Executives:.

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Analysts:.

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Aravinda Galappatthige - Canaccord Genuity Tim Casey - BMO.

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Ladies and gentlemen, good morning thank you for standing by and welcome to the Thomson Reuters Second Quarter 2015 Earnings Conference Call. At this time, all lines are in a listen-only mode. Later there will be an opportunity for your question and instructions will be given at that time.

If you should require any assistance today, please press star followed by a zero and an AT&T operator will assist you. As a reminder, today’s conference is being recorded. I would now like to turn the conference over to our host, Senior Vice President Investor Relations, Mr. Frank Golden. Please go ahead..

Good morning and thank you for joining us as we report our financial results for the second quarter. Our CEO, Jim Smith will start today’s discussion followed by Stephane Bello, our CFO.

Following their presentations we will open the calls for question and we would appreciate if you would limit yourselves to one question each in order to enable us to get to as many questions as possible.

Throughout today’s presentation, keep in mind that 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, and it’s also the basis on which we provide our 2015 outlook.

Now, 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.

With that I will turn it over to Jim Smith..

Thank you, Frank and thanks to those of you on the call for joining us. Today we will begin with a review of the second quarter results and our outlook for the balance of the year. Now lets turn to the resultts for the quarter.

As I stated on our Q1 earnings call, we've made significant progress putting the company back on a solid footing and you can again see that in the numbers we reported today. We had had a good first half of the year both opertaionally and financially. Importantaly, we’re on track with our expectations for the balance of the year.

Our guidance for 2015 is to return to positive organic revenue growth on a constatnt currency basis and we are on our way towards achieveing that objective.

We cautioned last quarter that increased volatility in foreign currnecy markets would likely have a higher than usual impact on our results in 2015 that indeed route to be the case again in second quarter.

Therefore, I'll provide you with both our reported results for the quarter and our results before currency, so you can clearly see the underlying progress we are making. Revenues were down 4% ona reported basis but were up 2% befoe currency a full 600 basis points swing due to currency in the quarter.

EBITDA was down 2% with the margin of 40 basis points on a reported basis, while before currency EBITDA was up 3% and the margin was up 50 basis points. Again on a ported basis, underlying profit was down 1% and the margin was up 60 basis points. Before currency, operating profit was up 7%, and the margin was up 100 basis points.

Adjusted EPS was $0.52, $0.01 better than the prior year period. And before currency EPS was $0.07 better than last year, a 14% increase. We also continue to execute on the capital strategy program that we announced in 2013 and since that time, we have returned over $3.8 billion to shareholders in the form of share buybacks and dividends.

Lastly given our encouraging first half performance, we again reaffirm our full-year 2015 outlook.

Some additional highlights for the quarter, first and foremost financial achieved its first quarter of revenue growth in more than three years up 1% and net sales were positive in the quarter and we are positive in all regions for the second quarter in a row.

This marked the fifth consecutive quarter of positive net sales and we have seen year-over-year improvement in 10 of the last 11 quarters. Second as I discussed in Q1, the financial business has three major migrations this year that are all on schedule, two are revenue related and one is cost takeout related.

The two product revenue related pieces involve migrating our remaining legacy foreign exchange and buyside customers on to our unified platform and making some commercial pricing adjustments.

We are on track having converted about half the $700 million in revenue that is involved in this program, these migrations as expected have resulted in downward pricing adjustments in some instances which is constraining financial’s revenue growth this year.

Despite this pricing pressure, our financial business revenue grew 1% organically in the quarter, the platform migration involves moving our large real time global infrastructure on to Electron, we have now moved over 90% of customers to our new Electron platform with 85% of those customers now entirely off the old platform.

We continue to incur some dual running cost which is dampening the margin. And that will continue to be the case until we close the old platform in the fourth quarter resulting in significant savings. Turning to legal, revenue growth was 2%, importantly U.S.

online revenue again grew slightly for the second consecutive quarter which is very encouraging and is reflective of improving net sales and higher retention rates for Westlaw. As I mentioned last quarter, we had not seen organic revenue growth in U.S. online legal since 2009.

Tax and accounting continues to execute well and had another good growth dampened a bit by government business which Stephane will cover. IP and Science returned to growth and was up 1%, a bit weaker than expected due to difficult prior year comparison and an 8% decline in transaction revenues.

