


57

51


12%

12%


19.8%

18.7%

110bp


Intellectual Property & Science


59

59


0%

3%


25.2%

27.3%

-210bp


Corporate & Other (includes Reuters News)


(62)

(67)









Underlying operating profit


$569

$567


0%

2%


18.3%

18.4%

-10bp


Thomson Reuters Corporation





Business Segment Information





(millions of U.S. dollars)





(unaudited)



















Six Months Ended











June 30,


Change







2013

2012 (1)


Total

Before
Currency

Organic





Revenues












Trading


$1,246

$1,340


-7%

-6%

-6%





Investors


1,068

1,087


-2%

-1%

-1%





Marketplaces


907

876


4%

5%

-2%





Governance, Risk & Compliance


114

103


11%

11%

9%





Financial & Risk


3,335

3,406


-2%

-1%

-3%





Legal


1,640

1,583


4%

4%

0%





Tax & Accounting


605

572


6%

7%

4%





Intellectual Property & Science


467

425


10%

11%

1%





Corporate & Other (includes Reuters News)


163

165


-1%

2%

2%





Eliminations


(5)

(5)









Revenues from ongoing businesses (2)


6,205

6,146


1%

2%

-1%





Other Businesses (3)


133

441









Revenues


$6,338

$6,587


-4%
















































Change


Margin


Adjusted EBITDA (4)





Total

Before
Currency


2013

2012

Change


Financial & Risk


$780

$844


-8%

-4%


23.4%

24.8%

-140bp


Legal


602

589


2%

2%


36.7%

37.2%

-50bp


Tax & Accounting


185

170


9%

9%


30.6%

29.7%

90bp


Intellectual Property & Science


149

147


1%

3%


31.9%

34.6%

-270bp


Corporate & Other (includes Reuters News)


(101)

(142)









Adjusted EBITDA


$1,615

$1,608


0%

2%


26.0%

26.2%

-20bp














Underlying Operating Profit (5)












Financial & Risk


$460

$543


-15%

-10%


13.8%

15.9%

-210bp


Legal


456

452


1%

1%


27.8%

28.6%

-80bp


Tax & Accounting


126

114


11%

11%


20.8%

19.9%

90bp


Intellectual Property & Science


110

114


-4%

-2%


23.6%

26.8%

-320bp


Corporate & Other (includes Reuters News)


(121)

(159)









Underlying operating profit


$1,031

$1,064


-3%

-1%


16.6%

17.3%

-70bp














Thomson Reuters Corporation

Reconciliation of Operating Profit to Adjusted EBITDA (4)

(millions of U.S. dollars)

(unaudited)








Three Months Ended



Six Months Ended


June 30,



June 30,



2013

2012 (1)

Change


2013

2012 (1)

Change









Operating profit

$597

$1,297

-54%


$987

$1,661

-41%

Adjustments to remove:








Amortization of other identifiable intangible assets

157

149



317

301


Fair value adjustments

(29)

(43)



(91)

(13)


Other operating gains, net

(136)

(798)



(130)

(820)


Operating profit from Other Businesses (3)

(20)

(38)



(52)

(65)


Underlying operating profit

$569

$567

0%


$1,031

$1,064

-3%

Adjustments to remove:








Depreciation and amortization of computer software (excluding Other Businesses (3))

289

269



584

544


Adjusted EBITDA

$858

$836

3%


$1,615

$1,608

0%









Underlying operating profit margin (5)

18.3%

18.4%

-10bp


16.6%

17.3%

-70bp

Adjusted EBITDA margin (4)

27.6%

27.2%

40bp


26.0%

26.2%

-20bp









Thomson Reuters Corporation

Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (4)

(millions of U.S. dollars)

(unaudited)








Three Months Ended



Six Months Ended


June 30,



June 30,



2013

2012 (1)

Change


2013

2012 (1)

Change









Earnings from continuing operations

$256

$916

-72%


$239

$1,224

-80%

Adjustments to remove:








Tax expense

209

270



456

230


Other finance costs (income)

17

16



72

(14)


Net interest expense

124

107



239

236


Amortization of other identifiable intangible assets

157

149



317

301


Amortization of computer software

188

165



376

337


Depreciation

101

108



208

217


EBITDA

$1,052

$1,731



$1,907

$2,531


Adjustments to remove:








Share of post-tax earnings in equity method investments

(9)

(12)



(19)

(15)


Other operating gains, net

(136)

(798)



(130)

(820)


Fair value adjustments

(29)

(43)



(91)

(13)


EBITDA from Other Businesses (3)

