Wolters Kluwer 2023 Full-Year Report
Alphen aan den Rijn, February 21, 2024 - Wolters Kluwer, a global leader in
professional information, software solutions and services, today releases its
full-year 2023 results.
Highlights

  * Revenues EUR5,584 million, up 5% in constant currencies and up 6% organically.
      * Recurring revenues (82% of total revenues) up 7% organically.

* Digital & services revenues (94% of total revenues) grew 6% organically.

      * Expert solutions (58% of total revenues) grew 8% organically.
      * Cloud software (16% of total revenues) grew 15% organically.
  * Adjusted operating profit EUR1,476 million, up 6% in constant currencies.
      * Adjusted operating profit margin up 30 basis points to 26.4%.
  * Diluted adjusted EPS EUR4.55, up 10% overall and up 12% in constant
    currencies.
  * Adjusted free cash flow EUR1,164 million, down 2% in constant currencies.
  * Net-debt-to-EBITDA of 1.5x; return on invested capital (ROIC) improved to
    16.8%.
  * Proposed 2023 total dividend EUR2.08 per share, an increase of 15%.
  * Share buybacks:
      * Completed 2023 share buyback of EUR1 billion.
      * Announcing 2024 share buyback of up to EUR1 billion, of which EUR100 million
        is completed.

* Outlook 2024: expect good organic growth and further improvement in adjusted

    operating profit margin, with the increase in diluted adjusted EPS to be
    dampened by higher financing cost and tax.
                    Full-Year Report of the Executive Board

Nancy McKinstry, CEO and Chair of the Executive Board, commented: "We achieved
6% organic growth and a year-on-year increase in adjusted operating margin,
despite macroeconomic and geopolitical headwinds. Strong momentum in recurring
revenues compensated for challenges in some of our non-recurring revenue
streams. We met our financial and sustainability goals, while increasing
investment in product innovation, including in generative AI, to support future
growth. We look forward to delivering another year of good organic growth and
margin improvement in 2024."
Key Figures - Year ended December 31
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EUR million (unless otherwise
stated) 2023 2022 ? ? CC ? OG
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Business performance - benchmark
figures

 Revenues                         5,584 5,453 +2%  +5%  +6%
 Adjusted operating profit        1,476 1,424 +4%  +6%  +7%

Adjusted operating profit margin 26.4% 26.1%

 Adjusted net profit              1,119 1,059 +6%  +7%
 Diluted adjusted EPS (EUR)         4.55  4.14  +10% +12%
 Adjusted free cash flow          1,164 1,220 -5%  -2%
 Net debt                         2,612 2,253 +16%
 ROIC                             16.8% 15.5%

IFRS reported results

 Revenues                         5,584 5,453 +2%
 Operating profit                 1,323 1,333 -1%
 Profit for the period            1,007 1,027 -2%
 Diluted EPS (EUR)                  4.09  4.01  +2%

Net cash from operating
activities 1,545 1,582 -2%
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?: % Change; ? CC: % Change in constant currencies (EUR/$ 1.05); ? OG: % Organic
growth. Benchmark figures are performance measures used by management. See
Note 3 for a reconciliation from IFRS to benchmark figures.
Full-Year 2024 Outlook
Our group-level guidance for 2024 is shown in the table below. We expect
sustained good organic growth in line with prior year and a further modest
increase in the adjusted operating profit margin. Margin improvement is expected
to be realized in the second half of the year, mainly due to timing of
investments.
Full-Year 2024 Outlook
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Performance indicators 2024 Guidance 2023 Actual
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Adjusted operating profit

 margin*                             26.4%-26.8%                 26.4%
 Adjusted free cash flow**      EUR1,150-1,200 million        EUR1,164 million
 ROIC*                                 17%-18%                   16.8%

