Alphen aan den Rijn (May 8,
2013) - Wolters Kluwer, a global leader in professional information
services, today released its
scheduled 2013 first quarter trading update reaffirming full year
guidance.
Highlights
- Full-year 2013 guidance affirmed.
- First-quarter revenue flat at constant
currencies, down 1% organically, reflecting difficult comparables
in several areas.
-
- Digital products achieved good organic
growth.
- Recurring revenues maintained positive organic
growth; books and other transactional revenues declined.
- First-quarter ordinary EBITA margin declined
modestly, partly due to investments in growth initiatives and the
timing of restructuring costs.
- Year to date, divestitures raise approximately
€90 million before tax, while net acquisition spend was
approximately €100 million.
- New ten year €700 million Eurobond completed with
2.875% coupon rate; existing €225 million perpetual cumulative
subordinated bonds to be redeemed and de-listed in May 2013.
- Net-debt-to-EBITDA improved to 2.3 as of March
31, 2013, better than our target of 2.5.
Nancy McKinstry, CEO and
Chairman of the Executive Board, commented:
"The first quarter faced tough comparables
against the prior year, but overall performance was in line with
our expectations. Our leading, growing businesses all achieved good
to strong organic revenue growth in the quarter, including
Corporate Legal Services, Tax & Accounting software, Clinical
Solutions, as well as our core Finance & Audit solutions. So
far this year, we have completed a number of strategic divestitures
and acquisitions which further focus and transform the portfolio.
We are continuing to invest in new and enhanced solutions, while
pursuing efficiencies to respond to challenging economic
conditions. Having also made significant progress on refinancing
our balance sheet, we are confident in delivering our guidance for
the full year."
First Quarter
Developments
First quarter revenues for the continuing
operations were stable at constant currencies, and declined 1% on
an organic basis, reflecting tough comparables in a number of
areas. In the quarter, revenues contributed by acquisitions made in
2012 were partly offset by revenue associated with divestitures
made last year. Digital products achieved good growth on an organic
basis. Recurring revenues saw positive organic growth, but this was
offset by declines in books and other transactional and cyclical
revenues. The ordinary EBITA margin eased in the quarter compared
to a year ago, due to product mix, investments in growth
initiatives, and increased restructuring expenses. Restructuring,
which was mainly severance, is expected to yield benefits in the
second half of the year.
In Legal & Regulatory, our North American
operation saw good organic growth, due to Corporate Legal Services
(CLS). CLS transactional revenue increased, despite difficult
comparables and lower M&A-related filings and trademark
searches. Trends in our European Legal & Regulatory business
remain challenging, as expected, with print products, training, and
public sector revenues seeing continued pressure. Year to date, the
division has made two divestitures in North America: Best Case
Solutions and the minority stake in AccessData. For the full year,
we continue to expect growth in North America but weakness in
Europe and divisional margin contraction.
In Tax & Accounting, seasonal revenue and
margin patterns are similar to 2012, as anticipated. Our North
American Tax & Accounting business achieved good organic growth
in software revenues, but this was offset by declines in bank
product fees and continued weakness in print publishing revenue.
Our European Tax & Accounting revenues were broadly stable on
an organic basis, showing good growth in software but declines in
print products and cyclical services, such as training. Asia
Pacific revenue was impacted by lower book sales.
Health performance in the first quarter was muted,
however stronger revenue growth and margin development is expected
as the year progresses. Clinical Solutions continued to deliver
double digit organic growth, driven by strong performances from
UpToDate, Pharmacy OneSource, and Medicom. The acquisition of
Health Language, a pioneer in medical terminology management, was
completed in January; the business is on pace to achieve double
digit organic growth in 2013. Medical Research revenues were lower
reflecting weaker advertising, reprint, and print journal
subscription revenues. Professional & Education, which has a
seasonally small first quarter, was impacted by the timing of book
orders in addition to weak markets for print products in both U.S.
and international markets.
Financial & Compliance Services faced tough
comparables in Originations and Audit, and challenging market
conditions in European transport services, as anticipated in our
outlook provided in February. Originations saw lower mortgage
transactional volumes and fewer new customer implementations than a
year ago. Audit achieved solid growth with its core internal audit
software TeamMate, but this was largely offset by revenue attrition
related to migrating Axentis customers. Finance, Risk &
Compliance, including FRSGlobal, achieved good organic growth. In
the year to date, the division has acquired iSentry, a software and
workflow solutions provider in the U.K., and has increased its
interest in AccessMatrix, a technology partner in India.
