Thomson Reuters Reports Full-Year and Fourth-Quarter 2014 Results
NEW YORK, Feb. 11, 2015 -- Thomson Reuters (TSX / NYSE: TRI) today
reported results for the full year and fourth quarter ended December 31, 2014.
The company achieved its 2014 Outlook and today provided a business outlook for
2015. Increases in earnings and profitability in both periods reflect lower
charges (described below) than in the prior-year periods.
* Revenues grew 1% for the full year and the fourth quarter, before currency
+ Organic revenue flat for the full year and up 1% in the fourth quarter
* Financial & Risk net sales were positive for both the full year and the
fourth quarter
+ First year of positive net sales since 2008
* Adjusted EBITDA increased 8% for the full year and was up 30% for the
fourth quarter
+ The margin for the full year was 26.3% vs. 24.5% in the prior year
* Underlying operating profit increased 14% for the full year and was up 65%
for the fourth quarter
+ The margin for the full year was 17.0% vs. 15.0% in the prior year
* Full-year adjusted EPS was $1.85 vs. $1.54 in 2013 and fourth-quarter
adjusted EPS was $0.43 vs. $0.21 in the prior-year period
+ Excluding charges from both periods, adjusted EPS was $2.00 for the
full year and $0.53 for the fourth quarter
+ Foreign currency had a $0.02 negative impact on adjusted EPS for the
full year and fourth quarter
* Board approves $0.02 annual dividend increase to $1.34 per share,
representing the 22nd consecutive annual increase
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"2014 was a year of solid progress with good execution across the company, and marks the third consecutive year when we
have met, or exceeded, our financial outlook," said James C. Smith, chief executive officer of Thomson Reuters. "Our
Financial business recorded its first year of positive net sales since 2008, and our Professional businesses continued
to build from a solid foundation and take advantage of attractive growth opportunities. I am pleased to say that we
expect to return to organic revenue growth and achieve greater profitability in 2015."
Consolidated Financial Highlights - Full-Year 2014
Twelve Months Ended December 31,
--------------------------------
(Millions of U.S. dollars, except EPS
and margins)
IFRS Financial Measures 2014 2013 Change
---- ---- ------
Revenues $12,607 $12,702 -1%
Operating profit $2,545 $1,516 68%
Diluted earnings per share (EPS) $2.35 $0.16 nm (1)
Cash flow from operations $2,366 $2,103 13%
In 2014, operating profit and diluted EPS included a $931 million gain realized in connection with the release of
accumulated foreign currency translation adjustments from shareholders' equity that were triggered by a reduction in
the number of subsidiaries in the company's legal organizational structure. In 2013, the company's diluted EPS included
tax charges of $836 million related to the consolidation of technology and content assets. These amounts were both
related to the company's simplification initiatives.
Non-IFRS Financial Measures (2) 2014 2013 Change
---- ---- ------
Revenues from ongoing businesses $12,605 $12,543 0%
Revenue growth before currency 1%
Adjusted EBITDA $3,313 $3,070 8%
Adjusted EBITDA margin 26.3% 24.5% 180bp
Underlying operating profit $2,138 $1,881 14%
Underlying operating profit margin 17.0% 15.0% 200bp
Adjusted earnings per share (EPS) $1.85 $1.54 20%
Free cash flow $1,445 $1,163 24%
(1) nm - not meaningful
(2) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS
measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes
to the appended tables.
* Revenues from ongoing businesses were $12.6 billion, a 1% increase before
currency.
* Adjusted EBITDA increased 8% and the margin was 26.3% vs. 24.5% in the
prior year. The increase was primarily due to lower charges compared to the
prior year. Charges for 2014 were $135 million vs. $357 million in 2013.
+ Excluding charges from both periods, adjusted EBITDA was up 1% and the
related margin was 27.4% vs. 27.3% in the prior year.
* Underlying operating profit increased 14% and the margin was 17.0% vs.
15.0% in the prior year. The increase was also primarily due to lower
charges in 2014.
+ Excluding charges from both periods, underlying operating profit
increased 1% and the related margin was 18.0%, unchanged from the prior
year.
* Adjusted EPS was $1.85 compared to $1.54 in the prior year.
+ Excluding charges from both periods, adjusted EPS was $2.00 vs. $1.93
in the prior year.
* Free cash flow was $1.4 billion vs. $1.2 billion in the prior year. The
increase reflected a significant pension contribution in 2013, partially
offset by higher severance payments in 2014.
Full-Year Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency
as Thomson Reuters believes this provides the best basis to measure the performance of its business.