Subscription revenues rose 4%, finally our global growth businesses achieved revenue growth of 6% all organic and I will remind that you that GGO results are included within each of the four business segments.

So the trends that we are now seeing with each of our four businesses back in a growth mode give us reason for optimism regarding our prospects for improving organic revenue growth and profitability as we look forward to 2016.

The financial business has turned the corner and we are beginning to realize the tangible benefits of the team’s good work over the past three years as evidenced by a 400 basis point improvement in financials organic revenue growth as compared to year ago.

A minus 3% to plus 1% and just as impressive this financials EBITDA margin improvement of over 100 basis points in one year. As it continues to make progress toward its 30% target. It is also encouraging to see that momentum in our legal business continue in the second quarter reflected by revenue growth of 2%.

That is 3% excluding, this performance was driven by 5% growth from our solution businesses and marginal growth in U.S. online revenues for the second consecutive quarter somewhat offset by a print decline of 5%. So in summary, we are pleased with our first half performance and growing momentum.

The strategy is working, which is reflected in today’s results. Going forward, we will continue to prioritize resources behind the highest growth opportunities, with the greatest change to improve our prospects in 2016 and beyond. Not let me turn it over to Stephane..

Thank you, Jim, and good afternoon to all of you. As Jim just explained currency again at a significant impact on the results. As reflected in the 600 basis points swing between reported revenues which were down 4%, and revenues before currency which were up 2%. This slide provides a snapshot of our second quarter and six months results.

For the rest of the presentation, I will speak to revenue growth before currency in line with the way we always have done it. So on a constant currency basis, second quarter revenues were up 2% or organic of financial business was up 1% organically while our pre-order businesses were 2% organically in aggregate during the quarter.

Adjusted EBITDA was down 2% with an EBITDA margin of 28.2% up 40 basis points compared to the prior year. Excluding the impact of currency EBIDTA was up 3% and the margin was up 50 basis points compared to Q2 last year. Our second quarter operating profit was down 1% compared to the prior year and the margin was up 60 basis points.

Again excluding the impact of currency operating profit was up 7% and the margin was up 100 basis points. Now there were some negative factors both last year and this year which impacted the year-on-year comparability of our second quarter performance.

As you may recall, we booked approximately $30 million of charges in the second quarter of last year which did not happen this year. On the other hand, we implemented our annual merit increases on April 1 of this year of three months earlier than we've planned.

So unbalanced the 100 basis points improvement in the margin addresses growth this quarter, genuinely reflects a continuing improvement in the underlying performance of the business. Now let me provide you with some additional cover on the performance of our individual businesses starting with legal. Demand for legal services in the U.S.

market was again up slightly. The third consecutive quarter of improvement with four of the last five quarters showing modest growth.

As Jim just indicated, legal grew 2% or organic during the second quarter, slightly below the 3% increase in the first quarter as both description and transaction revenue growth rates were slightly lower than in the first quarter as we expected.

Transaction revenues for the quarter, which are primarily services revenues and which represents 13% of the total were up 10% all organic. Once again driven by strong performance in FindLaw [Jeffry] (ph) and Latin America. Subscription revenues which accommodate for about three quarters of the total were up 2% again all organic.

Turning to our profitability metrics for the quarter. The EBITDA margin was down at 160 basis points only operating profit margin decreased 80 basis points. The margin declined was primarily due to the impact of salary increases which is I just said came into effect in the second quarter versus the third quarter last year.

For the full-year, we continue to forecast that legal EBITDA margin will be broadly flat compared to 2014. This next slide shows a more detailed look at the revenue performance of the three main sub-segments in our legal business. U.S.

online legal information which is 39% of total revenues was up slightly for the quarter as it was in the first quarter. So the positive trajectory continues for this business. The continued improvement in retention for Westlaw is making a significant contribution is retention rates up 60 basis points compared to 2014.

In addition, practical law continues to perform strongly is that business in the US now about three times the size, it was when we acquired it two and half years ago. US print revenues were down 5%, excluding the impact of U.S. print, the rest of the legal business that were 3% organically during the quarter.

And finally this quarter’s performance was once again driven by our legal solution businesses which continued to grow at a solid pace. These solutions businesses consist of everything except U.S. online legal information and U.S. Print. In aggregate, they made up of 45% of legal total revenue in the second quarter and they grew 5% for organic.

