February 21, 2018 - Wolters
Kluwer, a global leader in professional information, software
solutions, and services, today releases its full-year 2017
results.
Highlights
-
Revenues up 5% in constant
currencies and up 3% organically.
-
Adjusted operating profit
margin up 60 basis points to 22.8%.
-
Diluted adjusted EPS €2.32, up
13% in constant currencies.
-
Adjusted free cash flow €746
million, up 7% in constant currencies.
-
Return on invested capital
improved to 10.2%.
-
Balance sheet remains strong:
net-debt-to-EBITDA 1.7x at year-end.
-
Proposed full-year total
dividend of €0.85 per share, up 8%.
-
Share buyback: current
intention is to repurchase up to €400 million in shares in
2018.
-
Includes proceeds from Corsearch and Swedish
disposals, closed in January 2018.
-
Pending completion, ProVation disposal proceeds
to be used for additional share repurchases.
-
Outlook 2018: expect diluted
adjusted EPS to grow 10%-15% in constant currencies.
Full-Year Report
of the Executive Board
Nancy McKinstry, CEO and Chairman
of the Executive Board, commented: "I am
pleased to report further improvement in organic growth, margins,
cash flow and ROIC in 2017. Sustained investment is delivering
products and services that our customers value. Operational
excellence programs are making our organization more efficient and
agile. We made significant progress on divesting non-core assets
and on integrating acquisitions-improving the quality and growth
potential of our business. We look forward to the year ahead and
remain focused on executing on our strategic priorities."
Key Figures Full-Year 2017 (Under
IAS 18):
Year ended December 31 |
€ million (unless otherwise
stated) |
2017 |
2016* |
Var. |
Var. CC |
Var. OG |
Business performance - benchmark figures |
|
|
|
|
|
Revenues |
4,422 |
4,286 |
+3% |
+5% |
+3% |
Adjusted operating profit |
1,009 |
950 |
+6% |
+8% |
+8% |
Adjusted operating profit margin |
22.8% |
22.2% |
|
|
|
Adjusted net profit |
668 |
618 |
+8% |
+10% |
|
Diluted adjusted EPS (€) |
2.32 |
2.10 |
+11% |
+13% |
|
Adjusted free cash flow |
746 |
708 |
+5% |
+7% |
|
Net
debt |
2,069 |
1,927 |
+7% |
|
|
Return on invested capital (ROIC) |
10.2% |
9.8% |
|
|
|
IFRS results |
|
|
|
|
|
Revenues |
4,422 |
4,286 |
+3% |
|
|
Operating profit |
869 |
766 |
+13% |
|
|
Profit
for the year |
671 |
490 |
+37% |
|
|
Diluted EPS (€) |
2.33 |
1.66 |
+40% |
|
|
Net cash from operating activities |
940 |
927 |
+1% |
|
|
Var.: % Change; Var. CC: % Change constant currencies (€/$
1.11); Var. 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.
*2016 restated to treat customer credits for 'bank product'
services as a deduction to revenues and not as a cost of
sales. |
Full-Year 2018 Outlook (Reflects
IFRS 15 Accounting Standard, Effective in 2018)
Our guidance for full-year 2018 is provided in the
table below. We expect to deliver solid organic growth and margin
improvement. We expect to achieve an increase in diluted adjusted
EPS in constant currencies and improvement in return on invested
capital (ROIC). The first half operating profit is expected to see
modest improvement due to the phasing of investments and
savings.
Full-Year 2018 Outlook |
Performance indicators |
2018 Guidance |
2017 (Under IFRS 15) |
Adjusted operating
profit margin |
22.5%-23.0% |
22.2% |
Adjusted free cash
flow |
€725-€750 million |
€746
million |
ROIC |
10.0%-10.5% |
9.8% |
Diluted
adjusted EPS |
10%-15%
growth |
€2.22 |
Guidance for adjusted free cash flow and diluted adjusted EPS
is in constant currencies (€/$ 1.13). Guidance for EPS growth
assumes share repurchases for up to €400 million in 2018. Adjusted
operating profit margin and ROIC are in reported currencies and
assume an average EUR/USD rate around €/$ 1.20. |
Our guidance reflects the new IFRS 15 accounting
standard, which became effective on January 1, 2018. When applied
to 2017, under the method adopted by Wolters Kluwer, the adjusted
operating profit margin would be 22.2%, diluted adjusted EPS €2.22,
and ROIC 9.8%. IFRS 15 has no impact on free cash flow. Further
details are provided in Note 14 of this report.
