1 Wolters Kluwer Education From A to Z Investor/Analyst Day Amsterdam 25 November 2003

1

Wolters Kluwer Education Wolters Kluwer Education From A to ZFrom A to ZInvestor/Analyst DayInvestor/Analyst Day

AmsterdamAmsterdam

25 November 200325 November 2003

Education2WK Education From A to Z - 25 November 2003

AgendaAgenda

8.45 - 9.00 Introduction Nancy McKinstry8.45 - 9.00 Introduction Nancy McKinstry

9.00 - 10.15 Business overview and Markets - Harry Sterk9.00 - 10.15 Business overview and Markets - Harry Sterk

10.15 - 10.3010.15 - 10.30 Technology - Ilhan AksoycanTechnology - Ilhan Aksoycan

10.30 - 11.0010.30 - 11.00 Q & AQ & A

11.00 - 11.3011.00 - 11.30 Coffee BreakCoffee Break

11.30 -12.3011.30 -12.30 Strategy and Q & A - Harry SterkStrategy and Q & A - Harry Sterk

12.30 - 14.0012.30 - 14.00 Lunch, Hilton HotelLunch, Hilton Hotel

14.00 - 17.1514.00 - 17.15 Product demonstrations, WK office Product demonstrations, WK office

3

IntroductionIntroduction

Nancy McKinstry Nancy McKinstry

Chairman Executive BoardChairman Executive Board


The Professional’s First ChoiceProvide information, tools and solutions to

help professionals make their most critical decisionseffectively and improve their productivity

The Professional’s First ChoiceProvide information, tools and solutions to

help professionals make their most critical decisionseffectively and improve their productivity

Wolters KluwerWolters Kluwer Vision: Vision:

Large and profitable markets with potential to create value for Large and profitable markets with potential to create value for customerscustomers

Leading and distinct positions in key professional segments Leading and distinct positions in key professional segments Emerging customer needs and technologies create Emerging customer needs and technologies create

opportunities to build new products and servicesopportunities to build new products and services Build on proven capabilities in content development, technology Build on proven capabilities in content development, technology

and customer serviceand customer service


Education is an attractive businessEducation is an attractive business

• Stable, traditional text book businessStable, traditional text book business• Market size: € 1.4 billion (addressed markets), average Market size: € 1.4 billion (addressed markets), average

growth 1-3%growth 1-3%• Market-driven by multi-local content needsMarket-driven by multi-local content needs• Evolving electronic solutionsEvolving electronic solutions• Attractive margins and stable cash flows; cycle Attractive margins and stable cash flows; cycle

improvement in next three yearsimprovement in next three years• High market sharesHigh market shares• Education high on (political) agenda’sEducation high on (political) agenda’s• Brands and capabilities in Health, LTBE in compliance Brands and capabilities in Health, LTBE in compliance

that can be leveragedthat can be leveraged


Key Strategy ElementsKey Strategy Elements

Reduce Costs DevelopDevelop shared back-office shared back-office services services RRight-sizing in country operationsight-sizing in country operations

DevelopDevelop shared back-office shared back-office services services RRight-sizing in country operationsight-sizing in country operations22

Reorganize Strengthen senior management teamStrengthen senior management team33

Invest11 Reinforce text book publishing leadership Reinforce text book publishing leadership

positionposition Expand market share Expand market share -- mixed-media mixed-media

learning solutionslearning solutions Pursue growth in adjPursue growth in adjaacent marketscent markets

Reinforce text book publishing leadership Reinforce text book publishing leadership positionposition

Expand market share Expand market share -- mixed-media mixed-media learning solutionslearning solutions

Pursue growth in adjPursue growth in adjaacent marketscent markets

WKE: a business which meets the strategic direction of the group and complements the other divisions

WKE: a business which meets the strategic direction of the group and complements the other divisions


Wolters Kluwer Education VisionWolters Kluwer Education Vision

MissionMissionoffering learning communities offering learning communities

compelling cross-media learning compelling cross-media learning solutionssolutions..

MissionMissionoffering learning communities offering learning communities

compelling cross-media learning compelling cross-media learning solutionssolutions..

Key financialsKey financialsAchieve above market average growth, 25% EBITA approach Achieve above market average growth, 25% EBITA approach

Key financialsKey financialsAchieve above market average growth, 25% EBITA approach Achieve above market average growth, 25% EBITA approach

VisionVisionThe leading and fastest growing The leading and fastest growing provider ofprovider of quality learning solutionsquality learning solutions..

Integrating content, services, technology to facilitate learning processesIntegrating content, services, technology to facilitate learning processes. .

VisionVisionThe leading and fastest growing The leading and fastest growing provider ofprovider of quality learning solutionsquality learning solutions..

Integrating content, services, technology to facilitate learning processesIntegrating content, services, technology to facilitate learning processes. .

StrategyStrategyProtecting and growing the core businessProtecting and growing the core business::

Marketing and sales, integrated solutions, on-time, 20%+ innovation, segmentationMarketing and sales, integrated solutions, on-time, 20%+ innovation, segmentation

Aggressive expansion in new marketsAggressive expansion in new markets:: (e-learning, services, home market):(e-learning, services, home market):

StrategyStrategyProtecting and growing the core businessProtecting and growing the core business::

Marketing and sales, integrated solutions, on-time, 20%+ innovation, segmentationMarketing and sales, integrated solutions, on-time, 20%+ innovation, segmentation

Aggressive expansion in new marketsAggressive expansion in new markets:: (e-learning, services, home market):(e-learning, services, home market):


FFocus on delivering solid margins while ocus on delivering solid margins while positioning for growthpositioning for growth

Improving margins; rigid cost controlImproving margins; rigid cost control

Market focused management Market focused management

Learning services,integrated solutionsLearning services,integrated solutions

Multiple business models Multiple business models and sources of revenue and sources of revenue