Cash Flow, Acquisitions,
Divestitures, and Net Debt
First quarter cash conversion was lower than in the same period a
year ago, due to less favorable working capital movements as
anticipated. Ordinary free cash flow declined in the quarter but
remains on track with our full year expectations. In the year to
date, a number of disposals have raised pre-tax proceeds of
approximately €90 million, removing annual EBITA of approximately
€7 million. The largest divestment was Best Case Solutions. In the
year to date, net acquisition spending was approximately €100
million, including Health Language and a number of smaller
investments. The impact of acquisitions and divestitures made in
the year to date is expected to be slightly dilutive to earnings in
2013 due to the margins of the disposals.
In March, we succesfully completed a €700 million
10-year Eurobond issue, with a coupon of 2.875%. Proceeds will be
used to redeem the 6.875% perpetual cumulative subordinated bonds
in May 2013 and our 5.125% bonds which mature in early 2014. The
listing of the perpetual bonds on Euronext Amsterdam will be
terminated as of May 14, 2013. Twelve month rolling
net-debt-to-EBITDA was 2.3 at the end of the first quarter,
improving further from year-end 2012 (2.4) and better than our
leverage target of 2.5.
In line with our progressive dividend policy, a
dividend of €0.69 per share will be paid in cash on May 16, 2013.
Full-Year 2013
Outlook
Our full year outlook remains unchanged from the
guidance set out in February. Organic growth and margins are
expected to improve in the second half of the year as comparables
ease and the benefits of restructuring flow through. The table
below provides our outlook for the continuing operations in
2013.
Performance indicators |
2013 Guidance |
Ordinary EBITA margin |
21.5-22.0% |
Ordinary free cash flow |
>= €475 million |
Return on invested capital |
>= 8% |
Diluted ordinary EPS |
Low single-digit growth |
Guidance for ordinary free cash flow and diluted ordinary EPS
is in constant currencies (EUR/USD 1.29).
Guidance reflects IAS19R and removal of the pension financing
credit or charge from benchmark figures, and includes the estimated
impact of performance share issuance offset by share
repurchases. |
Guidance for ordinary free cash flow and diluted ordinary earnings
per share (EPS) is based on constant currency exchange rates.
Wolters Kluwer generates more than half of its ordinary EBITA in
North America. As a rule of thumb, based on our 2012 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. Benchmark net financing costs, which exclude
the pension financing credit or charge, are expected to be
approximately €130 million in constant currencies, reflecting the
negative carry caused by early refinancing of our bonds due in
2014. The benchmark effective tax rate on ordinary income before
tax is expected to be broadly in line with the benchmark tax rate
of 2012 (27.8%).
About Wolters
Kluwer
Wolters Kluwer is a global leader in professional information
services. Professionals in the areas of legal, business, tax,
accounting, finance, audit, risk, compliance and healthcare rely on
Wolters Kluwer's market leading information-enabled tools and
software solutions to manage their business efficiently, deliver
results to their clients, and succeed in an ever more dynamic
world. Wolters Kluwer reported 2012 annual revenues of €3.6
billion. The group employs over 19,000 people worldwide and
maintains operations in over 40 countries across Europe, North
America, Asia Pacific and Latin America. The company is
headquartered in Alphen aan den Rijn, the Netherlands. Wolters
Kluwer shares are listed on NYSE Euronext Amsterdam (symbol: WKL)
and are included in the AEX and Euronext 100 indices.
For more information about our products and
organization, visit www.wolterskluwer.com, follow @Wolters_Kluwer
on Twitter, or search for Wolters Kluwer videos on YouTube.
Financial Calendar |
May 16,
2013 |
Dividend
payment date (ordinary shares) |
May 23,
2013 |
ADR
dividend payment date |
July 31,
2013 |
Half-Year
2013 Results |
November
6, 2013 |
Third-Quarter 2013 Trading Update |
February
19, 2014 |
Full-Year
2013 Results |
Media |
Investors/Analysts |
Caroline
Wouters |
Meg
Geldens |
Corporate
Communications |
Investor
Relations |
t + 31
(0)172 641 459 |
t + 31
(0)172 641 407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
Forward-looking
Statements
This press release 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.
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