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|
Double-digit growth of sales, up 19% (12% at constant rates); organic sales growth at 5% |
|
Operating income (EBITA), before Internet and reorganizations, up 16% (+7% at constant rates) |
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EBITA after impact additional (Internet) product development investment (EUR 47 million) and reorganization provisions (EUR 60 million) up 7% (-2% at constant rates) |
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Additional (Internet) product development program (EUR 250 million over three years) on schedule |
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Internet sales boosted to EUR 228 million (1999: EUR 48 million) |
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Acquisitions: 37 transactions, increasingly high growth software companies |
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Ordinary net income before amortization of goodwill in line with forecast: slightly above 1999 level at EUR 412 million |
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Outlook 2001: ordinary net income before amortization of goodwill approximately 5% higher than the level realized in 2000
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|
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|
|
|
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|
|
EUR million
|
|
|
2000
|
|
|
1999 1)
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
3,664
|
|
|
3,081
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Internet sales
|
|
|
228
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITA
|
|
|
789
|
|
|
735
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
EBITA margin
|
|
|
21.5%
|
|
|
23.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary profit before tax and amortization of goodwill
|
|
|
611
|
|
|
589
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Ordinary net income before amortization of goodwill
|
|
|
412
|
|
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (before amortization of goodwill)
|
|
|
1.47
|
|
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees (average FTEs)
|
|
|
19,009
|
|
|
17,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1) The 1999 figures have been restated to make them comparable with the figures of 2000. Last year, results on divestments were presented as part of our operating income (EBITA). With effect from 2000, results on divestments are presented as a separate item, not included in operating income. The reason for this change is to improve the insight into the structural profitability of Wolters Kluwer's business. The 1999 figures are restated for this change. As a result, the 1999 EBITA now amounts to EUR 735 million, compared with EUR 781 million reported previously.
Rob Pieterse, Chairman of the Executive Board of Wolters Kluwer, about 2000:
'Most of our businesses have performed very well, with double-digit sales and operating income growth, especially our star performer Legal, Tax & Business North America. Internet sales have been boosted to almost a quarter of a billion euros and are profitable. This clearly shows that earlier product development investments are paying off. The results in Europe improved substantially in the second half of the year, but do not yet meet our standards. We have created significant provisions in 2000 for reorganizations to bring Europe in good shape again. We focus more on internally generated sales growth, without neglecting acquisition growth. The revitalization effort now taking place will make the company more robust and better able to face the future. By focusing more strongly on the opportunities presented by workflow tools and software built around our content, we expect to enhance the growth potential of our existing business.
We have reinforced the necessary change in approach by taking action in a number of areas. An internal portfolio review is being executed in our most important clusters in Europe and North America. This review is aimed at identifying those areas, which can achieve sustainable high growth and show good profitability.
Because we are almost recession proof, I am confident that Wolters Kluwer in 2001 will be able to deliver an ordinary net income before amortization of goodwill that is approximately 5% higher than the level realized in 2000.'
Highlights 2000
Double-digit sales growth, up 19% (12% at constant rates).
Sales reached EUR 3,664 million in 2000 which was an increase of 19% compared to 1999. Organic sales growth remained unchanged at 5% (1999: 5%), largely due to limited organic growth in Europe in the first half of the year.
Double-digit growth of EBITA before additional (Internet) product development and reorganization provisions.
All clusters showed double-digit growth of EBITA (before taking into account (Internet) product development spending and reorganization provisions), except Legal, Tax & Business Europe. However, additional (Internet) product development (EUR 47 million) and provisions for reorganizations in Legal, Tax & Business Europe and Education (EUR 60 million) resulted in total EBITA growth of 7% (-2% at constant rates).
Additional (Internet) product development program of EUR 250 million to drive future growth on schedule.
In March 2000, we announced a three-year additional investment program of EUR 250 million committed to the execution of new product development programs, often related to Internet-based information tools and services. In 2000, the first part, some EUR 47 million, was invested, with the aim of creating conditions for future growth.
Internet sales boosted to EUR 228 million.
The year 2000 showed the first signs that previous investments in new product development are paying off. The year ended with almost a fivefold increase of total Internet sales (to EUR 228 million). More important perhaps, is the fact that the Internet sales are returning profits at least in line with the Wolters Kluwer average.
Successful acquisition program.
