ANNUAL REPORT 2012 MARCH 11, 2013 Information in this annual report is provided as of March 1, 2013, unless otherwise indicated. Certain statements in this annual report are forward-looking. These forward-looking statements are based on certain assumptions and reflect our current expectations. 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. Some of the factors that could cause actual results to differ materially from current expectations are discussed in the “Risk Factors” section of this annual report as well as in materials that we from time to time file with, or furnish to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of the date of this annual report. Except as may be required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements. The following terms in this annual report have the following meanings, unless otherwise indicated: “Thomson Reuters,” “we,” “us” and “our” each refers to Thomson Reuters Corporation and its consolidated subsidiaries, unless the context otherwise requires; “Woodbridge” refers to The Woodbridge Company Limited and other companies affiliated with it; and “$,” “US$” or “dollars” are to U.S. dollars. For information regarding our disclosure requirements under applicable Canadian and U.S. laws and regulations, please see the “Cross Reference Tables” section of this annual report. Information contained on our website or any other websites identified in this annual report is not part of this annual report. All website addresses listed in this annual report are intended to be inactive, textual references only. The Thomson Reuters logo and our other trademarks, trade names and service names mentioned in this annual report are the property of Thomson Reuters. TABLE OF CONTENTS 2 Business 17 Risk Factors 24 Management’s Discussion and Analysis 78 Consolidated Financial Statements 134 Executive Officers and Directors 142 Additional Information 151 Cross Reference Tables Thomson Reuters Annual Report 2012 1 BUSINESS OVERVIEW We are the leading source of intelligent information for the world’s businesses and professionals, providing customers with competitive advantage. Intelligent information is a unique synthesis of human intelligence, industry expertise and innovative technology that provides decision-makers with the knowledge to act, enabling them to make better decisions faster. Through approximately 60,000 employees across more than 100 countries, we deliver this must-have insight to the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world’s most trusted news organization. Thomson Reuters shares are listed on the Toronto Stock Exchange and New York Stock Exchange (symbol: TRI) and our headquarters are located at 3 Times Square, New York, New York 10036. Our website is www.thomsonreuters.com. We are organized in four business units: Financial & Risk, a leading provider of critical news, information and analytics, enabling transactions and bringing together financial communities. Financial & Risk also provides leading regulatory and operational risk management solutions; Legal, a leading provider of critical online and print information, decision support tools, software and services to support legal, investigation, business and government professionals around the world; Tax & Accounting, a leading provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government; and • Intellectual Property & Science, a leading provider of comprehensive intellectual property and scientific information, decision support tools and services that enable governments, academia, publishers, corporations and law firms to discover, develop and deliver innovations. We also have a Global Growth & Operations organization which works across our business units to combine our global capabilities and to expand our local presence and development in countries and regions where we believe the greatest growth opportunities exist. At our Corporate center, we manage Reuters, the world's largest international news agency, which is a leading provider of real-time, high-impact, multimedia news and information services to newspapers, television and cable networks, radio stations and websites around the globe. BUSINESS MODEL AND KEY OPERATING CHARACTERISTICS We derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Some of our business units, in particular Legal and Intellectual Property & Science, are evolving towards becoming greater providers of solutions to our customers as part of an ongoing transformation from focusing primarily on providing data and information. These solutions often are designed to integrate our core information with software and workflow tools. We believe that transitioning a greater part of our business to solutions will help us increase customer value, create growth, diversify business mix and differentiate us from competitors. The table below describes some of our key operating characteristics. Industry leader • #1 or #2 in most of the market segments that we serve • Deep and broad industry knowledge • Products and services tailored for professionals Balanced and diversified • Four distinct core customer groups • Geographical diversity – our 2012 revenues were 57% from the Americas, 31% from Europe, the Middle East and Africa (EMEA) and 12% from Asia • Our largest single customer accounted for approximately 1% of our 2012 revenues • Technology and operating platforms are built to address the global marketplace Thomson Reuters Annual Report 2012 2 Attractive business model • 86% of our 2012 revenues were recurring • 91% of our 2012 revenues were from information delivered electronically, software and services • Strong & consistent cash generation capabilities 2012 PERFORMANCE In 2012, we reported the following results:* 2012 Change from 2011 (millions of US dollars, except EPS and margins) Revenues from ongoing businesses $ 12,899 3% Adjusted EBITDA $3,529 6% Adjusted EBITDA margin 27.4% 90 basis points Adjusted EBITDA less capital $2,567 9% expenditures Adjusted EBITDA less capital 19.9% 110 basis points expenditures margin Underlying operating profit $2,405 -4% Underlying operating profit margin 18.6% -130 basis points Adjusted earnings per share (EPS) $2.12 8% Free cash flow $ 1,737 8% Free cash flow from ongoing businesses $1,667 20% * Non-International Financial Reporting Standards (IFRS) measures, which are defined and reconciled to the most directly comparable IFRS measures in the “Management’s Discussion and Analysis” section of this annual report. Changes from 2011 are before currency for all results except for adjusted EPS and free cash flow. Despite an economic environment that proved to be more challenging than we had anticipated, we achieved our 2012 financial targets for revenues, profit and free cash flow, and we also made significant progress executing our four key priorities for the year. 2012 Priority 2012 Progress Restarting growth in our Financial • We simplified the business and improved product quality and customer & Risk business service • Customer satisfaction ratings and retention rates are improving • We executed on the development and rollout of our foundational future platforms, Thomson Reuters Eikon and Thomson Reuters Elektron • We have a robust product pipeline Investing in higher growing market • We continued to shift our investment towards what we believe are segments and adjacent market higher growth opportunities. We strengthened our positions in key segments market segments through the following acquisitions: o FXall – the leading independent global provider of electronic foreign exchange trading solutions to corporations and asset managers within our Financial & Risk segment o MarkMonitor – a provider of online brand protection within our Intellectual Property & Science segment o Practical Law Company (PLC) – a leading provider of legal know-how, current awareness and workflow tools within our Legal segment Thomson Reuters Annual Report 2012 3 2012 Priority 2012 Progress Utilizing the strengths and • We continue to expand our position at the intersection of regulation advantages of our global and finance businesses • Our Governance, Risk & Compliance (GRC) business reported organic revenue growth of 17%. We believe that we have an opportunity to significantly expand our GRC business and we are continuing to invest in it Accelerating development and • Our Global Growth & Operations (GGO) business reported 19% revenue expanding our position in faster growth (10% organic) growing geographic areas around • We are working to expand our position in faster-growing geographic the world areas 2013 PRIORITIES Our key priorities for 2013 are to continue: • Focusing on execution, product quality and customer satisfaction; • Driving growth through new product development, further expansion into fast-growing geographies and continuing the transformation to software and workflow solutions; and • Engaging a talented and diverse