SOURCE: Wolters Kluwer NV

July 29, 2009 02:06 ET

Wolters Kluwer 2009 Half-Year Results

AMSTERDAM, NETHERLANDS--(Marketwire - July 29, 2009) -


Full-Year Guidance Reiterated

Amsterdam (July 29, 2009) - Wolters Kluwer, a market-leading global information services and publishing company focused on professionals, released today its 2009 half-year results. Highlights include an improved operating margin, strong free cash flow growth, and stable performance from subscription businesses. These results reflect a resilient company, supported by an effective cost savings program, a strong financial foundation, and a growing online and software portfolio designed to drive long-term profitable growth.

Highlights

  * Diluted ordinary EPS grew 12% to EUR 0.70 (2008: EUR 0.62) or EUR 0.64
    at constant currencies
  * Ordinary EBITA margin improved 70 basis points to 18.6%
    reflecting success of cost savings programs, growth in electronic
    revenue, and the contribution of recent acquisitions
  * Free cash flow grew 38% to EUR 146 million (2008: EUR 106 million) or
    EUR 134 million at constant currencies
  * Revenue growth of 2% at constant currencies, organic revenue
    declined 3% due to the economic cycle effect on transactional and
    cyclical product lines, currencies lifted reported growth to 7%
  * Springboard operational excellence cost savings program on track
    and expected to comfortably deliver full-year run rate savings of
    EUR 55 million this year and EUR 120 million by 2011
  * Net debt reduced to EUR 2,235 million (EUR 2,254 million at December
    31, 2008)
  * Progressive annual dividend policy reiterated
  * 2009 full-year guidance reiterated


Key Figures First Half 2009

+-------------------------------------------------------------------+
| Six months ended |  2009 |  2008 | change | change CC | change OG |
| June 30          |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Revenue (EUR     | 1,720 | 1,608 |     7% |        2% |      (3%) |
| millions)        |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Electronic       |       |       |        |           |           |
| revenue % of     |   52% |   50% |        |           |           |
| total            |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Ordinary EBITA   |   320 |   288 |    11% |        4% |      (6%) |
| (EUR  millions)  |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Ordinary EBITA   | 18.6% | 17.9% |        |           |           |
| margin (%)       |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Ordinary net     |       |       |        |           |           |
| income (EUR      |   203 |   178 |    14% |        2% |           |
| millions)        |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Diluted EPS (EUR)|  0.45 |  0.50 |  (10%) |     (21%) |           |
|------------------+-------+-------+--------+-----------+-----------|
| Diluted ordinary |  0.70 |  0.62 |    12% |        0% |           |
| EPS (EUR )       |       |       |        |           |           |
|------------------+-------+-------+--------+-----------+-----------|
| Free cash flow   |   146 |   106 |    38% |       27% |           |
| (EUR  millions)  |       |       |        |           |           |
|-------------------------------------------------------------------|
| change - % Change; change CC - % Change constant currency         |
| (EUR/USD 1.47); change OG - % Organic growth                      |
+-------------------------------------------------------------------+


Nancy McKinstry, CEO and Chairman of the Executive Board, commented on the company's half-year performance:

"We are pleased to deliver solid profitability and cash flow in the first half of 2009. The performance over the first half demonstrates that the stable subscription base and growing online and software portfolio is serving Wolters Kluwer well. Electronic revenue grew 7% and now comprises 52% of total revenue, up from 50% in the prior year.

With a continued focus on operational excellence and a commitment to invest 8-10% of revenues in the business, we have the foundation in place to support long-term growth. We are confident that the macro trends leading to increased regulation, more complex compliance requirements, and a strong focus on productivity among all our customer segments will continue to drive the need for our high quality information and software solutions. Based on our performance for the first half of 2009, we are confident to reiterate our full-year 2009 guidance."

Overview

Despite challenging market conditions, the company's profitability improved in the period. Ordinary EBITA grew by 11% and the ordinary EBITA margin improved 70 basis points to 18.6% from 17.9% in 2008 driven by strong growth in higher margin online and software products, the contribution of acquisitions completed in the prior year, and operational excellence programs, including project Springboard. As a result of these improvements, diluted ordinary earnings per share grew 12% in 2009 to EUR 0.70; at constant currencies, diluted ordinary earnings per share were EUR 0.64.

