Exhibit 99.2
Unaudited Consolidated Financial Statements
THOMSON REUTERS CORPORATION
CONSOLIDATED INCOME STATEMENT
(unaudited)
Three months ended
| Nine months ended
| |||||||||||||||||||
(millions of U.S. dollars, except per share amounts) | Notes | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
CONTINUING OPERATIONS | ||||||||||||||||||||
Revenues | 2 | 1,594 | 1,574 | 4,979 | 4,862 | |||||||||||||||
Operating expenses | 5 | (958) | (1,023) | (3,022) | (3,145) | |||||||||||||||
Depreciation | (28) | (34) | (87) | (110) | ||||||||||||||||
Amortization of computer software | (132) | (119) | (377) | (354) | ||||||||||||||||
Amortization of other identifiable intangible assets | (24) | (25) | (72) | (76) | ||||||||||||||||
Other operating (losses) gains, net | 6 | (11) | 25 | 353 | 26 | |||||||||||||||
Operating profit | 441 | 398 | 1,774 | 1,203 | ||||||||||||||||
Finance costs, net: | ||||||||||||||||||||
Net interest expense | 8 | (32) | (48) | (121) | (145) | |||||||||||||||
Other finance income (costs) | 8 | 117 | 448 | (75) | 862 | |||||||||||||||
Income before tax and equity method investments | 526 | 798 | 1,578 | 1,920 | ||||||||||||||||
Share of post-tax (losses) earnings in equity method investments | 9 | (174) | (525) | 815 | (552) | |||||||||||||||
Tax benefit (expense) | 10 | 18 | (8) | (397) | (156) | |||||||||||||||
Earnings from continuing operations | 370 | 265 | 1,996 | 1,212 | ||||||||||||||||
(Loss) earnings from discontinued operations, net of tax | (3) | (37) | 21 | (92) | ||||||||||||||||
Net earnings | 367 | 228 | 2,017 | 1,120 | ||||||||||||||||
Earnings attributable to common shareholders | 367 | 228 | 2,017 | 1,120 | ||||||||||||||||
Earnings (loss) per share: | 11 | |||||||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
From continuing operations | $0.81 | $0.55 | $4.27 | $2.49 | ||||||||||||||||
From discontinued operations | (0.01) | (0.08) | 0.05 | (0.19) | ||||||||||||||||
Basic earnings per share | $0.80 | $0.47 | $4.32 | $2.30 | ||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
From continuing operations | $0.81 | $0.55 | $4.27 | $2.49 | ||||||||||||||||
From discontinued operations | (0.01) | (0.08) | 0.04 | (0.19) | ||||||||||||||||
Diluted earnings per share | $0.80 | $0.47 | $4.31 | $2.30 |
The related notes form an integral part of these consolidated financial statements.
Page 40
THOMSON REUTERS CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||||||
(millions of U.S. dollars) | Notes | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Net earnings |
| 367 |
|
| 228 |
|
| 2,017 |
|
| 1,120 |
| ||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Items that have been or may be subsequently reclassified to net earnings: | ||||||||||||||||||||
Cash flow hedges adjustments to net earnings |
| 8 |
|
| 22 |
|
| 66 |
|
| (3) |
|
| 89 |
| |||||
Cash flow hedges adjustments to equity |
| (22) |
|
| (47) |
|
| (2) |
|
| (68) |
| ||||||||
Foreign currency translation adjustments to equity |
| (124) |
|
| (244) |
|
| 27 |
|
| (505) |
| ||||||||
| (124) |
|
| (225) |
|
| 22 |
|
| (484) |
| |||||||||
Items that will not be reclassified to net earnings: | ||||||||||||||||||||
Fair value adjustments on financial assets |
| 12 |
|
| (2) |
|
| (2) |
|
| 4 |
|
| (20) |
| |||||
Remeasurement on defined benefit pension plans |
| (58) |
|
| (91) |
|
| (43) |
|
| (178) |
| ||||||||
Related tax benefit on remeasurement on defined benefit pension plans |
| 15 |
|
| 23 |
|
| 11 |
|
| 44 |
| ||||||||
| (45) |
|
| (70) |
|
| (28) |
|
| (154) |
| |||||||||
Other comprehensive loss |
| (169) |
|
| (295) |
|
| (6) |
|
| (638) |
| ||||||||
Total comprehensive income (loss) |
| 198 |
|
| (67) |
|
| 2,011 |
|
| 482 |
| ||||||||
Comprehensive income (loss) for the period attributable to: | ||||||||||||||||||||
Common shareholders: | ||||||||||||||||||||
Continuing operations |
| 201 |
|
| (30) |
|
| 1,990 |
|
| 574 |
| ||||||||
Discontinued operations |
| (3) |
|
| (37) |
|
| 21 |
|
| (92) |
| ||||||||
Total comprehensive income (loss) |
| 198 |
|
| (67) |
|
| 2,011 |
|
| 482 |
|
The related notes form an integral part of these consolidated financial statements.
Page 41
THOMSON REUTERS CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
September 30,
| December 31,
| |||||||||
(millions of U.S. dollars) | Notes | 2023 | 2022 | |||||||
Cash and cash equivalents | 12 |
| 2,516 |
|
| 1,069 |
| |||
Trade and other receivables |
| 982 |
|
| 1,069 |
| ||||
Other financial assets | 12 |
| 118 |
|
| 204 |
| |||
Prepaid expenses and other current assets |
| 439 |
|
| 469 |
| ||||
Current assets |
| 4,055 |
|
| 2,811 |
| ||||
Property and equipment, net |
| 395 |
|
| 414 |
| ||||
Computer software, net |
| 1,256 |
|
| 935 |
| ||||
Other identifiable intangible assets, net |
| 3,175 |
|
| 3,219 |
| ||||
Goodwill |
| 6,667 |
|
| 5,869 |
| ||||
Equity method investments | 9 |
| 1,801 |
|
| 6,199 |
| |||
Other financial assets | 12 |
| 373 |
|
| 527 |
| |||
Other non-current assets | 13 |
| 581 |
|
| 619 |
| |||
Deferred tax |
| 1,046 |
|
| 1,118 |
| ||||
Total assets |
| 19,349 |
|
| 21,711 |
| ||||
LIABILITIES AND EQUITY | ||||||||||
Liabilities | ||||||||||
Current indebtedness | 12 |
| 1,480 |
|
| 1,647 |
| |||
Payables, accruals and provisions | 14 |
| 925 |
|
| 1,222 |
| |||
Current tax liabilities |
| 423 |
|
| 324 |
| ||||
Deferred revenue |
| 935 |
|
| 886 |
| ||||
Other financial liabilities | 12 |
| 85 |
|
| 812 |
| |||
Current liabilities |
| 3,848 |
|
| 4,891 |
| ||||
Long-term indebtedness | 12 |
| 2,878 |
|
| 3,114 |
| |||
Provisions and other non-current liabilities | 15 |
| 720 |
|
| 691 |
| |||
Other financial liabilities | 12 |
| 204 |
|
| 233 |
| |||
Deferred tax |
| 507 |
|
| 897 |
| ||||
Total liabilities |
| 8,157 |
|
| 9,826 |
| ||||
Equity | ||||||||||
Capital | 16 |
| 3,388 |
|
| 5,398 |
| |||
Retained earnings |
| 8,933 |
|
| 7,642 |
| ||||
Accumulated other comprehensive loss |
| (1,129) |
|
| (1,155) |
| ||||
Total equity |
| 11,192 |
|
| 11,885 |
| ||||
Total liabilities and equity |
| 19,349 |
|
| 21,711 |
|
Contingencies (note 19)
The related notes form an integral part of these consolidated financial statements.
Page 42
THOMSON REUTERS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW
(unaudited)
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||||||
(millions of U.S. dollars)
| Notes
| 2023
| 2022
| 2023
| 2022
| |||||||||||||||
Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings from continuing operations |
|
|
|
| 370 |
|
| 265 |
|
| 1,996 |
|
| 1,212 |
| |||||
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Depreciation |
|
|
|
| 28 |
|
| 34 |
|
| 87 |
|
| 110 |
| |||||
Amortization of computer software |
|
|
|
| 132 |
|
| 119 |
|
| 377 |
|
| 354 |
| |||||
Amortization of other identifiable intangible assets |
|
|
|
| 24 |
|
| 25 |
|
| 72 |
|
| 76 |
| |||||
Share of post-tax losses (earnings) in equity method |
| 9 |
|
| 174 |
|
| 525 |
|
| (815) |
|
| 552 |
| |||||
Net losses (gains) on disposals of businesses and |
|
|
|
| 6 |
|
| (30) |
|
| (341) |
|
| (29) |
| |||||
Deferred tax |
|
|
|
| (251) |
|
| (176) |
|
| (369) |
|
| (193) |
| |||||
Other |
| 17 |
|
| (89) |
|
| (417) |
|
| 188 |
|
| (742) |
| |||||
Changes in working capital and other items |
| 17 |
|
| 257 |
|
| 181 |
|
| 417 |
|
| (35) |
| |||||
Operating cash flows from continuing operations |
|
|
|
| 651 |
|
| 526 |
|
| 1,612 |
|
| 1,305 |
| |||||
Operating cash flows from discontinued operations |
|
|
|
| 23 |
|
| 5 |
|
| 24 |
|
| (66) |
| |||||
Net cash provided by operating activities |
|
|
|
| 674 |
|
| 531 |
|
| 1,636 |
|
| 1,239 |
| |||||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Acquisitions, net of cash acquired |
| 18 |
|
| (678) |
|
| (19) |
|
| (1,201) |
|
| (190) |
| |||||
Proceeds from disposals of businesses and investments |
| 7 |
|
| - |
|
| 29 |
|
| 418 |
|
| 29 |
| |||||
Proceeds from sales of LSEG shares |
| 9 |
|
| 1,517 |
|
| 24 |
|
| 5,393 |
|
| 24 |
| |||||
Capital expenditures |
|
|
|
| (145) |
|
| (152) |
|
| (412) |
|
| (460) |
| |||||
Other investing activities |
| 9 |
|
| 14 |
|
| 25 |
|
| 82 |
|
| 87 |
| |||||
Taxes paid on sales of LSEG shares and disposals of |
|
|
|
| (273) |
|
| - |
|
| (543) |
|
| - |
| |||||
Investing cash flows from continuing operations |
|
|
|
| 435 |
|
| (93) |
|
| 3,737 |
|
| (510) |
| |||||
Investing cash flows from discontinued operations |
|
|
|
| - |
|
| - |
|
| (1) |
|
| (16) |
| |||||
Net cash provided by (used in) investing activities |
|
|
|
| 435 |
|
| (93) |
|
| 3,736 |
|
| (526) |
| |||||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net (repayments) borrowings under short-term loan facilities |
| 12 |
|
| (1,214) |
|
| 319 |
|
| (443) |
|
| 369 |
| |||||
Payments of lease principal |
|
|
|
| (13) |
|
| (17) |
|
| (44) |
|
| (50) |
| |||||
Payments for return of capital on common shares |
| 16 |
|
| - |
|
| - |
|
| (2,045) |
|
| - |
| |||||
Repurchases of common shares |
| 16 |
|
| - |
|
| (504) |
|
| (718) |
|
| (698) |
| |||||
Dividends paid on preference shares |
|
|
|
| (1) |
|
| (1) |
|
| (4) |
|
| (2) |
| |||||
Dividends paid on common shares |
| 16 |
|
| (218) |
|
| (208) |
|
| (672) |
|
| (627) |
| |||||
Other financing activities |
|
|
|
| (3) |
|
| (25) |
|
| 2 |
|
| (16) |
| |||||
Net cash used in financing activities |
|
|
|
| (1,449) |
|
| (436) |
|
| (3,924) |
|
| (1,024) |
| |||||
Translation adjustments |
|
|
|
| (2) |
|
| (4) |
|
| (1) |
|
| (8) |
| |||||
(Decrease) increase in cash and cash equivalents |
|
|
|
| (342) |
|
| (2) |
|
| 1,447 |
|
| (319) |
| |||||
Cash and cash equivalents at beginning of period |
|
|
|
| 2,858 |
|
| 461 |
|
| 1,069 |
|
| 778 |
| |||||
Cash and cash equivalents at end of period |
|
|
|
| 2,516 |
|
| 459 |
|
| 2,516 |
|
| 459 |
| |||||
Supplemental cash flow information is provided in note 17. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest paid, net of debt related hedges |
|
|
|
| (28) |
|
| (16) |
|
| (130) |
|
| (96) |
| |||||
Interest received |
|
|
|
| 31 |
|
| 4 |
|
| 55 |
|
| 5 |
| |||||
Income taxes paid |
| 17 |
|
| (284) |
|
| (49) |
|
| (662) |
|
| (194) |
|
Interest received and interest paid are reflected as operating cash flows.