Diluted adjusted EPS
growth** Mid- to high single-digit 12%
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*Guidance for adjusted operating profit margin and ROIC is in reporting
currency and assumes an average EUR/USD rate in 2024 of EUR/$1.11. **Guidance
for adjusted free cash flow and diluted adjusted EPS is in constant currencies
(EUR/$ 1.08). Guidance reflects share repurchases of EUR1 billion in 2024.
In 2023, Wolters Kluwer generated over 60% of its revenues and adjusted
operating profit in North America. As a rule of thumb, based on our 2023
currency profile, each 1 U.S. cent move in the average EUR/$ exchange rate for the
year causes an opposite change of approximately 3 euro cents in diluted adjusted
EPS(1).
We include restructuring costs in adjusted operating profit. We expect 2024
restructuring costs to be in the range of EUR10-15 million (FY 2023: EUR15 million).
We expect adjusted net financing costs(2) in constant currencies to increase to
approximately EUR60 million. We expect the benchmark tax rate on adjusted pre-tax
profits to increase and to be in the range of 23.0%-24.0% (FY 2023: 22.9%).
Capital expenditures are expected to remain at the upper end of our guidance
range of 5.0%-6.0% of total revenues (FY 2023: 5.8%). We expect the full-year
2024 cash conversion ratio to be around 95% (FY 2023: 100%) due to lower net
working capital inflows.
Our guidance assumes no additional significant change to the scope of
operations. We may make further acquisitions or disposals which can be dilutive
to margins, earnings, and ROIC in the near term.
2024 outlook by division
Our guidance for 2024 organic revenue growth by division is summarized below. We
expect the increase in group adjusted profit margin for 2024 to be driven
primarily by our Health, Legal & Regulatory, and Corporate Performance & ESG
divisions. The Tax & Accounting margin is expected to decline slightly due to
increased product investment.
Health: we expect full-year 2024 organic growth to be in line with prior year
(FY 2023: 6%).
Tax & Accounting: we expect full-year 2024 organic growth to be slightly below
prior year (FY 2023: 8%), due to slower growth in non-recurring outsourced
professional services and the absence of one-off favorable events in Europe.
Financial & Corporate Compliance: we expect full-year 2024 organic growth to be
in line with or better than prior year (FY 2023: 2%) as transactional revenues
are expected to stabilize.
Legal Regulatory: we expect full-year 2024 organic growth to be in line with
prior year (FY 2023: 4%).
Corporate Performance & ESG: we expect full-year 2024 organic growth to be
better than in the prior year (FY 2023: 9%) as Finance, Risk & Reporting
revenues stabilize.
Progress against 2022-2024 strategy
We are two years into our current three-year strategic plan, which has three
strategic priorities:

  * Accelerate Expert Solutions: we are focusing our investments on cloud-based
    expert solutions while continuing to transform selected digital information
    products into expert solutions. We are investing to enrich the customer
    experience of our products by leveraging advanced data analytics and
    artificial intelligence.
  * Expand Our Reach: we are seeking to extend into high-growth adjacencies
    along our customer workflows and to adapt our existing products for new

customer segments. We are working to develop partnerships and ecosystems for

    our key software platforms.
  * Evolve Core Capabilities: we are enhancing our central functions to drive

excellence and scale economies, mainly in sales and marketing (go-to-market) and in technology. We plan to advance our sustainability and ESG performance

    and capabilities and to continue investing in diverse and engaged talent to
    support innovation and growth.

