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Wolters Kluwer 2007 Full-Year Results

Wolters Kluwer reported its full-year 2007 results on February 27, 2008. The company achieved 4% organic revenue growth and expanded its operating margin to 20%. Net income from continuing operations increased 18% to €330 million. The CFO highlighted the company's financial performance, including double-digit growth in online and workflow tools revenue and improved margins across divisions. Exchange rate movements impacted reported growth rates.

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2007 Full-Year Results February 27, 2008 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board Boudewijn Beerkens CFO and Member of the Executive Board Jack Lynch Member of the Executive Board
Forward-looking Statements This presentation 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, 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. February 27, 2008 - Amsterdam 2
Agenda Accomplishments & Highlights Key Performance Indicators Divisional Operating Performance Financial Performance Springboard: Operational Excellence Update Outlook & Summary Q&A February 27, 2008 - Amsterdam 3
Our Strategy for Accelerating Profitable Growth 1 2 Grow Our Capture Leading Key Adjacent Positions Markets 4 3 Institutionalize Exploit Operational Global Excellence Scale and Scope February 27, 2008 - Amsterdam 4
Accomplishments 2007 Delivered on 2007 Key Performance Indicators Organic Revenue Growth Accelerated Ordinary EBITA Margin Accelerated Expanded Electronic Product Offerings Strengthened Leading Positions/ Expanded High-Growth Adjacent Markets Strong Shareholder Returns February 27, 2008 - Amsterdam 5
Highlights FY 2007 Organic Growth Ordinary EBITA Margin 20% 4% +1% +300 bps 3% 17% 2006 2007 2006 2007 Free Cash Flow Ordinary Diluted EPS €423 €1,48 +6% +35% €399 €1,09 2006 Millions 2007 2006 2007 At c onstant c urrenc ies EUR/ USD 1.26 At c onstant c urrenc ies EUR/ USD 1.26 February 27, 2008 - Amsterdam 6
Strong Growth: 6% Growth in Constant Currencies and 4% Organic Growth 2007 Revenue: €3,413 million ∆% Legal, Tax Health Full year 2007 ∆% Constant Organic Currencies1 & €761 Growth Regulatory Health 1% 1% Europe €1,249 CFS 6% 5% TAL 14% 6% Corporate LTRE 4% 4% & Financial Services Wolters Kluwer2 6% 4% €522 1 Constant currencies at EUR/USD = 1.26 Tax, 2 Continuing operations Accounting & Legal €881 February 27, 2008 - Amsterdam 7
Double-digit Growth: 27% Growth in Constant Currencies with 20% Ordinary EBITA Margin 2007 Ordinary EBITA: €667 Million Legal, Tax Health Ordinary ∆% Constant €112 Full year 2007 EBITA & Currencies1 Margin Regulatory Europe Health 2% 15% €253 CFS 35% 28% Corporate & Financial TAL 47% 22% Services LTRE 18% 20% €144 Wolters Kluwer2 27% 20% 1 Constant currencies at EUR/USD = 1.26 Tax, 2 Continuing operations Accounting & Legal €197 Note: Pie chart excludes €39 million in corporate costs February 27, 2008 - Amsterdam 8
Execution of Strategy has Yielded Clear Results in Performance Organic Revenue Growth Ordinary EBITA Margin 4% 20% 3% 2% 17% 16% 16% 1% 2004 2005 2006 2007 2004 2005 2006 2007 February 27, 2008 - Amsterdam 9
Portfolio of Wolters Kluwer is Significantly Transformed 2003 Revenue 2007 Revenue Print Online/ Online/ Workflow Tools Print Workflow Tools 31% 38% 55% 47% 14% 15% Services Services February 27, 2008 - Amsterdam 10
Driven by Double-digit Revenue Growth from Online and Workflow Tools Percent of Wolters Kluwer Revenue from Online/ Work Flow Tools 4-year CAGR 12% 47% Other 31% Electronic 4-year Online CAGR 17% Online 2003 2007 February 27, 2008 - Amsterdam 11
Limited Cyclical Exposure – Growing Subscription Base with Improving Retention Rates Subscription Revenue as a Revenue Components % of Total Revenue 66% Non- Cyclical 80% 60% Other Training Advertising Cyclical 4% 2% 14% 2003 2007 February 27, 2008 - Amsterdam 12
Continuing Delivery on Commitments to Enhance Shareholder Value Actual Actual Actual Actual Target Actual Key Performance Indicators 2003 2004 2005 2006 2007 2007 Organic Revenue Growth -2% 1% 2% 3% 4% 4% Ordinary EBITA Margin 18% 16% 16% 17% 19-20% 20% Cash Conversion 109% 126% 106% 99% 95-105% 91% Free Cash Flow €393m €456m €351m €399m ±€425m1 €423m1 ROIC (after tax) 7% 7% 7% 7% ≥WACC2 8% Ordinary diluted EPS €1.18 €1.02 €1.06 €1.10 €1.45- €1.481 €1.501 Note: 2006 and 2007 figures represent continuing operations and exclude Education 1 Figures stated at constant currencies EUR/USD = 1.26 2 WACC equals 8% after Tax February 27, 2008 - Amsterdam 13
Health Highlights Clinical Solutions Pharma Clinical Solutions – Double-digit growth 8% Solutions 29% Medical Research – Good growth driven by launch Professional & of OvidSP and strong subscription sales Education Medical Pharma Solutions – Double-digit growth in brand 45% Research analytics and managed care products offset by 18% price compression and softening pharma promotional spend Professional & Education – Softening wholesale/ retail ordering as sales shift to online channels Margins were flat to the previous year due largely to investments in new products and data sets Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 761 823 1% 1% 205 232 (1%) (1%) Revenue (USD) 1,044 1,036 298 300 Ordinary EBITA (EUR) 112 120 2% 2% 43 41 15% 15% Ordinary EBITA (USD) 156 152 62 53 Ordinary EBITA Margin 15% 15% 21% 17% 1 CC - Constant currencies at EUR/ USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 14
