Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2010 Earnings Presentation
47 slides from Wolters Kluwer's earnings presentation, Feb 23, 2011
Slide 1: 2010 Full Year Results
2010 Full Year Results 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 February 23, 2011
Slide 2: Forward-looking Statements
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 uncerta
Slide 3: Introduction, Divisional Overview, Financial Results, Outlook
Introduction Divisional Overview Financial Results Outlook 2010 Full-Year Results
Slide 4: 2010 Highlights
2010 Highlights Strong performance improvement – Revenue up 4% – Ordinary EBITA margin up 50 basis points – Free Cash Flow up 5% Underlying trends improving; Return to growth in HY2 Online, software and services revenues almost 70% of revenues Global presence significantly expanded 2010 Full
Slide 5: 2010 Guidance Delivered
2010 Guidance Delivered Key Performance Indicators 2010 Guidance 2010 Actual Achieved Ordinary EBITA Margin 20-21% 20.4% Free Cash Flow1 ≥ €400 million €427 million Return on Invested Capital (after tax) ≥ 8% 8.6% Diluted ordinary EPS1 €1.41 – 1.45 € 1.43 ¹ At constant currencies (EUR/USD =
Slide 6: Progress Against Mid-Term Targets
Progress Against Mid-Term Targets Medium-Term Targets 2010 Progress Revenue growth and Double-digit online & software growth 7% Solid performance, affected by global economic conditions Portfolio Online, software & composition services revenue 75% of total 69% Continued adoption of software and wo
Slide 7: Divisional Overview
Introduction Divisional Overview Financial Results Outlook 2010 Full-Year Results
Slide 8: Legal & Regulatory 2010 Highlights
Legal & Regulatory 2010 Highlights Online, Software Adoption and Globalization Strengthened Portfolio Solid retention and improving new sales levels Accelerating growth in Corporate Legal segment; 4% organic growth Expanded global market positions (Germany, Edital) Online and software drives
Slide 9: Legal & Regulatory Innovation & Growth
Legal & Regulatory Innovation & Growth Highlights Results Enhanced Tymetrix Real Rate 4.3 million invoices, $36 billion in spend Report software for legal billing Added 110,000 members in 2010; 40% increase analysis 19% organic growth Positions WK as premier global provider Acquired Edital
Slide 10: Tax & Accounting 2010 Highlights
Tax & Accounting 2010 Highlights Software Adoption and Globalization Driving Growth Strong growth for T&A software globally; 4% Platform enhancement supports significant user growth for IntelliConnect Print publishing decline continues Expanded global footprint in corporate market overall an
Slide 11: Tax & Accounting Innovation & Growth
Tax & Accounting Innovation & Growth Highlights Results Launched next generation SaaS tax software Launched/enhance global platforms Released enhancements to Intelliconnect® (ProSystem fx, IntelliConnect®) Significant customer increase to >200,000 Record 1st year adoption of Prosystem Portal
Slide 12: Health & Pharma Solutions 2010 Highlights
Health & Pharma Solutions 2010 Highlights Strong Focus on Innovation and Globalization Driving Growth Delivered solid improvement in top-line growth; 3% organic Extended leading positions in Clinical Solutions; 16% organic Product innovation supports strong growth in electronic revenues; 14%
Slide 13: Health & Pharma Solutions Innovation & Growth
Health & Pharma Solutions Innovation & Growth Highlights Results Medical Research Increased Titles, Publishers, Footprint OvidSP extends platform, Now used by 13 million individuals launches Multilingual interface Double-digit growth in emerging markets Professional and Education 264 front l
