Wolters Kluwer N.v. · EURONEXT:WKL
Wolters Kluwer — H1 2022 Earnings Presentation
43 slides from Wolters Kluwer's earnings presentation, Aug 3, 2022
Slide 1: Wolters Kluwer 2022 Half-Year Results
Wolters Kluwer 2022 Half-Year Results Nancy McKinstry, CEO Kevin Entricken, CFO August 3, 2022 2022 Half-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 2022 • Appendix: Financial Supplement • Appendix: ESG Metrics 2022 Half-Year Results 3
Slide 4: Introduction
Introduction The first half saw strong organic growth and margin improvement; we made early progress on our 2022-2024 strategic plan Financial Results Strategic and ESG Progress Accelerate Organic growth +7% Grew expert solutions to Expert 56% of total revenues Solutions Adjusted operating margin 28
Slide 5: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2022 • Appendix: Financial Supplement • Appendix: ESG Metrics 2022 Half-Year Results 5
Slide 6: First-half 2022 results
First-half 2022 results Strong organic growth and margin improvement; cash flow development as expected (€ million, unless otherwise stated) HY 2022 HY 2021 Δ Δ CC Δ OG Revenues 2,600 2,280 +14% +7% +7% Adjusted operating profit 734 613 +20% +10% +11% Adjusted operating profit margin 28.2% 26.9% Dil
Slide 7: Revenues by division
Revenues by division All four divisions delivered strong organic growth (€ million) HY 2022 HY 2021 Δ Δ CC Δ OG Health 674 579 +16% +6% +6% Tax & Accounting 843 732 +15% +9% +9% Governance, Risk & Compliance 638 544 +17% +7% +6% Legal & Regulatory 445 425 +5% +3% +6% Total revenues 2,600 2,280 +14%
Slide 8: Revenues by type
Revenues by type Digital & services subscriptions posted +8% organic growth; growth in non- recurring revenues slowed, with mixed trends Organic Growth (%) Organic Growth (%) Recurring Revenue Types (81% of total) Non-recurring Revenue Types (19% of total) 30% 30% 6% of total 73% of total revenue re
Slide 9: Adjusted operating profit by division
Adjusted operating profit by division Margin benefitted from operational gearing and favorable currency mix Margin (€ million) HY 2022 HY 2021 Δ Δ CC Δ OG HY 2022 HY 2021 Health 216 181 +19% +8% +8% 32.0% 31.2% Tax & Accounting 270 229 +18% +10% +10% 32.0% 31.3% Governance, Risk & Compliance 206 175
Slide 10: Adjusted net profit and EPS
Adjusted net profit and EPS Diluted adjusted EPS up 11% in constant currencies, reflecting the strong operating results and a lower share count (€ million, unless otherwise stated) HY 2022 HY 2021 ∆ ∆ CC Revenues 2,600 2,280 +14% +7% Adjusted operating profit 734 613 +20% +10% Adjusted operating pro
Slide 11: Adjusted free cash flow
Adjusted free cash flow Lower cash conversion and higher tax paid impacted adjusted free cash flow as expected (€ million, unless otherwise stated) HY 2022 HY 2021 ∆ ∆ CC Adjusted operating profit 734 613 +20% +10% Depreciation, amortization, and impairment of other intangibles 109 101 Depreciation
Slide 12: Movement in net debt
Movement in net debt Balance sheet remains strong enabling increased cash returns to shareholders (€ million, unless otherwise stated) HY 2022 FY 2021 HY 2021 Net debt at start of period (2,131) (2,383) (2,383) Adjusted free cash flow 497 1,010 476 Dividends paid (264) (373) (233) Acquisition spendi
Slide 13: Dividends and share buybacks
Dividends and share buybacks Interim dividend €0.63; 2022 share buyback increased to €1 billion Dividend per Share (€) Share Buybacks (€ million) Completed Intended 1.57 Total 1,000 1.36 dividend 1.18 0.98 0.85 550 410 350 350 Interim 300 dividend 0.54 0.63 356 0.39 0.47 350 0.20 0.34 200 200 2017 2
Slide 14: Results summary
Results summary First half saw strong organic growth and margin increase; balance sheet remains strong; share buyback increased Organic growth +7% Adjusted operating Diluted adjusted EPS margin 28.2% +11% up +130bps in constant currencies ROIC improved to 14.8% Adjusted FCF Strong balance sheet Inte
Slide 15: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2022 • Appendix: Financial Supplement • Appendix: ESG Metrics 2022 Half-Year Results 15
Slide 16: Health
