Wolters Kluwer 2009 Third-Quarter Scheduled Trading Update; Full-Year
Guidance Reiterated
(Thomson Reuters ONE) - Alphen aan de Rijn (November 4, 2009) - Wolters Kluwer, amarket-leading global information services and publishing companyfocused on professionals, today released its scheduled third-quartertrading update and reiterated its full-year guidance. The company'sstrong market positions, subscription resiliency, and solid financialposition provide evidence that it is weathering the economic cyclewell and will emerge as a stronger and better positioned company.Highlights * Subscription and other non-cyclical revenues, which comprise over 70% of total annualized revenues, continue to demonstrate resilient performance * Challenging market conditions continue, pressuring new sales and transactional product revenues * Solid ordinary EBITA margin year-to-date performance, setting the stage for achievement of full-year guidance * Springboard operational excellence program exceeding expectations; run rate savings upgraded to ?140-160 million by 2011 * Annual impairment analysis of goodwill and publishing rights resulted in a non-cash impairment charge of ?197 million in Q3, which has no impact on diluted ordinary earnings per share * Solid financial position reflecting a strong balance sheet and cash flow * Progressive annual dividend policy reiterated * Full-year guidance reiteratedNancy McKinstry, CEO and Chairman of the Executive Board, commentedon the company's third quarter trading update:"I am pleased to announce the delivery of strong operatingprofitability and cash flow for the nine months ended September 2009.While challenging trading conditions in the third quarter changedlittle as compared to the first half of 2009, our portfolio continuedto deliver resilient results. Subscription products delivered solidperformance year-to-date while new sales and transactional revenuescontinue to be pressured from weak economic conditions. Despite theseconditions, our professional customers continue to demand integratedworkflow and software solutions driving 9% growth in electronicrevenue. The ordinary EBITA margin was strong reflecting continuedmigration of revenues from print to electronic products, thecontribution of prior year acquisitions, and the benefits of theSpringboard operational excellence program. The Springboard programhas exceeded expectations to date giving us further confidence inachieving our full-year ordinary EBITA margin guidance. Today we areannouncing the expansion of the program which will generate higherrun rate cost savings over the life of the program. Based on ourperformance for the first nine months of 2009, we are confident toreiterate each of the components of our full-year 2009 guidance.""Additionally, I am pleased to announce today our strategy forMaximizing Value for Customers, which focuses on generating evengreater value for our customers and shareholders. Our strategy buildson the strong foundation of the transformation of Wolters Kluwer andleverages our global leading market positions. We are well positionedto drive growth by creating information-enabled solutions andnetworks that help our customers deliver results efficiently. Macrotrends leading to increased regulation, more compliance complexityand greater focus on productivity of our customers, underpin thesteadfast pursuit of our strategy to maximize value for customers andshareholders."Trading ConditionsUnderlying subscription and other non-cyclical revenues, over 70% oftotal revenues, were materially in line with the prior year.Subscription revenues delivered solid performance with retentionrates largely stable across the business. New subscription sales andother non-cyclical products, which include tax form clicks andrelated bank products, continued to be impacted by recessionarymarket conditions.Transactional product revenues, which make up approximately 30% oftotal revenues, continue to remain under pressure. Cyclical revenuesin the Corporate & Financial Services division make up approximately5% of total Wolters Kluwer revenue and include products related totransaction volumes in the M&A, IPOs, UCC lending, mortgage, andindirect lending markets. As expected, these revenues continued to beunder pressure due to reduced transaction volumes in the market ascompared to the prior year, however, negative trends in the thirdquarter have eased slightly as compared to trends at the half year.Advertising and pharmaceutical promotion revenues, approximately 5%of total half year revenue, continued to be challenged in the Healthbusiness, France, and the Netherlands. Other cyclical revenuesrepresent approximately 9% of total revenue and include training,consulting, and transport services. Performance in these productlines also continued to be weak. Book products which make upapproximately 9% of revenues performed