ANNUAL REPORT 2013 MARCH 12, 2014 Information in this annual report is provided as of March 5, 2014, 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 16 Risk Factors 24 Management’s Discussion and Analysis 80 Consolidated Financial Statements 145 Executive Officers and Directors 153 Additional Information 162 Cross Reference Tables Thomson Reuters Annual Report 2013 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. 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. We also operate Reuters, 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. Our businesses provide solutions, software and workflow tools which integrate our core data and information. We are in the process of transforming Thomson Reuters from a portfolio of businesses into an enterprise model. We believe that better leveraging of the solid foundation of assets that we have built and acquired will help us better serve our customers, drive organic growth and innovation and result in greater efficiencies from our scale. 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 2013 revenues were 60% from the Americas, 29% from Europe, the Middle East and Africa (EMEA) and 11% from Asia • Our largest single customer accounted for approximately 1% of our 2013 revenues • Technology and operating platforms are built to address the global marketplace Attractive business • 87% of our 2013 revenues were recurring model • 91% of our 2013 revenues were from information delivered electronically, software and services • Strong and consistent cash generation capabilities Thomson Reuters Annual Report 2013 2 2013 PERFORMANCE We met our 2013 Outlook, despite what continues to be a challenging environment in our two largest market segments – legal and financial. Below are highlights from our full year 2013 results. Basis for 2013 Outlook: Excluding Q4 Charges and (millions of U.S. dollars, except per share amounts) Pension Contribution3 Non-IFRS Financial Measures1 20132 2012 Change 2013 Change Revenues from ongoing businesses $12,543 $12,443 1% $12,543 1% Revenue growth before currency 2% 2% Adjusted EBITDA $3,070 $3,310 -7% $3,330 1% Adjusted EBITDA margin 24.5% 26.6% -210bp 26.5% -10bp Underlying operating profit $1,881 $2,205 -15% $2,156 -2% Underlying operating profit margin 15.0% 17.7% -270bp 17.2% -50bp Adjusted earnings per share (EPS) $1.54 $1.89 -19% $1.83 -3% Free cash flow $1,163 $1,737 -33% $1,690 -3% Free cash flow from ongoing businesses $1,098 $1,516 -28% $1,625 7% In 2013, we made significant progress on a number of fronts. • Financial & Risk continued its turnaround and improved its execution capabilities across product development, platform consolidation, back-office systems integration and product deployment. The business successfully ended the year with approximately 122,000 installed Eikon terminals (nearly triple the number at the end of 2012). We shut down four legacy platforms, including Bridge. Financial & Risk’s net sales performance, while still negative for the full year, improved from 2012. Financial & Risk also improved customer satisfaction metrics. • Legal continued its evolution to become more of a solutions business and continues to help legal professionals improve productivity, manage their businesses more efficiently and grow more quickly. Legal acquired Practical Law, which strengthened our position in the legal market segment and has greatly increased our efforts to transform our global legal research offering into a comprehensive “know how” solution. • Tax & Accounting delivered a strong performance in 2013 and grew revenues 9% (5% organically). Tax & Accounting’s global market segments continue to expand. • Intellectual Property & Science also had a strong performance in 2013 and grew revenues 11% (4% organically), driven by the launch of the unified Cortellis platform in Life Sciences and by the MarkMonitor acquisition in IP Solutions. Overall, our “growth” businesses, which represented just over 50% of our total revenues in 2013, grew 9% in the aggregate. We define our growth businesses as everything other than financial desktops and our U.S. core legal research and print businesses. However, that strong performance was offset by challenging market conditions. _________________________ (1) These and other non-International Financial Reporting Standards (IFRS) financial measures are defined and reconciled to the most directly comparable IFRS measures in the Management’s Discussion and Analysis section of this annual report. Additional information is provided in Appendix B of Management’s Discussion and Analysis. (2) In 2013, adjusted EBITDA and underlying operating profit were impacted by $357 million and $372 million of charges, respectively. Our Outlook communicated in February 2013 included approximately $100 million of these charges. (3) Results provided on this basis are consistent with our 2013 Outlook. Thomson Reuters Annual Report 2013 3 2014 PRIORITIES Our key priorities for 2014 are to: • transform from a portfolio company to an enterprise model and realize more benefits from simplification