Health Organic growth +6% led by Clinical Solutions; margin reflects operational gearing and mix shift € million HY 2022 HY 2021 Δ Δ CC Δ OG Clinical Solutions • Revenues up +8% organically, led by Revenues 674 579 +16% +6% +6% UpToDate and drug information Adjusted operating • Emmi posted high sing
Slide 17: Tax & Accounting
Tax & Accounting Organic growth +9% driven by cloud-based software; margin increase reflects operational gearing partly offset by increased investment € million HY 2022 HY 2021 Δ Δ CC Δ OG Corporate Performance2 • Revenues up +9% organically, led by CCH Revenues 843 732 +15% +9% +9% Tagetik Adjusted
Slide 18: Governance, Risk & Compliance
Governance, Risk & Compliance Organic growth +6% supported by recurring revenues; stable margin reflects operational gearing offset by increased investment € million HY 2022 HY 2021 Δ Δ CC Δ OG Legal Services • Revenues up +6% organically, supported by Revenues 638 544 +17% +7% +6% CT Corporation re
Slide 19: Legal & Regulatory
Legal & Regulatory Organic growth +6%, supported by double-digit organic growth in software; margin increase reflects operational gearing and underlying cost savings € million HY 2022 HY 2021 Δ Δ CC Δ OG EHS/ORM & Legal Software Revenues 445 425 +5% +3% +6% • Organic growth +20%, led by Enablon Adju
Slide 20: Strategy 2022-2024
Strategy 2022-2024 Our strategic plan aims to deliver good organic growth, improved margins and returns, and advance sustainability over the coming three years Product development spend1 • Drive investment in cloud-based expert solutions to be approximately 10% of • Transform selected digital inform
Slide 21: Cloud-based expert solutions
Cloud-based expert solutions Cloud software revenues grew +20% organically and account for more than a third of software revenues HY 2022 Revenues HY 2022 Software Organic growth HY 2022 (HY 2021): €2.6 billion Revenues €1.1 billion Total software: +9% (+5%) Split by Media Format Cloud software: +20
Slide 22: Expert solution: CCH Axcess
Expert solution: CCH Axcess We expect revenues for CCH Axcess cloud solution for U.S. professional firms will overtake those of the on-premise version in 2023 CCH Axcess Cloud Platform for North American Professional Firms • The only integrated cloud-based tax and accounting platform for U.S. accoun
Slide 23: Innovation
Innovation Investment in product development at record level: our talented, innovative teams are generating and realizing ideas and bringing these to market vSim for Nursing • Investment in product development increased to 10% of total revenues in HY 2022 • We are currently rolling out scores of pro
Slide 24: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2022 • Appendix: Financial Supplement • Appendix: ESG Metrics 2022 Half-Year Results 24
Slide 25: Guidance 2022
Guidance 2022 Raising outlook for adjusted operating profit margin and ROIC in reporting currency and for adjusted EPS growth in constant currencies Performance indicators 2022 Guidance Previous 2022 Guidance 2021 Actual Adjusted operating profit margin* 26.0%-26.5% 25.5%-26.0% 25.3% Adjusted free c
Slide 26: Divisional outlook 2022
Divisional outlook 2022 Improved organic growth outlook in Tax & Accounting and Legal & Regulatory Division Outlook • Organic growth to slow from 2021 levels, mainly due to the absence of a Health contract win of the size of the ASCO titles • Adjusted operating profit margin to improve • Organic gro
Slide 27: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2022 • Appendix: Financial Supplement • Appendix: ESG Metrics 2022 Half-Year Results 27
Slide 28: Revenues by type
Revenues by type (€ million) HY 2022 HY 2021 ∆ ∆ CC ∆ OG Digital and services subscriptions 1,890 1,637 +15% +8% +8% Print subscriptions 76 81 -5% -8% -8% Other recurring 135 133 +1% -7% +3% Recurring revenues 2,101 1,851 +14% +6% +7% Print books 55 55 +1% -4% +13% LS transactional 146 126 +16% +5%
Slide 29: Revenues by media format
Revenues by media format (€ million) HY 2022 HY 2021 ∆ ∆ CC ∆ OG Software 1,136 974 +17% +9% +9% Other digital1 1,029 908 +13% +6% +6% Total Digital 2,165 1,882 +15% +8% +8% Services 265 227 +16% +6% +5% Print 170 171 -1% -6% -1% Total revenues 2,600 2,280 +14% +7% +7% ∆: % Change; ∆ CC: % Change in
Slide 30: Reconciliation: adjusted net financing costs to financing results