Income taxes paid are reflected as either operating or investing cash flows depending on the nature of the underlying transaction.
The related notes form an integral part of these consolidated financial statements.
Page 43
THOMSON REUTERS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
(millions of U.S. dollars)
| Stated
| Contributed
| Total
|
| Retained
| Unrecognized
| Foreign
|
|
| Total
| Total
| |||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | 3,864 | 1,534 | 5,398 |
|
|
| 7,642 | 17 | (1,172) |
|
|
|
|
|
| (1,155) | 11,885 | |||||||||||||||||||||||||||
Net earnings | - | - | - |
|
|
| 2,017 | - | - |
|
|
|
|
|
| - | 2,017 | |||||||||||||||||||||||||||
Other comprehensive (loss) income | - | - | - |
|
|
| (32) | (1) | 27 |
|
|
|
|
|
| 26 | (6) | |||||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | - |
|
|
| 1,985 | (1) | 27 |
|
|
| 26 | 2,011 | ||||||||||||||||||||||||||||||
Return of capital on common shares (see note 16) | (2,107) | 60 | (2,047) |
|
|
| - | - | - |
|
|
|
|
|
| - | (2,047) | |||||||||||||||||||||||||||
Dividends declared on preference shares | - | - | - |
|
|
| (4) | - | - |
|
|
|
|
|
| - | (4) | |||||||||||||||||||||||||||
Dividends declared on common shares | - | - | - |
|
|
| (686) | - | - |
|
|
|
|
|
| - | (686) | |||||||||||||||||||||||||||
Shares issued under Dividend Reinvestment Plan (“DRIP”) | 14 | - | 14 |
|
|
| - | - | - |
|
|
|
|
|
| - | 14 | |||||||||||||||||||||||||||
Repurchases of common shares | 2 | - | 2 |
|
|
| (2) | - | - |
|
|
|
|
|
| - | - | |||||||||||||||||||||||||||
Stock compensation plans | 125 | (104) | 21 |
|
|
| (2) | - | - |
|
|
|
|
|
| - | 19 | |||||||||||||||||||||||||||
Balance, September 30, 2023 | 1,898 | 1,490 | 3,388 |
|
|
| 8,933 | 16 | (1,145) |
|
|
|
|
|
| (1,129) | 11,192 |
(millions of U.S. dollars)
| Stated
| Contributed
| Total
|
| Retained
| Unrecognized
| Foreign
| AOCL
| Total
| |||||||||||||||||||||||||||
Balance, December 31, 2021 | 3,813 | 1,683 | 5,496 |
|
|
| 9,149 | 25 | (836) | (811) | 13,834 | |||||||||||||||||||||||||
Net earnings | - | - | - |
|
|
| 1,120 | - | - | - | 1,120 | |||||||||||||||||||||||||
Other comprehensive (loss) income | - | - | - |
|
|
| (134) | 1 | (505) | (504) | (638) | |||||||||||||||||||||||||
Total comprehensive income (loss) | - | - | - |
|
|
| 986 | 1 | (505) | (504) | 482 | |||||||||||||||||||||||||
Dividends declared on preference shares | - | - | - |
|
|
| (2) | - | - | - | (2) | |||||||||||||||||||||||||
Dividends declared on common shares | - | - | - |
|
|
| (648) | - | - | - | (648) | |||||||||||||||||||||||||
Shares issued under DRIP | 21 | - | 21 |
|
|
| - | - | - | - | 21 | |||||||||||||||||||||||||
Repurchases of common shares | (53) | - | (53) |
|
|
| (668) | - | - | - | (721) | |||||||||||||||||||||||||
Automatic share purchase plan | (52) | - | (52) |
|
|
| (619) | - | - | - | (671) | |||||||||||||||||||||||||
Stock compensation plans | 143 | (154) | (11) |
|
|
| (6) | - | - | - | (17) | |||||||||||||||||||||||||
Balance, September 30, 2022 | 3,872 | 1,529 | 5,401 |
|
|
| 8,192 | 26 | (1,341) | (1,315) | 12,278 |
The related notes form an integral part of these consolidated financial statements.
Page 44
Thomson Reuters Corporation
Notes to Consolidated Financial Statements (unaudited)
(unless otherwise stated, all amounts are in millions of U.S. dollars)
Note 1: Business Description and Basis of Preparation
General business description
Thomson Reuters Corporation (the “Company” or “Thomson Reuters”) is an Ontario, Canada corporation with common shares listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”) and Series II preference shares listed on the TSX. The Company serves professionals across legal, tax, accounting, compliance, government, and media. Its products combine highly specialized software and insights to empower professionals with the data, intelligence, and solutions needed to make informed decisions, and to help institutions in their pursuit of justice, truth and transparency. Reuters, part of Thomson Reuters, is a world leading provider of trusted journalism and news.
These unaudited interim consolidated financial statements (“interim financial statements”) were approved by the Audit Committee of the Board of Directors of the Company on October 31, 2023.
Basis of preparation
The interim financial statements were prepared using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2022. The interim financial statements comply with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed.
The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving more judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements have been disclosed in note 2 of the consolidated financial statements for the year ended December 31, 2022.
The Company continues to operate in an uncertain macroeconomic and geopolitical environment caused by rising interest rates, high inflation, and ongoing geopolitical risks. The Company is closely monitoring the evolving macroeconomic and geopolitical conditions to assess potential impacts on its businesses. Due to the significant uncertainty created by these circumstances, some of management’s estimates and judgments may be more variable and may change materially in the future.
The accompanying interim financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s 2022 annual report.
References to “$” are to U.S. dollars, references to “C$” are to Canadian dollars and references to “£” are to British pounds sterling.
Recent accounting amendments
In May 2023, the IASB issued amendments to IAS 12 Income Taxes. The amendments require an exception to IAS 12, whereby an entity does not recognize or disclose information about deferred tax assets and liabilities specifically related to tax laws that have been enacted or substantively enacted to implement the Organization for Economic Co-operation and Development’s international tax reform recommendations known as the Pillar Two model rules. The Company has applied the exception which was effective upon the issuance of the amendments.
In August 2023, the IASB issued amendments to IAS 21, The Effect of Changes in Foreign Exchange Rates. The amendments provide guidance on the determination of an exchange rate to translate transactions and financial statements denominated or presented in a currency that is not exchangeable into another currency. The amendments are effective for reporting periods beginning January 1, 2025. The Company is assessing the impact of these amendments on its financial statements.
Updates issued by the IASB that are not applicable or consequential to the Company have been excluded from the discussion above.
Page 45
Note 2: Revenues
Revenues by type and geography
The following tables disaggregate revenues by type and geography and reconcile them to reportable segments (see note 3).