(20)

(42)



(52)

(75)


Adjusted EBITDA

$858

$836

3%


$1,615

$1,608

0%

Thomson Reuters Corporation

Reconciliation of Underlying Operating Profit (5) to Adjusted EBITDA (4) by Business Segment

(millions of U.S. dollars)

(unaudited)






Three Months Ended

June 30, 2013


Three Months Ended

June 30, 2012 (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

$260

$160

$420


$273

$148

$421

Legal

255

71

326


251

68

319

Tax & Accounting

57

30

87


51

28

79

Intellectual Property & Science

59

20

79


59

16

75

Corporate & Other (includes Reuters News)

(62)

8

(54)


(67)

9

(58)


$569

$289

$858


$567

$269

$836










Six Months Ended

June 30, 2013


Six Months Ended

June 30, 2012 (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

$460

$320

$780


$543

$301

$844

Legal

456

146

602


452

137

589

Tax & Accounting

126

59

185


114

56

170

Intellectual Property & Science

110

39

149


114

33

147

Corporate & Other (includes Reuters News)

(121)

20

(101)


(159)

17

(142)


$1,031

$584

$1,615


$1,064

$544

$1,608

















** excludes Other Businesses (3)



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,


2013

2012 (1)


2013

2012 (1)

Earnings attributable to common shareholders

$248

$902


$217

$1,196

Adjustments to remove:






Operating profit from Other Businesses (3)

(20)

(38)


(52)

(65)

Fair value adjustments

(29)

(43)


(91)

(13)

Other operating gains, net

(136)

(798)


(130)

(820)

Other finance costs (income)

17

16


72

(14)

Share of post-tax earnings in equity method investments

(9)

(12)


(19)

(15)

Tax on above items

36

263


58

208

Discrete tax items

151

(83)


372

(109)

Amortization of other identifiable intangible assets

157

149


317

301

Discontinued operations

(6)

1


(6)

3

Interim period effective tax rate normalization (7)

19

46


12

52

Tax charge amortization (8)

(24)

-


(32)

-

Dividends declared on preference shares

(1)

(1)


(2)

(2)

Adjusted earnings

$403

$402


$716

$722

Adjusted earnings per share

$0.48

$0.48


$0.86

$0.87







Diluted weighted-average common shares (millions)

832.5

830.7


831.5

830.5

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,


2013

2012 (1)

2013

2012 (1)

Net cash provided by operating activities

$904

$855

$1,020

$1,122

Capital expenditures, less proceeds from disposals

(188)

(207)

(538)

(487)

Other investing activities

17

10

21

20

Dividends paid on preference shares

(1)

(1)

(2)

(2)

Free cash flow

732

657

501

653

Remove: Other Businesses (3)

(49)

(59)

(42)

(113)

Free cash flow from ongoing businesses

$683

$598

$459

$540

Footnotes






(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19, Employee Benefits and the adoption of IFRS 11, Joint Arrangements.





(2) Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other (which includes Reuters News) less eliminations. Other Businesses (see note (3) below) are excluded.





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





(millions of U.S. dollars)

Three Months Ended


Six Months Ended


June 30,


June 30,

Other Businesses

2013

2012


2013

2012







Revenues

$55

$198


$133

$441







Operating profit

$20

$38


$52

$65

Depreciation and amortization of computer software

-

4


-

10

EBITDA

$20

$42


$52

$75







(4) 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.







(5) 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.







(6) Adjusted earnings and adjusted earnings per share include dividends declared on preference shares and amortization of the 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 (3) 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 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 (3) 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,


2013

2012 (1)


2013

2012 (1)







Revenues

$3,163

$3,272


$6,338

$6,587

Operating expenses

(2,256)

(2,351)


(4,580)

(4,891)

Depreciation

(101)

(108)


(208)

(217)

Amortization of computer software

(188)

(165)


(376)

(337)

Amortization of other identifiable intangible assets

(157)

(149)


(317)

(301)

Other operating gains, net

136

798


130

820

Operating profit

597

1,297


987

1,661

Finance costs, net:






Net interest expense

(124)

(107)


(239)

(236)

Other finance (costs) income

(17)

(16)


(72)

14

Income before tax and equity method investments

456

1,174


676

1,439

Share of post-tax earnings in equity method investments

9

12


19

15

Tax expense

(209)

(270)


(456)

(230)

Earnings from continuing operations

256

916


239

1,224

Earnings (loss) from discontinued operations, net of tax

6

(1)


6

(3)

Net earnings

$262

$915


$245

$1,221







Earnings attributable to:






Common shareholders

248

902


217

1,196

Non-controlling interests

14

13


28

25







Basic earnings per share

$0.30

$1.09


$0.26

$1.44

Diluted earnings per share

$0.30

$1.08


$0.26

$1.44







Basic weighted-average common shares

829,921,311

828,482,671


829,136,505

828,661,765

Diluted weighted-average common shares

832,509,774

830,744,813


831,453,225

830,507,227







(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19, Employee Benefits and the adoption of IFRS 11, Joint Arrangements.

