Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — CHEUVREUX Benelux Conference 2005
61 slides from Wolters Kluwer's conference presentation, May 19, 2005
Slide 1: CHEUVREUX Benelux Conference
CHEUVREUX Benelux Conference Boudewijn Beerkens CFO/Member Executive Board 19 May 2005 – London
Slide 2: Wolters Kluwer
Wolters Kluwer Leading multinational publisher and information services company €3.3 billion in revenues (2004) 19 thousand employees in 25 countries Strong financials Market capitalization of approximately €4.5 billion Publicly traded on the Amsterdam stock exchange 75% institutionall
Slide 3: Vision
Vision The Professional’s First Choice Provide information, tools and solutions to help professionals make their most critical decisions effectively and improve their productivity Large and profitable markets with potential to create value for customers Leading and distinct positions in key prof
Slide 4: Strategy: Product Value Progression
Strategy: Product Value Progression Providing smart tools and integrated solutions offering higher retention and margin potential Integrated Solutions Integrated Software End-to-end workflow system Smart Tools Compliance Retention Rate Workflow Tools Integrated Libraries Dynamic Content
Slide 5: Strategy
Strategy 1 Invest in growth around leading positions 2 Reduce costs through structural improvements 3 Reorganize the business to deliver growth CHEUVREUX Benelux Conference 19 May 2005 5
Slide 6: Strategy & Restructuring Impact
Strategy & Restructuring Impact EUR Million 2003 2004 2005E 2006E Total Product 200 200 200 ± 800 development 200 +50 +70 +80 (200 incr. spend over 3 yr period) spend (AR = 220) (AR = 255) (AR = 265) Non-exceptional restructuring - 25 30 10 costs ± 215 Exceptional restructuring 96 44 10 - costs FTE
Slide 7: Five Significant Businesses with Powerful Brands
Five Significant Businesses with Powerful Brands Corporate & Financial Tax, Accounting Legal, Tax & Health Education Services & Legal Regulatory Europe $775 million €309 million $544 million $742 million €1,296 million Pharmacists Banking Tax advisors HR managers Teachers Nurses Insura
Slide 8: 2005 Outlook & Beyond
2005 Outlook & Beyond Key Operational Measures Target 2007 2003 2004 Q105 2005* Onwards* Organic Revenue growth -2% 1% 2% 1-2% 4% Ordinary EBITA margin 18% 16% 14% 15-16% 19-20% Cash conversion 109% 126% 53% 95-105% ± 100% Key Financial Measures Ordinary free cash flow €393mln €456mln €11mln ± €250m
Slide 9: Health
Health CHEUVREUX Benelux Conference 19 May 2005 9
Slide 10: Health: Unique portfolio in growing market
Unique portfolio in growing market Health 2004 revenues: Leading global online medical €623 million; $775 million platform (Ovid) Markets Served include: Largest repository of full text and Hospitals and Libraries, Research bibliographic medical content Organizations, Medical Professional an
Slide 11: Health Results
Health Results Pharma 2004 organic growth of 3.3% Professional & Solutions (2003 = flat) Education 18% 32% Clinical Tools 1.3% in Q105, on track to achieve 7% target of 3-5% for FY Strong growth at Pharma Solutions and Professional & Education Continued good growth in Nursing and Health prof
Slide 12: Health Focus
Health Focus Society Services Service level improvements Improved retention rates Enhance product & service offerings Ovid Content enhancements Platform enhancements Point-of-Care Optimizing relationships with EMR partners Meet demand from EMR vendors asking for POC transactional produ
Slide 13: Corporate & Financial Services (CFS)
Corporate & Financial Services (CFS) CHEUVREUX Benelux Conference 19 May 2005 13
Slide 14: Corporate & Financial Services: Best in class workflow tools
Best in class workflow tools Corporate & Financial Services (CFS) 2004 Revenues: Financial Services; compliance products for €437 million; $544 million financial institutions Corporate Legal Services; representation in Key Brands; Bankers Systems, Inc., CT 50 states and UCC services for Bank
Slide 15: CFS Results
CFS Results 2004 organic growth of 5% Financial Services 4% in Q105, on track to achieve 36% target of 3-5% for FY Strong performance at Corporate Legal Services Corporate Legal Services Financial services saw a particularly 64% strong pick up in the second half of 2004 Change (million) Acqu
Slide 16: CFS Focus
CFS Focus Expand Workflow Solutions Corporate Legal Services Banking – leveraging PCi acquisition Expansion of UDS product line Extend e-billing and Litigation Support Services Provide flexible product & price modules (ASP) Expand sales coverage Continue Expere Rollout Continue move from
