Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters Second Quarter Earnings Conference. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder today's call is being recorded. A replay information will be given out at the conclusion of the conference. Hosting today's call we have Senior Vice President, Investor Relations Frank Golden. Please go ahead, sir.

Thank you very much. Good morning and thanks for joining us as we report our financial results for the second quarter of the year. Our CEO Jim Smith will start today's discussion followed by Stephane Bello, our CFO. Following their presentations we will open the call for questions. We would appreciate it if you would limit yourself to one question each in order to enable us to get to as many questions as possible. Several items to point out before we get started this morning. First, a reminder that throughout today's presentation when we compare performance period-on-period we look at revenue growth rates before currency as we believe this provides the best basis to measure the underlying performance of the business. Second, reminder that we entered into a definitive agreement to sell our IP & Science business. So its results are classified as discontinued operations and are not in either our reported results nor in our 2016 guidance, with one exception and that one exception is free cash flow, which is in both our reported results and our 2016 guidance and that has been our historic practice. One additional item, this presentation also contains disclosures of certain non-IFRS financial measures. As you may be aware the SEC recently issued guidance regarding IFRS and GAAP measures including a review of the calculation of the measures themselves. Now based on this guidance we've reviewed the presentation of our non-IFRS measures and you'll notice in today's release that we've made several changes in its format and provide a more balanced explanation of our IFRS measures. As part of this process we also reviewed the adjustments we've traditionally and consistently made to our adjusted earnings and adjusted EPS calculations. I want to draw your attention to a prospective change in the way we adjust for two tax-related items that we will be making beginning when we report the third quarter in October. We have not made any changes to our second quarter results. In aggregate these changes result in an $0.08 decrease in adjusted EPS for 2015 compared to our current calculations. Importantly, these changes have no impact on our previously reported revenue, adjusted EBITDA, underlying profit and free cash flow performance, nor on our 2016 guidance for those measures and that also includes the tax rate guidance that we've provided for 2016. Now in connection with today's earnings release we have posted on our IR website a reconciliation of our adjusted EPS performance for the past three years, reflecting the difference between the current and the new definitions. Finally, let me remind you that today's presentation contains forward-looking statements. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You can access these documents on our website or by contacting our investor relations department. Now to the results for the quarter. And I'll turn it over to Jim Smith. Jim?

Thank you, Frank. And thanks to those of you on the call for joining us. The turbulent market conditions I noted in the first quarter gave way to a cautious and uncertain world leading up to the Brexit vote in June. Against this challenging backdrop for many of our largest customers, especially the big European banks, our own results for the quarter were slightly below the expectations we had at the beginning of the year. However, we routinely remind you not to read too much into any individual quarter. This reporting period is a case in point. And despite being slightly under our expectations we have seen nothing to change our conviction about our long-term prospects nor to alter our full-year outlook. In fact, several unrelated items had a disproportionate impact on the quarter's results. First, the expected decline in recoveries revenues and commercial pricing adjustments in our Financial business were compounded by macroeconomic headwinds hitting large European banks and several emerging markets. Second, Legal saw a slowdown in transaction-related revenues and faced a very difficult prior year comparison which saw transaction revenues increase by 10%. And third, our Tax & Accounting business was impacted disproportionately in the quarter by some growing pains in its more volatile government segment. Despite these developments, our core business showed continued resilience and the headline numbers mask some encouraging progress in the quarter. For example, in our Financial & Risk business net sales were positive for the ninth consecutive quarter. Our risk offerings had their strongest sales quarter ever and risk revenues grew by 9% and our fees business grew 6%. Tax & Accounting's growth, excluding government, was 4%. In our Legal business subscription revenues, which make up about 75% of the total revenue, also grew 4%. Furthermore, we saw improved gross sales performance…

