Thomson Reuters

Linking Strategic Planning with Operational Planning

Dan SuretteDirector of FinanceFebruary 24th, 2012

Special Note

Safe Harbor / Forward-Looking Statements • This presentation contains forward-looking statements, including those about Thomson

Reuters outlook and prospects. Forward-looking statements are those which are not historical facts. These and other statements that relate to future results and events are based on Thomson Reuters current expectations.

• Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined in our disclosure filings and materials, which you can find on www.thomsonreuters.com. Please consult these documents for a more complete understanding of these risks and uncertainties. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Our outlook is provided for the purpose of providing information about current expectations for 2012. This information may not be appropriate for other purposes.  

2

Our Business

333

We are the world's leading source of intelligent information for businesses and professionals, combining industry expertise with innovative technology to deliver critical information to leading decision makers

TAX & ACCOUNTING: $1.1B

Checkpoint is used by all of the top 100 U.S. accounting firms

HEALTHCARE & SCIENCE: $0.9B

Informing healthcare decisions affecting over 150 million lives

Used by over 20 million researchers worldwide

MEDIA: $0.3B

Reuters news and information reaches one billion people daily

FINANCIAL: $7.1B

Provides financial applications for over half a million professionals globally

LEGAL: $3.7B

Westlaw is relied upon by 99% of the National Law Journal's top 250 U.S. law firms

MARKETS DIVISION: $7.4B PROFESSIONAL DIVISION: $5.6B

Note: Represents legacy structure, as of January 1, 2012 Thomson Reuters eliminated its Professional and Markets Divisions and reorganized into four reportable segments: Legal, Tax & Accounting, IP & Science and Financial & Risk

Competitive Advantage

444

Industry Leader

True Global Presence

Combining deep employee expertise across our verticals with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world's most trusted news organization

For Professionals, By Professionals

Attractive Business Model

• Over $10 billion in revenue• The world’s leading source of intelligent information for businesses and

professionals

• Serving customers through offices in more than 300 cities in more than 100 countries

• Revenue stream: 59% Americas, 30% EMEA, 11% Asia

• Subscription based• 86% of portfolio recurring revenue• Strong & consistent cash generation capabilities

Key Financial Principles

555

Drives shareholder value by providing:• Optimal financial flexibility to

support business/strategic objectives

• Ability to “stretch” if/when requiredfor the right opportunities

Drives shareholder value by:• Deploying capital towards most

attractive opportunities• Exiting underperforming and/or non-

strategic businesses• Capital allocation linked to business

strategy & operating performance

• Portfolio Optimization• Disciplined Acquisition

process • Disciplined Capex

management process

Drives shareholder value through:• Attractive and growing return of capital

to shareholders (dividends and stock buybacks) balanced with re-investment in the business (Capex & acquisitions)

• Target strong growth• Capital intensity• W/C management

#2 Focus on

free cash flow

• Target Net Debt / EBITDA of 2.0x

• Access to capital markets• Balance investments and

returns

#3 Support business objectives with a

robust capital strategy

#1 Invest to drive

long-term growth & returns

Business Model

666

• Strong financial profiles• Mission critical information• Many professionals, highly

distributed• Complex or risk-oriented

• Deep domain expertise• Managing structured and

unstructured data• Applying user context• World-class technology

leadership• Global / large communities

Attractive professional information market segments… …where we can deploy our core competencies

7

STEP 2: Measure our Performance

STEP 3: Take Action

For each segment we participate in, we ask:

• Is the sector large & growing?

• What is the short- and long-term outlook for growth?

• Are there benefits or efficiencies of scale?

• Do we have any natural advantages that position us for success?

How do we stack up?

• How does our financial performance compare to our competitors’?

• Are we gaining or losing market share?

• Are our margins best in class, average or below average?

• What is our trajectory?

