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Strong organic growth in Asia: Malaysia, Singapore and Hong Kong ... support growth and entry into new business areas that fit strategic requirements ...

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wolters kluwer full year results 2000 rob pieterse chairman of the executive board
Wolters Kluwer

Full Year Results 2000

Rob Pieterse, Chairman of the Executive Board

Analysts & Investors, March/April 2001

highlights
HIGHLIGHTS
  • Results on target in an eventful year
  • Successful new product development: EUR 228 million Internet sales
  • More focus on combining content with software & services
  • Cluster structure implemented: leveraging assets, people and products
  • Focus on creating conditions for sustainable double-digit growth
  • Portfolio review
  • Outlook for 2001: Ordinary Net Profit before Amortization of Goodwill up approximately 5%

Focus on Growing Differently

summary figures 2000
SUMMARY FIGURES 2000
  • Double-digit sales growth, up 19% (+12% @ constant rates)
    • Organic sales growth at 5%, in line with last year
    • Almost fivefold increase of profitable Internet sales
    • Healthy flow of acquisitions, increasingly focused on software and service companies
  • EBITA growth +7% (-2% @ constant rates)
    • Additional (Internet) product development investment: EUR 47 million
    • Reorganization provisions: EUR 60 million
  • Excluding these items EBITA +16% (+7% @ constant rates)
    • All clusters showed double-digit growth, except LTB Europe
    • LTB Europe strongly improved in 2nd half
  • Ordinary net income before amortization of goodwill in line with forecast, at EUR 412 million (1999: EUR 410 million)
breakdown of growth
BREAKDOWN OF GROWTH

Sales

EBITA

2000

1999

2000

1999*

Organic

5%

5%

0%

6%

Reorganization Provisions

Internet

--

--

--

--

(4%)

(5%)

(5%)

(1%)

Sub-total

Acquisitions

5%

8%

5%

9%

(9%)

8%

0%

9%

Divestments

(1%)

(4%)

(1%)

(1%)

At constant rates

12%

10%

(2%)

8%

Currency

7%

2%

9%

2%

Total

19%

12%

7%

10%

* 1999 Restated for book profit on trade books divestment

successful acquisition program
SUCCESSFUL ACQUISITION PROGRAM
  • 37 transactions: Annualized sales EUR 211 million
  • Stronger focus on software tools: More than one third of acquisitions are software tool companies
  • High growth properties: Generally software companies have high organic growth; margins at least in line with Wolters Kluwer average
  • Numerous affordable opportunities: Large pool of small and medium sized companies with strategic fit; multiples in line with traditional prices

Increasingly High Growth Software Tool Companies

creating conditions for sustainable double digit growth
CREATING CONDITIONS FOR SUSTAINABLE DOUBLE-DIGIT GROWTH
  • Successful new product development: Earlier investments paying off; EUR 228 million of profitable Internet sales
  • Investment stepped up: Additional (Internet) product development investment in 2000 of EUR 47 million; will more than double to around EUR 100 million in 2001
  • New managerial talentAppointment of significant number of (new) entrepreneurial, execution focused managers
  • Reorganizations: Significant number of operations in LTB Europe and Education being reorganized to improve efficiency, quality and competitive power
  • Traditional media strong footholdTraditional media formats remain strong performers; good base for leveraging content with software and services

Existing Base Stepping Stone for Extension of Business

strategic foundations five business principles
STRATEGIC FOUNDATIONS: FIVE BUSINESS PRINCIPLES
  • Portfolio review: Reassessment at all levels of the company’s portfolio, with a view to directing resources towards the best growth opportunities
  • ‘Smart’ information tools: Investing in integration of content with software and services
  • Fostering entrepreneurship: Creating the conditions and culture for entrepreneurial approach fuelling future growth
  • Operational excellence: Quality improvement in the broadest sense
  • Leveraging scale: Capitalizing on the company’s worldwide scale
portfolio review
PORTFOLIO REVIEW
  • Significant, sustainable organic growth potential
  • Characteristics:- B-to-B- Focus on regulatory/compliance need- Need-to-have- Workflow related
  • Size and scope:- Potential to achieve #1 or #2 position- Possibility to leverage internationally - Scale: ability to standardize

Results of Review Expected During Course of 2001

legal tax business europe hy2 improvement on restructuring measures
LEGAL, TAX & BUSINESS EUROPE: HY2 Improvement on Restructuring Measures
  • Strong performances in France and Italy, and at Teleroute.com and JobNews.nl
  • Results ten Hagen & Stam (NL) showed strong recovery in HY2 to break-even
  • Reorganization charge (EUR 34 million) and additional (Internet) product development spending (EUR 18 million) impact on EBITA
  • CEO operational as of 1 January 2001, portfolio review under way
  • Reorganizations announced/started in Netherlands, Belgium, Spain, and UK aimed at improving efficiency, quality and competitive power

