SAIS Limited (“SAIS” or the “Company“) (TSXv: SAIS), today announced that it has engaged Integral Wealth Securities Limited (“Integral“) to provide market-making services for the Company in compliance with the applicable policies of the TSX Venture Exchange (“TSXv“).
Integral will trade the securities of SAIS on the TSXv for the purpose of maintaining an orderly market and to provide liquidity of the Company’s common shares.
Under the conditions of the agreement, Integral will be paid $8,500 per month for their services for a minimum term of 12 months. During the initial 12 month period, SAIS will have a one-time right to terminate after three months, provided written notice of termination is received at least 7 days prior to the 90th day of the term. After the 12th month of the term, this agreement may be terminated by the Company upon 30 days written notice.
There are no performance factors contained in the agreement and Integral will not receive shares or options as compensation. SAIS and Integral are unrelated entities, and Integral has no present direct or indirect interest in the Company or its securities.
Full details of this agreement can be found on SEDAR at www.sedar.com.
SOURCE Sarment Holding Limited
Insights on the Gamification Global Market (2020 to 2030) – Industry Analysis and Growth Forecast
Dublin, Aug. 05, 2020 (GLOBE NEWSWIRE) — The “Gamification Market Research Report: By Solution, Deployment, Application, End User – Global Industry Analysis and Growth Forecast to 2030” report has been added to ResearchAndMarkets.com’s offering.
Around the globe, companies are increasing focus on improving the engagement of customers, with regard to product exploration, loyalty programs, interactive communication, and game-based marketing. Businesses are now utilizing gaming solutions, such as quizzes and games that offer personalized recommendations, to make the process of exploring the various products offered by them fun and enjoyable for users.
Thus, with companies looking at interactive ways to engage customers with their brand, the gamification market share is projected to witness a substantial increase in its revenue, from $7,841.5 million in 2019 to $76,298.9 million by 2030, at a CAGR of 24.2% between 2020 and 2030 (forecast period).
During the forecast period, the human resources category is expected to witness the highest gamification market CAGR, of 27.8%, on account of the increasing adoption of gaming solutions in recruitment, training and development, and employee motivation, for company growth.
By 2030, the consumer-driven bifurcation will dominate the market, owing to the steps being taken by organizations to raise the customer engagement rate, with the ultimate aim to make them loyal to the brand.
Cloud was the larger bifurcation in the gamification market during the historical period (2014-2019), as the adoption of cloud computing is rising due to the need for configurable gaming platforms, which helps extract as much return on investment (RoI) as possible.
In 2019, the retail division generated the highest revenue in the market, as retailers are quickly embracing the concept to increase their brand loyalty and sales, by better engaging with customers.
North America dominated the gamification market during the historical period, due to the growing IT spending, increasing number of startups, surging demand for artificial intelligence (AI)-powered gamification solutions, and surging efforts of businesses on better employee productivity and customer engagement. In the coming years, the fastest advance in the market would be experienced by Asia-Pacific (APAC), driven by the escalating smartphone penetration and digitization rate.
Key Topics Covered:
Chapter 1. Research Background
1.1 Research Objectives
1.2 Market Definition
1.3 Research Scope
1.3.1 Market Segmentation by Solution
1.3.2 Market Segmentation by Deployment
1.3.3 Market Segmentation by Application
1.3.4 Market Segmentation by End User
1.3.5 Market Segmentation by Region
1.3.6 Analysis Period
1.3.7 Market Data Reporting Unit
1.4 Key Stakeholders
Chapter 2. Research Methodology
2.1 Secondary Research
2.2 Primary Research
2.2.1 Breakdown of Primary Research Respondents
18.104.22.168 By region
22.214.171.124 By industry participant
126.96.36.199 By company type
2.3 Market Size Estimation
2.4 Data Triangulation
2.5 Assumptions for the Study
Chapter 3. Executive Summary
Chapter 4. Introduction
4.1 Definition of Market Segments
4.1.1 By Solution
4.1.2 By Deployment
4.1.3 By Application
188.8.131.52 Product development
184.108.40.206 Human resources
4.1.4 By End User
220.127.116.11 Media and entertainment
18.104.22.168 IT and telecom
4.2 Value Chain Analysis
4.3 Market Dynamics
22.214.171.124 Growing focus on level-progression monitoring
126.96.36.199 Adoption of gamification solutions by corporate sector
188.8.131.52 Integration of social media with gamification
184.108.40.206 Rising focus on enhanced customer experience
220.127.116.11 Impact analysis of drivers on market forecast
18.104.22.168 Lack of awareness about advantages of gamification
22.214.171.124 Impact analysis of restraints on market forecast
126.96.36.199 Integration of advanced technologies, such as AI and ML, in gamification solutions
4.4 Porter’s Five Forces Analysis
Chapter 5. Global Market Size and Forecast
5.1 By Solution
5.2 By Deployment
5.3 By Application
5.4 By End User
5.5 By Region
Chapter 6. North America Market Size and Forecast
6.1 By Solution
6.2 By Deployment
6.3 By Application
6.4 By End User
6.5 By Country
Chapter 7. Europe Market Size and Forecast
7.1 By Solution
7.2 By Deployment
7.3 By Application
7.4 By End User
7.5 By Country
Chapter 8. APAC Market Size and Forecast
8.1 By Solution
8.2 By Deployment
8.3 By Application
8.4 By End User
8.5 By Country
Chapter 9. MEA Market Size and Forecast
9.1 By Solution
9.2 By Deployment
9.3 By Application
9.4 By End User
9.5 By Country
Chapter 10. LATAM Market Size and Forecast
10.1 By Solution
10.2 By Deployment
10.3 By Application
10.4 By End User
10.5 By Country
Chapter 11. Competitive Landscape
11.1 List of Players and Their Offerings
11.2 Competitive Analysis of Key Players
11.3 Competitive Benchmarking of Key Players
11.4 Strategic Developments of Key Players
11.4.1 Product Launches
11.4.2 Mergers and Acquisitions
11.4.4 Client Wins
Chapter 12. Company Profiles
12.1 BI WORLDWIDE
12.1.1 Business Overview
12.1.2 Product and Service Offerings
12.2 Microsoft Corporation
12.2.1 Business Overview
12.2.2 Product and Service offerings
12.2.3 Key Financial Summary
12.3 SAP SE
12.3.1 Business Overview
12.3.2 Product and Service Offerings
12.3.3 Key Financial Summary
12.4 Salesforce.com Inc.
12.4.1 Business Overview
12.4.2 Product and Service Offerings
12.4.3 Key Financial Summary
12.5 Verint Systems Inc.
12.5.1 Business Overview
12.5.2 Product and Service Offerings
12.5.3 Key Financial Summary
12.6 FAYA Corporation
12.6.1 Business Overview
12.6.2 Product and Service Offerings
12.7 Axonify Inc.
12.7.1 Business Overview
12.7.2 Product and Service Offerings
12.8 MPS Interactive Systems Limited
12.8.1 Business Overview
12.8.2 Product and Service Offerings
12.9 Infosys Limited
12.9.1 Business Overview
12.9.2 Product and Service Offerings
12.9.3 Key Financial Summary
12.10 Khoros LLC
12.10.1 Business Overview
12.10.2 Product and Service Offerings
Chapter 13. Appendix
13.2 Sources and References
13.3 Related Reports
For more information about this report visit https://www.researchandmarkets.com/r/d47rle
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Sampo Group’s Results for January – June 2020
SAMPO PLC HALF-YEAR FINANCIAL REPORT 5 August 2020 at 9:35 am
Sampo Group’s Results for January – June 2020
Sampo Group’s profit before taxes for the first half of 2020 was EUR 569 million (981). The Group’s insurance technical performance continued to excel and a large part of the decrease in the market values of investment assets in March – April 2020 was recovered. The total comprehensive income, taking changes in the market value of assets into account, amounted to EUR 34 million (995) for the first half of 2020 and EUR 987 million (434) for the second quarter of 2020.
