February 24, 2016 - Wolters Kluwer, a global leader in professional
information services, today released its 2015 full-year
results.
Highlights
Nancy McKinstry, CEO and Chairman
of the Executive Board, commented:
"I am pleased to report we accelerated organic
growth to 3%, despite the tough comparable we faced in the fourth
quarter and the challenges that remain in some of our European
markets. Our strategy of expanding our leading, high growth
positions, delivering innovations that help our customers excel,
and driving efficiencies, has supported our growth and increased
margins and returns. We are confident we can deliver another year
of margin improvement and earnings growth in 2016."
Key Figures 2015
Full-Year:
Year ended December 31 |
|
|
|
|
|
(in millions of euros, unless otherwise
stated) |
2015 |
2014 |
D |
D CC |
D OG |
Business performance - benchmark
figures |
|
|
|
|
|
Revenues |
4,208 |
3,660 |
+15% |
+3% |
+3% |
Adjusted operating profit |
902 |
768 |
+17% |
+2% |
+3% |
Adjusted operating margin |
21.4% |
21.0% |
|
|
|
Adjusted net profit |
583 |
470 |
+24% |
+4% |
|
Diluted adjusted EPS (€) |
1.96 |
1.57 |
+25% |
+5% |
|
Adjusted free cash flow |
647 |
516 |
+26% |
+7% |
|
Net debt |
1,788 |
1,897 |
-6% |
|
|
Return on invested capital (ROIC) |
9.3% |
8.5% |
|
|
|
IFRS results |
|
|
|
|
|
Revenues |
4,208 |
3,660 |
+15% |
|
|
Operating profit |
667 |
569 |
+17% |
|
|
Profit for the year |
423 |
474 |
-11% |
|
|
Diluted EPS (€) |
1.42 |
1.58 |
-10% |
|
|
Net cash from operating activities |
843 |
663 |
+27% |
|
|
D: %
Change; D CC: % Change constant currencies (EUR/USD 1.33); 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 guidance for full-year 2016 is provided in the
table below. We expect to deliver margin improvement and to grow
diluted adjusted EPS at a mid-single-digit rate in constant
currencies this year.
2016 Outlook |
Performance indicators |
2016 guidance |
Adjusted operating profit margin |
21.5%-22.0% |
Adjusted free cash flow |
€600-€625 million |
Return on invested capital |
>
9% |
Diluted adjusted EPS |
Mid-single-digit growth |
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 return to 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 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
The outlook below reflects the new divisional
structure introduced in August 2015.
Health: we expect another
year of good organic revenue growth in Health, supported by robust
organic growth in Clinical Solutions (the Clinical Effectiveness
and Clinical Software Solutions units) and a gradually improving
trend in Health Learning, Research & Practice. Margins are
expected to improve slightly as we continue to invest to drive
organic growth.
Tax & Accounting: we
expect underlying revenue growth to improve slightly in 2016,
driven by continued mix shift towards software solutions. The first
half is, however, expected to see more muted growth due to normal
seasonal sales patterns. Margins are expected to ease in the first
half, but to be maintained for the full year.
Governance, Risk &
Compliance: we expect positive, but slower organic growth in
2016, as the division faces challenging comparables for
transactional and non-recurring license and implementation fees,
particularly in the first half. Margins are expected to improve
slightly.
Legal & Regulatory: for
the full-year, we expect organic revenue decline to be similar to
2015, with print trends continuing to outweigh growth in digital.
Organic growth in the first half is expected to benefit from timing
and one-off factors. Margins are expected to improve due to lower
restructuring costs. Efficiency savings are expected to fund wage
inflation and increased product investment.
Strategic Priorities
2016-2018
Every three years, we review and update our
strategic priorities and this year we are commencing our strategic
plan for 2016-2018. This plan builds on the strategic direction we
have been following in the past three years during which we
prioritized capital allocation towards specific leading, high
growth businesses and focussed on delivering solutions that bring
insights and productivity benefits to our customers. We also
stepped up efforts to drive operating efficiencies. This strategy
has delivered accelerated organic growth in the past two years and
has improved operating margins and return on invested capital in
2015. 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. Over the past four
years, our leverage has improved significantly and we finished 2015
with net-debt-to-EBITDA of 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 2015
Dividend
Wolters Kluwer has a progressive dividend policy
under which the company aims to increase the dividend per share
each year.