We successfully completed 37 transactions with total annualized sales of EUR 211 million for a combined price tag of EUR 458 million. More than a third of the acquisitions in 2000 were software companies, active in the fields of tax, accounting, human resources and health.
Ordinary net income before amortization of goodwill: slightly above 1999 level.
Ordinary net income before amortization of goodwill ended at EUR 412 million, slightly above the 1999 level of EUR 410 million. This was in line with expectations as profit growth was reinvested in new product development in order to create the basis for sustainable double-digit growth.
Group Financials
Sales in the year 2000 grew by nearly 19% to EUR 3,664 million (+12% at constant rates). Operating income before amortization of goodwill (EBITA) increased more than 7% from EUR 735 million to EUR 789 million. Excluding the additional (Internet) product development spending (EUR 47 million) and reorganization provisions, EBITA increased by 16% to EUR 896 million (up 7% at constant rates). Largely as a result of this additional spending and the reorganization provision of EUR 60 million, the EBITA margin fell from 23.9% in 1999 to 21.5% in 2000, within the 21-22% range we had forecast.
During 2000, many projects were initiated, aimed both at bringing our existing products online and developing new products. After spending a relatively modest amount of EUR 8 million in the first half of 2000, total investment for the full year 2000 came out at EUR 47 million, in line with our plans. For 2001, an additional investment in (Internet-related) product development of around EUR 100 million is foreseen (an increase of EUR 53 million compared to 2000).
In line with expectations, the new benchmark ordinary net income before amortization of goodwill increased modestly from EUR 410 million in 1999 to EUR 412 million in 2000. Due to some dilution resulting from stock dividend and stock options, cash earnings per share (based on the weighted average number of shares, 'fully diluted' basis) came out at EUR 1.47 per share versus EUR 1.48 in 1999. Excluding the net effect of additional product development spending, the increase in ordinary net income before amortization of goodwill would have been approximately 8%.
The cash flow from operating activities, which does not include proceeds from divestments, fell marginally from EUR 564 million in 1999 to EUR 552 million in 2000, mainly due to additional (Internet) product development spending, lower results for Legal, Tax & Business Europe, higher working capital requirements and increased financial expenses.
Our most important cash flow benchmark, ordinary free cash flow, provides insight into the cash flow from operating activities which is available for dividend payment, debt reduction and acquisitions, after taking account of the required net investments in fixed assets and the cash effect of acquisition provisions. This cash flow benchmark declined by 6% to EUR 363 million, providing a figure of EUR 1.30 for the ordinary free cash flow per share (based on the weighted average 'fully diluted' number of shares), compared to EUR 1.39 in 1999.
Internet-based sales increased nearly fivefold, rising from EUR 48 million in 1999 to EUR 89 million in the first half of 2000 and EUR 228 million (6% of sales) for the full year 2000. Paper products still account for some three quarters of total sales and although loose-leaf sales (22% of sales) now show a modest decline organically, journals (20% of sales) still show a healthy organic growth rate. However, electronic sales (Internet, other online and CD-ROM) demonstrate by far the strongest growth rate (+47%). Demand continues to vary greatly among geographic regions and professions, but we clearly expect the relative importance of electronic sales to grow. Especially fully web-based sales, will continue to rise strongly in the coming years.
More than half (53%) of our sales is currently subscription-driven (1999: 53%). For the Internet, upfront subscription agreements represent about two thirds. Advertising accounted for merely 5% of sales, with training and other sales making up the remainder.