Re-use of content assetsRe-use of content assets

Sell to parents, students, schools, Sell to parents, students, schools, government and corporationsgovernment and corporations

Curriculum and non-curriculum relatedCurriculum and non-curriculum related

# 1 in integrated learning solutions# 1 in integrated learning solutionsand servicesand services

Stable marginsStable margins

Product focused managementProduct focused management

Textbooks and ICTTextbooks and ICT

Publishing-focused Publishing-focused business modelbusiness model

Single use of contentSingle use of content

Sell to schools and Sell to schools and governmentgovernment

Curriculum relatedCurriculum related

#1 in traditional education #1 in traditional education publishingpublishing

TOMORROWTOMORROWTODAYTODAY

9

Business Overview and MarketsBusiness Overview and Markets

Harry Sterk Harry Sterk

CEO Wolters Kluwer EducationCEO Wolters Kluwer Education


OverviewOverviewHistorical core activities of WK in EuropeHistorical core activities of WK in Europe

Established as separate Established as separate divisiondivision in 2000 in 2000

Total 2002 sales: EUR Total 2002 sales: EUR 300300 million million

Total 2002 EBITA: EUR Total 2002 EBITA: EUR 5656 million million

EBITA margin : EBITA margin : 18.718.7%%

Approximately Approximately 1,5001,500 employees employees

SSeveneven countries, six core segments: countries, six core segments:PrimaryPrimarySecondarySecondaryHigherHigherVocationalVocationalAtlases/Atlases/After-school marketAfter-school marketSchool/Teacher School/Teacher ServicesServices

NetherlandsNetherlandsBelgiumBelgiumSwedenSwedenGermanyGermanyAustriaAustriaHungaryHungaryUnited KingdomUnited Kingdom


WK Education OrganizationWK Education Organization

Nelson Thornes / Moorhouse BlackU n ited K ingdom ( 326 FTEs)

Fred G rainger

LiberS w eden ( 360 FTEs)

J an Thurfj e ll

W olters NoordhoffN etherlands (453 FTEs)

Arj en H oll

W olters P lantynBelg ium ( 69 FTEs)

E rik Tam boryn

MuszakiH ungary ( 36 FTEs)

S andor Berczi

Digital Spirit/ W KE-Online( 81 FTEs)

Thom as F lum

BV-Eins/ J ugend & VolkG erm any / Austr ia ( 183 FTEs)

W ilm ar D iepgrond

* FTEs as of year-end 2002 (Digital Spirit 2003)* FTEs as of year-end 2002 (Digital Spirit 2003)

Division ManagementHarry Sterk (CEO)Gerard Vork (CFO)

Ilhan Aksoycan (CTO)Patrick Hendriks (BID)

(7 FTEs)

Tighter, leaner and more effective management team

Tighter, leaner and more effective management team


Revenue Breakdown 2002Revenue Breakdown 2002

Wolters Noordhoff

36%

Wolters Plantyn

7%

Liber23%

BV-Eins / J ugend &

Volk15% Muszaki

2%

Nelson Thornes/

Moorhouse Black17%


PortfolioPortfolio

NetherlandsNetherlands

BelgiumBelgium

United KingdomUnited Kingdom

Germany/AustriaGermany/Austria

SwedenSweden

Primary

Primary

Secondary

Secondary

HigherHigher

Vocational

Vocational

OtherOther

Surface indicates relative size of activity in WKE portfolioSurface indicates relative size of activity in WKE portfolio

HungaryHungary


FinancialsFinancials

0

100

200

300

400

€ m

ln

Revenues 287 319 308 300

EBITA 45 55 61 56

Margin 16% 17% 20% 19%

1999 2000 2001 2002


Market ProfileMarket Profile

StudentsStudents

ParentsParents

TeachersTeachers

School School AdministratorsAdministrators

ProfessionalsProfessionals

Primary educationPrimary education Secondary educationSecondary education Higher educationHigher education Vocational educationVocational education CorporateCorporate HomeHome

SchoolsSchools

GovernmentGovernment

BusinessBusiness

ParentsParents

SegmentsSegmentsSegmentsSegments

PurchasersPurchasersPurchasersPurchasers

End UsersEnd UsersEnd UsersEnd Users

Very often users are not the buyersVery often users

are not the buyers


Market Segments & CharacteristicsMarket Segments & Characteristics


Market Characteristics: PrimaryMarket Characteristics: PrimaryTarget GroupTarget GroupTarget GroupTarget Group Pre-school to 12 yearsPre-school to 12 yearsPre-school to 12 yearsPre-school to 12 years

TeachersTeachersTeachersTeachers

Schools (government funding)Schools (government funding)Schools (government funding)Schools (government funding)

Approx. 10 years per subject area, on Approx. 10 years per subject area, on average one replacement per yearaverage one replacement per yearApprox. 10 years per subject area, on Approx. 10 years per subject area, on average one replacement per yearaverage one replacement per year

Approx. 10 subject areasApprox. 10 subject areasApprox. 10 subject areasApprox. 10 subject areas

25% of division revenues (2002)25% of division revenues (2002)25% of division revenues (2002)25% of division revenues (2002)

variable per country (average 3%)variable per country (average 3%)variable per country (average 3%)variable per country (average 3%)

TrendsTrendsTrendsTrends

Decision Making UnitDecision Making UnitDecision Making UnitDecision Making Unit


LifecycleLifecycleLifecycleLifecycle

# of subjects# of subjects# of subjects# of subjects

Share of Share of division revenuesdivision revenues


Market Growth RateMarket Growth RateMarket Growth RateMarket Growth Rate

Uniform, relatively simple curriculumUniform, relatively simple curriculum: limited : limited development costsdevelopment costs

LLong cycles, generally stable businessong cycles, generally stable business Limited use of Limited use of information technology (ICT)information technology (ICT) Price elasticity relatively lowPrice elasticity relatively low (value pricing) (value pricing) More lump sum financing:More lump sum financing: opportunityopportunity for services for services Teachers shortagesTeachers shortages, and p, and performance demandserformance demands

