THOMSON REUTERS CORP Second-quarter performance consistent with full-year expectations
NEW YORK, July 29, 2015 /PRNewswire/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the second quarter ended June 30, 2015. The company also re-affirmed its full-year 2015 outlook.
-- Reported revenues were down 4% as the negative impact of foreign
currency reduced revenues by 6%
-- Revenues grew 2% before currency
-- Organic revenues grew 2%
-- Financial & Risk's organic revenues grew 1%
-- Legal's organic revenues increased 2%
-- Financial & Risk net sales were positive in all regions; net sales were
positive for the fifth consecutive quarter
-- Adjusted EBITDA decreased 2% to $856 million
-- The margin increased to 28.2% vs. 27.8% in the prior-year period
-- Excluding the impact of currency, adjusted EBITDA grew 3% and the
margin was 50 basis points higher than the prior-year period
-- Underlying operating profit decreased 1% to $576 million
-- The margin increased to 19.0% vs. 18.4% in the prior-year period
-- Excluding the impact of currency, underlying operating profit grew
7% and the margin was 100 basis points higher than the prior-year
period
-- Adjusted EPS was $0.52, versus $0.51 from the prior-year period
-- Excluding the impact of currency, adjusted EPS was $0.07 better than
the prior-year period
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"Today's results reflect the growing momentum within our business," said James C. Smith, president and chief executive officer of Thomson Reuters. "Our results are in line with our full-year expectations, and on a pre-currency basis, each of our four operating units reported growth for the first time in more than three years. We are entering the second half of 2015 from a position of strength and will continue to prioritize resources behind our highest growth opportunities."
Consolidated Financial Highlights - Second Quarter
Three Months Ended June 30,
(Millions of U.S. dollars, except EPS and
margins)
-----------------------------------------
IFRS Financial Measures 2015 2014 Change
---- ---- ------
Revenues $3,038 $3,159 -4%
Operating profit $405 $381 6%
Diluted earnings per share (EPS) $0.33 $0.31 6%
Cash flow from operations $931 $876 6%
Non-IFRS Financial Measures (1) 2015 2014 Change Change Before
Currency
--------
Revenues from ongoing businesses $3,038 $3,158 -4% 2%
Adjusted EBITDA $856 $877 -2% 3%
Adjusted EBITDA margin 28.2% 27.8% 40bp 50bp
Underlying operating profit $576 $581 -1% 7%
Underlying operating profit margin 19.0% 18.4% 60bp 100bp
Adjusted earnings per share (adjusted EPS) $0.52 $0.51 2% 14%
Free cash flow $709 $652 9%
(1) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes to the appended tables.
-- Revenues from ongoing businesses increased 2% (before currency) from the
prior-year period driven by the Legal, Tax & Accounting and Intellectual
Property & Science businesses, which grew 2% in aggregate, and by the
Financial & Risk business, which grew 1%.
-- Adjusted EBITDA decreased 2% from the prior-year period and the margin
increased 40 basis points to 28.2%. Excluding the impact of currency in
the quarter, the 2015 margin was 50 basis points higher than the
prior-year period. However, the margin was impacted by the timing of
annual salary increases for employees that came into effect in the
second quarter of this year compared to the third quarter of last year.
-- Underlying operating profit decreased 1% from the prior-year period and
the margin increased 60 basis points to 19.0%. Excluding the impact of
currency, the 2015 margin was 100 basis points higher than the
prior-year period.
-- Adjusted EPS was $0.52, up $0.01 from the prior-year period despite
foreign currency having had a $0.06 negative impact.
Second-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency (constant currency) as Thomson Reuters believes this provides the best basis to measure the performance of its business.
Financial & Risk
-- Revenues increased 1% (all organic). This represented the segment's best
performance and first quarter of organic revenue growth since the fourth
quarter of 2011.