CFS Highlights Corporate Legal Services - Strong renewals and Financial new sales in Compliance & Governance. Services 34% Corporate Double-digit growth in UCC, litigation support and Legal Services e-billing solutions 66% Deceleration in M&A and IPO transaction volumes in second half tempered growth Financial Services – Stable banking content, insurance and securities product line growth offset by lower mortgage volume levels Significant margin improvement driven by organic growth and benefit of restructuring programs Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 522 534 6% 5% 126 137 4% 2% Revenue (USD) 714 671 183 176 Ordinary EBITA (EUR) 144 116 35% 34% 34 30 28% 31% Ordinary EBITA (USD) 197 146 49 38 Ordinary EBITA Margin 28% 22% 27% 22% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 15
TAL Highlights Strong new sales and retention rates of tax and Law & accounting software and workflow tools and new Business Tax and software releases Accounting 41% Small Firm Services group contributed to overall 59% growth Good growth in publishing businesses, particularly legal education and Accounting Research Manager Good growth in enhanced integrated libraries and workflow tools for the legal market Margin improvement driven by Small Firm Services, restructuring of the U.K. business and offshoring and outsourcing initiatives. Full Year Fourth Quarter 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 881 826 14% 6% 228 218 15% 15% Revenue (USD) 1,205 1,035 330 281 Ordinary EBITA (EUR) 197 146 47% 28% 41 27 74% 78% Ordinary EBITA (USD) 269 181 61 35 Ordinary EBITA Margin 22% 18% 18% 12% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 16
LTRE Highlights SC BEL 3% FR Growth was driven by online offerings gaining 9% 19% momentum, new workflow solutions and software NL products as well as expansion of training and other 18% IT/SP services TLR 27% 6% Italy, Spain, and Central and Eastern Europe GER/CEE delivered very strong growth through innovation 18% and customer focus programs The Netherlands and Belgium delivered good growth as a result of successful restructuring efforts Margin improvement driven by revenue performance, cost-savings initiatives, and the benefits of restructuring programs Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 1,249 1,194 4% 4% 377 359 5% 5% Ordinary EBITA (EUR) 253 213 18% 17% 105 92 12% 13% Ordinary EBITA Margin 20% 18% 28% 26% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 17
Financials Performance February 27, 2008 - Amsterdam Boudewijn Beerkens CFO and Member of the Executive Board
Financial Highlights FY 2007 Organic Growth Ordinary EBITA Margin 20% 4% +1% +300 bps 3% 17% 2006 2007 2006 2007 February 27, 2008 - Amsterdam 19
Financial Highlights FY 2007 Net Income (Continuing Operations) Net Debt/ EBITDA Ratio €330 3.2 1 +18% 25% €279 2.4 Millions 2006 2007 2006 2007 1 2.9 before reclassification of Education to discontinued operations Ordinary Diluted EPS Dividend Recommendation €1,38 +10% €0,64 +25% €0,58 €1,10 2006 2007 2006 2007 February 27, 2008 - Amsterdam 20
Statement of Profit & Loss Full Year (€ millions) 2007 2006 ∆% ∆% CC1 Revenue 3,413 3,377 1% 6% Ordinary EBITA 667 556 20% 27% Ordinary EBITA Margin (%) 20% 17% Amortization (121) (121) - 7% Financing Results (102) (104) (1%) (2%) Taxation on income (100) (68) 46% 49% Other (14) 16 Net income (Continuing Operations) 330 279 18% 29% Net income (Discontinued Operations) 588 43 Net Income 918 322 1 CC - Constant currencies at EUR/USD = 1.26 February 27, 2008 - Amsterdam 21
Growth Rates Impacted by Movement of EUR/USD Exchange Rate Components of Growth Revenue by Region 3% 1% North 6% Europe America 45% 52% 4% 5% Asia Pacific 3% 1% Currencies Currency Rates Divestments Organic Growth Total Growth Acquisitions Constant February 27, 2008 - Amsterdam 22
Reconciliation Ordinary Net Income/EPS Full Year (€ millions) 2007 2006 Net Income to Shareholders 329 278 Amortization of Intangibles 121 121 Taxation on Amortization (46) (47) Results on Disposals 17 (8) Ordinary Net Income 421 344 Ordinary Diluted EPS 1.38 1.10 Weighted Average # Diluted Shares 305m 321m February 27, 2008 - Amsterdam 23
Consolidated Balance Sheet December 31st (€ millions) 2007 2006 Non-Current Assets 3,995 4,388 Operating Working Capital (644) (663) Non-Operating Working Capital (877) (906) Working Capital (1,521) (1,569) Capital Employed 2,474 2,819 Equity 1,214 1,196 Long Term Debt 986 1,232 Non-Current Liabilities 274 391 Total Financing 2,474 2,819 Net Debt 1,793 2,050 Net Debt/ Equity 1.5 1.7 Net Debt/ Ordinary EBITDA 2.4 3.21 1 Adjusted for divestiture of Education (2.9X pre-adjustment) February 27, 2008 - Amsterdam 24
Free Cash Flow December 31st (€ millions) 2007 2006 ∆% ∆% CC1 EBITDA 747 635 18% 24% Autonomous Movements in Working Capital (18) 9 Financing Charges (108) (126) Paid Corporate Income Tax (106) (17) Other (3) (16) Cash Flow from Operating Activities 512 485 6% 11% Capital Expenditures (125) (93) 34% 42% Dividends received 18 7 Free Cash Flow 4052 399 2% 6% Cash Conversion 91% 99% ¹ CC - Constant currencies at EUR/USD = 1.26 2 €423 million at constant currencies of EUR/USD = 1.26 February 27, 2008 - Amsterdam 25
