Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — H1 2012 Earnings Presentation
35 slides from Wolters Kluwer's earnings presentation, July 2012
Slide 1: Half-Year Results 2012
2012 Half-Year Results Nancy McKinstry Chief Executive Officer and Chairman Boudewijn Beerkens Chief Financial Officer Jack Lynch Member of the Executive Board
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 2012 Outlook Half-Year Results 2012 3
Slide 4: Highlights
Highlights Organic growth positive despite challenges in Europe – Health and Financial & Compliance Services grew 5% and 6% respectively – North America growth improves to 4% – Online, software and services grew 4% EBITA margin steady with continued investment Majority of pharma divestiture co
Slide 5: Agenda
Agenda Introduction Financial Review Operating and Strategic Review 2012 Outlook Half-Year Results 2012 5
Slide 6: Half-Year 2012 results
Half-Year 2012 results On track to meet full year guidance Continuing Operations (€ million) 2012 HY 2011 HY ∆ ∆ CC ∆ OG Revenues 1,739 1,619 +7% +3% +1% Ordinary EBITA 346 325 +7% +1% -2% Diluted Ordinary EPS (€) 0.68 0.65 +5% +1% Ordinary FCF 142 131 +9% +1% Net Debt 2,258 2,194 +3% ∆-% Change; ∆C
Slide 7: Revenues by division
Revenues by division Strong growth in Health and F&CS mitigates weakness in Europe Revenues – Continuing (€ million) 2012 HY 2011 HY ∆ ∆ CC ∆ OG Legal & Regulatory 724 695 +4% +1% -2% Tax & Accounting 486 467 +4% 0% 0% Health 349 295 +19% +10% +5% Financial & Compliance Services 180 162 +11% +6% +6%
Slide 8: Revenues by type
Revenues by type Growth in online, software & services offsets print decline (€ million) 2012 HY 2011 HY ∆ ∆ CC ∆ OG Electronic & service subscription 906 807 +12% +7% +5% Print subscription 236 242 -3% -4% -8% Other non-cyclical 175 162 +8% +2% +2% Recurring revenues 1,317 1,211 +9% +4% +2% CLS tra
Slide 9: Ordinary EBITA
Ordinary EBITA First half margin stable at 19.9% Margin Margin (€ million) 2012 HY 2011 HY ∆ ∆ CC ∆ OG 2012 HY 2011 HY Legal & Regulatory 144 136 +6% +1% -4% 19.9% 19.6% Tax & Accounting 122 129 -5% -10% -9% 25.1% 27.6% Health 68 51 +34% +23% +16% 19.5% 17.3% Financial & Compliance 32 29 +12% +4% +4
Slide 10: Ordinary Net Income and EPS
Ordinary Net Income and EPS First half 2012 diluted ordinary EPS up 1% in constant currencies (€ million) 2012 HY 2011 HY ∆ ∆ CC Revenues 1,739 1,619 +7% +3% Ordinary EBITA 346 325 +7% +1% Ordinary EBITA margin (%) 19.9 20.1 Financing results (62) (59) Associates (1) 0 Ordinary income before tax 283
Slide 11: IFRS Profit and Basic EPS
IFRS Profit and Basic EPS Rise in Basic EPS due to lower exceptionals and impairments (€ million) 2012 HY 2011 HY ∆ Ordinary EBITA 346 325 +7% Amortization intangibles (88) (75) Exceptional items (5) (47) Operating profit 253 203 +25% Net finance cost (62) (59) Associates (1) 0 Profit before tax 190
Slide 12: Free cash flow
Free cash flow Cash conversion remains robust (€ million) 2012 HY 2011 HY ∆ ∆ CC Ordinary EBITA 346 325 +7% +1% Depreciation and amortization of other intangibles 58 51 Autonomous movements in working capital (19) 0 Net capital expenditure (67) (54) Ordinary operating cash flow 318 322 -1% -5% Cash
Slide 13: Movement in net debt
Movement in net debt Net debt to EBITDA improved to 2.9x, despite increased returns to shareholders (€ million) 2012 HY 2011 FY 2011 HY Net debt at start of period (2,168) (2,035) (2,035) Ordinary free cash flow 142 443 131 Springboard restructuring, net of tax (15) (39) (18) Acquisition spending, i
Slide 14: Leverage
Leverage Expect to approach target of 2.5x by year-end Net Debt / EBITDA Ratio Financing Profile 1,453 3.2 3.2 3.1 3.0 2.9 2.9 2.7 2.4 700 340 442 1 2 2007 2008 2009 2010 2011 2011 2012 2012 2012 2013 2014 2015 2016 > 2016 HY HY HY Net debt / EBITDA Cash & cash equivalents + Debt maturity profile de
Slide 15: Balance Sheet
Balance Sheet Solid financial position (€ million) June 30, 2012 Dec. 31, 2011 June 30, 2011 Goodwill and intangible assets 4,756 4,729 4,296 Investment in equity accounted investees 99 65 58 Other non-current assets 290 311 282 Non-current assets 5,145 5,105 4,636 Current assets 1,333 1,586 1,382 C
Slide 16: Share buy-back and anti-dilution policy
Share buy-back and anti-dilution policy Program expanded to counter dilution 2011 dividend – 2011 dividend €0.68 – 45% elect cash, leading to €90 million dividend payment in first half – 55% elect stock, leading to 8.4 million additional shares 2012 share buy-back: €100 million completed – As of
Slide 17: Shareholder returns
Shareholder returns Cash flow supports progressive dividend and share buy-backs Dividend per share (€)1 Share buy-backs (€ million) 645 CAGR 4% 0.68 0.67 0.66 0.65 0.64 35 0.58 100 100 0.55 19 2 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 1 Dividend shown by year paid out.
