ALPHEN AAN DEN RIJN, NETHERLANDS--(Marketwire - Nov 7, 2012) - Wolters Kluwer today
scheduled third-quarter 2012 trading update.
* Full-year 2012 guidance confirmed.
* Nine-month revenue up +3% in constant currencies, up +1% organically.
- European markets remain challenging; Legal & Regulatory Europe
deteriorates in third quarter.
- North America and Asia driving growth; Tax & Accounting improves
in third quarter.
- Recurring revenues (75% of total) sustain momentum.
* Nine-month EBITA margin stable year-on-year.
* Nine-month ordinary free cash flow increased in constant currencies.
* Leverage ratio net-debt-to-EBITDA improves to 2.8x (2011 year-end:
- Expect net-debt-to-EBITDA to approach target of 2.5x by
Nancy McKinstry, CEO and Chairman of the Executive Board, commented:
"Our performance in the third quarter was largely as anticipated, with our
European operations facing a difficult macro-economic environment and our
American businesses maintaining their recent momentum. Growth in our
software, and services products globally continues to support overall
organic growth for the group. We are actively managing the portfolio to
faster growth, investing in product innovation and geographic expansion,
seeking further operating efficiencies. The quality of the business
improve and we remain confident we will deliver on our full-year guidance."
Full-Year 2012 Outlook
We reiterate our full-year 2012 guidance, despite worsened conditions in
and growing uncertainty around the US economy as we enter the fourth
Performance indicators 2012 Guidance(3))
Ordinary EBITA margin 21.5-22.5%
Ordinary free cash flow1) > = EUR425 million
Return on invested capital > = 8%
Diluted ordinary EPS1) Low single-digit growth2)
(1)) In constant currencies (EUR/USD 1.39)
(2)) Includes effect of 2012 share buy-backs, stock dividend and
(3)) Guidance is for continuing operations.
Springboard cost savings are on track to reach a run rate of EUR205-EUR210
in the full year (compared to EUR191 million in 2011).
Guidance is based on constant exchange rates. Wolters Kluwer generates more
half of its ordinary EBITA in North America. As a rule of thumb, based on
2011 currency profile, a 1 U.S. cent move in the average EUR/USD exchange
for the year causes an opposite 0.8 euro-cent change in diluted ordinary
Net financing costs are expected to be approximately EUR125 million in
currencies. The benchmark effective tax rate on ordinary income before tax
expected to be approximately 27.5% in 2012 due to an increasing proportion
profits in higher tax regions, such as North America.
Our divisional outlook for 2012 is as follows:
In Legal & Regulatory, we expect European markets to remain challenging in
near term. Our North American Legal & Regulatory business is positioned for
growth, although transactional revenue streams have softened in recent
The division's results will reflect two disposals of non-core publishing
operations in the Netherlands which were completed in the second quarter of
In Tax & Accounting, we continue to expect positive organic growth in the
half reflecting seasonal patterns. As indicated in July, we expect the
half margin to be broadly in line with the second half of 2011.
In Health, we expect continued strong demand for Clinical Solutions. Trends
journal advertising markets are likely to remain weak. Margins should
from the ongoing shift towards electronic products. The acquisition of
Language, announced on October 17, is currently expected to close in early
In Financial & Compliance Services, we expect good growth in Financial
and Audit, Risk & Compliance, but continued weakness in Transport Services.
Margins reflect investment in global expansion and lower Transport Services
Dividend Policy and Anti-dilution Policy
Wolters Kluwer has a progressive dividend policy under which the company
to increase the dividend per share each year. Shareholders have the option
elect dividend pay-out in cash or stock. As per our announcement on July
Wolters Kluwer intends to offset the dilution of its stock dividend and
performance share issuance annually via share repurchases. For the full
2012, the company expects to repurchase shares for up to EUR135 million. As
November 6, a total of 7.7 million ordinary shares have been repurchased
year for a total consideration of EUR100 million (average purchase price
Third-quarter organic revenue growth was 1%, overall in line with the first
half. Growth in North America and Asia Pacific has been partially offset by
declines in Legal & Regulatory Europe. Total recurring revenues (75% of
total) maintained momentum, as growth in electronic and services
more than offset the ongoing decline in print subscriptions. Trends in
transactional and other cyclical products weakened modestly in the quarter.
