TORONTO, Aug. 8, 2018 /PRNewswire/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the second quarter ended
June 30, 2018 and reaffirmed its
full-year 2018 outlook provided on May 11,
2018. The company also announced that its planned sale of a
55% interest in its Financial & Risk (F&R) business to
private equity funds managed by Blackstone is expected to close
early in the fourth quarter of 2018.
"I am pleased with our second-quarter and first-half results,
which put us on track to deliver a solid year," said Jim Smith, president and chief executive officer
of Thomson Reuters. "Following the close of our partnership with
Blackstone, Thomson Reuters will be well positioned to strengthen
and grow our business. We have leading positions and
must-have tools in our core markets. I believe we have a bright
future doing what we do best: combining information, technology and
human expertise to provide trusted answers."
Consolidated Financial Highlights - Three Months Ended
June 30
Unless otherwise noted, all results are from
continuing operations and exclude the results of the
company's Financial & Risk business unit (F&R). For 2018
reporting purposes, F&R is classified as a discontinued
operation, Reuters News is a reportable segment and prior-year
results have been restated accordingly.
|
|
|
|
Three Months Ended
June 30,
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
|
|
IFRS Financial
Measures(1)
|
2018
|
2017
|
Change
|
Change at
Constant
Currency
|
Revenues
|
$1,311
|
$1,280
|
2%
|
|
Operating
profit
|
$204
|
$218
|
-6%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$0.88
|
$0.27
|
226%
|
|
Cash flow from
operations (includes discontinued operations)
|
$803
|
$834
|
-4%
|
|
Non-IFRS Financial
Measures(1)
|
|
|
|
|
Revenues
|
$1,311
|
$1,280
|
2%
|
2%
|
Adjusted
EBITDA
|
$348
|
$380
|
-8%
|
-8%
|
Adjusted EBITDA
margin
|
26.5%
|
29.7%
|
-320bp
|
-290bp
|
Adjusted
EPS
|
$0.17
|
$0.19
|
-11%
|
-11%
|
Free cash flow
(includes discontinued operations)
|
$555
|
$580
|
-4%
|
|
|
(1) In addition
to results reported in accordance with International Financial
Reporting Standards
(IFRS), the company uses certain non-IFRS financial measures
as supplemental indicators of
its
operating performance and financial position. These and other
non-IFRS financial measures
are
defined and reconciled to the most directly comparable IFRS
measures in the tables
appended to this news release.
|
Revenues increased 2% due to higher recurring revenues.
Foreign currency had no impact on revenue growth.
Operating profit decreased 6% primarily due to costs and
investments incurred to reposition Thomson Reuters in
anticipation of separating F&R from the company.
- Adjusted EBITDA decreased 8% and the margin decreased to
26.5%, reflecting the same factors.
Diluted earnings per share (EPS) increased due to higher
net earnings from the F&R business. Net earnings increased
primarily because F&R assets held for sale are not depreciated,
and also due to a benefit from fair value adjustments associated
with foreign currency derivatives embedded in certain F&R
customer contracts.
- Adjusted EPS, which excludes discontinued operations,
was $0.17 and decreased $0.02 per share, or 11%, due to lower adjusted
EBITDA.
Cash flow from operations decreased $31 million primarily due to higher tax and
interest payments.
- Free cash flow decreased $25
million, reflecting the same factor.
Highlights by Business Unit – Three Months Ended June 30
|
|
|
|
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
Change
|
|
|
2018
|
2017
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Revenues
|
|
|
|
|
|
|
|
Legal(1)
|
|
$882
|
$858
|
|
3%
|
1%
|
2%
|
Tax &
Accounting
|
|
359
|
350
|
|
3%
|
-1%
|
4%
|
Reuters
News
|
|
72
|
74
|
|
-3%
|
2%
|
-5%
|
Eliminations
|
|
(2)
|
(2)
|
|
|
|
|
Revenues
|
|
$1,311
|
$1,280
|
|
2%
|
0%
|
2%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal(1)
|
|
$321
|
$325
|
|
-1%
|
1%
|
-2%
|
Tax &
Accounting
|
|
91
|
103
|
|
-12%
|
-2%
|
-10%
|
Reuters
News
|
|
8
|
9
|
|
-11%
|
11%
|
-22%
|
Corporate
|
|
(72)
|
(57)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$348
|
$380
|
|
-8%
|
0%
|
-8%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal(1)
|
|
36.4%
|
37.9%
|
|
-150bp
|
-10bp
|
-140bp
|
Tax &
Accounting
|
|
25.3%
|
29.4%
|
|
-410bp
|
-30bp
|
-380bp
|
Reuters
News
|
|
11.1%
|
12.2%
|
|
-110bp
|
100bp
|
-210bp
|
Corporate
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
26.5%
|
29.7%
|
|
-320bp
|
-30bp
|
-290bp
|
|
|
|
|
|
|
|
|
n/a: not applicable
(1) Includes
certain portions of the Risk business (Regulatory Intelligence and
Compliance
Learning) that will be retained by the Legal segment in connection
with the proposed
sale of 55% of the F&R business. These businesses generated
approximately $69
million of annual revenues in 2017.
|
|
Unless otherwise noted, all revenue growth comparisons by
business unit in this news release are at constant
currency (or exclude the impact of foreign currency) as
Thomson Reuters believes this provides the best basis to measure
their performance.
Legal
Revenues increased 2% to $882
million.
- Recurring revenues grew 4% (73% of total).
- Global print revenues declined 5% (18% of total).
- Transactions revenues were unchanged (9% of total).
Adjusted EBITDA decreased 1% to $321 million.
- The margin decreased to 36.4% from 37.9% due to product and
marketing investments, including costs related to the development
and launch in July of Westlaw Edge, a new legal research platform
that utilizes advanced artificial intelligence. In constant
currency, the margin decreased 140 basis points.
Tax & Accounting
Revenues increased 4% to $359
million.
- Recurring revenues grew 4% (77% of total).
- Transactions revenues were unchanged (20% of total).
- Print revenues grew 9% (3% of total).
Adjusted EBITDA decreased 12% to $91 million.
- The margin decreased to 25.3% from 29.4%, primarily due to
charges on a long-term contract in the Government business.
- As a reminder, Tax & Accounting is a seasonal business and
nearly 60% of its full-year revenues are historically generated in
the first and fourth quarters. As such, the margin performance of
this business is generally weaker in the second and third quarters
as costs are incurred in a more linear fashion throughout the year.