Revenues by type
| Legal
| Corporates
| Tax & Accounting Professionals
| Reuters News
| Global
| Eliminations/ Rounding
| Total
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30,
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring |
| 661 |
|
| 658 |
|
| 349 |
|
| 330 |
|
| 160 |
|
| 158 |
|
| 158 |
|
| 152 |
|
| - |
|
| - |
|
| (5) |
|
| (7) |
|
| 1,323 |
|
| 1,291 |
| ||||||||||||||||||||||||||||||||||||||||||
Transactions |
| 27 |
|
| 43 |
|
| 42 |
|
| 43 |
|
| 43 |
|
| 32 |
|
| 22 |
|
| 19 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 134 |
|
| 137 |
| ||||||||||||||||||||||||||||||||||||||||||
Global Print | - | - | - | - | - | - | - | - | 137 | 146 | - | - | 137 | 146 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 688 | 701 | 391 | 373 | 203 | 190 | 180 | 171 | 137 | 146 | (5) | (7) | 1,594 | 1,574 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by type
| Legal
| Corporates
| Tax & Accounting Professionals
| Reuters News
| Global
| Eliminations/ Rounding
| Total
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30,
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring |
| 2,000 |
|
| 1,967 |
|
| 1,015 |
|
| 968 |
|
| 503 |
|
| 507 |
|
| 468 |
|
| 459 |
|
| - |
|
| - |
|
| (17) |
|
| (19) |
|
| 3,969 |
|
| 3,882 |
| ||||||||||||||||||||||||||||||||||||||||||
Transactions |
| 107 |
|
| 132 |
|
| 203 |
|
| 189 |
|
| 211 |
|
| 153 |
|
| 81 |
|
| 76 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 602 |
|
| 550 |
| ||||||||||||||||||||||||||||||||||||||||||
Global Print | - | - | - | - | - | - | - | - | 408 | 430 | - | - | 408 | 430 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 2,107 | 2,099 | 1,218 | 1,157 | 714 | 660 | 549 | 535 | 408 | 430 | (17) | (19) | 4,979 | 4,862 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by geography(1) (country of destination)
| Legal
| Corporates
| Tax & Accounting
| Reuters News
| Global
| Eliminations/ Rounding
| Total
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30,
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. |
| 557 |
|
| 570 |
|
| 317 |
|
| 306 |
|
| 154 |
|
| 148 |
|
| 27 |
|
| 28 |
|
| 99 |
|
| 103 |
|
| (5) |
|
| (7) |
|
| 1,149 |
|
| 1,148 |
| ||||||||||||||||||||||||||||||||||||||||||
Canada (country of domicile) |
| 21 |
|
| 18 |
|
| 3 |
|
| 2 |
|
| 4 |
|
| 5 |
|
| 1 |
|
| 1 |
|
| 18 |
|
| 22 |
|
| - |
|
| - |
|
| 47 |
|
| 48 |
| ||||||||||||||||||||||||||||||||||||||||||
Other |
| 8 |
|
| 6 |
|
| 19 |
|
| 15 |
|
| 36 |
|
| 28 |
|
| 3 |
|
| 2 |
|
| 4 |
|
| 4 |
|
| - |
|
| - |
|
| 70 |
|
| 55 |
| ||||||||||||||||||||||||||||||||||||||||||
Americas (North America, Latin America, South America) | 586 | 594 | 339 | 323 | 194 | 181 | 31 | 31 | 121 | 129 | (5) | (7) | 1,266 | 1,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.K. |
| 69 |
|
| 64 |
|
| 29 |
|
| 26 |
|
| 5 |
|
| 4 |
|
| 110 |
|
| 103 |
|
| 9 |
|
| 8 |
|
| - |
|
| - |
|
| 222 |
|
| 205 |
| ||||||||||||||||||||||||||||||||||||||||||
Other |
| 6 |
|
| 16 |
|
| 11 |
|
| 11 |
|
| - |
|
| 1 |
|
| 27 |
|
| 24 |
|
| 1 |
|
| 3 |
|
| - |
|
| - |
|
| 45 |
|
| 55 |
| ||||||||||||||||||||||||||||||||||||||||||
EMEA (Europe, Middle East and Africa) | 75 | 80 | 40 | 37 | 5 | 5 | 137 | 127 | 10 | 11 | - | - | 267 | 260 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asia Pacific |
| 27 |
|
| 27 |
|
| 12 |
|
| 13 |
|
| 4 |
|
| 4 |
|
| 12 |
|
| 13 |
|
| 6 |
|
| 6 |
|
| - |
|
| - |
|
| 61 |
|
| 63 |
| ||||||||||||||||||||||||||||||||||||||||||
Total |
| 688 |
|
| 701 |
|
| 391 |
|
| 373 |
|
| 203 |
|
| 190 |
|
| 180 |
|
| 171 |
|
| 137 |
|
| 146 |
|
| (5) |
|
| (7) |
|
| 1,594 |
|
| 1,574 |
| ||||||||||||||||||||||||||||||||||||||||||
Revenues by geography(1) (country of destination)
| Legal
| Corporates
| Tax & Accounting
| Reuters News
| Global
| Eliminations/ Rounding
| Total
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30,
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| 2023
| 2022
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. |
| 1,710 |
|
| 1,699 |
|
| 999 |
|
| 946 |
|
| 554 |
|
| 520 |
|
| 79 |
|
| 86 |
|
| 303 |
|
| 308 |
|
| (17) |
|
| (19) |
|
| 3,628 |
|
| 3,540 |
| ||||||||||||||||||||||||||||||||||||||||||
Canada (country of domicile) |
| 61 |
|
| 52 |
|
| 7 |
|
| 6 |
|
| 26 |
|
| 27 |
|
| 3 |
|
| 3 |
|
| 48 |
|
| 58 |
|
| - |
|
| - |
|
| 145 |
|
| 146 |
| ||||||||||||||||||||||||||||||||||||||||||
Other |
| 23 |
|
| 22 |
|
| 57 |
|
| 45 |
|
| 105 |
|
| 84 |
|
| 7 |
|
| 6 |
|
| 11 |
|
| 12 |
|
| - |
|
| - |
|
| 203 |
|
| 169 |
| ||||||||||||||||||||||||||||||||||||||||||
Americas (North America, Latin America, South America) | 1,794 | 1,773 | 1,063 | 997 | 685 | 631 | 89 | 95 | 362 | 378 | (17) | (19) | 3,976 | 3,855 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.K. |
| 199 |
|
| 195 |
|
| 83 |
|
| 81 |
|
| 15 |
|
| 14 |
|
| 342 |
|
| 324 |
|
| 25 |
|
| 24 |
|
| - |
|
| - |
|
| 664 |
|
| 638 |
| ||||||||||||||||||||||||||||||||||||||||||
Other |
| 31 |
|
| 48 |
|
| 33 |
|
| 37 |
|
| - |
|
| 1 |
|
| 80 |
|
| 75 |
|
| 4 |
|
| 9 |
|
| - |
|
| - |
|
| 148 |
|
| 170 |
| ||||||||||||||||||||||||||||||||||||||||||
EMEA (Europe, Middle East and Africa) | 230 | 243 | 116 | 118 | 15 | 15 | 422 | 399 | 29 | 33 | - | - | 812 | 808 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asia Pacific |
| 83 |
|
| 83 |
|
| 39 |
|
| 42 |
|
| 14 |
|
| 14 |
|
| 38 |
|
| 41 |
|
| 17 |
|
| 19 |
|
| - |
|
| - |
|
| 191 |
|
| 199 |
| ||||||||||||||||||||||||||||||||||||||||||
Total |
| 2,107 |
|
| 2,099 |
|
| 1,218 |
|
| 1,157 |
|
| 714 |
|
| 660 |
|
| 549 |
|
| 535 |
|
| 408 |
|
| 430 |
|
| (17) |
|
| (19) |
|
| 4,979 |
|
| 4,862 |
|
(1) | In the three-month period, the Company reclassified $3 million (nine-month period—$4 million) of total revenues from Asia Pacific to the U.S. By segment, Legal Professionals increased U.S. revenues by $7 million and $21 million for the three and nine-month periods, respectively. Corporates and Tax & Accounting Professionals decreased U.S. revenues by $3 million and $1 million, respectively for the three-month period and $13 million and $4 million, respectively for the nine-month period. |
Note 3: Segment Information
The Company is organized as five reportable segments, reflecting how the businesses are managed. The segments offer products and services to target customers as described below.
Legal Professionals
The Legal Professionals segment serves law firms and governments with research and workflow products, focusing on intuitive legal research powered by emerging technologies and integrated legal workflow solutions that combine content, tools and analytics.
Corporates
The Corporates segment serves corporate customers from small businesses to multinational organizations, including the seven largest global accounting firms, with the Company’s full suite of content-driven technology solutions for in-house legal, tax, regulatory, compliance and IT professionals.
Page 46
Tax & Accounting Professionals
The Tax & Accounting Professionals segment serves tax, accounting and audit professionals in accounting firms (other than the seven largest, which are served by the Corporates segment) with research and workflow products, focusing on intuitive tax offerings and automating tax workflows.
Reuters News
The Reuters News segment supplies business, financial and global news to the world’s media organizations, professionals and news consumers through Reuters News Agency, Reuters.com, Reuters Events, Thomson Reuters products and to financial market professionals exclusively via London Stock Exchange Group (“LSEG”) products.
Global Print
The Global Print segment provides legal and tax information primarily in print format to customers around the world.
The Company also reports “Corporate costs”, which includes expenses for corporate functions. In 2022, Corporate costs also included expenses related to the Change Program (see note 5). Corporate costs does not qualify as a reportable segment.
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Revenues | ||||||||||||||||
Legal Professionals | 688 | 701 | 2,107 | 2,099 | ||||||||||||
Corporates | 391 | 373 | 1,218 | 1,157 | ||||||||||||
Tax & Accounting Professionals | 203 | 190 | 714 | 660 | ||||||||||||
Reuters News | 180 | 171 | 549 | 535 | ||||||||||||
Global Print | 137 | 146 | 408 | 430 | ||||||||||||
Eliminations/Rounding | (5) | (7) | (17) | (19) | ||||||||||||
Revenues | 1,594 | 1,574 | 4,979 | 4,862 | ||||||||||||
Adjusted EBITDA | ||||||||||||||||
Legal Professionals | 338 | 324 | 1,001 | 933 | ||||||||||||
Corporates | 164 | 147 | 481 | 443 | ||||||||||||
Tax & Accounting Professionals | 64 | 59 | 302 | 262 | ||||||||||||
Reuters News | 37 | 33 | 111 | 114 | ||||||||||||
Global Print | 55 | 50 | 158 | 153 | ||||||||||||
Total reportable segments adjusted EBITDA | 658 | 613 | 2,053 | 1,905 | ||||||||||||
Corporate costs | (26) | (78) | (82) | (209) | ||||||||||||
Fair value adjustments(1) | 4 | 16 | (14) | 21 | ||||||||||||
Depreciation | (28) | (34) | (87) | (110) | ||||||||||||
Amortization of computer software(2) | (132) | (119) | (377) | (354) | ||||||||||||
Amortization of other identifiable intangible assets | (24) | (25) | (72) | (76) | ||||||||||||
Other operating (losses) gains, net | (11) | 25 | 353 | 26 | ||||||||||||
Operating profit | 441 | 398 | 1,774 | 1,203 | ||||||||||||
Net interest expense | (32) | (48) | (121) | (145) | ||||||||||||
Other finance income (costs) | 117 | 448 | (75) | 862 | ||||||||||||
Share of post-tax (losses) earnings in equity method investments | (174) | (525) | 815 | (552) | ||||||||||||
Tax benefit (expense) | 18 | (8) | (397) | (156) | ||||||||||||
Earnings from continuing operations | 370 | 265 | 1,996 | 1,212 |
(1) | The three and nine months ended September 30, 2023 includes $2 million and $15 million, respectively, of acquired deferred revenue (2022 - nil). |
(2) | The three and nine months ended September 30, 2023 include $21 million (2022 - $7 million) and $48 million (2022 - $27 million), respectively, from amortization of acquired computer software. |
Reuters News revenues included $5 million (2022 - $7 million) and $17 million (2022 - $19 million) in the three and nine months ended September 30, 2023, respectively, primarily from content-related services that it provided to the Legal Professionals, Corporates and Tax & Accounting Professionals segments.
