Wolters Kluwer 2016 Half-Year Report
(Thomson Reuters ONE) -
July 29, 2016 - Wolters Kluwer, a global leader in professional information
services, today released its 2016 half-year results.
Highlights
* Full-year outlook reiterated, with guidance for adjusted free cash flow
raised.
* Revenues up 2% in constant currencies and up 3% organically.
* Digital & services revenues grew 5% organically (86% of total revenues).
* Recurring revenues grew 4% organically (78% of total).
* All main geographic regions delivered positive organic growth.
* Adjusted operating profit margin improved to 20.0%, helped by lower
restructuring charges.
* Diluted adjusted EPS ?0.88, up 6% in constant currencies.
* Adjusted free cash flow ?229 million, up 34% in constant currencies.
* Net-debt-to-EBITDA 1.7x compared to 2.1x a year ago.
* Interim dividend of ?0.19 cash per share to be paid in September.
Interim Report of the Executive Board
Nancy McKinstry, CEO and Chairman of the Executive Board, commented:
"We were pleased with our first half results. We achieved 3% organic growth and
improved our operating margins and cash flow. Better performance in Europe
helped us overcome a challenging comparable in the U.S. and slower growth in
Asia Pacific and Rest of World. We are continuing to see a positive response
from customers to the innovative expert solutions we are bringing to the market.
I am confident in our full year outlook."
Key Figures 2016 Half-Year:
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Six months ended June 30
(in millions of euros, unless
otherwise stated) 2016 2015 D D CC D OG
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Business performance - benchmark
figures
Revenues 2,042 2,015 +1% +2% +3%
Adjusted operating profit 408 391 +4% +5% +4%
Adjusted operating margin 20.0% 19.4%
Adjusted net profit 260 235 +10% +5%
Diluted adjusted EPS (?) 0.88 0.79 +12% +6%
Adjusted free cash flow 229 170 +35% +34%
Net debt 1,814 2,069 -12%
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IFRS results
Revenues 2,042 2,015 +1%
Operating profit 317 281 +13%
Profit for the period 199 162 +23%
Diluted EPS (?) 0.67 0.55 +23%
Net cash from operating
activities 326 267 +22%
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D: % Change; D CC: % Change constant currencies (EUR/USD 1.11); D OG: %
Organic growth. Benchmark (adjusted) figures are performance measures used by
management. See Note 5 for a reconciliation from IFRS to benchmark figures.
IFRS: International Financial Reporting Standards as adopted by the European
Union.
Full-Year 2016 Outlook
Our full-year 2016 outlook is unchanged, except that we have raised our guidance
range for adjusted free cash flow by ?50 million. We expect to deliver margin
improvement and to grow diluted adjusted EPS at a mid-single-digit rate in
constant currencies this year. Our guidance for full-year 2016 is provided in
the table below.
2016 Outlook
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Performance indicators 2016 guidance
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Adjusted operating profit margin 21.5%-22.0%
Adjusted free cash flow ?650-?675 million
Return on invested capital > 9%
Diluted adjusted EPS Mid-single-digit growth
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Guidance for adjusted free cash flow and diluted adjusted EPS is in constant
currencies (EUR/USD 1.11). Guidance for EPS growth assumes the announced share
repurchases are equally spread over 2016-2018. Adjusted operating profit
margin and ROIC are in reported currency.
Our guidance is based on constant exchange rates. In 2015, Wolters Kluwer
generated more than half of its revenues and adjusted operating profit in North
America. As a rule of thumb, based on our 2015 currency profile, a 1 U.S. cent
move in the average EUR/USD exchange rate for the year causes an opposite change
of approximately one and a half euro-cents in diluted adjusted EPS.
Restructuring costs, which are included in adjusted operating profit, are
expected to start returning to normal levels: we expect these costs to be around
?15-?25 million in 2016 (2015: ?46 million). We expect adjusted net financing
costs of approximately ?105 million, excluding the impact of exchange rate
movements on currency hedging and intercompany balances. We expect the benchmark
effective tax rate to be in the range of 27%-28% in 2016. We expect a cash
conversion ratio of approximately 95%, with capital expenditure rising to around
5% of total revenue.