- Earnings per share was EUR 0.81 (1.37) and mark-to-market earnings per share was EUR 0.02 (1.68). Return on equity for the Group amounted to 0.2 per cent (15.4) for the first half of 2020. Meanwhile, the net asset value per share on 30 June 2020 was EUR 16.99 (20.71).
- Sampo confirmed on 29 July 2020 after market rumours started to circulate that it is, together with Rand Merchant Investment Holdings Limited (RMI), in discussions with Hastings Group Holdings Plc regarding a possible cash offer to acquire the issued and to be issued share capital of Hastings not already owned or controlled by Sampo and RMI. Today Sampo and RMI have announced a recommended cash offer, through a newly-formed jointly owned company, to acquire Hastings.
- If segment’s profit before taxes was EUR 383 million (440). The insurance technical result increased to EUR 398 million (334) and the combined ratio for January – June 2020 amounted to 82.1 per cent (84.7). Premiums grew by 5 per cent on a fixed currency basis. Furthermore, all business areas and all markets recorded growth.
- Topdanmark segment’s profit before taxes decreased to EUR 38 million (146). Meanwhile, the combined ratio amounted to 84.2 per cent (79.0).
- Sampo’s share of Nordea’s net profit for January – June 2020 amounted to EUR 132 million (222). With regard to segment reporting, the share of Nordea’s profit is included in the segment entitled ‘Holding’.
- Profit before taxes for the Mandatum segment amounted to EUR 39 million (137). Meanwhile, premiums decreased to EUR 498 million (529).
|Key figures||1-6/2020||1-6/2019||Change, %||4-6/2020||4-6/2019||Change, %|
|Profit before taxes||569||981||-42||407||506||-19|
|Holding (excl. associates)||-29||31||–||-5||2||–|
|Profit for the period||469||826||-45||330||428||-23|
|Earnings per share, EUR||0.81||1.37||-0.56||0.55||0.73||-0.18|
|EPS (based on OCI) EUR||0.02||1.68||-1.66||1.73||0.74||0.99|
|NAV per share, EUR *)||16.99||20.71||-3.72||–||–||–|
|Average number of staff (FTE)||10,322||9,734||588||–||–||–|
|Group solvency ratio, % *)||187||167||20||–||–||–|
*) comparison figure from 31.12.2019
The figures in this report have not been audited. Income statement items are compared on a year-on-year basis and comparison figures for balance sheet items are from 31 December 2019, unless otherwise stated.
Sampo follows the disclosure procedure enabled by the Finnish Financial Supervisory Authority and hereby publishes its Interim Statement attached as a PDF file to this stock exchange release. The Interim Statement is also available at www.sampo.com/result.
|EXCHANGE RATES USED IN REPORTING
|Income statement (average)||10.6621||10.6649||10.5853||10.5679||10.5181|
|Balance sheet (at end of period)||10.4948||11.0613||10.4468||10.6958||10.5633|
|Income statement (average)||1.4280||1.4279||1.4183||1.4158||1.4090|
|Balance sheet (at end of period)||1.4813||1.4813||1.3982||1.4326||1.4153|
|Income statement (average)||0.9932||1.0195||1.0749||1.0816||1.0810|
|Balance sheet (at end of period)||0.9618||0.9610||1.0591||1.0809||1.0897|
|Income statement (average)||7.4648||7.4714||7.4661||7.4644||7.4651|
|Balance sheet (at end of period)||7.4526||7.4674||7.4715||7.4662||7.4636|
GROUP CEO’S COMMENT
The second quarter was a strong quarter for Sampo Group, despite the uncertainty related to COVID-19. Firstly, we continued to excel in P&C insurance underwriting, the backbone of our profit generation, and secondly, the investment markets reversed the negative experience from March and April, as the equity markets surged and bond spreads narrowed during May and June.
Business has been stable during the summer months, and we have also been able to focus on project Dorset. The code name refers to the offer we have published today, together with RMI, to acquire all shares in the UK motor insurance company Hastings Group Holdings Plc.
The offer is of course a step in the strategy to allocate more capital to P&C insurance, and Hastings is a unique company which we have followed for some time. It operates in the large UK motor insurance market and, more importantly, in the fast-growing segment of modern digital distribution which continues to take market share from the traditional operators. Hastings results have been impressive since the IPO in 2015.
The UK is certainly an interesting insurance market. It is not only very large, but also very advanced in digital terms. I am excited about the opportunities to develop Sampo with these digital capabilities, at the same time as our Nordic expertise in other areas like retention techniques and car manufacturer collaboration can support Hasting’s future development.
The fact that we do this together with RMI, a long-term shareholder in Hastings, reduces the acquisition risks significantly. RMI is a South African financial services investment holding company and has been the largest shareholder in Hastings since 2017.
Coming back to our existing businesses, If P&C posted a technical result that improved further from the already excellent level. Stable operations where premium increases corresponded well to claims inflation. Topdanmark also recovered from the difficult first quarter of this year.
Nordea’s progress in the second quarter was encouraging. The bank remains committed to meeting the financial targets 2022, and leading indicators on cost and customer satisfaction developed strongly. It has maintained the strong financial position it had when entering the COVID-19 crisis and with its high equity tier 1 ratio and ample credit loss buffers, the bank is well prepared to meet the challenges ahead.
Of all our business areas, Mandatum Life is the most exposed to the volatility in the financial markets. At the same time Mandatum is the one to benefit most from the upturn in the equity markets as witnessed in the second quarter of this year when the other comprehensive income rose to EUR 234 million. The company’s Solvency II ratio continues to be solid at 201 per cent.
Group CEO and President
SECOND QUARTER 2020 IN BRIEF
Sampo Group’s profit before taxes for the second quarter of 2020 was EUR 407 million (506). Earnings per share was EUR 0.55 (0.73) and mark-to-market earnings per share EUR 1.73 (0.74).
Net asset value per share increased EUR 1.63 during the second quarter of 2020 and was EUR 16.99. The net asset value increased mainly because of equity market recovery, and particularly, the increase in Nordea’s share price.
If’s combined ratio for the second quarter of 2020 amounted to 80.5 per cent (83.0). Profit before taxes amounted to EUR 254 million (242).
Topdanmark’s combined ratio for the second quarter 2020 amounted to 79.7 per cent (79.8) and profit before taxes to EUR 52 million (53).
Sampo’s share of Nordea’s second quarter 2020 net profit was EUR 48 million (140).
Profit before taxes for Mandatum amounted to EUR 55 million (65). Premiums written decreased to EUR 210 million (291).
EFFECTS OF COVID-19 ON SAMPO GROUP
Personnel and customer relations
Sampo Group has followed the recommendations from authorities in its respective countries both during the lock-down in the acute phase of the crisis as well as now that societies are gradually re-opening in The Nordic and Baltic countries.
In Sampo Group’s biggest subsidiary If P&C, 6,000 of more than 7,000 employees have been working remotely during the crisis and the remainder have been working in offices where social distancing measures have been observed. Mandatum Life also has followed the government advice and continues with remote work. Only a few percent of employees are working at the office premises. Also, in Topdanmark 95 per cent of employees have been working remotely.
When the COVID-19 pandemic reached the Nordic countries in mid-March 2020 priority was given to continuity and continued service and support to customers in the best way in the changed working conditions.
Operational efficiency and availability have been good and early indications show sick leave to have declined during the crisis.