In accordance with IFRS 8, Operating Segments, the Company discloses certain information about its reportable segments based upon measures used by management in assessing the performance of those reportable segments. These measures are defined below and may not be comparable to similar measures of other companies.
Segment Adjusted EBITDA
● | Segment adjusted EBITDA represents earnings or loss from continuing operations before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software and other identifiable intangible assets, the Company’s share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges, corporate related items and fair value adjustments, including those related to acquired deferred revenue. |
Page 47
● | The Company does not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of the reportable segments. |
● | Each segment includes an allocation of costs, based on usage or other applicable measures, for centralized support services such as technology, customer service, commercial policy, facilities management, and product and content development. Additionally, product costs are allocated when one segment sells products managed by another segment. |
Note 4: Seasonality
The Company’s revenues and operating profit on a consolidated basis do not tend to be significantly impacted by seasonality as it records a large portion of its revenues ratably over the contract term and its costs are generally incurred evenly throughout the year. However, the Company’s revenues from quarter to consecutive quarter can be impacted by the release of certain tax products, which tend to be concentrated in the fourth quarter and, to a lesser extent, in the first quarter of the year. The timing of costs related to the Change Program impacted the seasonality of the Company’s expenses and operating profit in 2022.
Note 5: Operating Expenses
The components of operating expenses include the following:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Salaries, commissions and allowances | 541 | 587 | 1,693 | 1,781 | ||||||||||||
Share-based payments | 19 | 21 | 62 | 68 | ||||||||||||
Post-employment benefits | 30 | 38 | 87 | 111 | ||||||||||||
Total staff costs | 590 | 646 | 1,842 | 1,960 | ||||||||||||
Goods and services(1) | 294 | 314 | 931 | 954 | ||||||||||||
Content | 61 | 60 | 194 | 192 | ||||||||||||
Telecommunications | 10 | 8 | 29 | 30 | ||||||||||||
Facilities | 9 | 11 | 27 | 30 | ||||||||||||
Fair value adjustments(2) | (6) | (16) | (1) | (21) | ||||||||||||
Total operating expenses | 958 | 1,023 | 3,022 | 3,145 |
(1) | Goods and services include professional fees, consulting and outsourcing services, contractors, selling and marketing, and other general and administrative costs. |
(2) | Fair value adjustments primarily represent gains or losses on intercompany balances that arise in the ordinary course of business due to changes in foreign currency exchange rates. |
Operating expenses in the three and nine months ended September 30, 2022 included $47 million and $111 million, respectively, related to the Change Program, which transitioned Thomson Reuters from a holding company to an operating company, and from a content provider into a content-driven technology company. The charges included severance as well as costs to drive technology and digital sales efficiencies. The Change Program was completed on December 31, 2022.
Note 6: Other Operating (Losses) Gains, Net
Other operating (losses) gains, net, were $(11) million and $353 million in the three and nine months ended September 30, 2023, respectively. Other operating (losses) gains, net, in the three-month period were not significant and in the nine-month period included a $347 million gain on the sale of a majority interest in the Company’s Elite business (see note 7) and a $23 million gain on the sale of a Canadian wholly-owned subsidiary to a company affiliated with The Woodbridge Company Limited (“Woodbridge”), the Company’s principal shareholder (see note 20). Other operating gains, net, were $25 million and $26 million in the three and nine months ended September 30, 2022, respectively, which included gains on the sale of two non-core businesses.
Note 7: Divestitures
In June 2023, the Company sold a majority interest in its Elite business, a provider of financial and practice management solutions to law firms, to TPG, a global alternative asset management firm, for proceeds of $418 million. The Company retained a 19.9% minority interest in the business with board representation and accounts for its interest using the equity method of accounting (see note 9).
Page 48
The consideration received and the net assets disposed in the transaction were as follows:
Nine months ended September 30,
| ||||
2023
| ||||
Consideration received — Cash and cash equivalents | 418 | |||
Trade receivables | (51) | |||
Prepaid expenses and other current assets | (13) | |||
Computer software | (36) | |||
Goodwill | (104) | |||
Other assets | (2) | |||
Total assets | (206) | |||
Payables and accruals | 14 | |||
Deferred revenue | 49 | |||
Total liabilities | 63 | |||
Net assets disposed | (143) | |||
Opening balance 19.9% equity investment in Elite | 87 | |||
Other | (15) | |||
Gain on sale before income tax | 347 |
Note 8: Finance Costs, Net
The components of finance costs, net, include interest expense (income) and other finance costs (income) as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Interest expense: | ||||||||||||||||
Debt | 52 | 40 | 153 | 120 | ||||||||||||
Derivative financial instruments — hedging activities | - | - | (1) | (1) | ||||||||||||
Other, net(1) | (7) | 6 | 2 | 16 | ||||||||||||
Fair value losses (gains) on cash flow hedges, transfer from equity | 22 | 66 | (3) | 89 | ||||||||||||
Net foreign exchange (gains) losses on debt | (22) | (66) | 3 | (89) | ||||||||||||
Net interest expense — debt and other | 45 | 46 | 154 | 135 | ||||||||||||
Net interest expense — leases | 3 | 2 | 7 | 6 | ||||||||||||
Net interest expense — pension and other post-employment benefit plans | 7 | 3 | 19 | 8 | ||||||||||||
Interest income | (23) | (3) | (59) | (4) | ||||||||||||
Net interest expense | 32 | 48 | 121 | 145 |
(1) | The three and nine months ended September 30, 2023 include $12 million of benefits related to the reversal of accrued interest associated with the release of tax reserves (see note 10). |
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Net (gains) losses due to changes in foreign currency exchange rates | (49) | (93) | 10 | (187) | ||||||||||||
Net (gains) losses on derivative instruments | (67) | (353) | 68 | (673) | ||||||||||||
Other | (1) | (2) | (3) | (2) | ||||||||||||
Other finance (income) costs | (117) | (448) | 75 | (862) |
Net (gains) losses due to changes in foreign currency exchange rates
Net (gains) losses due to changes in foreign currency exchange rates were principally comprised of amounts related to certain intercompany funding arrangements.
Net (gains) losses on derivative instruments
Net (gains) losses on derivative instruments related to foreign exchange contracts that are intended to reduce foreign currency risk on a portion of the Company’s indirect investment in LSEG, which is denominated in British pounds sterling.
Page 49
Note 9: Equity Method Investments
Equity method investments in the consolidated statement of financial position were comprised of the following:
September 30,
| December 31,
| |||||||
2023
| 2022
| |||||||
YPL | 1,556 | 6,028 | ||||||
Other equity method investments | 245 | 171 | ||||||
Total equity method investments | 1,801 | 6,199 |
Equity method investments were primarily comprised of the Company’s indirect investment in LSEG shares, which it holds through its direct investment in York Parent Limited and its subsidiaries (“YPL”). YPL is an entity jointly owned by the Company, Blackstone’s consortium (comprised of The Blackstone Group and its subsidiaries, and private equity funds affiliated with Blackstone), and certain current LSEG and former members of Refinitiv senior management. The increase in other equity method investments reflects the Company’s 19.9% minority interest in Elite, following the sale of a majority stake in the business in June 2023 (see note 7).
The investment in LSEG is subject to equity accounting because the LSEG shares are held through YPL, over which the Company has significant influence. As YPL owns only the financial investment in LSEG shares, which the parties intend to sell over time, and is not involved in operating LSEG, the investment in LSEG shares held by YPL is accounted for at fair value, based on the share price of LSEG. As the investment in LSEG is denominated in British pounds sterling, the Company has entered a series of foreign exchange contracts to mitigate currency risk on its investment (see note 12).
In the three and nine months ended September 30, 2023, the Company received $1.5 billion and $5.4 billion, respectively, related to the transactions described below. Of these amounts, $1.5 billion and $5.2 billion were received in the three and nine months ended September 30, 2023, respectively, in the form of dividends from YPL, which were recorded as a reduction of the Company’s investment and presented as investing activities in the consolidated statement of cash flow.
● | On January 31, 2023, the Company and Blackstone’s consortium collectively sold 21.2 million LSEG shares they co-own through YPL to Microsoft for a fixed U.S. dollar price of $94.50 per share. The Company received approximately $1.0 billion of gross proceeds from the sale of the 10.5 million shares it indirectly owned. In conjunction with the sale of shares to Microsoft, LSEG amended the terms of contractual lock-up provisions previously agreed between LSEG and the Blackstone consortium/Thomson Reuters entities that hold the LSEG shares. |
● | On March 8, 2023, the Company and Blackstone’s consortium collectively sold 28 million shares they co-own for £71.50 per share through a placing to institutional investors and an offer to retail investors. The Company received approximately $1.3 billion of gross proceeds from the sale of the 13.6 million shares it indirectly owned, which included approximately $96 million from the settlement of foreign exchange contracts intended to mitigate foreign exchange risk on the investment (see note 12). |
● | On May 19, 2023, the Company and Blackstone’s consortium collectively sold 33 million shares they co-own for £80.50 per share through a placing to institutional investors and an offer to retail investors. The Company received approximately $1.6 billion of gross proceeds from the sale of the 15.3 million shares it indirectly owned, which included approximately $28 million from the settlement of foreign exchange contracts intended to mitigate foreign exchange risk on the investment (see note 12). |
● | On September 7, 2023, the Company and Blackstone’s consortium collectively sold 35 million shares they co-own for £79.50 per share through a placing to institutional investors and an offer to retail investors. The Company received approximately $1.5 billion of gross proceeds from the sale of the 15.0 million shares it indirectly owned, which included approximately $27 million from the settlement of foreign exchange contracts intended to mitigate foreign exchange risk on the investment (see note 12). The Company also received $8 million in dividends from YPL related to the sale of call options discussed below. |
● | During the three and nine months ended September 30, 2023, LSEG repurchased 0.2 million and 1.7 million, respectively, of ordinary shares from YPL under an open market buyback program announced by LSEG in August 2022. The Company received proceeds of approximately $8 million and $70 million related to the approximately 0.1 million and 0.8 million shares it indirectly owned and sold as part of this buyback in the three and nine months ended September 30, 2023, respectively. |
As of September 30, 2023, the Company indirectly owned approximately 16.9 million LSEG shares. In connection with the September 2023 transactions described above, YPL entered into call options to sell approximately 8.2 million LSEG shares with maturity dates in 2023 and 2024 in the event the LSEG share price exceeds specified levels. The Company’s share of these call options covers approximately 3.5 million shares. The approximately 13.4 million LSEG shares owned by the Company and not subject to call options are subject to amended lock-up provisions under which it may sell approximately 6.1 million shares between March 2, 2024 and January 29, 2025, and approximately 7.3 million shares thereafter.