Financial & Risk
* Revenues were down 2% (down 3% organic) primarily due to the impact of
negative net sales in 2013 and a 5% organic decline in transactions-related
revenues. Recoveries revenues increased 1%.
+ Recurring revenues decreased 2% (down 3% organic) primarily due to the
impact of negative net sales in 2013.
+ Transactions-related revenues were flat (down 5% organic) due to lower
trading volumes in fixed income and foreign exchange markets.
* By geography, revenues in Europe, Middle East and Africa (EMEA) were down
3%, revenues in the Americas were flat (down 2% organic) and revenues in
Asia were flat (down 1% organic).
* Net sales were positive for the full year, and were positive in the
Americas and Asia but negative in EMEA.
* EBITDA increased 9% primarily due to savings related to simplification
programs and lower charges of $130 million compared to $245 million in the
prior year. The margin was 24.3% vs. 21.9% in the prior year.
+ Excluding charges from both periods, the margin was 26.3%, up 70 basis
points from the prior year.
+ Excluding charges from both periods and the negative impact of foreign
currency, the margin was 26.7%, up 100 basis points from the prior
year.
* Operating profit increased 17%, primarily due to savings related to
simplification programs and lower charges. The margin was 14.5% compared to
12.3% in the prior year.
+ Excluding charges from both periods, the margin was 16.5%, up 50 basis
points from the prior year.
+ Excluding charges from both periods and the negative impact of foreign
currency, the margin was 16.9%, up 80 basis points from the prior year.
Legal
* Revenues increased 2% (1% organic). Excluding US print, revenues grew 3%
(2% organic). Recurring revenues were up 4% (3% organic).
* Solutions businesses (46% of Legal revenues) grew 7% (6% organic), driven
by strong growth across the solutions offerings. Solutions businesses
represent all of Legal's revenue excluding US print and US online legal
information.
* US online legal information (38% of Legal revenues) declined 1%.
* US print (16% of Legal revenues) declined 7%.
* EBITDA increased 4%. The margin was 36.6% compared to 35.6% in the prior
year.
+ Excluding 2013 charges, the prior-year margin was 37.0%.
* Operating profit increased 6% with a margin of 28.4% vs. 26.9% in the prior
year.
+ Excluding 2013 charges, the prior-year margin was 28.3%.
Tax & Accounting
* Revenues increased 12% (9% organic) with growth across each segment led by
the Corporate and Professional businesses. Recurring revenues were up 12%
(8% organic).
* EBITDA increased 10% and the margin was 30.4%, unchanged from the prior
year. Improvement resulting from lower charges than the prior year was
offset by reinvestment in the business.
* Operating profit increased 15% and the margin was 21.5% compared to 20.7%
in the prior year.
Intellectual Property & Science
* Revenues increased 3% (2% organic) driven by recurring revenue growth of 7%
(77% of revenues), partially offset by a 6% decline in transactions-related
revenues (23% of revenues).
* EBITDA increased 8% with a margin of 32.4% compared to 31.0% in the prior
year. The EBITDA margin increase was primarily due to lower charges than
the prior year.
* Operating profit increased 6% with a margin of 23.6% compared to 22.9% in
the prior year. The operating profit margin increase was a result of lower
charges than the prior year.
Corporate & Other (Including Reuters News)
* Reuters News revenues were $319 million, down 1% from 2013.
* Corporate & Other costs were $305 million compared to $320 million in 2013.
Consolidated Financial Highlights – Fourth-Quarter 2014
Three Months Ended December 31,
-------------------------------
(Millions of U.S. dollars,
except EPS and margins)
IFRS Financial Measures 2014 2013 Change
---- ---- ------
Revenues $3,211 $3,278 -2%
Operating profit $1,339 $213 529%
Diluted earnings (loss) per share (EPS) $1.43 ($0.43) nm(1)
Cash flow from operations $792 $407 95%
In 2014, operating profit and diluted EPS included a $931 million gain realized in connection with the release of
accumulated foreign currency translation adjustments from shareholders' equity that were triggered by a reduction in
the number of subsidiaries in the company's legal organizational structure. In 2013, the company's diluted EPS included
a tax charge of $425 million related to the consolidation of technology and content assets. These amounts were both
related to the company's simplification initiatives. The increase in cash flow from operations reflected a fourth
quarter 2013 pension contribution of $500 million.