Uniform, relatively simple curriculumUniform, relatively simple curriculum: limited : limited development costsdevelopment costs

LLong cycles, generally stable businessong cycles, generally stable business Limited use of Limited use of information technology (ICT)information technology (ICT) Price elasticity relatively lowPrice elasticity relatively low (value pricing) (value pricing) More lump sum financing:More lump sum financing: opportunityopportunity for services for services Teachers shortagesTeachers shortages, and p, and performance demandserformance demands


Market Characteristics: SecondaryMarket Characteristics: Secondary

Target GroupTarget GroupTarget GroupTarget Group 12-18 years12-18 years12-18 years12-18 years


Parents (in most cases)Parents (in most cases)Parents (in most cases)Parents (in most cases)

Curriculum set by government (4-5 years). Core Curriculum set by government (4-5 years). Core methods have long life (revised editions)methods have long life (revised editions)Curriculum set by government (4-5 years). Core Curriculum set by government (4-5 years). Core methods have long life (revised editions)methods have long life (revised editions)

Approx. 10-15 subject areas (varies per country)Approx. 10-15 subject areas (varies per country)Approx. 10-15 subject areas (varies per country)Approx. 10-15 subject areas (varies per country)


Depending on curriculum cycle (average 3% per year)Depending on curriculum cycle (average 3% per year)Depending on curriculum cycle (average 3% per year)Depending on curriculum cycle (average 3% per year)









Performance demandsPerformance demandsTeacher shortagesTeacher shortagesIncreased use of ICTIncreased use of ICT: scope for revenue growth: scope for revenue growthICT infrastructure developedICT infrastructure developedOpportunities for integrated solutionsOpportunities for integrated solutions

Performance demandsPerformance demandsTeacher shortagesTeacher shortagesIncreased use of ICTIncreased use of ICT: scope for revenue growth: scope for revenue growthICT infrastructure developedICT infrastructure developedOpportunities for integrated solutionsOpportunities for integrated solutions


Secondary: WK Curriculum Effect Secondary: WK Curriculum Effect

The impact of curriculum effect may vary (depending on The impact of curriculum effect may vary (depending on adoption rates), but basic trend is evidentadoption rates), but basic trend is evident

The impact of curriculum effect may vary (depending on The impact of curriculum effect may vary (depending on adoption rates), but basic trend is evidentadoption rates), but basic trend is evident

80.080.0

90.090.0

100.0100.0

110.0110.0

120.0120.0

19991999 20002000 20012001 20022002 20032003 20042004 20052005 20062006

Index(

base

= 2

00

0)

Index(

base

= 2

00

0)

approx. 3%approx. 3% + /-10%+ /-10%


Market Characteristics: HigherMarket Characteristics: Higher

Target GroupTarget GroupTarget GroupTarget Group 18 years + (higher education)18 years + (higher education)18 years + (higher education)18 years + (higher education)


StudentsStudentsStudentsStudents

Varies by title; Bestsellers generally Varies by title; Bestsellers generally have long cycle (different editions)have long cycle (different editions)Varies by title; Bestsellers generally Varies by title; Bestsellers generally have long cycle (different editions)have long cycle (different editions)

High number of subject / coursesHigh number of subject / coursesHigh number of subject / coursesHigh number of subject / courses


3% per year3% per year3% per year3% per year









Fragmentation / specialization: opportunity for content Fragmentation / specialization: opportunity for content solutions (content organizer)= topline growthsolutions (content organizer)= topline growth

Internationalization: cross border sellInternationalization: cross border sell ICT infrastructure generally well in placeICT infrastructure generally well in place Upfront financing opportunities (co-development with Upfront financing opportunities (co-development with

customers)customers)

Fragmentation / specialization: opportunity for content Fragmentation / specialization: opportunity for content solutions (content organizer)= topline growthsolutions (content organizer)= topline growth

Internationalization: cross border sellInternationalization: cross border sell ICT infrastructure generally well in placeICT infrastructure generally well in place Upfront financing opportunities (co-development with Upfront financing opportunities (co-development with

customers)customers)


Market Characteristics: VocationalMarket Characteristics: Vocational

Target GroupTarget GroupTarget GroupTarget Group 16 years + 16 years + 16 years + 16 years +


Students / Schools (varies per country)Students / Schools (varies per country)Students / Schools (varies per country)Students / Schools (varies per country)

Varies by title; Bestsellers generally Varies by title; Bestsellers generally have long cycle (different editions)have long cycle (different editions)Varies by title; Bestsellers generally Varies by title; Bestsellers generally have long cycle (different editions)have long cycle (different editions)

High number of subject / coursesHigh number of subject / coursesHigh number of subject / coursesHigh number of subject / courses


3% per year (varies per country)3% per year (varies per country)3% per year (varies per country)3% per year (varies per country)









Fragmentation / specialization: opportunity for Fragmentation / specialization: opportunity for content solutions (content organizer)= topline content solutions (content organizer)= topline growthgrowth

ICT infrastructure generally well in placeICT infrastructure generally well in place Upfront financing opportunities (co-Upfront financing opportunities (co-

development with customers)development with customers)

Fragmentation / specialization: opportunity for Fragmentation / specialization: opportunity for content solutions (content organizer)= topline content solutions (content organizer)= topline growthgrowth

ICT infrastructure generally well in placeICT infrastructure generally well in place Upfront financing opportunities (co-Upfront financing opportunities (co-

development with customers)development with customers)


European Education: European Education: An Attractive MarketAn Attractive Market

Positive curriculum cycle Positive curriculum cycle

Increasing performance demands Increasing performance demands

Strong market positions and brandsStrong market positions and brands

Loyal customers, long cycles create (70-80%) recurring revenuesLoyal customers, long cycles create (70-80%) recurring revenues

