Slide 1: Wolters Kluwer 2023 Full-Year Results
Wolters Kluwer 2023 Full-Year Results Nancy McKinstry, CEO Kevin Entricken, CFO February 21, 2024 2023 Full-Year Results 1
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 • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 3
Slide 4: Introduction
Introduction 2023: delivered 6% organic growth and margin increase; significant progress towards strategic and ESG goals Financial Results Strategic and ESG Progress Accelerate Organic growth +6% Expert solutions, 58% of Expert revenues, +8% organically Solutions Adjusted operating profit margin 26.
Slide 5: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 5
Slide 6: Full-year 2023 results
Full-year 2023 results Organic growth +6%; margin up 30 basis points, EPS up 12% in constant currencies, and ROIC improved (€ million, unless otherwise stated) FY 2023 FY 2022 Δ Δ CC Δ OG Revenues 5,584 5,453 +2% +5% +6% Adjusted operating profit 1,476 1,424 +4% +6% +7% Adjusted operating profit mar
Slide 7: Revenues by division
Revenues by division Organic growth led by Tax & Accounting and Corporate Performance & ESG (€ million) FY 2023 FY 2022 Δ Δ CC Δ OG Health 1,508 1,448 +4% +7% +6% Tax & Accounting 1,466 1,394 +5% +8% +8% Financial & Corporate Compliance 1,052 1,056 0% +2% +2% Legal & Regulatory 875 916 -4% -4% +4% C
Slide 8: Revenues by type
Revenues by type Digital and services subscriptions sustained strong organic growth (+8%); non- recurring revenues saw mixed trends Organic Growth (%) Organic Growth (%) Recurring Revenue Types (82% of total) Non-recurring Revenue Types (18% of total) 20% 74% of total 20% revenue 10% 8% 8% 8% 8% 10%
Slide 9: Adjusted operating profit by division
Adjusted operating profit by division Margin increase driven mainly by Financial & Corporate Compliance and Legal & Regulatory Margin (€ million) FY 2023 FY 2022 Δ Δ CC Δ OG FY 2023 FY 2022 Health 454 434 +5% +8% +7% 30.1% 29.9% Tax & Accounting 479 455 +5% +8% +8% 32.7% 32.6% Financial & Corporate
Slide 10: Adjusted net profit and EPS
Adjusted net profit and EPS Adjusted EPS up +12% in constant currencies, benefitting from significantly lower net financing costs and a lower share count (€ million, unless otherwise stated) FY 2023 FY 2022 ∆ ∆ CC Revenues 5,584 5,453 +2% +5% Adjusted operating profit 1,476 1,424 +4% +6% Adjusted op
Slide 11: Adjusted free cash flow
Adjusted free cash flow Cash conversion returning to historical levels (€ million, unless otherwise stated) FY 2023 FY 2022 ∆ ∆ CC Adjusted operating profit 1,476 1,424 +4% +6% Depreciation, amortization, and impairment of other intangibles 232 235 Depreciation of right-of-use assets 67 71 Adjusted
Slide 12: Movement in net debt
Movement in net debt Modest rise in leverage to 1.5x; over 125% of free cash flow returned to shareholders (€ million, unless otherwise stated) FY 2023 FY 2022 Net debt at start of period (2,253) (2,131) Adjusted free cash flow 1,164 1,220 Dividends paid (467) (424) Acquisition spending, net of cash
Slide 13: Dividends and share buybacks
Dividends and share buybacks Proposing total dividend of €2.08 (+15%); announcing intention to repurchase up to €1 billion in shares in 2024 Dividend per Share (€) Share Buybacks (€ million) Total Completed Intended dividend 2.08 1,000 1,000 1,000 1.81 1.57 1.36 1.18 410 350 350 Interim 0.63 0.72 di
Slide 14: Results summary
Results summary Delivered robust organic growth and an improvement in margin; substantial returns to shareholders Organic growth +6% Adjusted operating Diluted adjusted EPS profit margin 26.4% +12% up 30bps in constant currencies ROIC improved to 16.8% Adjusted FCF Strong balance sheet Substantial r
Slide 15: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 15
Slide 16: Health
Health Organic growth +6%; margin reflects operational gearing and mix shift, partly offset by higher personnel costs € million FY 2023 FY 2022 Δ Δ CC Δ OG Clinical Solutions • Revenues up +7% organically Revenues 1,508 1,448 +4% +7% +6% • Clinical decision support, drug databases, Adjusted operatin
Slide 17: Tax & Accounting
Tax & Accounting Organic growth +8%, driven mainly by cloud software; margin stable despite increase in personnel costs and related expenses € million FY 2023 FY 2022 Δ Δ CC Δ OG Tax & Accounting North America • Revenues up +8% organically, driven by Revenues 1,466 1,394 +5% +8% +8% continued strong
Slide 18: Financial & Corporate Compliance
