Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — Investor Day (September 2006)
39 slides from Wolters Kluwer's investor day presentation, Sep 27, 2006
Slide 1: Accelerating Profitable Growth: Strategy Update
Accelerating Profitable Growth Strategy Update September 27, 2006 Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board Forward-Looking Statements This presentation contains forward- forward-looking statements. These statements may be identified by words such as "expect", "should", "coul
Slide 2: Agenda
Agenda Opening Remarks Market Overview Wolters Kluwer Strategic Priorities Divisional Strategies Key Financials Summary and Q&A Accelerating Profitable Growth September 27, 2006 Amsterdam 2 Today marks almost three years since we announced our strategy for transforming Wolters Kluwer T
Slide 3: Wolters Kluwer has delivered on its commitments
Wolters Kluwer has delivered on its commitments 2003-2006 Plan To Deliver Improved Value To Shareholders 9 Invested in growth around leading market positions 9 Reduced costs through structural improvements 9 Reorganized the business around core customers and markets 9 Established clear and transpare
Slide 4: We have restored organic growth across all divisions
We have restored organic growth across all divisions Organic Growth Rates by Division Total Health CFS TAL LTRE Education Wolters Kluwer 4-6% 3-5% 3-4% 2-3% 1-2% 0-1% 0.2% -1.6% -1.7% -2.2% -3.5% -4.5% ‘03 ’06G ‘03 ’06G ‘03 ’06G ‘03 ’06G ‘03 ’06G ‘03 ’06G G = Guidance Accelerating Profitable Growth
Slide 5: Strategic acquisitions have met or exceeded our financial criteria
Strategic acquisitions have met or exceeded our financial criteria 2003-2006 Acquisitions – Financial Returns All acquisitions, Revenue Year ROIC EPS accretive CAGR 2003- exceeds including: in year 1 20061 WACC2 Cedam, TyMetrix, 2003 Digital Spirit 8% 9 4 PCi Corporation, 2004 Summation 23% 9 1 DeAg
Slide 6: These results have been recognized by the market
These results have been recognized by the market Total Shareholder Return From October 31, 2003 to August 31, 2006 81,0% 74,4% 74,0% 71,9% 45,2% 43,9% 42,8% 42,0% 38,9% 38,5% 36,2% 34,3% 10,3% -0,4% W M T& La Re AE Pe Re U G Jo A. Th Em cG BM ru ol ga hn ar ed X om F ut M ap po te ra In so on rd e W
Slide 7: Our strategy for 2007 and beyond will build on our strengths
Our strategy for 2007 and beyond will build on our strengths to accelerate growth 2003-2006 Strategy Wolters Kluwer Today Strengthened Market Positions Leader in core markets and Portfolio Clear momentum around Restructured Cost Base and organic growth Increased Operational Rigor Local foc
Slide 8: Our strategy will result in sustained profitable growth
Our strategy will result in sustained profitable growth Financial Performance Guidance — Beyond 2007 Organic Organic Revenue Growth Beyond Revenue Growth Beyond 2007: 2007: 44 -- 5% 5% Operating Operating Margins Margins Continuous Continuous improvement improvement Ordinary Ordinary Diluted D
Slide 9: WK will explore strategic alternatives for Education
As we embark on our next strategy, WK will explore strategic alternatives for our Education business Education is a well-positioned and efficient business Moving forward, scale is becoming more important for growth as migration to electronic products in form of flexible learning systems accelera
Slide 10: Our core markets are attractive and growing
Our core markets are attractive and growing Core Markets - Projected Annual Growth Rates Estimated Annual Core Market Core Market Size Growth Rate (2006-2009) Health €6-9 bln 3-5% CFS €3-4 bln 4-5% TAL €4-6 bln 4-5% LTRE €6-7 bln 2-3% Education €1-2 bln 2-3% Accelerating Profitable Growth September
Slide 11: Distinct vertical customer markets benefit from deep positions
Wolters Kluwer’s distinct vertical customer markets benefit from deep positions WK Verticals Examples WK Assets Well established brands Unique market footprint Municipal Banks Corporate Lawyers HR Managers Deep customer knowledge CPA Market Physicians POC High degree of proprietary content Technolog
Slide 12: Vertical positions at the core of WK's growth program
… And are at the core of WK’s growth program Global Expansion New New Functionalities Products Core Products and Services Product Enhancements Price Leadership Seed Promising Adjacent Retention Excellence Market Market Segments Opportunities Market Share Gains Sales and Marketing Effective
Slide 13: Our future strategy will build on our leading brands and positions
Our future strategy will build on our leading brands and positions Revenues EBITA Key Vertical Brands Core Markets 2005 (mln) margin • Lippincott Williams & Wilkins • Clinical solutions • Ovid • Medical research Health €656 16% • Adis • Pharma solutions • Source Healthcare Analytics • Professional &