Low price elasticityLow price elasticity

ICT infrastructure improvingICT infrastructure improving

Local / fragmented competition: no pan-European competitorLocal / fragmented competition: no pan-European competitor

Homogeneous range of activitiesHomogeneous range of activities

Government commitment towards educationGovernment commitment towards education

No large (either in-or-out) state adoptionsNo large (either in-or-out) state adoptions


Operations OverviewOperations Overview


Market Positions Market Positions Revenue By Market SegmentRevenue By Market Segment

(2002)(2002)

PrimaryPrimary25%25%

SecondarySecondary38%38%

Higher EdHigher Ed18%18%

VocationalVocational15%15%

Other 4%Other 4%

Total = Total = €€ 300 M 300 M

BelgiumBelgium

UKUK

SwedenSweden

NetherlandsNetherlands

GermanyGermany

AustriaAustria

71M71M

262M262M

258M258M

336M336M

60-70M60-70M

330M330M

42M42M

28%

17%

21%

30%

Primary, Primary, Secondary, Higher EdSecondary, Higher Ed

Primary, SecondaryPrimary, Secondary

Primary, Secondary, Primary, Secondary, Higher Ed, Professional, Higher Ed, Professional, MapsMaps

Primary, Secondary, Primary, Secondary, Higher Ed, Vocational, Higher Ed, Vocational, Maps Maps

VocationalVocational

Primary, SecondaryPrimary, Secondary

Primary, Secondary, Primary, Secondary, VocationalVocational

AddressableAddressableMarketsMarkets

50%

WK Markets and Est. ShareWK Markets and Est. Share

2%

12%

All addressable market and WK share data are € 2002. Refers only to traditional schoolbook market. All addressable market and WK share data are € 2002. Refers only to traditional schoolbook market.

Excludes some € 31 mln revenues from new activities outside traditional markets (e.g. Liber Hermods (Sweden), Moorhouse Black (UK), ‘After-school’ market (Netherlands))Excludes some € 31 mln revenues from new activities outside traditional markets (e.g. Liber Hermods (Sweden), Moorhouse Black (UK), ‘After-school’ market (Netherlands))

HungaryHungary 35M35MPrimary, Secondary, Primary, Secondary, VocationalVocational

16%


The NetherlandsThe Netherlands

PrimaryPrimaryPrimaryPrimary

SegmentSegmentRank Rank WKEWKE Main competitorsMain competitors

# 2# 2# 2# 2 Malmberg, ZwijssenMalmberg, ZwijssenMalmberg, ZwijssenMalmberg, Zwijssen

Main strengths:Main strengths: High market sharesHigh market shares Strong brandsStrong brands Broad portfolio, present in every Broad portfolio, present in every

segmentsegment Scale economiesScale economies

Strategic priorities:Strategic priorities: Integrate ICT in learning solutionsIntegrate ICT in learning solutions Improve marketing and salesImprove marketing and sales Build out servicesBuild out services Standardise processesStandardise processes

SecondarySecondarySecondarySecondary # 1# 1# 1# 1 Malmberg, Thieme-M.Malmberg, Thieme-M.Malmberg, Thieme-M.Malmberg, Thieme-M.

HigherHigherHigherHigher # 1# 1# 1# 1 Various small playersVarious small playersVarious small playersVarious small players

VocationalVocationalVocationalVocational # 1/2# 1/2# 1/2# 1/2 Thieme M., Nijgh, Thieme M., Nijgh, MalmbergMalmbergThieme M., Nijgh, Thieme M., Nijgh, MalmbergMalmberg

AtlasesAtlasesAtlasesAtlases # 1# 1# 1# 1 ----


SwedenSweden

CompulsoryCompulsoryCompulsoryCompulsory

SegmentSegmentRank Rank WKEWKE Main Main

competitorcompetitor

# 1# 1# 1# 1 Bonnier, Natur/Kultur, Bonnier, Natur/Kultur, GleerupsGleerupsBonnier, Natur/Kultur, Bonnier, Natur/Kultur, GleerupsGleerups

Main strengths:Main strengths: Strong market positionsStrong market positions Broad portfolio, present in Broad portfolio, present in

(almost) every segment(almost) every segment Liber Hermods: distance learning Liber Hermods: distance learning

capabilitiescapabilities

Strategic priorities:Strategic priorities: Integrate ICT in learning solutionsIntegrate ICT in learning solutions Build out Liber Hermods to corporate Build out Liber Hermods to corporate

marketmarket

SecondarySecondarySecondarySecondary # 1# 1# 1# 1 Bonnier, Natur/Kultur, Bonnier, Natur/Kultur, GleerupsGleerupsBonnier, Natur/Kultur, Bonnier, Natur/Kultur, GleerupsGleerups

UniversityUniversityUniversityUniversity # 2# 2# 2# 2 Student litteratur, Student litteratur, Natur/KulturNatur/KulturStudent litteratur, Student litteratur, Natur/KulturNatur/Kultur

ProfessionalProfessionalProfessionalProfessional # 1# 1# 1# 1 ----

Atlases/MapsAtlases/MapsAtlases/MapsAtlases/Maps # 1# 1# 1# 1 ----


United KingdomUnited Kingdom




# 4# 4# 4# 4 Heinemann, Ginn, OUPHeinemann, Ginn, OUPHeinemann, Ginn, OUPHeinemann, Ginn, OUP

Main strengths:Main strengths: Strong brandsStrong brands High quality productsHigh quality products Active in all segmentsActive in all segments Connection with Moorhouse Black Connection with Moorhouse Black

(cross selling, total solution (cross selling, total solution offering)offering)

Strategic priorities:Strategic priorities: Capitalize on additional government Capitalize on additional government

funding of e-learning productsfunding of e-learning products Expand Moorhouse Black (e.g. corporate Expand Moorhouse Black (e.g. corporate

market)market)