2007 Cash Flow Sources and Uses Cash Sources: €1,165 million Cash Uses: €1,147 million € 95 € 198 € 193 € 665 € 111 € 645 € 405 Free Cash Flow Education Divestments/ Acquisitions Debt Reduction Dividend Share Buy-back Other February 27, 2008 - Amsterdam 26
Share Buy-back Concluded in December 2007 Returning €645 Million in Value to Shareholders 1st Program 2nd Program 2007 Total Total Number of Shares Purchased 21.9 million 7.9 million 29.8 million Total Consideration Paid €475 million €170 million €645 million Average Gross Purchase Price €21.71/ Share €21.60/ Share €21.68/ Share Management will recommend the cancellation of the shares acquired through the share buy-back programs at the Annual General Shareholders Meeting Returned €1.5 Billion to Shareholders Over Past 5 Years February 27, 2008 - Amsterdam 27
All Acquisitions are Accretive to Ordinary EPS in Year 1 and are Expected to Cover their Cost of Capital within 3-5 Years 2007 Acquisitions Health ProVation Medical Earn-out payments Desert Documents Mortgage Wholesale Segment CFS Banconsumer Services Indirect Lending AppOne Solutions for independent auto dealers and lenders TeamMate Integrated audit productivity software TAL GEE HR and Health & Safety compliance products MCFR (55%) Information Services in Russia LTRE Europea de Derecho Legal data base Spain Annualized revenues of €90 million 2007 revenue contribution of €13 million Wolters Kluwer Total net cash acquisition spending €198 million; including earn-outs of past deals Total consideration on 2007 acquisitions was €180 million February 27, 2008 - Amsterdam 28
Solid Financial Position Working Capital (EUR million) Free Cash Flow (EUR million) 456 393 399 405 351 149 34 30 9 (18) 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Figures prior to 2006 include Education Net Debt (EUR million) Debt Maturity Profile (EUR million) 983 918 2,050 1,900 1,793 1,637 696 1,527 176 32 6 12 18 2007 2008* 2009 2010 2011 2012 Due 2003 2004 2005 2006 2007 Cash & after Derivatives 2012 *2008: includes draw downs on credit facility of €696m, maturing 2011 February 27, 2008 - Amsterdam 29
Looking Forward: Strengthening Financial Position and Improving Financial Flexibility Bilateral private loan agreement Amount: ¥20 billion (approximately €126 million) Term: 30 years Signed: February 26, 2008 Cost of Funds: Attractive rate (6%) Denominated in ¥ (Japanese Yen) - swapped to € (Euro) February 27, 2008 - Amsterdam 30
Springboard: Operational Excellence Update February 27, 2008 - Amsterdam Jack Lynch Member of the Executive Board
Overview What is Springboard? Why now? What are the benefits? February 27, 2008 - Amsterdam 32
The Transformation of Wolters Kluwer has Produced Four Consecutive Years of Improved Top-line Performance Results of Transformation Organic Growth Improvement Plan 4% Profitable top-line growth 3% Four customer facing divisions ROI-based capital allocation 2% Sustained investment in products and technology 1% Operational focus Portfolio 47% electronic 2003 2003 2004 2005 2006 2007 -2% February 27, 2008 - Amsterdam 33
Wolters Kluwer Improved its Operating Performance Through a Number of Scale Leveraging Initiatives Reduced our spend on outside suppliers greater than €30 million by aggregating our purchasing power in North America and Europe. Consolidated our data centers from 39 to 2 in North America with 10% reduction in baseline costs expected in 2008. Reduced our real estate spend greater than €20 million through consolidation and optimization initiatives. + Moved 2,000 FTEs offshore Restructured underperforming businesses, including achieving back-office efficiencies. = Cumulative cost savings of €161M on an annual run rate basis February 27, 2008 - Amsterdam 34
Springboard is the Cornerstone of our Strategy to Institutionalize Operational Excellence Decentralized Consolidated Integrated Design Opportunity Rationalize Diversified Consolidate Holding Company Operating Company February 27, 2008 - Amsterdam 35
The Transformation Plan laid the Foundation for the Next Wave of Value Creation - Our Strategy to Accelerate Profitable Growth Grow Our Capture Leading Key Adjacent Positions Markets Institutionalize Exploit Operational Global Scale Excellence and Scope February 27, 2008 - Amsterdam 36
…and Will Drive the Next Level of Operational Efficiencies for Wolters Kluwer over the Next Four Years Opportunity Multi- Rationalize portfolio of 3,000 applications and Generational save 8-12% of current IT spend through Technology Plan consolidation and simplification Goal: 2011 Run Rate Savings: Content Supply Re-engineer and standardize content Chain manufacturing process to support next generation print and online publishing €50M to Supply €75M Expand global sourcing initiatives to address Management larger portion of €1.3B supplier spend Offshoring Extend the scope of our offshoring initiatives February 27, 2008 - Amsterdam 37