largely in line with the prioryear.Wolters Kluwer continues its commitment to invest approximately 8% to10% of its revenues in new and enhanced products to support long-termprofitable growth and as a result, several new products were launchedin the third quarter of 2009. Health & Pharma Solutions releasedProVation® Care Plans, software for nurses, pharmacists, and othercaregivers, which provides actionable evidence needed to improvepatient safety and demonstrate compliance with regulatory standards.Corporate & Financial Services strengthened its Wiz Sentri:Anti-Fraud solution to help U.S. and U.K. financial institutionsprevent crimes tied to cash management activities. Tax, Accounting &Legal launched IntelliConnect China GOLD - Global Online LegalDatabase. Legal, Tax & Regulatory Europe launched Itinera Luris, alitigation management workflow solution that integrates with Pluris,the online legal database for professionals.Reiterated 2009 Outlook+-------------------------------------------------------------------+| Key Performance Indicators | 2009 Guidance ||---------------------------------------+---------------------------|| Ordinary EBITA margin | Broadly in line with 2008 ||---------------------------------------+---------------------------|| Free cash flow[1] | ± ?350 million ||---------------------------------------+---------------------------|| Return on invested capital | >= 8% ||---------------------------------------+---------------------------|| Diluted ordinary earnings per | ?1.41 to ?1.46 || share[1] | ||---------------------------------------+---------------------------|| [1]At constant currencies (EUR/USD = | || 1.47) | |+-------------------------------------------------------------------+Management expects the current weak economic environment to continuethroughout the remainder of the year. With the peak renewal seasonunderway, the subscription portfolio is expected to continue itsresilient performance while new subscription sales and print productrenewals will continue to be pressured by market conditions. Despitethese conditions, management continues to expect that full-yearordinary EBITA margin will be broadly in line with 2008 levels anddiluted ordinary earnings per share will be between ?1.41 and ?1.46in constant currencies. Free cash flow is expected to beapproximately ?350 million for the full-year, consistent withprevious guidance. This performance will be supported by thecompany's stable subscription base, growing online and softwareportfolio, cost containment programs, and the contributions of theSpringboard operational excellence program.SpringboardThe Springboard operational excellence program is designed to furtherbusiness optimization initiatives resulting in sustainable margingrowth. Savings are expected to result largely from standardizedtechnology platforms and consolidated IT infrastructure, streamlinedcontent manufacturing processes, expanded global sourcing programs,offshore service centers for software development and testing, andcontent production and back office support functions.Execution to date has exceeded expectations giving us furtherconfidence in achieving the full-year ordinary EBITA margin guidance.As a result, the full program run rate savings estimates have beenincreased and the program has been expanded. The expansion andacceleration of supply management initiatives in Europe willcontribute positively to the program results. Additionally, furtherbusiness optimization initiatives in France, the Netherlands, theUnited Kingdom and Law & Business will contribute to additionalsavings. Furthermore, annualized run rate savings estimates for thefull program have been increase to ?140-160 million by 2011, anincrease over the previous estimate of ?120 million. Relatedexceptional expenses are expected to increase to approximately?220-240 million for the full program by 2011.+-------------------------------------------------------------------+| Springboard Savings and Cost Estimates (? | Previous | Increased || millions pre tax) | Guidance | Guidance ||--------------------------------------------+----------+-----------|| 2011 Run Rate Cost Savings | 120 | 140-160 ||--------------------------------------------+----------+-----------|| Exceptional Program Costs | 180 | 220-240 |+-------------------------------------------------------------------+Intangible Fixed AssetsIn the third quarter, Wolters Kluwer performed its annual impairmentanalysis of goodwill and publishing rights on the basis of itscash-generating units, as prescribed by IAS 36. Impairment testing iscarried out in accordance with company policies as described in note1 of the 2008 Annual Report. This resulted in a non-cash impairmentcharge of ?197 million, mainly related to the Health & PharmaSolutions and the Legal, Tax & Regulatory Europe divisions. Thecharge is mainly a consequence of market