A more detailed discussion of our strategy and business model can be found in
our annual report.
In 2023, we made important progress on our strategic plan. Expert solutions,
which include our software products and certain advanced information solutions,
accounted for 58% of total revenues (FY 2022: 56%) and grew 8% organically (FY
2022: 9%).
Today, around 50% of our digital revenues are from products that leverage
artificial intelligence (AI) to drive enhanced value for our customers. During
2023, we stepped up experimentation and investment in large language models
(LLMs) as generative LLMs became scalable. We began testing dozens of use cases,
collaborating with selected customers, and launched beta versions in Health and
Legal & Regulatory markets. For much of this work, we are partnering with
Microsoft, Google, and other technology suppliers.
Second, we also made progress on extending our reach into high-growth
adjacencies and geographies. The new Corporate Performance & ESG division,
formed in March 2023, set us on a path to extend our enterprise software
solutions into corporate workflows for ESG data collection, analysis, reporting,
and auditing. In the Health division, the acquisition of NurseTim bolstered our
position in nursing education solutions and test preparation while the
acquisition of Invistics drug diversion detection software broadened our
offering in the hospital market.
Third, we took significant steps in 2023 to evolve our core capabilities. We
centralized most of our product development teams, more than doubling the number
of FTEs that now report into our global development organization, Digital
eXperience Group (DXG). We formed a unified branding and communications function
and a unified financial organization to support the company globally. With
regard to our specific ESG objectives, the most notable advances were the
validation by the SBTi of our near-term emission reduction targets and
improvements in key human capital metrics, including turnover, engagement, and
belonging.
Financial policy, capital allocation, net debt, and liquidity
Wolters Kluwer uses its free cash flow to invest in the business organically and
through acquisitions, to maintain optimal leverage, and to 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, 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
flows.
Dividend policy and proposed final dividend 2023
Wolters Kluwer remains committed to a progressive dividend policy, under which
we aim to increase the dividend per share in euros each year, independent of
currency fluctuations. The payout ratio(3) can therefore vary from year to year.
Proposed annual increases in the dividend per share consider our ?nancial
performance, market conditions, and our need for ?nancial ?exibility. The policy
takes into account the characteristics of our business, our expectations for
future cash ?ows, and our plans for organic investment in innovation and
productivity, or for acquisitions. We balance these factors with the objective
of maintaining a strong balance sheet.
At the 2024 Annual General Meeting of Shareholders, we will propose a final
dividend of EUR1.36 per share, which would result in a total dividend over the
2023 financial year of EUR2.08 per share, an increase of 15%. Dividends are paid
in cash. Shareholders can choose to reinvest both interim and ?nal dividends by
purchasing additional Wolters Kluwer shares through the Dividend Reinvestment
Plan (DRIP) administered by ABN AMRO Bank N.V.
Share buybacks 2023 and 2024
As a matter of policy since 2012, Wolters Kluwer will offset the dilution caused
by our annual incentive share issuance with share repurchases (Anti-Dilution
Policy). In addition, from time to time when appropriate, we return capital to
shareholders through share buyback programs. Shares repurchased by the company
are added to and held as treasury shares and are either cancelled or utilized to
meet future obligations arising from share-based incentive plans.
In 2023, we completed share repurchases of EUR1 billion (8.7 million shares at an
average price of EUR114.44). See Note 8 for further information on issued share
capital.
Today, we are announcing our intention to repurchase shares for up to EUR1 billion
during 2024. In the year to date, up to and including February 19, 2024, we have
repurchased EUR100 million in shares (732,722 shares at an average price of
EUR136.48). Assuming global economic conditions do not deteriorate substantially,
we believe this level of share buybacks leaves us with ample headroom to support
our dividend plans, to sustain organic investment, and to make selective
acquisitions. The share repurchase program may be suspended, discontinued, or
modified at any time.
For the period starting February 23, 2024, up to and including April 29, 2024,
we have mandated a third party to execute EUR205 million in share buybacks on our
behalf, within the limits of relevant laws and regulations (in particular