Slide 14: Growing the core is a critical focus
The next phase of our strategy focuses on accelerating WK’s growth 1 2 Grow our Capture Leading Key Positions Adjacencies 4 3 Institutionalize Exploit Operational Global Scale Excellence And Scope Accelerating Profitable Growth September 27, 2006 Amsterdam 26 Growing the core is a critical focus for
Slide 15: Deeper product penetration will extend vertical leadership
Deeper product penetration and coverage of customer needs will extend WK vertical leadership le mpple Exxaam ntiinngg E t u n cccoou Customer && AAc TTaaxx Collaboration Practice Management Customer Needs Acct & Audit Software Acct & Audit Research Tax Prep Software Tax Research Small Firm & Fortune
Slide 16: Enhanced market execution will drive retention and share of spend
Enhanced market execution will drive greater retention and share of customer spend Tax Software Solutions — Retention Rates Percentage of New Sales Revenues By Number of Modules Purchased by Source (Tax Example) 100% 100% 100% ree twwaar Other SSoofft 99% ProSystem 7% teem m 98% Syysst Modules PPrro
Slide 17: We will selectively step beyond our core to adjacent markets
1 2 Grow our Capture Leading Key Positions Adjacencies 4 3 Institutionalize Exploit Operational Global Scale Excellence And Scope Accelerating Profitable Growth September 27, 2006 Amsterdam 32 We will selectively step beyond our core to adjacent markets, driven by our customer needs Strategic Initia
Slide 18: Targeting specific adjacencies that build off leading positions
Across the portfolio, we are targeting specific adjacencies that build off our leading positions Example Market Map: Health (Partial Map for Illustrative Purposes) End-User Segments Data/Content Software Tools/Analytics Services Books, Databases Medical Marketing/Comm. Journals, Pharma, Biotech & Ne
Slide 19: Seed investments in new offerings and business models
Seed investments in new offerings and business models will support WK growth Ovid PPV Revenues & Search Platforms Percent Revenue Growth Logos of platforms through which Ovid is reachable +85% 2003 2004 2005 Note: PubMed is a National Institute of Health-financed catalogue resource for health articl
Slide 20: We will scale capabilities to capture globalization opportunities
We will scale capabilities and investments to capture longer-term globalization opportunities Strategic Initiatives Leverage WK local brands/global scale and know-how to build a larger footprint in emerging markets (e.g., China and India) Focus on those offerings — software and services — that h
Slide 21: Leverage local brands and global scale to build our footprint
Leverage WK local brands, global scale & know-how to build our footprint in new markets WK Globalization Priorities Eastern Europe Use LTRE as the primary Europe expansion platform Build out WK Health – Focus on high-potential expand into key markets (Central and Eastern countries via local Eu
Slide 22: We will continue to exploit global scale
We will continue to exploit global scale as we move further into solutions and services Globalization Benefit of Tools/Services Significant Globalization Opportunity Services Modest Globalization Smart Opportunity Tools Help lines Integrated Consulting Solutions Integrate Electronic Software
Slide 23: Institutionalizing operational excellence
1 2 Grow our Capture Leading Key Positions Adjacencies 4 3 Institutionalize Exploit Operational Global Scale Excellence And Scope Accelerating Profitable Growth September 27, 2006 Amsterdam 44 Institutionalizing operational excellence will further support profitable growth Strategic Initiatives Bu
Slide 24: Deeper customer insight will strengthen leading positions
Deeper customer insight will strengthen our leading positions Customer Insight Program Overview Increases new product success rate Increases value to customer through unique features/ functionality Drives higher retention Accelerating Profitable Growth September 27, 2006 Amsterdam 46 Extending
Slide 25: Agenda: Divisional Strategies
Agenda Opening Remarks Market Overview Wolters Kluwer Strategic Priorities Divisional Strategies Key Financials Summary and Q&A Accelerating Profitable Growth September 27, 2006 Amsterdam 48 Health Health CFS CFS TAL TAL LTR-E LTR-E Education Education Accelerating Profitable Growth Sept
Slide 26: Health market and position
