Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2015 Earnings Presentation
45 slides from Wolters Kluwer's earnings presentation, Feb 24, 2016
Slide 1: Wolters Kluwer 2015 Full-Year Results
Wolters Kluwer 2015 Full-Year Results Nancy McKinstry – CEO Kevin Entricken – CFO February 24, 2016
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 2016 Appendix 2015 Full-Year Results 3
Slide 4: Introduction
Introduction Strategy is delivering improved performance Organic growth improved to +3% – Digital & services revenues grew +5% organically (83% of total revenues) Met or exceeded guidance – Adjusted operating profit margin increased in line with guidance – Adjusted free cash flow up +7% in const
Slide 5: Strategic progress
Strategic progress Key achievements 2015 ▪ Delivered 7% organic growth in leading, growth positions Expand ▪ Acquired Learner’s Digest International in Health and our leading, smaller bolt-on assets in Tax & Accounting high growth ▪ Divested Russia and several non-core assets positions ▪ Sustained i
Slide 6: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2016 Appendix 2015 Full-Year Results 6
Slide 7: Full-year 2015 results
Full-year 2015 results Organic growth accelerated, operating margin and ROIC improved (€ million, unless otherwise stated) FY 2015 FY 2014 ∆ ∆ CC ∆ OG Revenues 4,208 3,660 +15% +3% +3% Adjusted operating profit 902 768 +17% +2% +3% Adjusted operating profit margin 21.4% 21.0% Diluted adjusted EPS €1
Slide 8: Revenues – new divisions
Revenues – new divisions Organic growth in Health, Tax & Accounting, and Governance, Risk & Compliance more than offset decline in Legal & Regulatory (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG Health 1,022 816 +25% +6% +5% Tax & Accounting 1,132 989 +14% +4% +3% Governance, Risk & Compliance 1,065 854
Slide 9: Revenues – previous divisions
Revenues – previous divisions Tax & Accounting, Health and Financial & Compliance Services drive growth (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG Legal & Regulatory 1,626 1,497 +9% 0% 0% Tax & Accounting 1,078 946 +14% +3% +3% Health 1,022 816 +25% +6% +5% Financial & Compliance Services 482 401 +20%
Slide 10: Revenues by region
Revenues by region Organic growth continues to be driven by North America and Asia Pacific & ROW (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG North America 2,509 1,999 +26% +5% +5% Europe 1,371 1,373 0% -1% -1% AsiaPac & ROW 328 288 +14% +4% +4% Total revenues 4,208 3,660 +15% +3% +3% ∆: % Change; ∆ CC:
Slide 11: Revenues by media format
Revenues by media format Digital revenues sustained 6% organic growth (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG Digital 2,962 2,472 +20% +7% +6% Services 523 453 +16% 0% +3% Print 723 735 -1% -9% -7% Total revenues 4,208 3,660 +15% +3% +3% ∆: % Change; ∆ CC: % Change constant currencies (EUR/USD 1.33)
Slide 12: Adjusted operating profit – new divisions
Adjusted operating profit – new divisions Margin increases in Tax & Accounting and Governance, Risk & Compliance more than offset expected decline in Legal & Regulatory margin Margin Margin (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG FY 2015 FY 2014 Health 247 197 +25% +5% +4% 24.1% 24.1% Tax & Accounti
Slide 13: Adjusted operating profit – previous divisions
Adjusted operating profit – previous divisions Financial & Compliance Services was a key contributor to the margin increase Margin Margin (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG FY 2015 FY 2014 Legal & Regulatory 320 305 +5% -8% -7% 19.7% 20.3% Tax & Accounting 295 250 +18% +6% +7% 27.4% 26.4% Healt
Slide 14: Adjusted net profit and EPS
Adjusted net profit and EPS Diluted adjusted EPS up +5% in constant currencies (€ million, unless otherwise stated) FY 2015 FY 2014 ∆ ∆ CC Revenues 4,208 3,660 +15% +3% Adjusted operating profit 902 768 +17% +2% Adjusted operating profit margin 21.4% 21.0% Adjusted net financing costs (119) (113) Eq
Slide 15: IFRS profit and diluted EPS
IFRS profit and diluted EPS Reported EPS declines 10%, reflecting one-off factors related to tax (€ million, unless otherwise stated) FY 2015 FY 2014 ∆ Adjusted operating profit 902 768 +17% Amortization of acquired intangibles (214) (192) Results on divestments of operations (14) 10 Acquisition int
Slide 16: Adjusted free cash flow
