Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2011 Earnings Presentation
41 slides from Wolters Kluwer's earnings presentation, Feb 22, 2012
Slide 1: Full Year 2011 Results
Full Year 2011 Results Nancy McKinstry CEO and Chairman of the Executive Board Boudewijn Beerkens CFO and Member of the Executive Board Jack Lynch Member of the Executive Board February 22, 2012
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation contains forward-looking statements. These statements may be identified by words such as "expect", "should", "could", "shall", and similar expressions. Wolters Kluwer cautions that such forward-looking statements are qualified by certain risks and uncerta
Slide 3: Agenda
Agenda Overview Operational Review Financial Highlights Outlook Q&A 2011 Full-Year Results 3
Slide 4: Agenda
Agenda Overview Operational Review Financial Highlights Outlook Q&A 2011 Full-Year Results 4
Slide 5: 2011 Highlights: Financial Results
2011 Highlights: Financial Results Improved operating performance despite macro economic uncertainty Revenues up 4% (1% organic) fueled by 8% growth in electronic revenues Ordinary EBITA up 4% (2% organic) Diluted ordinary EPS up 3% to €1.47 Ordinary free cash flow remains strong up 1% to €4
Slide 6: Accomplishments
Accomplishments Good progress on strategic objectives to drive long term growth Active portfolio management improves quality of business – Acquisitions reinforce leading positions: Clinical Solutions, Corporate Portfolio Legal Services, Tax Software – Announced Divestment of Pharma business improves
Slide 7: Portfolio Transformation Continues
Portfolio Transformation Continues Data Analytics High disruptive potential Internal & external Online, Software value & Services WK Info Customer workflow Assets Value to Customers Tremendous upside potential Print Publishing Transaction / Legacy business usage data Transitioning to onl
Slide 8: Long Term Trends Support Growth
Long Term Trends Support Growth Wolters Kluwer is well positioned to capitalize on global market dynamics Global Dynamic WK Advantage Increasing Offering best-in-class Workloads & productivity solutions… Complexity Mobile Over 170 mobile apps Revolution and counting… Emerging Markets Emerging Growin
Slide 9: 2011 Performance
2011 Performance Market guidance achieved Continuing operations 2011 Guidance 2011 Actual Achieved Ordinary EBITA Margin 21.5 – 22% 21.7% Ordinary Free Cash Flow1) approx €412 million €455 million Return on Invested Capital (after tax)1) ≥ 8% 8.9% Diluted Ordinary EPS1) €1.46 – €1.51 €1.51 1
Slide 10: Agenda
Agenda Overview Operational Review Financial Highlights Outlook Q&A 2011 Full-Year Results 10
Slide 11: Legal & Regulatory
Legal & Regulatory Growth in the U.S. offsets pressure in Europe; Margins improve 3% organic growth in the U.S. led by strong growth at CLS 3% organic decline in Europe as markets remain pressured Market positions in Europe strengthen; retention rates improving Acquisition of NRAI extends le
Slide 12: Tax & Accounting
Tax & Accounting Strong growth in software and the positive phasing of bank products 4% organic growth in HY2 due to phasing of bank product revenues 6% organic growth in software partially offset by pressure in publishing Expanding global software portfolio Margins remain strong; impacted b
Slide 13: Health
Health Improved product mix delivers strong profitable growth 4% organic growth driven by Clinical Solutions and Ovid Margin increase driven by improved portfolio Strategic acquisition of Lexicomp extends market leading position Divestment of pharma business underway – Sale of MPS closed end
Slide 14: Financial & Compliance Services
Financial & Compliance Services Strong performance in Financial Services and Audit, Risk and Compliance Strong growth in Financial Services and ARC Logics Globalization results in 23% revenue growth outside of the U.S. – ARC Logics expands offerings in Europe, Asia – FRSGlobal continues to exten
Slide 15: Agenda