Reconciliation: adjusted net financing costs to financing results (€ million) HY 2022 HY 2021 Adjusted net financing costs (42) (42) Employee benefits financing component (1) (1) Change in fair value of financial assets - - Result on divestment of financial assets - - Divestment related results on e
Slide 31: IFRS profit and diluted EPS
IFRS profit and diluted EPS (€ million, unless otherwise stated) HY 2022 HY 2021 ∆ Adjusted operating profit 734 613 +20% Amortization of acquired intangibles & impairment (88) (60) Results on divestments of operations (4) (30) Other non-benchmark items1 (2) (4) Operating profit 640 519 +23% Financi
Slide 32: Balance sheet
Balance sheet (€ million, unless otherwise stated) June 30, 2022 Dec. 31, 2021 June 30, 2021 Goodwill and intangible assets 6,114 5,800 5,785 Property, plant and equipment 83 75 80 Right-of-use assets 306 301 323 Deferred tax and other non-current assets 129 114 143 Total non-current assets 6,632 6,
Slide 33: Debt maturity profile
Debt maturity profile Debt Maturity Profile – June 30, 2022 (€ million) Net debt breakdown: € million 1,111 Gross financial debt 2,977 Lease liabilities 337 Total gross debt 3,314 Less: Cash & cash equivalents and derivatives 1,111 Net debt 2,203 769 559 525 509 455 232 150 43 33 19 12 9 Cash & cash
Slide 34: Currency impact
Currency impact HY 2022 Revenues by Currency British pound 3% Other 7% Euro 23% U.S. dollar 67% Impact in € million on Adjusted operating Average rates Revenues profit 1 Euro HY 2022 HY 2021 HY 2022 HY 2022 U.S. dollar 1.10 1.21 158 55 British pound 0.84 0.87 2 0 Canadian dollar 1.39 1.50 3 1 Austra
Slide 35: Growth rates
Growth rates ∆ ∆ CC ∆ OG % % Change % Net Effect % % Currency in Constant Acquisitions Organic HY 2022 HY 2021 Change Impact Currencies & Disposals Growth Revenues Health 674 579 +16% +10% +6% - +6% Tax & Accounting 843 732 +15% +6% +9% 0% +9% Governance, Risk & Compliance 638 544 +17% +10% +7% +1%
Slide 36: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2022 • Appendix: Financial Review • Appendix: ESG Metrics 2022 Half-Year Results 36
Slide 37: ESG Metrics
ESG Metrics • ESG Ratings • Environmental: decarbonization • Social: employee culture • Social: diversity • Governance: stewardship • Governance: board skills 2022 Half-Year Results 37
Slide 38: ESG Ratings
ESG Ratings Sustainalytics ESG Risk Rating MSCI ESG Rating 0 10 20 30 40 50 AAA AA Wolters Kluwer 18.0 A FactSet 20.3 BBB Intuit 16.2 BB Sage Group 17.7 B Constellation Software 24.0 CCC Dassault Systèmes 17.0 Aspen Technology 22.3 2018 2019 2020 2021 2022 Sustainalytics risk rating: scale ranges fr
Slide 39: Environmental
Environmental Wolters Kluwer Decarbonization Programs Purchased energy-related carbon Cloud migration and on-premise server emissions1 decommissioning program Tons CO2 Emissions/FTE • In HY 2022, over 450 on-premise servers 2.0 decommissioned 2.00 1.70 1.79 Real estate rationalization program 1.67 1
Slide 40: Social: employee culture
Social: employee culture Employee Engagement Score Access to Learning Wolters Kluwer High Performing Norm Management Employees 100% 100% 100% 100% 100% 100% 84% 76% 76% 77% 74% 100% 83% 100% 100% 100% 100% 100% 50% 50% 56% 0% 0% 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Employee Turnove
Slide 41: Social: diversity
Social: diversity Supervisory Board Members: % Female Total Workforce: % Female 80% 80% 57% 48% 48% 47% 47% 46% 43% 43% 43% 43% 43% 40% 40% 0% 0% 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 Executive Board Members: % Female Belonging Score 2021 72 / 100 80% 50% 50% 50% 50% 50% 50% The bel
Slide 42: Governance: stewardship
Governance: stewardship Product Development Spend Annual Compliance Training (includes operating expenses and capital expenditures) (includes ethics, data privacy, IT and cybersecurity) % of Total Revenues % of Employees Completed 12% 100% 97% 99% 99% 99% 99% 10% 50% 8% 6% 0% 2017 2018 2019 2020 202
Slide 43: Governance: board skills
Governance: board skills Supervisory Board Skills Experience & Competencies Outside Boards Technology & Cybersecurity Organization, Development Social Policy, Management Independent Marketing & Committees Information Commercial Accounting, General Finance Gender Tenure Mgmt. Audit, Legal Age Member