In July 2015, we announced our intention to move
to semi-annual dividend frequency, starting with an interim
dividend for 2015. The 2015 interim dividend was set at 25% of the
prior year's total dividend, or €0.18 per ordinary share, and was
distributed on October 12, 2015.
In light of our current below-target leverage and
our strong 2015 operating performance, we will propose a final
dividend of €0.57 per ordinary share at the 2016 Annual General
Meeting of Shareholders. If approved, this will bring the total
dividend over the 2015 financial year to €0.75 per share, an
increase of 4 eurocents per share or 6% compared to the dividend
for the 2014 financial year (2014: €0.71). If approved, the 2015
dividend will mark the 10th consecutive
annual increase in dividend per share.
Under our progressive dividend policy, we remain
committed to increase the total dividend per share each year, with
the annual increase dependent on our financial performance, market
conditions, and our need for financial flexibility.
For 2016, we intend to again set the interim
dividend at 25% of prior year total dividend.
Dividend dates for 2016 are provided on page 34.
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. Including these anti-dilution repurchases, we announce
today our intention to buy back shares for up to €600 million over
the period 2016-2018. Assuming global economic conditions do not
deteriorate substantially, we believe this level of cash return
will leave us ample headroom for investment in the business,
including acquisitions.
Full-Year 2015 Results
Benchmark Figures
Group revenues increased 15% overall to €4,208
million, up 3% in constant currencies. Excluding both the impact of
exchange rate movements and the effect of acquisitions and
divestitures, organic revenue growth was also 3%, an improvement on
the prior year (2014: 2%). The effect of 2014 and 2015 acquisitions
on revenues was almost entirely offset by the effect of
disposals.
Revenues from North America (59% of total
revenues) increased 5% organically (2014: 3%) with all divisions
delivering improved organic growth in this region. Revenues from
Europe (33% of total revenues) declined 1% on an organic basis
(2014: 0%). Revenues from Asia Pacific and Rest of World (8% of
total revenues) grew 4% organically (2014: 7%).
Adjusted operating profit increased to €902
million, up 17% overall and up 2% in constant currencies. The
adjusted operating margin increased 40 basis points to 21.4% (2014:
21.0%), in line with our guidance range (21.0%-21.5%). The margin
improvement reflects favorable mix shift, efficiency savings and
currency, partially offset by increased restructuring, investment
and other costs. Full-year restructuring costs increased to €46
million (2014: €36 million), higher than we had previously
estimated (€35 million) as additional measures were initiated in
the fourth quarter. Approximately 65% of restructuring costs in
2015 were in Legal & Regulatory, with the remainder spread
across the other divisions.
Adjusted net financing costs rose to €119 million
(2014: €113 million), reflecting a €17 million loss on currency
hedging and revaluation of intercompany balances, due primarily to
the appreciation of the U.S. Dollar to EUR/USD 1.09 at year-end
2015. 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 €783 million, up 3%
in constant currencies (2014: €654 million). The benchmark
effective tax rate on adjusted profit before tax was 25.5% (2014:
27.6%), reflecting a one-time favorable adjustment relating to
deferred tax assets. We expect the benchmark tax rate to return to
27%-28% in 2016.
Diluted adjusted EPS was €1.96, up 25% overall and
up 5% in constant currencies.
IFRS Reported Figures
Reported operating profit increased 17% to €667
million (2014: €569 million), reflecting the increase in adjusted
operating profit, lower acquisition-related costs, higher
amortization of acquired intangibles, and a loss recorded on the
disposal of the Russian business (55% interest) partly offset by a
net book profit on the sale of certain non-core UK assets.
Reported financing results amounted to a negative
€125 million (2014: negative €56 million) and included adjusted net
financing costs of €119 million, the financing component of
employee benefits (€5 million), and a €1 million net loss on the
disposal of equity-accounted investees. Profit before tax increased
6% to €542 million (2014: €512 million).
