Wolters Kluwer reports 2003 preliminary results in line with outlook

Amsterdam (February 5, 2004) - Wolters Kluwer (Euronext Amsterdam: WKL), a leading multinational information services company, reported today its preliminary un-audited results for the year ended December 31, 2003. The company's results are consistent with the outlook reiterated in October and indicate continued stabilization of the business.

Highlights for 2003 include:*

Benchmark ordinary net income -12% in constant currencies in line with outlook Total revenues 3,352 million; ordinary EBITA 601 million Ordinary EBITA margin of 18% New strategy to invest in growth around leading market positions, restructure the cost base, and reorganize to improve operational and customer focus is firmly in place Cost reductions 79 million; approximately one third structural, including 500 FTE reduction Strong revenue growth in Canada, Italy, Central Europe, Scandinavia and Spain, as well as within Teleroute, Tax Compliance and Professional & Education units Net debt reduced by 29% from 2.7 billion to 1.9 billion Bond buy-back of 1.125 billion and new bond issue of 700 million successfully completed Ordinary EPS of 1.16 Dividend maintained at 0.55 for 2003. 

Nancy McKinstry, Chairman of the Executive Board, commented: "2003 was a year of transition for Wolters Kluwer, during which we began a significant cost reduction program and realignment of the organization for profitable growth. The new strategy announced in October is well underway and proceeding on schedule. Performance for the year was in line with our previous outlook, and we are encouraged by the improvement seen in fourth quarter performance, especially in North America." 
 
Variances in % Revenues
Ordinary EBITA
Benchmark ordinary net income
Organic -2
-7
Acquisitions 2
1
Divestments -5
-7
At constant rates -5
-13
-12
Currency -9
-10
-12
Total (euro terms) -14
-23
-24

* Note: "Ordinary" refers to figures adjusted for exceptional items and where applicable amortization of intangible assets. "Ordinary" figures are non-GAAP compliant financial figures, but are internally regarded as key performance indicators. With the exception of figures in Annex 2, all financial information is presented in accordance with old accounting principles; these principles were applied until December 31, 2002.


Wolters Kluwer's 2003 Cluster Highlights

Legal, Tax & Business Europe

Revenues 1,271 million; ordinary EBITA 215 million; ordinary EBITA margin 17% Organic growth in revenues -1.7%   The strategy in Europe is focused on growing online products and software tools across all core markets and restructuring operations to improve performance. Strong growth was experienced in Central Europe, Italy, Spain, Scandinavia and Teleroute. The competitive position in the Italian legal market was enhanced with the acquisition of CEDAM, a major legal publisher. The expansion of the European Internet Platform continued with the launch of several new products.
  The restructuring plan put in place for Belgium led to stabilized revenues and improved profitability. Order management system issues in the Netherlands have been resolved, though this unit's results were impacted by weak advertising sales and lack of major new legislation. In the UK, restructuring plans are underway. The new European organization has been successfully implemented, and management across the region was strengthened with the appointment of CEO Rolv Eide and other senior managers.

Legal, Tax & Business North America

Revenues $1,123 million; ordinary EBITA $282 million; ordinary EBITA margin 25% Organic growth in revenues -3.6% Revenues 993 million; ordinary EBITA 249 million The strategy to restructure Legal, Tax & Business North America outlined in March 2003 is developing according to plan. This strategy is focused on strengthening number one market positions by delivering integrated content solutions and software suites. Despite challenging economic conditions, good revenue growth was achieved in CCH Legal   Information Services, Tax Compliance and CCH Canada, driven by solid sales of new software solutions. At Aspen, the product line was rationalized to sharpen the focus on legal customers, systems-related issues were fixed and integration with the CCH legal unit began. CCH Legal Information Services extended its leading position in the corporate legal market through the acquisition of TyMetrix, the number one provider of electronic billing services. Stronger year-end renewal performance positioned these units for improved results in 2004. 

 Significant cost savings were achieved to improve operating margin levels to 25% for the full year. Going forward, opportunities for reducing the cost base will focus on moving to shared services for support functions, streamlining technology platforms, consolidating real estate holdings, and leveraging offshore development to control the rise in development spending.