The third quarter EBITA margin improved slightly and the nine-month margin
broadly stable year-on-year, supported by Springboard savings, the ongoing
in business mix, and the favorable effect of currency. Third-quarter cash
from operations increased in constant currencies and the cash conversion
improved in the quarter compared to the same period a year ago. Ordinary
cash flow also increased in constant currencies in the third quarter and
first nine months.
Our net-debt-to-EBITDA ratio (12 month rolling basis) was 2.8x as of
30, 2012, improving from 2.9x as of June 30, 2012 and 3.1x at year-end
expect to approach our target of 2.5x by the end of this year. This takes
account acquisitions completed in the second half, the largest of which was
Legal & Regulatory saw organic revenue trends deteriorate in the third
due mainly to weakening trends in loose leafs, books and cyclical products
(training, advertising) across Europe. The North American Legal &
business saw good organic growth in the third quarter, with Law & Business
improving and Corporate Legal Services (CLS) sustaining good momentum
lower transaction volumes associated with M&A, business formation, and
Tax & Accounting improved to positive organic growth in the third quarter,
anticipated. Growth in North American tax software more than offset
weakness in tax publishing and bank products. European revenues showed
growth in the third quarter, despite the worsened economic conditions.
European tax software compensated for declines in loose leaf, book and
revenues in the region. In Asia Pacific, revenues declined organically in
quarter due mainly to timing of publishing releases in Australia. Acclipse,
which offers online accounting software, including cloud-based solutions
finance and tax professionals in Australia, New Zealand, and other parts of
Pacific, was acquired during the quarter.
Health remains on track to deliver good growth and margin improvement this
Clinical Solutions achieved double-digit organic revenue growth in the
quarter, with UpToDate, ProVation Medical and Clinical Drug Information all
performing well. The acquisition of Health Language, currently expected to
in early 2013, brings medical terminology management databases and software
are highly complimentary to existing Clinical Solutions services. In
Research, Ovid's growth was positive in the quarter, while our medical
faced continued weakness in advertising markets. Professional & Education
achieved growth in the U.S. education segment, but this was offset by
in medical practice textbooks and international sales.
Financial & Compliance Services organic growth moderated in the third
from the levels seen in the first half. The full year is still expected to
acceleration in growth compared to 2011. Financial Services, which in the
half had benefitted from implementation fees from new banking customers,
achieved good organic growth, primarily from products for U.S. mortgage and
lending markets. FRSGlobal achieved double-digit organic growth in the
quarter as it continues to roll out globally. The combination with FinArch,
acquired in July, strengthens and extends our capabilities and geographic
Transport Services, based in Europe, saw continued top line weakness,
particularly in transactional revenues. Audit, Risk & Compliance delivered
strong organic revenue growth as it invests in expansion in Asia and
About Wolters Kluwer
Wolters Kluwer is a market-leading global information services company.
Professionals in the areas of legal, business, tax, accounting, finance,
risk, compliance and healthcare rely on Wolters Kluwer's leading
enabled tools and software solutions to manage their business efficiently,
deliver results to their clients, and succeed in an ever more dynamic
Wolters Kluwer reported 2011 annual revenues of EUR3.4 billion. The group
over 18,500 people worldwide and maintains operations in over 40 countries
across Europe, North America, Asia Pacific and Latin America. The company
headquartered in Alphen aan den Rijn, the Netherlands. Wolters Kluwer
listed on NYSE Euronext Amsterdam (symbol: WKL) and are included in the AEX
Euronext 100 indices.
For more information about our products and organization, visit
www.wolterskluwer.com, follow @Wolters_Kluwer on Twitter, or search for
Kluwer videos on YouTube.
December 7, 2012 Investor Seminar: Financial & Compliance Services
February 20, 2013 Full Year 2012 Results
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identified by words such as "expect", "should", "could", "shall" and
expressions. Wolters Kluwer cautions that such forward-looking statements
qualified by certain risks and uncertainties that could cause actual
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as a result of new information, future events or otherwise.
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