Non-IFRS Financial Measures (2) 2014 2013 Change
---- ---- ------
Revenues from ongoing businesses $3,211 $3,265 -2%
Revenue growth before currency 1%
Adjusted EBITDA $794 $610 30%
Adjusted EBITDA margin 24.7% 18.7% 600bp
Underlying operating profit $499 $302 65%
Underlying operating profit margin 15.5% 9.2% 630bp
Adjusted earnings per share (EPS) $0.43 $0.21 105%
Free cash flow $570 $187 205%
* Revenues from ongoing businesses were $3.2 billion, a 1% increase before
currency, reflecting 4% combined growth from the company's Legal, Tax &
Accounting and Intellectual Property & Science businesses, which was offset
by a 1% decline in Financial & Risk.
* Adjusted EBITDA increased 30%, and the margin was 24.7% vs. 18.7% in the
prior-year period, primarily due to savings related to simplification
programs and lower charges.
+ Excluding charges from both periods, adjusted EBITDA was unchanged and
the margin was 27.1%, up 50 basis points from the prior-year period.
* Underlying operating profit increased 65%, and the margin was 15.5% vs.
9.2% in the prior-year period, primarily due to savings related to
simplification programs and lower charges.
+ Excluding charges from both periods, underlying operating profit was
unchanged and the margin was 17.9%, up 20 basis points from the
prior-year period.
* Adjusted EPS was $0.43 compared to $0.21 in the prior-year period with
foreign currency having had a $0.02 negative impact on EPS in the quarter.
+ Excluding charges from both periods, EPS was $0.53, up 8% from the
prior-year period.
(1) nm - not meaningful
(2) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS
measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes
to the appended tables.
Fourth-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency
as Thomson Reuters believes this provides the best basis to measure the performance of its business.
Financial & Risk
* Revenues were down 1% (down 2% organic) primarily due to lower price
realization resulting from the migration of some legacy foreign exchange
and buy-side products to the Unified Platform. Recoveries revenues
increased 5%.
+ Recurring revenues decreased 2% (down 3% organic) due to the lower
price realization described above.
+ Transactions-related revenues were flat (down 3% organic) with
increased trading volumes in foreign exchange markets offset by a
decline in fixed income revenues.
* By geography, revenues in EMEA were down 2%, revenues in the Americas were
flat and revenues in Asia were down 2%.
* Net sales were positive for the quarter, and were positive in the Americas
and Asia but negative in EMEA.
* EBITDA increased 47% primarily due to savings from simplification programs
and lower charges ($70 million) compared to the prior-year period ($172
million). The margin was 22.4% vs. 14.6% in the prior-year period.
+ Excluding charges from both periods, the margin was 26.8%, up 190 basis
points from the prior-year period.
+ Excluding charges from both periods and the negative impact of foreign
currency, the margin was 27.3%, up 250 basis points from the prior-year
period.
* Operating profit increased by $112 million primarily due to savings related
to simplification programs and lower charges. The margin was 12.1% compared
to 4.8% in the prior-year period.
+ Excluding charges from both periods, the margin was 16.5%, up 100 basis
points from the prior-year period.
+ Excluding charges from both periods and the negative impact of foreign
currency, the margin was 17.3%, up 190 basis points from the prior-year
period.
Legal
* Revenues increased 2%. Excluding US print, revenues grew 4% (all organic),
the fourth sequential quarter of improving organic revenue growth.
* Solutions businesses (46% of Legal revenues) grew 8% (7% organic), driven
by strong growth from Serengeti, Practical Law and Pangea3. Solutions
businesses represent all of Legal's revenue excluding US print and US
online legal information.
* US online legal information (38% of Legal revenues) was flat.
* US print (16% of Legal revenues) declined 6%.
* EBITDA increased 10% due to lower charges than in the prior-year period.
The margin was 34.3% compared to 31.3% in the prior-year period.
+ Excluding charges from the prior-year period, the 2013 margin was
35.6%.
* Operating profit increased 15% with a margin of 26.1% vs. 22.9% in the
prior-year period.
+ Excluding charges from the prior-year period, the 2013 margin was
27.2%.
Tax & Accounting
* Revenues increased 10% (7% organic) driven primarily by the performance of
the Corporate and Professional businesses.
* EBITDA increased 4% and the margin was 33.2% compared to 34.5% in the
prior-year period. The EBITDA margin decline was primarily related to
organic reinvestment in the business.
* Operating profit increased 6% and the margin was 25.9% compared to 26.4% in
the prior-year period.
* Small movements in the timing of revenues and expenses can impact margins
in any given quarter for the Tax & Accounting business. Full-year margins
are more reflective of the segment's underlying performance.