|
|
|
|
|
|
|
|
|
|
|
|
|
2000
|
|
|
In %
|
|
|
1999
|
|
|
In %
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet sales
|
|
|
228
|
|
|
6
|
|
|
48
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Other online sales
|
|
|
75
|
|
|
2
|
|
|
89
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
303
|
|
|
8
|
|
|
137
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
CD-ROM
|
|
|
507
|
|
|
14
|
|
|
415
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
Total electronic sales
|
|
|
810
|
|
|
22
|
|
|
552
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Print sales
|
|
|
2,722
|
|
|
74
|
|
|
2,395
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
Training
|
|
|
132
|
|
|
4
|
|
|
134
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EUR million
|
|
|
3,664
|
|
|
100
|
|
|
3,081
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance of the clusters in 2000
Legal, Tax and Business Europe - strong improvement second half
Sales up 8% at EUR 1,316 million (1999: EUR 1,216 million), EBITA -14% at EUR 237 million (1999: EUR 275 million)
|
|
Strong performances in France, Italy, and at Teleroute.com and JobNews.nl |
|
Results ten Hagen & Stam (the Netherlands) showed strong recovery in HY2 to break-even |
|
Reorganization charge (EUR 34 million) and additional (Internet) product development (EUR 18 million) impact on EBITA |
|
New CEO operational as of January 1, 2001: portfolio review under way |
|
Reorganizations announced/started in the Netherlands, Belgium, Spain and the UK aimed at improving efficiency, quality and competitive power |
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Priority 2001: focus resources on growth areas |
The Legal, Tax and Business Europe cluster experienced many changes throughout the year. With effect from January 1, 2001, this cluster has its own CEO, David Smith (British nationality) who oversees all operations of our extensive European network.
During the first six months of the year under review, organic sales growth fell short of expectations and the organic EBITA came under pressure. In the second half of 2000, organic sales growth picked up noticeably and a substantial part of the shortfall in organic results reported in the first half-year was recovered in the July-December period.
The Wolters Kluwer activities in France and Italy, the recruitment web site JobNews.nl and Teleroute.com performed extremely well. Teleroute.com, Europe's leading online freight exchange system for the transport industry, is making excellent progress, rapidly moving its business to a fully web-based environment.
During the year new leadership was installed for Wolters Kluwer Netherlands, the largest cluster component, with annual sales close to EUR 400 million. Following a thorough review by the new management team, Wolters Kluwer Netherlands announced a major restructuring program. This entails the formation of three separate publishing companies: Kluwer, ten Hagen & Stam and Bohn Stafleu van Loghum. Ten Hagen & Stam reported disappointing results in the first half year, but in the second half, the performance of this company improved significantly, as a result of the measures taken, leading to sales equal to 1999 and an almost break-even situation for the full year.
Restructuring measures are also being implemented in several other European organizations, most notably Belgium, Spain and the United Kingdom. All these reorganizations are aimed at improving efficiency, quality and competitive power.
Jean-Marc Detailleur, Member of the Executive Board of Wolters Kluwer, responsible for Legal, Tax & Business Europe: 'The European cluster experienced a difficult year. Therefore we have taken some fundamental measures, and have announced restructuring programs throughout the cluster. I am confident that the new management team will bring Europe up to speed again. Everyone is clearly focused on establishing significant, sustainable and profitable growth.'
Legal, Tax and Business North America - star performer Sales up 38% at EUR 1,093 million (1999: EUR 789 million), EBITA up 31% at EUR 333 million (1999: EUR 255 million)
|
|
Sales surpassed the EUR 1 billion level (up 38%) |
|
Strong organic growth at CCH Legal Information Services and Aspen Publishers |
|
Bankers Systems (acquisition 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 spending has EUR 12 million impact on EBITA |
|
Priority 2001: extend leading market position into software tools and services
|
Reported sales of the North American operations surpassed the EUR 1 billion level in 2000 (up 38%). During 2000, LTB North America spent an additional EUR 12 million on product development, largely focused on Internet activities. Nearly 40% of sales are now derived from electronic products, including both CD-ROMs and Internet-related items. Fully web-based sales now account for 10% of the total as a result of both incremental new product sales and the ongoing product migration from CD-ROM and loose- leaf publications.
Organic growth picked up as the year progressed and on a full year basis the organic EBITA increase, before taking into account additional (Internet) product development spending, more or less equaled organic sales growth (7%). The CCH Legal Information Services (LIS) and Aspen Publishing operating companies reported particularly strong organic expansion and CCH Tax Compliance performed very well.
Acquisitions continue to form an important part of the LTB North America growth strategy. During the year 2000, a healthy flow of companies was acquired. These include certain business publishing assets of Harcourt Inc. acquired by Aspen Publishers, and also DPC and KnowledgePoint, acquired by CCH, and A-plus, which has been incorporated into CCH Tax Compliance. Bankers Systems Inc. (BSI) acquired in 1999, has in the meantime been further strengthened by the acquisitions earlier this year of CBF Systems and Tsoft, which are also active in the growth area of banking regulation.