Our guidance assumes no significant additional change in the scope of
operations. We may make further disposals which could be dilutive to margins and
earnings in the near term.
2016 Outlook by Division
Health: we expect another year of good organic revenue growth, similar to 2015,
supported by robust organic growth in Clinical Solutions and a gradually
improving trend in Health Learning, Research & Practice. Margins are expected to
improve slightly even as we continue to invest to drive organic growth.
Tax & Accounting: we expect full-year underlying revenue growth to slightly
improve on 2015 levels, driven by continued mix shift towards software
solutions. Margins are expected to be maintained for the full year, despite
higher investment.
Governance, Risk & Compliance: we continue to expect positive but slower organic
growth in the full year, given demanding comparables for transactional and non-
recurring license and implementation fees. Full-year margins are expected to
improve slightly.
Legal & Regulatory: we expect full-year organic revenue decline to be similar to
2015, with print and services trends expected to deteriorate in the third and
fourth quarter. Margins are expected to improve due mainly to lower
restructuring costs. Efficiency savings are expected to fund wage inflation and
increased product investment.
Strategic Priorities 2016-2018
In February 2016, we announced our strategic priorities for the next three years
(2016-2018). Our plan is to build on the strategic direction we have been
following in the past three years, by expanding our market coverage, increasing
our focus on expert solutions, and continuing to drive efficiencies. Our
2016-2018 strategic plan aims to sustain and, in the long run, further improve
our organic growth rate, margins and returns as we continue to focus on growing
value for customers, employees and shareholders. Our strategic priorities for
the next three years are:
* Expand market coverage: We will continue to allocate the majority of our
capital towards leading growth businesses and digital products, and extend
into market adjacencies and new geographies where we see the best potential
for growth and competitive advantage. Expanding our market reach will also
entail allocating funds to broaden our sales and marketing coverage in
certain global markets. We intend to support this organic growth strategy
with value-enhancing acquisitions whilst continuing our program of small
non-core disposals.
* Deliver expert solutions: Our plan calls for increased focus on expert
solutions that combine deep domain knowledge with specialized technology and
services to deliver expert answers, analytics and productivity for our
customers. To support digital growth across all divisions, we intend to
accelerate our ongoing shift to global platforms and to cloud-based
integrated solutions that offer mobile access. Our plan is to also expand
our use of new media channels and to create an all-round, rich digital
experience for our customers. Investment in new and enhanced products will
be sustained in the range of 8-10% of total revenues in coming years.
* Drive efficiencies and engagement: We intend to continue driving scale
economies while improving the quality of our offerings and agility of our
organization. These operating efficiencies will help fund investment and
wage inflation, and support a rising operating margin over the long term.
Through increased standardization of processes and technology planning, and
by focusing on fewer, global platforms and software applications, we expect
to free up capital to reinvest in product innovation. Supporting this effort
are several initiatives to foster employee engagement.
Leverage Target and Financial Policy
Wolters Kluwer uses its cash flow to invest in the business organically or
through acquisitions, to maintain optimal leverage, and provide returns to
shareholders. We regularly assess our financial position and evaluate the
appropriate level of debt in view of our expectations for cash flow, investment
plans, interest rates and capital market conditions.
As of June 30, 2016, our net-debt-to-EBITDA ratio was 1.7x, below our target of
2.5x. While we may temporarily deviate from our leverage target at times, we
continue to believe that, in the longer run, a net-debt-to-EBITDA ratio of
around 2.5x remains appropriate for our business given the high proportion of
recurring revenues and resilient cash flow.
Dividend Policy and 2016 Interim Dividend
Wolters Kluwer has a progressive dividend policy under which the company aims to
increase the dividend per share each year. We are committed to increasing the
total dividend per share each year, with the annual increase dependent on our
financial performance, market conditions, and our need for financial
flexibility.
As announced on February 24, 2016, the interim dividend for 2016 was set at 25%
of the prior year's total dividend, or ?0.19 per ordinary share. This interim
dividend will be distributed on September 14, 2016.
Dividend dates for 2016 are provided on page 30. Shareholders can choose to
reinvest both interim and final dividends by purchasing additional Wolters
Kluwer shares through the Dividend Reinvestment Plan (DRIP) provided by ABN AMRO
Bank NV.