Intellectual Property & Science
* Revenues decreased 1% (down 1% organic) with subscription revenue growth of
6% (75% of revenues) offset by a 17% decline in transactions-related
revenues (25% of revenues) compared to 16% transactions-related revenue
growth achieved in the fourth quarter of 2013, making for a difficult
comparison.
* EBITDA increased 27% with a margin of 35.3% compared to 27.3% in the
prior-year period. The EBITDA margin improvement primarily reflected lower
charges than in the prior-year period.
* Operating profit increased 33% with a margin of 26.8% compared to 19.6% in
the prior-year period. The operating profit margin increase primarily
reflected lower charges than in the prior-year period.
* Small movements in the timing of revenues and expenses can impact margins
in any given quarter for the Intellectual Property & Science business.
Full-year margins are more reflective of the segment's underlying
performance.
Corporate & Other (Including Reuters News)
* Reuters News revenues were $79 million, unchanged from the prior-year
period.
* Corporate & Other costs were $97 million compared to $129 million in the
prior-year period.
Business Outlook (Before Currency)
Thomson Reuters today issued its business outlook for 2015. The company expects:
* Positive organic revenue growth;
* Adjusted EBITDA margin to range between 27.5% and 28.5%;
* Underlying operating profit margin to range between 18.5% and 19.5%; and
* Free cash flow to range between $1.550 billion and $1.750 billion in 2015.
The company's 2015 Outlook assumes a constant currency basis with no further acquisitions or divestitures. In light of
the increased volatility we have recently seen in the foreign exchange markets, currency is likely to have a higher-
than-usual impact on our results in 2015.
Dividend and Share Repurchases
The board of directors approved a $0.02 per share annualized increase in the dividend to $1.34 per share. A quarterly
dividend of $0.335 per share is payable on March 16, 2015 to common shareholders of record as of February 23, 2015.
This dividend increase marks the 22nd consecutive annual dividend increase by the company.
In the fourth quarter of 2014, the company returned approximately $297 million to shareholders through the repurchase
of approximately 7.8 million shares under its current $1.0 billion share buyback program announced in July 2014. The
company has repurchased 36.2 million shares at a cost of approximately $1.3 billion since it announced its first $1.0
billion share buyback program in October 2013.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine
industry expertise with innovative technology to deliver critical information to leading decision makers in the
financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the
world's most trusted news organization. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges
(symbol: TRI). For more information, go to www.thomsonreuters.com.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards Board (IASB).
This news release includes certain non-IFRS financial measures. Thomson Reuters uses these non-IFRS financial measures
as supplemental indicators of its operating performance and financial position. These measures do not have any
standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar
measures used by other companies, and should not be viewed as alternatives to measures of financial performance
calculated in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly
comparable IFRS measures in the appended tables.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS
Certain statements in this news release, including, but not limited to, statements in the "Business Outlook (Before
Currency)" section and Mr. Smith's comments, are forward-looking. As a result, forward-looking statements are subject
to a number of risks and uncertainties that could cause actual results or events to differ materially from current
expectations. There is no assurance that the events described in any forward-looking statement will materialize. A
business outlook is provided for the purpose of presenting information about current expectations for 2015. This
information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking
statements which reflect expectations only as of the date of this news release. Except as may be required by applicable
law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.
The company's 2015 business outlook is based on various external and internal assumptions. Economic and market
assumptions include, but are not limited to, GDP growth in the countries where Thomson Reuters operates. Internal
financial and operational assumptions include, but are not limited to, continuing operational improvement in the
Financial & Risk business and the successful execution of new sales initiatives, ongoing product release programs,
globalization strategy and other growth and efficiency initiatives.
Some of the material risk factors that could cause actual results or events to differ materially from those expressed
in or implied by forward-looking statements in this news release include, but are not limited to, foreign currency
movements, changes in the general economy; actions of competitors; failure to develop new products, services,
applications and functionalities to meet customers' needs, attract new customers or expand into new geographic markets
and identify areas of higher growth; increased accessibility to free or relatively inexpensive information sources;
failures or disruptions of network systems or the Internet; failure to maintain a high renewal rate for subscription-
based services; dependency on third parties for data, information and other services; changes to law and regulations,
including the impact of the Dodd-Frank legislation and similar financial services laws around the world; failure to
adapt to recent organizational changes and effectively implement strategic initiatives; failure to recruit, motivate
and retain high quality management and key employees; failure to meet the challenges involved in operating globally;
failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or
dispositions; failure to protect the brands and reputation of Thomson Reuters; impairment of goodwill and identifiable
intangible assets; inadequate protection of intellectual property rights; threat of legal actions and claims; risk of
antitrust/competition-related claims or investigations; downgrading of credit ratings and adverse conditions in the
credit markets; fluctuations in foreign currency exchange and interest rates; the effect of factors outside of the
control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; and
actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company
Limited.