The MGTP Opportunity is to Rationalize the Application Portfolio to Reduce Cost and Improve Business Agility Diverse Portfolio of 3,000 Applications Rationalized Application Business Solution Portfolio Opportunity Development Business Solution Opportunity Development Enablement Application Fixed Operational Enhancements, 8 – 12% Cost Support, Reduction Maintenance Application Fixed Enhancements, Operational Support, Cost Maintenance Non Standard Systems and Processes Standardized Systems and Processes February 27, 2008 - Amsterdam 38
Optimizing Content Supply Chain is Focused on Unlocking the Full Value of our Content Assets Current State Future State Definitions Processes Repositories Products Definition Process Repository Products A A B B C C February 27, 2008 - Amsterdam 39
Online Inventory Storage & Distribution Costs Insignificant Making it Economically Viable to Sell Relatively Low Volume Products to Niche Segments €10.0M Sales Core Market Segments Niche Market Segments €0.5M The Long Tail 1 1 50 51 1,000 Products Ranked by Sales Volume 1 Coined by Chris Anderson in 2004 Wired Magazine Article entitled, “Why the Future of Business is Selling Less of More” February 27, 2008 - Amsterdam 40
Goal: Transfer Best Practices from Wolters Kluwer Businesses to Optimize the Content Supply Chain across the Company Example: Wolters Kluwer Spain Before After Time to Market 45 Days 12 Days New Products 234 440 Organic Growth -3% 8% EBITA Margin 14% 22% February 27, 2008 - Amsterdam 41
Today: 40% of a €1.3 Billion Supplier Spend is Addressed with our Sourcing Programs… Significant savings have been achieved from “low hanging fruit” Net New systems, processes Financial required to access Benefits more difficult categories current desired maturity range maturity range 0 1 2 3 4 5 Strategic and Tactical sourcing Maturity/ Investment … our objective is to expand into new, more difficult categories while locking down gains through new systems and processes February 27, 2008 - Amsterdam 42
Our Goal is to Increase the Number of FTEs Working on our Behalf Offshore by 50% in 2011 India Software Development Total Spending: $ 50M FTE’s: 1,000 Russia/Eastern Content Production Total Spending: $ 10M Europe FTE’s: 600 Software Development Total Spending: $ .2M FTE’s: 15 China Content Production Total Spending: $ 1M FTE’s: 9 North Africa Call Centers for LTRE Malaysia France in Morocco Global Total Content Production Total Spending: $ 2M FTEs $M FTE’s: 99 IT 1,100 50 Content 900 20 Madagascar Pre-press production work For LTRE- France North American Offshore Activities Philippines European Offshore Activities Content Production Total Spending: $ 3M Asia-Pacific Offshore Activities FTE’s: 128 February 27, 2008 - Amsterdam 43
In Summary… Springboard includes 4 Major Initiatives Content Supply Supply Offshoring: Multi-Generational Chain Re- Management Increase Scope of Technology Plan Engineering Program Expansion program Building on a successful business transformation, Springboard is the cornerstone of our strategy to institutionalize operational excellence. By simplifying and standardizing the core systems and processes we use to develop, sell and support our products globally we will create a springboard for accelerating profitable growth. Execution of our plan will generate run rate savings of €50-75M by 2011 February 27, 2008 - Amsterdam 44
Outlook February 27, 2008 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board
2008 Outlook Reflects Continued Enhancement to Shareholder Value Actual Actual Actual Actual Actual Target Key Performance Indicators 2003 2004 2005 2006 2007 2008 Organic Revenue Growth -2% 1% 2% 3% 4% 4% Ordinary EBITA Margin 18% 16% 16% 17% 20% 20% Free Cash Flow €393m €456m €351m €399m €405m ±€400m1 ROIC (after tax) 7% 7% 7% 7% 8% 8% Ordinary diluted EPS €1.18 €1.02 €1.06 €1.10 €1.38 €1.52- €1.571 Note: 2006, 2007, and 2008 figures represent continuing operations and exclude Education 1 Figures stated at constant currencies EUR/USD = 1.37 February 27, 2008 - Amsterdam 46
Divisional Outlook Supports Overall 2008 Guidance Organic Revenue Growth Health 1-3% CFS 3-5% TAL 4-6% LTRE 3-5% Wolters Kluwer 4% February 27, 2008 - Amsterdam 47
Since Wolters Kluwer Embarked on its Transformation, it has Created Significant Shareholder Value Total Shareholder Return 178% From October 31, 2003 to December 31, 2007 112% 90% 72% 61% 56% 56% 42% 39% 39% 32% 32% 28% 5% 3% Re W Jo Re UB AE Pe Gr Mc Do Mo Em La T& Th ol ga hn up ut ed X ar w M Gr om nd F ap te s r er o In Jo aw ad W on de El rs so Pr fo s ne ile se or - re n Kl Hi rm i sa v ie s i y uw ll a r er Note: Share performance including gross dividend reinvestment (with exception of AEX) Source: Bloomberg February 27, 2008 - Amsterdam 48
Accelerating Profitable Growth 1 2 Grow Our Leading Positions Capture Key Adjacent Markets 4 3 Institutionalize Operational Excellence Exploit Global Scale and Scope Enhanced value for customers, shareholders, and employees February 27, 2008 - Amsterdam 49

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Wolters Kluwer 2007 Full-Year Results

  • 1.
    2007 Full-Year Results February 27,2008 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board Boudewijn Beerkens CFO and Member of the Executive Board Jack Lynch Member of the Executive Board
  • 2.
    Forward-looking Statements This presentationcontains 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, 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. February 27, 2008 - Amsterdam 2
  • 3.