Page 50
YPL held a combination of LSEG ordinary shares and LSEG limited-voting ordinary shares (with the shares carrying in aggregate an approximate 12% economic interest and a 6% voting interest in LSEG compared to an approximate 30% economic interest and a 24% voting interest as of December 31, 2022). As of September 30, 2023, the Company owned 24.8% (December 31, 2022 – 42.84%) of YPL and indirectly owned approximately 16.9 million (December 31, 2022 – 72.0 million) LSEG shares. Given the reduction in its ownership in 2023, YPL is only entitled to nominate one non-executive director to the board of LSEG. As such, Thomson Reuters is no longer entitled to nominate a representative to the board of LSEG.
The Company’s share of post-tax (losses) earnings in equity method investments as reported in the consolidated income statement is comprised of the following:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
YPL | (167) | (520) | 828 | (543) | ||||||||||||
Other equity method investments | (7) | (5) | (13) | (9) | ||||||||||||
Total share of post-tax (losses) earnings in equity method investments | (174) | (525) | 815 | (552) |
The Company’s share of post-tax (losses) or earnings in its YPL investment was comprised of the following items:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
(Decrease) increase in LSEG share price | (111) | (2) | 587 | 687 | ||||||||||||
Foreign exchange (losses) gains on LSEG shares | (107) | (543) | 165 | (1,317) | ||||||||||||
Dividend income | 13 | 25 | 58 | 87 | ||||||||||||
Loss from forward contract | - | - | (77) | - | ||||||||||||
Loss from call options | (1) | - | (1) | - | ||||||||||||
Historical excluded equity adjustment(1) | 39 | - | 96 | - | ||||||||||||
YPL — share of post-tax (losses) earnings in equity method investments | (167) | (520) | 828 | (543) |
(1) | Represents income from the recognition of a portion of the cumulative impact of equity transactions that were excluded from the Company’s investment in YPL. |
Set forth below is summarized financial information for 100% of YPL as of September 30, 2023 and 2022.
Three months ended
| Nine months ended
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Mark-to-market of LSEG shares | (646) | (1,272) | 1,850 | (1,471) | ||||||||||||
Dividend income | 42 | 58 | 154 | 202 | ||||||||||||
Loss from forward contract | - | - | (179) | - | ||||||||||||
Loss from call options | (4) | - | (4) | - | ||||||||||||
Net (loss) earnings | (608) | (1,214) | 1,821 | (1,269) | ||||||||||||
Total comprehensive (loss) income | (608) | (1,214) | 1,821 | (1,269) |
Page 51
The following table reconciles the net assets attributable to YPL to the Company’s carrying value of its investment in YPL:
September 30,
| December 31,
| |||||||
2023
| 2022
| |||||||
Assets | ||||||||
Current assets |
| 28 |
|
| 190 |
| ||
Non-current assets |
| 7,032 |
|
| 14,620 |
| ||
Total assets |
| 7,060 |
|
| 14,810 |
| ||
Liabilities | ||||||||
Current liabilities |
| 49 |
|
| 10 |
| ||
Non-current liabilities |
| 198 |
|
| 202 |
| ||
Total liabilities |
| 247 |
|
| 212 |
| ||
Net assets attributable to YPL |
| 6,813 |
|
| 14,598 |
| ||
Net assets attributable to YPL - beginning period |
| 14,598 |
|
| 15,881 |
| ||
Net earnings (loss) attributable to YPL |
| 1,821 |
|
| (973) |
| ||
Distributions to owners |
| (9,606) |
|
| (310) |
| ||
Net assets attributable to YPL - ending period |
| 6,813 |
|
| 14,598 |
| ||
Thomson Reuters % share |
| 24.8% |
|
| 42.84% |
| ||
Thomson Reuters $ share |
| 1,686 |
|
| 6,254 |
| ||
Historical excluded equity adjustment(1) |
| (130) |
|
| (226) |
| ||
Thomson Reuters carrying amount |
| 1,556 |
|
| 6,028 |
|
(1) | Represents the cumulative impact of equity transactions excluded from the Company’s investment in YPL. |
See note 20 for related party transactions with YPL and Elite.
Note 10: Taxation
The Company recorded a tax benefit of $18 million for the three months ended September 30, 2023 and tax expense of $8 million for the three months ended September 30, 2022. The three months ended September 30, 2023 included $38 million (2022 - $133 million) of tax benefits related to the Company’s loss in equity method investments and $15 million (2022 - $81 million) of tax expense related to other finance income, primarily from gains on foreign exchange contracts related to the Company’s investment in LSEG. The three months ended September 30, 2023 also included $61 million of benefits from the release of tax reserves due to the expiration of applicable statutes of limitation.
Tax expense was $397 million and $156 million in the nine months ended September 30, 2023 and 2022, respectively, and included $195 million of tax expense (2022 - $150 million of tax benefits) related to the Company’s earnings or losses in equity method investments and $16 million of tax benefits (2022 - $159 million of tax expense) related to other finance costs or income. The nine months ended September 30, 2023, also included benefits of $61 million from the release of tax reserves and $24 million from the settlement of a tax audit, as well as $78 million of expense related to the sale of a majority stake in Elite.
Additionally, the tax benefit or expense in each period reflected the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, tax expense or benefit in interim periods is not necessarily indicative of the tax benefit or expense for the full year.
Note 11: Earnings Per Share
Basic earnings per share was calculated by dividing earnings attributable to common shareholders less dividends declared on preference shares by the sum of the weighted-average number of common shares outstanding and vested deferred share units (“DSUs”) outstanding during the period. DSUs represent common shares that certain employees have elected to receive in the future upon vesting of share-based compensation awards or in lieu of cash compensation.
Diluted earnings per share was calculated using the denominator of the basic calculation described above adjusted to include the potentially dilutive effect of outstanding stock options and time-based restricted share units (“TRSUs”).
Earnings used in determining consolidated earnings per share and earnings per share from continuing operations are as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Earnings attributable to common shareholders | 367 | 228 | 2,017 | 1,120 | ||||||||||||
Less: Dividends declared on preference shares | (1) | (1) | (4) | (2) | ||||||||||||
Earnings used in consolidated earnings per share | 366 | 227 | 2,013 | 1,118 | ||||||||||||
Less: Loss (earnings) from discontinued operations, net of tax | 3 | 37 | (21) | 92 | ||||||||||||
Earnings used in earnings per share from continuing operations |
| 369 |
|
| 264 |
|
| 1,992 |
|
| 1,210 |
|
Page 52
The weighted-average number of common shares outstanding, as well as a reconciliation of the weighted-average number of common shares outstanding used in the basic earnings per share computation to the weighted-average number of common shares outstanding used in the diluted earnings per share computation, is presented below:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Weighted-average number of common shares outstanding | 455,341,000 | 482,919,463 | 465,951,100 | 485,386,057 | ||||||||||||
Weighted-average number of vested DSUs | 117,515 | 183,692 | 127,277 | 230,075 | ||||||||||||
Basic | 455,458,515 | 483,103,155 | 466,078,377 | 485,616,132 | ||||||||||||
Effect of stock options and TRSUs | 603,848 | 785,031 | 759,765 | 692,905 | ||||||||||||
Diluted | 456,062,363 | 483,888,186 | 466,838,142 | 486,309,037 |
The impact of the share reduction from the return of capital and share consolidation transaction in June 2023 (see note 16) was factored into the weighted average number of common shares outstanding from the date of the transaction.
Note 12: Financial Instruments
Financial assets and liabilities
Financial assets and liabilities in the consolidated statement of financial position were as follows:
September 30, 2023
| Assets/ at Amortized
| Assets/ Value Earnings
| Assets at Fair Value through Other Comprehensive Income or Loss
| Derivatives
| Total
| |||||||||||||||
Cash and cash equivalents | 363 | 2,153 | - | - | 2,516 | |||||||||||||||
Trade and other receivables | 982 | - | - | - | 982 | |||||||||||||||
Other financial assets - current | 11 | 107 | - | - | 118 | |||||||||||||||
Other financial assets - non-current | 19 | 237 | 77 | 40 | 373 | |||||||||||||||
Current indebtedness | (1,480) | - | - | - | (1,480) | |||||||||||||||
Trade payables (see note 14) | (149) | - | - | - | (149) | |||||||||||||||
Accruals (see note 14) | (656) | - | - | - | (656) | |||||||||||||||
Other financial liabilities - current(1) | (62) | (23) | - | - | (85) | |||||||||||||||
Long-term indebtedness | (2,878) | - | - | - | (2,878) | |||||||||||||||
Other financial liabilities - non current(2) | (190) | (14) | - | - | (204) | |||||||||||||||
Total | (4,040) | 2,460 | 77 | 40 | (1,463) | |||||||||||||||
December 31, 2022
| Assets/ at Amortized
| Assets/ at Fair Value through
| Assets at Fair Value through Other Comprehensive Income or Loss
| Derivatives
| Total
| |||||||||||||||
Cash and cash equivalents | 820 | 249 | - | - | 1,069 | |||||||||||||||
Trade and other receivables | 1,069 | - | - | - | 1,069 | |||||||||||||||
Other financial assets - current | 13 | 191 | - | - | 204 | |||||||||||||||
Other financial assets - non-current | 24 | 400 | 61 | 42 | 527 | |||||||||||||||
Current indebtedness | (1,647) | - | - | - | (1,647) | |||||||||||||||
Trade payables (see note 14) | (237) | - | - | - | (237) | |||||||||||||||
Accruals (see note 14) | (834) | - | - | - | (834) | |||||||||||||||
Other financial liabilities - current(1)(3) | (781) | (31) | - | - | (812) | |||||||||||||||
Long-term indebtedness | (3,114) | - | - | - | (3,114) | |||||||||||||||
Other financial liabilities - non current(2) | (204) | (29) | - | - | (233) | |||||||||||||||
Total | (4,891) | 780 | 61 | 42 | (4,008) |
(1) | Includes lease liabilities of $53 million (2022 - $56 million). |
(2) | Includes lease liabilities of $171 million (2022 - $179 million). |
(3) | Includes a commitment to repurchase up to $718 million of shares related to the Company’s automatic share repurchase plan with its broker to repurchase the Company’s shares during its internal trading blackout period. See note 16. |
Cash and cash equivalents
Of total cash and cash equivalents, $102 million and $81 million as of September 30, 2023 and December 31, 2022, respectively, were held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and were therefore not available for general use by the Company.