-- Recurring revenues (76% of the segment's revenues) increased 1% (all
organic) due to an annual price increase and the impact of the
positive net sales trend more than offsetting the lower price
realization resulting from the migration of some foreign exchange
and buy-side customers to new products on Financial & Risk's unified
platform.
-- Transactions revenues (13% of the segment's revenues) were up 3% due
to increased fixed income revenues and growth in the BETA Systems
transaction business.
-- Recoveries revenues (11% of the segment's revenues) were down 1% and
are low-margin revenues. As some third-party clients move to direct
billing with customers, recoveries revenues are expected to continue
to decline over the balance of the year.
-- By geography, revenues in the Americas and Asia were each up 1% and
revenues in Europe, Middle East and Africa (EMEA) were flat.
-- Net sales were positive overall for the fifth consecutive quarter and
were positive in all regions. Net sales have now improved in 10 of the
last 11 quarters.
-- EBITDA increased 1% primarily due to savings related to efficiency
initiatives and increased revenues, which were largely offset by the
impact of foreign currency.
-- The margin was 27.7%, up 200 basis points from the prior-year
period. Excluding the impact of currency from both periods and the
impact of $30 million of charges taken by the company in the second
quarter of 2014, EBITDA increased 5% and the margin was up 110 basis
points to 28.7%. The margin was negatively impacted by the timing of
annual salary increases.
-- Foreign currency had a 100 basis point negative impact on the
margin.
-- Operating profit increased 3% compared to the prior-year period,
primarily due to the same factors noted above.
-- The margin was 17.7%, up 160 basis points from the prior-year
period.
-- Foreign currency had a 150 basis point negative impact on the
margin.
Legal
-- Revenues increased 2% (all organic). Excluding US print, revenues grew
3%.
-- Solutions businesses (45% of the segment's revenues) grew 5% (all
organic), driven by strong growth from the legal enterprise solutions
business including Elite and Serengeti, Pangea3 legal managed services
and the Investigations and Public Records business. Solutions businesses
represent all of Legal's revenue excluding US print and US online legal
information.
-- US online legal information (39% of the segment's revenues) grew
slightly for the second consecutive quarter.
-- US print (16% of the segment's revenues) declined 5%, as expected.
-- EBITDA decreased 5% and the margin was 37.4% compared to 38.9% in the
prior-year period. The margin was negatively impacted by the timing of
annual salary increases.
-- Operating profit decreased 4% with a margin of 29.9% compared to 30.7%
in the prior-year period. The margin was impacted by the same factors
noted above.
Tax & Accounting
-- Revenues increased 6% (5% organic) driven by the Corporate, Professional
and Knowledge Solutions businesses, partially offset by a decline in the
Government business. Recurring revenues were up 7% organically.
-- EBITDA decreased 8% and the margin was 27.5% compared to 30.2% in the
prior-year period. The EBITDA margin decrease was primarily related to
the decline in Government business revenues and the timing of annual
salary increases.
-- Operating profit decreased 3% and the margin was 19.3% compared to 20.1%
in the prior-year period. The margin decrease was a result of the same
factors that impacted the EBITDA margin.
-- Small movements in the timing of revenues and expenses can impact
margins in any given quarter for the Tax & Accounting business.
Full-year margins are more reflective of the segment's underlying
performance.
Intellectual Property & Science
-- Revenues were up 1% as subscription revenue (approximately 75% of the
segment's revenues) growth of 4% was offset by an 8% decline in
transactions revenues as fewer one-time deals affected the growth rate
in the quarter.
-- EBITDA decreased 5% with a margin of 32.7% compared to 33.9% in the
prior-year period. The EBITDA margin decline was primarily due to the
timing of annual salary increases.
-- Operating profit decreased 6% with a margin of 23.4% compared to 24.7%
in the prior-year period. The operating profit margin decrease was due
to the same items that impacted the EBITDA margin.
-- Small movements in the timing of revenues and expenses can impact
margins in any given quarter for the Intellectual Property & Science
business. Full-year margins are more reflective of the segment's
underlying performance.