This strong organic growth performance was driven by our legal enterprise solutions business which includes Elite and Serengeti and Pangea3 legal managed services business as well as strong growth in our investigations and public records business. Now let me spent a moment on legal improving growth dynamics.

As you can see on this slide in total legal business were 2% organically in the first half of the year as compared to flat in the first half of last year into a 1% organic decline for the whole of 2013.

This improvement is directly related to the evolution of a revenue mix and to the gross profile of the three main business segments within legal which are the defected on the slide. Our U.S. Online legal information business that improves from minus 2% both in 2013 and in the first half of 14 to slight growth in the first half of 2015.

This is a very encouraging turn around in what is legals most profitable business segment. The solutions businesses were 7% organically in the first half of this year up from 5% organic from the same period in 2014 and 3% organic in 2013.

These solutions businesses represent almost promising growth opportunities and that counted for 46% of legal’s revenue base in the first half of the year. They are delivering strong and steady growth. And finally, the decline in our U.S. Print business appears to establish at around 5% to 7%.

In this business which is highly profitable will become an increasingly smaller percentage of legal store revenue base. So it is the combination of the improving growth performance of our U.S.

Online business as well as the increasing size of the faster growing solution businesses which are driving a steady improvement in legal’s over growth performance. Now turning to tax net going that business has another good quarter was revenues up 6% of which 5% was organic.

Recurring revenues about 80% of the total was up 7% organically in the quarter which is inline with the first quarter. From a profit stand point EBITDA was down 8% in the quarter with the margin declining 270 basis points. Now the margin was negatively impacted by three factors this quarter.

First, the decline in revenue in our government business which is small but fairly volatile. Second, the timing of our annual salary increases and third, investments we continued to make in selected high growth opportunities. These three negative impacts were partially upset by currency which had a positive impact on margins in Q2.

For the second quarter operating profit was down 3% with the margin down 80 basis points for the same reasons that highlighted EBITDA.

As you can see on the next slide, our professional and cooperated segments which represents 70% of the business maintains the strong performance they recorded in the first quarter with organic growth rates of 10% and 11% respectively. And our knowledge solutions segments return to grow up in the second quarter.

As I have just mentioned our smallest segment, the government business at a challenging quarter was revenue down significantly due to timing related items or some contracts. Although, government a small percentage of the total business, each week performance had an impact of 170 basis point on revenue growth this quarter.

So if you were to exclude government tax and accountings revenue growth would have be closer to 8%. Revenues for the government business are less predictable in nature and so from time-to-time we do see results such as this in a given quarter.

However, we continue to expect that [indiscernible] to deliver another strong performance for the full year both on the top and bottom line levels. IT and science revenues were up 1% for the quarter. Again a big disappointing, but slightly better than the first quarter.

This performance was primarily the result of growth in subscription revenues partially offset by a lower number of transactional deals compared to the prior year period more in that in a moment.

The EBITDA margin and the operating profit margin were down 120 and 130 basis points respectively also driven in large part by the timing of the annual salary increases. Subscription revenues, which make up about three quarters of the total continue to perform well and were up 4% or organic during the second quarter.

Transaction revenues declined 8% or organic due to softer sales in the Academic segment. And as you can see on the slide the results for the first half of the year are similar to the second quarter as we have seen very similar trends for transaction revenue throughout the first half of the year.

As we always remind you small movements in the timing of revenues and expenses can impact margins in any given quarter for the IP and Science business and therefore full year results are more reflective of the segment’s underlying performance.

Now turning to our financial and risk business, second quarter revenues were down 6% on the reported basis with currency once again having significant impact, to exclude currency revenues were up 1% for the quarter whole organic, this is the first time the business has posted organic revenue growth since Q4 of 2011.

As Jim mentioned a moment ago, this represents a 400 basis points improvement compared to the prior year. For the balance of the year, we expect a decline in recoveries revenues to accelerate as more third parties move to direct billing.

Due to this projected decline in recoveries which to remind you are relatively low margin revenues we are not expecting to see incremental improvement in the growth rate of FNR for the remainder of the year.

Once again mid stage, we are positive in all regions and both the Americas and Asia showed positive organic revenue growth for the quarter which were flat.

The EBITDA margin for the quarter was up 200 basis points due to the simplification actions we took in 2014 which for the impact of currency from both periods and adjusting for the impact of the charges we took in Q2 of last year, the margin was up 110 basis points to 28.7%.