Page 53
Commercial paper program
The Company’s $2.0 billion commercial paper program provides cost effective and flexible short-term funding. The carrying amount of outstanding commercial paper of $638 million is included in “Current indebtedness” within the consolidated statement of financial position as of September 30, 2023 (December 31, 2022 – $1,048 million).
Credit facility
The Company has a $2.0 billion syndicated credit facility agreement which matures in November 2027 and may be used to provide liquidity for general corporate purposes (including acquisitions or support for its commercial paper program). There were no outstanding borrowings under the credit facility as of September 30, 2023 and December 31, 2022. Based on the Company’s current credit ratings, the cost of borrowing under the facility is priced at the Term Secured Overnight Financing Rate (“SOFR”)/Euro Interbank Offered Rate (“EURiBOR”)/Simple Sterling Overnight Index Average (“SONIA”) plus 102.5 basis points. The Company has the option to request an increase, subject to approval by applicable lenders, in the lenders’ commitments in an aggregate amount of $600 million for a maximum credit facility commitment of $2.6 billion.
The Company guarantees borrowings by its subsidiaries under the credit facility. The Company must also maintain a ratio of net debt as defined in the credit agreement (total debt after swaps less cash and cash equivalents) as of the last day of each fiscal quarter to EBITDA as defined in the credit agreement (earnings before interest, income taxes, depreciation and amortization and other modifications described in the credit agreement) for the last four quarters ended of not more than 4.5:1. If the Company were to complete an acquisition with a purchase price of over $500 million, the Company may elect, subject to notification, to temporarily increase the ratio of net debt to EBITDA to 5.0:1 at the end of the quarter within which the transaction closed and for each of the three immediately following fiscal quarters. At the end of that period, the ratio would revert to 4.5:1. As of September 30, 2023, the Company complied with this covenant as its ratio of net debt to EBITDA, as calculated under the terms of its syndicated credit facility, was 0.7:1.
Foreign exchange contracts
The Company has entered into foreign exchange contracts that are intended to reduce foreign currency risk related to a portion of its indirect investment in LSEG, which is denominated in British pounds sterling. The Company settled the following foreign exchange contracts in conjunction with YPL’s sale of LSEG shares:
● | On September 25, 2023, the Company settled foreign exchange contracts with a notional amount of £502 million ($650 million) for net proceeds of $27 million in conjunction with the sale of 15.0 million of LSEG shares. |
● | On June 7, 2023, the Company settled foreign exchange contracts with a notional amount of £1.2 billion ($1.6 billion) for net proceeds of $28 million in conjunction with the sale of 15.3 million of LSEG shares. |
● | On March 23, 2023, the Company settled foreign exchange contracts with a notional amount of £1.0 billion ($1.3 billion) for net proceeds of $96 million in conjunction with the sale of 13.6 million of LSEG shares. |
As of September 30, 2023, the Company had remaining foreign exchange contracts with a notional amount of £1.2 billion ($1.6 billion) outstanding. In the three and nine months ended September 30, 2023, gains of $67 million and losses of $68 million (2022 – gains of $353 million and $673 million), respectively, were reported within “Other finance income (costs)” in the consolidated income statement (see note 8) due to fluctuations in the U.S. dollar – British pounds sterling exchange rate. These instruments are not related to changes in the LSEG share price. The Company records the foreign exchange contracts at fair value each reporting period. The associated net fair value of these contracts was an asset of $90 million (December 31, 2022 asset of $309 million) and were recorded within other financial assets and liabilities, current or long-term as appropriate, in the consolidated statement of financial position. As of September 30, 2023, the Company’s interest in LSEG shares had a market value of approximately $1.7 billion, based on LSEG’s share price on that day (December 31, 2022 - $6.2 billion).
Fair Value
The fair values of cash and cash equivalents, trade and other receivables, trade payables and accruals approximate their carrying amounts because of the short-term maturity of these instruments. The fair value of long-term debt and related derivative instruments is set forth below.
Debt and Related Derivative Instruments
Carrying Amounts
Amounts recorded in the consolidated statement of financial position are referred to as “carrying amounts”. The carrying amounts of primary debt are reflected in “Current indebtedness” or “Long-term indebtedness” and the carrying amounts of derivative instruments are included in “Other financial assets” and “Other financial liabilities”, current or non-current, in the consolidated statement of financial position, as appropriate.
Fair Value
The fair value of debt is estimated based on either quoted market prices for similar issues or current rates offered to the Company for debt of the same maturity. The fair value of interest rate swaps is estimated based upon discounted cash flows using applicable current market rates and considering non-performance risk.
Page 54
The following is a summary of debt and related derivative instruments that hedged the cash flows of debt:
Carrying Amount
| Fair Value
| |||||||||||||||||||
September 30, 2023
| Primary
| Derivative
| Primary
| Derivative
| ||||||||||||||||
Commercial paper | 638 | - | 640 | - | ||||||||||||||||
C$1,400, 2.239% Notes, due 2025 | 1,034 | (40) | 981 | (40) | ||||||||||||||||
$600, 4.30% Notes, due 2023 | 600 | - | 598 | - | ||||||||||||||||
$450, 3.85% Notes, due 2024(1) | 242 | - | 236 | - | ||||||||||||||||
$500, 3.35% Notes, due 2026 | 498 | - | 471 | - | ||||||||||||||||
$350, 4.50% Notes, due 2043(1) | 116 | - | 82 | - | ||||||||||||||||
$350, 5.65% Notes, due 2043 | 342 | - | 296 | - | ||||||||||||||||
$400, 5.50% Debentures, due 2035 | 396 | - | 368 | - | ||||||||||||||||
$500, 5.85% Debentures, due 2040 | 492 | - | 449 | - | ||||||||||||||||
Total | 4,358 | (40) | 4,121 | (40) | ||||||||||||||||
Current portion | 1,480 | - | ||||||||||||||||||
Long-term portion | 2,878 | (40) |
Carrying Amount
| Fair Value
| |||||||||||||||||||
December 31, 2022 | Primary
| Derivative
| Primary
| Derivative
| ||||||||||||||||
Commercial paper | 1,048 | - | 1,050 | - | ||||||||||||||||
C$1,400, 2.239% Notes, due 2025 | 1,030 | (42) | 972 | (42) | ||||||||||||||||
$600, 4.30% Notes, due 2023 | 599 | - | 594 | - | ||||||||||||||||
$450, 3.85% Notes, due 2024(1) | 241 | - | 235 | - | ||||||||||||||||
$500, 3.35% Notes, due 2026 | 497 | - | 473 | - | ||||||||||||||||
$350, 4.50% Notes, due 2043(1) | 116 | - | 89 | - | ||||||||||||||||
$350, 5.65% Notes, due 2043 | 342 | - | 324 | - | ||||||||||||||||
$400, 5.50% Debentures, due 2035 | 396 | - | 379 | - | ||||||||||||||||
$500, 5.85% Debentures, due 2040 | 492 | - | 482 | - | ||||||||||||||||
Total | 4,761 | (42) | 4,598 | (42) | ||||||||||||||||
Current portion | 1,647 | - | ||||||||||||||||||
Long-term portion | 3,114 | (42) |
(1) | Notes were partially redeemed in October 2018. |
Fair value estimation
The following fair value measurement hierarchy is used for financial instruments that are measured in the consolidated statement of financial position at fair value:
● | Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; |
● | Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and |
● | Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). |
Page 55
The levels used to determine fair value measurements for those instruments carried at fair value in the consolidated statement of financial position are as follows:
September 30, 2023
| Total
| |||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Balance | ||||||||||||
Money market accounts | - | 2,153 | - | 2,153 | ||||||||||||
Other receivables(1) | - | - | 237 | 237 | ||||||||||||
Foreign exchange contracts(2) | - | 107 | - | 107 | ||||||||||||
Financial assets at fair value through earnings | - | 2,260 | 237 | 2,497 | ||||||||||||
Financial assets at fair value through other comprehensive income(3) | 25 | - | 52 | 77 | ||||||||||||
Derivatives used for hedging(4) | - | 40 | - | 40 | ||||||||||||
Total assets | 25 | 2,300 | 289 | 2,614 | ||||||||||||
Liabilities | ||||||||||||||||
Foreign exchange contracts(2) | - | (17) | - | (17) | ||||||||||||
Contingent consideration(5) | - | - | (20) | (20) | ||||||||||||
Financial liabilities at fair value through earnings | - | (17) | (20) | (37) | ||||||||||||
Total liabilities | - | (17) | (20) | (37) |
December 31, 2022
| Total
| |||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Balance | ||||||||||||
Money market accounts | - | 249 | - | 249 | ||||||||||||
Other receivables(1) | - | - | 245 | 245 | ||||||||||||
Foreign exchange contracts(2) | - | 346 | - | 346 | ||||||||||||
Financial assets at fair value through earnings | - | 595 | 245 | 840 | ||||||||||||
Financial assets at fair value through other comprehensive income(3) | 19 | - | 42 | 61 | ||||||||||||
Derivatives used for hedging(4) | - | 42 | - | 42 | ||||||||||||
Total assets | 19 | 637 | 287 | 943 | ||||||||||||
Liabilities | ||||||||||||||||
Foreign exchange contracts(2) | - | (37) | - | (37) | ||||||||||||
Contingent consideration(5) | - | - | (23) | (23) | ||||||||||||
Financial liabilities at fair value through earnings | - | (37) | (23) | (60) | ||||||||||||
Total liabilities | - | (37) | (23) | (60) |
(1) | Receivables under indemnification arrangement (see note 19). |
(2) | Relates to the management of foreign exchange risk on a portion of the Company’s indirect investment in LSEG. |
(3) | Investments in entities over which the Company does not have control, joint control or significant influence. |
(4) | Comprised of fixed-to-fixed cross-currency swaps on indebtedness. |
(5) | Obligations to pay additional consideration for prior acquisitions, based upon performance measures contractually agreed at the time of purchase. |
The receivable from the indemnification arrangement is level 3 in the fair value measurement hierarchy. The decrease in the receivable between December 31, 2022 and September 30, 2023 is primarily due to repayments from LSEG offset by fair value gains based on interest rates associated with the indemnifying party’s credit profile and net foreign exchange gains, which are included within “(Loss) earnings from discontinued operations, net of tax”, in the consolidated income statement.