Corporate & Other (Including Reuters News)
-- Reuters News revenues were $74 million, up 1% compared to the prior-year
period.
-- Corporate & Other costs were $70 million compared to $73 million in the
prior-year period.
Consolidated Financial Highlights - Six Months
Six Months Ended June 30,
(Millions of U.S. dollars, except EPS and
margins)
-----------------------------------------
IFRS Financial Measures 2015 2014 Change
---- ---- ------
Revenues $6,082 $6,289 -3%
Operating profit $812 $740 10%
Diluted earnings per share (EPS) $0.71 $0.65 9%
Cash flow from operations $1,168 $989 18%
Non-IFRS Financial Measures(1) 2015 2014 Change Change Before
Currency
--------
Revenues from ongoing businesses $6,082 $6,287 -3% 2%
Adjusted EBITDA $1,659 $1,697 -2% 4%
Adjusted EBITDA margin 27.3% 27.0% 30bp 50bp
Underlying operating profit $1,091 $1,109 -2% 6%
Underlying operating profit margin 17.9% 17.6% 30bp 80bp
Adjusted earnings per share (adjusted EPS) $0.96 $0.97 -1% 10%
Free cash flow $644 $517 25%
(1) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes to the appended tables.
-- Revenues from ongoing businesses increased 2% (before currency) from the
prior-year period driven by the Legal, Tax & Accounting and Intellectual
Property & Science businesses, which grew 3% in aggregate.
-- Adjusted EBITDA decreased 2% from the prior-year period and the margin
increased 30 basis points to 27.3%. Excluding the impact of currency,
the 2015 margin was 50 basis points higher than the prior-year period.
-- Underlying operating profit decreased 2% from the prior-year period and
the margin increased 30 basis points to 17.9%. Excluding the impact of
currency, the 2015 margin was 80 basis points higher than the prior-year
period.
-- Adjusted EPS was $0.96 compared to $0.97 in the prior-year period.
Foreign currency had an $0.11 negative impact.
-- Free cash flow for the first six months of the year was $644 million
compared to $517 million in the prior-year period primarily due to lower
severance payments.
Business Outlook (Before Currency)
Thomson Reuters today re-affirmed its full-year business outlook for 2015, which was previously communicated in February 2015. The company's 2015 outlook assumes constant currency rates compared to 2014 and is based on the expected performance of the company's existing businesses and does not factor in the impact of any acquisitions or divestitures that may occur during the year. In light of the increased volatility recently seen in the foreign currency markets, the company continues to believe that currency is likely to have a higher-than-usual impact on its results in 2015.
The company continues to expect:
-- Positive organic revenue growth;
-- Adjusted EBITDA margin to range between 27.5% and 28.5%;
-- Underlying operating profit margin to range between 18.5% and 19.5%; and
-- Free cash flow to range between $1.550 billion and $1.750 billion in
2015.
The information in this section is forward-looking and should be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks."
Dividend and Share Repurchases
In February 2015, Thomson Reuters board of directors approved a $0.02 per share annualized increase in the dividend to $1.34 per share. A quarterly dividend of $0.335 per share is payable on September 15, 2015 to common shareholders of record as of August 20, 2015.
In the second quarter of 2015, the company returned approximately $348 million to shareholders through the repurchase of approximately 8.5 million shares.
From January 1, 2015 through June 30, 2015, the company repurchased approximately 17.3 million shares at a cost of approximately $696 million.