Regulation (EU) 596/2014) and the company's Articles of Association. The maximum
number of shares which may be repurchased will not exceed the authorization
granted by the Annual General Meeting of Shareholders.
Net debt, leverage, credit facility, and liquidity position
Net debt on December 31, 2023, was EUR2,612 million, up from EUR2,253 million on
December 31, 2022. The net-debt-to-EBITDA ratio increased to 1.5x at year end
2023 (FY 2022: 1.3x). Gross debt includes the EUR700 million Eurobond (8-year
term; 3.750% annual coupon) issued on April 3, 2023.
Our EUR600 million multi-currency credit facility remains fully undrawn. As of
December 31, 2023, net cash available was EUR989 million(4).
Full-Year 2023 Results
Benchmark figures
Group revenues were EUR5,584 million, up 2% overall and up 5% in constant
currencies. Excluding the effect of currency and the net effect of divestments
and acquisitions, organic revenue growth was 6%, in line with the prior year (FY
2022: 6%).
Revenues from North America accounted for 64% of total group revenues and grew
5% organically (FY 2022: 6%). Revenues from Europe, 28% of total revenues, grew
7% organically (FY 2022: 6%). Revenues from Asia Pacific and Rest of World, 8%
of total revenues, grew 9% organically (FY 2022: 10%).
Adjusted operating profit was EUR1,476 million (FY 2022: EUR1,424 million), up 6% in
constant currencies. The related margin increased by 30 basis points to 26.4%
(FY 2022: 26.1%), in line with our full-year guidance range. The margin
improvement follows a margin increase in the fourth quarter driven by
operational gearing, mix shift, and the comparison to a more normalized cost
base in fourth quarter 2022. Personnel costs increased as expected due to an
increase in the number of employees and due to wage inflation. In addition,
there was an expected increase in personnel-related expenses, such as business
travel, events, and training costs.
Product development spending (including capitalized spend) increased in constant
currencies and amounted to 11% of revenues in 2023 (FY 2022: 11%). Restructuring
expenses, which are included in adjusted operating profit, increased to
EUR15 million (FY 2022: EUR6 million), at the upper end of our guidance range.
Adjusted net financing costs reduced to EUR27 million (FY 2022: EUR56 million) due
to higher interest income on our cash balances. Included in adjusted net
financing costs was a EUR7 million net foreign exchange gain (FY 2022: EUR5 million
net foreign exchange loss) mainly due to the translation of intercompany
balances.
Adjusted profit before tax was EUR1,450 million (FY 2022: EUR1,368 million), up 6%
overall and up 8% in constant currencies. The benchmark tax rate on adjusted
profit before tax increased to 22.9% (FY 2022: 22.6%), mainly due to lower prior
year favorable adjustments combined with the increased limitation on interest
deductibility in the Netherlands. Adjusted net profit was EUR1,119 million (FY
2022: EUR1,059 million), an increase of 7% in constant currencies.
Diluted adjusted EPS was EUR4.55 (FY 2022: EUR4.14), up 12% in constant currencies,
reflecting the increase in adjusted net profit and a 4% reduction in the diluted
weighted average number of shares outstanding to 246.0 million (FY 2022: 255.8
million).
IFRS reported figures
Reported operating profit declined 1% to EUR1,323 million (FY 2022: EUR1,333
million), mainly due to significantly lower divestment results: we incurred a
net disposal gain of EUR4 million in 2023 compared to a gain of EUR75 million in the
prior year. Amortization and impairments of intangible assets decreased 9% due
to reduced impairments in 2023.
Reported financing results amounted to a net cost of EUR27 million, significantly
lower than in the prior period (FY 2022: EUR57 million cost) due to higher
interest income on cash balances. The reported effective tax rate increased to
22.4% as the prior year included a significant tax-exempt divestment gain (FY
2022: 19.5%). As a result, net profit for the year decreased 2% overall to
EUR1,007 million (FY 2022: EUR1,027 million). Diluted EPS increased 2% to EUR4.09 (FY
2022: EUR4.01), benefitting from the lower weighted average number of shares
outstanding.
Cash flow
Adjusted operating cash flow was EUR1,476 million (FY 2022: EUR1,528 million), down
3% overall and down 1% in constant currencies. This reflects a cash conversion
ratio of 100% (FY 2022: 107%) returning to historical levels (95%-100%). Working
capital inflows of EUR98 million were significantly lower than in the prior year
while capital expenditures increased 8% overall and 10% in constant currencies.
Net capital expenditures were 5.8% of revenues (FY 2022: 5.4%). Cash payments
related to leases, including lease interest paid, were EUR74 million (FY 2022:
EUR81 million). Depreciation of physical assets, amortization and impairment of
internally developed software, and depreciation of right-of-use assets totaled