The company expects Tax & Accounting's full-year 2018 margin to
be in line with, or marginally higher than, the prior-year
margin.
Reuters News
Revenues were $72 million
compared to $74 million in the
prior-year period due to lower transactions revenues.
When the F&R transaction closes, Reuters News and the new
F&R partnership will enter into a 30-year agreement for Reuters
News to supply news and editorial content to the partnership for a
minimum of $325 million per year.
Reuters News revenues do not reflect any F&R payments until
after the transaction closes.
- Recurring revenues declined 2% (89% of total).
- Transactions revenues declined 25% (11% of total).
Adjusted EBITDA was $8
million, down $1 million from
the prior-year period.
- The margin decreased to 11.1% from 12.2%. In constant currency,
the margin decreased 210 basis points.
Corporate
Corporate costs at the adjusted EBITDA level were
$72 million compared to $57 million in the prior-year period (up 26%). As
previously announced, this is due to investments to reposition
Thomson Reuters in anticipation of separating F&R from the
company. These cash investments are expected to be incurred in 2018
and 2019.
Financial & Risk – Discontinued Operation
|
|
|
|
(Millions of U.S.
dollars, except for adjusted EBITDA margin)
(unaudited)
|
|
Financial &
Risk (Discontinued Operations)(1)
|
|
Three Months
Ended
|
|
|
|
|
June
30,
|
|
Change
|
|
|
2018
|
2017
|
|
Total
|
Foreign
Currency
|
Constant
Currency(2)
|
Revenues
|
|
$1,553
|
$1,501
|
|
3%
|
1%
|
2%
|
Adjusted
EBITDA
|
|
$472
|
$458
|
|
3%
|
-1%
|
4%
|
Adjusted EBITDA
margin
|
|
30.4%
|
30.5%
|
|
-10bp
|
-60bp
|
50bp
|
Cash flow from
operations
|
|
$451
|
$452
|
|
0%
|
|
|
Free cash flow
(non-IFRS measure)(2)
|
|
$289
|
$313
|
|
-8%
|
|
|
Capital
expenditures
|
|
$138
|
$117
|
|
18%
|
|
|
|
(1) Excludes
certain portions of the Risk business (Regulatory Intelligence and
Compliance Learning) that will be
retained by the Legal segment in connection with the proposed
sale of 55% of the F&R business. These
businesses generated approximately $69 million of annual revenues
in 2017.
|
(2) In addition
to results reported in accordance with IFRS, the company uses
certain non-IFRS financial measures
as supplemental indicators of its operating performance and
financial position. These and other non-IFRS
financial measures are defined and reconciled to the most directly
comparable IFRS measures in the tables
appended to this news release.
|
|
|
|
Revenues increased 2% to $1.6
billion, including an impact from the adoption of a new
accounting standard, IFRS 15. On an organic basis, revenues
increased 3%.
- Recurring revenues grew 2% (77% of total).
- Transactions revenues grew 7% (15% of total). On an organic
basis, transactions revenues grew 14%.
- Recoveries revenues decreased 3% (8% of total).
Adjusted EBITDA increased 3% to $472 million.
- The margin decreased to 30.4% from 30.5%. In constant currency,
the margin increased 50 basis points.
- Adjusted EBITDA included $39
million of costs related to the separation of the business.
Excluding these costs, adjusted EBITDA increased 13% and the margin
increased 300 basis points, primarily due to higher transaction
revenues.
Cash flow from operations was essentially unchanged from
the prior-year period.
- Free cash flow decreased 8% as higher adjusted EBITDA
was offset by increased capital expenditures and deal costs related
to the F&R transaction.
Consolidated Financial Highlights – Six Months Ended
June 30
Six
Months Ended June 30,
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
|
IFRS Financial
Measures(1)
|
2018
|
2017
|
Change
|
Change at
Constant
Currency
|
Revenues
|
$2,690
|
$2,611
|
3%
|
|
Operating
profit
|
$472
|
$492
|
-4%
|
|
Diluted EPS (includes
discontinued operations)
|
$0.40
|
$0.67
|
-40%
|
|
Cash flow from
operations (includes discontinued operations)
|
$1,222
|
$466
|
162%
|
|
Non-IFRS Financial
Measures(1)
|
|
|
|
|
Revenues
|
$2,690
|
$2,611
|
3%
|
2%
|
Adjusted
EBITDA
|
$778
|
$795
|
-2%
|
-2%
|
Adjusted EBITDA
margin
|
28.9%
|
30.4%
|
-150bp
|
-140bp
|
Adjusted
EPS
|
$0.44
|
$0.44
|
0%
|
0%
|
Free cash flow
(includes discontinued operations)
|
$675
|
($5)
|
n/m
|
|
n/m – not
meaningful
(1) In addition
to results reported in accordance with IFRS, the company uses
certain non-
IFRS financial measures as supplemental indicators of its
operating performance and
financial position. These and other non-IFRS financial measures are
defined and
reconciled to the most directly comparable IFRS measures in
the tables appended to
this news release.
|
Revenues increased 3% due to higher recurring revenues
and a positive impact from foreign currency.
- At constant currency, revenues increased 2%.
Operating profit decreased 4% due to costs
and investments incurred to reposition Thomson Reuters in
anticipation of separating F&R from the company.
- Adjusted EBITDA decreased 2% and the margin decreased to
28.9%, reflecting the same factor.
Diluted EPS decreased 40%, reflecting an $812 million deferred tax charge, most of which
was recorded in the first quarter of 2018, associated with the
proposed sale of a 55% interest in the F&R business. The tax
charge is required to be recorded when a business is first
considered held for sale, rather than when the sale is completed.
The company estimates that a cash tax payment of approximately
$300 million will arise later in 2018
in connection with the closing of the transaction, with
the remainder deferred until such time as the company disposes
of its 45% interest in the new partnership.
- Adjusted EPS, which excludes discontinued operations,
was $0.44, unchanged from the
prior-year period.
Cash flow from operations increased $756 million primarily because the prior-year
period included a $500 million
pension contribution as well as lower severance payments.
- Free cash flow increased $680
million, reflecting similar factors.