SecondarySecondarySecondarySecondary # 3# 3# 3# 3 Heinemann, Hodder, OUPHeinemann, Hodder, OUPHeinemann, Hodder, OUPHeinemann, Hodder, OUP

VocationalVocationalVocationalVocational # 2# 2# 2# 2 Heinemann, Thomson, Heinemann, Thomson, HodderHodderHeinemann, Thomson, Heinemann, Thomson, HodderHodder

InternationalInternationalInternationalInternational # 2# 2# 2# 2 Leader in CaribeanLeader in CaribeanLeader in CaribeanLeader in Caribean

ServicesServicesServicesServices n.a.n.a.n.a.n.a. ----


Germany / AustriaGermany / Austria

VocationalVocationalVocationalVocational



# 1# 1# 1# 1 Westermann, Handwerk-TWestermann, Handwerk-TWestermann, Handwerk-TWestermann, Handwerk-T

Main strengths:Main strengths: High market share in vocationalHigh market share in vocational High marginHigh margin Strong organization and managementStrong organization and management Connection with Digital Spirit (e-learning Connection with Digital Spirit (e-learning

technology and customer base)technology and customer base) Lean operationLean operation

Strategic priorities:Strategic priorities: Expand position in Compulsory (Austria Expand position in Compulsory (Austria

and Germany)and Germany) Explore opportunities in corporate Explore opportunities in corporate

marketmarket Develop services and toolsDevelop services and tools

CompulsoryCompulsoryCompulsoryCompulsory # 5# 5# 5# 5 Cornelsen, Klett, Cornelsen, Klett, Schroedell, WestermannSchroedell, WestermannCornelsen, Klett, Cornelsen, Klett, Schroedell, WestermannSchroedell, Westermann


BelgiumBelgium




# 1# 1# 1# 1 Van In, Die KeureVan In, Die KeureVan In, Die KeureVan In, Die Keure

Main strengths:Main strengths:Strong brandsStrong brandsHigh market sharesHigh market sharesHigh quality productsHigh quality productsActive in all segmentsActive in all segments

Strategic priorities:Strategic priorities:Integrate ICT in learning solutionsIntegrate ICT in learning solutionsExpand in higher educationExpand in higher education

SecondarySecondarySecondarySecondary # 1# 1# 1# 1 Pelckmans, Van In, Pelckmans, Van In, De BoeckDe BoeckPelckmans, Van In, Pelckmans, Van In, De BoeckDe Boeck

HigherHigherHigherHigher # 1# 1# 1# 1 Highly fragmentedHighly fragmentedHighly fragmentedHighly fragmented


HungaryHungary




# 2# 2# 2# 2 Nemzeti, ApaczaiNemzeti, ApaczaiNemzeti, ApaczaiNemzeti, Apaczai

Main strengths:Main strengths: Strong brandsStrong brands High market share in vocationalHigh market share in vocational High quality productsHigh quality products Good relations with governmentGood relations with government Lean operationLean operation

Strategic priorities:Strategic priorities: Expand number of subjects in PrimaryExpand number of subjects in Primary Build out position in SecondaryBuild out position in Secondary Continue to bid for e-learning tenders of Continue to bid for e-learning tenders of

governmentgovernment

SecondarySecondarySecondarySecondary # 3# 3# 3# 3 NemzetiNemzetiNemzetiNemzeti

VocationalVocationalVocationalVocational #1#1#1#1 TankönyvmesterTankönyvmesterTankönyvmesterTankönyvmester


Digital Spirit / WKE-OnlineDigital Spirit / WKE-Online

Main strengths:Main strengths: Innovative and reliable technology Innovative and reliable technology

basebase Market leaderMarket leader Strong brandStrong brand Excellent customer baseExcellent customer base ProfitableProfitable competence center competence center

Strategic priorities:Strategic priorities: Expand in corporate e-learningExpand in corporate e-learning Clone corporate e-learning solutions to Clone corporate e-learning solutions to

curriculum based e-learningcurriculum based e-learning Integrating WK-E Online with Digital Spirit Integrating WK-E Online with Digital Spirit

creating one-stop technology shopcreating one-stop technology shop Fold DS into BV-Eins (managerial, Fold DS into BV-Eins (managerial,

backoffice, administrative etc.)backoffice, administrative etc.) Division wide CMS implementation (DAL)Division wide CMS implementation (DAL)

Back-EndBack-End

Content ManagementContent Management

(WKE-Online)(WKE-Online)

DeliveryDelivery

Learning Management SystemLearning Management System

Front-End:Front-End:

Content ProductionContent Production

(digital spirit)(digital spirit)

32

TechnologyTechnology StrategyStrategy

Ilhan Aksoycan Ilhan Aksoycan

CTO Wolters Kluwer EducationCTO Wolters Kluwer Education


Technology supporting the businessTechnology supporting the business Main components:Main components:

Information systems:Information systems: supporting product-planning & supporting product-planning & development, marketing, sales & distribution and back-officedevelopment, marketing, sales & distribution and back-office

Technical infrastructure:Technical infrastructure: to run these systems and to enable to run these systems and to enable optimal communication within the divisionoptimal communication within the division

Divisional strategy:Divisional strategy: StandardizationStandardization based on best of breed technologies like SAP, based on best of breed technologies like SAP,

K&P, Oracle etc.K&P, Oracle etc. Standardization of processesStandardization of processes enabling joint activities like joint enabling joint activities like joint

printing dealsprinting deals Standardization of information streamsStandardization of information streams leading to uniformity leading to uniformity

of information leading to improved controlof information leading to improved control The status of implementation:The status of implementation:

Roll-out will be complete by the end of 2004Roll-out will be complete by the end of 2004

Resulting in: Uniform and reliable management information, improved process control, costs below 3.5% of revenues


Role of technology in productsRole of technology in products Flexibility.Flexibility.