As we mentioned last quarter, we continue to incur some dual running cost as we work to migrate and close the real time network. We do expect to complete these migration in the latter part of the year at which time we expect to see a more pronounced improvement in the margin.

As Jim mentioned, the platform migration is very much on track, it is about 90% of our clients now installed on the new network and about 85% of those clients running solely on the Electron platform.

As we have said before we need to migrate 100% of our customers onto the new platform in order to enjoy the full cost benefit of these migration and we continue to expect to get there in the fourth quarter.

Operating profit was up 3% with the margin up 160 basis points for the quarter and again excluding the impact of currency and charges, the margin was up 120 basis points.

Now looking at the financial and risk revenue in a bit more detail, recurring revenues which were 76% of the total were up 1% during the quarter whole organic, recoveries about 11% of the total were down 1% for the quarter and as I just mentioned we expect the decline to accelerate in the second half of the year and into 2016 as some of our third-party partners move to a direct billing arrangement with our customers.

Finally, transaction revenues which is 13% of the total were up 3% all organic. Our FX pool, [indiscernible] and businesses all contributed to these growth for the quarter, however we saw some softness in for FX matching transaction revenues is [indiscernible] than in prior year.

During the first half of this year, we have seen a bit of decoupling between volatility and volume in the foreign exchange rates. Volumes have been lower despite higher volatility due to the fact that market makers appear to be less willing to risk trading capital. We are not yet calling this a trends but it is something that we are closely watching.

Now you can see on this next slide how the financial and risk business mix has continued to evolve as fees and non-desktop products have become a greater proportion of total revenues.

In the second quarter of this year, these two businesses made a 36% of the finance and risk revenue base as compared to 32% in 2013 and they grow organically at 6% and 5% respectively. So we had about third of our financial and risk business growing mid single digits in Q2.

Desktop revenues have improved the growth rates significantly since 2013 as a result of a far better product and improved retention rates. I should also remind that best of revenues in the second quarter of 2015 were impacted by the migration activity these are resulting in lower price realization.

Excluding the negative impact from this migrations best of revenue would in fact be growing slightly. That means the vast majority of our best of revenues are slowly getting back into gross territory. So the return of financial business to grow is driven by factors that are quite similar to what I just described when I discussed our legal business.

First, we need the higher growth part of the business risk, feeds, and hopefully transactions continue to grow and become a bigger percentage of the total revenue base.

And second as we complete the migration of our legacy desktops to icon, we are seeing a meaningful improvement in the gross performance of that business, minus 6% decline in 2013 to minus 3% in the second quarter of this year and in two positive territory once we complete the commercial adjustments associated with the remaining product migrations.

Finally, let me review financial and risks progress relative to their EBITDA margin target as we do every quarter. As was the case in Q1, currency had a significant impact on the second quarter results. On this slide we have excluded the impact of currency and the negative impact of the charges we took in Q2 last year.

And that gets us to the underlying margin number. The second quarter reflected the impact of the annual salary increases for employees, but even thinking this into account FNR’s EBITDA margin increased by a 110 basis points versus last year.

Now turning to our consolidated results, let me start with our free cash flow performance for the first half of the year and working from the bottom to the top of the slide. You can see that free cash flow for the first six months of the year was $644 million compared to $517 million in the prior year period.

This included $54 million of cash payments related to our simplification programs as compared to $159 million in the first half of 2014. Free cash flow excluding the impact of the simplification charges was $698 million, $22 million higher than the prior year period.

Now it’s an important to decide cash taxes for the first six months of this year were $72 million higher than the first half of last year, which was largely timing related. So the trend in our underlying free cash flow performance continues to be very strong to adjust for that factor.

As a reminder, in the second quarter we completed the billion dollar buyback program in last July and this May, we announced a third billion dollar buyback which we expect to complete by the end of 2016.

As you mentioned, we continue to execute on the capital strategy program which we announced in October 2013, and we have now returned over $3.8 billion to shareholders in the form of share buybacks and dividends over the period.

Now turning to our earnings per share performance, second quarter adjusted EPS was $0.52 per share, a penny better than a year ago. Foreign currency at a $0.06 negative impact on a year-on-year basis so before currency EPS improved by $0.07 about half of which represented better operating performance on the other half was lower charges.

