Thomson Reuters
Reports Second-Quarter 2018 Results
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.
Logo -
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"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. |
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|
|
|
|
|
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. |