Opportunities in our markets and new educational-methods and Opportunities in our markets and new educational-methods and structures require a high level of flexibility from our products and structures require a high level of flexibility from our products and production processes.production processes.

Personalized content and blended learning.Personalized content and blended learning.Customers require increasingly personalized content and want Customers require increasingly personalized content and want products based on different and often combined media formats products based on different and often combined media formats (blended learning)(blended learning)

Speed and control.Speed and control. Greater diversity of products and shorter time to market requires Greater diversity of products and shorter time to market requires better control of the production processesbetter control of the production processes

Reusage of digital content assets.Reusage of digital content assets.Personalized products, delivered in different media formats makes Personalized products, delivered in different media formats makes reusability of content and learning components essentialreusability of content and learning components essential


Divisional StrategyDivisional Strategy Standard technology Standard technology for the internal production-line for content for the internal production-line for content

production and product assembly. Based on industry standard production and product assembly. Based on industry standard components.components.

Open architecture Open architecture for electronic publishing and e-learningfor electronic publishing and e-learning

In-house competence In-house competence around integration of content, courseware around integration of content, courseware development and e-publishing/e-learningdevelopment and e-publishing/e-learning

No in-house development of core technologies. No in-house development of core technologies. Strong Strong preference for industry standard technology components with in-house preference for industry standard technology components with in-house integration capabilityintegration capability

Partnerships for infrastructure Partnerships for infrastructure with main players in the industry with main players in the industry (like IBM) to deliver the infrastructure and operational competence(like IBM) to deliver the infrastructure and operational competence

Resulting in: Low technology risk, controlled technology investments, incremental costs, short time to market


Technology enabling productsTechnology enabling products

WEBWEB PublishingPublishing

Content Content acquisitionacquisition

Conversion to Conversion to XMLXML

Content creationContent creation direct to XMLdirect to XML

Structured,Structured, re-usable,re-usable,

media independentmedia independent contentcontent

DigitalDigitalAssetAsset

LibraryLibrary

Pro

du

ct

Assem

bly

Pro

du

ct

Assem

bly

QuarkQuarkPDFPDF

LMSLMS

BOOKS

E-LEARNING

REFERENCE

Etc.Etc.

InfrastructureInfrastructureInfrastructureInfrastructure

Workflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systems

Content FactoryContent FactoryContent FactoryContent Factory PublishingPublishingPublishingPublishing ProductProduct


Implementation StatusImplementation Status Content Management System (CMS)Content Management System (CMS)

Concept has been defined and is being rolled out on a project-by Concept has been defined and is being rolled out on a project-by project basis. In 2004 the roll out of CMS will be accelerated project basis. In 2004 the roll out of CMS will be accelerated aiming to bring all new products into this platformaiming to bring all new products into this platform

Competence center: Digital Spirit/WKE OnlineCompetence center: Digital Spirit/WKE OnlineThe internal competences around e-content development, The internal competences around e-content development, courseware development and marketing/sales of e-learning courseware development and marketing/sales of e-learning products has been strengthened through the acquisition of Digital products has been strengthened through the acquisition of Digital SpiritSpirit

IBM and Microsoft partnershipsIBM and Microsoft partnershipsA cooperation with IBM is in place, discussions with others ongoingA cooperation with IBM is in place, discussions with others ongoing

Developed productsDeveloped productsSignificant products like the Liber Hermods distance learning Significant products like the Liber Hermods distance learning platform Athena, Digicoach product of Wolters Noordhoff and the platform Athena, Digicoach product of Wolters Noordhoff and the Moorhouse Black education portal are based on this technical Moorhouse Black education portal are based on this technical platform.platform.


Implementation StatusImplementation Status

WEBWEB PublishingPublishing

Content Content acquisitionacquisition

Conversion to Conversion to XMLXML

Content creationContent creation direct to XMLdirect to XML

Structured,Structured, re-usable,re-usable,

media independentmedia independent contentcontent

DigitalDigitalAssetAsset

LibraryLibrary

Pro

du

ct

Assem

bly

Pro

du

ct

Assem

bly

QuarkQuarkPDFPDF

LMSLMS

BOOKS

E-LEARNING

REFERENCE

Etc.Etc.

InfrastructureInfrastructureInfrastructureInfrastructure

Workflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systemsWorkflow management, planning and fulfillment systems

Content FactoryContent FactoryContent FactoryContent Factory PublishingPublishingPublishingPublishing ProductProduct

WKE OnlineWKE OnlineDigital SpiritDigital Spirit

ProductionProductionDepartments Opco’sDepartments Opco’s

Partners (e.g. IBM)Partners (e.g. IBM)

SAP, Klopotek and othersSAP, Klopotek and others


Q&AQ&A

40

StrategyStrategy

Harry Sterk Harry Sterk

CEO Wolters Kluwer EducationCEO Wolters Kluwer Education


Key Strategy ElementsKey Strategy Elements

Reduce Costs DevelopDevelop shared back-office shared back-office services services RRight-sizing in country operationsight-sizing in country operations

DevelopDevelop shared back-office shared back-office services services RRight-sizing in country operationsight-sizing in country operations22

Reorganize Strengthen senior management teamStrengthen senior management team33

Invest11 Reinforce text book publishing leadership Reinforce text book publishing leadership

positionposition Expand market share Expand market share -- mixed-media mixed-media

learning solutionslearning solutions Pursue growth in adjPursue growth in adjaacent marketscent markets

Reinforce text book publishing leadership Reinforce text book publishing leadership positionposition

Expand market share Expand market share -- mixed-media mixed-media learning solutionslearning solutions

Pursue growth in adjPursue growth in adjaacent marketscent markets


1. Invest: 1. Invest: Reinforce text book publishing leadership positionReinforce text book publishing leadership position

Copy successful products/approaches from Copy successful products/approaches from geography to geography (e.g., Higher geography to geography (e.g., Higher Education, atlases)Education, atlases)