The $1.0 billion share buyback program announced in July 2014 was completed in the second quarter of 2015. In May 2015, the company announced a third $1.0 billion share buyback program. The company has repurchased approximately 2.6 million shares at a cost of approximately $101 million under the new buyback program through June 30, 2015.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world's most trusted news organization. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, go to www.thomsonreuters.com.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
This news release includes certain non-IFRS financial measures, such as revenues from ongoing businesses, adjusted EBITDA and the related margin, underlying operating profit and the related margin, free cash flow, adjusted EPS, and selected measures before the impact of foreign currency. Thomson Reuters uses these non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These measures do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the appended tables.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS
Certain statements in this news release, including, but not limited to, statements in the "Business Outlook (Before Currency)" section and Mr. Smith's comments, are forward-looking. As a result, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. There is no assurance that the events described in any forward-looking statement will materialize. A business outlook is provided for the purpose of presenting information about current expectations for 2015. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements which reflect expectations only as of the date of this news release. Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.
The company's 2015 business outlook is based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, GDP growth in the countries where Thomson Reuters operates. Internal financial and operational assumptions include, but are not limited to, continuing operational improvement in the Financial & Risk business and the successful execution of new sales initiatives, ongoing product release programs, globalization strategy and other growth and efficiency initiatives.
Some of the material risk factors that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements in this news release include, but are not limited to, changes in the general economy; actions of competitors; failure to develop new products, services, applications and functionalities to meet customers' needs, attract new customers or expand into new geographic markets and identify areas of higher growth; failures or disruptions of telecommunications, network systems or the Internet; fraudulent or unpermitted data access or other cyber-security or privacy breaches; increased accessibility to free or relatively inexpensive information sources; failure to maintain a high renewal rate for subscription-based services; dependency on third parties for data, information and other services; changes to law and regulations, including the impact of the Dodd-Frank legislation and similar financial services laws around the world; tax matters, including changes to tax laws, regulations and treaties; fluctuations in foreign currency exchange and interest rates; failure to adapt to recent organizational changes and effectively implement strategic initiatives; failure to recruit, motivate and retain high quality management and key employees; failure to meet the challenges involved in operating globally; failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or dispositions; failure to protect the brands and reputation of Thomson Reuters; impairment of goodwill and identifiable intangible assets; inadequate protection of intellectual property rights; threat of legal actions and claims; risk of antitrust/competition-related claims or investigations; downgrading of credit ratings and adverse conditions in the credit markets; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; and actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company Limited. These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual and quarterly reports are also available in the "Investor Relations" section of www.thomsonreuters.com.
CONTACTS
MEDIA 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 second-quarter 2015 results today beginning at 8:30 a.m. Eastern Time (ET). You can access the webcast by visiting the "Investor Relations" section of www.thomsonreuters.com. An archive of the webcast will be available following the presentation.
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
June 30, Change
-------- ------
2015 2014 Total Before Organic
Currency (5)
-----------
Revenues
--------
Financial & Risk $1,552 $1,655 -6% 1% 1%
Legal 840 850 -1% 2% 2%
Tax & Accounting 327 324 1% 6% 5%
Intellectual Property &
Science 248 251 -1% 1% 1%
Corporate & Other (includes
Reuters News) 74 82 -10% 1% 1%
Eliminations (3) (4)
--- ---
Revenues from ongoing
businesses (1) 3,038 3,158 -4% 2% 2%
Other Businesses (2) - 1
--- ---
Revenues $3,038 $3,159 -4%
====== ======
Margin
------
Adjusted EBITDA (3) Change 2015 2014 Change
------------------ ------ ---- ---- ------
Financial & Risk $430 $426 1% 27.7% 25.7% 200bp
Legal 314 331 -5% 37.4% 38.9% -150bp
Tax & Accounting 90 98 -8% 27.5% 30.2% -270bp
Intellectual Property &
Science 81 85 -5% 32.7% 33.9% -120bp
Corporate & Other (includes
Reuters News) (59) (63)
Adjusted EBITDA $856 $877 -2% 28.2% 27.8% 40bp
==== ====
Underlying Operating Profit
(4)
---------------------------
Financial & Risk $274 $266 3% 17.7% 16.1% 160bp
Legal 251 261 -4% 29.9% 30.7% -80bp
Tax & Accounting 63 65 -3% 19.3% 20.1% -80bp
Intellectual Property &
Science 58 62 -6% 23.4% 24.7% -130bp
Corporate & Other (includes
Reuters News) (70) (73)
--- ---
Underlying operating profit $576 $581 -1% 19.0% 18.4% 60bp
==== ====
Refer to page 12 for explanation of footnotes.