Physical customer visits to our offices have been stopped or are subject to extra precautions. Business travel and conferences have also been halted. During this period subsidiaries have been able to offer a normal service level and customer satisfaction has remained on a high level. There has been no disruption in the customer service.
If’s claims cost for the first six months of 2020 was negatively impacted from travel insurance policies primarily following imposed government travel restrictions due to COVID-19. At the end of the reporting period, the total number of reported claims amounted to just over 50 000, corresponding to a gross claims cost of approximately SEK 400 million (EUR 38 million) mostly in BA Private and Norway. The net claims cost is expected to be significantly reduced by a reinsurance cover with a net retention for this event of SEK 100 million (EUR 9 million).
The lock down activities in the Nordic countries had a positive effect on claims cost especially at the beginning of the second quarter of 2020. The largest factor being reduced traffic on the roads that resulted in an extraordinary and temporary decrease in motor claims. Towards the end of the period, as governments started to reopen societies, claims frequency also returned to a more normal level. At the same time an increase in repair costs is likely because of lack of material, delays in transportation of material or shortage of personnel following implemented government travel restrictions.
During the second quarter of 2020 there was a clear negative impact on premium volume because of the COVID-19 situation. This was a result of many variables including fewer new cars sold, decommissioning of vehicles and lower insurable sums and goods.
Mandatum Life’s claims cost in January-June 2020 was in line with the previous year. Premium income was 6 per cent, EUR 32 million, below the previous year in January-June, but in April-June both claims paid and premium income were around EUR 80 million below the previous year.
In its Half-year Report for 2020 published on 17 July 2020 Topdanmark described the impact COVID-19 had on its operations. The report is available at www.topdanmark.com.
The swift monetary responses by central banks and governments have helped to stabilize the financial markets after the initial shock reaction in March 2020. Leading equity indices have rebounded strongly and credit spreads on bonds have narrowed since then.
Companies in Sampo Group have enjoyed good returns in the second quarter of 2020. However, the mark-to-market losses in the investment portfolio suffered during March – April 2020 had not been fully recovered by the end of the quarter.
The solvency positions of Sampo Group and its subsidiaries remained robust in the second quarter of 2020. More information is available in the section Solvency.
Impacts on future operating models
As Sampo Group’s personnel gradually returns to the offices, the Group follows the recommendations of authorities in individual countries. This means that operations are returning to normal step by step and with somewhat varying speed in each country. Social distancing measures are still in effect also during the re-opening phase and the principle is to offer employees the flexibility to continue working from home for the foreseeable future, while re-opening the offices for those employees who wish to return.
The COVID-19 pandemic will have lasting effects on how operations are organized in the Group. The crisis has accelerated the digitalization of work life. Remote work has proven itself both effective and to be an important tool for handling unexpected crises. Going forward, increased flexibility will be expected by employees and recruitment candidates.
Group companies have started several “Post Corona” initiatives relating to the use of remote work in the future and the required changes in HR and employment relations.
Profit before taxes for January – June 2020 for the If segment was EUR 383 million (440). The total comprehensive income for the period after tax was EUR 106 million (462). The combined ratio for the period was 82.1 per cent (84.7) and the risk ratio was 61.4 per cent (63.0).
Net releases from the technical reserves relating to the prior year claims were EUR 103 million (108) in January-June. The technical result increased to EUR 398 million (334). The insurance margin (the technical result in relation to the net premiums earned) increased to 18.3 per cent (15.7).
Large claims were EUR 47 million worse than expected in the first half of 2020. The Norwegian market was particularly impacted by large loss development in the first half.
The Swedish discount rate used to discount the annuity reserves was -0.81 per cent and had a negative effect of EUR 2 million on the profit in the first half of 2020.
Gross written premiums increased to EUR 2,846 million (2,772) in January – June 2020. Adjusted for currency, premium growth was 5.2 per cent compared to the corresponding period a year ago. Furthermore, growth was positive in all business and market areas – it was highest in Denmark where it accelerated to 12.0 per cent. Gross written premiums grew by 6.6 per cent in Norway, 4.6 per cent in Sweden, and 2.0 per cent in Finland. In BA Industrial, premium growth amounted to 9.4 per cent, in BA Commercial it was 6.6 per cent, in BA Baltic it reached 2.1 per cent, and in BA Private 3.2 per cent.
The risk ratio 59.3 (61.2) for the second quarter improved compared to last year. This was driven by an underlying improvement from implemented actions over a longer period as well as an extraordinary benign frequency situation in the second quarter due to the COVID-19 which resulted in a significant reduction in traffic and lower activity especially at the beginning of the quarter. Towards the end of the period claims returned to more normal levels. The positive effect on the net risk ratio in the second quarter was approximately 4 percentage points.
The cost ratio was 20.8 per cent (21.7) and the expense ratio was 15.2 per cent (16.2).
On 30 June 2020, the total investment assets of If amounted to EUR 10.8 billion (10.8).
If’s solvency position is described in the section entitled ‘Solvency’.
At the end of June 2020, Sampo plc held 41,997,070 Topdanmark shares, which corresponds to 46.7 per cent of all shares and 48.1 per cent of related voting rights in the company. The market value of the holding was EUR 1,544 million on 30 June 2020.
As a consequence of the COVID-19 situation, only DKK 8.5 of the previously announced dividend of DKK 17 per share was paid following the AGM on 2 April 2020. Consequently, Sampo received EUR 48 million in dividends from Topdanmark on 7 April.
Topdanmark’s Board of Directors has decided to postpone payment of the remainder of the dividend for 2019 until the AGM on 25 March 2021. It is still the intention to distribute in part or in full the remaining DKK 8.5 of the previously announced dividend.
Topdanmark’s profit before taxes for January–June 2020 amounted to EUR 38 million (146). During the second quarter of 2020, Topdanmark’s profit before taxes was almost unchanged despite a lower life result.
The combined ratio amounted to 84.2 per cent (79.0). The expense ratio was almost unchanged at 16.7 per cent.
The following text is based on Topdanmark’s Half-year report 2020 report, which was published on 17 July 2020.
During the first half of 2020, Topdanmark’s premiums increased 2.7 per cent in non-life insurance and 20.7 per cent in life insurance. In the private segment, premiums were negatively impacted by the termination of the distribution agreement with Danske Bank at the end of the first half of 2019. From 2021, it is expected that the Nordea agreement will compensate fully for the terminated distribution agreement with Danske Bank in terms of premiums.
During the first half of 2020, Topdanmark’s technical result decreased due to lower run-off, and by a higher level of weather-related claims. During the second quarter, however, the technical result increased.
In the first half of 2020, weather-related claims represented a 1.0 percentage point deterioration of the claims trend. Thereby, the level of weather-related claims was EUR 1 million below the assumed normal level.
The level of large claims represented a 0.1 percentage point deterioration of the claims trend in the first half of 2020.
Topdanmark’s solvency position is described in the section entitled ‘Solvency’.
Further information on Topdanmark A/S and its January – June 2020 results is available at www.topdanmark.com.
NORDEA (associated company)
On 30 June 2020, Sampo plc held 804,922,858 Nordea shares, which corresponds to a holding of 19.87 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 8.42 per share. The closing price as at 30 June 2020 was EUR 6.15.
The AGM on 28 May 2020 mandated the Board of Directors to decide on a dividend payment of a maximum of EUR 0.40 per share for the financial year 2019 to be distributed in one or several instalments. The Board of Directors intends to follow the recommendation adopted by the ECB and refrain from deciding on a dividend payment based on the authorization before 1 October 2020.
The following text is based on Nordea’s Half-Year Financial Report 2020 published on 17 July 2020.
Nordea reported a solid result with revenues largely unchanged. Net interest income increased by 2 per cent, supported by volume growth, especially in mortgages, in all countries. Operating profit was EUR 306 million − significantly impacted by loan loss provisions.