The reported effective tax rate increased to 21.9%
(2014: 7.4%). In 2014, the tax rate reflected a non-taxable
revaluation gain on Datacert and a positive tax impact relating to
previously divested assets partly offset by a tax charge on
internal asset transfers. In 2015, the tax rate reflects a one-time
favorable adjustment relating to deferred tax assets. Due to the
higher tax rate, total profit for the year declined 11% to €423
million (2014: €474 million) and diluted EPS declined 10% to €1.42
per share (2014: €1.58).
Cash Flow
Adjusted operating cash flow was €903 million
(2014: €764 million), up 4% in constant currencies. The cash
conversion ratio was 100%, better than expected due to strong
working capital inflows in the final weeks of the year. Following
outflows in the first half, the full year saw a net autonomous
working capital inflow of €18 million (2014: €4 million). Capital
expenditures were €188 million (4.5% of revenues), up 13% in
constant currencies, reflecting increased investment in product
development, particularly in Health and Tax & Accounting.
Adjusted free cash flow was €647 million, up 7% in
constant currencies. Paid financing costs decreased to €101 million
(2014: €135 million). This benefit was partly offset by higher
corporate income tax paid of €141 million (2014: €98 million),
reflecting timing of tax payments.
Acquisition spending, net of cash acquired, was
€179 million (2014: €178 million), including €21 million related to
earn-outs on past acquisitions. The majority of 2015 acquisition
spending related to the purchase of Learner's Digest International,
a U.S. continuing medical education provider (September 2015).
Smaller acquisitions included SBS Software in Germany (January
2015), SureTax in the U.S. (June 2015) and Effacts in the
Netherlands (July 2015).
Cash proceeds from disposals, net of cash
disposed, were €24 million (2014: €11 million), relating mainly to
the divestment of our interest in the Russian business (September
2015) and certain non-core UK assets (December 2015).
Dividends paid to shareholders totaled €263
million (2014: €209 million) and consisted of the dividend over
2014 (€211 million), paid in May 2015, and the 2015 interim
dividend (€52 million) paid in October 2015. Share repurchases
totaled €140 million.
Balance Sheet, Net Debt and
Leverage
Net debt reduced to €1,788 million as of December 31, 2015,
compared to €1,897 million at December 31, 2014. The leverage ratio
net-debt-to-EBITDA was 1.7x at year-end 2015, improving from 2.1x
at year-end 2014.
About Wolters
Kluwer
Wolters Kluwer N.V. (AEX: WKL) is a global leader
in professional information services and solutions for
professionals in the health, tax and accounting, risk and
compliance, finance and legal sectors. 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 company, headquartered in Alphen aan den Rijn,
the Netherlands, serves customers in over 180 countries, maintains
operations in over 40 countries, and employs 19,000 people
worldwide.
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 program. The ADRs are traded on the over-the-counter market
in the U.S. (WTKWY).
For more information about our solutions and
organization, visit www.wolterskluwer.com, follow us on Twitter,
Facebook, LinkedIn, and YouTube.
Financial Calendar
February
24, 2016 |
Full-Year
2015 Results |
March 9,
2016 |
Publication of 2015 Annual Report |
March 9,
2016 |
Publication of 2015 Sustainability Report |
April 21,
2016 |
2016
Annual General Meeting of Shareholders |
April 25,
2016 |
Ex-dividend date: 2015 final dividend |
April 26,
2016 |
Record
date: 2015 final dividend |
May 11,
2016 |
First-Quarter 2016 Trading Update |
May 12,
2016 |
Payment
date: 2015 final dividend ordinary shares |
May 19,
2016 |
Payment
date: 2015 final dividend ADRs |
July 29,
2016 |
Half-Year
2016 Results |
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 |
info@wolterskluwer.com |
ir@wolterskluwer.com |
Forward-looking
Statements
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.
The full press release is available here:
Wolters Kluwer 2015 Full-Year
Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Wolters Kluwer NV via Globenewswire
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