Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2013 Earnings Presentation
39 slides from Wolters Kluwer's earnings presentation, Feb 19, 2014
Slide 1: 2013 Full-Year Results
2013 Full-Year Results February 19, 2014 | 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 2014 Outlook Appendix Full-Year Results 2013 3
Slide 4: Introduction
Introduction In 2013, our leading, high growth positions and digital products drove positive organic growth for the group Our 2013 results were in line with the guidance we set at the start of the year — Health performed better than expected, offsetting the challenge faced by F&CS — Ordinary fre
Slide 5: Good progress on strategic goals
Good progress on strategic goals Leading, high growth positions Expanding Leading, growing +7% organically High Growth Positions Acquisition of Health Language and Prosoft to extend leading positions Investing 8-10% of revenues in new Deliver Solutions and enhanced products And Insights Digi
Slide 6: Agenda
Agenda Introduction Financial Review Strategic and Operating Review 2014 Outlook Appendix Full-Year Results 2013 6
Slide 7: Full-year 2013 results
Full-year 2013 results Results in line with guidance (€ million, unless otherwise stated) 2013 2012 ∆ ∆ CC ∆ OG Revenues 3,565 3,597 -1% +2% +1% Ordinary EBITA 765 774 -1% +2% +1% Ordinary EBITA margin 21.5% 21.5% Diluted ordinary EPS €1.56 €1.56 0% +3% Ordinary free cash flow 503 507 -1% +3% Net-de
Slide 8: Revenues by division
Revenues by division Strong organic growth at Health; challenges faced by F&CS (€ million) 2013 2012 ∆ ∆ CC ∆ OG Legal & Regulatory 1,447 1,485 -3% -1% -1% Tax & Accounting 965 981 -2% +1% +1% Health 775 745 +4% +8% +6% Financial & Compliance Services 378 386 -2% +1% -4% Total Revenues 3,565 3,597 -
Slide 9: Revenues by type
Revenues by type Faster growth in recurring revenue offset by transactional trends (€ million) 2013 2012 ∆ ∆ CC ∆ OG Digital & service subscription 1,951 1,885 +4% +6% +4% Print subscription 399 443 -10% -8% -7% Other non-cyclical 338 342 -1% +2% +2% Recurring revenues 2,688 2,670 +1% +3% +2% Books
Slide 10: Revenues by media format
Revenues by media format Growth in digital more than offsets decline in print (€ million) 2013 2012 ∆ ∆ CC ∆ OG Digital 2,180 2,101 +4% +7% +5% Services 561 567 -1% +1% 0% Print 824 929 -11% -9% -8% Total revenues 3,565 3,597 -1% +2% +1% ∆-% Change; ∆CC-% Change constant currencies (EUR/USD 1.29); ∆
Slide 11: Ordinary EBITA
Ordinary EBITA Margin increase in Health and T&A offsets decline in L&R and F&CS Margin Margin (€ million) 2013 2012 ∆ ∆ CC ∆ OG 2013 2012 Legal & Regulatory 313 327 -4% -1% -2% 21.6% 22.0% Tax & Accounting 259 259 0% +3% +4% 26.8% 26.4% Health 175 163 +7% +11% +7% 22.6% 21.9% Financial & Compliance
Slide 12: Ordinary net income and EPS
Ordinary net income and EPS Diluted ordinary EPS up +3% in constant currencies (€ million, unless otherwise stated) 2013 2012 ∆ ∆ CC Revenues 3,565 3,597 -1% +2% Ordinary EBITA 765 774 -1% +2% Ordinary EBITA margin 21.5% 21.5% Ordinary net financing costs1) (117) (121) Equity-accounted investees (1)