Thomson Reuters Corporation

Consolidated Statement of Financial Position

(millions of U.S. dollars)

(unaudited)






June 30,


December 31,


2013


2012 (1)

Assets




Cash and cash equivalents

$1,613


$1,283

Trade and other receivables

1,760


1,818

Other financial assets

95


72

Prepaid expenses and other current assets

567


638

Current assets excluding assets held for sale

4,035


3,811

Assets held for sale

56


302

Current assets

4,091


4,113





Computer hardware and other property, net

1,254


1,416

Computer software, net

1,632


1,659

Other identifiable intangible assets, net

7,953


8,134

Goodwill

16,545


16,251

Other financial assets

299


355

Other non-current assets

595


559

Deferred tax

55


50

Total assets

$32,424


$32,537

Liabilities and equity




Liabilities




Current indebtedness

$1,021


$1,008

Payables, accruals and provisions

2,011


2,612

Deferred revenue

1,344


1,222

Other financial liabilities

47


95

Current liabilities excluding liabilities associated with assets held for sale

4,423


4,937

Liabilities associated with assets held for sale

1


35

Current liabilities

4,424


4,972





Long-term indebtedness

6,907


6,223

Provisions and other non-current liabilities

2,310


2,502

Other financial liabilities

84


37

Deferred tax

1,652


1,305

Total liabilities

15,377


15,039

Equity




Capital

10,431


10,371

Retained earnings

8,141


8,311

Accumulated other comprehensive loss

(1,886)


(1,537)

Total shareholders' equity

16,686


17,145

Non-controlling interests

361


353

Total equity

17,047


17,498

Total liabilities and equity

$32,424


$32,537





(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19, Employee Benefits and the adoption of IFRS 11, Joint Arrangements.

Thomson Reuters Corporation

Consolidated Statement of Cash Flow

(millions of U.S. dollars)

(unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30,


2013

2012 (1)


2013

2012 (1)

Cash provided by (used in):






Operating activities






Net earnings

$262

$915


$245

$1,221

Adjustments for:






Depreciation

101

108


208

217

Amortization of computer software

188

165


376

337

Amortization of other identifiable intangible assets

157

149


317

301

Net gains on disposals of businesses and investments

(142)

(789)


(156)

(826)

Deferred tax

70

44


242

(135)

Other

60

(48)


125

61

Changes in working capital and other items

208

311


(337)

(54)

Net cash provided by operating activities

904

855


1,020

1,122







Investing activities






Acquisitions, net of cash acquired

(118)

(101)


(848)

(260)

Proceeds from disposals of businesses and investments,

net of taxes paid

322

1,369


352

1,983

Capital expenditures, less proceeds from disposals

(188)

(207)


(538)

(487)

Other investing activities

17

10


21

20

Investing cash flows from continuing operations

33

1,071


(1,013)

1,256

Investing cash flows from discontinued operations

-

90


-

90

Net cash provided by (used in) investing activities

33

1,161


(1,013)

1,346







Financing activities






Proceeds from debt

854

-


1,294

-

Repayments of debt

-

(2)


(440)

(2)

Net repayments under short-term loan facilities

(332)

(287)


-

(423)

Repurchases of common shares

-

(144)


-

(168)

Dividends paid on preference shares

(1)

(1)


(2)

(2)

Dividends paid on common shares

(260)

(256)


(519)

(512)

Other financing activities

(2)

12


7

20

Net cash provided by (used in) financing activities

259

(678)


340

(1,087)







Translation adjustments on cash and cash equivalents

(6)

(7)


(17)

(3)

Increase in cash and cash equivalents

1,190

1,331


330

1,378

Cash and cash equivalents at beginning of period

423

451


1,283

404

Cash and cash equivalents at end of period

$1,613

$1,782


$1,613

$1,782







(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19, Employee Benefits and the adoption of IFRS 11, Joint Arrangements.

SOURCE Thomson Reuters

For further information:

http://www.thomson.com

http://photos.prnewswire.com/prnh/20130208/MM57185LOGO

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