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Six Months Ended
June 30, Change
-------- ------
2015 2014 Total Before Organic
Currency (5)
-----------
Revenues
--------
Financial & Risk $3,104 $3,313 -6% 0% 0%
Legal 1,650 1,653 0% 2% 2%
Tax & Accounting 700 672 4% 8% 6%
Intellectual Property &
Science 485 494 -2% 1% 1%
Corporate & Other (includes
Reuters News) 148 161 -8% 1% 1%
Eliminations (5) (6)
--- ---
Revenues from ongoing
businesses (1) 6,082 6,287 -3% 2% 1%
Other Businesses (2) - 2
--- ---
Revenues $6,082 $6,289 -3%
====== ======
Margin
------
Adjusted EBITDA
(3) Change 2015 2014 Change
--------------- ------ ---- ---- ------
Financial & Risk $831 $825 1% 26.8% 24.9% 190bp
Legal 593 615 -4% 35.9% 37.2% -130bp
Tax & Accounting 216 213 1% 30.9% 31.7% -80bp
Intellectual
Property &
Science 141 157 -10% 29.1% 31.8% -270bp
Corporate &
Other (includes
Reuters News) (122) (113)
Adjusted EBITDA $1,659 $1,697 -2% 27.3% 27.0% 30bp
====== ======
Underlying
Operating
Profit (4)
-----------
Financial & Risk $515 $506 2% 16.6% 15.3% 130bp
Legal 464 476 -3% 28.1% 28.8% -70bp
Tax & Accounting 161 149 8% 23.0% 22.2% 80bp
Intellectual
Property &
Science 96 113 -15% 19.8% 22.9% -310bp
Corporate &
Other (includes
Reuters News) (145) (135)
---- ----
Underlying
operating
profit $1,091 $1,109 -2% 17.9% 17.6% 30bp
====== ======
Refer to page 12 for explanation of footnotes.
Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 Change 2015 2014 Change
---- ---- ------ ---- ---- ------
Operating profit $405 $381 6% $812 $740 10%
Adjustments to remove:
Amortization of other identifiable intangible assets 147 165 296 328
Fair value adjustments 59 33 6 35
Other operating (gains) losses, net (35) 2 (23) 5
Operating loss from Other Businesses (2) - - - 1
--- --- --- ---
Underlying operating profit $576 $581 -1% $1,091 $1,109 -2%
Remove: depreciation and amortization of computer 280 296 568 588
software (excluding Other Businesses (2))
Adjusted EBITDA $856 $877 -2% $1,659 $1,697 -2%
==== ==== ====== ======
Underlying operating profit margin (4) 19.0% 18.4% 60bp 17.9% 17.6% 30bp
==== ==== ==== ====
Adjusted EBITDA margin (3) 28.2% 27.8% 40bp 27.3% 27.0% 30bp
==== ==== ==== ====
Thomson Reuters Corporation
Reconciliation of Net Earnings to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 Change 2015 2014 Change
---- ---- ------ ---- ---- ------
Net earnings $281 $260 8% $601 $552 9%
Adjustments to remove:
Tax expense 14 40 42 27
Other finance costs
(income) 5 (29) (37) (57)
Net interest expense 107 111 212 219
Amortization of other
identifiable
intangible assets 147 165 296 328
Amortization of
computer software 193 197 386 391
Depreciation 87 99 182 197
--- --- --- ---
EBITDA $834 $843 $1,682 $1,657
Adjustments to remove:
Share of post-tax
earnings in equity
method investments (2) (1) (6) (1)
Other operating
(gains) losses, net (35) 2 (23) 5
Fair value
adjustments 59 33 6 35
EBITDA from Other
Businesses (2) - - - 1
--- --- --- ---
Adjusted EBITDA $856 $877 -2% $1,659 $1,697 -2%
==== ==== ====== ======
Refer to page 12 for explanation of footnotes.
Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit (4) to Adjusted EBITDA (3) by Business Segment
(millions of U.S. dollars)
(unaudited)
Three Months Ended Three Months Ended
June 30, 2015 June 30, 2014
------------- --------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Profit Depreciation EBITDA Operating Profit Depreciation EBITDA
and
and Amortization of
Computer
Amortization Software **
of Computer
Software
---
Financial & Risk $274 $156 $430 $266 $160 $426
Legal 251 63 314 261 70 331
Tax & Accounting 63 27 90 65 33 98
Intellectual Property & Science 58 23 81 62 23 85
Corporate & Other (includes Reuters News) (70) 11 (59) (73) 10 (63)
$576 $280 $856 $581 $296 $877
==== ==== ==== ==== ==== ====
Six Months Ended Six Months Ended
June 30, 2015 June 30, 2014
------------- -------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Profit Depreciation EBITDA Operating Profit Depreciation EBITDA
and
and Amortization of
Computer
Amortization Software **
of Computer
Software
--------
Financial & Risk $515 $316 $831 $506 $319 $825
Legal 464 129 593 476 139 615
Tax & Accounting 161 55 216 149 64 213
Intellectual Property & Science 96 45 141 113 44 157
Corporate & Other (includes Reuters News) (145) 23 (122) (135) 22 (113)
$1,091 $568 $1,659 $1,109 $588 $1,697
====== ==== ====== ====== ==== ======
** Excludes Other Businesses ((2))
Refer to page 12 for explanation of footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA (5), Underlying Operating Profit (5) and the Related Margins, and
Adjusted Earnings Per Share (EPS) (5) Excluding the Effects of Foreign Currency
(millions of U.S. dollars, except for per share data and margins)
(unaudited)
Three Months Ended June 30,
---------------------------
% Change BP Change
-------- ---------
2015 2014 Total Foreign Before 2015 2014 Total Foreign Before
Currency Currency Margin Margin Currency Currency
--- -------- ------ --- -------- --------
Adjusted EBITDA $856 $877 -2% -5% 3% 28.2% 27.8% 40bp -10bp 50bp
Underlying operating profit $576 $581 -1% -8% 7% 19.0% 18.4% 60bp -40bp 100bp
Adjusted EPS $0.52 $0.51 2% -12% 14% n/a n/a n/a n/a n/a
----- ----- --- --- --- --- --- --- --- ---
Six Months Ended June 30,
-------------------------
% Change BP Change
-------- ---------
2015 2014 Total Foreign Before 2015 2014 Total Foreign Before
Currency Currency Margin Margin Currency Currency
--- -------- ------ --- -------- --------
Adjusted EBITDA $1,659 $1,697 -2% -6% 4% 27.3% 27.0% 30bp -20bp 50bp
Underlying operating profit $1,091 $1,109 -2% -8% 6% 17.9% 17.6% 30bp -50bp 80bp
Adjusted EPS $0.96 $0.97 -1% -11% 10% n/a n/a n/a n/a n/a
----- ----- --- --- --- --- --- --- --- ---
n/a - not applicable
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings (6)
(millions of U.S. dollars, except as otherwise indicated and except for per share data)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Earnings attributable to common shareholders $262 $249 $567 $531
Adjustments to remove:
Operating loss from Other Businesses (2) - - - 1
Fair value adjustments 59 33 6 35
Other operating (gains) losses, net (35) 2 (23) 5
Other finance costs (income) 5 (29) (37) (57)
Share of post-tax earnings in equity method investments (2) (1) (6) (1)
Tax on above items (11) (4) 3 (4)
Tax items impacting comparability 4 14 (2) -
Amortization of other identifiable intangible assets 147 165 296 328
Interim period effective tax rate normalization (7) 2 7 3 (5)
Tax charge amortization (8) (21) (21) (43) (43)
Dividends declared on preference shares - - (1) (1)
Adjusted earnings $410 $415 $763 $789
==== ==== ==== ====
Adjusted earnings per share $0.52 $0.51 $0.96 $0.97
===== ===== ===== =====
Diluted weighted-average common shares (millions) 788.9 813.4 793.2 817.3
===== ===== ===== =====
Refer to page 12 for explanation of footnotes.