Priority 2001:Focus Resources on Growth Areas

legal tax business north america new product success strong growth internet
LEGAL, TAX & BUSINESS NORTH AMERICA: New Product Success; Strong Growth Internet
  • Strong organic growth at LIS and Aspen Publishers
  • Acquisition Bankers Systems (1999) performed above expectation
  • Tax Research Network achieved great market acceptance
  • LoisLaw acquired to further develop segment of small & medium sized legal firms
  • Additional (Internet) product development investment: EUR 12 million

Priority 2001: Extend Leading Market Position into

Software Tools and Services

legal tax business asia pacific strong efficiency improvement
LEGAL, TAX & BUSINESS ASIA PACIFIC: Strong Efficiency Improvement
  • Improved cost control and efficiency drives margin enhancement
  • Strong organic growth in Asia: Malaysia, Singapore and Hong Kong
  • Acquisition of (stakes in) workflow software companies: MAUS, EBC, LawNow

Priority 2001: Further Expansion into Asia

international health science strong sales growth reported
INTERNATIONAL HEALTH & SCIENCE: Strong Sales Growth Reported
  • Strong organic sales growth at Adis, Ovid Technologies, Facts & Comparisons
  • Acquisition of Springhouse creates leading position in US nursing market
  • Kluwer Academic Publishers shows healthy organic sales growth
  • EBITA impacted by additional (Internet) product development spending of EUR 13 million

Priority 2001: Acceleration of Electronic Delivery

of Content and Software Tools

education good progress cluster integration
EDUCATION: Good Progress Cluster Integration
  • Strong performance in Netherlands, Belgium and Hungary
  • No. 2 position in UK established with acquisition of Thomas Nelson
  • Reorganization Germany progressing, further reorganizations planned, all aimed at improving competitive strength and efficiency of operations

Priority 2001: Expand E-learning Activities

outlook 2001 confident to achieve 5 increase benchmark profit almost recession proof
OUTLOOK 2001: Confident to Achieve ± 5% Increase Benchmark Profit; Almost Recession Proof
  • Additional investment EUR 100 million:Fully expensed additional (Internet) product development investment will more than double to EUR 100 million
  • Benchmark profit up approximately 5%Ordinary net income before amortization of goodwill to increase approximately 5% @ constant currency
  • Growth in 2nd halfGrowth weighted towards second half of 2001 due to phasing effect of additional (Internet) product development investments
  • Book profit from divestmentSubstantial book profit to be realized from the anticipated divestment of remaining Professional Training companies
medium term targets
MEDIUM TERM TARGETS
  • Tools & ServicesExtension of leading positions proprietary content towards complementary productivity tools and services in existing markets, in line with customer demand
  • Expand market shareLeveraging current positions in growing markets to expand product line and market share
  • Entry new business areasPursuance of acquisitions that support growth and entry into new business areas that fit strategic requirements
  • Operational excellenceIncrease focus on operational excellence
  • EntrepreneurshipFostering entrepreneurship and controlled risk taking
  • InternetCompletion additional (Internet) product development program
  • RevitalizationThroughout organization, including reorganizations in Europe
summary
SUMMARY
  • Results on target in an eventful year
  • Successful new product development: EUR 228 million Internet sales
  • More focus on combining content with software & services
  • Cluster structure implemented: leveraging assets, people and products
  • Focus on creating conditions for sustainable double-digit growth
  • Portfolio review
  • Outlook for 2001: Ordinary Net Profit before Amortization of Goodwill up approximately 5%

Focus on Growing Differently

characteristics of business
CHARACTERISTICS OF BUSINESS
  • Growth orientedDouble-digit sales growth in each of past five years; sales tripled since 1994.
  • Geographic diversificationBusiness is geographically balanced with activities in three continents.
  • Local play, global leverageOften local information markets served by local operating companies, yet capitalizing on global scale.
  • Focus on professionalsClearly defined portfolio, fully focused on professional customer groups.
  • Need-To-KnowThe company has a strong base of proprietary and copyrighted content and tools (approx. 75% of sales) that are crucial (need-to-know) for professionals in their work.
  • Strong subscription baseMore than 50% of sales is subscription based (prepaid), and we have established a loyal customer base
  • Well-established brandsWe own some of the oldest and longest established, and most respected brands in our markets that represent core values such as authority, quality, reliability and trust.
  • Recession proofStrong subscription base, need-to-have services, low dependency on advertising
smart information tools
‘SMART’ INFORMATION TOOLS
  • Focus investment on smart information tools:Leverage content with software and services
    • Smart: Adding intelligence; comments, indexing, linking, customization, software functionality
    • Information: Content and knowledge about a specific field (tax, medicine, law etc.) is embedded in all products and services
    • Tools: ‘Something regarded as necessary to the carrying out of one\'s occupation or profession’; essential