So to wrap up, we are pleased with our start of the year and based on the first half’s results we are reaffirming our outlook for the full year. With that, let me turn it back over to Frank..

Thanks very much, Stephane, and that concludes our formal remarks on quarterly results, and now I would be happy to open the call for questions. So if we could have our first question, operator..

Thank you [Operator Instructions] Our first question today will come from the line of Toni Kaplan representing Morgan Stanley. Please go head..

Good morning, everyone. This is actually [Patrick Hoff] (Ph) filling in for Toni this morning. Lapping quarters of positive net sales in FNR, can you give us a sense of whether the third quarter will be a tougher comp than 2Q for net sales..

James Smith:.

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Okay, thank you..

Our next question today comes from the line of Drew McReynolds with RBC Capital. Please go ahead..

Thanks very much and congrats on the revenue growth. Jim just now that you have a stronger footing clearly under each of the, this four businesses and sounds like there is still cyclical tailwind out there.

Just wondering if and when there any change to your acquisition versus organic growth focus, as we move into 2016, tend on kind of revisiting things now that your potentially focused on things internally. Thank you..

James Smith:.

So I am sure that will always be some level of tactical acquisition activity but we’re still focused on executing right now and serving our customer..

Okay..

Our next question comes from the line of Manav Patnaik with Barclays. Please go ahead..

Hi, this is actually a Greg calling on for Manav just wanted to ask about your pricing and reference data business.

I know I’ve seen a couple of headlines out that you’re adding in today pricing but I guess more broadly just wanted to hear about your strategy in that business and what you think you said in the competitive landscape?.

Stephane Bello:.

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Okay, thank you..

And we have a question from Vince Valentini with TD Securities. Please go ahead sir..

This is Vince.

Two questions on potential problem, so Europe I mean there always been some economic challenges there anything changing in your conversations with your major customers there and then secondly global growth, plus 6 percentage is a bit less than what we have been seeing in that, in prior periods without being getting up closure to double digit so you seeing some challenges there in some of those emerging markets starting to decelerate little bit.

Thanks..

James Smith:.

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Yes, good morning Vince the two things I would highlight as first this is now a business that is close to $1.02 billion in revenues, so growing that revenue base at 6% is not a bad performance, the other thing I would point to is that when we speak about some of the commercial adjustments that impact our funds and risk business these do impact our original also and so the organic growth rate is a little bit depressed if you want because of these commercial adjustments this year..

Our next question is from the line of Sara Gubins with Merrill Lynch. Please go ahead..

Hi this is [David Chew] for Sara. So it sounds like about half of the FX and migration is complete, so when do you expect to get all 700 in revenue over on….

As we said David in the past we do expect it is going to happen over 2015 and 2016, I would expect migration of our foreign exchange based on to be largely but not fully completed by the end of this year, so there is still going to be some let over if I like a better word if you want in the first quarter of 2016 where we should be very much done with this one by the first half of 2016.

On the buy side, on the asset management side, we are adopting a much more deliberate approach there and so we know that this is going to take us well into 2016 and potentially a little bit further but I would say that the vast majority of the migration is, the migration is progressing very well and most of the commercial adjustments impact that we talked about are going to essentially hit this year with the little bit still hitting us in the first quarter of next year..

Okay.

And just one follow-up, so is it still fair to assume that this migration represents about a 200 basis points drag to revenue?.

You are speaking about the impact of the commercial adjustments, I would say it is about in that region, I mean I think in the quarter we said that if you were to exclude the impact of the commercial adjustments the growth [indiscernible] somewhere between 2% and 3%, I think that is exactly where it would have been also in Q2 maybe just a little bit above 2% into the second quarter..

Okay. Perfect, thank you..

Our next question comes from the line of Ato Garrett with Deutsche Bank. Please go ahead..

Just a follow-up on the previous question relating to pricing realization, you mentioned clearly that there is some headwind there from the FX migrations but can you talk about pricing for new customers on desktops?.

James Smith:.

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Great and then one quick follow-up on legal, I want to get your expectations for the growth for the balance of the year, should we still continue to expect the first quarter to be the highest growth for the year do you already think we might see a little bit of a bounce back in the back half?.

Yes I would say, what I would always recommend is looking at the trajectory of the growth rate, not quarter by quarter but more in annual basis if you look at our legal business it was negative 1% in 2013 moved just to slight positive growth rate last year in 2015 in the first half of this year I think it was about 2% that is probably a good projection for the full year be around 2% and then from there in 2016 and 2017 because of the mixed dynamics I explained on that slide, we would expect a gradual improvement in the growth rate year after year..

