CorporateInvestorsJuly 25, 2012

Wolters Kluwer 2012 half-year results

Full-year 2012 guidance confirmed.

Wolters Kluwer, a global leader in professional information services, today released its 2012 half-year results.

Highlights

  • Full-year 2012 guidance confirmed.
  • Revenues up 3% in constant currencies and up 1% organically.
  • Deterioration in Europe offset by improved organic growth in North America.
  • Recurring revenues up 2% organically (76% of total revenues).
  • Online, software and services revenues up 4% organically (75% of total revenues).
  • Health and Financial & Compliance Services grew organically 5% and 6%, respectively.
  • Ordinary EBITA €346 million; Ordinary EBITA margin of 19.9%.
  • Leverage ratio net-debt-to-EBITDA improves to 2.9x (2011 year-end: 3.1x).
  • Expect to approach target of 2.5x by year-end.
  • Healthcare Analytics disposal completed in May as part of pharma divestiture program.
  • €100 million share buy-back completed on July 9; program will be expanded by up to €35 million under new policy to offset dilution from stock dividend and performance shares.

Nancy McKinstry, CEO and Chairman of the Executive Board, commented: “Our performance is on track, despite challenging macro-economic conditions in Europe. Improved momentum in North America and growth in our online, software and services products globally have helped deliver positive organic growth for the group in the first half. We continue investments in product innovation and geographic expansion while actively pursuing operating efficiencies. We remain confident we will deliver on our full-year guidance.”

Key figures half-year 2012 ended June 30

€ million, unless otherwise indicated 2012 2011 ∆ CC ∆ OG
Business performance – benchmark figures
Revenue 1,739 1,619 +7% +3% +1%
Ordinary EBITA 346 325 +7% +1% -2%
Ordinary EBITA margin (%) 19.9% 20.1%
Ordinary net income 204 196 +4% 0%
Diluted ordinary EPS(€) 2 0.68 0.65 +5% +1%
Ordinary free cash flow 142 131 +9% +1%
Net debt 2,258 2,194 +3%
IFRS results1
Revenue 1,739 1,619 +7%
Operating profit 253 203 +25%
Profit for the period2 124 9 nm
Diluted EPS (€)2 0.42 0.03 nm
Net cash from operating activities 192 162 +19%

∆ - % Change; ∆ CC - % Change constant currencies (EUR/USD 1.39); ∆ OG – % Organic growth; nm – not meaningful. Benchmark and IFRS figures are for continuing operations unless otherwise noted. Benchmark figures are performance measures used by management. See Note 2 of the Interim Financial Report for a reconcilation from IFRS to benchmark figures. 1)International Financial Reporting Standards as adopted by the European Union. 2)Includes discontinued operations.

Full-Year 2012 Outlook

We remain confident we will deliver on our full-year guidance. The ordinary EBITA margin is expected to improve slightly in the second half, despite investment and cost inflation, as a result of the ongoing mix shift towards electronic solutions and the gradual build up of Springboard cost savings towards the targetted €205 = €210 million run rate (full-year 2011: €191 million). The table below provides our outlook for the continuing operations for 2012.

Peformance indicators 2012 Guidance
Ordinary EBITA margin 21.5-22.5%
Ordinary free cash flow1 ≥ €425million
Return on invested capital ≥ 8%
Diluted ordinary EPS1 Low single-digit growth2

1)Inconstant currencies(EUR/USD 1.39). 2)Includes effect of 2012 share buy-backs, stock dividend and performance shares.

Guidance is based on constant exchange rates. Wolters Kluwer generates more than half of its ordinary EBITA in North America. As a rule of thumb, based on our 2011 currency profile, a 1 U.S. cent move in the average EUR/USD exchange rate for the year causes an opposite 0.8 euro-cent change in diluted ordinary EPS.

Net financing costs are expected to be approximately €125 million in constant currencies. The effective benchmark tax rate on ordinary income before tax is expected to be approximately 27.5% in 2012 due to an increasing proportion of profits in higher tax regions.

  • Legal & Regulatory: We expect European markets to remain challenging in the second half. Our North American business is positioned for growth. Cost savings continue to build throughout the year which should help support margins. The second half will see the effect of two disposals of non-core publications in the Netherlands, which together represented approximately 2% of divisional revenues in 2011.
  • Tax & Accounting: We expect organic growth to improve in the second half of the year reflecting seasonal buying patterns. The second half margin is expected to be broadly in line with the second half of 2011.
  • Health: We expect continued strong demand for Clinical Solutions. Trends in journal advertising markets are likely to remain weak. Margins should benefit from the ongoing shift towards electronic solutions.
  • Financial & Compliance Services: We expect good growth in Financial Services and Audit, Risk & Compliance, but continued weakness in Transport Services.

Download the full 2012 Half-Year Results PDF

About Wolters kluwer

Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the health, tax & accounting, governance, risk & compliance, and legal & regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services.

About Wolters kluwer

Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the health, tax & accounting, governance, risk & compliance, and legal & regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services.

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.
Contacts
Annemarije Dérogée-Pikaar
Annemarije Dérogée - Pikaar
Director, Corporate Affairs & Communications
Global Branding & Communications
Meg Geldens
Meg Geldens
Vice President, Investor Relations
Investor Relations