The Wolters Kluwer 2011 Annual Report and Financial Statements
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2011 Annual Report 2011 Annual Report Visit the 2011 Annual Report online and download the iPad app. WKAR-cover-050312-LM.indd 1 06-03-12 14:30 In this report we showed you the world of our customers; this is also our world. We meet and work together in cities worldwide. We understand the needs of our customers - from the Bundestag in Berlin, where politicians and public officers work on new legislation; to large ballrooms in Dallas, with thousands of professionals gathering for a conference; to the skyscrapers in Shanghai and Kuala Lumpur, and new, advanced hospitals in Beijing; to the international courts and C-suite boardrooms, where critical decisions are taken; to the Japanese stock exchange and dealing rooms worldwide, where compliance is eminent 25/8; to Wolters Kluwer offices, where our employees work every day to serve customers better. Cover photo: Reichstag, home of the Bundestag; Berlin, Germany WKAR-cover-050312-LM.indd 2 06-03-12 14:30 Wolters Kluwer 2011 Annual Report 01 The World of Our Customers Wolters Kluwer matters to its customers. They trust us to support them in managing their business efficiently and delivering results to their clients. The next frontier for professionals is to take advantage of an ever more mobile, information-rich world to increase their effectiveness and productivity. Throughout this report, you will read stories that tell how Wolters Kluwer creates value through expertise, champions innovation, and demonstrates leadership. You will see the world of our customers - their work environments and professional spaces - and you will understand the difference Wolters Kluwer makes in their professional lives. We deliver expert insights, software, and services on a global scale with a strong local presence. Customers trust Wolters Kluwer as the go-to resource to guide them in their daily activities and to help them achieve their goals. 100581_001_025_LM_v3.indd 1 05-03-12 08:22 02 Content Overview Expertise 40 42 44 Building a Best of 2011 Meet the Next Network Trends in Generation of Legal Expertise The App Maker Knowledge Professionals need to anticipate and respond Senior technology Our customers, together with to game-changing expert chats with our authors and domain trends to stay ahead of 15-year old about experts all contribute to a the curve. developing apps. growing network of legal knowledge. We share our knowledge 46 48 and expertise in many 50 Sharing Expertise ways and support our Sales in North China Get It Right with the Community neighborhoods around the world. In an ever-increasing In Our A Day in environment of the Life regulations and Neighbor- compliance, it is Through our sales reps’ important for our hood contacts with customers to get it right. customers, we learn a lot about the trends in each of our businesses and regions. Leadership 54 56 58 60 Developing Best of 2011 You Tell Us, Top Notch New Leading We Listen for the Awards Generations Our customers tell us Professional Our leading solutions that what we do matters of Leaders to them. We offer our customers were recognized by opportunities to connect Our vision is to be a builder many different awards and learn about trends, of global talent that attracts over 2011. technologies, and best the leaders of tomorrow. practices. Each one of our 62 64 employees and partners 66 Advancing the 175+ Years Lead has their own story that Successfully Business the Way connects them to the Completed history of Wolters Big Data Once Upon Kluwer. 145 Projects There are opportunities a Time 2011 marked the to extract value from successful completion of the massive amounts of the four-year Spring- data generated as a board program, by-product of providing delivering great results. professional services. 100581_001_025_LM_v3.indd 2 05-03-12 08:22 Wolters Kluwer 2011 Annual Report 03 Innovation Innovation Tourna- 70 72 74 ments are a great tool Connecting Best of 2011 Imagine the to stimulate new ideas Possibilities across the company the Dots Mobile and to engage each and Taking every employee. Mobility, collaboration, Innovation advanced search, and the Insights delivered by It to the evolution towards hybrid Wolters Kluwer at work, Next Level content-software solutions. at home, or on-the-go. 76 78 81 82 The The Voice United Family 2011 Global Courtroom of the Hospital – China Innovation Award of Tomorrow Customer Improving Engaging Patient Care Ideas The introduction of new There are many different technologies drives ways of incorporating The opportunities and Engaging employees in change in all professions customer needs into the challenges of delivering innovation is necessary and the law is no development efforts of quality patient and to build the right culture exception. our products. healthcare for the largest that supports successful population on earth. product development. 