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow from Ongoing Businesses (9)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Net cash provided by
operating activities $931 $876 $1,168 $989
Capital expenditures,
less proceeds from
disposals (223) (225) (526) (473)
Other investing
activities 1 1 3 2
Dividends paid on
preference shares - - (1) (1)
Free cash flow 709 652 644 517
Remove: Other Businesses
(2) - 1 - 1
--- --- --- ---
Free cash flow from
ongoing businesses $709 $653 $644 $518
==== ==== ==== ====
Footnotes
(1) Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other (which includes Reuters News) less eliminations. Other Businesses (see note (2) below) are excluded.
(2) Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification.
(3) Thomson Reuters defines adjusted EBITDA as underlying operating profit excluding the related depreciation and amortization of computer software. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues from ongoing businesses.
(4) Underlying operating profit is operating profit from reportable segments and Corporate & Other (includes Reuters News). Underlying operating profit margin is the underlying operating profit expressed as a percentage of revenues from ongoing businesses.
(5) The changes in revenues from ongoing businesses, adjusted EBITDA and underlying operating profit and the related margins, and adjusted earnings per share before currency (at constant currency or excluding the effects of currency) are determined by converting the current and prior period's local currency equivalent using the same exchange rates.
(6) Adjusted earnings and adjusted earnings per share include dividends declared on preference shares and amortization of the 2013 tax charges associated with the consolidation of technology and content assets but exclude the pre-tax impacts of amortization of other identifiable intangible assets as well as the post-tax impacts of fair value adjustments, other operating (gains) and losses, certain impairment charges, the results of Other Businesses (see note (2) above), other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method investments, discontinued operations and other items affecting comparability. Adjusted earnings per share is calculated using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to shareholders.
(7) Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters operates. The adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.
(8) Reflects amortization of the 2013 tax charges associated with the consolidation of the ownership and management of technology and content assets. For the non-IFRS measure, the majority of the charges are amortized over seven years, the period over which the tax is expected to be paid.
(9) Free cash flow is net cash provided by operating activities less capital expenditures, other investing activities and dividends paid on the company's preference shares. Other Businesses (see note (2) above) are also removed to arrive at free cash flow from ongoing businesses.
Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Revenues $3,038 $3,159 $6,082 $6,289
Operating expenses (2,241) (2,315) (4,429) (4,628)
Depreciation (87) (99) (182) (197)
Amortization of computer software (193) (197) (386) (391)
Amortization of other identifiable intangible assets (147) (165) (296) (328)
Other operating gains (losses), net 35 (2) 23 (5)
Operating profit 405 381 812 740
Finance costs, net:
Net interest expense (107) (111) (212) (219)
Other finance (costs) income (5) 29 37 57
Income before tax and equity method investments 293 299 637 578
Share of post-tax earnings in equity method investments 2 1 6 1
Tax expense (14) (40) (42) (27)
--- --- --- ---
Net earnings $281 $260 $601 $552