Slide 13: IFRS profit and diluted EPS
IFRS profit and diluted EPS Net profit benefits from disposal gains and lower discontinued loss (€ million, unless otherwise stated) 2013 2012 ∆ Ordinary EBITA 765 774 -1% Amortization of acquired intangibles (185) (192) Results on divestments of operations 47 4 Acquisition integration costs and oth
Slide 14: Ordinary free cash flow
Ordinary free cash flow Cash conversion back to normal levels; lower tax payments (€ million, unless otherwise stated) 2013 2012 ∆ ∆ CC Ordinary EBITA 765 774 -1% +2% Depreciation and amortization of other intangibles 132 120 Capital expenditure (148) (144) Autonomous movements in working capital (2
Slide 15: Movement in net debt
Movement in net debt Net debt reduced by approximately €100 million (€ million, unless otherwise stated) 2013 FY 2012 FY Net debt at January 1 (2,086) (2,168) Ordinary free cash flow 503 507 Springboard restructuring, net of tax (10) (24) Acquisition spending, including costs, net of cash (198) (115
Slide 16: Acquisitions and divestitures
Acquisitions and divestitures Acquisitions support strategy and meet financial criteria Over 85% of our acquisition spend of past 6 years Acquisition Spend was applied to our leading, high growth positions 2008-2013 – Nearly two thirds invested in Clinical Solutions and Tax & Accounting software O
Slide 17: Leverage
Leverage Net-debt-to-EBITDA ratio improved to 2.2x Net-Debt-to-EBITDA (Ratio) 3.1x 2.9x 2.7x Target: 2.5x 2.4x 2.2x 2009 2010 2011 2012 2013 2012 restated for IAS 19R and IFRS 11 Full-Year Results 2013 17
Slide 18: Debt maturity profile
Debt maturity profile €700 million (2.875%) Eurobond issued in 2013 to secure 2014 bond maturity Debt Maturity Profile (€ million) 835 756 747 696 January 2014: 700 €700 million 700 bond redeemed 247 189 135 28 2 56 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 >2023 year-end Cash & cash eq
Slide 19: Balance Sheet
Balance Sheet Solid financial position (€ million) Dec. 31, 2013 Dec. 31, 2012 Goodwill and intangible assets 4,592 4,651 Equity-accounted investees and financial assets 58 110 Other non-current assets 212 216 Non-current assets 4,862 4,977 Cash 755 328 Other current assets 1,247 1,251 Deferred inco
Slide 20: Returns to shareholders
Returns to shareholders Proposed dividend increase to €0.70 for 2013 to be paid in cash Progressive dividend policy: eighth consecutive year of increase Anti-dilution policy: share buy-back of up to €25 million in 2014 Dividend per share (€)1) Share buy-backs (€ million) 645 0.70 0.69 0.68 0.67
Slide 21: Summary
Summary Revenues up +1% organically Ordinary EBITA of €765 million; up +2% in constant currencies; margin stable at 21.5% Ordinary diluted EPS €1.56, up +3% in constant currencies Ordinary free cash flow of €503 million, up +3% in constant currencies Net-debt-to-EBITDA ratio improved to 2.
