Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2014 Earnings Presentation
41 slides from Wolters Kluwer's earnings presentation, Feb 18, 2015
Slide 1: 2014 Full-Year Results
2014 Full-Year Results February 18, 2015 | Amsterdam Nancy McKinstry Chief Executive Officer and Chairman Kevin Entricken Chief Financial Officer
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 Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2014 Full-Year Results 3
Slide 4: Introduction
Introduction Guidance met, organic growth improved, returning cash 2014 results in line with guidance set at the start of the year – Adjusted operating margin 21.0%, within guidance range – Adjusted EPS up +3% at constant currencies, in line with guidance – Adjusted free cash flow €516 million, be
Slide 5: Strategic progress
Strategic progress Key achievements 2014 ▪ Delivered 7% organic growth in our leading, Expand high growth positions; Double-digit growth in our leading, faster-growing economies ▪ Expanded CLS with acquisition of Datacert high growth ▪ Implemented several small disposals positions ▪ Digital and serv
Slide 6: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2014 Full-Year Results 6
Slide 7: Full-year 2014 results
Full-year 2014 results Results in line with guidance; organic growth improves to 2% (€ million, unless otherwise stated) FY 2014 FY 2013 ∆ ∆ CC ∆ OG Revenues 3,660 3,565 +3% +3% +2% Adjusted operating profit 768 765 0% 0% -1% Adjusted operating profit margin 21.0% 21.5% Diluted adjusted EPS €1.57 €1
Slide 8: Revenues by division
Revenues by division Tax & Accounting, Health and Financial & Compliance Services support organic growth (€ million) FY 2014 FY 2013 ∆ ∆ CC ∆ OG Legal & Regulatory 1,497 1,447 +3% +4% -1% Tax & Accounting 946 965 -2% -1% +3% Health 816 775 +5% +5% +5% Financial & Compliance Services 401 378 +6% +6%
Slide 9: Revenues by region
Revenues by region Organic growth driven by North America and Asia Pacific & ROW (€ million) FY 2014 FY 2013 ∆ ∆ CC ∆ OG North America 1,999 1,924 +4% +5% +3% Europe 1,373 1,387 -1% -1% 0% AsiaPac & ROW 288 254 +13% +12% +7% Total revenues 3,660 3,565 +3% +3% +2% ∆: % Change; ∆ CC: % Change constant
Slide 10: Revenues by media format
Revenues by media format Digital revenues up 6% organically, growing in all divisions (€ million) FY 2014 FY 2013 ∆ ∆ CC ∆ OG Digital 2,472 2,286 +8% +8% +6% Services 453 454 0% 0% 0% Print 735 825 -11% -10% -9% Total revenues 3,660 3,565 +3% +3% +2% ∆: % Change; ∆ CC: % Change constant currencies (
Slide 11: Adjusted operating profit
Adjusted operating profit Margin decline due to increased restructuring Margin Margin (€ million) FY 2014 FY 2013 ∆ ∆ CC ∆ OG FY 2014 FY 2013 Legal & Regulatory 305 313 -3% -3% -6% 20.3% 21.6% Tax & Accounting 250 259 -3% -3% -3% 26.4% 26.8% Health 197 175 +13% +11% +11% 24.1% 22.6% Financial & Comp
Slide 12: Restructuring costs
Restructuring costs Excluding restructuring, margin up 10 basis points Restructuring is included in adjusted operating profit Restructuring costs increased to €36 million in 2014 Majority of restructuring costs were in Legal & Regulatory and Tax & Accounting (€ million, unless otherwise stated
Slide 13: Adjusted net profit and EPS
Adjusted net profit and EPS Diluted adjusted EPS up +3% in constant currencies (€ million, unless otherwise stated) FY 2014 FY 2013 ∆ ∆ CC Revenues 3,660 3,565 +3% +3% Adjusted operating profit 768 765 0% 0% Adjusted operating profit margin 21.0% 21.5% Adjusted net financing costs (113) (117) Equity
Slide 14: IFRS profit and diluted EPS
IFRS profit and diluted EPS Non-recurring gains and tax benefits drive IFRS net profit up +37% (€ million, unless otherwise stated) FY 2014 FY 2013 ∆ Adjusted operating profit 768 765 0% Amortization of acquired intangibles (192) (185) Results on divestments of operations 10 47 Acquisition integrati
Slide 15: Adjusted free cash flow
