Wolters Kluwer on track

First half-year 2000 highlights


	Sales were up 18%, ordinary net income (before amortization of goodwill) increased by 19%;
	Sales of electronic products increased by 30% to EUR 344 million, now representing 20% of total sales;
	Internet sales amounted to EUR 89 million, now representing 5% of total sales;
	Implementation of cluster Internet strategies is on course;
	18 acquisitions were completed representing annualized sales of EUR 145 million;
	Full year outlook of flat ordinary net income (before amortization of goodwill) reiterated.


(in EUR million)	1st half-year	1st half-year	+/-


	2000	1999


Sales	1,69	1,431	18%


Operating income before depreciation and amortization of goodwill (EBITDA)	406	336	21%


Operating income before amortization of goodwill (EBITA)	362	302	20%


Pre-tax income before amortization of goodwill	278	234	19%


Ordinary net income before amortization of goodwill	191	160	19%


Ordinary free cash flow	76	84	-10%


EPS before amortization of goodwill and extraordinary items "fully diluted"	0.68	0.58	17%

Note:
With effect from 2000, the presentation of results is focused on the benchmark Ordinary Net Income before Amortization of Goodwill. This benchmark includes operating income after financing results, taxation and minority interests. It does not take into account amortization of goodwill and extraordinary items. Therefore, the first-half year figures 1999 have been restated. As a consequence the book profit on the divestment of Trade Publishing in 1999 (EUR 46 million) has now been treated as an extraordinary item (EUR 30 million after tax). The cash flow statement has been adjusted accordingly.

Review of first half-year 2000

In the first half-year 2000, sales increased by 18% to EUR 1,690 million and operating income (EBITA) grew 20%. All clusters contributed to this performance, except Legal, Tax & Business Europe, which experienced some difficulties. The overall increase in sales and operating income compared to the first half-year 1999 breaks down as follows:


	Sales		Operating income before amortization goodwill (EBITA)


	1st half-year 2000	1st half-year 1999	1st half-year 2000	1st half-year 1999


Organic Growth	4%	4%	5%	4%


Acquisitions	9%	11%	9%	14%


Divestments	-2%	-2%	-1%	-13%


Additional Internet investments	-	-	-2%	0%


At constant rates	11%	13%	11%	5%


Currencies	7%	-1%	9%	-1%


Total	18%	12%	20%	4%

Overall organic growth remained at 4%, mainly as a result of the disappointing growth in the cluster Legal, Tax & Business Europe.

Sales growth generated by acquisitions remained strong. In the period under review, 18 companies with annualized sales of approximately EUR 145 million were acquired, for a total consideration of EUR 354 million. The main acquisitions were Thomas Nelson (educational publisher, United Kingdom), Atres Software (tax and employment law software, Spain), Knowledge Point (human resources software, United States), FDS Tax Point (tax compliance software, United Kingdom), and Springhouse (publisher of nursing information, United States). In addition, Wolters Kluwer acquired full ownership of the Dutch Internet-based recruitment advertising company JobNews. An increasing number of acquisitions was made in the field of compliance software/workflow tools. The profitability of the acquired companies is in line with the overall profitability of Wolters Kluwer.

Although EBITDA increased by 21%, ordinary free cash flow decreased by 10%. Working capital remained well under control in the period under review. Provisions set up in the course of 1999 resulted in a cash outflow in the first half-year 2000, consequently reducing ordinary free cash flow.

The net acquisition spending exceeded the ordinary free cash flow and was financed with existing committed credit facilities.

The tax rate increased slightly from 29.9% to 30.6%. For the full year 2000 a further increase is expected due to higher contribution from activities in higher taxed areas. The second half-year 1999 tax rate benefited from some one-off tax items.

In March 2000, Wolters Kluwer announced the realignment of activities into five clusters. CEOs are operational in Legal, Tax & Business Asia Pacific, International Health & Science, and Education. On July 1, 2000, the Board of the European Legal, Tax & Business cluster became operational. The appointment of a CEO for the Legal, Tax & Business cluster North America has been made and will be announced soon.