Slide 17: Tax, Accounting & Legal (TAL)
Tax, Accounting & Legal (TAL) CHEUVREUX Benelux Conference 19 May 2005 17
Slide 18: Tax Accounting & Legal: Leader in tax and speciality legal
Leader in tax and speciality legal Tax Accounting & Legal (TAL) 2004 Revenues: Leading position in tax research and €596 million; $742 million compliance markets Tax products for research and compliance Customers include 98 of the top 100 US activities of accountants and lawyers accounting f
Slide 19: TAL Results
TAL Results 2004 saw flat organic growth due to deliberate pruning of Legal ($23m) Legal 34% 4% in Q105, on track to achieve target of 2% for FY Tax & Accounting showed good organic growth driven by strong sales Tax & in tax and accounting software in tax Accounting season 66% Savings achiev
Slide 20: TAL Focus
TAL Focus Globalization Versioning products for different market segments Global offering ProSystemsFX Continue adding new products to the PFX office suite Penetrate small-firm market Continue Launch of Integrated Content Libraries Expand specialty Legal libraries Launch integrated Tax l
Slide 21: Legal, Tax & Regulatory Europe (LTRE)
Legal, Tax & Regulatory Europe (LTRE) CHEUVREUX Benelux Conference 19 May 2005 21
Slide 22: Legal, Tax, Regulatory Europe: Significant provider in Europe
Significant provider in Europe Legal, Tax, Regulatory Europe (LTRE) 2004 Revenues: €1,296 million Leading provider of information, software tools and services LTRE operates in 15 countries throughout Europe Deeply rooted local brands and recognized content quality Products target the legal
Slide 23: LTRE Results
LTRE Results SC UK 3% FR 13% 17% 2004 showed improved organic growth on previous years BEL 9% Flat organic growth in Q105; good improvement on last year (-2.3%) IT/SP 16% Restructuring continues in the Netherlands, UK and Belgium NL Market share gains in Italy, France, 21% GER/AUS/CEE TLR 16
Slide 24: LTRE Focus
LTRE Focus Transform Restructuring in the Netherlands, Belgium and acceleration of the UK plan Alignment of resources to improve product development, sales & marketing and linkage between software and services business Centralizing software and on-line platform development, exploring European
Slide 25: Education
Education CHEUVREUX Benelux Conference 19 May 2005 25
Slide 26: Education: Unparalleled market positions
Unparalleled market positions Education 2004 Revenues: €309 million Stable, traditional text book business Operations in the Netherlands, Belgium, Evolving electronic solutions UK, Sweden and Germany Products for primary, secondary schools, as well as vocational and distance Seasonal bus
Slide 27: Education Results
Education Results Germany / Aus Other 15% 8% 2004 organic growth of 1% Negative growth of -5.2% due to UK seasonality of business; on track to 16% achieve 1-2% organic growth for 2005 Netherlands Good performance in the 39% Netherlands, Belgium and Sweden Good control of costs Sweden 22% Cha
Slide 28: Education Focus
Education Focus ICT Expansion Further expand traditional textbook business with ICT components Use of common ICT / development architecture and platforms Adjacent Market Expansion Testing & Assessment Corporate e-learning / digitalspirit.com CHEUVREUX Benelux Conference 19 May 2005 28
Slide 29: Strong Financials
Strong Financials Working Capital (EUR million) Free Cash Flow (EUR million) 456 386 400 393 363 328 149 34 23 -12 1999 2000 2001 2002 2003 2004 -39 1999 2000 2001 2002 2003 2004 -54 Net Debt (EUR million) Debt Maturity Profile (EUR million) 2821 975 2614 2664 2363 1900 687 645 1527 375 236 232 5 19
Slide 30: All 2004 Targets Achieved or Exceeded
All 2004 Targets Achieved or Exceeded Key Operational Measures 2003 Target 2004 Actual 2004 Revenue growth* 0% 0-1% √ 1% Ordinary EBITA margin 18% 14-16% √ 16% (After exceptional items) 15% 13-15% 15% √ Cash conversion 109% 100-110% √ 126% Key Financial Measures Ordinary Free Cash Flow €393mln ≥ €30
Slide 31: Accomplishments
Accomplishments Delivered on all targets Restored top-line growth Cost savings ahead of schedule Reorganization complete Strong renewal performance Momentum Building in 2005 CHEUVREUX Benelux Conference 19 May 2005 31
Slide 32: Outlook
Outlook Continued investments Deliver stronger growth New products Stronger customer relationship Support the integrated business Shared services; Global Platform, SAP, Execute restructuring Off-shoring Datacenter consolidation Health Extend positions in CFS highest return markets
Slide 33: 2005 Outlook & Beyond