Financial & Corporate Compliance Organic growth +2%, supported by +7% growth in recurring revenues; margin increase reflects tight cost control and favorable revenue mix € million FY 2023 FY 2022 Δ Δ CC Δ OG Legal Services • Organic growth +2%, with recurring revenues Revenues 1,052 1,056 0% +2% +2%
Slide 19: Legal & Regulatory
Legal & Regulatory Organic growth +4%, led by digital information solutions; margin reflects operational gearing and cost control, partly offset by increased investment Legal & Regulatory Information Solutions € million FY 2023 FY 2022 Δ Δ CC Δ OG • Organic growth +4%, driven by +8% growth in Revenu
Slide 20: Corporate Performance & ESG
Corporate Performance & ESG Organic growth +9%; margin reflects higher personnel costs and increased investment € million FY 2023 FY 2022 Δ Δ CC Δ OG EHS/ORM (Enablon) • Organic growth +16%, with strong performance Revenues 683 639 +7% +9% +9% in both cloud and on-premise software Adjusted operating
Slide 21: Strategic progress
Strategic progress Significant progress in the second year of our current strategic plan Strategy 2022-2024 Product development • Grew expert solutions +8% organically spend1 to be approximately Accelerate • Invested 11% of revenues in product development 10% of revenues Expert • Introduced generati
Slide 22: Innovation: generative AI
Innovation: generative AI Building on 10 years experience with AI, we have started introducing generative AI features to products leveraging our health and legal content Generative AI Features Launched DL UpToDate - U.S. Wolters Kluwer Online - Germany • Beta launched October 2023 (AI Labs) • Beta l
Slide 23: Innovation: Corporate Performance & ESG
Innovation: Corporate Performance & ESG CP&ESG has launched its first product integration providing a seamless data connection between Enablon and CCH Tagetik Corporate Performance Management Solution Data integration CCH Tagetik CPM Open and extendible • Organic growth: +20% • ESG related product r
Slide 24: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 24
Slide 25: Guidance 2024
Guidance 2024 Expect sustained good organic growth and a further modest increase in the adjusted operating profit margin Performance indicators 2024 Guidance 2023 Actual Adjusted operating profit margin* 26.4%-26.8% 26.4% Adjusted free cash flow** €1,150-€1,200 million €1,164 million ROIC* 17%-18% 1
Slide 26: Divisional outlook 2024
Divisional outlook 2024 Expect increase in group adjusted profit margin to be driven primarily by Health, Legal & Regulatory, and Corporate Performance & ESG Division Organic growth outlook Health 2024 organic growth to be in line with prior year (FY 2023: 6%). 2024 organic growth to be slightly bel
Slide 27: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2024 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 27
Slide 28: Revenues by type
Revenues by type (€ million) FY 2023 FY 2022 ∆ ∆ CC ∆ OG Digital and services subscriptions 4,134 3,950 +5% +7% +8% Print subscriptions 136 157 -13% -12% -7% Other recurring 273 281 -3% -1% +3% Recurring revenues 4,543 4,388 +4% +6% +7% Print books 120 129 -7% -5% 0% FCC transactional1 320 349 -8% -
Slide 29: Revenues by media format
Revenues by media format (€ million) FY 2023 FY 2022 ∆ ∆ CC ∆ OG Software 2,515 2,375 +6% +8% +8% Other digital1 2,208 2,180 +1% +3% +6% Digital 4,723 4,555 +4% +6% +7% Services 534 533 0% +3% +3% Print 327 365 -10% -9% -5% Total revenues 5,584 5,453 +2% +5% +6% ∆: % Change; ∆ CC: % Change in consta
Slide 30: Software revenues
Software revenues FY 2023 Revenues FY 2023 Software Organic growth FY 2023 (FY 2022): €5.6 billion Revenues €2.5 billion Total software: +8% (+9%) Split by Media Format Cloud software: +15% (+17%) Top software products Cloud CCH Axcess/ 37% TAA ☁ ▤ software ProSystem fx (SaaS) eOriginal FCC Services
Slide 31: Reconciliation: adjusted net financing costs to financing results
Reconciliation: adjusted net financing costs to financing results (€ million) FY 2023 FY 2022 Adjusted net financing costs (27) (56) Employee benefits financing component (3) (1) Change in fair value of financial assets 0 - Result on divestment of financial assets - - Divestment related results on e
Slide 32: IFRS profit and diluted EPS
IFRS profit and diluted EPS (€ million, unless otherwise stated) FY 2023 FY 2022 ∆ Adjusted operating profit 1,476 1,424 +4% Amortization & impairment of acquired intangibles (146) (160) Results on divestments of operations 4 75 Other non-benchmark items1 (11) (6) Operating profit 1,323 1,333 -1% Fi