Our legal publisher Aspen Publishers benefited from the positive acceptance of new editions and made good progress with further building out its position with small and mid-sized legal firms. Organic growth at Aspen Publishers exceeded expectations, due in particular to exceptional performance by the law & business division. An important event for Aspen Publishers was the acquisition of Loislaw, announced at the end of the year 2000. Loislaw is a US provider of primary and secondary source material for legal research that is delivered on a subscription basis over the Internet. Aspen's extensive line of analytical materials, combined with Loislaw's source data, helps create valuable Internet applications that will bring greater value to the attorney, corporate and education markets. Furthermore the advantages of Aspen's effective marketing capabilities will strongly lift the sales of Loislaw.
Hugh Yarrington, Member of the Executive Board of Wolters Kluwer, responsible for Legal, Tax & Business North America: 'In North American legal, tax and accounting, we are clearly the number one player in our markets. In 2000, we capitalized on our leading position and reached the EUR 1 billion milestone, with strong organic performance and a continuation of an aggressive acquisition strategy. The strong organic sales growth of 7% is credible proof that we are successful in what is worldwide our most profitable market.'
Legal, Tax and Business Asia Pacific - strong efficiency improvementSales up 7% at EUR 60 million (1999: EUR 56 million), EBITA 23% at EUR 12 million (1999: EUR 10 million)
|
|
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 and LawNow) |
|
Additional (Internet) product development spending has EUR 2 million impact on EBITA |
|
Priority 2001: further expansion into Asia
|
Legal, Tax and Business Asia Pacific enjoyed an excellent year, with organic EBITA rising by 27% before taking into account additional (Internet) product development spending, leading to an impressive improvement in the EBITA margin. This reflects greatly improved cost-control in combination with a strong focus on pursuing a myriad of growth opportunities. Australia continues to be the core market for this cluster, but the increasing focus on the Asian countries, such as Singapore, Malaysia and Hong Kong is paying off with significant organic growth in this region.
International Health & Science - strong sales growth reported
Sales up 25% at EUR 752 million (1999: EUR 599 million), EBITA up 18% at EUR 179 million (1999: EUR 152 million)
|
|
Strong organic sales growth at Adis International (pharmaceutical), Ovid Technologies (STM - Internet online), Facts & Comparisons (drug information) |
|
Acquisition of Springhouse creates leading position in nursing market |
|
Kluwer Academic Publishers shows healthy organic sales growth |
|
Additional (Internet) product development spending has EUR 13 million impact on EBITA |
|
Priority 2001: acceleration of electronic delivery of content and software tools
|
Our International, Health & Science business enjoyed another good year, benefiting from both solid underlying growth and a number of strategic acquisitions during the year. Organic sales growth was 5%, in part driven by strong performances of Ovid Technologies, Adis International and Facts & Comparisons. Acquisitions had a significant impact on sales growth, particularly with the integration of the nursing publisher Springhouse into Lippincott, Willliams & Wilkins. The cluster's reported sales increased with 25% ending slightly above EUR 750 million level, some 20% of Wolters Kluwer sales.
Internet sales now represent 9% of total sales. In the course of the year, an additional EUR 13 million was charged against EBITA for (Internet) product development, including for example, Clineguide.com, a point-of-care research-based software product and Drugfacts.com, aimed at the pharmaceutical market.
Kluwer Academic Publishers, one of the world's leading publishers of academic books and journals, reported strong journal sales in 2000, while book sales were somewhat lower than last year. Internet sales grew rapidly, as further progress was made with the rollout of Kluwer Online.
Hugh Yarrington, Member of the Executive Board of Wolters Kluwer, responsible for International Health & Science:
'Being a number one in the global health information market, we have invested significantly in the electronic delivery of content and software tools. Although expectations about the impact of the Internet on the medical professions are promising, it is only just starting to have an impact on the working life of doctors. However, in the institutional market integration of the Internet is further ahead, illustrated by the tremendous sales growth of Ovid's web product.'