Highlights by Business Unit – Six Months Ended June 30
|
|
|
|
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June
30,
|
|
Change
|
|
|
2018
|
2017
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Revenues
|
|
|
|
|
|
|
|
Legal(1)
|
|
$1,754
|
$1,699
|
|
3%
|
1%
|
2%
|
Tax &
Accounting
|
|
796
|
767
|
|
4%
|
0%
|
4%
|
Reuters
News
|
|
144
|
148
|
|
-3%
|
3%
|
-6%
|
Eliminations
|
|
(4)
|
(3)
|
|
|
|
|
Revenues
|
|
$2,690
|
$2,611
|
|
3%
|
1%
|
2%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal(1)
|
|
$640
|
$639
|
|
0%
|
0%
|
0%
|
Tax &
Accounting
|
|
238
|
244
|
|
-2%
|
-1%
|
-1%
|
Reuters
News
|
|
16
|
22
|
|
-27%
|
5%
|
-32%
|
Corporate
|
|
(116)
|
(110)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$778
|
$795
|
|
-2%
|
0%
|
-2%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal(1)
|
|
36.5%
|
37.6%
|
|
-110bp
|
-10bp
|
-100bp
|
Tax &
Accounting
|
|
29.9%
|
31.8%
|
|
-190bp
|
-30bp
|
-160bp
|
Reuters
News
|
|
11.1%
|
14.9%
|
|
-380bp
|
30bp
|
-410bp
|
Corporate
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
28.9%
|
30.4%
|
|
-150bp
|
-10bp
|
-140bp
|
|
|
|
|
|
|
|
|
n/a: not applicable
(1) Includes
certain portions of the Risk business (Regulatory Intelligence and
Compliance
Learning) that will be retained by the Legal segment in connection
with the proposed sale
of 55% of the F&R business. These businesses generated
approximately $69 million of
annual revenues in 2017.
|
Financial & Risk – Discontinued Operation
|
|
|
|
(Millions of U.S.
dollars, except for adjusted EBITDA margin)
(unaudited)
|
|
|
Financial &
Risk (Discontinued Operations)(1)
|
|
Six Months
Ended
|
|
|
|
|
|
|
June
30,
|
|
Change
|
|
|
2018
|
2017
|
|
Total
|
Foreign
Currency
|
Constant
Currency(2)
|
Revenues
|
|
$3,136
|
$2,986
|
|
5%
|
2%
|
3%
|
Adjusted
EBITDA
|
|
$998
|
$919
|
|
9%
|
2%
|
7%
|
Adjusted EBITDA
margin
|
|
31.8%
|
30.8%
|
|
100bp
|
-20bp
|
120bp
|
Cash flow from
operations
|
|
$661
|
$522
|
|
27%
|
|
|
Free cash flow
(non-IFRS measure)(2)
|
|
$380
|
$269
|
|
41%
|
|
|
Capital
expenditures
|
|
$246
|
$222
|
|
11%
|
|
|
|
(1) Excludes
certain portions of the Risk business (Regulatory Intelligence and
Compliance Learning)
that will be retained by the Legal segment in connection
with the proposed sale of 55% of the F&R
business. These businesses generated approximately $69 million
of annual revenues in
2017.
|
(2) In addition
to results reported in accordance with IFRS, the company uses
certain non-IFRS
financial measures as supplemental indicators of its
operating performance and financial position.
These and other non-IFRS financial measures are defined
and reconciled to the most directly
comparable IFRS measures in the tables appended to this
news release.
|
Dividend & Share Repurchases; Financial & Risk
Transaction Proceeds Update
In January 2018, the Thomson
Reuters board of directors approved an annual dividend of
$1.38 per common share for the year.
A quarterly dividend of $0.345 per
share is payable on September 17,
2018 to common shareholders of record as of August 16, 2018.
Thomson Reuters previously signed a definitive agreement to sell
a 55% majority stake in the Financial & Risk business and enter
into a strategic partnership with private equity funds managed by
Blackstone. Canada Pension Plan Investment Board and an affiliate
of GIC will invest alongside Blackstone. Thomson Reuters will
receive approximately $17 billion in
gross proceeds at closing (subject to purchase price adjustments)
and will retain a 45% interest in the business. The transaction is
expected to close early in the fourth quarter of 2018 and is
subject to specified regulatory approvals and customary closing
conditions. Substantially all required regulatory approvals have
been received at this time.
The company repurchased 9.1 million shares during the second
quarter at a cost of $359 million
under its $1.5 billion buyback
program, which is being effected under the company's normal course
issuer bid (NCIB). The company did not repurchase any shares in the
first quarter.
The company currently expects to use between $9 billion and $10
billion of the estimated $17
billion of gross proceeds of the Financial & Risk
transaction to return capital to its shareholders. A significant
portion of this return is expected to be through a substantial
issuer bid/tender offer made to all shareholders, which may be at a
premium to the then-current market price of the company's
shares. The company's principal shareholder (Woodbridge) is expected to participate pro
rata in the substantial issuer bid/tender offer. Repurchases in
2018 under the NCIB program prior to the closing of the transaction
will be included in the contemplated $9
billion and $10 billion of
shareholder returns.
The price that Thomson Reuters will pay for shares in open
market transactions under its NCIB will be the market price at the
time of purchase or such other price as may be permitted by the
Toronto Stock Exchange. The amount of shares that Thomson Reuters
buys back under the $1.5 billion
repurchase program will be dependent on the timing of the closing
of the transaction and other factors, such as market conditions,
share price and other opportunities to invest capital for growth.
Thomson Reuters may elect to suspend or discontinue share
repurchases at any time, in accordance with applicable laws.
The company expects to use between $3.0
billion and $4.0 billion of
proceeds from the proposed Financial & Risk transaction to
repay debt, enabling it to remain substantially below its target
leverage ratio (net debt/adjusted EBITDA) of 2.5:1.
As previously disclosed, the company intends to utilize the
remaining $1.0 billion to
$3.0 billion of proceeds to fund
strategic, targeted acquisitions to bolster its positions in key
growth segments of its Legal Professionals, Tax Professionals and
Corporates businesses.
The company also expects to use between $1.5 billion and $2.5
billion for cash taxes, pension contributions, bond
redemption costs, and other fees and outflows related to the
transaction. These funds include $500
million to $600 million of
spend that the company views as necessary to eliminate stranded
costs as well as investments to re-position the company following
the separation of the businesses.
Organizational Changes
On July 1, 2018, Brian Peccarelli and Neil Masterson became Co-Chief Operating
Officers. Mr. Peccarelli is overseeing the customer-facing
operations including Legal Professionals, Tax Professionals and
Corporates, as well as driving sales. Mr. Masterson is overseeing
Operations & Enablement with responsibility for managing
commercial and technology operations, including those around sales
capabilities, digital customer experience and product and content
development.