Our guidance is based on constant exchange rates.
In 2017, Wolters Kluwer generated more than 60% of its revenues and
adjusted operating profit in North America. As a rule of thumb,
based on our 2017 currency profile, each 1 U.S. cent move in the
average €/$ exchange rate for the year causes an opposite change of
approximately two euro cents in diluted adjusted EPS.
Restructuring costs are included in adjusted
operating profit. We currently expect restructuring costs of
€15-€25 million in 2018 (2017: €33 million). We expect adjusted net
financing costs of approximately €70 million (2017: €109 million),
excluding the impact of exchange rate movements on currency hedging
and intercompany balances. This reflects the redemption of our
Eurobond maturing in April 2018. We expect the benchmark effective
tax rate to be approximately 26%, subject to further interpretation
and clarification of the changes introduced in the U.S. Tax Cuts
and Jobs Act.
Capital expenditure is expected to be in the range
of 5%-6% of total revenues (2017: 4.8%, including benefit from real
estate dispositions). Under IFRS 15, we anticipate a cash
conversion ratio of approximately 100% in 2018. Our guidance
assumes no additional significant change to the scope of
operations. We may make further disposals which can be dilutive to
margins and earnings in the near term.
2018 Outlook by Division
Health: we expect good
organic growth, similar to prior year levels, and a stable margin
for the full year. The first half margin is expected to decline due
to the timing of investments.
Tax & Accounting: we
expect improved organic growth and a stable margin for the full
year. The first half margin is expected to decline due to the
timing of investments.
Governance, Risk &
Compliance: we expect good organic growth and an improved
margin for the full year.
Legal & Regulatory: we
expect underlying revenue to be broadly flat in 2018. We expect the
full-year margin to be in line with 2017, as cost savings are
reinvested in wage increases and product development.
Strategic Priorities
2016-2018
Two years ago, we announced our strategic plan for
2016-2018. This plan (Growing our Value)
prioritizes expanding our market coverage, increasing our focus on
expert solutions, and driving further operating efficiencies and
employee engagement. Our strategy aims to sustain and, in the long
run, further improve our organic growth rate, margins and returns
as we focus on growing value for customers, employees, and
shareholders. Our priorities are to:
-
Expand market coverage: We
will continue to allocate most of our capital towards our leading
growth businesses and digital products, and will extend into market
adjacencies and new geographies where we see the best potential for
growth and competitive advantage. Expanding our market reach also
entails 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 while
continuing our program of 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 also to 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.
-
Drive efficiencies and
engagement: We intend to continue driving scale economies while
improving the quality of our offerings and the 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.
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.
At December 31, 2017, our net-debt-to-EBITDA ratio
was 1.7x.
Dividend Policy and 2017
Dividends
Wolters Kluwer has a progressive dividend policy
under which the company aims to increase the dividend per share
each year. The annual increase is dependent on our financial
performance, market conditions, and our need for financial
flexibility. Our dividend policy takes into consideration the
nature of our business and our expectations for future cash flow
and investment needs.
For 2017, we are proposing a total dividend of
€0.85 per share in cash, comprising the interim dividend of €0.20
(paid in September 2017) and the final dividend of €0.65 (to be
paid in May 2018). This represents an increase of 6 euro cents or
8% over the prior year total dividend (2016: €0.79). The dividend
is subject to approval at the Annual General Meeting of
Shareholders to be held on April 19, 2018.
For 2018, we intend to set the interim dividend at
40% of prior year total dividend (previously: 25%). This will
result in a 2018 interim dividend of €0.34 (to be paid in September
2018).
Dividend dates for 2018 are provided on page 37.
Shareholders can choose to reinvest both interim and final
dividends by purchasing additional Wolters Kluwer shares through
the Dividend Reinvestment Plan (DRIP) administered by ABN AMRO Bank
N.V.
Anti-Dilution Policy and
Share Buyback Program 2016-2018
Wolters Kluwer has a policy to offset the dilution
caused by our annual incentive share issuance with share
repurchases. In 2017, approximately 1.4 million shares were
repurchased under this policy.
On February 24, 2016, we announced a three-year
share buyback program (2016-2018) which originally envisaged
spending up to €200 million in each year on share repurchases,
including amounts required to offset incentive share issuance. This
buyback program was subsequently expanded to include additional
repurchases intended to mitigate dilution caused by divestments
made in 2017 and early 2018.