2005 Outlook & Beyond Key Operational Measures Target 2007 2003 2004 Q105 2005* Onwards* Organic Revenue growth -2% 1% 2% 1-2% 4% Ordinary EBITA margin 18% 16% 14% 15-16% 19-20% Cash conversion 109% 126% 53% 95-105% ± 100% Key Financial Measures Ordinary free cash flow €393mln €456mln €11mln ± €250m
Slide 34: 2005 Outlook
2005 Outlook Target Lower Free Cash Key Operational Measures 2004 2005* Flow 2005 Non-recurring working capital Organic revenue growth 1% 1-2% improvement of €149 mln in 2004 Ordinary EBITA margin 16% 15-16% Increased CAPEX spending (After exceptional items) 15% 14-15% First coupon payment of
Slide 35: Use of Cash
Use of Cash Invest in growth Reduce Debt Cash Flow Dividend CHEUVREUX Benelux Conference 19 May 2005 35
Slide 36: Summary
Summary Momentum to deliver strong growth New Strategy yielding results on all fronts Strong cost savings Strong financial position Mid-term outlook: 4% organic growth and 19-20% margins Fulfilling the Promise to be… CHEUVREUX Benelux Conference 19 May 2005 36
Slide 37: 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 CHEUVREUX Benelux Conference 19 May 2005 37
Slide 38: Appendix
Appendix 19 May 2005 – London
Slide 39: Q1 2005 Results
Q1 2005 Results 19 May 2005 – London
Slide 40: Highlights Q105
Highlights Q105 Clear momentum on all fronts; in particular organic growth Q105 Key Financials — Organic revenue growth of 2% versus 1% last year — Ordinary EBITA margin of 14% in-line with Q104 — Structural cost savings of €22 million on track to achieve full year target of €80- 90 million — Pr
Slide 41: Health Results Q105
Health Results Q105 Pharma Professional & Solutions Education 18% 26% Organic growth of 1.3%, on track to achieve full year guidance of 3-5% Clinical Tools 8% Significant growth expectations for remaining quarters due to strong Q104 comparables Continued good growth in Nursing and Health profe
Slide 42: CFS Results Q105
CFS Results Q105 Organic growth of 4.1% Financial Good performance at Corporate Legal Services Services (3.4% organic growth) despite 36% strong comparables in Q104 (13%) Financial services had a particularly strong quarter with 5.3% organic Corporate Legal Services growth 64% Recent acquisi
Slide 43: TAL Results Q105
TAL Results Q105 4.2% organic growth in the quarter, with both Tax & Accounting and Legal showing Legal 30% good growth Tax & Accounting enjoys continued growth driven by solid performance during tax season and continued strong new tax and accounting software sales Tax & Accounting Margins rem
Slide 44: LTRE Results Q105
LTRE Results Q105 SC UK 4% FR 19% Flat organic growth; good 13% improvement on last year (-2.3%) BEL 7% Plans fully in place to well manage pruning of products later in the year IT/SP Restructuring progressing well in the 18% Netherlands, UK and Belgium NL 18% Continued strong on-line growth
Slide 45: Education Results Q105
Education Results Q105 Germany / Aus Other 9% 5% Negative growth of -5.2% due to seasonality of business; on track to UK Netherlands achieve 1-2% organic growth for 2005 22% 30% Good performance in Belgium and Sweden Margins remain strong as last year’s restructuring yields savings Sweden 34%
Slide 46: Impact of Restructuring
Impact of Restructuring EUR Million Q1 2004 2004 Q1 2005 2005E Non-exceptional restructuring 3 25 9 30 costs Exceptional restructuring 3 44 3 10 costs FTE 260 724 83 400 reductions Total cost savings 14 70 22 80-90 CHEUVREUX Benelux Conference 19 May 2005 46
Slide 47: Well On-Track to Achieve 2005 Guidance
Well On-Track to Achieve 2005 Guidance Key Operational Measures Actual 2004 Q105 Target 2005* Organic revenue growth 1% 2% 1-2% Ordinary EBITA margin 16% 14% 15-16% Cash conversion 126% 53% 95-105% Key Financial Measures Ordinary free cash flow €456mln €11mln ± €250mln ROIC %** 7% n/a 6-7% Ordinary
Slide 48: 2004 Financials
2004 Financials 19 May 2005 – London
Slide 49: Key Financials
Key Financials Actual Constant Organic Currencies Currencies Growth EUR Million 2004 2003 % % % Revenue 3,261 3,436 (5) (1) 1 Ordinary EBITA 521 610 (15) (10) (6) Ordinary EBITA margin % 16 18 EBITA margin % 15 15 Ordinary Net Income 311 349 (11) (4) Ordinary EPS (fully diluted) €1.04* €1.18 (12) (6
Slide 50: Profit & Loss
2004 2004 Ordinary Profit & Loss EUR Millions Health Revenues 623 EBITA 103 CFS 437 83 EUR Million 2004 2003 TAL 596 139 LTRE 1,296 183 Revenue 3,261 3,436 Education 309 52 Ordinary EBITA 521 610 Corporate (39) Ordinary EBITA margin % 16 18 Total 3,261 521 Exceptional items (44) (96) EBITA 477 514
Slide 51: Profit & Loss (cont.)