The company also announced it is transitioning from a
product-centric structure to a customer-centric structure. This new
structure is intended to move decision making closer to the
customer and allow it to serve customers better with its full suite
of offerings. The company expects to begin reporting under
the new organizational structure with its fourth-quarter 2018
results.
Business Outlook 2018 (At Constant Currency)
Thomson Reuters today reaffirmed its Outlook for 2018 as
previously provided on May 11,
2018.
The company's 2018 Outlook assumes constant currency rates
compared to 2017 and does not factor in the impact of acquisitions
or divestitures that may occur, except for the planned F&R
transaction. F&R is considered a discontinued operation for the
full-year 2018 and is excluded from the company's 2018 Outlook.
For the full-year 2018, the company expects:
- Low single-digit revenue growth (excludes any 2018 payments to
Reuters News from F&R following the closing of the
transaction)
- Adjusted EBITDA to range between $1.2
billion - $1.3 billion
(including the costs referred to below)
- Total Corporate costs between $500
million and $600 million
(including stranded costs and investments to reposition the company
following the separation of the businesses)
- Depreciation and amortization of computer software between
$500 million and $525 million
- Capital expenditures of approximately 10% of revenues
- Effective tax rate on adjusted earnings between 14% - 16%
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."
Thomson Reuters
Thomson Reuters is the world's leading source of news and
information for professional markets. Our customers rely on us to
deliver the intelligence, technology and expertise they need to
find trusted answers. The business has operated in more than 100
countries for more than 100 years. Thomson Reuters shares are
listed on the Toronto and New York
Stock Exchanges (symbol: TRI). For more information, visit
www.thomsonreuters.com.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its financial statements in
accordance with International Financial Reporting Standards (IFRS),
as issued by the International Accounting Standards Board
(IASB).
This news release includes certain non-IFRS financial
measures, such as adjusted EBITDA and the related margin (other
than at the business unit or segment level), free cash flow,
adjusted EPS, and selected measures excluding 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. The term "organic" refers to
Thomson Reuters' existing businesses before the impact of
acquisitions, dispositions and IFRS 15.
The company's business outlook contains various non-IFRS
financial measures. For outlook purposes only, the company is
unable to reconcile these non-IFRS measures to the most comparable
IFRS measures because it cannot predict, with reasonable certainty,
the 2018 impact of changes in foreign exchange rates which impact
(i) the translation of its results reported at average foreign
currency rates for the year, and (ii) other finance income or
expense related to foreign exchange contracts and intercompany
financing arrangements. Additionally, the company cannot reasonably
predict the occurrence or amount of other operating gains and
losses, which generally arise from business transactions that it
does not anticipate.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL
ASSUMPTIONS AND MATERIAL RISKS
Certain statements in this news release, including, but not
limited to, statements in the "Business Outlook 2018 (At Constant
Currency)" section, Mr. Smith's comments, statements regarding the
expected timing for the closing of the Financial & Risk
transaction, the company's anticipated uses of proceeds from the
F&R transaction and Tax & Accounting's expected full-year
adjusted EBITDA margin, 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 a
transaction involving all or part of the F&R business will be
completed or that the events described in any other forward-looking
statement will materialize. A business outlook is provided for the
purpose of presenting information about current expectations for
2018. 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 2018 business outlook is based on various
external and internal assumptions. Economic and market assumptions
include, but are not limited to, GDP growth in most of the
countries where Thomson Reuters operates, a continued increase in
demand for high quality information and workflow solutions and a
continued need for trusted products and services that help
customers navigate changing geopolitical, economic and regulatory
environments. Internal financial and operational assumptions
include, but are not limited to, the successful execution of sales
initiatives, ongoing product release programs, our globalization
strategy and other growth and efficiency initiatives.
Some of the material risk factors that could cause
actual results or events to differ materially from those expressed
in or implied by forward-looking statements in this news
release include, but are not limited to, changes in the
general economy; actions of competitors; failure to develop new
products, services, applications and functionalities to meet
customers' needs, attract new customers and retain existing ones,
or expand into new geographic markets and identify areas of higher
growth; fraudulent or unpermitted data access or other
cyber-security or privacy breaches; failures or disruptions of
telecommunications, data centers, network systems or the Internet;
increased accessibility to free or relatively inexpensive
information sources; failure to meet the challenges involved in
operating globally; failure to maintain a high renewal rate for
recurring, subscription-based services; dependency on third parties
for data, information and other services; changes to law and
regulations; tax matters, including changes to tax laws,
regulations and treaties; fluctuations in foreign currency exchange
and interest rates; failure to adapt to organizational changes and
effectively implement strategic initiatives; failure to attract,
motivate and retain high quality management and key employees;
failure to protect the brands and reputation of Thomson Reuters;
inadequate protection of intellectual property rights; threat of
legal actions and claims; downgrading of credit ratings and adverse
conditions in the credit markets; failure to derive fully the
anticipated benefits from existing or future acquisitions, joint
ventures, investments or dispositions; the effect of factors
outside of the control of Thomson Reuters on funding obligations in
respect of pension and post-retirement benefit arrangements, risk
of antitrust/competition-related claims or investigations;
impairment of goodwill and other identifiable intangible assets;
actions or potential actions that could be taken by the company's
principal shareholder, The Woodbridge Company Limited; failure to
complete the proposed Financial & Risk transaction;
difficulties separating Financial & Risk from the company; and
failure to realize the benefits of the strategic Financial &
Risk partnership. These and other factors are discussed in
materials that Thomson Reuters from time to time files with, or
furnishes to, the Canadian securities regulatory authorities and
the U.S. Securities and Exchange Commission. Thomson Reuters annual
and quarterly reports are also available in the "Investor
Relations" section of www.thomsonreuters.com.
CONTACTS
|
|
|
|
MEDIA
David
Crundwell
Senior Vice
President, Corporate Affairs
+1 416 649
9904
david.crundwell@tr.com
|
INVESTORS
Frank J.
Golden
Senior Vice
President, Investor Relations
+1 646 223
5288
frank.golden@tr.com
|
Thomson Reuters will webcast a discussion of its
second-quarter 2018 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You
can access the webcast by visiting ir.thomsonreuters.com. An
archive of the webcast will be available following the
presentation.