Thank you, Jim, and good morning or good afternoon to all of you. As I did on the first quarter call, I would like to cover a few housekeeping items before discussing the results for our second quarter. First, as Frank mentioned, when discussing our performance against the prior year, I will be comparing year-on-year results excluding IP & Science which is classified as discontinued operations. This will also hold for all metrics except free cash flow which includes IP & Science and is not restated in line with the way we have always treated divestitures in the past. Second, currency had a much smaller impact on our results than last year. However, as always I will talk to revenue growth before currency. And finally, given our focus on driving organic revenue growth and delivering simplification, our recent acquisition activity has been far less significant than in prior years, meaning that growth rates discussed on this call are organic. So on to our results. On a constant currency basis our second quarter revenues were unchanged compared to the prior year. Financial was down 1% while our Legal and Tax & Accounting businesses each grew 1% during the quarter. Adjusted EBITDA was down 2% with the margin down 20 basis points to 27.3%. Currency had a 40 basis points favorable impact on the margin. Operating profit was down 1% with the margin at 18.2% flat to the prior year, and currency also had a 30 basis points favorable impact on that margin. As Jim mentioned, there are a few specific items that had a dampening impact on the second-quarter results. And I will discuss these items in more detail as I review the performance of our individual business segments. So let me start with our Legal business. Demand for legal services…

Thank you, Stephane. So in conclusion we are reaffirming our 2016 outlook given the visibility we have into the second half of the year. Our ability to deliver the bottom line in this quarter in spite of the challenges on the top line speaks to the underlying quality of our business. Accelerating organic revenue growth remains one of our key priorities. And we continue to prioritize efforts towards the big levers that we believe we can pull to accelerate our journey to long-term sustainable revenue and profit growth. As I said a moment ago, the global economic uncertainty following Brexit could create some short-term headwinds. Therefore, we are in the process of reviewing whether we can accelerate some of our transformation in this. As we start our 2017 planning process will further sharpen our pencils to ensure that we deliver on our near-term commitments while at the same time continuing to invest and build for our long-term growth. Now let me turn it back to Frank so that we can take your questions.

Thanks for much, Jim, and that concludes our formal remarks. And now we'd be happy to take questions. So, operator, if we could have the first question please.

Thank you. [Operator Instructions] Okay. First question from the line of Paul Steep [Scotia Capital]. Please go ahead.

Morning. Jim, just on Brexit obviously there was an impact on volume there. Are there opportunities, though with Brexit I guess on the F&R side in terms of you stepping in and providing a new series of systems that your global clients and even regional clients have need in that environment and what's your team saying and what's been the feedback so far from those clients?

I think it's far too early to make bold predictions about where Brexit is likely to lead because the negotiations haven't even begun yet as to what the landscape will look like post-separation. However, it is fair to say that we are one of the few companies in the world that could benefit from both a more complex regulatory environment that one can imagine might follow Brexit and also from the continued cost pressures that our largest customers are facing. So we do believe there's opportunity. A big part of our value proposition over the past few years has been our ability to help our customers reduce their overall cost base by taking on some tasks that they used to perform themselves. Those talks are ongoing and I suspect that they will gain even more importance and strategic direction at the very top of those banks in light of the continued macroeconomic pressure.

Great. Just one follow-up as well for I guess either over you. Stephane outlined the use of proceeds from IP & Science. There will be some capital left over out of that. How are you prioritizing the balance between a desire to go back and do M&A to add strategically to the portfolio versus internal organic investment to accelerate maybe the next generation of platform, be it in Legal or in Tax & Accounting or maybe even in a segment of F&R? Thanks.

I will give you a high-level answer and Stephane can certainly add to it or correct me if I give the wrong impression. Our strategy on focusing on organic growth is not impacted in any way by the fact that we're going to have these extra proceeds for a period of time. We are focused on driving organic growth. We are focused on knitting together a scalable global platform and our appetite for M&A has never been limited by how much cash we had in our back pockets. And so we will make a strategic decision on what the best way to deploy that capital is after we go back and discuss it with our board at the end of this year as we always do and set out a capital plan for the year. So it really doesn't change our perspective at all. We still see lots of opportunity to continue to build. And as we have done in the past we've done a lot less acquisition activity over the past few years. But we've always been mindful and had our eye on those things that could make a difference. And if we have an opportunity to make a meaningful acquisition that can help us we will consider it, but it won't be impacted by the amount of cash that we have on hand.

