Wolters Kluwer N.V. · EURONEXT:WKL
Wolters Kluwer — FY2008 Earnings Presentation
35 slides from Wolters Kluwer's earnings presentation, Feb 25, 2009
Slide 1: Resilient Performance Full-Year 2008 Results
Resilient Performance Full-Year 2008 Results February 25, 2009 - 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
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 Highlights Key Performance Indicators Divisional Operating Performance Financial Performance Outlook & Summary Q&A Full-Year 2008 Results February 25, 2009 – Amsterdam 3
Slide 4: Highlights Full-Year 2008
Highlights Full-Year 2008 Resilient earnings growth, profit margins, and free cash performance despite weaker market conditions 10% growth in diluted ordinary EPS in constant currencies 20.1% ordinary EBITA margin (60 basis point improvement over 2007) Free cash flow improved 3% to €415 million in c
Slide 5: 2008 Accomplishments
2008 Accomplishments Delivered new and enhanced online and software products supporting organic growth in subscription and other non-cyclical products of 3% Launched next-generation delivery platforms Acquired key strategic assets: MYOB, Addison, IntelliTax and UpToDate Expanded footprint globally w
Slide 6: Key Performance Indicators
Key Performance Indicators Good earnings growth, profit margins, and strong free cash performance despite weaker market conditions Target 2008 2008 2007 Organic Revenue Growth 0% Positive2 4% Ordinary EBITA Margin 20.1% 20% 19.5% €415 ±€400 €405 Free Cash Flow1 million million million ROIC (after ta
Slide 7: Consolidated Revenue
Product Type Consolidated Revenue Books CFS Cyclical 6% 11% Advertising 4% Revenue growth of 3% driven by Subscription & Pharma Promo acquisitions and 9% growth in online Other Non- 3% Cyclical and software solutions 71% Training 2% Solid organic growth in subscription and other non-cyclical pro
Slide 8: Revenue Growth
Revenue Growth Good growth in core subscription and other non-cyclical products lines driven by higher margin electronic products. Economic pressures impacted divisions with higher components of cyclical revenue streams Revenue: Full-Year 2008 €3,374 million Revenue: Full-Year 2008 € millions 2008 2
Slide 9: Innovative Information, Software and Services
Innovative Information, Software and Services Continued growth in higher margin electronic products now comprising 49% of total revenue 2008 Revenue €3,374 million Electronic Revenue as a % of Total 49% 47% 46% Online Print 29% 42% 36% 38% Software Services 20% 15% 2004 2005 2006 2007 2008 Full-Year
Slide 10: Ordinary EBITA
Ordinary EBITA 5% growth in constant currencies driven by higher margin electronic products, improving retention rates, and operating efficiencies Ordinary EBITA: Full-Year 2008 €678 million Health Ordinary EBITA %: Full-Year 2008 € 86 2008 2007 ∆ CC Legal, Tax & Corporate Health 12.5% 14.7% (24%) R
Slide 11: Health Highlights
Health Highlights Clinical Solutions 10% Pharma Solutions Organic revenue decline was driven by reduced 29% wholesaler orders as inventory levels were adjusted, downward pressure on advertising and pharma Professional & promotional revenues due to the weakening economic Education environment and t
Slide 12: Health Revenue
Revenues: Twelve months ended December 31st Health Revenue (€ millions) 2008 2007 ∆% Subscription & other non-cyclical 442 433 2% 1X Items: Revenues were impacted by Books 158 160 (1%) distribution channel shift as wholesalers adjusted inventory levels to reflect changing Advertising & pharma prom
Slide 13: CFS Highlights
CFS Highlights Financial Division revenues declined 2% organically driven by the Services 35% impact of the cycle on transaction volumes, however margins proved resilient Corporate Legal Services Corporate Legal Services declined 3% as corporate 65% formation transactions and UCC lien search vol
Slide 14: CFS Revenue
CFS Revenue Revenues: Twelve months ended December 31st (€ millions) 2008 2007 ∆% Good organic revenue growth in the subscription Subscription & other non-cyclical 310 298 4% business driven by banking analytics, securities Corporate & Legal Services transactions 151 168 (10%) and insurance produc
Slide 15: TAL Highlights
TAL Highlights Strong new sales and retention rates of tax and Law & accounting software and workflow tools Business Tax and 40% Small Firm Services group contributed double-digit Accounting growth 60% Good growth in publishing businesses, particularly legal education, online integrated librar
Slide 16: TAL Revenue
Revenues: Twelve months ended December 31st TAL Revenue (€ millions) 2008 2007 ∆% Subscription & other non-cyclical 730 710 3% Solid organic revenue growth in core subscription business driven by strong Books 98 98 0% performance of software and corporate market Other cyclical (training and consul
Slide 17: LTRE Highlights
Scandinavia LTRE Highlights Belgium 9% 3% France 16% Growth was driven by online offerings gaining momentum, new workflow solutions and software Netherlands 17% products as well as expansion of training and other Italy/ Spain services 28% Teleroute Germany/ Italy, Spain and Central and Eastern E
Slide 18: LTRE Revenue
Revenues: Twelve months ended December 31st LTRE Revenue (€ millions) 2008 2007 ∆% Subscription & other non-cyclical 959 932 3% Strong organic revenue growth in electronic revenue, particularly in Italy, Spain and Central Books 124 127 (2%) and Eastern Europe Advertising 75 78 (4%) Advertising r