Agenda Overview Operational Review Financial Highlights Outlook Q&A 2011 Full-Year Results 15
Slide 16: Financial Highlights
Financial Highlights Resilient performance from continued operations Organic Growth Electronic & Services Revenues 71% 1.1% +290 bp +50 bp 0.6% 68% 2010 2011 2010 2011 Ordinary EBITA Margin Ordinary Free Cash Flow (€ million) +10 bp 21.7% +1% 455 449 -1% 21.6% 446 443 2010 2011 2010 2011 constant cu
Slide 17: Revenues by Division
Revenues by Division Growth in 3 of 4 Divisions; Modest decline in L&R driven by Europe Revenues €3,354 million Health 19% F&CS L&R 10% 43% T&A 28% (€ million, continuing operations) 2011 2010 ∆ ∆ CC ∆ OG Legal & Regulatory 1,451 1,471 (1%) 0% (1%) Tax & Accounting 931 922 1% 2% 2% Health 639 608 5%
Slide 18: Revenues by Media
Revenues by Media Continued growth in electronic and service subscriptions Revenue Composition Electronic revenues remain the driver of organic growth Subscription 74% recurring revenues support & other Books 10% recurring ongoing stability in results 74% Cyclical 16% Year-end December 31 (€ mil
Slide 19: Ordinary EBITA
Ordinary EBITA Overall margin improvement driven by Health performance Ordinary EBITA €771 million Excl. Corporate costs of €43 million Health 16% F&CS L&R 8% 42% T&A 34% Year-end December 31 EBITA margin (€ million, continuing operations) 2011 2010 Legal & Regulatory 22.4% 22.1% Tax & Accounting 27
Slide 20: Springboard Operational Excellence
Springboard Operational Excellence Full savings to be realized in 2012 Program completed in 2011 Total run-rate savings of €191 million; €104 million investment in 2011 Run-rate savings of €205-210 million per year to be realized in 2012 Program savings and costs Target € million (pre-tax) 200
Slide 21: Income Statement
Income Statement Profit impacted by higher Springboard cost and impairment Twelve months ended December 31 (€ million) 2011 2010 ∆ ∆ CC1 ∆ OG Revenues 3,354 3,308 1% 4% 1% Ordinary EBITA 728 716 2% 4% 2% Ordinary EBITA margin (%) 21.7% 21.6% Exceptional items (131) (71) Amortization of publishing ri
Slide 22: Ordinary Free Cash Flow
Ordinary Free Cash Flow Operational cash flow improvements offset by higher tax payments Twelve months ended December 31 (€ million) 2011 2010 ∆ ∆ CC1 Ordinary EBITA 728 716 2% 4% Depreciation 106 101 Autonomous movements in working capital 23 8 Financing charges (129) (123) Paid corporate income ta
Slide 23: Capital Allocation
Capital Allocation Capital is consistently focused towards higher growth markets Business Investment Allocation: 22% of Revenues High Growth (>5%) 28% 52% 82% Moderate Growth (2-5%) 41% 30% Stable/Low Growth (<2%) 31% 18% Revenues By Investment Growth Bracket Allocation Investments include CAPEX, Pr
Slide 24: Organic Investment
Organic Investment Continued focus on organic investment supports innovation 2011 Investment in Product Development Investment in product development 9% of Revenues (capex 4%, Opex 5%) and EBITA margin trend € million 21.6% 21.7% 350 20.8% 21.1% 22% 20.2% Legal & Regulatory Kleos, Jurion 300 16.5% 1
Slide 25: Key Acquisitions in 2011
Key Acquisitions in 2011 Acquisitions strengthen global market positions Extends leading position in the Legal & Regulatory corporate legal services market SAAS accounting & ERP software Tax & Accounting Global Tax Software Tax software based on SAAS Clinical decision support (mobile applications) D
Slide 26: No material refinancing need before 2014
No material refinancing need before 2014 Leverage guidance of 2.5x in reach in the medium term Ample liquidity and headroom 2012 net debt / EBITDA to decrease as Springboard costs will not recur Financing Profile Net Debt / EBITDA Ratio 1,452 3.2 3.2 3.1 2.9 2.7 2.7 2.4 2.5 701 354 364 2 3 2011
Slide 27: Shareholder returns
Shareholder returns Solid cash flow supports shareholder returns Proposed dividend of €0.68 per share (increase of 1.5%) Announcing new share buy-back program in 2012 of up to €100 million Dividend per share (€), by year paid out Total share buy-backs (€ million) 645 0.68 0.67 0.66 0.65 0.64 100