In 2016, we completed €200 million in share
buybacks under this program. In 2017, we completed €300 million of
repurchases (7.8 million shares at an average price of €38.62),
including an additional €100 million to mitigate the EPS dilution
related to two divestments completed in 2017 (Transport Services
and certain U.K. publishing assets).
Following completion of the divestments of
Corsearch and certain Swedish assets in January 2018, we now intend
to execute up to €400 million in buybacks in 2018, including the
proceeds of these divestments.
In January 2018, Wolters Kluwer signed an
agreement to divest ProVation Medical. Assuming completion, Wolters
Kluwer intends to deploy the proceeds of this divestment towards
additional share repurchases of approximately €150 million in 2018
and 2019 to mitigate the expected earnings dilution.
Repurchased shares are added to and held as
treasury shares. Part of the shares held in treasury will be
retained and used to meet future obligations under share-based
incentive plans. At the 2018 Annual General Meeting of
Shareholders, Wolters Kluwer will propose cancelling any or all of
the other shares held in treasury or to be acquired under the share
buyback program 2016-2018.
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.
Full-Year 2017 Results
Benchmark Figures
Group revenues increased 3% overall to €4,422
million. Excluding the effect of exchange rate movements, primarily
the depreciation of the U.S. dollar and British pound, revenues
rose 5% in constant currencies. Organic growth was 3% (2016: 3%),
with all four divisions achieving similar or better organic growth
than in the prior year. Organic growth excludes the impact of
exchange rate movements, accounting changes, and the effect of
acquisitions and divestitures.
Revenues from North America (61% of total
revenues) sustained 4% organic growth (2016: 4%), with clear
improvement in our U.S. Legal & Regulatory unit compensating
for slightly slower growth in Health and Governance, Risk &
Compliance in this region. Revenues from Europe (31% of total
revenues) grew 2% organically (2016: 1%), with the improvement on
prior year driven by Governance, Risk & Compliance. Revenues
from Asia Pacific and Rest of World (8% of total revenues) grew 6%
organically, accelerating across all divisions (2016: 3%).
Adjusted operating profit grew 6% overall and 8%
in constant currencies to €1,009 million. The adjusted operating
profit margin advanced by 60 basis points to 22.8% (2016: 22.2%),
driven by Health and Governance, Risk & Compliance. Included in
adjusted operating profits were €33 million of restructuring costs
(2016: €29 million). Restructuring expenses were higher than guided
during the year, as we fast-tracked several operational efficiency
initiatives in our Legal & Regulatory and Tax & Accounting
divisions, taking charges in the fourth quarter of 2017.
Adjusted net financing costs were €109 million
(2016: €107 million). Adjusted net financing costs are defined as
total financing results excluding the financing component of
employee benefits, results of investments available-for-sale, and
net book gains or losses on equity-accounted investees.
Income from equity-accounted investees increased
to €4 million, mainly due to improvement at our 40%-owned Austrian
affiliate.
Adjusted profit before tax was €904 million (2016:
€845 million), an increase of 7% overall and 9% in constant
currencies.
The benchmark effective tax rate on adjusted
profit before tax decreased to 25.9% (2016: 26.8%), reflecting
reduced U.S. state tax charges and a one-time release of tax
liabilities for closed tax years. As a result, adjusted net profit
increased 8% overall and 10% in constant currencies to €668
million.
Diluted adjusted EPS increased 11% overall to
€2.32 (2016: €2.10), reflecting the increase in adjusted net profit
and a 2% reduction in the weighted average number of shares
outstanding. In constant currencies, diluted adjusted EPS increased
13%.
IFRS Reported Figures
Reported operating profit rose 13% to €869 million
(2016: €766 million), reflecting the increase in adjusted operating
profit and net capital gains of €60 million on the disposals of
Transport Services (July 2017) and certain U.K. publishing assets
(September 2017). This gain was partly offset by an increase in
amortization of acquired intangibles and higher fair value changes
of earn-out liabilities.
Reported financing results amounted to a cost of
€108 million (2016: €113 million cost) including the financing
component of employee benefits of €5 million (2016: €6
million). We realized a €6 million capital gain on the sale of our
50% interest in Ipsoa Francis Lefebvre, an Italian publishing joint
venture.
Reported profit before tax increased 17% to €765
million (2016: €655 million).