05 Message from the CEO “Our customers Report of the Other Information continued to place Executive Board 168 Corporate Governance their trust in us and 173 Risk Management we delivered a stream 20 Profi le of the Executive Board of innovations to 22 Review of the Year 178 Statements by the Executive Board bring enhanced value 26 2011 Financial Developments 179 Report of the Wolters Kluwer to them.” Preference Shares Foundation 180 Information for Shareholders Supervisory Board and Investors and Remuneration 184 5-Year Key Figures 86 Profi le Supervisory Board 88 Report of the Supervisory Board 91 Remuneration Report Company Information 08 Company Profi le 2011 Financial Statements 15 Financial Overview 96 Consolidated Statements 101 Notes to the Consolidated Financial Statements 157 Financial Statements of Wolters Kluwer nv 158 Notes to the Financial Statements of Wolters Kluwer nv 164 Other Information on the Financial Statements 100581_001_025_LM_v3.indd 3 05-03-12 08:22 04 Message from the CEO Nancy McKinstry at Marketstreet, Philadelphia, meeting with Wolters Kluwer employees of the Medical Research and Professional & Education units, June, 2011 100581_001_025_LM_v3.indd 4 05-03-12 08:22 Wolters Kluwer 2011 Annual Report 05 Nancy McKinstry, CEO and Chairman of the Executive Board Innovation Leads the Way The world of our professional customers keeps changing at an ever-increasing pace. Increased complexity of regulations and compliance requirements, new technologies and a greater focus on value for price, are just some of the key trends that are changing the game for our customers. Wolters Kluwer delivered strong financial results in 2011. Behind these results lies the strength of our market positions and our strategy. As global economic circum- stances were challenging, our customers continued to place their trust in us and we delivered a stream of innovations to bring enhanced value to them. We have expanded our online and productivity solutions to help our customers manage the increased volume and com- plexity of their work. More and more, these innovations are delivered to our customers through mobile and digital products which allow them to be productive anywhere. Most importantly, these innovations are making a difference - even saving lives - as highlighted through research by Harvard University showing that the use of Wolters Kluwer’s UpToDate solution by hospitals leads to lower mortality and shorter hospital stays. These strengths make us a leader in our markets and a trusted partner to our customers. We are encour- aged by our progress during 2011 and the value we have delivered to our customers, our communities, and our shareholders. 100581_001_025_LM_v3.indd 5 05-03-12 08:22 06 Message from the CEO Financial strength In 2011, we achieved our targets across all operating performance indicators. We extended our leading positions, grew online and software revenues, and increased cash flow. Our total revenues grew in constant currencies by 4% to €3,354 million, 1% organically. Our growth in electronic and service subscriptions was 8% and we delivered improved retention rates across all of our markets. Profit- ability also improved as our EBITA margin expanded to 21.7% as a result of stronger underlying growth. Our free cash flow accelerated to €443 million, allowing us to distribute additional returns to shareholders with an increase in our dividend and a share buy-back program. Importantly, the transformation of our business continues. Today, 71% of our revenue comes from higher value and more profitable online and software products and services. And the resiliency of our business is increasing as subscrip- tion revenue now accounts for 74% of our total business. Our efforts to enlarge our global footprint were supported by several strategic acquisitions. In 2011, we undertook several initiatives to focus our portfolio on capturing opportunities in higher-growth markets where our leading positions and deep domain expertise can be leveraged to accelerate our growth. As a result, in July, we announced the divestment of the pharma business which will allow the Health division to take full advantage of its leading market positions in profes- sional information and clinical decision support solutions. The voice of the customer Customers are at the center of everything we do. The world of our professional customers keeps changing at an ever-increasing pace. Greater complexity of regulations and compliance requirements, new technologies, and a greater focus on productivity are just some of the key trends that are changing the game for our customers. At Wolters Kluwer, ‘voice-of-the-customer’ initiatives like the iLab within our Clinical Solutions unit or the more than 900 customer interviews by senior executives in Germany, helped to deliver leading-edge solutions that address the pain points of our customers. This relentless focus on the customer is reflected in our strong market positions and brands. We continuously focus on enhancing the value we provide to customers relative to other products in the market. We measure our progress through ‘net promoter scores’ and innovation dashboards, and I am pleased that the majority of our products outpace competitive alterna- tives.