Explore opportunities to expand presence in Explore opportunities to expand presence in new European geographic markets new European geographic markets

Improve sales and marketing capabilitiesImprove sales and marketing capabilities Capture larger share of curriculum adoptionsCapture larger share of curriculum adoptions

Expand in segments in current geographies Expand in segments in current geographies where we are under represented where we are under represented

Expand Geographic

Presence

Expand Geographic

Presence

Clone Successful Products

Clone Successful Products

StrengthenSales and Marketing

StrengthenSales and Marketing

Focus AreasFocus Areas DescriptionDescription

Expand in new segments

Expand in new segments


SCHOOL BUDGETS (100%)SCHOOL BUDGETS (100%)

Surface Surface indicates indicates total market total market sizesize

TEXT BOOKS (4-6%)TEXT BOOKS (4-6%)Currently 30% share of Currently 30% share of the text book market, the text book market, which in itself represents which in itself represents some 4-6% of the total some 4-6% of the total school budgetsschool budgets

SCHOOL SERVICES & SYSTEMSSCHOOL SERVICES & SYSTEMS

1. Invest: 1. Invest: Pursue Growth in Adjacent MarketsPursue Growth in Adjacent Markets


1. Invest: 1. Invest: Pursue Growth in Adjacent MarketsPursue Growth in Adjacent Markets

Schools / Teachers / Students

Parents / Students (home situation)

Business / Corporate/ Government

Curriculum Related /

Mandatory

Non Curriculum Related

Services:

Rent-a-teacher *, assessment

services*, risk assessment, compliance

services, back office etc.

“Home market”:‘First time

readers’ material, edutainment

software, atlases etc.

Discretionary learning:

Language education, IT skill

training etc.

Learning support:Homework

support services, exam

preparation, additional

learning material

Compliance driven e-learning:Health safety and

environment education, etc.

CUSTOMER MARKET

LEARNING NEED

Exam services

Text book publishing

+ ICT integration*

CURRENT CORE


1. Invest: 1. Invest: Expand Market Share – Mixed Media Learning Expand Market Share – Mixed Media Learning SolutionsSolutions

IntegratedIntegratedText book + Text book +

CD-ROM / Internet CD-ROM / Internet ModulesModules

CD ROM / Internet CD ROM / Internet modules modules integratedintegrated with with text bookstext books

Electronic components Electronic components contain exercise material contain exercise material for students, and for students, and additional (differentiation) additional (differentiation) resources for teachersresources for teachers

Sold as integrated Sold as integrated package, value pricing package, value pricing

++

++

No migration !


1. Invest1. InvestSystems and Services RationaleSystems and Services Rationale

Poised for growth - organic growth potentialPoised for growth - organic growth potential

Unique launch platform: brands, positions, channelsUnique launch platform: brands, positions, channels

Complementing needs: one-stop-shop fully integrated solutions Complementing needs: one-stop-shop fully integrated solutions

Fragmentation/ small players: Fragmentation/ small players: consolidation opportunityconsolidation opportunity

Text book is the natural Text book is the natural access key to this marketaccess key to this marketText book is the natural Text book is the natural

access key to this marketaccess key to this market


SCHOOL BUDGETS (100%)SCHOOL BUDGETS (100%)

Surface Surface indicates indicates total market total market sizesize

TEXT BOOKS (4-6%)TEXT BOOKS (4-6%)

SCHOOL SERVICESSCHOOL SERVICES & SYSTEMS& SYSTEMS

1. Invest:1. Invest:A Natural EvolutionA Natural Evolution

BOOKBOOK

ICTICT

LMSLMS

•Assessment servicesAssessment services

•Teacher svcs.Teacher svcs.

•ComplianceCompliance svcs.svcs.

•Professional Professional management svcs.management svcs.

TechnologyTechnology: : •common platforms and alliancescommon platforms and alliancesContentContent: : •content management systems, digital content management systems, digital asset libraries asset libraries standardization standardization

TechnologyTechnology: : •common platforms and alliancescommon platforms and alliancesContentContent: : •content management systems, digital content management systems, digital asset libraries asset libraries standardization standardization


Risks & OpportunitiesRisks & Opportunities

?? funding issuesfunding issues

++ marketing & salesmarketing & sales

++ compelling productscompelling products

++ right prices (value pricing)right prices (value pricing)

++ high innovation levelshigh innovation levels

- existing segments- existing segments

- new segments (systems & services)- new segments (systems & services)

Above market average growthAbove market average growth Above market average growthAbove market average growth


New Business DevelopmentNew Business DevelopmentSplit between core and new businessSplit between core and new business Core business development:Core business development:

Text books with integrated ICT componentsText books with integrated ICT components New methodsNew methods

Within business unitsWithin business units

Initially separate, small teams, scaled up Initially separate, small teams, scaled up when there is customer buy-inwhen there is customer buy-in

New business:New business: Related products and services building on existing assets, skills Related products and services building on existing assets, skills

and/or channelsand/or channels


Customer driven approachCustomer driven approach

Previous approachPrevious approach

Start with developing productStart with developing product Build first, sell laterBuild first, sell later Selling on product featuresSelling on product features

New approachNew approach

Start with business model, Start with business model, start with customersstart with customers

Sell first, build later (customer Sell first, build later (customer buy-in required)buy-in required)

Selling on customer benefitsSelling on customer benefits

Quote from publisher:Quote from publisher:

““It takes courage to sell It takes courage to sell something which you have something which you have not built yet”not built yet”

Quote from publisher:Quote from publisher:

““It takes courage to sell It takes courage to sell something which you have something which you have not built yet”not built yet”

Quote from Harry Sterk:Quote from Harry Sterk:

““It takes more courage to It takes more courage to build something before you build something before you have sold it”have sold it”

Quote from Harry Sterk:Quote from Harry Sterk:

““It takes more courage to It takes more courage to build something before you build something before you have sold it”have sold it”