Nordea estimates total net loan losses for the full year 2020 to be below EUR 1 billion.
In the quarter underlying net loan losses were EUR 310 million. On top of that Nordea has made additional management judgement allowances of EUR 388 million leading to total Q2 net loan losses of EUR 698 million. Nordea now has a management judgement buffer of EUR 650 million in place to cover for future loan losses, IFRS 9 model improvements and the European Central Bank’s new guidance on non-performing loans.
Nordea’s capital position remains very strong with a common equity tier 1 ratio of 15.8 per cent, which is 5.6 percentage points above the requirement.
Sampo’s share of Nordea’s profit before taxes for January–June 2020 amounted to EUR 132 million (222).
Mandatum segment’s profit before taxes for January – June 2020 amounted to EUR 39 million (137). The total comprehensive income for the period after tax reflecting the changes in market values of assets decreased to EUR -90 million (190). Return on equity was -13.3 per cent (30.1).
Mandatum Life Group’s premium income amounted to EUR 498 million (529) for the first half of 2020 Unit-linked premiums were EUR 439 million, i.e. 88 per cent of total premiums.
Net investment income, excluding income on unit-linked contracts, decreased to EUR 30 million (203) due to the market turmoil in the first quarter of 2020. In April – June, net investment income, excluding unit-linked contracts, was EUR 53 million.
Net income from unit-linked contracts decreased to EUR -312 million (523). In the second quarter of 2020, net income from unit-linked contracts amounted to EUR 572 million. In January – June of 2020 fair value reserve decreased to EUR 316 million (438).
Mandatum Life Group’s total technical reserves amounted to EUR 11.5 billion (12.0). Unit-linked reserves decreased to EUR 7.8 billion (8.1) at the end of June 2020. The amount corresponds to 67 percent (68) of total technical reserves. Since the end of March 2020, unit-linked reserves increased by almost EUR 600 million.
At the end of June 2020, with-profit reserves decreased to EUR 3.7 billion (3.9). Reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 149 million to EUR 2.0 billion in January – June 2020.
Mandatum Life has overall supplemented its technical reserves with a total of EUR 184 million (230) due to low level of interest rates. The figure does not take into account the reserves relating to the segregated fund. The discount rate used for the years 2020 and 2021 is 0.25 per cent. The rate used for 2022 is 1.25 per cent.
The discount rate for segregated liabilities is 0.0 per cent and the discount rate reserve of segregated liabilities amounted to EUR 250 (263) at the end of June 2020.
At the end of June 2020, Mandatum Life’s investment assets, excluding the assets of EUR 7.8 billion (8.1) covering unit-linked liabilities, amounted to EUR 5.3 billion (5.7) at market values.
The expense result in the first half of 2020 amounted to EUR 10 million (7). Risk result was EUR 11 million (10).
Mandatum Life’s solvency position is described in the section Solvency.
Profit before taxes for January – June 2020 for the Holding segment amounted to EUR 109 million (258). Sampo’s share of profits for the associated companies Nordea and NDX Intressenter for January – June 2020 amounted to EUR 137 million (226), of which Nordea’s share was EUR 132 million (222) and NDX Intressenter’s share was EUR 5 million (4).
The Holding segment’s profit before taxes, excluding the associates for January – June 2020, was EUR -29 million (31).
Changes in market values of derivative instruments and currency exchange rates can cause volatility in the net investment income and finance cost lines.
Sampo plc’s holding in Nordea was booked in the consolidated balance sheet at EUR 6.8 billion, i.e. EUR 8.42 per share. The market value of the holding was EUR 4.9 billion, i.e. EUR 6.15 per share, on 30 June 2020.
Events after the end of the reporting period
Sampo confirmed on 29 July 2020 after market rumours started to circulate that it is, together with a South-African financial services investment holding company Rand Merchant Investment Holdings Limited (RMI), in discussions with the UK P&C insurance company Hastings Group Holdings Plc (Hastings) regarding a possible cash offer to acquire the issued and to be issued share capital of Hastings not already owned or controlled by Sampo and RMI.
Following the announcement on 29 July 2020, Sampo and RMI have today announced a recommended cash offer, through a newly-formed jointly owned company, to acquire all issued and to be issued shares Hastings not already owned or controlled by Sampo and RMI.
The cash offer price is GBp 250 for each Hastings share, valuing Hastings’ entire issued and to be issued share capital at approximately GBP 1.66 billion or approximately EUR 1.84 billion.
The cash offer represents a premium of approximately 37.5 per cent to volume-weighted average price of GBp 182 per Hastings share for the three-month period ended on 4 August 2020, the last business day before of the date of the offer announcement.
Following the completion of the offer, Sampo and RMI will own and control 70 per cent and 30 per cent of the shares and votes in the jointly owned company, respectively.
The size of Sampo’s investment, based on its 70 per cent stake, would be GBP 1.16 billion or EUR 1.29 billion valued at the offer price. Sampo expects to fund its part of the acquisition with approximately EUR 1 billion of newly issued hybrid Tier 2 capital with the residual coming from existing cash resources.
Sampo estimates that the acquisition of Hastings will have a positive impact on its earnings per share in the mid-single digits. The acquisition is not expected to impact on Sampo’s dividend policy in the short term but is expected to enhance the dividend potential in the long term.
Meanwhile it is expected that Sampo’s solvency position will remain robust at approximately 175 per cent (post planned issuance of approximately EUR 1 billion of hybrid Tier 2 capital). Sampo does not believe that the transaction will lead to a change in the Group’s credit ratings subject to the planned financing structure.
The independent directors of Hastings intend to recommend unanimously that Hastings’ shareholders approve the offer and have entered into irrevocable undertakings to do so in an amount of 0.33 per cent of the company’s issued share capital.
The transaction is subject to Hastings’ shareholder approval and regulatory approvals and is expected to be closed by the end of 2020.
Annual General Meeting
The Board of Directors of Sampo plc decided on 25 March 2020 to postpone the Annual General Meeting that was scheduled to be held on 23 April 2020. The postponement was made in order to ensure the safety and well-being of Sampo’s shareholders, Sampo’s employees, and other stakeholders, in light of the COVID-19 outbreak and the related health threat.
On 6 May 2020 Sampo Board decided to cancel the previous dividend proposal of EUR 2.20 per share and announce a new proposal of EUR 1.50 per share. The Annual General Meeting, held on 2 June 2020, decided to distribute the proposed dividend of EUR 1.50 per share for 2019. The record date for dividend payment was 4 June 2020 and the dividend was paid on 11 June 2020. The Annual General Meeting adopted the financial accounts for 2019 and discharged the Board of Directors and the CEO from liability for the financial year.
The Annual General Meeting elected eight members to the Board of Directors. The following members were re-elected to the Board: Christian Clausen, Fiona Clutterbuck, Jannica Fagerholm, Johanna Lamminen, Risto Murto, Antti Mäkinen and Björn Wahlroos. Georg Ehrnrooth was elected as a new member to the Board. The Members of the Board were elected for a term continuing until the close of the next Annual General Meeting.
At its organizational meeting, the Board elected Björn Wahlroos as Chair of the Board and Jannica Fagerholm as Vice Chair. Christian Clausen, Risto Murto, Antti Mäkinen and Björn Wahlroos (Chair) were elected to the Nomination and Remuneration Committee. Fiona Clutterbuck, Georg Ehrnrooth, Jannica Fagerholm (Chair) and Johanna Lamminen were elected to the Audit Committee.
All the proposed Board members have been determined to be independent of the company and its major shareholders under the rules of the Finnish Corporate Governance Code 2020. The curriculum vitaes of the Board Members are available at www.sampo.com/board.