Adjusted free cash flow Cash conversion of 100%, better than expected (€ million, unless otherwise stated) FY 2015 FY 2014 ∆ ∆ CC Adjusted operating profit 902 768 +17% +2% Depreciation and amortization of other intangibles 171 140 Adjusted EBITDA 1,073 908 +18% +3% Capital expenditure (188) (148) A
Slide 17: Movement in net debt
Movement in net debt Leverage ratio improved to 1.7x, despite over 55% of free cash flow returned to shareholders (€ million, unless otherwise stated) FY 2015 FY 2014 Net debt at January 1 (1,897) (1,988) Adjusted free cash flow, incl. Springboard 647 512 Dividends paid (263) (209) Acquisition spend
Slide 18: Leverage
Leverage Net-debt-to-EBITDA improved to 1.7x, better than target level Net-Debt-to-EBITDA (Ratio) 3.1x Target: 2.7x 2.5x 2.4x 2.2x 2.1x 1.7x 2010 2011 2012 2013 2014 2015 2015 Full-Year Results 18
Slide 19: Dividend
Dividend Proposing full-year total dividend of €0.75 per share, up +6% Dividend per Share (€)1) 2015: introduced semi-annual dividend frequency. Interim dividend of €0.18 0.75 paid in October 2015 0.67 0.68 0.69 0.70 0.71 0.64 0.65 0.66 0.58 Proposed Proposing final dividend of €0.57, 0.55 final
Slide 20: Share buybacks
Share buybacks Completed €140 million share buyback in 2015. Announcing up to €600 million buyback over the next three years (2016-2018) Share Buybacks (€ million) Committed to anti-dilution policy to offset dilution caused by performance share issuance Share Buyback Announcing intention to buy
Slide 21: Summary
Summary Organic growth accelerated to +3% Adjusted operating margin 21.4%, increased by 40 basis points Diluted adjusted EPS €1.96, up +5% in constant currencies Adjusted free cash flow of €647 million, up +7% in constant currencies Net-debt-to-EBITDA ratio improved to 1.7x Proposing ful
Slide 22: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2016 Appendix 2015 Full-Year Results 22
Slide 23: Health
Health Sustained +5% organic growth; margin reflects increased investment and restructuring € million FY 2015 FY 2014 Δ Δ CC Δ OG Clinical Solutions Revenues 1,022 816 +25% +6% +5% Organic growth +10%, driven by double- digit growth of UpToDate Adjusted operating profit 247 197 +25% +5% +4% Drug
Slide 24: Tax & Accounting
Tax & Accounting Organic growth +3% supported by software +6%; margins improved € million FY 2015 FY 2014 Δ Δ CC Δ OG North America Revenues 1,132 989 +14% +4% +3% Good organic growth driven by software and other digital products Adjusted operating profit 311 261 +19% +7% +8% Cloud-based suite,
Slide 25: Governance, Risk & Compliance
Governance, Risk & Compliance Organic growth +5%, buoyed by non-recurring revenues; margins improved € million FY 2015 FY 2014 Δ Δ CC Δ OG Corporate Legal Services Revenues 1,065 854 +25% +7% +5% Organic growth +6%, including +2% in 4Q CLS transactional revenues +8% Adjusted operating profit 298
Slide 26: Legal & Regulatory
Legal & Regulatory Organic decline as print still outweighs digital growth; margins impacted by planned increase in restructuring € million FY 2015 FY 2014 Δ Δ CC Δ OG Legal & Regulatory Revenues 989 1,001 -1% -5% -2% Organic growth -2%, improving modestly (2014: -3%) Adjusted operating profit 96
Slide 27: Strategy 2013-2015
Strategy 2013-2015 Our strategy of the past few years has driven continued portfolio transformation Revenues by Media Format Revenues by Type Revenues by Geographic Market 9% 7% 17% 26% 17% 33% 17% 40% 13% 13% 8% 6% 74% 76% 70% 61% 54% 59% 2012 2015 2012 2015 2012 2015 Digital Recurring Europe Servi
Slide 28: Strategy 2013-2015
Strategy 2013-2015 Leading, high growth units, now 51% of total revenues, grew +7% organically % of 2015 divisional Organic Growth revenues Leading High Growth Units Divisions:1) 2012 2015 Finance, Risk & F&CS 49% 58% Compliance; Audit +7% Total Clinical Health 38% 47% +10% Leading Solutions High Gr
Slide 29: Organic growth and margin
Organic growth and margin Organic growth accelerated and margin improved Organic Growth (%) Adjusted Operating Profit Margin (%) 6% 6% Digital revenues 5% 5% 4% 4% 21.7% 21.5% 21.5% 21.4% 3% 21.0% 2% 2% 20.4% 19.9% 1% 1% 1% 0% Total Wolters Kluwer -3% 2009 2010 2011 2012 2013 2014 2015 2009 2010 201
Slide 30: Market trends