    Agenda Accomplishments &Highlights Key Performance Indicators Divisional Operating Performance Financial Performance Springboard: Operational Excellence Update Outlook & Summary Q&A February 27, 2008 - Amsterdam 3
  • 4.
    Our Strategy forAccelerating Profitable Growth 1 2 Grow Our Capture Leading Key Adjacent Positions Markets 4 3 Institutionalize Exploit Operational Global Excellence Scale and Scope February 27, 2008 - Amsterdam 4
  • 5.
    Accomplishments 2007 Delivered on 2007 Key Performance Indicators Organic Revenue Growth Accelerated Ordinary EBITA Margin Accelerated Expanded Electronic Product Offerings Strengthened Leading Positions/ Expanded High-Growth Adjacent Markets Strong Shareholder Returns February 27, 2008 - Amsterdam 5
  • 6.
    Highlights FY 2007 Organic Growth Ordinary EBITA Margin 20% 4% +1% +300 bps 3% 17% 2006 2007 2006 2007 Free Cash Flow Ordinary Diluted EPS €423 €1,48 +6% +35% €399 €1,09 2006 Millions 2007 2006 2007 At c onstant c urrenc ies EUR/ USD 1.26 At c onstant c urrenc ies EUR/ USD 1.26 February 27, 2008 - Amsterdam 6
  • 7.
    Strong Growth: 6%Growth in Constant Currencies and 4% Organic Growth 2007 Revenue: €3,413 million ∆% Legal, Tax Health Full year 2007 ∆% Constant Organic Currencies1 & €761 Growth Regulatory Health 1% 1% Europe €1,249 CFS 6% 5% TAL 14% 6% Corporate LTRE 4% 4% & Financial Services Wolters Kluwer2 6% 4% €522 1 Constant currencies at EUR/USD = 1.26 Tax, 2 Continuing operations Accounting & Legal €881 February 27, 2008 - Amsterdam 7
  • 8.
    Double-digit Growth: 27%Growth in Constant Currencies with 20% Ordinary EBITA Margin 2007 Ordinary EBITA: €667 Million Legal, Tax Health Ordinary ∆% Constant €112 Full year 2007 EBITA & Currencies1 Margin Regulatory Europe Health 2% 15% €253 CFS 35% 28% Corporate & Financial TAL 47% 22% Services LTRE 18% 20% €144 Wolters Kluwer2 27% 20% 1 Constant currencies at EUR/USD = 1.26 Tax, 2 Continuing operations Accounting & Legal €197 Note: Pie chart excludes €39 million in corporate costs February 27, 2008 - Amsterdam 8
  • 9.
    Execution of Strategyhas Yielded Clear Results in Performance Organic Revenue Growth Ordinary EBITA Margin 4% 20% 3% 2% 17% 16% 16% 1% 2004 2005 2006 2007 2004 2005 2006 2007 February 27, 2008 - Amsterdam 9
  • 10.
    Portfolio of WoltersKluwer is Significantly Transformed 2003 Revenue 2007 Revenue Print Online/ Online/ Workflow Tools Print Workflow Tools 31% 38% 55% 47% 14% 15% Services Services February 27, 2008 - Amsterdam 10
  • 11.
    Driven by Double-digitRevenue Growth from Online and Workflow Tools Percent of Wolters Kluwer Revenue from Online/ Work Flow Tools 4-year CAGR 12% 47% Other 31% Electronic 4-year Online CAGR 17% Online 2003 2007 February 27, 2008 - Amsterdam 11
  • 12.
    Limited Cyclical Exposure– Growing Subscription Base with Improving Retention Rates Subscription Revenue as a Revenue Components % of Total Revenue 66% Non- Cyclical 80% 60% Other Training Advertising Cyclical 4% 2% 14% 2003 2007 February 27, 2008 - Amsterdam 12
  • 13.
    Continuing Delivery onCommitments to Enhance Shareholder Value Actual Actual Actual Actual Target Actual Key Performance Indicators 2003 2004 2005 2006 2007 2007 Organic Revenue Growth -2% 1% 2% 3% 4% 4% Ordinary EBITA Margin 18% 16% 16% 17% 19-20% 20% Cash Conversion 109% 126% 106% 99% 95-105% 91% Free Cash Flow €393m €456m €351m €399m ±€425m1 €423m1 ROIC (after tax) 7% 7% 7% 7% ≥WACC2 8% Ordinary diluted EPS €1.18 €1.02 €1.06 €1.10 €1.45- €1.481 €1.501 Note: 2006 and 2007 figures represent continuing operations and exclude Education 1 Figures stated at constant currencies EUR/USD = 1.26 2 WACC equals 8% after Tax February 27, 2008 - Amsterdam 13
  • 14.
    Health Highlights Clinical Solutions Pharma Clinical Solutions – Double-digit growth 8% Solutions 29% Medical Research – Good growth driven by launch Professional & of OvidSP and strong subscription sales Education Medical Pharma Solutions – Double-digit growth in brand 45% Research analytics and managed care products offset by 18% price compression and softening pharma promotional spend Professional & Education – Softening wholesale/ retail ordering as sales shift to online channels Margins were flat to the previous year due largely to investments in new products and data sets Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 761 823 1% 1% 205 232 (1%) (1%) Revenue (USD) 1,044 1,036 298 300 Ordinary EBITA (EUR) 112 120 2% 2% 43 41 15% 15% Ordinary EBITA (USD) 156 152 62 53 Ordinary EBITA Margin 15% 15% 21% 17% 1 CC - Constant currencies at EUR/ USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 14
  • 15.