At year-end 2017, we recorded a one-time non-cash
revaluation to our U.S. deferred tax position due to the lower U.S.
corporate tax rate introduced by the U.S. Tax Cuts and Jobs Act.
This benefit was partly offset by the mandatory repatriation tax
introduced in this U.S. tax reform. Including these year-end
adjustments totaling €57 million, the reported effective tax rate
was 12.3% (2016: 25.2%). As a result, total profit for the year
increased 37% to €671 million (2016: €490 million) and diluted
earnings per share increased 40% to €2.33 (2016: €1.66).
Cash Flow
Adjusted operating cash flow was €974 million
(2016: €948 million), an increase of 3% overall and 5% in constant
currencies. The cash conversion ratio declined to 97% (2016: 100%)
in line with longer term average. Net capital expenditure was €210
million, and included €13 million in proceeds from the disposition
of several real estate assets in the U.S. and Europe. Without that
benefit, capital expenditure as a percent of revenues would have
reduced slightly to 5.0% compared to the prior year (2016: 5.2%).
Depreciation and the amortization of internally developed software
and other assets rose to €209 million (2016: €179 million). Net
working capital outflows of €34 million (2016: inflows of €43
million) were largely due to a reduction in payables.
Adjusted free cash flow was €746 million (2016:
€708 million), up 5% overall and up 7% in constant currencies.
Corporate income taxes paid increased by €48 million to €156
million, the prior year having benefitted from favorable timing of
tax payments. Paid financing costs declined to €87 million (2016:
€100 million) due to higher interest income on deposits and a cash
result on currency hedging contracts. The net movement in
restructuring provisions of €6 million related to cash spending of
€27 million and additions of €21 million excluding non-benchmark
items.
Dividends paid to shareholders during the year
totaled €232 million, comprising the 2016 final dividend and 2017
interim dividend, and dividends paid to minority interests.
Acquisition spending, net of cash acquired and
including acquisition-related costs, was €316 million (2016: €461
million). Most of our acquisition spending reflects the purchase of
Tagetik in Tax & Accounting (April 2017). Deferred payments on
acquisitions made in prior years, including earnouts, amounted to
€12 million.
Divestiture proceeds, net of cash disposed, were
€94 million (2016: €14 million) and relate primarily to the sale of
Transport Services and certain U.K. publishing assets.
During the year, we completed €300 million of
share buybacks. The cash outflow also reflects €2 million of share
buybacks made in 2016 but settled in January 2017.
Net Debt and Leverage
Net debt at December 31, 2017, was €2,069 million,
an increase of €142 million since December 31, 2016, as a result of
acquisitions, share buybacks, and currency translation of cash and
cash equivalents. The net-debt-to-EBITDA ratio at year end 2017 was
unchanged at 1.7x.
In the second quarter of 2018, we will use cash
and deposits to redeem the principal of our €750 million, 6.375%
senior Eurobond which matures on April 10, 2018.
About Wolters Kluwer
Wolters Kluwer is a global leader in professional
information, software solutions, and services for the health, tax
& accounting, finance, risk & compliance, 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 2017 annual revenues of
€4.4 billion. The group serves customers in over 180 countries,
maintains operations in over 40 countries, and employs
approximately 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
March 7,
2018 |
2017
Annual Report |
April 19,
2018 |
2018
Annual General Meeting of Shareholders |
April 23,
2018 |
Ex-dividend date: 2017 final dividend |
April 24,
2018 |
Record
date: 2017 final dividend |
May 9,
2018 |
First-Quarter 2017 Trading Update |
May 17,
2018 |
Payment
date: 2017 final dividend ordinary shares |
May 24,
2018 |
Payment
date: 2017 final dividend ADRs |
August 1,
2018 |
Half-Year
2018 Results |
August
27, 2018 |
Ex-dividend date: 2018 interim dividend |
August
28, 2018 |
Record
date: 2018 interim dividend |
September
19, 2018 |
Payment
date: 2018 interim dividend |
September
26, 2018 |
Payment
date: 2018 interim dividend ADRs |
October
31, 2018 |
Nine-Month 2018 Trading Update |
February
20, 2019 |
Full-Year
2018 Results |
Media |
Investors/Analysts |
Annemarije Dérogée-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 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).
Wolters Kluwer 2017 Full-Year
Results
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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 N.V. via Globenewswire
Grafico Azioni Wolters Kluwers NV (EU:WKL)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Wolters Kluwers NV (EU:WKL)
Storico
Da Apr 2023 a Apr 2024