Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — H1 2008 Earnings Presentation
32 slides from Wolters Kluwer's earnings presentation, Jul 30, 2008
Slide 1: Half-Year Results 2008
Half-Year Results 2008 July 30, 2008 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board Boudewijn Beerkens CFO and Member of the Executive Board
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: Agenda
Agenda Introduction Highlights Key Performance Indicators Divisional Operating Performance Financial Performance Outlook & Summary Q&A Half-Year 2008 Results July 30, 2008 – Amsterdam 3
Slide 4: The Professional's First Choice
The Professional’s First Choice Global information services company focused on professionals HEALTH CORPORATE & FINANCIAL SERVICES (CFS) Wolters Kluwer Health is the leading global provider Wolters Kluwer Corporate & Financial Services has a of information and business intelligence for leading, comp
Slide 5: Leading positions in the markets served
The Professional’s First Choice Leading positions in the markets served Corporate & Tax, Legal, Tax & Health Financial Accounting & Regulatory Services Legal Europe Health Tax Accounting Banking Securities Legal Legal Education Corporate Public Half-Year 2008 Results July 30, 2008 – Amsterdam 5
Slide 6: Diversified and Defensive Portfolio
Diversified and Defensive Portfolio Good visibility with stable performance Revenue by Geography Revenue by Type Half-Year 2008: €1,608 Million Half-Year 2008: €1,608 million Non- North Cyclical Europe 81% America 47% 50% Other Cyclical 13% Asia Pacific 3% Training 2% Advertising 4% Half-Year 2008 R
Slide 7: Our Strategy for Accelerating Profitable Growth
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 Half-Year 2008 Results July 30, 2008 – Amsterdam 7
Slide 8: Highlights Half-Year 2008
Highlights Half-Year 2008 Positive earnings growth, profit margins, and cash flow performance despite weaker market conditions 20% diluted ordinary EPS growth1 4% Revenue growth1 (1% organic growth) 8% Electronic revenue growth1 Resilient profit margin despite weaker market conditions Solid free cas
Slide 9: Revenue Growth
Revenue Growth Good growth in core subscription base and higher margin electronic products Revenue: Six Months Ended June 2008 - €1,608 million Revenue: Six Months Ended June 30 € millions 2008 2007 ∆ CC ∆ OG Legal, Tax Health €305 Health 305 354 (2%) (2%) & Regulatory Corporate CFS 236 268 1% 0% Eu
Slide 10: Innovative Information, Software, and Services
Innovative Information, Software, and Services Continued growth in higher margin electronic products now comprising 50% of total revenue Half-Year 2008 Revenue Electronic Revenue as a % €1,608 Million of Total Full Year Half Year 50% 48% 34% 46% 47% 50% Print 42% Online/ 38% Workflow Tools 16% Servi
Slide 11: Ordinary EBITA
Ordinary EBITA Growth in higher margin electronic products, improving retention rates, and operating efficiencies Ordinary EBITA: Six Months Ended June 2008 - €288 million Health € 14 Ordinary EBITA %: Six Months Ended June 30 Corporate € millions 2008 2007 ∆ CC ∆ OG Legal, Tax & Financial Health 4.
Slide 12: Key Performance Indicators
Key Performance Indicators Strong earnings growth, solid profit margins, and good cash flow performance, despite weaker market conditions Half Year Full Year Group Key Performance Indicators Target 2008 2007 2008 2007 Organic Revenue Growth 1% 3% 3% 4% Ordinary EBITA Margin 17.9% 18.1% 20% 19.5% €40
Slide 13: Health Highlights
Health Highlights Medical Research: Strong Clinical Solutions growth driven by Ovid 9% Pharma subscription renewals and Solutions new products 32% Clinical Solutions: Good Professional & Education growth driven by new 37% sales of ProVation Medical Medical and Medi-Span Research Pharma Solutio
Slide 14: CFS Highlights
CFS Highlights Corporate Legal Services: Financial — Good results in representation. Services — Lower volumes in Corporate 34% transactions associated Legal with M&A and IPOs Services 66% Financial Services: — Solid growth in analytics, fraud, securities and insurance products. — Reduced lending
Slide 15: TAL Highlights
TAL Highlights Tax and Accounting: — Strong new software sales and improved retention Law & — Double-digit growth at Business Small Firm Services, 36% contributed by all Tax and business lines Accounting — Good growth in Canada 64% and Asia Pacific Law & Business: — First-half revenue comparable
Slide 16: LTRE Highlights
LTRE Highlights Double-digit organic BEL SC FR revenue growth of 9% 3% 17% electronic products drives these products to 46% of NL total revenue (2007: 43%) 17% IT/SP Improving retention rates TLR 28% and new sales efforts 6% GER/CEE Strong growth continued in 20% Spain, Italy, Belgium, and Cen
Slide 17: Financial Performance