These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to,
the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual
and quarterly reports are also available in the "Investor Relations" section of www.thomsonreuters.com.
CONTACTS
MEDIA INVESTORS
David Crundwell Frank J. Golden
Corporate Affairs Senior Vice President, Investor Relations
+1 646 223 5285 +1 646 223 5288
david.crundwell@thomsonreuters.com frank.golden@thomsonreuters.com
Thomson Reuters will webcast a discussion of its full-year and fourth-quarter 2014 results today beginning at 8:30 a.m.
Eastern Time (ET). You can access the webcast by visiting the "Investor Relations" section of www.thomsonreuters.com.
An archive of the webcast will be available following the presentation.
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Twelve Months Ended
December 31, Change
------------ -----------------------------------
2014 2013 Total Before Currency Organic
---- ---- ----- --------------- -------
Revenues
--------
Financial & Risk $6,538 $6,648 -2% -2% -3%
Legal 3,379 3,351 1% 2% 1%
Tax & Accounting 1,370 1,243 10% 12% 9%
Intellectual Property & Science 1,011 982 3% 3% 2%
Corporate & Other (includes Reuters News) 319 331 -4% -1% -1%
Eliminations (12) (12)
--- ---
Revenues from ongoing businesses (1) 12,605 12,543 0% 1% 0%
Other Businesses (2) 2 159
--- ---
Revenues $12,607 $12,702 -1%
======= =======
Margin
--------------------------------
Adjusted EBITDA (3) Change 2014 2013 Change
------------------ ------ ---- ---- ------
Financial & Risk $1,591 $1,457 9% 24.3% 21.9% 240bp
Legal 1,238 1,194 4% 36.6% 35.6% 100bp
Tax & Accounting 417 378 10% 30.4% 30.4% 0bp
Intellectual Property & Science 328 304 8% 32.4% 31.0% 140bp
Corporate & Other (includes Reuters News) (261) (263)
Adjusted EBITDA $3,313 $3,070 8% 26.3% 24.5% 180bp
====== ======
Underlying Operating Profit (4)
------------------------------
Financial & Risk $951 $816 17% 14.5% 12.3% 220bp
Legal 958 903 6% 28.4% 26.9% 150bp
Tax & Accounting 295 257 15% 21.5% 20.7% 80bp
Intellectual Property & Science 239 225 6% 23.6% 22.9% 70bp
Corporate & Other (includes Reuters News) (305) (320)
---- ----
Underlying operating profit $2,138 $1,881 14% 17.0% 15.0% 200bp
====== ======
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
December 31, Change
------------ -----------------------------------
2014 2013 Total Before Currency Organic
---- ---- ----- --------------- -------
Revenues
--------
Financial & Risk $1,597 $1,673 -5% -1% -2%
Legal 872 868 0% 2% 2%
Tax & Accounting 397 368 8% 10% 7%
Intellectual Property & Science 269 275 -2% -1% -1%
Corporate & Other (includes Reuters News) 79 86 -8% 0% 0%
Eliminations (3) (5)
--- ---
Revenues from ongoing businesses (1) 3,211 3,265 -2% 1% 1%
Other Businesses (2) - 13
--- ---
Revenues $3,211 $3,278 -2%
====== ======
Margin
-------------------------------
Adjusted EBITDA (3) Change 2014 2013 Change
------------------ ------ ---- ---- ------
Financial & Risk $358 $244 47% 22.4% 14.6% 780bp
Legal 299 272 10% 34.3% 31.3% 300bp
Tax & Accounting 132 127 4% 33.2% 34.5% -130bp
Intellectual Property & Science 95 75 27% 35.3% 27.3% 800bp
Corporate & Other (includes Reuters News) (90) (108)
Adjusted EBITDA $794 $610 30% 24.7% 18.7% 600bp
==== ====
Underlying Operating Profit (4)
------------------------------
Financial & Risk $193 $81 138% 12.1% 4.8% 730bp
Legal 228 199 15% 26.1% 22.9% 320bp
Tax & Accounting 103 97 6% 25.9% 26.4% -50bp
Intellectual Property & Science 72 54 33% 26.8% 19.6% 720bp
Corporate & Other (includes Reuters News) (97) (129)
--- ----
Underlying operating profit $499 $302 65% 15.5% 9.2% 630bp
==== ====
Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------- ------------------------------
2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
Operating profit $1,339 $213 529% $2,545 $1,516 68%
Adjustments to remove:
Amortization of other
identifiable intangible assets 159 159 647 641
Fair value adjustments (38) 7 (91) (14)
Other operating gains, net (965) (74) (969) (198)
Operating loss (profit)
from Other Businesses (2) 4 (3) 6 (64)
--- --- --- ---
Underlying operating profit $499 $302 65% $2,138 $1,881 14%
Remove: depreciation and
amortization of computer
software (excluding Other Businesses (2)) 295 308 1,175 1,189
--- --- ----- -----
Adjusted EBITDA $794 $610 30% $3,313 $3,070 8%
==== ==== ====== ======
Underlying operating profit margin (4) 15.5% 9.2% 630bp 17.0% 15.0% 200bp
==== === ==== ====
Adjusted EBITDA margin (3) 24.7% 18.7% 600bp 26.3% 24.5% 180bp
==== ==== ==== ====
Thomson Reuters Corporation