Slide 22: Agenda
Agenda Introduction Financial Review Strategic and Operating Review 2014 Outlook Appendix Full-Year Results 2013 22
Slide 23: Legal & Regulatory
Legal & Regulatory Revenue decline abates; margin impacted Corporate Legal Services € million 2013 2012 Δ Δ CC Δ OG Revenue up +5% organically Revenues 1,447 1,485 -3% -1% -1% Transactional revenue +8% with mixed 313 327 -4% -1% -2% trends Ordinary EBITA Trademark business, Corsearch, Margin 2
Slide 24: Tax & Accounting
Tax & Accounting Results supported by growth in software globally North America € million 2013 2012 Δ Δ CC Δ OG Software revenues up +6%, partially Revenues 965 981 -2% +1% +1% offset by expected decline in bank products and publishing Ordinary EBITA 259 259 0% +3% +4% Cloud-based CCH Axcess wel
Slide 25: Health
Health Organic growth accelerates to 6%; margin up 70 basis points Clinical Solutions € million 2013 2012 Δ Δ CC Δ OG Sustains double-digit organic growth Revenues 775 745 +4% +8% +6% Strong performance across all product 175 163 +7% +11% +7% areas Ordinary EBITA Health Language revenue up in
Slide 26: Financial & Compliance Services
Financial & Compliance Services Results impacted by downturn in U.S. mortgage refinancing, regulatory delays and product migration Finance, Risk & Compliance € million 2013 2012 Δ Δ CC Δ OG Organic growth +3%; deceleration in Q4 Revenues 378 386 -2% +1% -4% due to delays in banking regulations 64
Slide 27: Progress on strategy
Progress on strategy 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 insights o
Slide 28: 1. Expand our leading, high growth positions
1. Expand our leading, high growth positions Our leading, high growth positions in total grew 7% organically 44% of total 2013 organic growth revenues of units indicated % of division: Finance, Risk & +3% Financial & Compliance 54% Compliance and Audit1) Health 42% Clinical Solutions >10% Total orga
Slide 29: 2. Deliver solutions and insights
2. Deliver solutions and insights We launched several products that improve our customers’ productivity and outcomes Drives Decisions and Tailored to the Increasingly Mobile Outcomes Customer Enhanced enterprise General Counsel NAVIGATOR Cloud-based tax & accounting governance, risk and for small to
Slide 30: 3. Drive efficiencies
3. Drive efficiencies We are continuing to drive savings and creating global scale economies Sales Channel Process & Sourcing Technology Real Estate & Go to Market Organization Renegotiated Optimized hosting Consolidated Replaced Redesigned CLS’ paper, printing, and infrastructure office s
Slide 31: Agenda
Agenda Introduction Financial Review Strategic and Operating Review 2014 Outlook Appendix Full-Year Results 2013 31
Slide 32: Divisional Outlook 2014
Divisional Outlook 2014 Corporate Legal Services to see good organic growth, with momentum in transactional revenues slowing Legal & Regulatory Legal & Regulatory (excluding CLS) to see organic revenue decline and margin contraction, partly due to restructuring Tax software to achieve good org
Slide 33: Guidance 2014
Guidance 2014 Performance indicators FY2014 Guidance Ordinary EBITA Margin 20.5%–21.5% Ordinary free cash flow ≥ €475 million Return on invested capital ≥ 8% Diluted ordinary EPS Low single-digit growth Guidance for ordinary free cash flow and diluted ordinary EPS is in constant currencies (EUR/USD
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 EBITA Breakdown
Revenue and EBITA Breakdown 2013 Revenues by division 2013 Ordinary EBITA1) 1) Excluding corporate F&CS F&CS costs of €46 million 11% 8% Legal & Health Legal & Health Regulatory Regulatory 21% 22% 39% 40% Tax & Tax & Accounting Accounting 27% 32% 2013 Revenues by type 2013 Revenues by media format P
Slide 37: Revenues by region
Revenues by region (€ million) 2013 2012 ∆ ∆ CC ∆ OG North America 1,913 1,932 -1% +3% +2% Europe 1,385 1,437 -4% -2% -2% AsiaPac & ROW 267 228 +17% +15% +5% Total Revenues 3,565 3,597 -1% +2% +1% ∆-% Change; ∆CC-% Change constant currencies (EUR/USD 1.29); ∆OG–% Organic growth. 2012 restated for IA
Slide 38: Reconciliation: Ordinary net financing costs to financing results
Reconciliation: Ordinary net financing costs to financing results (€ million) 2013 2012 Ordinary net financing costs (117) (121) Divestment related results on equity-accounted investees 12 - Employee benefits financing component (5) (5) Write-down of investments available-for-sale (18) - Financing r
Slide 39: Currency
Currency Revenue EBITA Average rates Closing rates impact impact 1 Euro 2013 2012 2013 2012 2013 2013 U.S. Dollar 1.33 1.29 1.38 1.32 (66) (20) British Pound 0.85 0.81 0.83 0.82 (7) (1) Australian Dollar 1.38 1.24 1.54 1.27 (6) (2) Canadian Dollar 1.37 1.29 1.47 1.31 (4) (1) Other (12) (2) Total imp