The Annual General Meeting decided to pay the following fees to the members of the Board of Directors until the close of the 2021 Annual General Meeting: the Chair of the Board will be paid an annual fee of EUR 180,000 and other members of the Board will be paid EUR 93,000 each. Furthermore, the members of the Board and its Committees will be paid the following annual fees: the Vice Chair of the Board EUR 26,000, the Chair of the Audit Committee EUR 26,000 and the member of the Audit Committee EUR 6,000. A Board member shall in accordance with the resolution of the Annual General Meeting acquire Sampo plc’s A shares at the price paid in public trading for 50 per cent of his/her annual fee excluding taxes and similar payments.
The Annual General Meeting accepted Sampo plc’s Remuneration Policy for Governing Bodies. The resolution on the Remuneration Policy was advisory.
Ernst & Young Oy was elected as Auditor. The Auditor will be paid a fee determined by an invoice approved by Sampo. Kristina Sandin, APA, will act as the principally responsible auditor.
At the general meeting 320,359,477 shares (57.7 per cent of shares) and 325,159,477 votes (58.0 per cent of all votes) were represented, including advance voting and a proxy representation.
The minutes of the Annual General Meeting are available for viewing at www.sampo.com/agm and at Sampo plc’s head office at Fabianinkatu 27, Helsinki, Finland.
Shares and shareholders
The Annual General Meeting held on 2 June 2020 authorized the Board to repurchase a maximum of 50,000,000 Sampo A shares. The price paid for the shares repurchased under the authorization shall be based on the current market price of Sampo A shares on the securities market. The authorization will be valid until the close of the next Annual General Meeting, nevertheless not more than 18 months after AGM’s decision.
During January – June 2020 Sampo plc made no repurchases of its own shares and it has not purchased any shares after the end of the reporting period. Furthermore, Sampo plc and its subsidiaries did not hold any Sampo shares as at 30 June 2020.
Topdanmark’s Annual General Meeting on 2 April 2020 decided to pay one-half of the planned dividend and postpone the decision on the payment of the other half until autumn. Sampo received EUR 48 million on 7 April in dividends from Topdanmark. On 17 July 2020 Topdanmark’s Board of Directors decided to follow the recommendation by the Danish FSA and postpone the payment of the remainder of the dividend until the AGM on 25 March 2021.
Mandatum Life decided not to pay the dividend of EUR 150 million planned for March 2020.
Nordea’s AGM on 28 May 2020 mandated the Board of Directors to decide on a dividend payment for the financial year 2019. The Board of Directors intends to follow the recommendation adopted by the ECB and refrain from deciding on a dividend payment based on the authorization before 1 October 2020.
If normally pays its dividend at the end of each year. The company had already paid a dividend of SEK 7.5 billion (EUR 710 million) in December 2019.
The relevant ratings for Sampo Group companies did not change in the first half of 2020. The ratings at the end of June 2020 are presented in the table below.
|Rated company||Moody’s||Standard & Poor’s|
Sampo plc – Issuer Credit Rating
|If P&C Insurance Ltd – Insurance Financial Strength Rating||A1||Stable||A+||Stable|
|If P&C Insurance Holding Ltd (publ) – Issuer Credit Rating||–||–||A||Stable|
|Mandatum Life Insurance Company Ltd – Issuer Credit Rating||–||–||A+||Stable|
Sampo Group calculates its group solvency under the Solvency II rules. In this calculation Nordea is treated as an equity investment. According to the Solvency II directive, Sampo Group’s solvency ratio amounted to 187 per cent (167) at the end of June 2020. Had the year-end 2019 solvency been calculated taking into account the revised dividend proposal, the adjusted solvency ratio would have been 174 per cent.
Positive development in the equity market, strong underwriting result and the narrowing of bond spreads increased Sampo Group’s own funds. On the other hand, changes in the symmetric adjustment and the volatility adjustment increased SCR (Solvency Capital Requirement) and reduced the solvency level. The volatility adjustment changes also decreased Group’s Own funds. The rise in Nordea’s share price during the second quarter of 2020 increased SCR, but had, in aggregate, a positive impact on the solvency by increasing the own funds even more.
Solvency position in the subsidiaries
The insurance subsidiaries apply Solvency II rules in their regulatory solvency calculations. The If Group companies use either partial internal models or the standard model for the calculation of their solo solvency position. Mandatum Life reports in accordance with the standard formula for Solvency II. Meanwhile, Topdanmark uses a partial internal model to report its stand-alone solvency position.
If Group has an A+ rating from S&P which will continue to require significantly more capital than the standard formula and therefore the use of the standard formula has no practical implications on If Group’s capital position. On 30 June 2020, If Group’s Solvency II capital requirement under the standard formula amounted to EUR 1,794 million (1,890) and own funds amounted to EUR 3,474 million (3,592). The solvency ratio amounted to 194 per cent (190).
The S&P single-A capital requirement for If Group amounted to EUR 2,939 million (3,083) on 30 June 2020 and the capital base was EUR 3,121 million (3,151).
Topdanmark calculates most of its non-life and health risks and their respective solvency capital requirement by applying a partial internal model approved by the DFSA. Other risks are calculated by the Solvency II SCR standard formula. Topdanmark’s solvency ratio under the partial internal model was 197 per cent (177) at the end of June 2020.
Mandatum Life’s solvency ratio after transitional measures amounted to 201 per cent (176) on 30 June 2020. The comparison figure would have increased from 176 per cent to 194 per cent if the cancellation of the EUR 150 million dividend payment in March 2020 was taken into account. Own funds were EUR 2,127 million (2,117) and the Solvency Capital Requirement (SCR) was EUR 1,058 million (1,204). The strong investment returns and growth in unit-linked savings increased own funds. On the other hand, tightening volatility adjustment intensified the negative effect of the decreased interest rate level. SCR increased because of the higher equity risk exposure and the change in the symmetric adjustment factor.
Without transitional measures, own funds would have amounted to EUR 1,781 million (1,756) and the solvency capital requirement would have amounted to EUR 1,070 million (1,234), leading to a solvency ratio of 166 per cent (142).
On 30 June 2020, Sampo plc’s debt financing amounted to EUR 3,659 million (3,908) and interest bearing assets amounted to EUR 787 million (1,725). Interest bearing assets include bank accounts, fixed income instruments and EUR 351 million (359) of hybrid capital and subordinated debt instruments issued by the subsidiaries and associated companies.
Sampo plc’s net debt amounted to EUR 2,797 million (2,183). The net debt calculation takes into account interest bearing assets and liabilities. Gross debt to Sampo plc’s equity was 54 per cent (51) and financial leverage was 35 per cent (34).
On 28 May 2020 Sampo plc repaid SEK 3,000 million senior notes maturing on that date.
On 30 June 2020, financial liabilities in Sampo plc’s balance sheet consisted of issued senior bonds and notes of EUR 3,109 million (3,414). In addition, Sampo plc has issued subordinated notes of EUR 495 million (494). Outstanding commercial papers amounted to EUR 50 million (0). The average interest, net of interest rate swaps, on Sampo plc’s debt as of 30 June 2020 was 1.3 per cent (1.3).
More information on Sampo Group’s outstanding debt issues is available at: www.sampo.com/debtfinancing.
Outlook for 2020
Sampo Group’s insurance businesses are expected to report good insurance technical results for 2020. However, the investment results are at this point in time more uncertain than usual. The mark-to-market results for 2020 are highly dependent on capital market developments, particularly in life insurance.
If P&C is expected to reach a combined ratio of 82 – 85 per cent in 2020.
With regard to Topdanmark, reference is made to the profit forecast model that the company publishes on a quarterly basis.
Nordea’s contribution to the Group’s profit is expected to be significant.