Okay. Thank you..

Next we will go to line of Bill Bird with FBR. Please go ahead sir..

Good morning. I was wondering if you could talk a bit about churn maybe you could speak to kind of icon churn versus total desktop churn and how much room you think there is for improvement and just secondly you were very clear in kind of calling out accelerating recoveries declines. How big do you expect the upcoming headwind to be from that at FNR.

Thank you..

Well, I think the first part of that and then list upon the second part of that.

We’re seeing a significant improvement in churn, I assume you are talking about retention, with over 200 basis point improvement in our overall retention rates, where we’ve got new modern icon platforms in place and then in fact if you look at some of the other desktop business that we have, the remaining was that are same enroll management or imagine we have very solid in fact better retention rates there.

And I think we reported for this quarter, we are approaching 90% now in terms of the retention rates on those icon platforms.

So we have seen the improvement there, I can tell you that internally we are targeting increased improvement and we see that based upon customer SAP, we see it on with the product on improvements to customer service that we have and so we intend to continue to improve that.

But the good news about those improved retention rates is they do bring down that customer churn and then obviously, this is far more profitable to keep an existing customer than to go and try to win a new one.

So we are focused on that, we’ve seen marked improvement over the last two years in our retention rates and we think there is room to improve it even further..

And Bill on your question regarding recoveries, really hard to predict exactly how much of the headwind will be because it depends upon the timing which of third party partners are moving to the direct dealing arrangement with customers.

But in the first half, the rate of decline of recoveries was in the area of like 1% and we would suddenly expect that to accelerate to mid-to-high single digits of decline in the second half of the year. Again, I mean what’s important there is that, this is not really highly profitable revenue for us.

So it doesn’t have any impact this change in direct dealing arrangement has no impact on the growth rate of EBITDA of free cash flow or operating profit, which is really just a contractual change in terms of how we do the billing with our customers..

Thank you..

And we’ll to the line of Paul Steep representing Scotia Capital. Please go ahead..

Thanks. I guess for Jim and Stephane, both, maybe could talk about where the investments going in terms of the CapEx spend that’s been out there this year and how we should think about major platform refreshes particular I guess I was thinking legal for about five years into Westlaw.

How you are thinking about redeployment in that capital and how we should think about it into 2016 and 2017 into big refreshes. Thanks guys..

Okay. Let me start with good morning. I would say that where the investments are going right now, there are two clear priorities, the first one is investments in our highest growth areas. So that will be areas like global trade management, KYC and risk in general or legal solutions business and the lag, that’s where we making a fair bit of investments.

And also I think as we look next year and the year after where we need to continue to make investment, is make sure that we keep improving the stability of our platforms and really make sure that we have one of the strongest infrastructure that we can, because that’s actually the backbone of the company.

So that’s really where I think investment will be growing going forward..

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Stephane Bello:.

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Great, thanks guys..

Our next question comes from the line of Peter Appert representing Piper Jaffray. Please go ahead..

Thanks good morning. So Jim that the risk here up over simplification sounds like the fourth quarter is a pretty big inflection for as in our in terms of growth and profitability the pricing reset done as the migrations completed to cost down with the elimination of duplicate networks.

I’m wondering if one that fair assessment and two more importantly does it suggest that perhaps it more confident that you get to the 30% margin in 2016?.

I think that’s probably a fair view the situation if we can continued to execute over the balance of this year, 2016 looks very encouraging..

And may be as just a follow on to that, I’m wondering in the context of that whether you think better than 30% is potentially achievable on an intermediate term basis..

Well, we’re going to get, let’s get the 30% - right.

I think honestly look, if you look at where our margins are and you look at where some competitor margins are, there is clearly opportunity for us to continued to be more efficient inside the business and once we get to the 30% margin what will have to do is weight the tradeoffs between improving the margin right and investing and things that will drive growth..

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Right, thank you..

There we have a question from line of Doug Arthur with UBS Research. Please go ahead..

Doug are you there?. Hi operator we’ll take the next question..

Okay, we’ve got a line of Aravinda Galappatthige with Canaccord Genuity. Please go ahead..

Aravinda Galappatthige:.