Proactively shift the business

• Invest to add the right capabilities (buy or build)

• Transition away from or evolve businesses that no longer have the right characteristics

• Example: Transition from print to electronic

STEP 1: Evaluate our Market Segments

Putting Growth & Returns into Practice

8

Disciplined Approach

• Deliver a disciplined review of the growth & returns performance for share in each segments

• Track the size and estimated future growth rates for the market segments we participate in

• Identification of segments for further study

Revenue Growth

Margin

High

Low

HighLow

Business Growth vs Market GrowthExample: for discussion purposes only

9

$X.XBAvg. Revenues

+1% Below Market Growth %

+1% Above Market Growth %

Key:

Market Growth Line

“Above Market Growth”

“Below Market Growth”

Segment Revenue Growth % is:

Market Growth % CAGR

Within 1% of Market Growth %

Org

an

ic R

ev

en

ue

Gro

wth

% C

AG

R

0%

5%

10%

15%

0% 5% 10% 15%

10

Past Process

Strategic Plan Operating Plan

July• Developed by Strategy Groups

and presented to the Board• Analyze markets where we

compete• Develop view of Thomson

Reuters in terms of markets• Size in terms of relative market

share• Growth vs market• Internal view of company

Growth and profits in certain markets

December• Developed by Finance Groups

and delivered and delivered to the Board

• Aggregate financials across the company

• Develop view of the company in terms of management reporting

• Growth rates determined as reasonable based primarily off of past performance

• Analysis around growth, revenue flow through and FCF conversion

Str

ateg

y

Fin

ance

11

Strategic Planning

Westlaw Online

Legal Briefs

Large Law

Small Law

Corp Law

Large Law

Small Law

Corp Law

Market Segments Operating Segments

12

Proposed Changes

Key Shortcoming Proposed Solution

• Strategic rollup of businesses based on Market segments

• No way to translate results in market segments to results in operating segments

• No way to use market growth as key indicator of business growth

• Align Operating segments with Market segments

• Or at least a way to reconcile between the two

13

Revised Process

Strategic Plan Operating Plan

• Partners with Finance in development of Strategic and Operating plans• Agrees with Finance on agreed upon market/operating segments where we have revenues• Provides short term and long term market growth in agreed upon segments• Utilizes business growth as provided by Finance• More grounded and robust analysis as market share revenues tie to Business forecasts

• Partners with Strategy in the development of Operating and Strategic plans• Agrees with Strategy on agreed upon operating/market segments where we have revenues• Provides short term and long term business growth in agreed upon segments• Utilizes market growth as provided by Strategy• More grounded and robust analysis as market growth projections are a leading indicator for

Business Growth

Strategy

Finance

July December

14

Systems SupportExample: for discussion purposes only

2010 2011 2012 2013 2014 2015 2011 2012 LT CAGR 2010 2011 2012 2011 2012 LT GrowthLearning Division

k-12 1,000 1,050 1,113 1,180 1,262 1,351 5% 6% 6% 5,000 5,250 5,565 5% 6% 5%College 500 520 541 562 585 608 4% 4% 4% 5,000 5,150 5,305 3% 3% 4%Post Grad 400 428 467 513 564 621 7% 9% 10% 6,000 6,300 6,678 5% 6% 7%Continued Ed 400 424 437 445 450 454 6% 3% 2% 8,000 8,320 8,653 4% 4% 4%Testing Services 300 315 334 354 375 398 5% 6% 6% 1,200 1,260 1,336 5% 6% 8%

Revenues Organic Growth Total Market Market Growth

Business Data Market Data

K-12 SBU

Rest of Market

-

1,000

2,000

3,000

4,000

5,000

6,000

2012

Market Growth % CAGR

Org

anic

Rev

enu

e G

row

th %

CA

GR

0%

5%

10%

15%

0% 5% 10% 15%

15

Execution on Strategic Planning

Strategic Plan

InvestmentsOperating Plan

• High growth sectors• Investment needs

• Acquisition assessment• Large capex projects

• Consistency in Targets• Market Growth –

leading indicator

16

Insights

• Market growth is a leading indicator for operating segments long term

• Short term variability depending on health of business vs market• Can highlight consistent underperformance or overperformance

• Large investments are not always in the highest growth businesses• Portfolio investing is more about largest returns• Leveraging large profitable businesses (low growth) can have

larger rewards than investing in growth

• Forcing businesses to reconcile between market segments and operating segments provides increased visibility

• Reduces flexibility around ‘soft’ targets• Increased communication/visibility to hedges