The major risks and uncertainties for the Group in the near-term
In its current day-to-day business activities Sampo Group is exposed to various risks and uncertainties, mainly through its separately managed major business units.
Major risks affecting the Group companies’ profitability and its variation are market, credit, insurance and operational risks that are quantified independently by the major business units. At the group level, sources of risks are the same, although they are not directly additive due to the effects of diversification.
Uncertainties in the form of major unforeseen events may have an immediate impact on the Group’s profitability. The identification of unforeseen events is easier than the estimation of their probabilities, timing, and potential outcomes. Currently, the COVID-19 pandemic is causing significant negative effects on the Nordic economies. The duration of the measures taken to contain the virus and their effects on economic and capital market development are uncertain. There are also a number of widely identified macroeconomic, political and other sources of uncertainty which can, in various ways, affect the financial services industry in a negative manner.
Other sources of uncertainty are unforeseen structural changes in the business environment and already identified trends and potential wide-impact events. These external drivers may have a long-term impact on how Sampo Group’s business will be conducted. Examples of already identified trends are technological developments in areas such as artificial intelligence and digitalization, demographic changes, and sustainability issues that may also have profound effects on companies from the financial sector.
Board of Directors
For more information, please contact:
Knut Arne Alsaker, Group CFO, tel. +358 10 516 0010
Jarmo Salonen, Head of Investor Relations and Group Communications, tel. +358 10 516 0030
Maria Silander, Communications Manager, Media Relations, tel. +358 10 516 0031
An English language conference call for investors, analysts and the media will be arranged today at 1 pm Finnish time (11 am UK time). To participate, please call one of the following telephone numbers: +1 631 913 1422, +44 333 300 0804, +46 856 642 651, or +358 981 710 310. The conference code is 25893753#.
The conference call can also be followed live at: www.sampo.com/result. A recorded version will be available later at the same address.
In addition, the Supplementary Financial Information Package is available at: www.sampo.com/result.
Sampo will publish the Interim Statement for the period January–September 2020 on 4 November 2020.
London Stock Exchange
The principal media
Financial Supervisory Authority
Wolters Kluwer 2020 Half-Year Report
Wolters Kluwer 2020 Half-Year Report
August 5, 2020 – Wolters Kluwer, a global leader in professional information, software solutions, and services, today releases its half-year 2020 results.
- Revenues €2,294 million, up 3% in constant currencies and up 3% organically.
- Excluding revenues associated with the PPP1, organic growth would have been 2%.
- Recurring revenues up 4% organically (81% of total revenues); non-recurring impacted by COVID-19.
- Digital & services revenues up 5% organically (93% of total); print down 18% organically.
- Adjusted operating profit €577 million, up 14% in constant currencies.
- Adjusted operating profit margin benefitted from temporary cost reductions and other factors.
- Diluted adjusted EPS €1.59, up 18% in constant currencies.
- Adjusted free cash flow €336 million, up 10% in constant currencies.
- Balance sheet and liquidity remain strong.
- Net-debt-to-EBITDA 1.5x; recent refinancing improves liquidity and extends maturity profile.
- Interim dividend of €0.47 per share, set at 40% of prior year total dividend.
- Share buyback: €175 million of 2020 buyback of up to €350 million completed to date.
- Outlook 2020: specific guidance remains suspended.
- Recurring revenues from digital information, software and service subscriptions holding up well.
- Print and non-recurring revenue streams expected to be weak in the remainder of the year.
Half-Year Report of the Executive Board
Nancy McKinstry, CEO and Chairman of the Executive Board, commented: “In these unprecedented times, I am particularly proud of our employees who have been focusing their efforts on supporting our customers and who have remained agile and engaged while adjusting to remote working conditions. COVID-19 has impacted non-recurring and print revenue streams and slowed new sales activity, but our strategically important recurring digital revenues are demonstrating resilience. While we continue to suspend our specific 2020 guidance, we remain confident in the company’s long-term prospects.”
|Key Figures – Six months ended June 30|
|€ million, unless otherwise stated||2020||2019||∆||∆ CC||∆ OG|
|Business performance – benchmark figures|
|Adjusted operating profit||577||497||+16%||+14%||+14%|
|Adjusted operating profit margin||25.2%||22.5%|
|Adjusted net profit||426||351||+21%||+16%|
|Diluted adjusted EPS||1.59||1.28||+24%||+18%|
|Adjusted free cash flow||336||300||+12%||+10%|
|IFRS reported results|
|Profit for the period||374||303||+23%|
|Diluted EPS (€)||1.40||1.11||+26%|
|Net cash from operating activities||491||436||+13%|
|∆: % Change; ∆: CC % Change in constant currencies (€/$ 1.12); ∆: OG % Organic growth. Benchmark adjusted figures are performance measures used by management. See Note 4 for a reconciliation from IFRS to benchmark figures.|
Full-Year 2020 Outlook Remains Suspended due to COVID-19 Uncertainty
The COVID-19 pandemic and the measures and restrictions to control it continue to create challenges for our customers and uncertainty around economic conditions for everyone. Until we have greater clarity on the outlook, our specific 2020 guidance on adjusted operating profit margin, adjusted free cash flow, return on invested capital (ROIC), and diluted adjusted EPS remains suspended.
We currently expect recurring revenues for digital information, software and services subscriptions to show resilience, but we note that new sales of subscription products have been more difficult in current market conditions. Recurring revenues from print subscriptions have seen accelerated decline, which we expect will continue in the coming quarters. Of our non-recurring revenues2 (FY 2019: 22% of total revenues), sales of new software licenses and implementation services are seeing delays, while transactional volumes, training, books, and other ad hoc revenue products are likely to remain weak in current conditions. A freeze on travel, a hold on non-critical hiring, and other temporary cost reductions initiated in the second quarter benefitted margins in the first half. These measures and additional programs and restructuring planned for the second half are aimed at protecting the full-year 2020 adjusted operating profit margin while sustaining investment in key products and strategic infrastructure.
If current exchange rates persist, the U.S. dollar rate will have a negative effect on results reported in euros. In 2019, Wolters Kluwer generated more than 60% of its revenues and adjusted operating profit in North America. As a rule of thumb, based on our 2019 currency profile, each 1 U.S. cent move in the average €/$ exchange rate for the year causes an opposite change of approximately 2 euro cents in diluted adjusted EPS.
Restructuring costs are included in adjusted operating profit. We now anticipate that restructuring costs will be in the range of €25-€35 million in 2020 (FY 2019: €26 million), higher than anticipated at the start of the year. We currently expect adjusted net financing costs of approximately €70 million in constant currencies3, including approximately €10 million in lease interest charges. We currently expect the benchmark tax rate on adjusted pre-tax profits to be in the range of 23%-24% for 2020.
Capital expenditure is expected to be at the upper end of our normal range of 5%-6% of total revenues (FY 2019: 4.9%). Cash repayments of lease liabilities are expected to be in line with depreciation of right-of-use assets (FY 2019: €80 million). We currently expect the full-year cash conversion ratio to be around 95% (FY 2019: 96%). See Note 5 for the calculation of our cash conversion ratio.
Any guidance we provide assumes no additional significant change to the scope of operations. We may make further acquisitions or disposals which can be dilutive to margins and earnings in the near term.
2020 Outlook by Division
Health: We currently expect full-year organic growth to be positive but slower than 2019 levels.
Tax & Accounting: We currently expect full-year revenues to be broadly flat on an organic basis compared to prior year due to a challenging comparable (FY 2019: organic growth of 6%) and a more difficult new sales environment.
Governance, Risk & Compliance: Excluding revenues associated with the PPP1, we expect revenues to see organic decline for the full year, due to declines in non-recurring revenues.
