Wolters Kluwer

1
Wolters Kluwer

• DELIVERING VALUE FROM LEADING POSITIONS

• Nancy McKinstry - Chairman Executive Board
• December 9, 2003 UBS Annual Media Week
  Conference, New York

2
Agenda

• Overview of Wolters Kluwer
• Review of Strategy
• Division Profiles
• Measuring Performance and Financials
• Summary

3
Our Vision
The Professionals First Choice Provide
information, tools and solutions to help
professionals make their most critical
decisionseffectively and improve their
productivity

• Large and profitable markets with potential to
  create value for customers
• Leading and distinct positions in key
  professional segments
• Emerging customer needs and technologies create
  opportunities to build new products and services
• Build on proven capabilities in content
  development, technology and customer service

4
Portfolio Of Five Significant Businesses With
Powerful Brands
Corporate Financial Services
Health
Tax, Accounting Legal(US Asia Pacific)
Education
Legal, Tax Regulatory Europe
5
Key Growth Areas Health, Corporate Financial
Services
Division
Market Size
Market Growth (2004-2006)
Key Growth Investments
Health
5.3 bln
2-5

• Clinical tools innovation
• Content expansion
• International expansion

Corporate and Financial Services
1.1 bln
3-5

• Corporate legal department workflow suite
• Large bank market expansion
• Patriot Act compliance and fraud management
• Insurance and securities workflow tools

Tax, Accounting Legal (US Asia Pacific)
2.9 bln
2-3

• Integrated content products
• New content and forms platform
• Tax compliance and practice management suite

Legal, Tax Regulatory Europe
4.1 bln
2-3

• European Internet Platform / On-line products
• Forms, services, workflow tools

Education
1.4 bln
1-3

• Additional textbook positions
• School services

Sources Company financials, analyst reports, WK
analysis
6
Leading Market Positions
Wolters Kluwer's Market Position
New Five Division Structure
Total Revenues 3,895m (2002)
Note ProRata revenues new divisions not
including divested non-core 193m Market share
does not include LTB Asia Pacific
Sources Company financials, analyst reports,
Wolters Kluwer analysis
7
Agenda

• Overview of Wolters Kluwer
• Review of Strategy
• Division Profiles
• Measuring Performance and Financials
• Summary

8
Overview
3-Year Plan To Deliver Improved Value To
Shareholders

• Invest in growth around leading market positions
• Reduce costs through structural improvements to
  deliver growth and improve manageability
• Reorganize the business to deliver growth
• Establish clear and transparent financial targets
  tied to shareholder value
• Maintain dividend at 0.55 per share for 2003
• Reduce debt position through sizeable bond buy
  back

9
Our Strategy
1
Invest in growth around leading positions
2
Reduce costs through structural improvements
3
Reorganize the business to deliver growth
10
Invest In Growth Key Actions
Manage Portfolio In Line With Growth Opportunities
Strengthen and Expand Customer Relationships
Deliver End-To-End Solutions
Invest In Online Growth and Migration
Pursue Selected Acquisitions
ROIC is the Key Financial Measure of All Actions
11
Manage Portfolio In Line With Growth Opportunities
Wolters Kluwers Key Sources of Growth
Tax, Accounting Legal (North America Asia
Pacific)
Legal, Tax and Regulatory Europe
Moderate Growth
Prune Product Line or Divest 125-150 million
with limited profit potential
12
Tax Compliance An Example Of Growth
13
Strengthen And Expand Customer Relationships
Example Ovid
Workflow Integration
MS Office Research Pane
HP Medical Desktop
Pay Per View Access
Ovid_at_Hand
Peer Review Tracking Software
Article Pre-publication
LinkSolver
Society Membership Module
Portal Toolkit
Paperless Workflow
SkolarMD_at_Ovid
Society Portal Creation
OvidResearcher
Value Added ProductsContent Creators
Value Added ProductsResearchers
14
Deliver End-to-End Solutions
Growth Area
Professional/ Other Education
Research/ Reference
Workflow Productivity
Business/Practice Management
Medi-Span, e-prescribing, PDA products,
SkolarMD_at_Ovid, Clineguide, Medical Communications
Point-of-care Systems, Pharma Databases,
Business Intelligence
Text and Reference, SkolarMD_at_Ovid, Other CME
LWW Text and Reference, LWW and Adis Journals,
OVID, Medi-Span, Facts Comparisons
Health
Expere, CCH Wall Street, Actimize, hCue,
Representation, Corporate and UCC compliance
services, ARTA Lending, ARTA Deposit, eForms, IRA
Center, Patriot Act Compliance
BSI Compliance Training, Learn_at_CT, CLE Accredited
Seminars
Primary and secondary content in corporate
securities, banking, insurance and trade
regulations
Corporate Financial Services
Tax compliance systems and forms and systems,
paperless audit tool
Tax compliance, time and billing, web site
building and hosting, Client Relate
Aspen Legal and Paralegal Education, CCH
Learning Center
Primary and secondary legal, tax , accounting,
audit health and human resources content
Tax, Accounting Legal
Forms, Compliance Expert Software, Workflow
Tools, Consulting Services (e.g., Croner) and
Teleroute
Practice Management Software (primarily Legal
and Tax)
Training, Seminars
Primary and Secondary Content on print,
electronic and on-line media
Legal, Tax, Regulatory Europe
Curriculum-based Publishing, Distance
Learning
General school services rent-a-teacher, risk
assessment, teacher training, school management
products
Testing/ assessment ? quality assurance, ICT
components, Learning Management Systems,
corporate e-learning,
Education
15
Invest in Electronic Growth and Migration