Reconciliation of Earnings (Loss) from Continuing Operations to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------------ ----------------------------
2014 2013 Change 2014 2013 Change
---- ---- ------ ---- ---- ------
Earnings (loss) from continuing operations $1,157 ($347) nm $1,959 $175 nm
Adjustments to remove:
Tax expense 9 425 62 848
Other finance costs 60 19 85 53
Net interest expense 113 112 442 460
Amortization of other identifiable intangible assets 159 159 647 641
Amortization of computer software 192 202 778 773
Depreciation 103 106 397 416
--- --- --- ---
EBITDA $1,793 $676 $4,370 $3,366
Adjustments to remove:
Share of post-tax losses (earnings) in equity
method investments - 4 (3) (20)
Other operating gains, net (965) (74) (969) (198)
Fair value adjustments (38) 7 (91) (14)
EBITDA from Other Businesses (2) 4 (3) 6 (64)
--- --- --- ---
Adjusted EBITDA $794 $610 30% $3,313 $3,070 8%
==== ==== ====== ======
Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit (4) to Adjusted EBITDA (3) by Business Segment
(millions of U.S. dollars)
(unaudited)
Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
----------------------------------------- -------------------------------------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Depreciation and EBITDA Operating Depreciation and EBITDA
Profit Amortization Profit Amortization
of Computer of Computer
Software ** Software **
----------------------------------------- -------------------------------------------
Financial & Risk $193 $165 $358 $81 $163 $244
Legal 228 71 299 199 73 272
Tax & Accounting 103 29 132 97 30 127
Intellectual
Property & Science 72 23 95 54 21 75
Corporate & Other
(includes Reuters News) (97) 7 (90) (129) 21 (108)
$499 $295 $794 $302 $308 $610
==== ==== ==== ==== ==== ====
Twelve Months Ended Twelve Months Ended
December 31, 2014 December 31, 2013
-------------------------------------------- -------------------------------------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Depreciation and EBITDA Operating Depreciation and EBITDA
Profit Amortization Profit Amortization
of Computer of Computer
Software ** Software **
-------------------------------------------- -------------------------------------------
Financial & Risk $951 $640 $1,591 $816 $641 $1,457
Legal 958 280 1,238 903 291 1,194
Tax & Accounting 295 122 417 257 121 378
Intellectual
Property & Science 239 89 328 225 79 304
Corporate & Other
(includes Reuters News) (305) 44 (261) (320) 57 (263)
$2,138 $1,175 $3,313 $1,881 $1,189 $3,070
====== ====== ====== ====== ====== ======
** Excludes Other Businesses(2)
Thomson Reuters Corporation
Reconciliation of Earnings (Loss) Attributable to Common Shareholders
to Adjusted Earnings (5)
(millions of U.S. dollars, except as otherwise indicated and except for per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Earnings (loss) attributable to common shareholders $1,147 ($351) $1,909 $137
Adjustments to remove:
Operating loss (profit) from Other Businesses (2) 4 (3) 6 (64)
Fair value adjustments (38) 7 (91) (14)
Other operating gains, net (965) (74) (969) (198)
Other finance costs 60 19 85 53
Share of post-tax losses (earnings) in equity
method investments - 4 (3) (20)
Tax on above items 2 24 12 64
Tax items impacting comparability - 406 (10) 773
Amortization of other identifiable intangible assets 159 159 647 641
Discontinued operations - (4) - (10)
Interim period effective tax rate normalization (6) - (3) - -
Tax charge amortization (7) (21) (13) (86) (76)
Dividends declared on preference shares (1) (1) (3) (3)
Adjusted earnings $347 $170 $1,497 $1,283
==== ==== ====== ======
Adjusted earnings per share $0.43 $0.21 $1.85 $1.54
===== ===== ===== =====
Diluted weighted-average common shares (millions) 803.2 828.6 810.9 831.0
===== ===== ===== =====
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow from Ongoing Businesses (8)
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
-------------- ------------
2014 2013 2014 2013
---- ---- ---- ----
Net cash provided by operating activities $792 $407 $2,366 $2,103
Capital expenditures, less proceeds from disposals (264) (253) (968) (1,004)
Other investing activities 43 34 50 67
Dividends paid on preference shares (1) (1) (3) (3)
Free cash flow 570 187 1,445 1,163
Remove: Other Businesses (2) 3 11 2 (65)
--- --- --- ---
Free cash flow from ongoing businesses $573 $198 $1,447 $1,098
==== ==== ====== ======
Footnotes
(1) Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other (which includes
Reuters News) less eliminations. Other Businesses (see note (2) below) are excluded.