Legal & Regulatory: We currently expect organic decline in revenues in 2020 due to accelerated declines in print products and lower license fees, training, and other non-recurring revenues.
Our Business and Strategy
Our mission is to empower our professional customers with the information, software solutions, and services they need to make critical decisions, achieve successful outcomes, and save time. We support professionals across four customer segments: health; tax & accounting; governance, risk & compliance; and legal & regulatory. All our customers face the challenge of increasing proliferation and complexity of information and the pressure to deliver better outcomes at a lower cost. Many of our customers are looking for mobility, flexibility, intuitive interfaces, and integrated open architecture technology to support their decision-making. We aim to solve their problems and add value to their workflow with our range of digital solutions and services, which we continuously evolve to meet their changing needs. Since 2003, we have been re-investing 8%‑10% of our revenues in developing new and enhanced products and the supporting technology platforms.
Our fastest growing products continue to be our expert solutions, which combine deep domain knowledge with specialized technology and services to deliver answers, analytics, and improved productivity for our customers. Our business model is primarily based on subscriptions or other recurring revenues (81% of total revenues in HY 2020), augmented by implementation services revenues as well as volume-based transactional or other non-recurring revenues. Renewal rates for our digital information, software and service subscriptions are high and are one of the key indicators by which we measure our success. We have been evolving our technology towards fewer, globally scalable platforms, with reusable components. We are transitioning our solutions to the cloud and leveraging advanced technologies such as artificial intelligence, natural language processing, and predictive analytics to drive further innovation. We are standardizing tools, streamlining our technology infrastructure (including data centers) and improving our development processes using agile methods. It is our 19,000 employees who drive our achievements and we have been working to ensure we are providing engaging and rewarding careers.
Strategic Priorities 2019-2021
While COVID-19 is impacting our near-term financial performance, we remain committed to the strategic priorities we set out at the start of 2019. These strategic priorities are to:
- Grow Expert Solutions: We will focus on scaling our expert solutions by extending these offerings and broadening their distribution through existing and new channels, including strategic partnerships. We will invest to build or acquire positions in adjacent market segments.
- Advance Domain Expertise: We intend to continue transforming our information products and services by enriching their domain content with advanced technologies to deliver actionable intelligence and deeper integration into customer workflows. We will invest to enhance the user experience of these products through user-centric design and differentiated interfaces.
- Drive Operational Agility: We plan to strengthen our global brand, go-to-market and digital marketing capabilities to support organic growth. We will invest to upgrade our back-office systems and IT infrastructure. By 2021, we expect to complete the modernization of our Human Resources technology to support our efforts to attract and nurture talent.
In the 2019-2021 timeframe, we expect to maintain product development at between 8%-10% of total revenues. We expect to fund the modernization of back-office systems by deriving additional cost savings. The strategy is based on organic growth, although we may make further bolt-on acquisitions or non-core disposals to enhance our value and market positions. Acquisitions must fit our strategic direction, strengthen or extend our existing business, be accretive to diluted adjusted EPS in their first full year and, when integrated, deliver a return on invested capital above our weighted average cost of capital (8%) within three to five years.
Despite the COVID-19 disruption, we are making progress on this plan. In the first half of 2020, our expert solutions accounted for over 50% of total revenues and continued to deliver faster organic growth than the group as a whole. Our global expert solutions, which include products such as UpToDate in Health, TeamMate and CCH Tagetik in Tax & Accounting, OneSumX in Governance, Risk & Compliance, and Enablon in Legal & Regulatory, in aggregate achieved high single-digit organic growth. In the first half, we divested several small businesses that no longer fit our long-term strategic direction, contributing to a more focused portfolio. We increased investment in our digital information products, such as our European legal research solutions and our tax research platform CCH Answer Connect, to enhance their content, functionality and user interfaces, and to add capabilities that leverage artificial intelligence. We also advanced our operational agility, making further progress in the first half in moving towards standardized technology platforms and components and transitioning products to the cloud. In the first half of 2020, cloud software revenues grew 19% organically reaching just over a quarter of our total software revenues.
Financial Policy, Capital Allocation, Net Debt and Liquidity
Wolters Kluwer uses its cash flow to invest in the business organically and through acquisitions, to maintain optimal leverage, and 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 at times, 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 flow.
For more than 30 years, Wolters Kluwer has increased or maintained its annual dividend per share in euros (or euro equivalent). In 2007, the company established a progressive dividend policy and, since 2011, all dividends are paid in cash. In 2015, we introduced an interim dividend payment, aligning cash distributions closer to our seasonal cash flow pattern.
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 pay-out ratio4 can vary from year to year. Proposed annual increases in the dividend per share take into account our ﬁnancial performance, market conditions, and our need for ﬁnancial ﬂexibility. The policy takes into consideration the characteristics of our business, our expectations for future cash ﬂows, 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.
Interim Dividend 2020
As announced on February 26, 2020, the interim dividend for 2020 was set at 40% of the prior year total dividend. This results in an interim dividend of €0.47 per share, to be distributed on September 24, 2020 to holders of ordinary shares, or October 1, 2020, to holders of Wolters Kluwer ADRs.
Shareholders can choose to reinvest both interim and ﬁnal dividends by purchasing additional Wolters Kluwer shares through the Dividend Reinvestment Plan (DRIP) administered by ABN AMRO Bank N.V.
Share Buyback 2020
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 further share buyback programs. Shares repurchased by the company are added to and held as treasury shares and are either cancelled or held to meet future obligations arising from share-based incentive plans.
On February 26, 2020, we announced our intention to repurchase shares for up to €350 million during 2020. On May 6, 2020, we re-affirmed this intention with the stipulation that we would temporarily slow the pace of share repurchases. In the year to August 4, 2020, we have spent €175 million on share buybacks, of which €154 million was settled in the first half of 2020.
Assuming global economic conditions do not deteriorate substantially, we believe current levels of cash returns leave us with ample headroom to support our dividend plans, to sustain organic investment in innovation and productivity, and to make selective acquisitions. The share repurchases may be suspended, discontinued, or modified at any time.
For the period starting August 6, 2020, up to and including October 28, 2020, we have engaged a third party to execute €100 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 acquired will not exceed the authorization granted by the General Meeting of Shareholders. Repurchased shares are added to and held as treasury shares and will be used for capital reduction purposes or to meet future obligations arising from share-based incentive plans.
Net Debt and Liquidity Position
Net debt at June 30, 2020, was €2,247 million, compared to €2,318 million at June 30, 2019 and €2,199 million at December 31, 2019. The rolling twelve months’ net-debt-to-EBITDA ratio was 1.5x at June 30, 2020.
Our liquidity position remains strong with, as of June 30, 2020, net cash available of €502 million (cash and cash equivalents of €978 million less bank overdrafts used for cash management purposes of €476 million), partly offset by outstanding Euro commercial paper of €305 million.
On July 3, 2020, we issued a new €500 million 10-year senior unsecured Eurobond with an attractive coupon of 0.75%. The proceeds will be used for general corporate purposes.
On July 10, 2020, we signed a new €600 million 3-year multi-currency credit facility. This new facility will mature in 2023 and includes two one-year extension options, replacing an existing facility which was due to expire in July 2021. This facility is currently undrawn. We remain comfortably below the debt covenant on our credit facility.
Apart from a €250 million private loan agreement maturing in December 2020, we currently have no long-term debt maturing between 2020 and 2022.
Share Cancellation 2020
At the 2020 Annual General Meeting of April 23, 2020, shareholders approved a resolution to cancel for capital reduction purposes any or all ordinary shares held in treasury or to be acquired by the company as authorized by shareholders, up to a maximum of 10% of issued share capital. As authorized by shareholders, the Executive Board has determined the number of ordinary shares to be cancelled this year is 5.5 million. Wolters Kluwer intends to cancel these shares in the second half of 2020. As of August 4, 2020, Wolters Kluwer held 8.1 million shares in treasury. A portion of these treasury shares will be retained in order to meet future obligations under share-based incentive plans.