conditions resulting inlower expected long-term growth rates, particularly within theadvertising, training and pharmaceutical promotion markets. Theimpact of the charge is expected to be ?0.65 on reported dilutedfull-year earnings per share. The charge has no impact on dilutedordinary earnings per share.Solid Financial PositionThe resilient portfolio and strong cash generation continue tosupport a solid financial position. The company has a strongliquidity position with headroom in excess of the company's ?500million policy minimum. Debt was refinanced in early 2008 atattractive interest rates pushing maturities out beyond 2013. Thenet-debt-to-EBITDA ratio was further improved in the third quarter inkeeping with management's intention to move closer to its target of2.5 times net-debt-to-EBITDA over the medium term.Strategy Update: Maximizing Value for CustomersIn a separate press release simultaneously issued this morning,Wolters Kluwer provided a 2010-2012 Strategy Update for MaximizingValue for Customers. In addition, a presentation by senior managementwill be conducted today at the Hilton Hotel, Amsterdam. Thepresentation will be simultaneously web cast on the corporate websitewww.wolterskluwer.com.Benchmark FiguresWherever used in this press release, the term "ordinary" refers tofigures adjusted for exceptional items and, where applicable,amortization of publishing rights and impairment of goodwill andpublishing rights. Exceptional items consist of qualifyingrestructuring expenses. "Ordinary" figures are non-IFRS compliantfinancial figures, but are internally regarded as key performanceindicators to measure the underlying performance of the basebusiness. These figures are presented as additional information anddo not replace the information in the income statement and in thecash flow statement. The term "ordinary" is not a defined term underInternational GAAP.About Wolters KluwerWolters Kluwer is a leading global information services andpublishing company. The company provides products and services forprofessionals in the health, tax, accounting, corporate, financialservices, legal, and regulatory sectors. Wolters Kluwer had 2008annual revenues of ?3.4 billion, employs approximately 20,000 peopleworldwide, and maintains operations in over 35 countries acrossEurope, North America, Asia Pacific, and Latin America. WoltersKluwer is headquartered in Alphen aan den Rijn, the Netherlands. Itsshares are quoted on Euronext Amsterdam (WKL) and are included in theAEX and Euronext 100 indices. Visit www.wolterskluwer.com forinformation about our market positions, customers, brands, andorganization.Should you wish to change how you receive information from WoltersKluwer, please click here.Forward-looking StatementsThis press release contains forward-looking statements. Thesestatements may be identified by words such as "expect," "should,""could," "shall," and similar expressions. Wolters Kluwer cautionsthat such forward-looking statements are qualified by certain risksand uncertainties that could cause actual results and events todiffer materially from what is contemplated by the forward-lookingstatements. Factors which could cause actual results to differ fromthese forward-looking statements may include, without limitation,general economic conditions; conditions in the markets in whichWolters Kluwer is engaged; behavior of customers, suppliers, andcompetitors; technological developments; the implementation andexecution of new ICT systems or outsourcing; and legal, tax, andregulatory rules affecting Wolters Kluwer's businesses, as well asrisks related to mergers, acquisitions, and divestments. In addition,financial risks such as currency movements, interest ratefluctuations, liquidity, and credit risks could influence futureresults. The foregoing list of factors should not be construed asexhaustive. Wolters Kluwer disclaims any intention or obligation topublicly update or revise any forward-looking statements, whether asa result of new information, future events, or otherwise.Calendar2009 Full-Year Results February 24, 2010Publication of 2009 Annual Report March 18, 2010Annual General Meeting of Shareholders, April 21, 2010AmsterdamFull overview available at www.wolterskluwer.com.Media Investors/AnalystsCaroline Wouters Kevin EntrickenVice President, Corporate Vice President, InvestorCommunications Relationst + 31 (0)172 641 459 t + 31 (0)172 641 407press(at)wolterskluwer.com ir(at)wolterskluwer.comPresentations by Senior Management on November 4, 2009 - Hilton HotelAmsterdamStrategy Update: Maximizing Value for CustomersInvestor/Analyst Meeting: 10:00 AM CETPresentation will be web cast on the corporate websitewww.wolterskluwer.comhttp://hugin.info/130682/R/1352416/327164.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 04.11.2009 - 08:03 Uhr
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