Washing MachineWashing Machine

IdeasIdeas

A Continuous Process: Keep the Machine Full and Accept Early Failure

A Continuous Process: Keep the Machine Full and Accept Early Failure

‘‘Reject andReject andForget’ (80%?)Forget’ (80%?) 20%: Step two:20%: Step two:

ResourcesResources

““Will you buy this?” Will you buy this?” is the most powerful is the most powerful

market researchmarket research


Venture Capital ApproachVenture Capital Approach

Small, dedicated local teamsSmall, dedicated local teams

Divisional business development board: monitoring and cloning. Divisional business development board: monitoring and cloning. Focus on actionFocus on action

Idea is as good as buy-in of customers. Funding in balance with Idea is as good as buy-in of customers. Funding in balance with customer buy-in (committed sales)customer buy-in (committed sales)

Strict go/no go decisions (threshold investment levels)Strict go/no go decisions (threshold investment levels)

Kill or ‘promote’ quickly. Good concepts get scaled upKill or ‘promote’ quickly. Good concepts get scaled up

Lot’s of opportunities and…people trust us.Lot’s of opportunities and…people trust us.

Exploiting well evaluated investment opportunities. Low risk, high speed.

Exploiting well evaluated investment opportunities. Low risk, high speed.


2. Reduce Costs 2. Reduce Costs Reduction of € 15 mln between 2003-2006 Reduction of € 15 mln between 2003-2006

IT/ICTIT/ICT • Partnership with prefered suppliers (e.g. IBM) Partnership with prefered suppliers (e.g. IBM) • One internal e-learning competence centreOne internal e-learning competence centre• CMS, Digital Asset Library CMS, Digital Asset Library • Roll-out backoffice: SAP/KlopotekRoll-out backoffice: SAP/Klopotek

ProductionProduction • Printing, design and pre-press outsourced Printing, design and pre-press outsourced • Central purchasingCentral purchasing• Asia-routeAsia-route

RemunerationRemuneration • Much more performance orientedMuch more performance oriented

Staffing levelsStaffing levels • Reductions where possibleReductions where possible• Improving personnel cost/revenue ratioImproving personnel cost/revenue ratio

VC-approachVC-approach • Development based on market buy-inDevelopment based on market buy-in• Strict go/no-go criteria Strict go/no-go criteria

StandardizationStandardization • Product formatsProduct formats• Active cloningActive cloning

… … and, increase speedand, increase speed… … and, increase speedand, increase speed


3. Reorganize3. ReorganizeHow to Accomplish the Mission?How to Accomplish the Mission? Having the right people in the right place: Having the right people in the right place:

New MD’sNew MD’s ‘‘Oath for Growth’ (contract with staff) Oath for Growth’ (contract with staff) Emphasis on marketing and salesEmphasis on marketing and sales Shift product focus to customer focusShift product focus to customer focus

Core business:Core business: Operational excellence (revenues)Operational excellence (revenues)

- On-timeOn-time- Appropriate quality of contentAppropriate quality of content- Marketing & sales, market share game, segmentationMarketing & sales, market share game, segmentation

Operational excellence (costs)Operational excellence (costs)- 25% approach (cost benchmarking): identifying the issues25% approach (cost benchmarking): identifying the issues- ROIC should exceed WACC (8% after tax)ROIC should exceed WACC (8% after tax)- Standardization & transparency: standard systems, templates etc.Standardization & transparency: standard systems, templates etc.- Simplify organizationSimplify organization

New business (see presentation later) New business (see presentation later)


3. Reorganize3. ReorganizeActive HR Policy: Oath for GrowthActive HR Policy: Oath for Growth

Signed contract with senior staff on:Signed contract with senior staff on:

1- top line (organic) growth1- top line (organic) growth

2- customer focus: on buying rather than liking2- customer focus: on buying rather than liking

3- active portfolio management3- active portfolio management

4- clear (internal) communication4- clear (internal) communication

5- bottom line growth5- bottom line growth

6- sticking to the rules6- sticking to the rules

7- ‘can-do’ mentality7- ‘can-do’ mentality

8- active HR policy: culling mediocrity8- active HR policy: culling mediocrity

9- sense of urgency9- sense of urgency

Active policy to have people in place with the right Active policy to have people in place with the right attitude and cultureattitude and culture


Some examples (past 12 months) Some examples (past 12 months)

New Managing Directors appointed in Belgium, United Kingdom New Managing Directors appointed in Belgium, United Kingdom and the Netherlandsand the Netherlands

Merging operations of Germany and AustriaMerging operations of Germany and Austria

SAP/Klopotek implementations (financial and workflow systems) in SAP/Klopotek implementations (financial and workflow systems) in Germany and the NetherlandsGermany and the Netherlands

Reduction of UK workforce by nearly 20%Reduction of UK workforce by nearly 20%

Content management system in placeContent management system in place

Strategic (technology) alliances in place (e.g. IBM)Strategic (technology) alliances in place (e.g. IBM)

New product family launched with ICT-components in the New product family launched with ICT-components in the NetherlandsNetherlands


SummarySummary

Well defined and leading market position in EuropeWell defined and leading market position in Europe - - scale countsscale counts

Macro-dynamics moving to our advantageMacro-dynamics moving to our advantage

Clear potential for growthClear potential for growth- rejuvenated managementrejuvenated management- customer not product focusedcustomer not product focused- heavy emphasis on marketing and salesheavy emphasis on marketing and sales- potential bolt-on acquisitions to develop the corepotential bolt-on acquisitions to develop the core- available available funding from governmentfunding from government

Cost control opportunities continue Cost control opportunities continue

Clear direction and complementary to GroupClear direction and complementary to Group

We will grow faster than the marketWe will grow faster than the market

Documents

1 Wolters Kluwer Education From A to Z Investor/Analyst Day Amsterdam 25 November 2003