Thomson Reuters
Corporation
Consolidated
Income Statement
(millions of U.S.
dollars, except per share data)
(unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
CONTINUING
OPERATIONS
|
|
|
|
|
|
Revenues
|
$1,311
|
$1,280
|
|
$2,690
|
$2,611
|
Operating
expenses
|
(964)
|
(899)
|
|
(1,916)
|
(1,810)
|
Depreciation
|
(29)
|
(34)
|
|
(59)
|
(62)
|
Amortization of
computer software
|
(100)
|
(93)
|
|
(198)
|
(189)
|
Amortization of other
identifiable intangible assets
|
(28)
|
(35)
|
|
(57)
|
(70)
|
Other operating gains
(losses), net
|
14
|
(1)
|
|
12
|
12
|
Operating
profit
|
204
|
218
|
|
472
|
492
|
Finance costs,
net:
|
|
|
|
|
|
Net interest
expense
|
(81)
|
(89)
|
|
(159)
|
(181)
|
Other finance income
(costs)
|
14
|
(60)
|
|
21
|
(88)
|
Income before tax and
equity method investments
|
137
|
69
|
|
334
|
223
|
Share of post-tax
earnings (losses) in equity method
investments
|
2
|
(7)
|
|
4
|
(5)
|
Tax benefit
(expense)
|
3
|
(15)
|
|
(24)
|
(26)
|
Earnings from
continuing operations
|
142
|
47
|
|
314
|
192
|
Earnings from
discontinued operations, net of tax
|
515
|
159
|
|
32
|
328
|
Net
earnings
|
$657
|
$206
|
|
$346
|
$520
|
|
|
|
|
|
|
Earnings attributable
to:
|
|
|
|
|
|
Common
shareholders
|
625
|
192
|
|
286
|
489
|
Non-controlling
interests
|
32
|
14
|
|
60
|
31
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share:
|
|
|
|
|
|
From
continuing operations
|
$0.20
|
$0.07
|
|
$0.44
|
$0.26
|
From
discontinued operations
|
0.68
|
0.20
|
|
(0.04)*
|
0.41
|
Basic and diluted
earnings (loss) per share
|
$0.88
|
$0.27
|
|
$0.40
|
$0.67
|
|
|
|
|
|
|
Basic
weighted-average common shares
|
709,674,170
|
721,009,957
|
|
710,215,950
|
724,088,186
|
Diluted
weighted-average common shares
|
710,095,394
|
722,504,109
|
|
710,797,432
|
725,409,478
|
|
|
*
|
Basic and diluted
loss per share from discontinued operations reflects an $812
million deferred tax charge, most of which was recorded in the
first quarter of 2018, associated with the proposed sale of a 55%
interest in the Financial & Risk business. The tax charge
is required to be recorded when a business is first considered held
for sale, rather than when the sale is completed. The company
estimates that a cash tax payment of approximately $300 million
will arise later in 2018 in connection with the closing of the
transaction with the remainder deferred until such time as the
company disposes of its 45% interest in the new
partnership.
|
Thomson Reuters
Corporation
Consolidated
Statement of Financial Position
(millions of U.S.
dollars)
(unaudited)
|
|
|
June
30,
|
|
December
31,
|
2018
|
|
2017
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$879
|
|
$874
|
Trade and other
receivables
|
856
|
|
1,457
|
Other financial
assets
|
48
|
|
98
|
Prepaid expenses and
other current assets
|
380
|
|
548
|
Current
assets excluding assets held for sale
|
2,163
|
|
2,977
|
Assets held for
sale
|
14,445
|
|
-
|
Current
assets
|
16,608
|
|
2,977
|
|
|
|
|
Computer hardware and
other property, net
|
502
|
|
921
|
Computer software,
net
|
910
|
|
1,458
|
Other identifiable
intangible assets, net
|
3,298
|
|
5,315
|
Goodwill
|
4,984
|
|
15,042
|
Other financial
assets
|
40
|
|
83
|
Other non-current
assets
|
586
|
|
605
|
Deferred
tax
|
47
|
|
79
|
Total
assets
|
$26,975
|
|
$26,480
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Current
indebtedness
|
$2,595
|
|
$1,644
|
Payables, accruals
and provisions
|
1,037
|
|
2,086
|
Deferred
revenue
|
781
|
|
937
|
Other financial
liabilities
|
1,106
|
|
129
|
Current
liabilities excluding liabilities associated with assets held for
sale
|
5,519
|
|
4,796
|
Liabilities
associated with assets held for sale
|
1,657
|
|
-
|
Current
liabilities
|
7,176
|
|
4,796
|
|
|
|
|
Long-term
indebtedness
|
4,936
|
|
5,382
|
Provisions and other
non-current liabilities
|
1,204
|
|
1,740
|
Other financial
liabilities
|
211
|
|
279
|
Deferred
tax
|
1,285
|
|
708
|
Total
liabilities
|
14,812
|
|
12,905
|
|
|
|
|
Equity
|
|
|
|
Capital
|
9,132
|
|
9,549
|
Retained
earnings
|
6,375
|
|
7,201
|
Accumulated other
comprehensive loss
|
(3,864)
|
|
(3,673)
|
Total shareholders'
equity
|
11,643
|
|
13,077
|
Non-controlling
interests
|
520
|
|
498
|
Total
equity
|
12,163
|
|
13,575
|
Total liabilities
and equity
|
$26,975
|
|
$26,480
|
Thomson Reuters
Corporation
Consolidated
Statement of Cash Flow
(millions of U.S.