Financial Performance July 30, 2008 - Amsterdam Boudewijn Beerkens CFO and Member of the Executive Board
Slide 18: Highlights Half-Year 2008
Highlights Half-Year 2008 Diluted Ordinary EPS1 Free Cash Flow1 € 0.68 € 114 € 114 Millions € 0.56 +20% Stable 2007 2008 2007 2008 Ordinary EBITA Margin Net Debt/ EBITDA Ratio2 18% 18% 2.0 2.5 Maintained On Target 2007 2008 2007 2008 1At constant currencies EUR/USD 1.37 – Free Cash Flow in € million
Slide 19: Half-Year 2008 Revenue Growth
Half-Year 2008 Revenue Growth Good growth from core subscription base Subscription Non- Subscription Revenue Half-Year 2008 Revenue Revenue €1,608 Million 67% of total 33% of total revenue revenue 2% growth in 5% growth in constant currencies constant currencies Electronic: Flat Continue
Slide 20: Revenue Growth: Impact of weakening U.S. dollar
Revenue Growth Impact of weakening U.S. dollar Components of Growth Revenue by Geography Half Year 2008 €1,608 Million 3% 4% North Europe America 47% 1% 50% Acquisitions/ Currencies Currency Organic Growth Growth Divestments Constant Total Rates Asia Pacific 3% (8%) (4%) Half-Year 2008 Results July
Slide 21: Statement of Profit & Loss
Statement of Profit & Loss Six months ended June 30 (€ millions) 2008 2007 ∆ ∆ CC Revenue 1,608 1,677 (4%) 4% Ordinary EBITA 288 304 (5%) 4% Ordinary EBITA Margin (%) 17.9% 18.1% Amortization (56) (62) (10%) (2%) Financing Results (49) (55) (11%) (8%) Taxation on income (39) (44) (10%) (7%) Other 0
Slide 22: Reconciliation Ordinary Net Income/EPS
Reconciliation Ordinary Net Income/EPS Six Months ended June 30 (€ millions) 2008 2007 Net Income to Shareholders 144 154 Amortization of Intangibles 56 62 Taxation on Amortization (21) (23) Results on Disposals (1) (12) Ordinary Net Income 178 181 Weighted Average # Diluted Shares 287 million 312 m
Slide 23: Consolidated Balance Sheet
Consolidated Balance Sheet June 30, December € millions 2008 31, 2007 Non-Current Assets 3,865 3,995 Operating Working Capital (526) (644) Non-Operating Working Capital (94) (877) Working Capital (620) (1,521) Capital Employed 3,245 2,474 Equity 1,164 1,214 Long Term Debt 1,819 986 Non-Current Liabi
Slide 24: Free Cash Flow
Free Cash Flow Six months ended June 30 (€ millions) 2008 2007 ∆ ∆ CC EBITDA 326 343 (5%) 4% Autonomous Movements in Working Capital (61) (51) Financing Charges (67) (86) Paid Corporate Income Tax (29) (43) Other 5 (2) Cash Flow from Operating Activities 174 161 8% 20% Capital Expenditures (69) (50)
Slide 25: Half-Year 2008 Cash Flow Sources and Uses
Half-Year 2008 Cash Flow Sources and Uses Improved company’s liquidity and headroom and extending its debt maturity profile Cash Sources: Cash Uses: 30 Year private loan agreements €1,009 million €975 million Amount: ¥20 billion € 750 (approximately €126 million) € 91 Term: 30 years € 27 Signe
Slide 26: Solid Financial Position
Solid Financial Position Net Debt/ EBITDA Free Cash Flow (EUR million) 2.9 407 399 405 ±400 2.6 2.5 2.5 311 2.4 2004 2005 2006 2007 2008 HY 2004 2005 2006 2007 2008 2008 Guidance at constant currencies EUR/ USD 1.37 Guidance Net Debt (EUR million) Debt Maturity Profile (EUR million) 1,777 2,050 1,79
Slide 27: Outlook
Outlook July 30, 2008 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board
Slide 28: Revenue Phasing
Revenue Phasing Revenue growth is traditionally second half weighted Organic Growth Phasing: 2007 10% 9% 9% 8% 7% 7% 6% 6% 6% 5% 5% 5% 4% 4% 4% 3% 3% 3% 3% 2% 2% 1% 1% 1% 0% 0% Health Corporate & Tax, Accounting & Legal, Tax & Total Wolters Financial Services Legal Regulatory Europe Kluwer 1st Half
Slide 29: Updated Outlook: tightening of organic growth ranges
Updated Outlook Good visibility allows the tightening of organic growth ranges Organic Revenue Growth Health 1-2% Corporate & Financial Services 2-3% Tax, Accounting & Legal 4-5% Legal, Tax & Regulatory Europe 3-4% Wolters Kluwer 3% Half-Year 2008 Results July 30, 2008 – Amsterdam 29
Slide 30: Updated Outlook: organic revenue growth adjusted to 3%
Updated Outlook Organic revenue growth outlook adjusted to 3%, reiterate all other key performance indicators Actual Actual Actual Actual Actual Target Key Performance Indicators 2003 2004 2005 2006 2007 2008 Organic Revenue Growth -2% 1% 2% 3% 4% 3% Ordinary EBITA Margin 18% 16% 16% 17% 20% 20% ±€4
Slide 31: Summary
Summary Diversified and defensive portfolio 80% of revenue is non-cyclical Strong electronic revenue growth Improving retention rates Strong profitability Solid foundation for the future Half-Year 2008 Results July 30, 2008 – Amsterdam 31
Slide 32: The Professional's First Choice
The Professional’s First Choice Provide information, tools, and solutions to help professionals make their most critical decisions effectively and improve their productivity Half-Year 2008 Results July 30, 2008 – Amsterdam 32