The company's leading brands, resilient portfolio, and strong cash generation continue to support a solid financial position. In the six months ended June 30, 2009, free cash flow grew 38% to EUR 146 million. Net debt as of June 30, 2009, was EUR 2,235 million (EUR 2,254 million December 31, 2008) representing a net-debt-to-EBITDA ratio of 3.1. The net-debt-to-EBITDA ratio was reduced in the first half in keeping with management's intention to move closer to its target of 2.5 times net-debt-to-EBITDA over the medium term. Prior year debt refinancing at attractive rates extended the maturity profile out beyond 2013, ensuring a strong liquidity position and sufficient headroom in excess of the company's EUR 500 million policy minimum.


Revenue growth components

(All amounts are in millions of euros unless otherwise indicated)

+-------------------------------------------------------------------+
| Six months     |  % of |  2009 |  2008 | change | change | change |
| ended June 30  | Total |       |       |        |     CC |     OG |
|----------------+-------+-------+-------+--------+--------+--------|
| Subscription & |       |       |       |        |        |        |
| other          |   73% | 1,257 | 1,137 |    11% |     6% |   (1%) |
| non-cyclical   |       |       |       |        |        |        |
|----------------+-------+-------+-------+--------+--------+--------|
| Books          |    9% |   149 |   141 |     6% |     1% |     1% |
|----------------+-------+-------+-------+--------+--------+--------|
| Advertising &  |    5% |    81 |    88 |   (8%) |  (13%) |  (13%) |
| promotional    |       |       |       |        |        |        |
|----------------+-------+-------+-------+--------+--------+--------|
| CFS            |    5% |    92 |    92 |     0% |  (13%) |  (13%) |
| transactional  |       |       |       |        |        |        |
|----------------+-------+-------+-------+--------+--------+--------|
| Other cyclical |    8% |   141 |   150 |   (6%) |  (10%) |  (10%) |
|----------------+-------+-------+-------+--------+--------+--------|
| Total revenues |  100% | 1,720 | 1,608 |     7% |     2% |   (3%) |
|-------------------------------------------------------------------|
| change - % Change; change CC - % Change constant currency         |
| (EUR/USD 1.47); change OG - % Organic growth                      |
+-------------------------------------------------------------------+


Wolters Kluwer revenue grew 7% to EUR 1,720 million for the six months ended June 30, 2009, compared to EUR 1,608 million in the same period of the prior year. Key strategic acquisitions contributed growth of 5% while underlying revenue declined 3%, reflecting the economy's impact on transactional and cyclical product lines, while the positive impact of currencies as compared to the prior year contributed 5% to total growth.

Underlying subscription and other non-cyclical revenues, which make up 73% of total half-year revenues, were materially in line with the prior year. With retention rates largely stable across the business, subscription revenues showed a solid performance compared with the prior year, while other non-cyclical products, which include tax form clicks and related bank products, were weaker due to recessionary market conditions. New subscription sales experienced downward pressure in the first half driven by weak economic conditions as sales cycles lengthened. This has largely impacted the Tax, Accounting & Legal and Legal, Tax & Regulatory Europe divisions. Despite these conditions, customers continue to demand integrated workflow and software solutions driving growth in electronic revenue. Electronic revenues now comprise 52% of total revenues up from 50% in the prior year.

Underlying transactional product revenues, which make up 27% of total half-year revenues, declined 8% and continue to remain under pressure due to recessionary market conditions. Cyclical revenues in the Corporate & Financial Services division make up 5% of total Wolters Kluwer revenue and include products related to transaction volumes in the M&A, IPOs, UCC lending, mortgage, and indirect lending markets. As expected, these revenues declined 13% in the period. Similarly, advertising and pharmaceutical promotion revenues, 5% of total half-year revenue, continued to be challenged by the weak economic conditions and posted a 13% decline in the period - primarily in the Health division, France, and the Netherlands. Other cyclical revenues represent 8% of total revenue and include training, consulting, and transport services. These product lines declined 10% in the half year primarily impacting the Tax, Accounting & Legal and Legal, Tax & Regulatory Europe divisions. Partially offsetting these trends, book products which make up 9% of revenues showed growth of 1% in the period. Strong ordering ahead of the fall semester selling season benefited results in the Health division and Legal Education within the Tax, Accounting & Legal division.


The full press release on the 2009 half-year results is available here:

PDF version of Press Release -- http://hugin.info/130682/R/1331350/314976.pdf



Media                                 Investors/Analysts
Caroline Wouters                      Kevin Entricken
Vice President, Corporate             Vice President, Investor
Communications                        Relations
t + 31 (0)20 60 70 459                t + 31 (0)20 60 70 407
press@wolterskluwer.com               ir@wolterskluwer.com

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