Health market and position Market Size1 and Growth ($ bln) Market Share 2006 WK 11% Reed 13% Elsevier 10.4 10.9 49% 9.4 9.9 49% 7% 6.3 6.5 Thomson 5.3 Others 20% 2003 2004 2005 2006 2007E 2008E 2009E IMS Total = $9.4 bln 1 Excludes non-addressable segments (e.g., Academic & related advertising) and
Slide 27: Our Strategy: Health
Our Strategy: Health Extend proprietary content positions in core Build out Healthcare therapeutic categories Analytics, including consulting services Leverage content into Expand ProVation specialty customer workflows at 1 2 coverage and leverage its critical points of use, ProVation platfo
Slide 28: CFS market and position
CFS market and position CLS Market Share 2006 Others Market Size¹ and Growth ($ bln) WK 29% 39% CLS FS 2.5 2.4 2.1 2.2 6% 2.0 1.9 1.7 West 5% 21% LexisNexis 1.1 1.1 1.2 0.9 0.9 1.0 1.0 CSC Total = $1 bln 2003 2004 2005 2006 2007E 2008E 2009E FS Market Share 2006 FS (Banking Compliance) Market Share
Slide 29: Our Strategy: Corporate and Financial Services
Unique Presence in Financial Services Banking Mortgage Broad Products and Tools In Securities Multiple Verticals Insurance Other Compliance Compliance Solutions Lending Deposit Platforms Leading Platforms & Technology Fair Lending and AML Analytics Research and Computer- Based Training Strong Brands
Slide 30: TAL market and position
Health Health CFS CFS TAL TAL LTR-E LTR-E Education Education Accelerating Profitable Growth September 27, 2006 Amsterdam 58 Legal Market Share¹ (2005) TAL market and position Other 3%;ALM 3% WK L&B BNA 3% 7% Market Size² and Growth ($ Bln) 8% 5% 27% 9.2 Reed 8.4 8.8 Thomson 50% Elsevier 8.1 7.0 7.2
Slide 31: Create the most comprehensive suite of Tax & Accounting tools
Create the most comprehensive suite of Tax & Accounting tools in the industry Advance to next generation .Net Strengthen Strengthen platform Enable portability and transparent interaction with smart ASP solutions Conversion .Net Conversion ProSystem ProSystem Suite Suite New and enhanced produ
Slide 32: Our Strategy: Tax, Accounting and Legal
Our Strategy: Tax, Accounting and Legal Migrate to .Net platform for ProSystem Extend leadership to low- Increase adoption of end CPA markets through online content with targeted products and launch of global Atlas brands platform 1 2 Expand position in SME Deepen and enhance markets Grow
Slide 33: LTR-E market and WK position
LTR-E market and WK position Competitive positions (2006 market shares) Market Size1 (€ bln) WK 20% Reed 7% 7.3 7.1 60% 4% Thomson 6.9 2% Beck 6.6 Others 2% 3% Haufe 2% SDU 2006 2007E 2008E 2009E F. Lefebvre Total = €6.6 bln 1 New addressable markets have been included as of 2006 Accelerating Profit
Slide 34: Education market and position
Health Health CFS CFS TAL TAL LTR-E LTR-E Education Education Accelerating Profitable Growth September 27, 2006 Amsterdam 66 Education market and position Competitive positions (2005 market shares) Market Size1 (€ bln) WK 25% 1.0 1.1 1.0 1.0 1.0 54% 10% Sanoma Others 6% 5% Harcourt 2005 2006 2007E 2
Slide 35: Education strategy: flexible learning system
Education Strategy is focused on growth by providing a full range of products within a flexible learning system How Do We Migrate to an End Game With Integrated Models Phase I Phase 2 Phase 3 Phase 4 Books Books Books Books Integrated ICT Integrated ICT Integrated ICT Current status: (e-learning) (e
Slide 36: 2007 Guidance is reiterated
2007 Guidance is reiterated 2007 Financial Performance Guidance Target Key Operational Measures 2007 1 Organic revenue growth 4% Ordinary EBITA margin 19-20% Cash conversion 95-105% Key Financial Measures Free cash flow €400 mln ROIC %2 WACC3 Ordinary diluted EPS €1.45-1.55 1 At constant currenc
Slide 37: Progressive dividend policy and improved financial performance
Strong performance translates into increased shareholder return through a progressive dividend policy… Progressive Progressive Progressive Progressive Dividend Dividend Policy Policy 2006 2006 5% 5% increase increase of of the the 2006 2006 dividend dividend (€0.58) (€0.58) Accelerating Profit
Slide 38: WK will continue to improve our Capital Efficiency
WK will continue to improve our Capital Efficiency Strong Strong and and Increasing Increasing Free Free Cash Cash Flow Flow Improving Improving Return Return on on Invested Invested Capital Capital Increasing Increasing Returns Returns to to Shareholders Shareholders by by Progressive Progressive D
Slide 39: Accelerating Profitable Growth
Accelerating Profitable Growth Our strategy will strengthen WK’s leadership in key vertical markets Strategy for 2007 and beyond will accelerate profitable growth through four strategic actions: 1. Grow our leading positions 2. Capture key adjacencies 3. Exploit global scale and scope 4. Institu