Adjusted free cash flow Cash conversion better than expected (€ million, unless otherwise stated) FY 2014 FY 2013 ∆ ∆ CC Adjusted operating profit 768 765 0% 0% Depreciation and amortization of other intangibles 140 132 Adjusted EBITDA 908 897 +1% +1% Capital expenditure (148) (148) Autonomous movem
Slide 16: Movement in net debt
Movement in net debt Net debt reduced (€ million, unless otherwise stated) FY 2014 FY 2013 Net debt at January 1 (1,988) (2,086) Adjusted free cash flow 516 503 Dividends paid (209) (204) Springboard restructuring, net of tax (4) (10) Free cash flow after dividends and Springboard 303 289 Other sour
Slide 17: Leverage
Leverage Net-debt-to-EBITDA below target level Net-Debt-to-EBITDA (Ratio) 3.1x 2.9x Target: 2.7x 2.5x 2.4x 2.2x 2.1x 2009 2010 2011 2012 2013 2014 2014 Full-Year Results 17
Slide 18: Debt maturity profile
Debt maturity profile Next major debt maturity not until in 2018 May 2014: Issued new 10-year €400 million Eurobond with 2.5% coupon July 2014: Renewed €600 million multi-currency credit facility Debt Maturity Profile (€ million) 748 696 20 535 395 247 204 148 14 2014 2015 2016 2017 2018 2019 20
Slide 19: Returns to shareholders
Returns to shareholders Increasing cash returns Progressive dividend policy: ninth consecutive year of increase Share buy-back of up to €140 million in 2015 Dividend per share (€)1) Share buy-backs (€ million) 0.71 645 0.70 0.69 0.68 0.67 0.66 0.65 135 140 0.64 100 0.58 0.55 19 20 25 2005 2006 2
Slide 20: Summary
Summary Revenues up +2% organically ― Leading, high growth positions +7% ― Digital & services revenues +5% Adjusted operating profit of €768 million; margin reflects increased restructuring Diluted adjusted EPS €1.57, up +3% in constant currencies Adjusted free cash flow of €516 million, up
Slide 21: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2014 Full-Year Results 21
Slide 22: Legal & Regulatory
Legal & Regulatory Continued print decline; margin impacted by restructuring € million FY 2014 FY 2013 Δ Δ CC Δ OG Corporate Legal Services Revenues 1,497 1,447 +3% +4% -1% Revenue +5% organically, buoyed by Q4 transactional revenues Adjusted 305 313 -3% -3% -6% Transactional revenue +7%, benefi
Slide 23: Tax & Accounting
Tax & Accounting Software grows 5% globally; margins reflect increased restructuring € million FY 2014 FY 2013 Δ Δ CC Δ OG North America Revenues 946 965 -2% -1% +3% Software revenues up +5%, with both on-premise and cloud solutions Adjusted operating profit 250 259 -3% -3% -3% performing well Mar
Slide 24: Health
Health Organic growth +5%; margin up 150 basis points € million FY 2014 FY 2013 Δ Δ CC Δ OG Clinical Solutions Revenues 816 775 +5% +5% +5% Double-digit organic growth, with strong Adjusted performances across most product areas 197 175 +13% +11% +11% and in all regions globally operating profit M
Slide 25: Financial & Compliance Services
Financial & Compliance Services Organic growth +4%; margin reflects lower transaction volumes, investment and restructuring € million FY 2014 FY 2013 Δ Δ CC Δ OG Finance, Risk & Compliance Revenues 401 378 +6% +6% +4% Organic growth in double-digits, driven by strong software license and Adjusted
Slide 26: Progress on strategic goals
Progress on strategic goals Our strategy aims to accelerate profitable growth Expand Focus the majority of our investments on high growth segments where we have our leading, achieved market leadership high growth positions Invest in products and services to deliver the tailored solutions and ins
Slide 27: 1. Expand our leading, high growth positions
1. Expand our leading, high growth positions Our leading, high growth positions in total grew 7% organically Wolters Kluwer Revenue FY 2014 Leading, high growth units within divisions (48% of total revenues) Divisions: % of division: Organic Growth: Financial & Compliance Finance, Risk & >10% 58% Se
Slide 28: Improved organic growth