dollars)
(unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Earnings from
continuing operations
|
$142
|
$47
|
|
$314
|
$192
|
Adjustments
for:
|
|
|
|
|
|
Depreciation
|
29
|
34
|
|
59
|
62
|
Amortization of
computer software
|
100
|
93
|
|
198
|
189
|
Amortization of other
identifiable intangible assets
|
28
|
35
|
|
57
|
70
|
Deferred
tax
|
(30)
|
(16)
|
|
(25)
|
(12)
|
Other
|
11
|
151
|
|
58
|
211
|
Pension
contribution
|
-
|
-
|
|
-
|
(500)
|
Changes in working
capital and other items
|
72
|
46
|
|
(100)
|
(219)
|
Operating cash flows
from continuing operations
|
352
|
390
|
|
561
|
(7)
|
Operating cash flows
from discontinued operations
|
451
|
444
|
|
661
|
473
|
Net cash provided by
operating activities
|
803
|
834
|
|
1,222
|
466
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(1)
|
(5)
|
|
(28)
|
(5)
|
Proceeds from
disposals of businesses and investments
|
-
|
-
|
|
-
|
10
|
Capital
expenditures
|
(131)
|
(124)
|
|
(310)
|
(232)
|
Proceeds from
disposals of property and equipment
|
27
|
-
|
|
27
|
-
|
Other investing
activities
|
18
|
9
|
|
18
|
15
|
Investing cash flows
from continuing operations
|
(87)
|
(120)
|
|
(293)
|
(212)
|
Investing cash flows
from discontinued operations
|
(138)
|
(100)
|
|
(246)
|
(383)
|
Net cash used in
investing activities
|
(225)
|
(220)
|
|
(539)
|
(595)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Proceeds from
debt
|
-
|
-
|
|
1,370
|
-
|
Repayments of
debt
|
(870)
|
-
|
|
(870)
|
(550)
|
Net borrowings
(repayments) under short-term loan facilities
|
1,313
|
(105)
|
|
61
|
150
|
Repurchases of common
shares
|
(359)
|
(294)
|
|
(359)
|
(578)
|
Dividends paid on
preference shares
|
-
|
-
|
|
(1)
|
(1)
|
Dividends paid on
common shares
|
(239)
|
(241)
|
|
(475)
|
(483)
|
Other financing
activities
|
1
|
11
|
|
1
|
16
|
Financing cash flows
from continuing operations
|
(154)
|
(629)
|
|
(273)
|
(1,446)
|
Financing cash flows
from discontinued operations
|
(24)
|
(22)
|
|
(35)
|
(31)
|
Net cash used in
financing activities
|
(178)
|
(651)
|
|
(308)
|
(1,477)
|
Increase (decrease)
in cash and bank overdrafts
|
400
|
(37)
|
|
375
|
(1,606)
|
Translation
adjustments
|
(13)
|
3
|
|
(12)
|
5
|
Cash and bank
overdrafts at beginning of period
|
844
|
800
|
|
868
|
2,367
|
Cash and bank
overdrafts at end of period
|
$1,231
|
$766
|
|
$1,231
|
$766
|
|
|
|
|
|
|
Cash and bank
overdrafts at end of period comprised of:
|
|
|
|
|
|
Cash and cash
equivalents
|
$879
|
$771
|
|
$879
|
$771
|
Cash and cash
equivalents in assets held for sale
|
356
|
-
|
|
356
|
-
|
Bank
overdrafts
|
(4)
|
(5)
|
|
(4)
|
(5)
|
|
$1,231
|
$766
|
|
$1,231
|
$766
|
Thomson Reuters
Corporation
|
Reconciliation of
Earnings from Continuing Operations to Adjusted
EBITDA(1)
|
(millions of U.S.
dollars, except for margins)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$142
|
$47
|
202%
|
|
$314
|
$192
|
64%
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Tax (benefit)
expense
|
(3)
|
15
|
|
|
24
|
26
|
|
Other finance (income)
costs
|
(14)
|
60
|
|
|
(21)
|
88
|
|
Net interest
expense
|
81
|
89
|
|
|
159
|
181
|
|
Amortization of other
identifiable intangible assets
|
28
|
35
|
|
|
57
|
70
|
|
Amortization of
computer software
|
100
|
93
|
|
|
198
|
189
|
|
Depreciation
|
29
|
34
|
|
|
59
|
62
|
|
EBITDA
|
$363
|
$373
|
|
|
$790
|
$808
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Share of post-tax
(earnings) losses in equity
method investments
|
(2)
|
7
|
|
|
(4)
|
5
|
|
Other operating
(gains) losses, net
|
(14)
|
1
|
|
|
(12)
|
(12)
|
|
Fair value
adjustments
|
1
|
(1)
|
|
|
4
|
(6)
|
|
Adjusted
EBITDA
|
$348
|
$380
|
-8%
|
|
$778
|
$795
|
-2%
|
Adjusted EBITDA
margin(1)
|
26.5%
|
29.7%
|
-320bp
|
|
28.9%
|
30.4%
|
-150bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson Reuters
Corporation
|
Reconciliation of
Net Earnings to Adjusted
Earnings(2)
|
(millions of U.S.
dollars, except for share and per share data)
|
(unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
Net
earnings
|
$657
|
$206
|
219%
|
|
$346
|
$520
|
-33%
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Fair value
adjustments
|
1
|
(1)
|
|
|
4
|
(6)
|
|
Amortization of other
identifiable intangible assets
|
28
|
35
|
|
|
57
|
70
|
|
Other operating
(gains) losses, net
|
(14)
|
1
|
|
|
(12)
|
(12)
|
|
Other finance (income)
costs
|
(14)
|
60
|
|
|
(21)
|
88
|
|
Share of post-tax
(earnings) losses in equity method
investments
|
(2)
|
7
|
|
|
(4)
|
5
|
|
Tax on above
items
|
(6)
|
(18)
|
|
|
(11)
|
(20)
|
|
Tax items impacting
comparability
|
(14)
|
6
|
|
|
(12)
|
6
|
|
Earnings from
discontinued operations, net of tax
|
(515)
|
(159)
|
|
|
(32)
|
(328)
|
|
Interim period
effective tax rate normalization(3)
|
(2)
|
3
|
|
|
2
|
(2)
|
|
Dividends declared on
preference shares
|
-
|
-
|
|
|
(1)
|
(1)
|
|
Adjusted
earnings
|
$119
|
$140
|
-15%
|
|
$316
|
$320
|
-1%
|
Adjusted
EPS
|
$0.17
|
$0.19
|
-11%
|
|
$0.44
|
$0.44
|
0%
|
Foreign
currency(4)
|
|
|
0%
|
|
|
|
0%
|
Constant
currency(4)
|
|
|
-11%
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
Diluted
weighted-average common shares (millions)
|
710.1
|
722.5
|
|
|
710.8
|
725.4
|
|
|
|
|
Refer to page 14 for
footnotes.
|
Thomson Reuters
Corporation
Reconciliation of
Earnings from Discontinued Operations to Financial &
Risk Adjusted EBITDA(1)
(millions of U.S.