The Company recognizes transfers into and out of the fair value measurement hierarchy levels at the end of the reporting period in which the event or change in circumstances that caused the transfer occurred. There were no transfers between hierarchy levels for the nine months ended September 30, 2023.
Valuation Techniques
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
● | Quoted market prices or dealer quotes for similar instruments; |
● | The fair value of cross-currency interest rate swaps and foreign exchange contracts are calculated as the present value of the estimated future cash flows based on observable yield curves; |
● | The fair value of other receivables considers estimated future cash flows, current market interest rates and non-performance risk; and |
● | The fair value of contingent consideration is calculated based on estimates of future revenue performance. |
Page 56
Note 13: Other Non-Current Assets
September 30,
| December 31,
| |||||||
2023
| 2022
| |||||||
Net defined benefit plan surpluses | 31 | 48 | ||||||
Cash surrender value of life insurance policies | 346 | 337 | ||||||
Deferred commissions | 96 | 121 | ||||||
Other non-current assets(1) | 108 | 113 | ||||||
Total other non-current assets | 581 | 619 |
(1) | Includes a tax receivable from HM Revenue & Customs (“HMRC”) of $87 million and $94 million as of September 30, 2023 and December 31, 2022, respectively (see note 19). |
Note 14: Payables, Accruals and Provisions
September 30,
| December 31,
| |||||||
2023
| 2022
| |||||||
Trade payables | 149 | 237 | ||||||
Accruals | 656 | 834 | ||||||
Provisions | 85 | 108 | ||||||
Other current liabilities | 35 | 43 | ||||||
Total payables, accruals and provisions | 925 | 1,222 |
Note 15: Provisions and Other Non-Current Liabilities
September 30,
| December 31,
| |||||||
2023
| 2022
| |||||||
Net defined benefit plan obligations | 562 | 526 | ||||||
Deferred compensation and employee incentives | 70 | 72 | ||||||
Provisions | 73 | 86 | ||||||
Other non-current liabilities | 15 | 7 | ||||||
Total provisions and other non-current liabilities | 720 | 691 |
Note 16: Capital
Return of Capital and Share Consolidation
In June 2023, the Company returned approximately $2.0 billion to its shareholders through a return of capital transaction, which was funded from the proceeds of the Company’s dispositions of LSEG shares (see note 9). The transaction consisted of a cash distribution of $4.67 per common share and a share consolidation, or “reverse stock split”, at a ratio of 1 pre-consolidated share for 0.963957 post-consolidated shares. Shareholders who were subject to income tax in a jurisdiction other than Canada were given the opportunity to opt-out of the transaction. The share consolidation was proportional to the cash distribution and the share consolidation ratio was based on the volume weighted-average trading price of the shares on the NYSE for the five-trading day period immediately preceding June 23, 2023, the effective date for the return of capital transaction. Woodbridge, our principal shareholder, participated in this transaction. As a result of the share consolidation, the Company’s outstanding common shares were reduced by 15.8 million common shares.
Share repurchases – Normal Course Issuer Bid (“NCIB”)
The Company buys back shares (and subsequently cancels them) from time to time as part of its capital strategy. On November 1, 2023, the Company announced that it plans to repurchase up to $1.0 billion of its common shares (see note 21). This new buyback program is in addition to the $2.0 billion repurchase program that the Company completed in the three months ended March 31, 2023. Share repurchases are typically executed under a NCIB. Shares will be repurchased for the new buyback program under a renewed NCIB, which was approved by the TSX and effective on November 1, 2023. Under the renewed NCIB up to 10 million common shares may be repurchased between November 3, 2023 and November 2, 2024. The Company may repurchase common shares in open market transactions on the TSX, the NYSE and/or other exchanges and alternative trading systems, if eligible, or by such other means as may be permitted by the TSX and/or NYSE or under applicable law, including private agreement purchases or share purchase program agreement purchases if the Company receives, if applicable, an issuer bid exemption order in the future from applicable securities regulatory authorities in Canada for such purchases. The price that the Company will pay for common shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by the TSX.
Details of share repurchases were as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Share repurchases (millions of U.S. dollars) | - | 504 | 718 | 698 | ||||||||||||
Shares repurchased (number in millions) | - | 4.6 | 6.0 | 6.5 | ||||||||||||
Share repurchases - average price per share in U.S. dollars | - | $ | 109.98 | $ | 120.10 | $ | 106.92 |
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Decisions regarding any future repurchases will depend on certain factors, such as market conditions, share price and other opportunities to invest capital for growth. The Company may elect to suspend or discontinue share repurchases at any time, in accordance with applicable laws. From time to time when the Company does not possess material nonpublic information about itself or its securities, it may enter into a pre-defined plan with its broker to allow for the repurchase of shares at times when the Company ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Any such plans entered into with the Company’s broker will be adopted in accordance with applicable Canadian securities laws and the requirements of Rule 10b5-1 under the U.S. Securities Exchange Act of 1934, as amended.
Dividends
Dividends on common shares are declared in U.S. dollars. In the consolidated statement of cash flow, dividends paid on common shares are shown net of amounts reinvested in the Company under its dividend reinvestment plan (“DRIP”). Due to administrative complexities, the Company temporarily suspended its DRIP for any dividend payable in advance of the return of capital transaction, and paid such dividends in cash. The Company resumed the DRIP after the completion of the return of capital transaction.
Details of dividends declared per common share and dividends paid on common shares are as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Dividends declared per common share | $0.490 | $0.445 | $1.470 | $1.335 | ||||||||||||
Dividends declared | 224 | 215 | 686 | 648 | ||||||||||||
Dividends reinvested | (6) | (7) | (14) | (21) | ||||||||||||
Dividends paid | 218 | 208 | 672 | 627 |
Note 17: Supplemental Cash Flow Information
Details of “Other” in the consolidated statement of cash flow are as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Non-cash employee benefit charges | 31 | 40 | 106 | 126 | ||||||||||||
Net (gains) losses on foreign exchange and derivative financial instruments | (117) | (450) | 76 | (861) | ||||||||||||
Fair value adjustments (see note 5) | (6) | (16) | (1) | (21) | ||||||||||||
Other | 5 | 9 | 9 | 14 | ||||||||||||
(89) | (417) | 188 | (742) |
Details of “Changes in working capital and other items” are as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Trade and other receivables | 18 | 27 | 49 | 64 | ||||||||||||
Prepaid expenses and other current assets | 22 | (17) | 56 | 32 | ||||||||||||
Other financial assets | - | 27 | - | 40 | ||||||||||||
Payables, accruals and provisions | 21 | 51 | (328) | (316) | ||||||||||||
Deferred revenue | (23) | (16) | 29 | 42 | ||||||||||||
Other financial liabilities | - | (27) | - | (40) | ||||||||||||
Income taxes(1) | 222 | 134 | 648 | 170 | ||||||||||||
Other | (3) | 2 | (37) | (27) | ||||||||||||
257 | 181 | 417 | (35) |
(1) | The three and nine months ended September 30, 2023 reflects current tax liabilities that were recorded on the sale of LSEG shares (see note 9), for which the tax payments are included in investing activities. |
Details of income taxes paid are as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
2023
| 2022
| 2023
| 2022
| |||||||||||||
Operating activities - continuing operations | (11) | (49) | (118) | (178) | ||||||||||||
Investing activities - continuing operations | (273) | - | (543) | - | ||||||||||||
Investing activities - discontinued operations(1) | - | - | (1) | (16) | ||||||||||||
Total income taxes paid | (284) | (49) | (662) | (194) |
(1) | Reflects payments made to HMRC (see note 19). |
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In the nine months ended September 30, 2023, the Company received refunds of $36 million related to payments previously made for notices of assessment under the Diverted Profit Tax regime, of which $10 million was received directly from HMRC and $26 million was received from LSEG under an indemnity arrangement. In the nine months ended September 30, 2022, the Company paid $82 million related to notices of assessment under the Diverted Profit Tax regime, of which $28 million was paid directly to HMRC and $54 million was paid to LSEG under an indemnity arrangement. LSEG remitted the payments it received under the indemnity to HMRC on the Company’s behalf. The payments made directly to, and refunds received from HMRC were included as income taxes paid in the consolidated statement of cash flow. The payments made to, and refunds received from LSEG were presented in operating activities from discontinued operations in the consolidated statement of cash flow and were not included as taxes paid. See note 19.
Note 18: Acquisitions
Acquisitions primarily comprise the purchase of all the equity interests of the businesses acquired, which are integrated into existing operations of the Company to broaden its offerings to customers as well as its presence in global markets. The results of acquired businesses are included in the consolidated financial statements from the date of acquisition. Acquisitions also include asset acquisitions and investments in businesses in which the Company does not have a controlling interest.