Slide 28: Financial Summary
Financial Summary Improvement in operating performance Capital towards higher growth markets Increased shareholder returns 2011 Full-Year Results 28
Slide 29: Agenda
Agenda Overview Operational Review Financial Highlights Outlook Q&A 2011 Full-Year Results 29
Slide 30: Outlook
Outlook Continued resilience in challenging economic climate Expect 2012 to mirror US and Asia driving growth trends in HY2 2011 Europe remains challenged Improving operating performance Portfolio characteristics Recurring revenues: 74% of total and growing remain resilient Shift towards h
Slide 31: Guidance
Guidance 2012 Guidance Ordinary EBITA Margin 21.5 – 22.5% Ordinary Free Cash Flow1) ≥ €425 million Return on Invested Capital (after tax)1) ≥ 8% Diluted Ordinary EPS1,2) Low single digit growth Net financing result Approximately €125 million Benchmark tax rate Approximately 27.5% 1) At constant curr
Slide 32: Summary
Summary Improved operating performance Resilient portfolio; growing online and software solutions Continued investment in innovation and globalization Solid profitability and cash flow Well positioned for the future 2011 Full-Year Results 32
Slide 33: Q&A
Q&A February 22, 2012
Slide 34: Results: Progress Against Mid-Term Targets
Results: Progress Against Mid-Term Targets Medium Term Targets 2011 Progress Revenue growth and Double-digit online & software growth 8% Solid performance, affected by global economic conditions Portfolio Online, software & composition services revenues 75% of total 71% Continued adoption of softw
Slide 35: Legal & Regulatory Revenues
Legal & Regulatory Revenues By Region By Media format By Product RoW Online Software Other 1% 33% 6% Cyclical North CLS 13% America Transaction 36% 10% Services Books Europe 23% 9% Recurring 63% 68% Print 38% (€ million) 2011 2010 ∆ ∆ CC ∆ OG Electronic & service subscription 634 625 1% 3% 1% Print
Slide 36: Tax & Accounting Revenues
Tax & Accounting Revenues By Region By Media Format By Product Online Recurring Europe 27% 90% 38% Software North 45% America Other 55% Print Cyclical 16% 4% Services Books Asia/ROW 12% 6% 7% (€ million) 2011 2010 ∆ ∆ CC ∆ OG Electronic & service subscription 594 577 3% 4% 3% Print subscription 88 9
Slide 37: Health Revenues
Health Revenues By Business Unit By Media Format By Product Online Medical 51% Research Clinical Other 21% Recurring Solutions Cyclical 34% 4% 70% Ads 4% Software Professional 6% Books & Education Print 22% 45% Services 40% 3% (€ million) 2011 2010 ∆ ∆ CC ∆ OG Electronic & service subscription 330 2
Slide 38: Financial & Compliance Services Revenues
Financial & Compliance Services Revenues By Business Unit By Media Format By Product Other Online Cyclical ARC Logics / 31% 22% Transport Software Services 46% Financial 42% FS Cyclical Recurring Services 58% Print 17% 61% 6% Services 17% (€ million) 2011 2010 ∆ ∆ CC ∆ OG Electronic & service subscr
Slide 39: Balance Sheet
Balance Sheet (€ million) December 31 2011 December 31 2010 Non-current assets 5,105 4,957 Current assets 1,586 1,600 Current liabilities (2,517) (2,380) Working capital (931) (780) Capital employed 4,174 4,177 Total equity 1,561 1,631 Long-term debt 2,158 2,141 Other non-current liabilities 455 405
Slide 40: Reconciliation: Net Profit to Ordinary EPS
Reconciliation: Net Profit to Ordinary EPS Twelve months ended December 31 (€ million) 2011 2010 Profit for the period attributed to equity holders 244 297 Amortization of publishing rights1 157 144 Taxation on amortization and impairments1 (54) (51) Results on disposals (after taxation) 9 0 Excepti
Slide 41: Reconciliation: Effective Tax Rate
Reconciliation: Effective Tax Rate 2011 Effective Tax Increased as result of larger weight US (€ million) Dec 31 2011 Dec 31 2010 Reported income tax expense 68 74 Tax on exceptional items 43 25 Tax on amortisation of publishing rights and impairments 54 51 Tax on divestments (1) 0 Tax on ordinary i