Slide 18: Summary Half-Year 2012 Results
Summary Half-Year 2012 Results On track to meet full year guidance Organic growth Stable margin +1% +19.9% Improving leverage Commitment to 2.9x offset dilution Half-Year Results 2012 18
Slide 19: Agenda
Agenda Introduction Financial Review Operating and Strategic Review 2012 Outlook Half-Year Results 2012 19
Slide 20: Legal & Regulatory
Legal & Regulatory Growth in North America mitigates challenges in Europe Europe – Economic conditions remain difficult € million 2012 HY1 2011 HY1 Δ Δ CC Δ OG – Organic growth deteriorates to -4.5% Revenues 724 695 +4% +1% -2% – Gaining share in key markets Ordinary EBITA 144 136 +6% +1% -4% – Cost
Slide 21: Tax & Accounting
Tax & Accounting Organic growth flat, margin decline reflects mix and investment North America – Software grows in all segments € million 2012 HY1 2011 HY1 Δ Δ CC Δ OG – Publishing challenging, especially print Revenues 486 467 +4% 0% 0% – Bank product decline as expected Ordinary EBITA 122 129 -5%
Slide 22: Health
Health Organic growth of 5% and significant margin improvement Clinical Solutions – Organic growth double-digit € million 2012 HY1 2011 HY1 Δ Δ CC Δ OG – Investment to extend geographically Revenues 349 295 +19% +10% +5% and into new specialties Ordinary EBITA 68 51 +34% +23% +16% Margin 19.5% 17.3%
Slide 23: Financial & Compliance Services
Financial & Compliance Services Organic growth accelerates to 6%; EBITA margin stable Financial Services – High single-digit organic growth € million 2012 HY1 2011 HY1 Δ Δ CC Δ OG – Bank customer wins Revenues 180 162 +11% +6% +6% – FRSGlobal double-digit organic growth Ordinary EBITA 32 29 +12% +4%
Slide 24: Strategic objectives
Strategic objectives Good progress on strategic objectives to drive long-term growth Continued transformation – Capital allocated towards higher growth markets Portfolio – Acquisitions: FinArch and Acclipse in July – Divestitures: Healthcare Analytics, two publishing units in the Netherlands Organic
Slide 25: Portfolio transformation 2004-2012
Portfolio transformation 2004-2012 Electronic & services now represents 75% of total revenue Revenue by Format 100% 90% 25% 80% 52% 70% 16% 60% 50% 40% 13% 30% 59% 20% 35% 10% 0% 2004 FY* 2012 HY* Electronic Services Print * Reported numbers Half-Year 25 Results 2012
Slide 26: Capital allocation
Capital allocation Investment focussed on higher growth markets Business Investment Allocation High Growth (>5%) 30% 44% 79% Moderate Growth (2-5%) 41% 35% Stable/Low Growth (<2%) 29% 21% Revenues By Investment Growth Bracket Allocation Investments include CAPEX, Product Development Spend, Acquisiti
Slide 27: Rebalancing European footprint
Rebalancing European footprint Through capital allocation and portfolio shifts 37%1 of group revenue – Strong market positions in brands across 18 countries – Southern Europe and pruning reduced group organic growth by 1% Investing in growth segments – Online and software in Legal & Regulatory d
Slide 28: Acquisitions and divestitures
Acquisitions and divestitures Acquisitions and divestitures help accelerate transformation Acquisitions: – FinArch: regulatory reporting for banks; bolt-on to FRSGlobal – Acclipse: collaborative tax & accounting tools, Asia-Pacific – Both growing rapidly – Must cover WACC (8%) within 3-5 years and
Slide 29: Innovation
Innovation Sustained investments in new and enhanced products Organic investment in new product development Full-Year Half-Year 350 12% 12% 300 200 10% 10% 250 8% 150 8% 200 6% 6% 150 100 4% 4% 100 50 50 2% 2% 0 0% 0 0% 2007 2008 2009 2010 2011 H1 2010 H1 2011 H1 2012 New Product development (CC) Ne
Slide 30: Globalization
Globalization Online and software solutions address global market needs Extending Digital Solutions Legal Spend/Tymetrix (L&R) Brand/Trademark (L&R) Kleos (L&R) Global Integrator (T&A) Atlas (T&A) Ovid (Health) UpToDate (Health) TeamMate (F&CS) FRS Global (F&CS) Half-Year Results 2
Slide 31: Operational excellence
Operational excellence Cost savings from Springboard continued in first half Springboard operational excellence program on track to deliver €205-210 million run rate savings this year Began implementation of Global Infrastructure Delivery Network (consolidation of data centers, globally) Centr
Slide 32: Agenda
Agenda Introduction Financial Review Operating and Strategic Review 2012 Outlook Half-Year Results 2012 32
Slide 33: Divisional outlook 2012
Divisional outlook 2012 Expect European markets to remain challenging North American business positioned for growth Legal & Regulatory Cost savings will help support margins Impact of disposals in the Netherlands Organic growth to improve in the second half Tax & Accounting Seasonal buyi
Slide 34: Guidance 2012
Guidance 2012 Key metric FY 2012 Guidance Ordinary EBITA Margin 21.5 – 22.5% Ordinary Free Cash Flow1) ≥ €425 million Return on Invested Capital (after tax)1) ≥ 8% Diluted Ordinary EPS1,2) Low single-digit growth Net financing result Approximately €125 million Benchmark tax rate Approximately 27.5%
Slide 35: Q&A
Q&A Nancy McKinstry Chief Executive Officer and Chairman Boudewijn Beerkens Chief Financial Officer Jack Lynch Member of the Executive Board