Legal, Tax & Business Asia Pacific

Revenues AUD 117 million; ordinary EBITA AUD 17 million; ordinary EBITA margin 15% Organic growth in revenues 0.3% Revenues 67 million; ordinary EBITA 10 million The Asia Pacific market rebounded in the second half of 2003, contributing to improved revenue and operating income performance over last year. The software group's performance also benefited from improved market conditions, contributing to improved performance over prior year.

Health

Revenues $713 million; ordinary EBITA $117 million; ordinary EBITA margin 16% Organic growth in revenues 0.3% Revenues 630 million; ordinary EBITA 103 million   The Health strategy announced in Fall 2002 is mid-way in its implementation. This strategy is concentrated on driving penetration and usage of the Ovid online platform, strengthening core content businesses and pursuing growth in pharmaceutical markets and clinical tools. 

  While overall performance was below expectations, improvements in two of Health's largest business units are encouraging. The Professional & Education unit achieved solid revenue growth due to the rejuvenation of its core publishing program in nursing and medicine, and the Ovid online platform continued to extend its number one position in the health market with strong international sales. However, the medical journal business was challenged by the loss of a major journal and the weak advertising market. 


Education

Revenues 291 million; ordinary EBITA 56 million; ordinary EBITA margin 19% Organic growth in revenues -3.5% Education's strategy is focused on investing to reinforce its number one position in textbook publishing and improving operating efficiency through shared back office services and consolidation of locations.

Despite challenging market conditions, operating margins improved, led by progress in operating efficiencies in Belgium and the Netherlands. Most operations have installed new senior management. Revenues remain challenged by tight government spending throughout Europe. The acquisition of Digital Spirit, an e-learning company, advanced Education's growth plans in the educational e-learning and services markets. 

Non-core

Revenues 100 million; ordinary EBITA 11 million; ordinary EBITA margin 11% Organic growth in revenues of -4.4% Results from the non-core segment were better than expected due to improvements in operating margins and stabilized revenue performance. Though advertising revenues, which have dropped off since 2002, heavily influence this part of the business, the situation is offset by ongoing restructuring efforts that are already yielding good results.

Corporate

Corporate ordinary EBITA (43) million   Notes to Editors
The former cluster structure within Wolters Kluwer mentioned in this press release was changed to a division structure effective January 1, 2004. The divisions are: Health; Corporate & Financial Services; Tax, Accounting & Legal; Legal, Tax & Regulatory Europe; and Education.
The information in this press release is based on un-audited figures and data for the year 2003 (Annex 1). The financial results for the full year 2003, including the full profit and loss account, balance sheet, cash flow statement and other financial details, will be released on March 8, 2004.
In the 2003 annual accounts, Wolters Kluwer will adopt Dutch accounting guidelines RJ 270,
RJ 271, RJ 340 for the period January 1, 2003 to December 31, 2003. These accounting changes will bring Wolters Kluwer's accounting principles closer to International Financial Reporting Standards (IFRS) and have a slight positive impact on revenues/EBITA/EPS (Annex2).


Forward-looking statement

This announcement might contain forward-looking statements, which may be identified by words such as "expect", "should", "could", "shall" and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what is expected presently. Factors leading thereto may include without limitation general economic conditions, conditions in the capital markets, conditions in the markets in which Wolters Kluwer is engaged, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting Wolters Kluwer's businesses.


Wolters Kluwer

Wolters Kluwer is a leading multinational publisher and information services company. The company's core markets are spread across the health, tax, accounting, corporate/financial, legal/regulatory and education sectors. Wolters Kluwer has annual revenues (2003) in excess of 3.3 billion, employs approximately 19,500 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.

2004 Calendar

2003 Full Year Results 8-Mar-04 Publication of Annual Report 6-Apr-04 Annual Meeting of Shareholders 21-Apr-04 Investor/Analyst Day (CFS Division) 27-Apr-04 Q1 2004 Results 13-May-04 2004 Half Year Results 10-Aug-04 Q3 2004 Results 17-Nov-04 


Contacts:

Investors/Analysts

Oya Yavuz
Vice President, Investor Relations

t:: +31 (0)20 6070 407
ir@wolterskluwer.com


Media


Caroline Wouters
Manager, External Communications

t::+31 (0)20 6070 459
press@wolterskluwer.com


Click here for full press release, including annexes (pdf)