    CFS Highlights Corporate Legal Services - Strong renewals and Financial new sales in Compliance & Governance. Services 34% Corporate Double-digit growth in UCC, litigation support and Legal Services e-billing solutions 66% Deceleration in M&A and IPO transaction volumes in second half tempered growth Financial Services – Stable banking content, insurance and securities product line growth offset by lower mortgage volume levels Significant margin improvement driven by organic growth and benefit of restructuring programs Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 522 534 6% 5% 126 137 4% 2% Revenue (USD) 714 671 183 176 Ordinary EBITA (EUR) 144 116 35% 34% 34 30 28% 31% Ordinary EBITA (USD) 197 146 49 38 Ordinary EBITA Margin 28% 22% 27% 22% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 15
  • 16.
    TAL Highlights Strong new sales and retention rates of tax and Law & accounting software and workflow tools and new Business Tax and software releases Accounting 41% Small Firm Services group contributed to overall 59% growth Good growth in publishing businesses, particularly legal education and Accounting Research Manager Good growth in enhanced integrated libraries and workflow tools for the legal market Margin improvement driven by Small Firm Services, restructuring of the U.K. business and offshoring and outsourcing initiatives. Full Year Fourth Quarter 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 881 826 14% 6% 228 218 15% 15% Revenue (USD) 1,205 1,035 330 281 Ordinary EBITA (EUR) 197 146 47% 28% 41 27 74% 78% Ordinary EBITA (USD) 269 181 61 35 Ordinary EBITA Margin 22% 18% 18% 12% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 16
  • 17.
    LTRE Highlights SC BEL 3% FR Growth was driven by online offerings gaining 9% 19% momentum, new workflow solutions and software NL products as well as expansion of training and other 18% IT/SP services TLR 27% 6% Italy, Spain, and Central and Eastern Europe GER/CEE delivered very strong growth through innovation 18% and customer focus programs The Netherlands and Belgium delivered good growth as a result of successful restructuring efforts Margin improvement driven by revenue performance, cost-savings initiatives, and the benefits of restructuring programs Full Year Fourth Quarter Millions 2007 2006 ∆% CC1 ∆% OG2 2007 2006 ∆% CC1 ∆% OG2 Revenue (EUR) 1,249 1,194 4% 4% 377 359 5% 5% Ordinary EBITA (EUR) 253 213 18% 17% 105 92 12% 13% Ordinary EBITA Margin 20% 18% 28% 26% 1 CC - Constant currencies at EUR/USD = 1.26 2 OG – Organic Growth February 27, 2008 - Amsterdam 17
  • 18.
    Financials Performance February 27,2008 - Amsterdam Boudewijn Beerkens CFO and Member of the Executive Board
  • 19.
    Financial Highlights FY2007 Organic Growth Ordinary EBITA Margin 20% 4% +1% +300 bps 3% 17% 2006 2007 2006 2007 February 27, 2008 - Amsterdam 19
  • 20.
    Financial Highlights FY2007 Net Income (Continuing Operations) Net Debt/ EBITDA Ratio €330 3.2 1 +18% 25% €279 2.4 Millions 2006 2007 2006 2007 1 2.9 before reclassification of Education to discontinued operations Ordinary Diluted EPS Dividend Recommendation €1,38 +10% €0,64 +25% €0,58 €1,10 2006 2007 2006 2007 February 27, 2008 - Amsterdam 20
  • 21.
    Statement of Profit& Loss Full Year (€ millions) 2007 2006 ∆% ∆% CC1 Revenue 3,413 3,377 1% 6% Ordinary EBITA 667 556 20% 27% Ordinary EBITA Margin (%) 20% 17% Amortization (121) (121) - 7% Financing Results (102) (104) (1%) (2%) Taxation on income (100) (68) 46% 49% Other (14) 16 Net income (Continuing Operations) 330 279 18% 29% Net income (Discontinued Operations) 588 43 Net Income 918 322 1 CC - Constant currencies at EUR/USD = 1.26 February 27, 2008 - Amsterdam 21
  • 22.
    Growth Rates Impactedby Movement of EUR/USD Exchange Rate Components of Growth Revenue by Region 3% 1% North 6% Europe America 45% 52% 4% 5% Asia Pacific 3% 1% Currencies Currency Rates Divestments Organic Growth Total Growth Acquisitions Constant February 27, 2008 - Amsterdam 22
  • 23.
    Reconciliation Ordinary NetIncome/EPS Full Year (€ millions) 2007 2006 Net Income to Shareholders 329 278 Amortization of Intangibles 121 121 Taxation on Amortization (46) (47) Results on Disposals 17 (8) Ordinary Net Income 421 344 Ordinary Diluted EPS 1.38 1.10 Weighted Average # Diluted Shares 305m 321m February 27, 2008 - Amsterdam 23
  • 24.
    Consolidated Balance Sheet December 31st (€ millions) 2007 2006 Non-Current Assets 3,995 4,388 Operating Working Capital (644) (663) Non-Operating Working Capital (877) (906) Working Capital (1,521) (1,569) Capital Employed 2,474 2,819 Equity 1,214 1,196 Long Term Debt 986 1,232 Non-Current Liabilities 274 391 Total Financing 2,474 2,819 Net Debt 1,793 2,050 Net Debt/ Equity 1.5 1.7 Net Debt/ Ordinary EBITDA 2.4 3.21 1 Adjusted for divestiture of Education (2.9X pre-adjustment) February 27, 2008 - Amsterdam 24
  • 25.