And next question is from the line of Sara Gubins [Bank of America Merrill Lynch]. Please go ahead.

Hi, this is David Chu for Sara Gubins. Thanks for taking the question. So can you just discuss net sales trends? I mean it seems like revenue for Asia and EMEA worsened a bit, so just any thoughts there?

We've seen very similar trend to what we've seen in prior quarters, David. Net sales were positive for the ninth quarter in a row and if you look at the geographic breakdown it was pretty much the same thing I think we've seen for the last at least couple of quarters, which is positive net sales in the Americas and in Asia offset by negative sales in Europe because of pressures that Jim detailed in his remarks. So really no major change in the trends that we've seen.

Okay. Great. Can you quantify what transaction volume would have looked like ex-the Brexit-related trades?

For the quarter?

Yes.

Good question. I would expect they would have been probably flat to maybe very slightly negative.

Okay. Great. Thank you.

Big volume increase on June 24. But as I said the ramp-up to the vote we saw volumes being still more modest.

Okay. Actually should we see a continuation as we head into third quarter, like are you seeing elevated trade volumes still?

Not – sorry, not to the extent that we have seen on June 24. That was really a spike, I would have say that we haven't seen since then.

Got it, okay. Thank you.

[Operator Instructions] Next question is from Vince Valentini [TD Securities]. Please go ahead.

Thanks very much. A question on the recurring revenues within F&R, so your commentary is that in the back half of the year the drag from recoveries and the drag from commercial pricing adjustments will get better. But I'm wondering specifically about the recurring revenues. They were up 1% in the first quarter, now they are flat in the second quarter. Do you also see an improving trend in that segment of revenues in the second half?

I think what we're seeing is like the headwinds that we've seen in the first half will start abating in the second half as we have predicted. Underlying if you look at what happens to recurring revenues it's really a combination of volume, which is driven by net sales, and we have now nine consecutive quarters of positive net sales which obviously means that's not - that's a good factor. And price, and we've been consistently achieving the price we were hoping somewhere between 1.5% and 2%. So that’s - it's really the reduction of the headwinds that inspire or are more confident about what growth should look like for Financial & Risk in total in the second half.

If I can just clarify, so in that net sales number as you said volume and price. So the commercial pricing adjustments you've been talking about they are still flowing through on the FX segment, those are included in the net sales calculation or is that a separate number?

No, they are not included, so net sales is purely a volume calculation.

So it doesn't factor in the annual price increases you might do or any of these sort of one-off adjustments, none of the price equation there, it is purely just the volume?

Correct.

Great, thank you.

Next question is from the line of Andrew Steinerman [JPMorgan]. Please go ahead.

How're you doing? This is Michael Cho in for Andrew. Just a couple of quick questions. First, on the F&R segment you guys referenced it before on the commercial pricing adjustments. So what kind of actual revenue headwind is from the actual pricing adjustments, given like what can we expect in a given quarter? And then can you also remind us when that is going to stop?

Yes, Michael, let me try to take that question. Look what we've said is that F&R reported revenue growth of minus 1% in the quarter and we said that excluding recoveries, which we quantified at 170 basis points and pricing adjustment it would be around 2%. So that gives you a sense of, a broad sense of what these commercial pricing adjustment have in terms of impact. And in terms of the timing, they have been declining every quarter as essentially we have rolled out the new offering to most of our customer base. So we expect that to and by the end of the year, the negative impact of these pricing adjustments.

Got it. Thank you. And then just one follow-up, just a question on FX, what kind of headwind are you expecting in 3Q just given that the volatility on the pound was really towards the end of 2Q? Thanks.