Improved organic growth Revenue KPIs showing progress Organic Growth Non-recurring Revenue Digital & Services Revenue Recurring Revenue excluding print books (80% of total revenues) (76% of total revenues) (16% of total revenues) 5% 4% 4% 3.0% 2.7% 2013 2014 2013 2014 2013 2014 -4% Both years reflec
Slide 29: 2. Deliver solutions and insights
2. Deliver solutions and insights Improve our customers’ productivity and outcomes Tailored to Increases mobility and Driving improved customer needs productivity outcomes Kleos UpToDate Anywhere Lippincott’s Nursing Advisor Next Generation cloud product Expanded global reach of Clinical decision su
Slide 30: 3. Drive efficiencies
3. Drive efficiencies Creating global scale and savings in our operations Sales Channel Process & Sourcing Technology Real Estate & Go to Market Organization Legal & Regulatory and Tax and Accounting Outsourcing print, automating editorial & production and consolidating real estate Streamlined e
Slide 31: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2014 Full-Year Results 31
Slide 32: Divisional Outlook 2015
Divisional Outlook 2015 Corporate Legal Services to see organic growth, albeit at a more moderate pace in the second half Legal & Regulatory Division, including Legal & Regulatory Solutions, to see organic revenue decline and modest margin contraction Revenue momentum similar to 2014, with gro
Slide 33: Guidance 2015
Guidance 2015 Performance indicators FY 2015 Guidance Adjusted operating profit margin 21.0%–21.5% Adjusted free cash flow €500-€525 million Return on invested capital ≥ 8% Diluted adjusted EPS Mid-single-digit growth Guidance for adjusted free cash flow and diluted adjusted EPS is in constant curre
Slide 34: Q&A
Q&A Nancy McKinstry Chief Executive Officer and Chairman Kevin Entricken Chief Financial Officer
Slide 35: Appendix
Appendix Nancy McKinstry Chief Executive Officer and Chairman Kevin Entricken Chief Financial Officer
Slide 36: Revenue and operating profit breakdown
Revenue and operating profit breakdown FY 2014 Revenues by division FY 2014 Adjusted operating profit1) 1) Excluding corporate F&CS F&CS 11% 8% Legal & Legal & Health Health Regulatory Regulatory 24% 22% 37% 41% Tax & Tax & Accounting Accounting 26% 31% FY 2014 Revenues by type FY 2014 Revenues by m
Slide 37: Revenues by type
Revenues by type (€ million) FY 2014 FY 2013 ∆ ∆ CC ∆ OG Digital and services subscriptions 2,155 2,016 +7% +7% +5% Print subscriptions 341 387 -12% -10% -8% Other recurring 281 274 +2% +2% +1% Recurring revenues 2,777 2,677 +4% +4% +3% Print books 289 322 -11% -11% -10% CLS transactional 215 191 +1
Slide 38: Reconciliation: Adjusted net financing costs to financing results
Reconciliation: Adjusted net financing costs to financing results (€ million) FY 2014 FY 2013 Adjusted net financing costs (113) (117) Divestment related results on AccessData - 12 Loss on investment available-for-sale (14) - Employee benefits financing component (5) (5) Revaluation gain on minority
Slide 39: Balance Sheet
Balance Sheet (€ million, unless otherwise stated) Dec. 31, 2014 Dec. 31, 2013 Goodwill and intangible assets 5,172 4,592 Equity-accounted investees and financial assets 32 58 Other non-current assets 216 212 Non-current assets 5,420 4,862 Cash and cash equivalents 535 755 Other current assets 1,412
Slide 40: Currency
Currency Impact adjusted Impact operating Average rates revenue profit 1 Euro FY 2014 FY 2013 FY 2014 FY 2014 U.S. Dollar 1.33 1.33 6 6 British Pound 0.81 0.85 (6) 0 Canadian Dollar 1.47 1.37 (4) 0 Australian Dollar 1.47 1.38 (4) 0 Brazilian Real, Russian Ruble and other (2) (3) Total impact (€ mill
Slide 41: Sensitivity to U.S. Dollar
Sensitivity to U.S. Dollar Impact of a 1% weakening of the U.S. Dollar against the Euro (€ million) 2014 Revenues (21) Adjusted operating profit (6) Adjusted net profit (3) Adjusted FCF (4) Diluted adjusted EPS (Euro) (0.01) Does not include the impact of other currency exposures. Does not include t