Anti-Dilution Policy and Share Buyback Program
Wolters Kluwer has a policy to offset the dilution caused by our annual
performance share issuance with share repurchases.
In February 2016, we announced our intention to buy back shares for up to ?600
million over the three year period 2016-2018, including anti-dilution
repurchases. Assuming global economic conditions do not deteriorate
substantially, we believe this level of cash return leaves us with ample
headroom for investment in the business, including acquisitions.
In the year to date, we repurchased 2.0 million ordinary shares for a total
consideration of ?70 million (average price ?34.52), of which ?3 million was
settled in July, as part of this buyback program. The repurchased shares are
added to and held as treasury shares. It remains our intention to buy back up to
?600 million in shares in the period 2016-2018, spread evenly over the three
years.
Half-Year 2016 Results
Benchmark Figures
Group revenues increased 1% overall and 2% in constant currencies to ?2,042
million. Organic revenue growth, which excludes both the impact of exchange rate
movements and the effect of acquisitions and divestitures, was 3%, an
improvement on the comparable period (HY 2015: 2%). Disposals made in 2015 and
first half 2016 outweighed the effect of acquisitions on revenues.
By geographic market, North American revenues (61% of total) increased 4%
organically (HY 2015: 5%), slowing as expected due to challenging comparables in
Governance, Risk & Compliance. Europe (31% of total) grew 1% on an organic basis
(HY 2015: 2% decline), improving in Legal & Regulatory, Tax & Accounting and
Governance, Risk & Compliance. Revenues from Asia Pacific and Rest of World (8%
of total) grew 2% organically (HY 2015: 6%) with varying trends by market.
Adjusted operating profit increased 4% overall and 5% in constant currencies to
?408 million. The adjusted operating margin increased 60 basis points to 20.0%
(HY 2015: 19.4%), driven primarily by lower restructuring costs compared to the
first half of 2015. Efficiency savings, operational gearing and the effect of
loss-making disposals were largely balanced by increased investment in revenue
growth. Restructuring costs were ?8 million compared to ?22 million in the
comparable period. Approximately half of restructuring costs were in the Legal &
Regulatory division. We continue to guide to restructuring expenses between ?15
million and ?25 million for the full year 2016.
Adjusted net financing costs reduced to ?51 million (HY 2015: ?67 million), with
foreign exchange losses of ?1 million (HY 2015: ?16 million) recorded in the
period. As a reminder, adjusted net financing costs exclude the financing
component of employee benefits, results of investments available-for-sale, and
book gains/losses on equity-accounted investees.
Adjusted profit before tax was ?357 million (HY 2015: ?324 million), an increase
of 6% in constant currencies. The benchmark effective tax rate on adjusted
profit before tax was 27.2% (HY 2015: 27.5%).
Diluted adjusted EPS was ?0.88, up 12% overall and up 6% in constant currencies.
IFRS Reported Figures
Reported operating profit increased 13% to ?317 million (HY 2015: ?281 million),
reflecting the increase in adjusted operating profit and lower amortization of
acquired intangibles.
Reported financing results amounted to a cost of ?54 million (HY 2015: ?69
million cost), and included adjusted net financing cost of ?51 million and the
financing component of employee benefits of ?3 million. Profit before tax
increased 24% to ?263 million (HY 2015: ?212 million).
The reported effective tax rate increased to 24.4% (HY 2015: 23.4%), due mainly
to an increased proportion of profits from countries with higher tax rates.
Total profit for the six month period increased 23% to ?199 million (HY 2015:
?162 million) and diluted earnings per share increased 23% to ?0.67 (HY 2015:
?0.55).
Cash Flow
Adjusted operating cash flow was ?366 million (HY 2015: ?340 million), up 8%
overall and up 8% in constant currencies. This reflects a cash conversion ratio
of 90% (HY 2015: 87%). Working capital outflows in the first half were reduced.
Capital expenditure amounted to ?101 million (5% of revenues) reflecting
investment in product development, particularly in Tax & Accounting and
Governance, Risk & Compliance. We continue to expect capital expenditure to be
5% of total revenues for the full year.
Adjusted free cash flow was ?229 million, up 34% in constant currencies,
reflecting the increase in adjusted operating cash flow and lower taxes paid.
