Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — H1 2015 Earnings Presentation
37 slides from Wolters Kluwer's earnings presentation, Jul 29, 2015
Slide 1: 2015 Half-Year Results
2015 Half-Year Results July 29, 2015 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 2015 Half-Year Results 3
Slide 4: Introduction
Introduction Good first half results – Organic growth +2% and underlying margin increase – Diluted adjusted EPS up +5% at constant currencies Progress on strategic objectives – Leading high growth positions delivered 7% organic growth – Digital & services revenues grew 5% organic – Delivering in
Slide 5: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2015 Half-Year Results 5
Slide 6: Half-year 2015 results
Half-year 2015 results On course to meet full year guidance (€ million, unless otherwise stated) HY 2015 HY 2014 ∆ ∆ CC ∆ OG Revenues 2,015 1,716 +17% +3% +2% Adjusted operating profit 391 313 +25% +5% +4% Adjusted operating profit margin 19.4% 18.2% Diluted adjusted EPS €0.79 €0.63 +24% +5% Adjuste
Slide 7: Revenues by division
Revenues by division Organic growth driven by three divisions (€ million) HY 2015 HY 2014 ∆ ∆ CC ∆ OG Legal & Regulatory 792 710 +12% +2% 0% Tax & Accounting 529 454 +17% +3% +3% Health 465 365 +27% +5% +5% Financial & Compliance Services 229 187 +22% +5% +5% Total revenues 2,015 1,716 +17% +3% +2%
Slide 8: Revenues by region
Revenues by region Growth in North America and Asia Pacific outweighed decline in Europe (€ million) HY 2015 HY 2014 ∆ ∆ CC ∆ OG North America 1,191 921 +29% +6% +5% Europe 667 666 0% -1% -2% AsiaPac & ROW 157 129 +22% +6% +6% Total revenues 2,015 1,716 +17% +3% +2% ∆: % Change; ∆ CC: % Change const
Slide 9: Revenues by media format
Revenues by media format Digital and services up 5% organically, now 84% of total (€ million) HY 2015 HY 2014 ∆ ∆ CC ∆ OG Digital 1,424 1,157 +23% +7% +6% Services 271 230 +18% 0% +1% Print 320 329 -3% -10% -9% Total revenues 2,015 1,716 +17% +3% +2% ∆: % Change; ∆ CC: % Change constant currencies (
Slide 10: Adjusted operating profit
Adjusted operating profit Adjusted operating profit margin increased due to T&A and F&CS Margin Margin (€ million) HY 2015 HY 2014 ∆ ∆ CC ∆ OG HY 2015 HY 2014 Legal & Regulatory 141 128 +10% -7% -9% 17.8% 18.0% Tax & Accounting 143 106 +35% +17% +16% 27.0% 23.4% Health 93 73 +27% +4% +4% 19.9% 19.9%
Slide 11: Adjusted net profit and EPS
Adjusted net profit and EPS Diluted adjusted EPS up +5% in constant currencies (€ million, unless otherwise stated) HY 2015 HY 2014 ∆ ∆ CC Revenues 2,015 1,716 +17% +3% Adjusted operating profit 391 313 +25% +5% Adjusted operating profit margin 19.4% 18.2% Adjusted net financing costs (67) (49) Equi
Slide 12: IFRS profit and diluted EPS
IFRS profit and diluted EPS Reported EPS down 19% due to lack of exceptional gains and foreign exchange loss (€ million, unless otherwise stated) HY 2015 HY 2014 ∆ Adjusted operating profit 391 313 +25% Amortization of acquired intangibles (106) (92) Results on divestments of operations 0 (1) Acquis
Slide 13: Adjusted free cash flow
Adjusted free cash flow FCF broadly stable at constant currency (€ million, unless otherwise stated) HY 2015 HY 2014 ∆ ∆ CC Adjusted operating profit 391 313 +25% +5% Depreciation and amortization of other intangibles 78 67 Adjusted EBITDA 469 380 +23% +4% Capital expenditure (84) (63) Autonomous mo
Slide 14: Movement in net debt
Movement in net debt Net debt increased following cash returns to shareholders (€ million, unless otherwise stated) HY 2015 FY 2014 HY 2014 Net debt at start of period (1,897) (1,988) (1,988) Adjusted free cash flow, incl. Springboard 170 512 134 Dividends paid (211) (209) (207) Acquisition spending
Slide 15: Returns to shareholders
Returns to shareholders Share buy-back completed and introducing interim dividends Dividend per share (€)1) Intent to move to semi-annual dividend frequency, starting with an interim dividend for 2015 0.71 0.67 0.68 0.69 0.70 0.64 0.65 0.66 25% of prior year’s total dividend 0.58 0.55 Subject
Slide 16: Summary
Summary On course to meet full year guidance Revenues up +2% organically ― Leading, high growth positions +7% ― Digital & services revenues +5% Adjusted operating profit of €391 million ― Underlying margin increase Diluted adjusted EPS €0.79, up +5% in constant currencies Adjusted free cash
Slide 17: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2015 Half-Year Results 17
Slide 18: Legal & Regulatory
Legal & Regulatory Strong transaction volumes; margin reflects increased restructuring € million HY 2015 HY 2014 Δ Δ CC Δ OG Corporate Legal Services Revenues 792 710 +12% +2% 0% Organic growth +8%, lifted by strong Adjusted transactional volumes 141 128 +10% -7% -9% operating profit CLS transac