• Wolters Kluwer has in recent years invested
  significantly in online products and electronic
  compliance tools
• Internet and other Electronic revenues growing
  rapidly
• Represent 30 of current total revenues
• Management projects to reach 45 of total
  revenues by 2006

16
Accelerate Investments in Growth by 200m...
...to a Total Level of 800m Over the Next 3
Years

• All divisions investing to enhance core products
  and build new products to support customer demand
  for tools and solutions as well as changes in
  law, medicine and education
• Investments focused on Health and Corporate
  Financial Services divisions
• Incorporates investments communicated previously
  for Europe and North America

17
Our Strategy
1
Invest in growth around leading positions
2
Reduce costs through structural improvements
3
Reorganize the business to deliver growth
18
Reduce Costs Through Structural Improvements
Key Actions
Develop shared services for Finance, HR and some
Technology functions
Consolidate real estate
Rationalize back office functions within
operating companies and divisions
Standardize and consolidate technology
platforms, data centers and increase use of
off-shore development and IT outsourcing
Total FTE Reductions from 2003 to 2006 1600 FTEs
( 8)
19
Cost Savings Over Three Years Will Be 240 Million
Division
Selective Shared Services
Real Estate Consolidation
Back Office and System Rationalization
IT Rationalization

• Restructuring Costs 03-06
• mln

• Cost Savings03-06
• mln

Health
?
?
?
35
40
Corporate Financial Services
?
?
?
45
55
Tax, Accounting Legal
?
?
?
?
40
50
Tax, Legal Regulatory Europe
?
?
?
?
80
80
Education
?
?
?
15
15
TOTAL
215
240
Shared services initiatives may cause
divisional differences
20
Impact of Restructuring 2003-2006
2003
2004
2005
2006
TOTAL
RestructuringCosts ( mln)
100
80
25
10
215
FTEReductions
500
500
400
200
1600
Total Cost Savings ( mln)
20
40
80
100
240
Beyond 2006, annualized cost savings of about
100 million
Of which 150 mln will be charged as
exceptional items
21
Our Strategy
1
Invest in growth around leading positions
2
Reduce costs through structural improvements
3
Reorganize the business to deliver growth
22
Reorganize The Business To Deliver Growth

• Organize business into five divisions, which
  become primary operating units
• Organize into customer driven businesses with
  distinct growth opportunities
• Drive integration of operating units
• Simplify businesses through consolidation of
  functions, elimination of management layers and
  combined locations
• Provide day to day management
• Shift in Corporate Governance
• Divisions report to Chairman of Executive Board
• Formation of Executive Committee
• Greater operational role for corporate office
• Strengthen corporate HR, Technology and Strategic
  Planning

23
Organisation Structure
Chairman Nancy McKinstry
Health Christopher Ainsley
Tax, Accounting Legal (US Asia Pacific)
Corporate Financial Services Christopher
Cartwright
Education Harry Sterk
Legal, Tax Regulatory Europe Rolv Eide
Shared Services North America
Shared Services Europe

• Create two divisions within LTBNA
• Merge Asia Pacific into US Tax, Accounting
  Legal division
• Create shared services in North America and in
  Europe

Asia Pacific will report to Jean-Marc
Detailleur in 2004
24
What Will Be Different
Going Forward
Past

