Founded in 1836, Wolters Kluwer is a Dutch global information service company that provides information, software, and services to the legal, business, tax, accounting, finance, audit, risk, compliance, and healthcare markets under four divisions: Legal & Regulatory Tax & Accounting, Health, and Financial & Compliance Services. The company is active in over 150 countries.
Analysis & Key Developments
Financial
Wolters Kluwer closed fiscal 2013 with a loss in revenue and profits. Across the group, organic growth in digital and services subscriptions grew 4% organically, more than compensating for the ongoing decline in print subscriptions. Revenue from legal books declined, while health and tax publishing performed better. Book publishing accounted for 9% of the company’s total revenue.
Revenue from the Legal & Regulatory division declined due to several disposals, offset by the transfer of U.S. publishing assets from Tax & Accounting (revenues 15 million EUR) and small acquisitions during the year. The European Legal & Regulatory operations, which represent 56% of divisional revenues, declined by 3%. Corporate Legal Services, which represents 30% of divisional revenues, achieved 5% growth, supported by subscription and transactional revenue. Earnings experienced a dip due to revenue decline, wage inflation, dilutive disposals, restructuring costs, investments in growth initiatives, and currency movements.
Tax & Accounting revenue fell as acquisitions were largely offset by a number of small disposals and the transfer of U.S. publishing assets into the Legal & Regulatory division. North American operations represented 54% of corporate revenue and achieved 6% organic growth, offset by a decline in bank product fees and print subscriptions. In Europe, where 36% of divisional revenues are generated, Tax & Accounting achieved modest growth despite a challenging market situation.
Wolters Kluwer’s Health division recorded strong growth with revenues climbing from 745 million EUR to 775 million EUR in 2013. The unit’s flagship clinical decision support tool, Clinical Solutions, became the largest part of the unit, accounting for 42% of the division with sales increased by 10%, due to recent acquisitions of Medi-Span and Lexicomp in North America, Medicom in China, and ProVation, a documentation software provider that noted double-digit growth.
In 2013, the Financial & Compliance Service division saw strong growth in its finance and audit businesses but faced a downturn in U.S. mortgage refinancing volumes.
Ownership, Mergers & Acquisition, Internal Organization
Wolters Kluwer continued to re-shape its portfolio through strategic acquisitions, investment in leading-edge products and divestments across all divisions, including emerging markets such as China and Brazil. The acquisition of Health Language, Inc. was completed in early 2013. Brazilian tax software provider Prosoft was acquired in May 2013.
In February 2014, Wolters Kluwer announced it would buy the remaining 62% of Third Coast Holdings, Inc. which provides enterprise legal management software and services for general counsel and law firms in the U.S. and internationally.
Earlier Developments
Financial
Wolters Kluwer closed 2012 with a revenue growth of 2% at constant currencies to 3.60 billion EUR supported by online, software, and other services, which were up 4% organically and now comprise 74% of total revenues. Revenue declines in Europe were offset by growth in North America (4%) and in Asia (8%). Wolters Kluwer completed a share buy-back of 135 million EUR. Growth could be achieved across all segments surveyed.
The organic growth achieved in North America was driven by corporate Legal Services in the Legal & Regulatory business, while declines in Europe (6%) came from print products.
The Health business’s revenues increased 8% in constant currencies to 745 million EUR, while ordinary EBITA grew 19% in constant currencies to 163 million EUR. Clinical Solutions cover 38% of divisional revenues and maintains double-digit organic growth. In the Financial & Compliance Service, both revenues and ordinary EBITA experienced a 9% increase in constant currencies fueled by new and expanded customer contracts in finance, originations and audit.
The Tax & Accounting business saw solid growth accounting for 981 million EUR from 931 million EUR.
Ownership, Mergers & Acquisition, Internal Organization
Wolters Kluwer acquired Acclipse in 2012, which offers online accounting software to customers in Asia Pacific, and FinArch, a global provider of integrated finance and risk solutions. In January 2013, Wolters Kluwer Health completed the acquisition of Health Language, a leader in medical terminology management.
International
From 2003 to 2012 revenues from Asia Pacific and the rest of the world doubled from 3% to 6%. Additional growth potential is expected in fast-growing markets such as China and India.
Digital
Approximately 74% of revenues come from online, software and services, including 350 mobile apps and 100 e-journals. The share of revenues generated by print products Wolters Kluwer since initated its transformation process has fallen from 55% to 26% in 2012. With 59% of its revenues generated through online sales, the Health sector features the greatest share of revenues from digital.
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