Profit & Loss (cont.) EUR Million 2004 2003 Net income 135 (69) Amortization of intangibles 238 423 Taxation on amortization (21) (46) Results on divestments (after tax) (70) (20) Exceptional items (after tax) 29 61 Ordinary Net Income 311 349 Ordinary EPS (fully diluted) €1.04 €1.18 Weighted averag
Slide 52: Consolidated Balance Sheet
Consolidated Balance Sheet EUR Million 2004 2003 Total fixed assets 2,944 3,299 Total current assets 1,852 1,745 Total current liabilities (1,704) (1,353) Working capital 148 392 Capital Employed 3,092 3,691 Significantly Reduced Net Debt Shareholders’ equity 775 861 2821 Long-term liabilities 2,093
Slide 53: Cash Flow from Operating Activities
Cash Flow from Operating Activities EUR Million 2004 2003 Ordinary EBITA 521 610 Depreciation 103 112 Autonomous movements in working capital 149 34 Payments US & NL pension funds (42) - Cash Flow from Operations 731 756 Financing costs (62) (134) Paid corporate income tax (83) (106) Appropriation o
Slide 54: Cash Flow from Investments
Cash Flow from Investments EUR Million 2004 2003 Cash Flow from Operating Activities 534 500 Capital expenditure fixed assets (73) (92) Appropriation acquisition provisions (5) (15) Acquisition spending (56) (97) Divestment of activities (5) 500 Cash Flow Investments (139) 296 Movement in loans (65)
Slide 55: Free Cash Flow
Free Cash Flow EUR Million 2004 2003 Cash flow from operating activities 534 500 Cash flow investments (139) 296 Cash flow financing (111) (676) Net Cash Flow 284 120 Cash and cash equivalents as at Jan. 1 404 293 Exchange differences on cash equivalents (1) (9) Continued Strong Cash and Cash Equiva
Slide 56: Working Capital Development (Organic Trend)
Working Capital Development (Organic Trend) Analysis of contribution (+) absorption of (-) Cash Flow EUR Million 2004 2003 04/03 Inventories 9 17 (8) Trade debtors 70 4 66 Other debtors (3) 11 (14) Strong Working Deferred income 6 19 (13) Capital Management Trade creditors 65 (5) 70 149 Other short-
Slide 57: Acquisitions and Divestments 2004
Acquisitions and Divestments 2004 Acquisitions: — Total acquisition spending €56 million (including mainly earn outs and increased stake in Cedam) — Summation (US), Telesoftware (Spain), Beam (Education), Sian (US) — Total considerations of these four acquisitions is €32 million; annualized revenu
Slide 58: International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS) Net Income Equity (EUR million) (EUR million) 31 Dec. 2004 Dutch GAAP 135 775 Adjustments Goodwill and intangible assets (IFRS 3) 155 155 Pension expense / liabilities (IAS 19) (1) 11 Share option expense (IFRS 2) (3) - Deferred tax (IAS 12) 25 (196
Slide 59: Key Growth Areas
Key Growth Areas Market Growth Division Market Size Key Growth Investments (2004-2006) Clinical tools innovation Health $5.3 bln 2-5% Content expansion International expansion Corporate legal department workflow suite Corporate & Large bank market expansion $1.9 bln 3-5% Financial Services
Slide 60: On Target to Achieve 45% Electronic Revenues
On Target to Achieve 45% Electronic Revenues 45 35 30 31 25 27 17 22 18 17 18 17 16 16 18 20 13 13 10 6 2 1999 2000 2001 2002 2003 2004 2006E Internet Rev enues Other Electronic Rev enues CHEUVREUX Benelux Conference 19 May 2005 60
Slide 61: Divisional Outlook 2005
Divisional Outlook 2005 Division Organic Revenue Growth Health 3-5% Corporate & Financial Services 3-5% Tax, Accounting & Legal 2% Legal, Tax & Regulatory Europe -1%* Education 1-2% Wolters Kluwer 1-2% * Including ~ €20 million pruning CHEUVREUX Benelux Conference 19 May 2005 61