dollars, except for margins)
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
June
30,
|
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
|
Earnings from
discontinued operations
|
$515
|
$159
|
224%
|
|
$32
|
$328
|
-90%
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Tax expense
(benefit)
|
18
|
(10)
|
|
|
886
|
(12)
|
|
Other finance (income)
costs
|
(5)
|
31
|
|
|
-
|
30
|
|
Net interest
expense
|
2
|
6
|
|
|
6
|
7
|
|
Amortization of other
identifiable intangible assets
|
-
|
85
|
|
|
28
|
169
|
|
Amortization of
computer software
|
-
|
75
|
|
|
30
|
159
|
|
Depreciation
|
-
|
43
|
|
|
14
|
87
|
|
EBITDA
|
$530
|
$389
|
|
|
$996
|
$768
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Other operating
losses, net
|
19
|
20
|
|
|
60
|
29
|
|
Fair value
adjustments
|
(83)
|
54
|
|
|
(65)
|
124
|
|
IP & Science
discontinued operations
|
6
|
(5)
|
|
|
7
|
(2)
|
|
Financial &
Risk discontinued operations adjusted
EBITDA
|
$472
|
$458
|
3%
|
|
$998
|
$919
|
9%
|
Adjusted EBITDA
margin(1)
|
30.4%
|
30.5%
|
-10bp
|
|
31.8%
|
30.8%
|
100bp
|
Thomson Reuters
Corporation
|
|
Reconciliation of
Net Cash Provided by Operating Activities to Free Cash
Flow(5)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
June
30,
|
|
June
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
Net cash provided by
operating activities
|
$803
|
$834
|
|
$1,222
|
$466
|
Capital
expenditures
|
(131)
|
(124)
|
|
(310)
|
(232)
|
Proceeds from
disposals of property and equipment
|
27
|
-
|
|
27
|
-
|
Capital expenditures
from discontinued operations
|
(138)
|
(117)
|
|
(246)
|
(222)
|
Other investing
activities
|
18
|
9
|
|
18
|
15
|
Dividends paid on
preference shares
|
-
|
-
|
|
(1)
|
(1)
|
Dividends paid to
non-controlling interests from discontinued operations
|
(24)
|
(22)
|
|
(35)
|
(31)
|
Free cash
flow
|
$555
|
$580
|
|
$675
|
$(5)
|
|
|
|
|
|
|
|
|
.
Thomson Reuters
Corporation
|
Reconciliation of
Operating Cash Flows from Discontinued Operations to Financial
&
Risk Free Cash Flow(5)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
Operating cash flows
from discontinued operations
|
$451
|
$444
|
|
$661
|
$473
|
Remove: Operating
cash flows - IP & Science discontinued operations
|
-
|
8
|
|
-
|
49
|
Capital expenditures
from discontinued operations
|
(138)
|
(117)
|
|
(246)
|
(222)
|
Dividends paid to
non-controlling interests from discontinued operations
|
(24)
|
(22)
|
|
(35)
|
(31)
|
Free cash flow -
Financial & Risk discontinued operations
|
$289
|
$313
|
|
$380
|
$269
|
|
|
Refer to page 14 for
footnotes.
|
Footnotes
|
|
(1)
|
Thomson Reuters
defines adjusted EBITDA for its business units as earnings from
continuing operations, or for F&R as earnings from discontinued
operations, before tax expense or benefit, net interest expense,
other finance costs or income, depreciation, amortization of
software and other identifiable intangible assets, Thomson Reuters
share of post-tax (earnings) losses in equity method investments,
other operating gains and losses, certain asset impairment charges,
fair value adjustments and corporate related items. Consolidated
adjusted EBITDA is comprised of adjusted EBITDA for its business
units and Corporate. Adjusted EBITDA margin is adjusted EBITDA
expressed as a percentage of revenues. Thomson Reuters uses
adjusted EBITDA because it provides a consistent basis to evaluate
operating profitability and performance trends by excluding items
that the Company does not consider to be controllable activities
for this purpose. Adjusted EBITDA also represents a measure
commonly reported and widely used by investors as a valuation
metric. Additionally, this measure is used by Thomson Reuters and
investors to assess a company's ability to incur and service
debt.
|
(2)
|
Adjusted earnings and
adjusted EPS include dividends declared on preference shares but
exclude the post-tax impacts of fair value adjustments,
amortization of other identifiable intangible assets, other
operating gains and losses, certain asset impairment charges, other
finance costs or income, Thomson Reuters share of post-tax
(earnings) losses in equity method investments, discontinued
operations and other items affecting comparability. Thomson Reuters
calculates the post-tax amount of each item excluded from adjusted
earnings based on the specific tax rules and tax rates associated
with the nature and jurisdiction of each item. Adjusted EPS is
calculated using diluted weighted-average shares and does not
represent actual earnings or loss per share attributable to
shareholders. Thomson Reuters uses adjusted earnings and adjusted
EPS as they provide a more comparable basis to analyze earnings and
they are also measures commonly used by shareholders to measure the
company's performance.
|
(3)
|
Adjustment to reflect
income taxes based on estimated full-year effective tax rate.
Earnings or losses for interim periods under IFRS reflect income
taxes based on the estimated effective tax rates of each of the
jurisdictions in which Thomson Reuters operates. The non-IFRS
adjustment reallocates estimated full-year income taxes between
interim periods, but has no effect on full-year income
taxes.
|
(4)
|
The changes in
revenues, adjusted EBITDA and the related margins, and adjusted
earnings per share before currency (at constant currency or
excluding the effects of currency) are determined by converting the
current and prior-year period's local currency equivalent using the
same exchange rates.
|
(5)
|
Free cash flow
(includes free cash flow from continuing and discontinued
operations) is net cash provided by (used in) operating activities,
proceeds from disposals of property and equipment, and other
investing activities less capital expenditures, dividends paid on
the company's preference shares, and dividends paid to
non-controlling interests from discontinued operations. Thomson
Reuters uses free cash flow as it helps assess the company's
ability, over the long term, to create value for its shareholders
as it represents cash available to repay debt, pay common dividends
and fund share repurchases and new acquisitions.
|
Supplemental
|
Thomson Reuters
Corporation
|
Depreciation and
Amortization of Computer Software by Business
Segment
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
June
30,
|
|
June
30,
|
|
2018
|
2017
|
|
2018
|
2017
|
Legal
|
$65
|
$63
|
|
$128
|
$127
|
Tax &
Accounting
|
37
|
32
|
|
74
|
64
|
Reuters
News
|
4
|
5
|
|
8
|
9
|
Corporate
|
23
|
27
|
|
47
|
51
|
Total depreciation
and amortization of computer software
|
$129
|
$127
|
|
$257
|
$251
|
|
|
|
|
|
|
|
|
Appendix
A
|
|
|
|
The following
supplemental information provides revised 2017 business segment
information excluding the Financial & Risk (F&R) business,
which was classified as a discontinued operation beginning in the
first quarter of 2018. The information provided illustrates the
company's business on a continuing operations basis. As it includes
certain estimates, it is subject to revision until the proposed
F&R transaction is completed.
|
|
Revised Business
Segment Information
|
|
(Excluding the
F&R Segment)
|
|
(millions of U.S.