• Growth by investing in leading market positions,
  guided by ROIC

• Acquisitions cornerstone of strategy

• Integrated, customer focused divisions, managed
  with operational and financial rigor

• Fragmented, decentralized managed business

• Alignment of investments around leading market
  positions

• Investments applied broadly across many
  opportunities

• Six Key Performance Measures linked to
  shareholder value

• Multiple performance measures for corporate,
  cluster and operating units

25
Agenda

• Overview of Wolters Kluwer
• Review of Strategy
• Division Profiles
• Measuring Performance and Financials
• Summary

26
Health - Strong Share In WK Market Segments
Market Share Market 5.3 bln
WK Highlights

• Leading global online medical platform
• Three of the top ten titles in all critical
  specialties in medical and nursing
• Largest repository of full text and bibliographic
  medical content
• Key publishing partner for more than 60 top
  medical societies

Reed 17
Other 59
Thomson 9
WK 13
McGraw Hill 1
Pearson 1
Source Company financials, analyst reports,
Outsell, Verispen, Pharmaceutical Executive, WK
information, WK analysis
27
Strong Market Share In Corporate Financial
Services
Corporate Legal Services Market Share Addressable
market 743 mln
WK Highlights

• Corporate
• Representation leader since 1892
• Registered agent to 200K businesses
• Representing 80 of Fortune 1000
• CT is the law firms preferred provider
• Largest compliance services provider to the
  National Law Journal top 250
• Financial
• Limited direct competition in banking compliance
• 1 position in community banks and mortgage
  segments
• Aggressively pursuing regional/national segments

CSC 24
Legal Information Services 40
Regional Players 36
Financial Compliance Services Market
Share Addressable market 324 mln()
1 position in the community banks, credit unions
and mortgage lenders segment
Others 33
BSI 46
Includes GulfPak, CSI, CUNA Mutual, Greatland
Harland 21

Excludes national bank market where BSI has
share of lt3, securities and insurance
Sources Annual Report of the Jurisdictions,
Representation Data from Delaware, Lieberman
Research Group, Hase Shannen Research Find/SVP,
TowerGroup, Hoovers, DB, Celente, Company
financials, analyst reports, WK information
28
WK Is 1 In Tax
US Tax Market Share Addressable Market 1,080
mln
WK Highlights
Other 22
WK 32

• Leading position in tax research and compliance
  markets
• Top Tax Compliance Product - 1 in 5 out of 10
  offerings
• 94 of the top 100 US accounting firms are CCH
  and/or tax compliance customers
• 1 in Securities law and other speciality areas

BNA 5
Intuit 17
Thomson 24
US Legal Research Market Share Addressable
Market 1,542 mln
ASPEN/ CCH Legal 19
West 44
Reed 19
BNA 8
Other 10
Excludes accounting market, Asia Pacific and
Canada Includes specialized legal content and
law school market
Source Company Reports, YE Company Reportgs,
MSDW, UBS Warburg, Lehman Brothers, WK Analysis
29
A Clear Leader In Europe
Highlights
WK LTR Europe Market Position
NL
F
UK
B
I
G
S
CE
SC

• Leading provider of information, software tools
  and services for European tax and accounting,
  legal and regulatory markets
• Balanced national presence
• Deeply rooted local brands and recognized content
  quality
• 1 or 2 player in almost every core market and
  geography
• Strong penetration and market shares

Legal
1
2
1
2
4
2
1
1
Tax
1
3
2
1
1
4
1
1
3
HR
1
1
1
1
1
3
1
4
5
EHS
3
2
1
1
2
3
1
5
2
Public/Social
1
1
1
2
1
1
1
2
Trans.
1
1
Environment, Health SafetySource Company
Reports, DB estimates, Analyst Reports, MSDW, WK
information and analysis
30
WK Is The Leader In European Education
Market Size ( 1.4 bln)
Market Attractiveness and Share Position

• Attractiveness
• Stable, traditional text book business
• Market-driven by multi-local content needs
• Evolving electronic solutions
• Attractive margins and stable cash flows cycle
  improvement in next 3 years
• Share
• 1 in the Netherlands, Sweden, Belgium
• 3 in the U.K.
• 1 in Germany, in vocational strengthening
  presence in primary

Austria 3
Belgium 5
Netherlands 26
Sweden 20
Germany 25
U.K. 21
Source Company Reports, DB estimates, Analyst
Reports, MSDW, WK information and analysis
31
Agenda

• Overview of Wolters Kluwer
• Review of Strategy
• Division Profiles
• Measuring Performance and Financials
• Summary

