One Company

In April 2008, The Thomson Corporation acquired Reuters Group PLC and created the largest professional information company in the world. The fit and complementarity between the two businesses, cultures and staffs were tailor-made, and we were able to start leveraging our scale almost immediately – for example, by incorporating Reuters News into products from our Legal and Science units. What was new was the Thomson Reuters brand, which was soon ranked 44th among BusinessWeek’s 100 Best Global Brands.

Although some may think of Thomson Reuters as a new company, our move to the leading position in the industry lies on an arc of strategic intent that has been decades in the making...the result of foresight, diligent acquisition and expansion, careful growth and a patient capital strategy.

Thomson’s acquisition of Reuters, like the acquisition of West a dozen years earlier, was an important step along a strategic continuum. It combined Thomson’s leading positions in legal, finance, tax, accounting, healthcare and science in North America with Reuters strength in financial services and media in Europe, the Middle East and Asia to produce a company that is strong and balanced, both by geography and market.

Thomson Reuters global footprint is a critical element of our growth strategy. It helps us appeal to and meet the needs of an increasingly global class of customers, and positions us to tap into the higher growth rates available in emerging and professionalizing markets. To each market we bring in-depth understanding of our customers’ needs, agile technology platforms, proprietary content and scale.

Our customers are professionals in key sectors of the global economy. We supply them with the intelligent information they need to succeed in fields that are vital to developed and emerging economies alike.

Our customers rely on our information because we hold it to the same standards of accuracy, objectivity and independence that have long been exemplified by Reuters News coverage. These standards are codified in the Reuters Trust Principles, which we have adopted across the company.

The intelligent information we provide to these professionals is “must have,” not discretionary. It is central to their ability to do their jobs, and a source of competitive advantage. Intelligent information is a synthesis of highly relevant content and software which derives its competitive value from human intelligence, industry expertise and innovative technology. It helps our clients add value to their own enterprises by enabling them to make better decisions faster. It is knowledge to act.

We serve a wide variety of customers with a single, tested business model. It is the same business model in our Markets division as in our Professional division, and the same in Asia as in North America. Its power comes from its basis in the sale of electronic content and services to professionals, primarily on a subscription basis. Over the years it has proven to be capital-efficient and cash-flow generative, and it has enabled us to maintain leading and scalable positions in our chosen markets.

While our business model is unified, our portfolio is diverse. Even in a recession as deep and widespread as the one we are experiencing today, there are parts of our business, such as Healthcare and Tax & Accounting, which can continue to grow at attractive rates while we invest for an eventual recovery in financial services. Similarly, our Asian businesses continued to grow in the second half of 2008 as markets in the U.S. and U.K. began to falter.

Woodbridge, as our principal shareholder, provides Thomson Reuters with another, very real competitive advantage. The investment company of the Thomson family for many years, Woodbridge is committed to building sustainable value for all shareholders. With billions of dollars invested in Thomson Reuters, it is highly focused on core issues such as strategic direction, capital strategy, performance metrics and governance, and it brings to these issues a stable, long-term view that is completely aligned with the type of shareholder Thomson Reuters seeks to attract and retain.

Strong Performance

We were very pleased with the performance of Thomson Reuters in 2008. Despite the most challenging economic environment in decades, the company grew revenues 8% – at the top of the 6–8% growth range that we had forecast in calmer markets when we completed the Reuters acquisition. Both divisions contributed strongly to this growth, with the Professional division growing revenues 8% and the Markets division up 7%. Our 2008 revenues reflected global balance as well, with 58% coming from the Americas; 32% from Europe, the Middle East and Africa; and 10% from Asia.

Good flow-through from topline growth, enhanced by integration-related savings, led to a 19% increase in underlying operating profit for the year. And the strength of our business model was certainly in evidence as we delivered $2.3 billion in underlying free cash flow.

We made excellent progress on integrating Reuters and Thomson Financial as our new Markets division, improving service to our customers and continuing positive net sales. In executing our integration plan we also found new opportunities for savings, raising our target from $750 million to $1 billion in annualized cost savings by the end of 2011.

We have now begun the second phase of the acquisition integration: retiring legacy products and systems to simplify the business and help make it more agile, responsive and profitable. This year we are starting to roll out new strategic products, consolidate data centers and capture revenue synergies.

We continuously review and adjust our organizational structure to better leverage resources and align our operations with global opportunities. At the beginning of the year we combined our five former operating units in the Professional division into three global businesses: Legal, Tax & Accounting, and Healthcare and Science. We also created a new unit within Legal to pursue an attractive global opportunity in information and services for professionals who create, manage and transact in all forms of intellectual property.

While we anticipate that market conditions will remain very challenging in 2009, we are confident that our strong balance sheet, proven business model and well balanced portfolio will continue to perform through the current economic cycle.

With Gratitude

A year like the one we experienced in 2008 – our first as Thomson Reuters – requires the grit and grace of many. We owe gratitude to our more than 50,000 employees around the world, from our innovative product development teams to our energetic sales force to the courageous journalists who bring the great stories of our time to Thomson Reuters customers. Many of our employees have been working two jobs – their own and the task of becoming one company in one year. That they have succeeded is a testament to their extraordinary commitment and ability.

We are also indebted to our customers, for their loyalty to our products and their patience with our progress, for being both the reason for our performance and the standard to which we must continuously rise.

When the acquisition closed last April, six directors from Reuters joined our board. We are grateful both to those members of the Thomson and Reuters boards who took the opportunity of a mission accomplished to retire and to the current members of our board for their guidance and vigilance through this extraordinary period.

Sincerely,