Wolters Kluwer 2010 Annual Report

Benchmark figures	2010	2009	Change in actual currencies (%)	Change in constant currencies (%)

Revenues	3,556	3,425	4	0
Ordinary EBITA	727	682	7	3
Ordinary EBITA margin (%)	20.4	19.9
Ordinary net income	444	427	4	2
Free cash flow	445	424	5	4
Cash conversion ratio (CAR)	0.95	0.96

Return on invested capital (ROIC) (%)	8.6	8.5
Return on invested capital (ROIC) (%), including impairment in NOPAT	8.6	5.2

Net debt	2,035	2,007	1
Net debt to EBITDA (ratio)	2.7	2.9
Net interest coverage (ratio)	5.6	5.7

Diluted ordinary EPS (€)	1.48	1.45	2
Diluted ordinary EPS in constant currencies (€)	1.43	1.43		0
Diluted free cash-flow per share (€)	1.48	1.44	3	2

Reconciliation of benchmark figures

Reconciliation between operating profit and ordinary EBITA	2010	2009

Operating profit	481	234
Amortization of publishing rights and impairments	175	368
EBITA	656	602

Non-benchmark costs in operating profit	71	80

Ordinary EBITA	727	682

Return on invested capital (ROIC)	2010	2009

Ordinary EBITA	727	682
Allocated tax	(185)	(166)
Net operating profit after allocated tax (NOPAT)	542	516

Average invested capital	6,279	6,069
ROIC (NOPAT/Average invested capital) (%)	8.6	8.5

Reconciliation between profit for the year and ordinary net income	2010	2009

Profit for the year attributable to the equity holders of the Company (A)	288	118
Amortization of publishing rights and impairments (adjusted for non-controlling interests)	172	358
Tax on amortization and impairments of publishing rights and goodwill	(62)	(93)
Results on disposals (after taxation)	0	(8)
Non-benchmark costs in operating profit (after taxation)	46	52
Ordinary net income (B)	444	427

Reconciliation between cash flow from operating activities and free cash flow	2010	2009

Net cash from operating activities	546	510
Net capital expenditure	(145)	(123)
Dividends received	1	1
Appropriation of Springboard provisions (after taxation)	43	36
Free cash flow (C)	445	424

Per share information (in €)	2010	2009

Weighted average number of shares (D) in millions of shares	296.4	290.1
Diluted weighted average number of shares (E) in millions of shares	300.3	293.8
Ordinary EPS (B/D)	1.50	1.47
Diluted ordinary EPS (minimum of ordinary EPS and [B/E])	1.48	1.45
Diluted ordinary EPS in constant currencies	1.43	1.43

Basic EPS (A/D)	0.97	0.41
Diluted EPS (minimum of basic EPS and [A/E])	0.96	0.40

Free cash flow per share (C/D)	1.50	1.46
Diluted free cash flow per share (minimum of free cash flow per share and [C/E])	1.48	1.44

Non-benchmark costs in operating profit	2010	2009

Personnel-related restructuring costs	25	33
Onerous contracts	0	2
Asset write-offs	1	0
Third party costs	26	21
Other exceptional costs	6	12
Subtotal Springboard costs	58	68
Acquisition integration costs	5	12

Total Springboard/acquisition integration costs (note 25)	63	80

Acquisition related costs (note 5)	8	-

Total non-benchmark costs in operating profit	71	80

Benchmark tax rate	2010	2009

Income tax expense	66	3
Tax benefit on amortization and impairments	62	93
Tax benefit on result on disposals	0	12
Tax benefit on non-benchmark costs	25	28
Tax on Ordinary Income (F)	153	136
Ordinary net income	444	427
Adjustment for non-controlling interests	2	2
Ordinary income before tax (G)	599	565

Benchmark tax rate (F/G) (%)	26	24

Non-benchmark costs in operating profit

Non-benchmark costs relate to expenses arising from circumstances or transactions that, given their size or nature, are clearly distinct from the ordinary activities of the Group and are excluded from the benchmark figures:

Springboard costs;
Restructuring costs;
Acquisition integration costs;
Acquisition related costs; and
Fair value changes of contingent considerations.

In 2010, the Company adopted IFRS 3 (Revised) ‘Business Combinations’ in which acquisition related costs are expensed when incurred. Also any change in the fair value of contingent purchase considerations is recognized through the income statement. Previously these items have been presented as an adjustment of goodwill. These items, given their size or nature are clearly distinct from the ordinary activities of the Group and therefore are excluded from the benchmark figures as of January 1, 2010.

Springboard

On November 5, 2008 Wolters Kluwer announced to accelerate its Springboard restructuring initiative. This initiative is driving the next wave of operational excellence at Wolters Kluwer by simplifying and standardizing the core systems and processes used to develop, sell, and support products and services globally. Springboard expenses include costs related to IT system migration and implementation, outsourcing, migration costs, costs related to reengineering the content creation process, and also include severance and property consolidation costs.

Restructuring costs

Restructuring costs excluded from benchmark figures are defined as expenses arising from circumstances or transactions that, given their size or nature, are clearly distinct from the ordinary activities of the Group.

Acquisition integration costs

Acquisition integration costs are those one-time non recurring cost incurred by the company to integrate activities acquired either by business combination or asset transaction.

Acquisition related costs

Acquisition related costs are one-time non-recurring cost incurred by the Group resulting from acquisition activities.

Fair value changes contingent considerations

Results from changes in fair value of the contingent consideration are not considered to be part of ordinary operational business results.

Note 2: Benchmark Figures