Market trends Changing customer needs are creating opportunities and challenges 1 Continued 2 Increasing 3 4 Changing 5 Increasing pressure on volume and High growth of client needs: disruption from professionals to complexity of professionals in millennials work cloud, mobile, improve global develo
Slide 31: Strategic priorities 2016-2018
Strategic priorities 2016-2018 Our plan for 2016-2018 builds on the strategic direction of the past three years ▪ Allocate majority of capital to leading, growing businesses Expand ▪ Extend into adjacent market segments and new geographies ▪ Broaden our global sales and marketing coverage Market Cov
Slide 32: Product innovation
Product innovation Continued investment in Expert Solutions and other digital innovation UpToDate Cheetah Clinical decision support resource for New intuitive legal research platform healthcare practitioners 2015 2015 Double-digit organic growth; reached 1.1 million Greatly enhanced usability, s
Slide 33: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2016 Appendix 2015 Full-Year Results 33
Slide 34: Divisional outlook 2016
Divisional outlook 2016 Another year of good organic growth, supported by robust growth in Clinical Health Solutions and gradually improving trend in Health Learning, Research & Practice Expect slight margin improvement as we continue to invest to drive growth Expect underlying revenue growth
Slide 35: Guidance 2016
Guidance 2016 Performance indicators FY 2016 Guidance Adjusted operating profit margin 21.5%–22.0% Adjusted free cash flow €600-€625 million Return on invested capital > 9% Diluted adjusted EPS Mid-single-digit growth Guidance for adjusted free cash flow and diluted adjusted EPS is in constant curre
Slide 36: Q&A
Q&A
Slide 37: Appendix
Appendix
Slide 38: Balance Sheet
Balance Sheet (€ million, unless otherwise stated) Dec. 31, 2015 Dec. 31, 2014 Goodwill and intangible assets 5,550 5,172 Equity-accounted investees and financial assets 30 32 Other non-current assets 208 216 Non-current assets 5,788 5,420 Cash and cash equivalents 812 535 Other current assets 1,499
Slide 39: Reconciliation: Adjusted net financing costs to financing results
Reconciliation: Adjusted net financing costs to financing results (€ million) FY 2015 FY 2014 Adjusted net financing costs (119) (113) Loss on investment available-for-sale - (14) Employee benefits financing component (5) (5) Divestment related results on equity-accounted investees (1) 76 Financing
Slide 40: Revenues by type
Revenues by type (€ million) FY 2015 FY 2014 ∆ ∆ CC ∆ OG Digital and services subscriptions 2,561 2,155 +19% +6% +5% Print subscriptions 314 341 -8% -12% -9% Other recurring 326 281 +16% +1% +0% Recurring revenues 3,201 2,777 +15% +3% +3% Print books 299 289 +4% -6% -5% CLS transactional 278 215 +29
Slide 41: Revenues by media format and type
Revenues by media format and type FY 2015 Revenues Governance, Risk & Health Tax & Accounting Legal & Regulatory Compliance Services Print Print 6% 7% 2% Print 21% Digital: Services Services other 32% Print Digital 1% 16% Tax & 48% Digital 41% Accounting software 66% Digital 78% 71% Services 11% FS
Slide 42: Debt maturity profile
Debt maturity profile Debt Maturity Profile (€ million) 812 752 697 396 294 248 196 12 5 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025 year-end Cash & cash equivalents Debt due in 2016 includes €285 million of bank overdrafts used for cash management purposes. Total cash and cash equi
Slide 43: Former Tax & Accounting
Former Tax & Accounting € million FY 2015 FY 2014 Δ Δ CC Δ OG Revenues 1,078 946 +14% +3% +3% Adjusted 295 250 +18% +6% +7% operating profit Margin 27.4% 26.4% ∆: % Change; ∆ CC: % Change constant currencies (EUR/USD 1.33); ∆ OG: % Organic growth Revenues by Media Format Revenues by Geographic Marke
Slide 44: Former Financial & Compliance Services
Former Financial & Compliance Services € million FY 2015 FY 2014 Δ Δ CC Δ OG Revenues 482 401 +20% +6% +6% Adjusted 90 65 +37% +21% +21% operating profit Margin 18.6% 16.3% ∆: % Change; ∆ CC: % Change constant currencies (EUR/USD 1.33); ∆ OG: % Organic growth F&CS Segments Revenues by Geographic Mar
Slide 45: Former Legal & Regulatory
Former Legal & Regulatory € million FY 2015 FY 2014 Δ Δ CC Δ OG Revenues 1,626 1,497 +9% 0% 0% Adjusted 320 305 +5% -8% -7% operating profit Margin 19.7% 20.3% ∆: % Change; ∆ CC: % Change constant currencies (EUR/USD 1.33); ∆ OG: % Organic growth L&R Segments Revenues by Geographic Market Corporate