==== ==== ==== ====
Earnings attributable to:
Common shareholders 262 249 567 531
Non-controlling interests 19 11 34 21
Basic earnings per share $0.33 $0.31 $0.72 $0.65
===== ===== ===== =====
Diluted earnings per share $0.33 $0.31 $0.71 $0.65
===== ===== ===== =====
Basic weighted-average common shares 785,441,698 809,941,274 789,793,561 813,910,056
=========== =========== =========== ===========
Diluted weighted-average common shares 788,852,919 813,363,597 793,192,368 817,255,753
=========== =========== =========== ===========
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
June 30, December 31,
2015 2014
---- ----
Assets
Cash and
cash
equivalents $1,127 $1,018
Trade
and
other
receivables 1,693 1,810
Other
financial
assets 172 161
Prepaid
expenses
and
other
current
assets 741 657
--- ---
Current
assets 3,733 3,646
Computer
hardware
and
other
property,
net 1,095 1,182
Computer
software,
net 1,492 1,529
Other
identifiable
intangible
assets,
net 6,776 7,124
Goodwill 16,209 16,403
Other
financial
assets 122 127
Other
non-
current
assets 541 536
Deferred
tax 49 50
--- ---
Total
assets $30,017 $30,597
======= =======
Liabilities and equity
Liabilities
Current
indebtedness $1,564 $534
Payables,
accruals
and
provisions 2,038 2,443
Deferred
revenue 1,383 1,355
Other
financial
liabilities 244 265
--- ---
Current
liabilities 5,229 4,597
Long-
term
indebtedness 6,971 7,576
Provisions
and
other
non-
current
liabilities 2,107 2,171
Other
financial
liabilities 235 161
Deferred
tax 1,390 1,433
----- -----
Total
liabilities 15,932 15,938
Equity
Capital 10,057 10,157
Retained
earnings 6,816 7,168
Accumulated
other
comprehensive
loss (3,277) (3,147)
------ ------
Total
shareholders'
equity 13,596 14,178
Non-
controlling
interests 489 481
--- ---
Total
equity 14,085 14,659
------ ------
Total
liabilities
and
equity $30,017 $30,597
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Cash provided by (used
in):
Operating activities
Net
earnings $281 $260 $601 $552
Adjustments for:
Depreciation 87 99 182 197
Amortization
of
computer
software 193 197 386 391
Amortization
of
other
identifiable
intangible
assets 147 165 296 328
Net
(gains)
losses
on
disposals
of
businesses
and
investments (25) - (25) 1
Deferred
tax (39) (35) (66) (75)
Other 116 77 102 111
Changes
in
working
capital
and
other
items 171 113 (308) (516)
--- --- ---- ----
Net
cash
provided
by
operating
activities 931 876 1,168 989
--- --- ----- ---
Investing activities
Acquisitions,
net
of
cash
acquired (7) (137) (15) (137)
Proceeds
from
disposals
of
businesses
and
investments, 75 12 75 12
net of taxes
paid
Capital
expenditures,
less
proceeds
from
disposals (223) (225) (526) (473)
Other
investing
activities 1 1 3 2
Net
cash
used
in
investing
activities (154) (349) (463) (596)
---- ---- ---- ----
Financing activities
Net
borrowings
under
short-
term
loan
facilities 170 - 570 -
Repurchases
of
common
shares (348) (353) (696) (617)
Dividends
paid
on
preference
shares - - (1) (1)
Dividends
paid
on
common
shares (254) (258) (512) (520)
Other
financing
activities 11 125 52 129
--- --- --- ---
Net
cash
used
in
financing
activities (421) (486) (587) (1,009)
---- ---- ---- ------
Increase
(decrease)
in
cash
and
bank
overdrafts 356 41 118 (616)
Translation
adjustments 3 3 (9) 3
Cash
and
bank
overdrafts
at
beginning
of
period 765 655 1,015 1,312
--- --- ----- -----
Cash
and
bank
overdrafts
at
end
of
period $1,124 $699 $1,124 $699
====== ==== ====== ====
Cash and bank overdrafts
at end of period
comprised of:
Cash
and
cash
equivalents $1,127 $704 $1,127 $704
Bank
overdrafts (3) (5) (3) (5)
--- --- --- ---
$1,124 $699 $1,124 $699
====== ==== ====== ====
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SOURCE Thomson Reuters