Slide 33: Balance sheet
Balance sheet (€ million, unless otherwise stated) Dec. 31, 2023 Dec. 31, 2022 Goodwill and intangible assets 5,920 6,042 Property, plant and equipment 79 79 Right-of-use assets 241 283 Deferred tax and other non-current assets 100 129 Total non-current assets 6,340 6,533 Cash and cash equivalents 1
Slide 34: Debt maturity profile
Debt maturity profile Debt Maturity Profile – December 31, 2023 (€ million) Net debt breakdown: € million 1,135 Gross financial debt 3,477 Lease liabilities 272 Total gross debt 3,749 Less: Cash & cash equivalents and derivatives 1,137 Net debt 2,612 707 663 548 531 562 512 132 55 20 10 8 1 20241 20
Slide 35: Currency impact
Currency impact FY 2023 Revenues by Currency British pound 3% Other 8% Euro 22% U.S. dollar 67% Impact in € million on: Adjusted operating Average rates Revenues profit 1 Euro FY 2023 FY 2022 FY 2023 FY 2023 U.S. dollar 1.08 1.05 (102) (30) British pound 0.87 0.85 (3) 0 Canadian dollar 1.46 1.37 (6)
Slide 36: Growth rates
Growth rates ∆ ∆ CC ∆ OG % % Change % Net Effect % % Currency in Constant Acquisitions Organic (€ million, unless otherwise stated) FY 2023 FY 2022 Change Impact Currencies & Disposals Growth Revenues Health 1,508 1,448 +4% -3% +7% +1% +6% Tax & Accounting 1,466 1,394 +5% -3% +8% 0% +8% Financial &
Slide 37: Former reporting structure: revenues by division
Former reporting structure: revenues by division (€ million) FY 2023 FY 2022 Δ Δ CC Δ OG Health 1,508 1,448 +4% +7% +6% Tax & Accounting 1,874 1,758 +7% +9% +9% Governance, Risk & Compliance 1,312 1,333 -2% +1% +1% Legal & Regulatory 890 914 -3% -2% +6% Total revenues 5,584 5,453 +2% +5% +6% Δ: % Ch
Slide 38: Former reporting structure: adjusted operating profit by division
Former reporting structure: adjusted operating profit by division Margin (€ million) FY 2023 FY 2022 Δ Δ CC Δ OG FY 2023 FY 2022 Health 454 434 +5% +8% +7% 30.1% 29.9% Tax & Accounting 537 513 +5% +7% +7% 28.6% 29.2% Governance, Risk & Compliance 421 418 +1% +4% +4% 32.1% 31.3% Legal & Regulatory 13
Slide 39: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Financial Supplement • Appendix: Sustainability and ESG Metrics 2023 Full-Year Results 39
Slide 40: Sustainability and ESG Metrics
Sustainability and ESG Metrics • ESG Ratings • Governance • Environmental • Social: employee culture • Social: diversity • Governance: board skills 2023 Full-Year Results 40
Slide 41: ESG Ratings
ESG Ratings Sustainalytics ESG Risk Rating MSCI ESG Rating 0 10 20 30 40 50 AAA AA Wolters Kluwer 14.4 A FactSet 18.4 BBB Intuit 17.9 BB Sage Group 18.0 B Aspen Technology 18.8 CCC Dassault Systèmes 18.4 Constellation Software 25.6 2018 2019 2020 2021 2022 2023 Sustainalytics risk rating: scale rang
Slide 42: Governance
Governance Product Development Spend Cybersecurity Maturity Score (includes operating expenses and capital expenditures) Indexed (2020 = 100.0) % of Total Revenues 120 12% 110 Based on 10% NIST-CSF* 100 Framework Indexed 2020 8% = 100.0 90 6% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 20
Slide 43: Environmental
Environmental FY 2023 progress Scope 1 & 2 Emissions per FTE1 • Near-term emissions reduction targets Metric tons CO2e emissions/FTE validated by SBTi 1.5 • Office footprint (m2) reduced by 5% organically • Business travel emissions per FTE increased but 1.0 1.08 were 16% below 2019 baseline • 1,542
Slide 44: Social: employee culture
Social: employee culture Employee Engagement Score1 Belonging Score2 Wolters Kluwer High-Performing Norm 100 Glint Top 25% Belonging measures 100 the extent to which 84 employees believe 73 75 72 76 77 75 they can bring their 74 75 authentic selves to 76 77 78 work and be accepted for who they are 5
Slide 45: Social: diversity
Social: diversity Supervisory Board Members: % Female Executive Board Members: % Female 80% 80% 67% 57% 50% 50% 50% 50% 50% 50% 43% 43% 43% 43% 40% 40% 0% 0% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Managers: % Female Total Workforce: % Female 80% 80% 48% 47% 47% 46% 46% 46% 39% 3
Slide 46: Governance: board skills
Governance: board skills Ann Ziegler Jack de Kreij Jeanette Horan Heleen Kersten Sophie Vandebroek Chris Vogelzang • American, 1958 • Dutch, 1959 • British, 1955 • Dutch, 1965 • American, 1962 • Dutch, 1962 • Chair, Supervisory • Vice-Chair, • Co-Chair, Selection • Member, Selection • Member, Audit