Extend Leading Content Positions into

Software Tools and Services

acquisitions
ACQUISITIONS
  • Shift towards software
  • Approximately 1/3 of acquisitions in 2000 were software tool companies, such as: KnowledgePoint, Atres Software, Sistemi, FDS Tax Point , A-plus Software
portfolio breakdown strong growth electronic sales
PORTFOLIO BREAKDOWN: Strong Growth Electronic Sales

Overview Internet sales EUR m % of cluster

LTB Europe 46 3.5%

LTB North America 109 9.9%

International Health and Science 66 8.7%

Education 72.1%

228 6.2%

working capital development
WORKING CAPITAL DEVELOPMENT

Analysis of contribution to (or absorption of) cash flow

leveraging key proprietary assets in areas of content software and services intersection
LEVERAGING KEY PROPRIETARY ASSETS IN AREAS OF CONTENT, SOFTWARE, AND SERVICES & INTERSECTION

Software

Tax software, e.g. KlubasDecisions Support Systems, e.g. Clineguide

Online Consulting

InKnowvation, Medrevu.com

Content

Services

Software

Software & Compliance Services

Tax-forum, Drugfacts customized

Transaction Databases

FDS Advance, licensing of drugfiles, forms

slide37
INTERNATIONAL HEALTH & SCIENCE:Well Positioned in All Segments and Ahead of Competitors in Providing Tertiary Material

High

  • Ovid private databases
  • SCP/Oracle
  • pharma desktop
  • clineanswers
  • medrevu.com
  • drugfacts.com
  • my nursingcenter.com
  • Stedmans.com
  • ADIS databases
  • Ovid On Call
  • Ovid/ SMS
  • Ovid/medweaver
  • LWW/Medcases
  • LWW Oncology.com
  • Addition of hyperlinks
  • Integration of workflow tools
  • Libraries of integrated content

Tertiary

Material

  • Addition of indexes
  • Commentaries
  • Expert analysis
  • Authored periodicals
  • Domain sites (eg LWWMedicine)
  • E-Genesis
  • Crossref
  • Ovid medline
  • more than 300 3rd party medical journals represented
  • Ovid
  • KluwerOnLine
  • LWWOnLine
  • E-facts
  • Reprints.com
  • more than 1,000 proprietary journals
  • catalog of over 40,000 books

Value

Added

Secondary

Material

The collective body of journal articles/books/database entries/reviews/notes/images/video clips/charts/sounds; all linked together by topic maps and thesauri (in development)/toc/key words

  • Public Domain Information
  • Content for basic research

Primary Source

Material

Low

slide38

LEGAL,TAX & BUSINESS EUROPE:Well Positioned in All Segments and Ahead of Competitors in Providing Tertiary Material

High

  • Atres (Spain)
  • [email protected] (Belgium)
  • Tutto Lavoro Windows (Italy)
  • Kluwer Plaza’s (Netherlands)
  • AOK-line (Germany)
  • Lamyline (France)
  • Fd-centre.net (UK)
  • Addition of hyperlinks
  • Integration of workflow tools
  • Libraries of integrated content

Tertiary

Material

  • Addition of indexes
  • Commentaries
  • Expert analysis
  • Authored periodicals

Value

Added

  • Reference Book for Employers (UK)
  • Fiscal Tax Compliance (Belgium)
  • Droit de l’Environnement (France)
  • Lohnbüro (Germany)
  • Kluwer Fiscal Guide
  • La Legge (Italy)
  • Nederlands juristenblad (Netherlands)
  • El Diario La Ley (Spain)
  • Cremers (Netherlands)

Secondary

Material

  • Public Domain Information
  • Content for basic research
  • Kluwer law text books (Netherlands)
  • Base de Datos Legislacion (Spain)
  • Juridisque Cour de Cassation (France)
  • Employment Case Law Index (UK)
  • Lex (PL)
  • Convenios Colectivos (Spain)

Primary Source

Material

Low

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