Slide 19: Tax & Accounting
Tax & Accounting Software up +5%. Margin reflects lower restructuring and operational gearing € million HY 2015 HY 2014 Δ Δ CC Δ OG North America Revenues 529 454 +17% +3% +3% Software revenues up +5% organically On-premise software sustains growth; Adjusted operating profit 143 106 +35% +17% +1
Slide 20: Health
Health Organic growth +5%; margin reflects first-half-weighted restructuring € million HY 2015 HY 2014 Δ Δ CC Δ OG Clinical Solutions Revenues 465 365 +27% +5% +5% Organic growth +11% Adjusted UpToDate added major customers in 93 73 +27% +4% +4% operating profit Japan, Brazil and Spain Margin 19
Slide 21: Financial & Compliance Services
Financial & Compliance Services Organic growth+5% and margin improves € million HY 2015 HY 2014 Δ Δ CC Δ OG Finance, Risk & Compliance Revenues 229 187 +22% +5% +5% Organic growth +5% driven by upfront Adjusted software license, professional services 36 28 +31% +11% +11% and implementation fees op
Slide 22: Strategic progress
Strategic progress Our strategy aims to accelerate profitable growth ▪ Leading, growth positions grew +7% organically Expand ▪ Selected software acquisitions our leading, ▪ Combining Corporate Legal Services and Financial & Compliance Services high growth positions ▪ Increased investment in new and
Slide 23: 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 HY 2015 Leading, high growth units within divisions (52% of total revenues) Divisions: % of division: Organic Growth: Financial & Compliance Finance, Risk & 56% +5% Se
Slide 24: 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 Expere® ComplianceOne® UpToDate Clinical Consultant CCH iFirm Practice Manager TILA-RESPA UpToDate clinical decision Cloud-based
Slide 25: 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 Solutions Driving operational excellence in editorial and production Restructuring marketing and sales; investing in di
Slide 26: Agenda
Agenda Introduction Financial Review Strategic and Operating Review Outlook 2015 Appendix 2015 Half-Year Results 26
Slide 27: 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 Continued revenue decline in Legal & Regulatory Solutions Margins constrained by cost inflation, restructuring and investments Revenue growth similar t
Slide 28: 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 29: Q&A
Q&A Nancy McKinstry Chief Executive Officer and Chairman Kevin Entricken Chief Financial Officer
Slide 30: Appendix
Appendix Nancy McKinstry Chief Executive Officer and Chairman Kevin Entricken Chief Financial Officer
Slide 31: Revenue and operating profit breakdown
Revenue and operating profit breakdown HY 2015 Revenues by division HY 2015 Adjusted operating profit1) 1) Excluding corporate F&CS F&CS 12% 9% Legal & Legal & Health Regulatory Health Regulatory 22% 34% 23% 39% Tax & Tax & Accounting Accounting 26% 35% HY 2015 Revenues by type HY 2015 Revenues by m
Slide 32: Revenues by type
Revenues by type (€ million) HY 2015 HY 2014 ∆ ∆ CC ∆ OG Digital and services subscriptions 1,250 1,022 +22% +7% +5% Print subscriptions 159 172 -8% -12% -10% Other recurring 162 140 +16% -2% -3% Recurring revenues 1,571 1,334 +18% +4% +3% Print books 112 114 -1% -11% -10% CLS transactional 139 101
Slide 33: Reconciliation: Adjusted net financing costs to financing results
Reconciliation: Adjusted net financing costs to financing results (€ million) HY 2015 HY 2014 Adjusted net financing costs (67) (49) Employee benefits financing component (2) (2) Revaluation gain on minority interest in Datacert - 76 Financing results (69) 25 2015 Half-Year Results 33
Slide 34: Balance Sheet
Balance Sheet (€ million, unless otherwise stated) June 30, 2015 Dec. 31, 2014 June 30, 2014 Goodwill and intangible assets 5,398 5,172 4,840 Equity-accounted investees and financial assets 31 32 42 Other non-current assets 229 216 212 Non-current assets 5,658 5,420 5,094 Cash and cash equivalents 5
Slide 35: Debt maturity profile
Debt maturity profile Debt Maturity Profile (€ million) 750 696 13 510 396 284 247 203 12 1 3 HY 2015 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025 Cash & cash equivalents + €13 million collateral posted 2015 Half-Year Results 35
Slide 36: Currency
Currency Impact adjusted Impact operating Average rates revenue profit 1 Euro HY 2015 HY 2014 HY 2015 HY 2015 U.S. Dollar 1.12 1.37 231 60 British Pound 0.73 0.82 7 1 Canadian Dollar 1.38 1.51 3 1 Australian Dollar 1.43 1.50 1 0 Brazilian Real, Russian Ruble and other 2 0 Total impact (€ million) 24
Slide 37: 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 th