That's an interesting question, Michael. On our reported results we have about 15% of our revenue base that is generated in the UK. So the impact of the depreciation of the pound sterling obviously is going to weight in negatively on reported revenue. We always focus on revenue before currency so we show you clearly the impact but the reported revenue will obviously be impacted by the decline in the sterling as we have seen since the Brexit vote. No major impact, though, at the EBITDA or free cash flow level because as you know we have a very large expense base in the UK also. So on a net basis if you want from a currency perspective we actually are slightly short sterling to the extent of maybe $150 million to $200 million a year. So if anything it may be slightly beneficial, but pretty minor because it's not a big exporter anymore.

Thank you.

Next question is from the line of Aravinda Galappatthige [Canaccord Genuity]. Please go ahead.

Good morning. Thanks for taking my questions. I was wondering if you could talk a little bit more about the transactional component in legal. I think you referred to some headwinds in FindLaw. I was wondering if you can discuss sort of the outlook there. I know it was a tough base but were there other factors that put pressure on the business and how should we think about that component going forward? Thanks.

I think there were a number of factors within the transactional bucket in legal and, frankly, they are unrelated. But part of that business is building websites and maintaining websites for law firms. Other parts of that business are more directly related to customer acquisition and helping firms market themselves. The latter part of that business was tougher for us in the quarter. And then by far the biggest swing in that bucket was in our Legal Managed Services where we do legal process outsourcing business, and that's highly dependent upon big litigations. And in fact, if you look at that category business alone it was up 35% in the second quarter last year based upon the back of some work we did in one big commercial litigation that settled and didn't repeat. So that's just by nature a lumpier business as you might suspect as large class action lawsuits for example get filed or a government enforcement action against a regulated business transpire. That's just lumpy business in general. So it's kind of all three of those things put together.

That's great color. Thank you.

Next question is from the line of Andre Benjamin [Goldman Sachs]. Please go ahead.

Thank you, good morning. I guess, my question was about the KYC solution, if you could maybe give a little bit of color on how large you think the addressable market is there and within say the next couple of years, two or three years how much revenue you think it could be contributing and how the competitive environment is trending versus market in TTC?

Sure. I think this is - look, we think it's a significant market and we think it falls right into the sweet spot of what we've been building toward for the past several years. One, in reference to the prior question from Paul, it’s a perfect example of the kind of thing that we can be doing that banks would have done themselves. And our capabilities on the regulatory front and the assets that we have related to KYC are clearly leaders in the market. We think it's the first step in what could be a significant line of business for us. And it is exactly the result of an ongoing conversation about ways to improve and streamline the KYC offerings in Sub-Saharan Africa and the fact that we've got the four leading banks in South Africa to work with us as we pull it together we think is going to be very significant. We think it's something that can expand not only throughout Africa but throughout the rest of the world. And it's a good model for us. Can I put a number on how big a business I think it could be? I would be very hesitant to do so at this point. But we think it could be a significant part of continuing to build out our position in that risk and compliance world, serving financial services customers and providing things for them that they used to do themselves.

Thanks. If I could squeeze in a follow-up because it seems like there is a window here, I guess Stephane, how are you thinking about the 6.5% notes due in 2018? Is that something you would look to address given how low rates are these days or do you feel like they are going to be low long enough that you will just address that when you get a little bit closer?

I'm not sure I follow you, Andre. What's the question?

The 6.5% interest debt about $1 billion that is due in 2018. How you thinking about potentially calling that sooner given where rates are? Do you feel like rates are going to be low long enough that you don't need to deal with that right now?

In the past we have redeemed some of our debt. We've done that when it makes sense economically to do so, and we continue to look at it at this. At this point in time there's no specific plans of doing anything like this. But it's something we look at, our treasury team obviously looks at. And at some point in time if something makes sense we will consider it.

Thank you.

Next question is from the line of Doug Arthur. Please go ahead. Q –Unidentified Analyst: I just wanted to ask a few more questions on Tax & Accounting. I've got to go back to the fourth quarter of 2012 to see an organic growth rate of 1% for that segment. Government, obviously, you've been pretty clear on that. But that's such a small part of the segment. It looks like also Corporate Solutions slowed down quite a bit from the first quarter. I assume that's timing, but is there anything else going on that concerns you there?