Developments by cluster

Legal, Tax & Business Europe


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	624	605	3%


Operating income before amortization goodwill (EBITA)	121	149	-19%


EBITA margin (%)	19.4%	24.6%


Employees (ultimo FTEs)	7,284	7,030	4%

Sales in Legal, Tax & Business Europe increased by 3% in the period under review. Organic sales rose 1%. A steady growth of revenue was shown in France, at Teleroute, and in Central and Eastern Europe. In other European countries, Wolters Kluwer was confronted with attrition of loose-leaf products, which was offset by sales growth of electronic and other products. Many countries in the European cluster are in the middle of a major transition process leading to a more customer focused business approach. Additional efforts have been made to improve marketing databases, and more attention is being given to new product development, especially workflow software products. Operating income showed a decrease of 19%. Management problems and difficulties with the implementation of administrative information systems in the Netherlands had a significant negative impact on the results. Measures have been taken to improve the performance in the Netherlands and these include the appointment of new top management, the implementation of a flatter organization structure, and an improvement of business control processes. Since July 1, 2000, the new European cluster management is operational. The primary focus of this management team is to streamline several businesses (notably in Spain, Belgium, and the Netherlands), to step up product development, standardize technology, and coordinate Internet projects. As a result of all these measures it is expected that the outcome of the second half-year will be better than the corresponding period last year.

Legal, Tax & Business North America


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	505	347	46%


Operating income before amortization goodwill (EBITA)	146	111	32%


EBITA margin (%)	28.8%	31.9%


Employees (ultimo FTEs)	5,529	4,226	31%

The North American activities had a strong first half-year. Significant acquisition activity in 1999 contributed to the sales increase of 46%, of which 5% was organic growth. During the first-half 2000, the aggressive acquisition program of the North American operations was continued with the takeover of A Plus (tax compliance software), HBJ (professional tax and accounting publications), and Knowledge Point (human resources software). CCH LIS, CCH Tax Compliance and CCH Canadian showed strong organic growth. Organic growth at CCH US Publishing continued to be moderate in the absence of new tax legislation. However, the organic growth of the 1999 acquisition Bankers Systems Inc. (BSI) exceeded expectations although margins of BSI are not yet at the Wolters Kluwer average. Internet sales grew fast as expected and significant progress was made on the cluster's overall Internet strategy. The appointment of a cluster CEO will be announced soon.

Legal, Tax & Business Asia Pacific


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	32	27	19%


Operating income before amortization goodwill (EBITA)	6	5	20%


EBITA margin (%)	20.1%	19.6%


Employees (ultimo FTEs)	456	458	-

The operations in the Asia Pacific region showed a strong performance in the first half-year, with sales increasing 19%, of which 11% was organic growth. The cluster CEO, appointed in 1999, focused on tight cost control, business restructuring, and the implementation of an aggressive (regional) Internet strategy, launching several websites for professionals. Currently 85% of sales are generated in Australia and New Zealand, but the cluster is further penetrating markets in the rest of Asia, particularly in Japan and China.

International Health & Science


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	339	283	20%


Operating income before amortization goodwill (EBITA)	80	69	16%


EBITA margin (%)	23.6%	24.5%


Employees (ultimo FTE's)	2,506	2,403	4%

Total sales of the International Health & Science cluster grew 20% in the first half-year, of which 7% was organic growth. Particularly good performance was shown at Kluwer Academic Publishers (KAP), Adis, and Ovid Technologies. The market position of Lippincott Williams & Wilkins was further strengthened by the acquisition of Springhouse, a nursing publishing company with revenues of EUR 52 million. Internet development was stepped up significantly, resulting in a successful expansion of (KAP's) Kluwer Online, which is in the process of negotiating agreements with major library consortia to ensure wide-ranging access to its journal content via the Web. Ovid Technologies continued to move customers to its subscription-based Web product. Currently more than half of Ovid's sales are generated via Internet.

Education


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	113	100	13%


Operating income before amortization goodwill (EBITA)	12	5	+>100%


EBITA margin (%)	10.4%	4.9%


Employees (ultimo FTEs)	1,391	1,441	-3%

The Education cluster had a good first half-year and sales increased by 13%, of which 5% was organic growth. Growth of sales and EBITA was driven by solid performance of the operations in the Netherlands and Germany. It should be noted, however, that the educational publishing business is strongly geared towards the second half of the year. Following the acquisition of Thomas Nelson in January 2000, the educational publishing activities in the United Kingdom doubled in size. The newly formed company, Nelson-Thornes, now has the number two position in the UK educational publishing market.