Half-Year 2020 Results
Group revenues rose 4% overall to €2,294 million, including a 1% positive impact from currency, mainly the U.S. dollar which averaged €/$ 1.10 in the period (HY 2019: €/$ 1.13). In constant currencies, revenues increased by 3%. The net effect of divestments and acquisitions on revenues was slightly negative. Excluding both the impact of currency and the effect of acquisitions and disposals, organic growth was 3% (HY 2019: 4%). Excluding revenues associated with the PPP1, organic growth would have been 2%.
Revenues from North America, which accounted for 63% of group revenues, grew 4% organically (HY 2019: 3%). Revenues from Europe, 30% of total revenues, saw organic growth decelerate to 2% (HY 2019: 6%), with all divisions experiencing slower growth. Revenues from Asia Pacific and Rest of World, 7% of total revenues, were broadly stable on an organic basis (compared to growth of 3% a year ago), with robust performance in Tax & Accounting offset by weakened trends in other divisions.
Adjusted operating profit was €577 million, an increase of 14% in constant currencies. The adjusted operating profit margin increased 270 basis points to 25.2% (HY 2019: 22.5%), as a result of temporary cost reductions, including a freeze on travel, a hold on non-critical hiring, a reduction in promotional spending, and other short-term actions initiated in mid-March. In addition, the margin reflects a €10 million reduction in restructuring charges, a one-time insurance reimbursement, and a benefit from revenues associated with the PPP1.
Our share of profits from associates, net of tax, was €5 million (HY 2019: €0 million), mainly due to a one-time higher result related to the stake in Logical Images that was divested in May 15, 2020, for €10 million.
Adjusted net financing costs reduced to €25 million (HY 2019: €31 million), reflecting exchange rate movements.
Adjusted profit before tax was €557 million (HY 2019: €466 million), up 15% in constant currencies. The benchmark tax rate on adjusted profit before tax reduced to 23.5% (HY 2019: 24.7%) due to lower interest charges and limitations in The Netherlands and the favorable impact of tax losses in 2020.
Adjusted net profit was €426 million (HY 2019: €351 million), an increase of 16% in constant currencies.
Diluted adjusted EPS was €1.59 (HY 2019: €1.28), up 18% in constant currencies, reflecting the increase in adjusted net profit and a 2% reduction in the diluted weighted number of shares outstanding to 267.6 million (HY 2019: 273.3 million).
IFRS Reported Figures
Reported operating profit rose 18% to €500 million (HY 2019: €423 million), mainly reflecting the 16% increase in adjusted operating profit. Amortization and impairment of acquired identifiable intangible assets increased to €75 million (HY 2019: €73 million).
Reported financing results amounted to a net cost of €19 million (HY 2019: €24 million), including a €7 million net gain on disposals of associates and financial assets (HY 2019: €9 million). The disposals included our remaining 45% interest in Medicom in China and our 40% interest in Logical Images in the U.S.
The reported effective tax rate was 23.1% (HY 2019: 24.0%) reflecting lower interest charges and limitations in the Netherlands and the favorable impact of tax losses in 2020. Total reported profit for the period increased 23% to €374 million (HY 2019: €303 million) and diluted earnings per share increased 26% to €1.40 (HY 2019: €1.11).
Adjusted operating cash flow was €485 million (HY 2019: €447 million), up 7% in constant currencies. The cash conversion ratio declined to 84% (HY 2019: 90%) due to increased capital expenditures and increased working capital outflows. Net capital expenditure increased to €121 million (HY 2019: €100 million) due to increased expenditure related to investments in critical products and systems. Working capital outflows reflect timing of payments. Cash payments related to leases, including lease interest payments, increased to €41 million (HY 2019: €39 million). Depreciation, including the amortization and impairment of internally developed software and other products, increased 2% at constant currencies to €103 million (HY 2019: €100 million). Depreciation of right-of-use-assets was €36 million (HY 2019: €35 million).
Net interest paid, excluding lease interest paid, was €39 million (HY 2019: €34 million). Corporate income tax paid was €111 million, broadly in line with the prior period (HY 2019: €112 million). Net cash use of restructuring provisions amounted to €4 million (HY 2019: €6 million), relating to net restructuring additions of €3 million and appropriations of €7 million.
Adjusted free cash flow was €336 million (HY 2019: €300 million), up 12% overall and up 10% in constant currencies.
Total acquisition spending, net of cash acquired and including transaction costs, was €26 million (HY 2019: €34 million) and primarily relates to the acquisition of CGE by Legal & Regulatory. Deferred payments on acquisitions completed in prior years, including earnouts, amounted to €3 million (HY 2019: €0 million).
Divestment proceeds, net of cash disposed and transaction costs, were €20 million (HY 2019: €32 million) and relate to the divestment of certain Belgian training assets, the sale of certain German business lines, and the sale of our stakes in Medicom and Logical Images.
Dividends paid to shareholders during the first six months amounted to €210 million (HY 2019: €174 million) in respect of the 2019 final dividend. During the first six months, €156 million of shares were repurchased (HY 2019: €87 million) of which €154 million was settled before June 30 (HY 2019: €84 million).
Net Debt and Leverage
Net debt at June 30, 2020, was €2,247 million compared to €2,199 million at December 31, 2019. Included in net debt were €370 million of short-term and long-term lease liabilities. The rolling twelve-months’ net-debt-to-EBITDA ratio was 1.5x (Year-end 2019: 1.6x).
We continue to pay close attention to our performance on environmental, social, and governance matters. We are currently launching a new Code of Business Ethics to reinforce a culture of integrity and openness. The new code will form part of our annual mandatory compliance training for all employees globally. During the ongoing COVID-19 pandemic, we have been conducting regular employee surveys to monitor engagement levels and inform managers on what support is needed during this time, when approximately 95% of employees are still working from home and many are experiencing increased workloads.
This year we also strengthened our “Green is Green” program which aims to support our office managers and employees to adopt environmentally sound practices. The recently agreed new credit facility provides us with an option to introduce sustainability or ESG targets.
About Wolters Kluwer
Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the healthcare; tax and accounting; governance, risk and compliance; and legal and regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services.
Wolters Kluwer reported 2019 annual revenues of €4.6 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 19,000 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 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).
September 1, 2020 Ex-dividend date: 2020 interim dividend
September 2, 2020 Record date: 2020 interim dividend
September 24, 2020 Payment date: 2020 interim dividend
October 1, 2020 Payment date: 2020 interim dividend ADRs
October 30, 2020 Nine-Month 2020 Trading Update
February 24, 2021 Full-Year 2020 Results
March 10, 2021 Publication of Annual Report
April 22, 2021 Annual General Meeting of Shareholders
Annemarije Dérogée-Pikaar Meg Geldens
Global Branding & Communications Investor Relations
t + 31 (0)172 641 470 t + 31 (0)172 641 407
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; 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.
1 Throughout this document, “the PPP” refers to the U.S. Small Business Association’s Paycheck Protection Program established by the 2020 U.S. Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Wolters Kluwer Compliance Solutions (part of Governance Risk & Compliance) adapted its TSoftPlus platform to support its bank customers in lending under this program.
2 Non-recurring revenues include revenues from transactional services, software license sales and implementation services, training, advertising, print books, and other products sold on an ad hoc basis.
3 Guidance for net financing costs in constant currencies excludes the impact of exchange rate movements on currency hedging and intercompany balances.
4 Pay-out ratio: dividend per share divided by adjusted earnings per share.
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