Slide 14: Financial & Compliance Services 2010 Highlights
Financial & Compliance Services 2010 Highlights Increased Legislation, Compliance and Globalization Driving Growth Solid growth despite mixed lending conditions; 4% organic Established strong market positions in high growth segments (ARC Logics) Significant global expansion; 33% sales non-US
Slide 15: Financial & Compliance Service Innovation & Growth
Financial & Compliance Service Innovation & Growth Highlights Results ARC Logics launches integrated Added 250 new global customers offering into Financial Services Serves 1,800 customers/100 countries and Insurance 18% organic growth Positions Wolters Kluwer as Global Risk Solutions Acquisi
Slide 16: Financial Results
Introduction Divisional Overview Financial Results Outlook 2010 Full-Year Results
Slide 17: Financial Highlights
Financial Highlights Positive Momentum Across the Board Organic Growth Electronic Revenue 0% 54% +180 bp +320 bp 52% (3%) (3%) 2009 2010 2009 2010 Ordinary EBITA Margin Free Cash Flow (million) 20.4% €445 +50 bp +€21m €424 19.9% 2009 2010 2009 2010 2010 Full-Year Results 17
Slide 18: Global Divisions
Global Divisions First Full Year of Reporting Under New Divisional Structure Legal & Tax & Accounting Health & Pharma Financial & Regulatory Solutions Compliance Services ‣ Kluwer ‣ CCH ‣ Adis ‣ AppOne ‣ CT Corporation ‣ Addison ‣ Lippincott ‣ AuthenticWeb ‣ Aspen Publishers ‣ A3 Software Williams &
Slide 19: Improved Margin through Product Mix and Springboard
Improved Margin through Product Mix and Springboard 2010 Revenue €3,556 million 2010 EBITA €767 million Excluding Corporate costs of €40 million Health & Health & Financial & Pharma Pharma Compliance Solutions Legal & Solutions Legal & Services 15% Regulatory 23% Regulatory 8% Financial & 42% Compli
Slide 20: Continued Growth in Electronic and Service Subscriptions
Continued Growth in Electronic and Service Subscriptions Revenue Composition Books 10% Subscription & FS transaction 2% other recurring CLS transaction 4% 71% Advertising 3% Pharma Promotion 2% Training & Consulting 5% Other cyclical 3% (€ million) 2010 2009 ∆ ∆ CC ∆ OG Electronic & service subscrip
Slide 21: Growth Momentum Picking-Up
Growth Momentum Picking-Up Growth improvement in HY2 Cyclical business strongest in Q4 Subscription retention rates stable and improving across all divisions Organic growth 5% 3% 3% -1% 2% 2% 2% 1% 1% -6% -3% -1% 2009 FY 2010 HY1 2010 HY2 L&R T&A F&CS H&PS Note: detailed divisional full year g
Slide 22: Cost Declines, M&S Investments Ramping
Cost Declines, M&S Investments Ramping Cost of Revenue General & Admin Cost1 37.3% 22.4% 21.4% 36.2% 36.0% 20.5% 20.5% 35.6% 35.8% 19.7% 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Marketing & Sales Publishing & Editorial 18.9% 5.5% 5.4% 5.2% 4.9% 18.4% 18.5% 18.5% 4.3% 18.3% 2006 2007 2008 20
Slide 23: Springboard Savings Expectations Upgraded
Springboard Savings Expectations Upgraded Multi Generational Technology Plan Program continues to exceed expectations Content Global Shared Services provides additional opportunity Re-engineering – Standardize technology platforms – Consolidate IT infrastructure Supplier – Expand global sourcing
Slide 24: Ordinary Net Income up 4%
Ordinary Net Income up 4% Better Margins Offset Higher Tax & Finance Results Twelve months ended December 31 (€ million) 2010 2009 ∆ ∆ CC1 ∆ OG Revenue 3,556 3,425 4% 0% 0% Ordinary EBITA 727 682 7% 3% 3% Ordinary EBITA margin (%) 20.4% 19.9% Financing results (129) (119) Tax on ordinary income (153