    Free Cash Flow December 31st (€ millions) 2007 2006 ∆% ∆% CC1 EBITDA 747 635 18% 24% Autonomous Movements in Working Capital (18) 9 Financing Charges (108) (126) Paid Corporate Income Tax (106) (17) Other (3) (16) Cash Flow from Operating Activities 512 485 6% 11% Capital Expenditures (125) (93) 34% 42% Dividends received 18 7 Free Cash Flow 4052 399 2% 6% Cash Conversion 91% 99% ¹ CC - Constant currencies at EUR/USD = 1.26 2 €423 million at constant currencies of EUR/USD = 1.26 February 27, 2008 - Amsterdam 25
  • 26.
    2007 Cash FlowSources and Uses Cash Sources: €1,165 million Cash Uses: €1,147 million € 95 € 198 € 193 € 665 € 111 € 645 € 405 Free Cash Flow Education Divestments/ Acquisitions Debt Reduction Dividend Share Buy-back Other February 27, 2008 - Amsterdam 26
  • 27.
    Share Buy-back Concludedin December 2007 Returning €645 Million in Value to Shareholders 1st Program 2nd Program 2007 Total Total Number of Shares Purchased 21.9 million 7.9 million 29.8 million Total Consideration Paid €475 million €170 million €645 million Average Gross Purchase Price €21.71/ Share €21.60/ Share €21.68/ Share Management will recommend the cancellation of the shares acquired through the share buy-back programs at the Annual General Shareholders Meeting Returned €1.5 Billion to Shareholders Over Past 5 Years February 27, 2008 - Amsterdam 27
  • 28.
    All Acquisitions areAccretive to Ordinary EPS in Year 1 and are Expected to Cover their Cost of Capital within 3-5 Years 2007 Acquisitions Health ProVation Medical Earn-out payments Desert Documents Mortgage Wholesale Segment CFS Banconsumer Services Indirect Lending AppOne Solutions for independent auto dealers and lenders TeamMate Integrated audit productivity software TAL GEE HR and Health & Safety compliance products MCFR (55%) Information Services in Russia LTRE Europea de Derecho Legal data base Spain Annualized revenues of €90 million 2007 revenue contribution of €13 million Wolters Kluwer Total net cash acquisition spending €198 million; including earn-outs of past deals Total consideration on 2007 acquisitions was €180 million February 27, 2008 - Amsterdam 28
  • 29.
    Solid Financial Position Working Capital (EUR million) Free Cash Flow (EUR million) 456 393 399 405 351 149 34 30 9 (18) 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Figures prior to 2006 include Education Net Debt (EUR million) Debt Maturity Profile (EUR million) 983 918 2,050 1,900 1,793 1,637 696 1,527 176 32 6 12 18 2007 2008* 2009 2010 2011 2012 Due 2003 2004 2005 2006 2007 Cash & after Derivatives 2012 *2008: includes draw downs on credit facility of €696m, maturing 2011 February 27, 2008 - Amsterdam 29
  • 30.
    Looking Forward: StrengtheningFinancial Position and Improving Financial Flexibility Bilateral private loan agreement Amount: ¥20 billion (approximately €126 million) Term: 30 years Signed: February 26, 2008 Cost of Funds: Attractive rate (6%) Denominated in ¥ (Japanese Yen) - swapped to € (Euro) February 27, 2008 - Amsterdam 30
  • 31.
    Springboard: Operational Excellence Update February 27,2008 - Amsterdam Jack Lynch Member of the Executive Board
  • 32.
    Overview What isSpringboard? Why now? What are the benefits? February 27, 2008 - Amsterdam 32
  • 33.
    The Transformation ofWolters Kluwer has Produced Four Consecutive Years of Improved Top-line Performance Results of Transformation Organic Growth Improvement Plan 4% Profitable top-line growth 3% Four customer facing divisions ROI-based capital allocation 2% Sustained investment in products and technology 1% Operational focus Portfolio 47% electronic 2003 2003 2004 2005 2006 2007 -2% February 27, 2008 - Amsterdam 33
  • 34.
    Wolters Kluwer Improvedits Operating Performance Through a Number of Scale Leveraging Initiatives Reduced our spend on outside suppliers greater than €30 million by aggregating our purchasing power in North America and Europe. Consolidated our data centers from 39 to 2 in North America with 10% reduction in baseline costs expected in 2008. Reduced our real estate spend greater than €20 million through consolidation and optimization initiatives. + Moved 2,000 FTEs offshore Restructured underperforming businesses, including achieving back-office efficiencies. = Cumulative cost savings of €161M on an annual run rate basis February 27, 2008 - Amsterdam 34
  • 35.
    Springboard is theCornerstone of our Strategy to Institutionalize Operational Excellence Decentralized Consolidated Integrated Design Opportunity Rationalize Diversified Consolidate Holding Company Operating Company February 27, 2008 - Amsterdam 35
  • 36.
    The Transformation Planlaid the Foundation for the Next Wave of Value Creation - Our Strategy to Accelerate Profitable Growth Grow Our Capture Leading Key Adjacent Positions Markets Institutionalize Exploit Operational Global Scale Excellence and Scope February 27, 2008 - Amsterdam 36
  • 37.
    …and Will Drivethe Next Level of Operational Efficiencies for Wolters Kluwer over the Next Four Years Opportunity Multi- Rationalize portfolio of 3,000 applications and Generational save 8-12% of current IT spend through Technology Plan consolidation and simplification Goal: 2011 Run Rate Savings: Content Supply Re-engineer and standardize content Chain manufacturing process to support next generation print and online publishing €50M to Supply €75M Expand global sourcing initiatives to address Management larger portion of €1.3B supplier spend Offshoring Extend the scope of our offshoring initiatives February 27, 2008 - Amsterdam 37
  • 38.