EUR299 million (FY 2022: EUR306 million).
Net interest paid, excluding lease interest paid, reduced to EUR17 million
(FY 2022: EUR45 million), reflecting higher interest income on cash and cash
equivalents. Income tax paid increased to EUR325 million (FY 2022: EUR289 million).
The net cash outflow related to restructuring was EUR1 million (FY 2022: outflow
of EUR12 million). As a result, adjusted free cash flow was EUR1,164 million (FY
2022: EUR1,220 million), down 2% in constant currencies.
Total acquisition spending, net of cash acquired and including transaction
costs, was EUR68 million (FY 2022: EUR95 million), and primarily relates to the
acquisitions of NurseTim on January 9, 2023, Invistics on June 7, 2023, and tax
content and tools provider MFAS on October 31, 2023.
Dividends paid amounted to EUR467 million (FY 2022: EUR424 million). The cash
deployed towards share repurchases was as announced, EUR1 billion, and in line
with prior year (FY 2022: EUR1 billion).
Sustainability and ESG achievements 2023
In 2023, we continued efforts designed to attract, engage, develop, and retain
talent globally. Our employee turnover rate improved to 9.8% (FY 2022: 15.3%)
despite still competitive markets for technology talent. Our employee engagement
score improved 1 point to 78 and our belonging score improved 2 points to 75.
In November 2023, the Science Based Targets initiative (SBTi) validated our
near-term emissions reduction targets under which we intend to reduce absolute
scope 1 and 2 greenhouse gas (GHG) emissions by 50% and absolute scope 3 GHG
emissions by 30% by the year 2030 from a 2019 base year.
Our annual scope 1 and 2 emissions, which are entirely accounted for by our
offices around the world, reduced by 8% in 2023 compared to the prior year. At
year-end 2023, our global office footprint (m(2)) was reduced by 5% compared to
year-end 2022, bringing the cumulative reduction from 2019 baseline to 25%. Our
server decommissioning program led to the closure of 12 data center locations
and the decommissioning of 1,542 servers. In 2023, total business travel related
emissions returned to pre-pandemic absolute levels, but business travel
emissions per FTE were 16% below 2019 baseline level.
In preparation for compliance with the EU Corporate Sustainability Reporting
Directive and European Sustainability Reporting Standards (ESRS), which become
mandatory as of financial year 2024, we have carried out an initial double
materiality assessment based on the ESRS and will be providing additional
disclosure in our annual report.
Our sustainability efforts were recognized with an improved 14.4 ESG risk rating
from Morningstar Sustainalytics, which qualifies Wolters Kluwer as top-rated and
in the leading 5% of 1,109 companies in the Software & Services industry.
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in information, software
solutions and services for professionals in healthcare; tax and accounting;
financial and corporate compliance; legal and regulatory; corporate performance
and ESG. We help our customers make critical decisions every day by providing
expert solutions that combine deep domain knowledge with technology and
services.
Wolters Kluwer reported 2023 annual revenues of EUR5.6 billion. The group serves
customers in over 180 countries, maintains operations in over 40 countries, and
employs approximately 21,400 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, Euro Stoxx 50, 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, visit www.wolterskluwer.com
(http://www.wolterskluwer.com), follow us on LinkedIn
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(http://www.youtube.com/user/WoltersKluwerComms) and Instagram
(https://www.instagram.com/_wolterskluwer/)
Media
Paul Lyon
External Communications
t + 44 (0)7765-391-824
press@wolterskluwer.com
Investors/Analysts
Meg Geldens
Investor Relations
t + 31 (0)172-641-407
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;
conditions created by global pandemics, such as COVID-19; 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). Trademarks referenced are owned by Wolters Kluwer N.V. and its
subsidiaries and may be registered in various countries.
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(1) This rule of thumb excludes the impact of exchange rate movements on
intercompany balances, which is accounted for in adjusted net financing costs in
reported currencies and determined based on period-end spot rates and balances.
(2) Adjusted net financing costs include lease interest charges. Guidance for
adjusted net financing costs in constant currencies excludes the impact of
exchange rate movements on currency hedging and intercompany balances.
(3) Dividend payout ratio: dividend per share divided by adjusted earnings per
share.
(4) Total cash and cash equivalents of EUR1,135 million less overdrafts used for
cash management purposes of EUR146 million.
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