Paid financing costs amounted to ?81 million (HY 2015: ?82 million) and
corporate income taxes paid were ?60 million (HY 2015: ?68 million). The net
reduction in restructuring provisions of ?8 million reflects cash spent on
efficiency programs.
Dividends paid to shareholders totaled ?167 million in relation to the final
dividend over 2015. This compares to ?211 million in the first half of 2015,
which represented the total dividend over the 2014 financial year. The 2016
interim dividend (approximately ?56 million) will be paid in September 2016.
First half 2016 acquisition spending, net of cash acquired, was ?30 million (HY
2015: ?38 million), including ?3 million related to earn-outs on past
acquisitions. Acquisition spending relates mainly to the acquisitions of Triad
Professional Services in Governance, Risk & Compliance (February 2016), PrepU
adaptive learning technology in Health (April 2016), and CPE Link in Tax &
Accounting (June 2016).
Cash spent on share repurchases amounted to ?67 million in the first half, with
a further ?3 million settled in July.
Balance Sheet, Net Debt and Leverage
Net debt was ?1,814 million as of June 30, 2016, compared to ?1,788 million at
December 31, 2015 and ?2,069 million as of June 30, 2015. The twelve month
rolling net-debt-to-EBITDA ratio was 1.7x at the end of June 2016 compared to
2.1x a year ago.
About Wolters Kluwer
Wolters Kluwer is a global leader in professional information services and
solutions for professionals in the areas of health, tax & accounting, finance,
risk & compliance, and legal. We help our customers make critical decisions
every day by providing expert solutions that combine deep domain knowledge with
specialized technology and services.
Wolters Kluwer reported 2015 annual revenues of ?4.2 billion. The group serves
customers in over 180 countries, maintains operations in over 40 countries, and
employs over 19,000 people worldwide. The company is headquartered in Alphen aan
den Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in
the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1
American Depositary Receipt (ADR) program. The ADRs are traded on the over-the-
counter market in the U.S. (WTKWY).
For more information about our products and organization, visit
www.wolterskluwer.com and follow us on Twitter, Facebook, LinkedIn, and YouTube.
Financial Calendar
August 29, 2016 Ex-dividend date: 2016 interim dividend
August 30, 2016 Record date: 2016 interim dividend
September 14, 2016 Payment date: 2016 interim dividend ordinary shares
September 21, 2016 Payment date: 2016 interim dividend ADRs
November 2, 2016 Nine-Month 2016 Trading Update
February 22, 2017 Full-Year 2016 Results
Media Investors/Analysts
Annemarije Pikaar Meg Geldens
Corporate Communications Investor Relations
t + 31 (0)172 641 470 t + 31 (0)172 641 407
press(at)wolterskluwer.com ir(at)wolterskluwer.com
Forward-looking Statements and Other Important Legal Information
This report 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 uncertainties that could cause actual results and
events to differ materially from what is contemplated by the forward-looking
statements. Factors which could cause actual results to differ from these
forward-looking statements may include, without limitation, general economic
conditions; conditions in the markets in which Wolters Kluwer is engaged;
behavior of customers, suppliers, and competitors; technological developments;
the implementation and execution of new ICT systems or outsourcing; and legal,
tax, and regulatory rules affecting Wolters Kluwer's businesses, as well as
risks related to mergers, acquisitions, and divestments. In addition, financial
risks such as currency movements, interest rate fluctuations, liquidity, and
credit risks could influence future results. The foregoing list of factors
should not be construed as exhaustive. Wolters Kluwer disclaims any intention or
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Elements of this press release contain or may contain inside information about
Wolters Kluwer within the meaning of Article 7(1) of the Market Abuse Regulation
(596/2014/EU).
The full press release is available here:
Wolters Kluwer 2016 Half-Year Report (PDF):
http://hugin.info/130682/R/2031823/756209.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Wolters Kluwer NV via GlobeNewswire
[HUG#2031823]
Unternehmensinformation / Kurzprofil:
Datum: 29.07.2016 - 08:00 Uhr
Sprache: Deutsch
News-ID 486269
Anzahl Zeichen: 22850
contact information:
Town:
Alphen aan den Rijn
Kategorie:
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