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Sure, happy to take that question. At the EBITDA level if you look at in absolute dollar terms I think the impact year-to-date is above the $100 million or so now at the free cash flow level there are two important offset.

There is some offset in working capital movements and there is the biggest offset which is the hedges that we have on the group that the foreign exchange impact, the currency impact on free cash flow this year is much lesser than $100 million is about $30 million..

Okay, great. That’s very helpful and just lastly with respect to the, the ID on [indiscernible] platform any idea or can give us some color around what sort of the potential uptick with be as we kindly get that behind us and we’re talking something in the range for about 150 basis points. Thank you..

I say this, I would say that dual customer running in the second quarter where in the area of $10 million plus or minus so you can extrapolate from that and get a sense of where our margins would have been or could be once we don’t have to incurr these dual running costs anymore, and as you can see right next from the progress we get [indiscernible] from that 30% margin target which obviously makes us in very good that’s actually a pretty good performance given that if we are able to get there by the end of the year if we are able to get to an exit rate of 30% as we end the year, we would have done that in spite having facing much, much higher headwinds from a transaction revenues than what we were expecting over the period that the lapse since we set that target out.

So it is a good result but basically as I said the platform is the migration certainly going to help the margin in the fourth quarter..

The $10 million per year in dual running cost is that a quarterly number?.

Yes that is a quarterly number..

Okay, great. Thank you..

And we go to line of Tim Casey with BMO. Please go ahead..

Thanks good morning.

Given the volatility on foreign exchange markets, I mean obviously that is having an impact on your reported results, but are you getting any benefits on the transaction or any of the other FX platforms you have from a revenue point of view you see increased volatility helping you on some of the trading platforms, are you seeing any benefits in business that way?.

That is a very good question and you’ve seen what we reported in terms of transaction revenue growth this quarter, it was like 3% that is lower than what we would expected to be given the volatility that we are seeing in the markets and so as we mentioned on the call, what we are seeing is the little bit of decoupling between high volatility and high volumes and we think that due to the fact that some of the largest players particularly on the sell side are essentially staying bit on the sidelines as we have seen them in the past as there are number of investigations going on and so what we think is happening is that they just want to make sure that operationally they are completely compliant from a trading perspective and then they reenter for the market.

But we will have to say time will tell but at this point in time your point is a good one given the increased volatility in terms of we would have expected to see more volume, we are not seeing that volume and it is not just on all platform, I think it is a little bit across the board on foreign exchange side, the another area where we have seen good continued growth is on our FX platform, so treasurers and buy side continue to have a very healthy level of training activity but the biggest chunk of trading and volume is probably not as high as what we would expect the given currency volatility.

So little bit of benefit, transaction volumes were up 3% as I said on the call we would have expected that transaction volume to be up by more given the volatility we are seeing in the market. So that is a bit of a disappointment..

And would you characterize that level of activity is that a high margin revenue piece or is it relatively….

No that is very high margin, transactions are very high margin..

Right, okay, Thank you..

Operator, I think we have one final question and I am happy to say I think we have found Doug Arthur, so Doug?.

Can you hear me now?.

Yes we can..

Thanks. I just wanted to go back to legal for a second, the 39% of revenues that is online legal, can you just sort of refresh our memory in terms of what are the main components that are sort of keeping the growth from turning more positive, thanks..

Stephane Bello:.

- :.

And do you still see sort of a tension between large legal firm demand and small and medium sized firms or is that all sort of going the same direction?.

Let me jump in there, I think we have been surprisingly encouraged in both sectors over the past I would say six to eight quarters. And what the dynamic has played out there, if you think about a bright philosophy going very fast, it’s a very small part of the mix, Westlaw in the U.S.

particularly is the big grow up and as you know that we had a lot of price competition from Lexis in the marketplace, we were very disciplined about selling on value and price and that appears to have been a successful though painful past the tape and frankly we’re seeing.

What we saw was the downturn of Westlaw period, offset some of the growth in practical law we saw that stabilize and now Westlaw itself get back in growth for the quarter which was highly encouraging and we’ve done that on the back of quality wins in the phase of pretty stiff price competition.

So I think if you are looking at damper on that growth, it’s been price competition again Westlaw primarily from Lexis..

Great. Thank you. End of Q&A.

Okay. That was our final question and we’d like to thank you all for joining us to review our second quarter results. Speak to you again next quarter. Thank you..

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