July 29, 2015 - Wolters Kluwer, a global leader in professional information services, today released its 2015 half-year results.
Highlights
Full-year outlook reiterated.
First-half revenues up 3% in constant currencies and up 2% organically.
Leading, growing positions grew 7% organically (52% of total revenues).
Digital & services revenues grew 5% organically (84% of total).
Growth in North America and Asia Pacific outweighed decline in Europe.
First-half adjusted operating profit €391 million, up 5% in constant currencies.
First-half diluted adjusted EPS €0.79, up 5% in constant currencies.
Adjusted free cash flow €170 million, broadly stable in constant currencies.
Leverage ratio net-debt-to-EBITDA 2.1x.
€140 million share buyback completed on July 1.
Announcing intent to pay interim dividends, starting with €0.18 in October 2015.
Corporate Legal Services and Financial & Compliance Services to be combined, enabling us to pursue opportunities in governance, risk & compliance markets.

Interim Report of the Executive Board
Nancy McKinstry, CEO and Chairman of the Executive Board, commented:
"Our first half performance is encouraging. Organic growth improved to 2%, supported by our leading, high growth businesses and reinforced by strong transactional revenues in North America. The ongoing shift in business mix and our efficiency programs drove underlying margin increase. We have stepped up investment in product development and sales and marketing to build future growth, and we remain confident we will meet our guidance for 2015."

Key Figures 2015 Half-Year:
Six months ended June 30
(in millions of euros, unless otherwise stated)
2015 2014 D D CC D OG

Business performance - benchmark figures
Revenues 2,015 1,716 +17% +3% +2%
Adjusted operating profit 391 313 +25% +5% +4%
Adjusted operating margin 19.4% 18.2%
Adjusted net profit 235 190 +24% +5%
Diluted adjusted EPS (€) 0.79 0.63 +24% +5%
Adjusted free cash flow 170 136 +25% -1%
Net debt 2,069 2,227 -7%

IFRS results
Revenues 2,015 1,716 +17%
Operating profit 281 214 +31%
Profit for the period 162 200 -19%
Diluted EPS (€) 0.55 0.67 -19%
Net cash from operating activities 245 188 +30%

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 2015 Outlook
Our guidance for the full year is unchanged. We note that comparables become more challenging in the second half, particularly for Corporate Legal Services and Financial & Compliance Services, and investments will be second-half weighted. As indicated in February, this year we intend to further sharpen our portfolio towards our leading, high growth businesses, to step up organic investment in digital products, and to continue to drive efficiencies. We expect the adjusted operating profit margin to increase in 2015. We currently expect restructuring costs to be approximately €35 million for the full year (2014: €36 million) and to occur mainly in Legal & Regulatory Solutions. The table below provides our guidance for the full-year.

2015 Outlook
Performance indicators
2015 guidance

Adjusted operating profit margin
21.0%-21.5%

Adjusted free cash flow
€500-€525 million

Return on invested capital
>= 8%
Diluted adjusted EPS
Mid-single-digit growth

Guidance for adjusted free cash flow and diluted adjusted EPS is in constant currencies (EUR/USD 1.33). Guidance for EPS growth reflects the announced share repurchases. Adjusted operating profit margin and ROIC are in reporting currencies.

Our guidance is based on constant exchange rates. Wolters Kluwer generates more than half of its revenues and adjusted operating profit in North America. As a rule of thumb, based on our 2014 currency profile, a 1 U.S. Dollar cent move in the average EUR/USD exchange rate for the year causes an opposite 1 euro-cent change in diluted adjusted EPS. Currency is expected to have a more significant influence on results in 2015 than in recent years.

For the full-year, we expect adjusted net financing costs of approximately €100 million excluding the impact of exchange rate movements on currency hedging and intercompany balances. Including the effect of currency and assuming June period-end exchange rates (including a EUR/USD rate of 1.12) prevail until year-end, we estimate adjusted net financing costs of around €125 million. We expect the benchmark effective tax rate to be between 27% and 28% in 2015. We expect our cash conversion ratio to return towards historic average of 95%, and capital expenditure between 4% and 5% of 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.

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