Acquisition activity
The number of acquisitions completed, and the related consideration were as follows:
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
Number of transactions
| 2023
| 2022
| 2023
| 2022
| ||||||||||||
Businesses acquired | 2 | - | 3 | 2 | ||||||||||||
Investments in businesses(1) | - | 2 | 5 | 5 | ||||||||||||
Asset acquisitions | - | 1 | - | 1 | ||||||||||||
2 | 3 | 8 | 8 |
Three months ended September 30,
| Nine months ended September 30,
| |||||||||||||||
Total consideration
| 2023
| 2022
| 2023
| 2022
| ||||||||||||
Businesses acquired | 707 | - | 1,220 | 153 | ||||||||||||
Less: Cash acquired | (10) | - | (35) | (2) | ||||||||||||
Businesses acquired, net of cash | 697 | - | 1,185 | 151 | ||||||||||||
Investments in businesses(1) | (24) | 9 | 11 | 27 | ||||||||||||
Asset acquisitions(2) | - | 8 | - | 8 | ||||||||||||
Deferred and contingent consideration payments | 5 | 2 | 5 | 4 | ||||||||||||
678 | 19 | 1,201 | 190 |
(1) | Reclassification of initial investment in Casetext, Inc., which was acquired in August 2023, and included within businesses acquired, net of cash, amounts above. |
(2) | The three and nine months ended September 30, 2022 includes acquisitions of intangible assets of which $8 million was paid in cash and $5 million was recorded as a financial liability. |
The following provides a brief description of acquisitions completed in the nine months ended September 30, 2023 and 2022:
Date | Company | Acquiring Segments | Description | |||
August 2023 | Casetext, Inc. | Legal Professionals | A business that uses artificial intelligence and machine learning to enable legal professionals to work more efficiently. | |||
July 2023 | Imagen Ltd | Reuters News | A media asset management company. | |||
January 2023 | SurePrep LLC | Corporates and Tax & Accounting Professionals | A provider of tax automation software and services. | |||
April 2022 | ThoughtTrace | Corporates | A business that uses artificial intelligence and machine learning to read, organize and manage document workflows. |
Purchase price allocation
Purchase price allocations related to certain acquisitions may be subject to adjustment pending completion of final valuations. The Company’s consolidated statement of financial position as of December 31, 2022 has been adjusted to reflect the completion of a purchase price allocation related to a 2022 acquisition. This adjustment increased computer software and decreased goodwill by $13 million, respectively.
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The details of net assets acquired were as follows:
September 30,
| December 31,
| |||||||||||||||||||
2023
| 2022
| |||||||||||||||||||
Sureprep LLC | Casetext, Inc. | Other | Total | Total | ||||||||||||||||
Cash and cash equivalents | 25 | 8 | 2 | 35 | 2 | |||||||||||||||
Trade receivables | 8 | 1 | 2 | 11 | 3 | |||||||||||||||
Prepaid expenses and other current assets | 3 | 3 | - | 6 | 1 | |||||||||||||||
Current assets | 36 | 12 | 4 | 52 | 6 | |||||||||||||||
Property and equipment | 2 | - | - | 2 | - | |||||||||||||||
Computer software | 180 | 192 | 7 | 379 | 74 | |||||||||||||||
Other identifiable intangible assets | 13 | 8 | 6 | 27 | 2 | |||||||||||||||
Other non-current assets | 1 | - | - | 1 | - | |||||||||||||||
Total assets | 232 | 212 | 17 | 461 | 82 | |||||||||||||||
Payables and accruals | (6) | (2) | (5) | (13) | (1) | |||||||||||||||
Deferred revenue | (47) | (5) | (2) | (54) | (4) | |||||||||||||||
Other financial liabilities | - | - | (2) | (2) | - | |||||||||||||||
Current liabilities | (53) | (7) | (9) | (69) | (5) | |||||||||||||||
Provisions and other non-current liabilities | (1) | - | - | (1) | (18) | |||||||||||||||
Deferred tax | (9) | (37) | (3) | (49) | (10) | |||||||||||||||
Total liabilities | (63) | (44) | (12) | (119) | (33) | |||||||||||||||
Net assets acquired | 169 | 168 | 5 | 342 | 49 | |||||||||||||||
Goodwill | 344 | 490 | 44 | 878 | 104 | |||||||||||||||
Total | 513 | 658 | 49 | 1,220 | 153 | |||||||||||||||
Businesses acquired, net of cash | 488 | 650 | 47 | 1,185 | 151 |
The excess of the purchase price over the net assets acquired was recorded as goodwill and reflects synergies and the value of the acquired workforce. Relative to the acquisitions completed in 2023 and 2022, the majority of goodwill is not expected to be deductible for tax purposes.
Other
The revenues and operating profit of acquired businesses were not material to the Company’s results of operations.
Note 19: Contingencies, Commitments and Guarantees
Lawsuits and legal claims
The Company is engaged in various legal proceedings, claims, audits and investigations that have arisen in the ordinary course of business. These matters include, but are not limited to, employment matters, commercial matters, defamation claims and intellectual property infringement claims. The outcome of all of the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial condition taken as a whole.
Uncertain tax positions
The Company is subject to taxation in numerous jurisdictions and is routinely under audit by many different taxing authorities in the ordinary course of business. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain, as taxing authorities may challenge some of the Company’s positions and propose adjustments or changes to its tax filings.
As a result, the Company maintains provisions for uncertain tax positions that it believes appropriately reflect its risk. These provisions are made using the Company’s best estimates of the amount expected to be paid based on a qualitative assessment of all relevant factors. When appropriate, the Company performs an expected value calculation to determine its provisions. The Company reviews the adequacy of these provisions at the end of each reporting period and adjusts them based on changing facts and circumstances. Due to the uncertainty associated with tax audits, it is possible that at some future date, liabilities resulting from such audits or related litigation could vary significantly from the Company’s provisions. However, based on currently enacted legislation, information currently known by the Company and after consultation with outside tax advisors, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial condition taken as a whole.
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Through September 30, 2023, the Company paid $430 million of tax as required under notices of assessment issued by the U.K. tax authority, HM Revenue & Customs (“HMRC”), under the Diverted Profits Tax (“DPT”) regime that collectively related to the 2015, 2016, 2017 and 2018 taxation years of certain of its current and former U.K. affiliates. HMRC is conducting an audit of the 2019 and 2020 taxation years and, based on recent discussions, management believes it is reasonably possible that HMRC may issue similar notices in the next three months for another taxation year, which could be significant. As the Company does not believe these current and former U.K. affiliates fall within the scope of the DPT regime, it will continue contesting these assessments through all available administrative and judicial remedies and intends to vigorously defend its position. As the assessments largely relate to businesses that the Company has sold, the majority are subject to indemnity arrangements under which the Company has been required to pay additional taxes to HMRC or the indemnity counterparty.
The Canadian tax authority, the Canada Revenue Agency (“CRA”), is conducting an audit of the 2016 to 2019 taxation years. Based on recent correspondence with CRA, management believes it is reasonably possible that CRA may issue notices of assessment related to certain transfer pricing matters and the disposition of a business and the Company may be required to pay a portion of such assessments, which could be significant. As the Company believes that CRA’s positions are without merit, it will contest any such assessments through all available administrative and judicial remedies and the Company intends to vigorously defend its position.
Because the Company believes that its position is supported by the weight of law, it does not believe that the resolution of these matters will have a material adverse effect on its financial condition taken as a whole. Payments made by the Company are not a reflection of its view on the merits of the case. As the Company expects to receive refunds of substantially all of the aggregate of amounts paid pursuant to these notices of assessment, it expects to continue recording substantially all of these payments as non-current receivables from HMRC, the indemnity counterparty or CRA on its financial statements. The Company expects that its existing sources of liquidity will be sufficient to fund any future required payments.
Guarantees
The Company has an investment in 3XSQ Associates, an entity jointly owned by a subsidiary of the Company and Rudin Times Square Associates LLC (“Rudin”), that owns and operates the 3 Times Square office building (“the building”) in New York, New York. In June 2022, 3XSQ Associates obtained a $415 million, 3-year term loan facility to refinance existing debt, fund the building’s redevelopment, and cover interest and operating costs during the redevelopment period. The building is pledged as loan collateral. Thomson Reuters and Rudin each guarantee 50% of (i) certain principal loan amounts and (ii) interest and operating costs. Thomson Reuters and Rudin also jointly and severally guarantee (i) completion of commenced works and (ii) lender losses arising from disallowed acts, environmental or otherwise. To minimize economic exposure to 50% for the joint and several obligations, Thomson Reuters and a parent entity of Rudin entered into a cross-indemnification arrangement. The Company believes the value of the building is expected to be sufficient to cover obligations that could arise from the guarantees. The guarantees do not impact the Company’s ability to borrow funds under its $2.0 billion syndicated credit facility or the related covenant calculation.
Note 20: Related Party Transactions
As of September 30, 2023, the Company’s principal shareholder, Woodbridge, beneficially owned approximately 69% of the Company’s common shares.
Transaction with Woodbridge
In March 2023, the Company sold a Canadian wholly owned subsidiary to a company affiliated with Woodbridge for $23 million. The subsidiary’s assets consisted of accumulated tax losses that management did not expect to utilize against future taxable income prior to their expiry based on currently enacted Canadian tax law. As such, no tax benefit for the losses had been recognized in the consolidated financial statements. Under Canadian law, certain losses may only be transferred to related companies, such as those affiliated with Woodbridge. A gain of $23 million was recorded within “Other operating (losses) gains, net” within the consolidated income statement. In connection with this transaction, the board of directors’ Corporate Governance Committee obtained an independent fairness opinion. The Company utilized the independent fairness opinion to determine that the negotiated price between the Company and Woodbridge was reasonable. After reviewing the matter, the Corporate Governance Committee approved the transaction. Directors who were not considered independent because of their positions with Woodbridge refrained from deliberating and voting on the matter at the committee meeting.
Transactions with YPL
In the nine months ended September 30, 2023, the Company received $5.2 billion of dividends from YPL primarily related to the sale of LSEG shares indirectly owned by the Company. See note 9 for further details about these transactions.
Transactions with Elite
In June 2023, the Company sold a majority interest in its Elite business to TPG and retained a 19.9% minority interest with board representation. To facilitate the separation, the Company agreed to provide certain operational services to Elite, including technology and administrative services, for a specified period. From the date of the sale through September 30, 2023, the Company recorded $5 million as contra-expense related to these transactions.
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As of September 30, 2023, the consolidated statement of financial position included a receivable from Elite of $33 million and a payable to Elite of $13 million related to all transactions between the two companies.
Except for the above transactions, there were no new significant related party transactions during the first nine months of 2023. Refer to “Related party transactions” disclosed in note 31 of the Company’s consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s 2022 annual report, for information regarding related party transactions.
Note 21: Subsequent Events
Share repurchases
On November 1, 2023, the Company announced the renewal of its normal course issuer bid pursuant to the Company’s plan to repurchase up to $1.0 billion of its common shares. The completion of this program will depend on certain factors such as market conditions, share price and other opportunities to invest capital for growth. See note 16.
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