So again, if Stephane could – kind of four big buckets there. You are right, Government is a small sector, but it took a big hit. That made an impact on the quarter as you saw in the numbers. I would say it was up flat quarter for as well as for our Knowledge Solutions business which is just the underlying information business that was used to be known as Checkpoint which is now the online information business. And that's been a low grower for us that just had a flat quarter. The Professional business continues to be solid for us and the Corporate business did go back but it had a very strong first quarter. So we expect that all in throughout the year those segments will - those three segments will perform as they have in the past. We don't see material changes in those underlying trends. And it's been a big grower for us. We think it will continue to be a big grower for us and there is nothing that causes us to think anything will be different than it has been over the past several years. Q –Unidentified Analyst: Okay great. Thank you.

Next question is from the line of Tim Casey. Please go ahead. Q –Unidentified Analyst: Thanks, good morning. Jim, as you look to the planning process through the back half of this year, can you talk a little bit about how you are thinking about efficiency initiatives beyond 2017? Because that is going to be the conclusion of sort of the enterprise-wide four-year plan you have articulated. And just – and I'm assuming that's a process that's going to be ongoing. Can you speak to us about how we should think about things after this efficiency program has ended?

Yes and I will ask Stephane if he wants to quantify anything. But I would start by saying that as you know, this year we set up our enterprise technology ops center and fold all of the central technology, all of the individual operating technology budgets and the operating centers all into the control of our Chief Transformation Officer. And directionally I have been delighted at the opportunities we've seen as a result of having done that. And every time we sit down and have a quarterly review with that group I think we see more opportunity to continue to streamline our operations and to become more effective and more efficient. So I think we have a healthy runway in front of us to continue to become more effective and efficient. And I think we have a number of years in front of us where we can be on a steady path to continued improvement in that regard. We will always make those tough trade-offs between how much those - how much of those savings we reinvest in revenue opportunities that are there and how much we take to the bottom line in any given period. And as we kind of do quarter-by-quarter and year-by-year we'll just make those decisions based upon how attractive we think the revenue growth opportunities are and how achievable those opportunities are. We've always said we'd trade a point of margin for a point of growth. The good news is I see ample opportunity for us to create that dilemma for ourselves because we are, I don't want to say relatively early in the process, but we are far from the end of the process.

Okay. And our next question is from the line of Giasone Salati. Please go ahead. Q –Unidentified Analyst: Hi, just a quick clarification. When we look out at the F&R business in Europe is it right that your presence in Continental Europe is relatively stronger than peers, and if you could quantify that?

Yes, if you look at the F&R business our revenue base is just under 40% European base and I would say half of that is in the UK and half is in Continental Europe. We probably have a larger exposure in Europe than many of our competitors. And so call it round number 20% of F&R's revenues are in the UK and about 20% is in Continental Europe, which is I would say proportionate, I'm not totally familiar with what our competitors have. But I would think it is larger than what our competitors see.

And if you think about it, and again I like Stephane wouldn't have market share numbers by European countries or even by Europe and the UK at hand, would expect that to be the case. I would say we have a disproportionate exposure and/or penetration, particularly on the large sell side banks in Europe. And if you think about it, the old Reuters franchise goes back more than 200 years in Europe and the UK. Q –Unidentified Analyst: Great. So that's potentially has more benefit if Brexit pushes some business through Europe, through Continental Europe? Thank you.

Yes, thank you. And I would just underscore, we do have feet on the ground in all the major European money centers. We have staff there, we have deep relationships there. And I think we're well-positioned to serve our customers regardless of what happens and what shifts might take place and where the important transactions happen and where our customers choose to locate their operations in Europe. And so – and we have a scalable platform. So we'll watch very carefully as the events unfold and we will follow our customers' leads in serving them. Q –Unidentified Analyst: Very clear. Thank you.