Slide 25: Record Free Cash Flow
Record Free Cash Flow Net Cash from Operating Activities Net Capital Expenditures (€ million) (€ million) 521 546 485 512 510 140 145 382 125 123 93 79 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Autonomous Movements in Working Capital Free Cash Flow (€ million) (€ million) 27 424 44
Slide 26: €100 Million Share Buy-back
€100 Million Share Buy-back Continued Strong Cash Flow Growth Drives Cash Return to Shareholders Announced share buy-back program €100 million, or ~6 million shares1 Finalization expected in 2011 1 at share price close 22 February 2011 2010 Full-Year Results 26
Slide 27: No Refinancing Need Before 2014
No Refinancing Need Before 2014 Liquidity and headroom secured with new 5 year facility and 10 year loan Net-Debt-to-EBITDA ratio improves towards medium-term target Financing Profile Net-Debt-to-EBITDA Ratio 1,436 3.2 3.2 2.9 2.7 2.4 698 503 397 5 2 0 2010 2011 2012 2013 2014 2015 > 2015 2006 2
Slide 28: Key Acquisitions in 2010
Key Acquisitions in 2010 Strengthening key global markets and product lines Division Acquisition Rationale Edital (Jul) Global trademark and brand solutions L&R LexisNexis Germany (Dec) Reinforces strong market position T&A Tax Compliance Software Solutions (Apr) Tax software for corporate tax segme
Slide 29: Acquisitions
Acquisitions Acquisitions Must Meet or Exceed Financial Criteria EPS Year ROIC Acquisitions, Including: accretive exceeds in Year 1 WACC DeAgostini, Nolis, Osra, Eon, Best Case, 2005 Tripoint, Entyre, Amerisearch, Boucher 3 NDC, Heymanns, ProVation, Sage, ATX 2006 Kleinrock, UTS TaxWise 3* MCFR,
Slide 30: Financial Summary
Financial Summary Improving trends continuing across the business Revenue mix and transformation drive profitability Springboard guidance upgraded for final year Proposed share buy-back and dividend increase shareholder returns Strong free cash flow and balance sheet support strong and fle
Slide 31: Outlook
Introduction Divisional Overview Financial Results Outlook 2010 Full-Year Results
Slide 32: 2011 Will Build On Momentum Established in 2010
2011 Will Build On Momentum Established in 2010 Market trends remain favorable – Increase in regulation and complexity – Focus by customers on productivity – Globalization 2010 performance showed good progress against our objectives to accelerate growth Underlying indicators continue to improv
Slide 33: 2011 Guidance
2011 Guidance 2011 Guidance Ordinary EBITA Margin 20.5 - 21% Free Cash Flow1 ≥ €425 million Return on Invested Capital (after tax)1 ≥ 8% Diluted Ordinary EPS1,2 €1.50 – €1.55 Financing result ~ €130 million Benchmark tax rate ~ 26% Diluted weighted average shares ~ 307 million2 1at constant currenci
Slide 34: Medium-Term Outlook Confirmed
Medium-Term Outlook Confirmed Key Performance Indicators Medium-term outlook Double-digit online & software growth Revenue Growth/ Online, software & services revenue 75% Portfolio Composition of total revenues Ordinary EBITA Continuous improvement Free cash flow1 ≥ €400 million per annum Diluted or
Slide 35: Summary
Summary Strong performance in 2010 creates momentum Market conditions and underlying business trends improving in all divisions Continued investment to drive growth from innovation and globalization Share Buy-back and dividend increase shareholder returns Expect 2011 to improve top-line an
Slide 36: Q & A 2010 Full-Year Results
=). Wolters Kluwer 2010 Full-Year Results
Slide 37: Legal & Regulatory Revenue