Education - good progress cluster integration Sales up 8% at EUR 311 million (1999: EUR 287 million), EBITA up 20% at EUR 54 million (1999: EUR 45 million)
|
|
Strong performance in the Netherlands, Belgium and Hungary |
|
No. 2 position in UK established with acquisition of Thomas Nelson |
|
Reorganization charge (EUR 11 million) and additional (Internet) product development (EUR 3 million) impact on EBITA |
|
Reorganization Germany progressing |
|
Priority 2001: expand e-learning activities
|
Education focused strongly on improving operational excellence in the year 2000. Moreover, the integration of Thomas Nelson with effect from January was an important event. This company was successfully integrated into the existing UK educational activities and moved Wolters Kluwer to a number 2 position in the United Kingdom. In the Netherlands, Wolters-Noordhoff, our largest educational publisher, was able to combine internal operational improvements with favorable market conditions affecting both the primary and secondary education markets. Belgium and Hungary also performed well, and in Germany we made good progress in integrating the various companies active in this market.
In the year under review the German educational publishing operations were reorganized. The previously independently operating publishers in the German market were concentrated to eliminate internal competition and to focus on a joint market approach.
A charge of EUR 11 million has been taken (against EBITA 2000) for planned further reorganizations in this cluster, which will be implemented during the course of 2001.
The first signs of successful new product development were visible in 2000. Important online activities progressed well: the online learning project in cooperation with the Goethe Institute and a home learning program built around exam training.
Professional training
In March 2000, Wolters Kluwer announced the planned divestment of the Professional Training activities, a group of companies active in the field of providing training services and solutions to major corporations, non-profit organizations and professionals. In the course of 2000, it became apparent that a divestment of the group in pieces would create the most value for Wolters Kluwer. Wolters Kluwer completed three transactions and sold Krauthammer International, IEC, and HQ, representing EUR 47 million of sales, around one third of total cluster sales. The group of remaining companies displayed satisfactory performance. Currently negotiations about a transfer of ownership of these businesses are in progress.
Dividend
With the introduction of the new performance benchmark (ordinary net income before amortization of goodwill), the dividend base and the payout ratio have been redefined. The Dutch Tax Reform 2001 as it has become relevant for Dutch private investors, has an impact on the balance between the choice for cash or shares. Wolters Kluwer has decided to maintain the opportunity for shareholders to re-invest their dividend. Instead of a discount (1999: approximately 4%) we will offer a premium of approximately 2%.
On the basis of a payout ratio of approximately one third, expressed as a percentage of the new benchmark ordinary net income before amortization of goodwill, we propose to distribute a dividend of EUR 0.50 (1999: EUR 0.46) in cash per ordinary share/depositary receipt for the financial year 2000.
The cash dividend will be put before the Annual General Meeting of Shareholders on May 4, 2001 as will be the proposal for the stock dividend premium, after which shareholders will be asked to make their choice known by May 15, 2001 at the latest. The stock dividend will be determined on May 15, 2001 (after close of trading). Dividend will be payable as from May 17, 2001.
Outlook Wolters Kluwer - Ordinary net income before amortization of goodwill up approximately 5%
Wolters Kluwer serves professional markets with mainly 'must-have' products, integrating content with software and services. Our exposure to cyclical income sources such as advertising is very limited. Hence, we do not expect much impact from a weakening economy as forecast for the coming year. However, our results will be affected by the further acceleration of our additional (Internet) product development investment from EUR 47 million in 2000 to approximately EUR 100 million in 2001. This investment will be charged to the profit and loss account and will curtail our 2001 profit growth, as previously announced. Taking into account the higher level of additional (Internet) product development spending, we expect our year 2001 ordinary net income before goodwill amortization to increase approximately 5%, measured in constant currencies. Due to phasing in 2000 of the additional (Internet) product development spending towards the second half of the year, we expect this year's profit growth to be realized during the July-December period.
Forward-Looking Statements
This press release contains forward-looking statements. These statements 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 limitations general economic conditions, 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 business.
Note for the editor:
Wolters Kluwer is a multinational information services company with annual sales of approximately EUR 3.7 billion, employing approximately 19,000 people in Europe, North America and Asia Pacific. The company's core activities are Legal, Tax & Business, International Health & Science, and Education. The Wolters Kluwer shares are quoted on the Euronext Amsterdam. The Annual Report 2000 of Wolters Kluwer will be released on April 17, 2001. The Annual General Meeting of Shareholders will take place on May 4, 2001. The financial results for the first half 2001 will be announced on August 14, 2001.
Internet: www.wolterskluwer.com
For more information, please contact:
- Press:Eric Heres, tel. + 31 20 6070 335
- Analysts/InvestorsAnnie Hull-Bom, tel. +31 20 6070 407
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