Our next question is from the line of Drew McReynolds [RBC Capital Markets]. Please go ahead.

Thanks very much. Stephane first just a clarification and a question after. Just on your EPS comment for 2017 I think I heard 2.35. Can you, I missed the context of what that number is.

Yes, I was trying through a lot of numbers. I was trying to sum up where we are moving from the original $2.80 target. And you remember through in the first quarter we had moved that to like $2.30 and the three elements we discussed on this call were the beneficial impact from the proceeds we are going to get from the IP & Science sale on one hand and then the changing calculation for the two tax items in our adjusted EPS. And the net of these three factors is about a positive $0.05 which brings us from 2.30 to 2.35.

Okay, perfect. And just the broader question, I guess for you as well Stephane, a little confused I guess on your leverage target of 2.5 times. With proceeds and even putting in $1.5 billion buyback, I mean, I just don't get you above 2 times going forward. So just wondering is my math incorrect, is this just providing flexibility for M&A option value as any large Company would? Can you just kind of clarify or kind of bridge what I see as a fairly under levered situation versus that 2.5 target?

Of course, your math is perfectly correct because it always is. Remember we did announce a buyback promise of $1.5 billion in February. That was a little higher than what we had done in the past at about $1 billion and that was really taking into consideration two things. The first is the fact that we were counting on getting some proceeds from the IP & Science sale and that we would essentially use some of these proceeds towards the buyback. And the second was a consideration that there are limits, as you are pretty well familiar with, with the number of shares that we can buy in any given year under the rules of the normal course issuer bid programs. I think the main constraint for us is that we cannot buy more than 5% of our outstanding shares which really limits the amount of buyback we can do in any given year unless we were to do a tender offer which is much more complex and more expensive. So there are a few considerations to take into account. We will - let us complete the current tranche that we are in the course of doing as you have seen from the release. We are a little bit over a third done. As of the end of the second quarter we had done a bit more than $500 million, so we still have $1 billion to go under that buyback as soon. As we are done with that program we will sit down with our board, look at the circumstances, the options we have and decide what we will do next.

Thank you.

Operator, we'll take one final question please.

Next question is from the line of Rob Peters. Please go ahead.

Hi. Thank you very much for squeezing me in. Jim, getting back to as I know it's come up a lot, but when people look at Brexit a lot - it seems a lot of the focus is on the F&R segment. But as I understand there is going to be a flurry of legal work that has to be done leading up to any potential exit. I was just wondering if you could talk about any opportunities you actually see in your Legal segment to benefit from any of that activity?

Sure. I think the story of Brexit at the moment is kind of short term versus long-term issue. I think short term there's no question there's an opportunity certainly for large law firms to advise their large clients on how to comply with what's going to be a shifting regulatory environment. So I do think it will be and also, frankly, for other professional services firms to advise. That's a near term opportunity. What it looks like long term it is just impossible to say. But if you look at our Legal business only about 10% of our revenues in the Legal business per se come from Europe and UK. So it's a less significant impact on us overall and long-term who knows how it's going to play out. I think it is going to create a lot of activity in business in the near term, long term who knows. But I would say, again, one of the things that's fortunate about where we sit today is that we do have significant operations in every one of the key financial centers in Europe. So we will be able to operate out of office as we already have and perhaps shift staff around if we need to, to serve customers as they shift. But I would anticipate building off of what we've already built as opposed to having to go out and make significant new investments in new geographic locations to serve our customers.

Perfect. Thank you very much. And maybe just to quickly follow that up, in terms of the Solutions business, I think you had highlighted the UK, Ireland and LatAm were growing on the Legal side. Do you think any of that was related to people getting kind of started up ahead of the vote or is that something else driving that there?

No, I think that's just the underlying growth of the strength of those solutions. I think it is totally unrelated.

Perfect. Thank you very much.

Thanks, Jim, and that will conclude our call. We thank you very much for joining us today and we look forward to speaking to you again on our third quarter call in October. Have a good day.

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