Legal & Regulatory Revenue By Region By Media format By Product Print Other 40% Cyclical CLS 14% North Transaction America 9% Europe 44% Books Online 56% 10% Recurring 29% Services 67% 21% Software 10% (€ million) 2010 2009 ∆ ∆ CC ∆ OG Electronic & service subscription 640 627 2% (1%) 0% Print subsc
Slide 38: Tax & Accounting Revenue
Tax & Accounting Revenue By Region By Media Format By Product Online Recurring 26% 90% Europe 37% Software North 45% America 56% Other Print Cyclical 17% 5% Services Asia/ROW 12% Books 7% 5% (€ million) 2010 2009 ∆ ∆ CC ∆ OG Electronic & service subscription 581 542 7% 3% 3% Print subscription 96 10
Slide 39: Health & Pharma Solutions Revenue
Health & Pharma Solutions Revenue By Business Unit By Media Format By Product Online Clinical 49% Solutions Pharma Recurring 20% Solutions 63% Other 25% Cyclical 5% Medical Pharma Professional Software Research Promo & Education 5% 20% 9% 35% Print Books Services 40% Ads 18% 6% 5% (€ million) 2010 2
Slide 40: Financial & Compliance Services Revenue
Financial & Compliance Services Revenue By Business Unit By Media Format By Product Other ARC Logics / Cyclical Online 24% Transport Software 37% Services 40% 39% Financial Recurring Services FS Cyclical 59% 61% 17% Print Services 10% 13% (€ million) 2010 2009 ∆ ∆ CC ∆ OG Electronic & service subscr
Slide 41: Currency Impact on Revenue Growth
Currency Impact on Revenue Growth Components of Revenue Growth Geographical Revenue Split North America 52% +4% 4% 0% Asia/RoW Europe 5% 43% +1% -1% 0% Net acquisitions Currency Total Books/Cyclical Print Subs/ Other non-cycl Electr & Service subscr 2010 Full-Year Results 41
Slide 42: Income Statement
Income Statement Twelve months ended December 31 (€ million) 2010 2009 ∆ ∆ CC1 ∆ OG Revenue 3,556 3,425 4% 0% 0% Ordinary EBITA 727 682 7% 3% 3% Ordinary EBITA margin (%) 20.4% 19.9% Exceptional items (71) (80) Amortization of publishing rights (175) (165) Impairment of goodwill and publishing right
Slide 43: Balance Sheet
Balance Sheet (€ million) December 31 2010 December 31 2009 Non-current assets 4,957 4,539 Operating working capital (696) (631) Non-operating working capital (84) (253) Working capital (780) (884) Capital employed 4,177 3,655 Total equity 1,631 1,355 Long-term debt 2,141 1,891 Other non-current lia
Slide 44: Free Cash Flow
Free Cash Flow Twelve months ended December 31 (€ million) 2010 2009 ∆% ∆% CC1 Ordinary EBITA 727 682 7% 3% Depreciation 104 101 Autonomous movements in working capital 4 (7) Financing charges (123) (120) Paid corporate income tax (73) (89) Appropriation of provisions (82) (70) Other (11) 13 Cash fl
Slide 45: Reconciliation: Effective Tax Rate
Reconciliation: Effective Tax Rate 2011 Effective Tax Rate Expected to Increase to 26% (€ million) Dec 31 2010 Dec 31 2009 Reported profit before tax 353 113 Exceptional items 71 80 Amortisation of publishing rights 175 165 Impairments of goodwill and publishing rights - 203 Results on divestments 0
Slide 46: Reconciliation: Net Profit to Ordinary EPS
Reconciliation: Net Profit to Ordinary EPS Twelve months ended December 31 (€ million) 2010 2009 Net Profit 287 110 Non-controlling interests 1 8 Net profit to equity holders 288 118 Amortization of publishing rights1 172 164 Impairment of publishing rights and Goodwill1 - 194 Taxation on amortizati
Slide 47: Historical Financial Data (unaudited)
Historical Financial Data (unaudited) (€ million, unless otherwise stated) 2010 2009 2008 Legal & Regulatory Revenue 1,511 1,518 1,629 Ordinary EBITA 326 315 359 Organic growth (2%) (6%) 0% Margin 21.6% 20.8% 22.0% Tax & Accounting Revenue 922 886 801 Ordinary EBITA 262 243 217 Organic growth 1% 1%