32
Strategy Will Increase Shareholder Value
Target 2004
2007 onwards
Key Operational Measures
Revenue growth
0-1
3-4
EBITA margin After exceptional items
14-15 13-14
19-20
Cash conversion
85
85-90
Key Financial Measures
150-200 mln
Free cash flow
gt 300 mln
ROIC
Moving towards WACC
Above WACC
0.99
EPS
gt 1.40
WACC is currently 8 after tax
33
Executive Compensation Tied To Shareholder
Interests

• Modify Short Term Incentive Plan
• Measures aligned to Key Performance Measures
  (KPMs) (e.g. ROIC, Personnel costs as percentage
  of sales)
• Top 220 managers
• Create New Long Term Incentive Plan
• Replaces existing stock option program
• Total Shareholder Return (TSR) and Return On
  Invested Capital (ROIC) are key performance
  measures of new plan
• Performance shares earned over 3 years
• Top 80 executives

AGM approval needed in April for Executive
Board compensation
34
Prudent Balance Sheet Management

• 1. Reduce Debt - Tender Offer for
• 6.125 Bonds due 2005 and 5.50 Bonds due 2006
• 1.000 Convertible Bonds 2001 due 2006
• 2. Extend Debt Majurity - Euro denominated bond
  issue
• Benchmark Euro offering - 10 year
• Rationale
• Reduce re-financing risk in 2005 and 2006
• Smooth the maturity profile and improve duration
• Efficiently utilize existing cash position
• Current low interest rate environment and strong,
  stable markets

Proactively address the redemption obligations of
2005/2006 and efficiently utilise cash
35
Transaction Summary

• Tender offers straight bonds and convertible
• Success rate on the straight bond tender approx.
  70 and the convertible tender 30
• We significantly reduced the debt redemption in
  2005/2006 with approx. EUR 1.1 bln

• New bond issue
• With the successful issue of EUR 700 mln 10.1
  year notes due Jan. 2014, we prudently termed
  out our debt, significantly increasing our
  duration

36
Outcome

• Tender Face/nominal value
• Senior bond05 550 mln Tender, 69 buy
  380 mln
• Senior bond06 750 mln Tender, 71 buy
  536 mln
• Convertible 06 700 mln Tender, 30 buy
  210 mln
• Total buy back approx. 1,125 mln

Sources New senior bond 700 mln Surplus
cash 425 mln Total approx.
1,125 mln
37
Agenda

• Overview of Wolters Kluwer
• Review of Strategy
• Division Profiles
• Measuring Performance and Financials
• Summary

38
Our Strategy Will Deliver Value To Shareholders

• Invest in growth around leading market positions
• Reduce costs through structural improvements to
  fund growth and increase flexibility
• Reorganize the business to deliver growth by
  getting closer to our markets and customers
• Manage the business in a fundamentally different
  way
• Operational focus and rigor
• Clear financial targets focused on ROIC
• Tighter alignment of management and shareholder
  interests
• Optimize financial structure and working capital

Now is the time to put this strategy in place.
We have the people and processes in place to
make this happen. We are determined to succeed.
39
The Professionals First Choice
40
Appendix
41
EBITA Margin Development 2003-2004
2003
2004
Underlying Business
17
16-17
EBITA MarginIncluding Impact of Additional
Product Development Spend
14-15
Impact of Restructuring
14
13-14
Effect of one-off cost savings in 2003
42
Wolters Kluwer
2002 Revenues (3,895m)
2002 EBITA (777m) (2)
(1)
Legal Tax Business 63
Legal Tax Business 68
(1) Non-core includes KAP, Ten, Hagen Stam,
ISBW (2) Including corporate costs (excluding
814m) and before exceptional items
43
Definitions KPMs

• Revenue growthThe outcome of total (recognized)
  revenue divided by the revenue of the previous
  period
• EBITA marginEarnings before exceptional items,
  interest, tax, and amortization divided by
  revenue
• Cash conversionCash flow from operations less
  net expenditure fixed assets / EBITA before
  exceptional items
• Free cash flowCash flow from operating
  activities minus net expenditure in fixed assets
  and the release/appropriation of the acquisition
  provisions
• ROIC (Return on Invested Capital)Full year EBITA
  before exceptional items and after tax, divided
  by average invested capital adjusted for
  cumulative goodwill amortization and goodwill
  charged to equity
• Adjusted EPSEarnings (benchmark net income)
  divided by the fully diluted weighted average
  number of shares