Slide 19: Financial Performance
Financial Performance Full-Year 2008 Results February 25, 2009 - Amsterdam Boudewijn Beerkens CFO and Member of the Executive Board
Slide 20: 2008 Highlights
2008 Highlights Resilient earnings growth, profit margins, and free cash performance despite weaker market conditions Ordinary EBITA Margin 1 Ordinary Diluted EPS 20.1% 19.5% +10% € 1.52 € 1.38 +60 bps 2007 2008 2007 2008 1 Dividend Recommendation Free Cash Flow € millions € 415 +2% € 405 € 0.65 € 0
Slide 21: Currency Impact
Currency Impact Growth rates impacted by movement of EUR/USD exchange rate Components of Growth Revenue by Geography Full-Year 2008: €3,374 million Asia Pacific Cyclical 3% North America -1% 3% Europe 52% 48% 45% 48% North 2% Europe America Organic -1% 4% 0% Rest of World Subscription, 1X Items Net
Slide 22: Statement of Profit & Loss
Statement of Profit & Loss Full Year (€ millions) 2008 2007 ∆% ∆% CC1 Revenue 3,374 3,413 (1%) 3% Ordinary EBITA 678 667 2% 5% Ordinary EBITA Margin (%) 20.1% 19.5% Springboard/ acquisition integration costs (51) Amortization (124) (121) 2% 8% Financing Results (119) (102) 17% 21% Taxation on income
Slide 23: Operating Expenses
Operating Expenses Early cost containment measures provided margin support 20.1% 19.5% Early action Headcount reduction 20.5% 21.5% Real estate rationalization 4.9% 4.3% Tight monitoring of discretionary 18.9% 18.5% costs Marketing & sales expenses were in 35.6% 36.2% line with company tar
Slide 24: Investment Levels in Line with Targets
Investment Levels in Line with Targets The company continues to invest in new products and platforms to support future growth Investments as a % of Revenues 9% 8-10% 8% 4-6% 5% 4% 4% 4% 4% 2007 Actual 2008 Actual 2009 Target Operating expenditures Capital expenditures Full-Year 2008 Results February
Slide 25: Reconciliation Ordinary Net Income/ EPS
Reconciliation Ordinary Net Income/ EPS Full year (€ millions) 2008 2007 Net Income (Continuing Operations) 315 330 Minority Interests (2) (1) Net Income to Shareholders 313 329 Amortization of Intangibles 124 121 Taxation on Amortization (50) (46) Results on Disposals (after taxation) 2 17 Exceptio
Slide 26: Consolidated Balance Sheet
Consolidated Balance Sheet December 31st (€ millions) 2008 2007 Non-Current Assets 4,873 3,995 Operating Working Capital (640) (643) Non-Operating Working Capital (459) (878) Working Capital (1,099) (1,521) Capital Employed 3,774 2,474 Equity 1,447 1,214 Long-Term Debt 1,914 986 Non-Current Liabilit
Slide 27: Refinance 2008 – Extended maturity profile
Refinance 2008 – Extended maturity profile Liquidity and headroom secured, and push out maturity profile at attractive cost of funds Debt Maturity Profile (€ Million) – Extending Duration Before Refinance 2008 After Refinance 2008 Perpetual bond 225 30y Private Loans: 2038 157 20y Eurobond: 2028 36
Slide 28: Free Cash Flow
Free Cash Flow December 31st (€ millions) 2008 2007 ∆% ∆% CC1 Ordinary EBITA 678 667 2% 5% Depreciation 78 80 Aut. Movements in Working Capital (19) (18) Financing Charges (94) (108) Paid Corporate Income Tax (91) (106) Appropriation of Provisions (36) (17) Other 5 14 Cash Flow from Operating Activi
Slide 29: 2008 Acquisitions
2008 Acquisitions All acquisitions are accretive to ordinary EPS in year 1 and are expected to cover their cost of capital within 3-5 years Division 2008 Acquisitions Segment Health UpToDate ¨ Clinical data to physicians MYOB ¨ Accountancy software/ services in UK TAL IntelliTax ¨ Tax preparation so
Slide 30: Acquisition Financial Criteria
Acquisition Financial Criteria Strategic acquisitions will meet or exceeded our financial criteria Revenue EPS Year ROIC Acquisitions, Including: CAGR* accretive exceeds in Year 1 WACC DeAgostini, Nolis, Osra, Eon, Best Case, 2005 6% 3 2 Tripoint, Entyre, Amerisearch, Boucher NDC, Heymanns, ProVatio
Slide 31: Springboard
Springboard Program ahead of expectations Program Savings and Costs 2008 2009 2010 2011 Total € million (pre tax) Actual Estimate Estimate Estimate Cost Savings 16 55 100 120 120 Exceptional Program Cost 45 55 45 35 180 Accelerating Springboard Improving Operations Driving Long Term Performance Inve
Slide 32: Solid Financial Position
Solid Financial Position Working Capital (€ million) Free Cash Flow (€ million) 130 407 399 405 395 311 27 19 (18) (19) 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Net Debt (€ million) Debt Maturity Profile (€ million) 1,860 2,254 2,050 1,793 1,527 1,637 667 361 58 11 642* 11 8 2008 2009 2010
Slide 33: 2009 Outlook
2009 Outlook February 25, 2009 - Amsterdam Nancy McKinstry CEO and Chairman of the Executive Board
Slide 34: 2009 Outlook
2009 Outlook Key Performance Indicators 2009 Guidance Ordinary EBITA Margin Broadly In-line with 2008 Free Cash Flow1 ± €350 million Return on Invested Capital (after tax) ≥ 8% Ordinary Diluted EPS1 €1.41 to €1.462 ¹ At constant currencies (EUR/USD = 1.47) 2 2008 EPS in 2007 constant currency (€1.52
Slide 35: Summary
Summary Diversified and resilient portfolio Good progress against strategic goals Solid profitability and cash flow Strong financial position Well positioned for the future Full-Year 2008 Results February 25, 2009 – Amsterdam 35