dollars except for per share amounts)
|
|
(unaudited)
|
|
|
|
|
Year
Ended
|
|
|
|
Year
Ended
|
|
December 31,
2017
|
Adjustments
|
December 31,
2017
|
|
Previously
Reported
|
Remove F&R
Segment
Results
|
Add Back
Retained
Businesses(3)
|
Other
Adjustments(4)
|
Revised
Excluding F&R
|
Revenues
|
|
|
|
|
|
|
Financial &
Risk
|
$6,112
|
(6,112)
|
-
|
-
|
-
|
|
Legal
|
3,390
|
-
|
69
|
-
|
$3,459
|
|
Tax &
Accounting
|
1,551
|
-
|
-
|
-
|
1,551
|
|
Reuters
News(1)
|
296
|
-
|
-
|
-
|
296
|
|
Eliminations
|
(16)
|
7
|
-
|
-
|
(9)
|
|
Revenues from
continuing operations
|
$11,333
|
(6,105)
|
69
|
-
|
$5,297
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
|
|
|
|
|
Financial &
Risk
|
$1,916
|
(1,916)
|
-
|
-
|
-
|
|
Legal
|
1,279
|
-
|
28
|
-
|
$1,307
|
|
Tax &
Accounting
|
495
|
-
|
-
|
-
|
495
|
|
Reuters
News(1)
|
27
|
-
|
-
|
-
|
27
|
|
Corporate
|
(280)
|
-
|
-
|
36
|
(244)
|
|
Adjusted
EBITDA
|
$3,437
|
(1,916)
|
28
|
36
|
$1,585
|
|
|
|
|
|
|
|
|
Adjusted
earnings(2)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$3,437
|
(1,916)
|
28
|
36
|
$1,585
|
|
Depreciation and
amortization of computer software
|
(995)
|
581
|
(10)
|
(72)
|
(496)
|
|
Adjustments:
|
|
|
|
|
|
|
Interest
|
(362)
|
-
|
-
|
4
|
(358)
|
|
Tax
|
(205)
|
121
|
(2)
|
3
|
(83)
|
|
Non-controlling interests
|
(64)
|
-
|
-
|
64
|
-
|
|
Dividends declared on preference shares
|
(2)
|
-
|
-
|
-
|
(2)
|
|
Adjusted
earnings
|
$1,809
|
(1,214)
|
16
|
35
|
$646
|
|
|
|
|
|
|
|
|
Adjusted
EPS(2)
|
$2.51
|
(1.68)
|
0.02
|
0.05
|
$0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Effective January 1,
2018, Reuters News is a reportable segment.
|
|
|
(2)
|
Refer to the
explanatory footnotes on page 14 for definitions of our non-IFRS
measures. Refer to the company's 2017 Annual Report for a
reconciliation of this non-IFRS financial measure to the most
directly comparable IFRS measure.
|
|
|
(3)
|
Represents the
Regulatory Intelligence and Compliance Learning businesses that
will be retained by the company's Legal segment following the
closing of the proposed F&R transaction.
|
|
|
(4)
|
Other adjustments
include the following:
|
|
- Adjusted EBITDA contains costs primarily for
real estate optimization that relate to properties to be
transferred with the Financial & Risk business.
- Depreciation and amortization of computer
software relates to assets that will not be transferred with the
Financial & Risk business.
- Non-controlling interests relates to third
party shareholdings in Tradeweb that will be transferred with the
Financial & Risk business.
|
Appendix
A
|
|
The following
supplemental information provides revised 2017 business segment
information excluding the F&R business, which was classified as
a discontinued operation beginning in the first quarter of 2018.
The information provided illustrates the company's business on a
continuing operations basis. As it includes certain estimates,
periods subsequent to June 30, 2017 are subject to revision until
the proposed F&R transaction is completed.
|
|
Revised Business
Segment Information
|
(Excluding the
F&R Segment)
|
(millions of U.S.
dollars except for per share amounts and margins)
|
(unaudited)
|
|
|
2017
|
|
First Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Full
Year
|
Revenues
|
|
|
|
|
|
Legal
|
$841
|
$858
|
$860
|
$900
|
$3,459
|
Tax &
Accounting
|
417
|
350
|
341
|
443
|
1,551
|
Reuters
News
|
74
|
74
|
73
|
75
|
296
|
Eliminations
|
(1)
|
(2)
|
(2)
|
(4)
|
(9)
|
Revenues from
continuing operations
|
$1,331
|
$1,280
|
$1,272
|
$1,414
|
$5,297
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
|
|
|
|
Legal
|
$314
|
$325
|
$345
|
$323
|
$1,307
|
Tax &
Accounting
|
141
|
103
|
95
|
156
|
495
|
Reuters
News
|
13
|
9
|
7
|
(2)
|
27
|
Corporate
|
(53)
|
(57)
|
(60)
|
(74)
|
(244)
|
Adjusted
EBITDA
|
$415
|
$380
|
$387
|
$403
|
$1,585
|
|
|
|
|
|
|
Adjusted
earnings(1)
|
|
|
|
|
|
Adjusted
EBITDA
|
$415
|
$380
|
$387
|
$403
|
$1,585
|
Depreciation and
amortization of computer software
|
(124)
|
(127)
|
(117)
|
(128)
|
(496)
|
Adjustments:
|
|
|
|
|
|
Interest
|
(92)
|
(89)
|
(89)
|
(88)
|
(358)
|
Tax
|
(18)
|
(24)
|
(1)
|
(40)
|
(83)
|
Dividends declared on preference shares
|
(1)
|
-
|
(1)
|
-
|
(2)
|
Adjusted
earnings
|
$180
|
$140
|
$179
|
$147
|
$646
|
Adjusted
EPS(1)
|
$0.25
|
$0.19
|
$0.25
|
$0.21
|
$0.90
|
|
|
|
|
|
|
Adjusted EBITDA
margin(1)
|
|
|
|
|
|
Legal
|
37.3%
|
37.9%
|
40.1%
|
35.9%
|
37.8%
|
Tax &
Accounting
|
33.8%
|
29.4%
|
27.9%
|
35.2%
|
31.9%
|
Reuters
News
|
17.6%
|
12.2%
|
9.6%
|
n/m
|
9.1%
|
Corporate
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
31.2%
|
29.7%
|
30.4%
|
28.5%
|
29.9%
|
n/m – not
meaningful
|
|
|
|
|
|
n/a – not
applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Refer to the
explanatory footnotes on page 14 for definitions of our non-IFRS
measures.
|
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