(2) Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not
qualify for discontinued operations classification.
(millions of U.S. dollars) Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
Other Businesses 2014 2013 2014 2013
---------------- ---- ---- ---- ----
Revenues - $13 $2 $159
=== === === ====
Operating (loss) profit ($4) $3 ($6) $64
Depreciation and amortization of computer software - - - -
--- --- --- ---
EBITDA ($4) $3 ($6) $64
=== === === ===
(3) Thomson Reuters defines adjusted EBITDA as underlying operating profit excluding the related depreciation and
amortization of computer software. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues from
ongoing businesses.
(4) Underlying operating profit is operating profit from reportable segments and Corporate & Other (includes Reuters
News). Underlying operating profit margin is the underlying operating profit expressed as a percentage of revenues from
ongoing businesses.
(5) Adjusted earnings and adjusted earnings per share include dividends declared on preference shares and amortization
of the 2013 tax charges associated with the consolidation of technology and content assets but exclude the pre-tax
impacts of amortization of other identifiable intangible assets as well as the post-tax impacts of fair value
adjustments, other operating (gains) and losses, certain impairment charges, the results of Other Businesses (see note
(2) above), other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method
investments, discontinued operations and other items affecting comparability. Adjusted earnings per share is calculated
using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to
shareholders.
Because Thomson Reuters reported a net loss from continuing operations under IFRS for the three months ended December
31, 2013, the weighted-average number of common shares used for basic and diluted loss per share is the same, as the
effect of stock options and other equity incentive awards would reduce the loss per share, and therefore be anti-
dilutive. Since our non-IFRS measure "adjusted earnings" is a profit, potential common shares are included, as they
lower adjusted EPS and are therefore dilutive.
The following table reconciles IFRS and non-IFRS common share information:
(weighted-average common shares) Three Months Ended
December 31, 2013
-----------------
IFRS: Basic and Diluted 825,270,499
Effect of stock options and other equity incentive awards 3,355,232
---------
Non- IFRS Diluted 828,625,731
===========
(6) Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for
interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which
Thomson Reuters operates. The adjustment reallocates estimated full-year income taxes between interim periods, but has
no effect on full-year income taxes.
(7) Reflects amortization of the 2013 tax charges associated with the consolidation of the ownership and management of
technology and content assets. For the non-IFRS measure, the majority of the charges are amortized over seven years,
the period over which the tax is expected to be paid.
(8) Free cash flow is net cash provided by operating activities less capital expenditures, other investing activities
and dividends paid on the company's preference shares. Other Businesses (see note (2) above) are also removed to arrive
at free cash flow from ongoing businesses.
Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues $3,211 $3,278 $12,607 $12,702
Operating expenses (2,383) (2,672) (9,209) (9,554)
Depreciation (103) (106) (397) (416)
Amortization of computer software (192) (202) (778) (773)
Amortization of other identifiable intangible assets (159) (159) (647) (641)
Other operating gains, net 965 74 969 198
Operating profit 1,339 213 2,545 1,516
Finance costs, net:
Net interest expense (113) (112) (442) (460)
Other finance costs (60) (19) (85) (53)
Income before tax and equity method investments 1,166 82 2,018 1,003
Share of post-tax (losses) earnings in equity
method investments - (4) 3 20
--- --- --- ---
Tax expense (9) (425) (62) (848)
--- ---- --- ----
Earnings (loss) from continuing operations 1,157 (347) 1,959 175
Earnings from discontinued operations, net of tax - 4 - 10
--- --- --- ---
Net earnings (loss) $1,157 ($343) $1,959 $185
====== ===== ====== ====
Earnings (loss) attributable to:
Common shareholders 1,147 (351) 1,909 137
Non-controlling interests 10 8 50 48
Basic earnings (loss) per share $1.43 ($0.43) $2.36 $0.16
===== ====== ===== =====
Diluted earnings (loss) per share $1.43 ($0.43) $2.35 $0.16
===== ====== ===== =====
Basic weighted-average common shares 799,929,289 825,270,499 807,897,067 828,235,931
=========== =========== =========== ===========
Diluted weighted-average common shares 803,207,856 825,270,499 810,930,098 830,984,677
=========== =========== =========== ===========
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
December 31, December 31,
2014 2013
---- ----
Assets
Cash and cash equivalents $1,018 $1,316
Trade and other receivables 1,810 1,751
Other financial assets 161 183
Prepaid expenses and other current assets 657 650
--- ---
Current assets 3,646 3,900
Computer hardware and other property, net 1,182 1,291
Computer software, net 1,529 1,622
Other identifiable intangible assets, net 7,124 7,890
Goodwill 16,403 16,871
Other financial assets 127 192
Other non-current assets 536 583
Deferred tax 50 90
--- ---
Total assets $30,597 $32,439
======= =======
Liabilities and equity
Liabilities
Current indebtedness $534 $596
Payables, accruals and provisions 2,443 2,624
Deferred revenue 1,355 1,348
Other financial liabilities 265 193
--- ---
Current liabilities 4,597 4,761
Long-term indebtedness 7,576 7,470
Provisions and other non-current liabilities 2,171 1,759
Other financial liabilities 161 102
Deferred tax 1,433 1,917
----- -----
Total liabilities 15,938 16,009
Equity
Capital 10,157 10,347
Retained earnings 7,168 7,303
Accumulated other comprehensive loss (3,147) (1,614)
------ ------
Total shareholders' equity 14,178 16,036
Non-controlling interests 481 394
--- ---
Total equity 14,659 16,430
------ ------
Total liabilities and equity $30,597 $32,439
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Cash provided by (used in):
Operating activities
Net earnings (loss) $1,157 ($343) $1,959 $185
Adjustments for:
Depreciation 103 106 397 416
Amortization of computer software 192 202 778 773
Amortization of other identifiable intangible assets 159 159 647 641
Net gains on disposals of businesses and investments (8) (38) (9) (195)
Release of accumulated foreign currency translation adjustments (931) - (931) -
Deferred tax (86) 138 (273) 434
Other 82 77 230 289
Pension contributions - (500) - (500)
Changes in working capital and other items 124 606 (432) 60
--- --- ---- ---
Net cash provided by operating activities 792 407 2,366 2,103
--- --- ----- -----
Investing activities
Acquisitions, net of cash acquired (2) (254) (167) (1,241)
Proceeds from disposals of businesses and investments,
net of taxes paid - 195 14 550
Capital expenditures, less proceeds from disposals (264) (253) (968) (1,004)
Other investing activities 43 34 50 67
Investing cash flows from continuing operations (223) (278) (1,071) (1,628)
Investing cash flows from discontinued operations - (4) - 6
--- --- --- ---
Net cash used in investing activities (223) (282) (1,071) (1,622)
---- ---- ------ ------
Financing activities
Proceeds from debt 483 1,974 1,480 3,268
Repayments of debt (1,120) (800) (1,120) (2,240)
Repurchases of common shares (297) (300) (1,023) (400)
Dividends paid on preference shares (1) (1) (3) (3)
Dividends paid on common shares (255) (260) (1,033) (1,038)
Other financing activities (19) (23) 129 (19)
--- --- --- ---
Net cash (used in) provided by financing activities (1,209) 590 (1,570) (432)
------ --- ------ ----
(Decrease) increase in cash and bank overdrafts (640) 715 (275) 49
Translation adjustments (8) (1) (22) (13)
Cash and bank overdrafts at beginning of period 1,663 598 1,312 1,276
----- --- ----- -----
Cash and bank overdrafts at end of period 1,015 1,312 1,015 1,312
===== ===== ===== =====
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents 1,018 1,316 1,018 1,316
Bank overdrafts (3) (4) (3) (4)
--- --- --- ---
$1,015 $1,312 $1,015 $1,312
====== ====== ====== ======
SOURCE Thomson Reuters