    The MGTP Opportunityis to Rationalize the Application Portfolio to Reduce Cost and Improve Business Agility Diverse Portfolio of 3,000 Applications Rationalized Application Business Solution Portfolio Opportunity Development Business Solution Opportunity Development Enablement Application Fixed Operational Enhancements, 8 – 12% Cost Support, Reduction Maintenance Application Fixed Enhancements, Operational Support, Cost Maintenance Non Standard Systems and Processes Standardized Systems and Processes February 27, 2008 - Amsterdam 38
  • 39.
    Optimizing Content SupplyChain is Focused on Unlocking the Full Value of our Content Assets Current State Future State Definitions Processes Repositories Products Definition Process Repository Products A A B B C C February 27, 2008 - Amsterdam 39
  • 40.
    Online Inventory Storage& Distribution Costs Insignificant Making it Economically Viable to Sell Relatively Low Volume Products to Niche Segments €10.0M Sales Core Market Segments Niche Market Segments €0.5M The Long Tail 1 1 50 51 1,000 Products Ranked by Sales Volume 1 Coined by Chris Anderson in 2004 Wired Magazine Article entitled, “Why the Future of Business is Selling Less of More” February 27, 2008 - Amsterdam 40
  • 41.
    Goal: Transfer BestPractices from Wolters Kluwer Businesses to Optimize the Content Supply Chain across the Company Example: Wolters Kluwer Spain Before After Time to Market 45 Days 12 Days New Products 234 440 Organic Growth -3% 8% EBITA Margin 14% 22% February 27, 2008 - Amsterdam 41
  • 42.
    Today: 40% ofa €1.3 Billion Supplier Spend is Addressed with our Sourcing Programs… Significant savings have been achieved from “low hanging fruit” Net New systems, processes Financial required to access Benefits more difficult categories current desired maturity range maturity range 0 1 2 3 4 5 Strategic and Tactical sourcing Maturity/ Investment … our objective is to expand into new, more difficult categories while locking down gains through new systems and processes February 27, 2008 - Amsterdam 42
  • 43.
    Our Goal isto Increase the Number of FTEs Working on our Behalf Offshore by 50% in 2011 India Software Development Total Spending: $ 50M FTE’s: 1,000 Russia/Eastern Content Production Total Spending: $ 10M Europe FTE’s: 600 Software Development Total Spending: $ .2M FTE’s: 15 China Content Production Total Spending: $ 1M FTE’s: 9 North Africa Call Centers for LTRE Malaysia France in Morocco Global Total Content Production Total Spending: $ 2M FTEs $M FTE’s: 99 IT 1,100 50 Content 900 20 Madagascar Pre-press production work For LTRE- France North American Offshore Activities Philippines European Offshore Activities Content Production Total Spending: $ 3M Asia-Pacific Offshore Activities FTE’s: 128 February 27, 2008 - Amsterdam 43
  • 44.
    In Summary… Springboard includes 4 Major Initiatives Content Supply Supply Offshoring: Multi-Generational Chain Re- Management Increase Scope of Technology Plan Engineering Program Expansion program Building on a successful business transformation, Springboard is the cornerstone of our strategy to institutionalize operational excellence. By simplifying and standardizing the core systems and processes we use to develop, sell and support our products globally we will create a springboard for accelerating profitable growth. Execution of our plan will generate run rate savings of €50-75M by 2011 February 27, 2008 - Amsterdam 44
  • 45.
    Outlook February 27, 2008- Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board
  • 46.
    2008 Outlook ReflectsContinued Enhancement to Shareholder Value Actual Actual Actual Actual Actual Target Key Performance Indicators 2003 2004 2005 2006 2007 2008 Organic Revenue Growth -2% 1% 2% 3% 4% 4% Ordinary EBITA Margin 18% 16% 16% 17% 20% 20% Free Cash Flow €393m €456m €351m €399m €405m ±€400m1 ROIC (after tax) 7% 7% 7% 7% 8% 8% Ordinary diluted EPS €1.18 €1.02 €1.06 €1.10 €1.38 €1.52- €1.571 Note: 2006, 2007, and 2008 figures represent continuing operations and exclude Education 1 Figures stated at constant currencies EUR/USD = 1.37 February 27, 2008 - Amsterdam 46
  • 47.
    Divisional Outlook SupportsOverall 2008 Guidance Organic Revenue Growth Health 1-3% CFS 3-5% TAL 4-6% LTRE 3-5% Wolters Kluwer 4% February 27, 2008 - Amsterdam 47
  • 48.
    Since Wolters KluwerEmbarked on its Transformation, it has Created Significant Shareholder Value Total Shareholder Return 178% From October 31, 2003 to December 31, 2007 112% 90% 72% 61% 56% 56% 42% 39% 39% 32% 32% 28% 5% 3% Re W Jo Re UB AE Pe Gr Mc Do Mo Em La T& Th ol ga hn up ut ed X ar w M Gr om nd F ap te s r er o In Jo aw ad W on de El rs so Pr fo s ne ile se or - re n Kl Hi rm i sa v ie s i y uw ll a r er Note: Share performance including gross dividend reinvestment (with exception of AEX) Source: Bloomberg February 27, 2008 - Amsterdam 48
  • 49.
    Accelerating Profitable Growth 1 2 Grow Our Leading Positions Capture Key Adjacent Markets 4 3 Institutionalize Operational Excellence Exploit Global Scale and Scope Enhanced value for customers, shareholders, and employees February 27, 2008 - Amsterdam 49