Professional Training


(in EUR million)	1st half-year 2000	1st half-year 1999	+/-





Sales	77	68	13%


Operating income before amortization goodwill (EBITA)	10	10	-


EBITA margin (%)	12.3%	14.0%


Employees (ultimo FTEs)	871	820	6%

Although sales improved versus last year, profits of the training companies were flat. In March 2000, the Executive Board announced the decision to divest these activities. In the light of the concentrated effort to migrate the publishing activities to the Web, the Executive Board resolved that further improvement and expansion of the training activities would distract too many resources from the core activities. It is expected that the divestment of these activities will be completed during the second half-year of 2000.

Developments by media


(in EUR million)	Sales in 1st half-year			% of total sales


	2000	1999	+/-	2000	1999


- Internet	89	20	+>100%	5%	1%


- Other online	23	31	-26%	1%	2%


Sub-total	112	51	+>100%	6%	3%


- CD ROM	232	214	8%	14%	15%


Electronic	344	265	30%	20%	18%


Print	1,269	1,098	16%	75%	77%


Training	77	68	13%	5%	5%


Total WK	1,690	1,431	18%	100%	100%

Electronic sales increased by 30% in the first half-year to EUR 344 million, accounting for 20% of total sales. Internet sales increased to EUR 89 million (compared to EUR 48 million in the full year 1999) and now represent 5% of total sales. Around two thirds of Internet sales are subscription based, while EUR 4 million is generated through e-shops (online ordering of traditional products). In the first half-year, almost 100 Internet sites throughout Wolters Kluwer generated sales, of which CCH Tax Research Network, CT Advantage, Ovid, and Teleroute were the largest. Print sales increased by 16%, driven by growth from all product formats (books, journals, newsletters and loose-leaf publications).

Internet update

Existing Internet sales grew rapidly to EUR 89 million in the first half-year as all Wolters Kluwer businesses actively continued to pursue their Internet opportunities. In March 2000, Wolters Kluwer announced it would invest an additional EUR 250 million in the period 2000-2002 to accelerate its Internet strategy. In the first half-year 2000, excellent progress was made with the implementation of this strategy. The additional amount of EUR 250 million is allocated to:


	Web-enabling the existing assets (e.g. content, software) with additional functionalities (e.g. linking, searching, personalization, updating) and integrating the existing (revenue generating) web products and sites into new vertical sites aimed at specific groups of professionals;
	Developing new products through the integration of content, software, and services;
	Creating two standardized technology infrastructure platforms to be shared by the operating companies.

The technology organization is now in place, with the main positions at the corporate and cluster levels filled. The main task of the technology organization is to establish the centralized technology infrastructures announced earlier this year. Key technology components of vertical websites will be leveraged across all Wolters Kluwer operating companies. Hosting of Internet sites will be concentrated in two locations, one in North America and another in Europe. Development will be managed in-house, with significant parts outsourced to strategic partners. In the second half-year, Wolters Kluwer expects to sign contracts with strategic technology partners in North America and Europe for hosting and development services.

In the first half-year EUR 8 million of the overall EUR 250 million was invested in additional Internet projects. For the full year an amount of EUR 50-60 million is expected. Most of the EUR 250 million has now been committed to projects. Substantial part of this additional budget is to be spent on the launch of two European wide portals (juriforum.com and tax-forum.com), the legal, tax, HR and business portal in the United States (cchgroup.com), and a global portal for the health market (healthandscienceweb.com). It is anticipated that the addditional Internet spend will accelerate organic sales growth from currently 4-5% to 6-7% per annum as of 2003, and the operating income margin will improve to 24%. Internet sales are expected to reach approximately EUR 1.2 billion (around 30% of total sales) in 2002.

Outlook Full Year

As announced in March 2000, Wolters Kluwer expects ordinary net income (before amortization of goodwill) to remain unchanged relative to the level realized in 1999. A substantial book profit is expected from the anticipated divestment of the Professional Training group, which is likely to be completed during the second half of 2000.

For further information, please contact:
Press: Patrick Hendriks, Secretary to the Executive Board, tel. +31 20 6070 450
Analysts/Investors: Annie Hull-Bom, Head of Investor Relations, +31 20 6070 407

Wolters Kluwer nv
P.O. Box 75248
1070 AE Amsterdam
the Netherlands
e-mail: info@wolterskluwer.com (press)
e-mail: ir@wolterskluwer.com (investor relations)