First-half revenues up 2% in constant currencies and up 1% organically.
Leading, growing positions (47% of total revenues) on average grew 6% organically.
Digital revenues (68% of total) grew 5% organically, more than offsetting print decline.
Digital and services revenues now account for 81% of total revenues (HY 2013: 78%)
First-half adjusted operating profit margin declined, as expected, due to restructuring costs.
Restructuring costs of €19 million in first half; continue to expect €25-30 million for full year.
First half diluted adjusted EPS €0.63, up 1% at constant currencies.
Adjusted free cash flow €136 million, up 1% at constant currencies.
Net-debt-to-EBITDA of 2.6x, following dividend and acquisition payments in second quarter.
Acquisition of Datacert in April builds on our leading growth position in Corporate Legal Services.
Announcing renewal of €600 million multi-currency credit facility.
Nancy McKinstry, CEO and Chairman of the Executive Board, commented: “In the first half of the year, we continued to build on and invest in our leading, growing positions and digital solutions, and these areas delivered sustained organic growth. Trends in Europe are still quite varied, but we are encouraged by recent performance of digital products in this region. Our planned restructuring program is well underway and we remain confident of achieving the guidance we set out at the start of the year.”
Full-Year 2014 Outlook
We reiterate the full-year guidance set out in February this year. Our full-year 2014 margin guidance includes anticipated restructuring costs of €25-€30 million, of which €19 million occurred in the first half. The table below provides our 2014 guidance.
Adjusted operating profit margin Adjusted free cash flow Return on invested capital Diluted adjusted EPS
20.5%-21.5% ≥ €475 million ≥ 8% Low single-digit growth
Guidance for adjusted free cash flow and diluted adjusted EPS is in constant currencies (EUR/USD 1.33).
Our guidance is based on constant exchange rates. Wolters Kluwer generates more than half of its revenue and adjusted operating profit in North America. As a rule of thumb, based on our 2013 currency profile, a 1 U.S. cent move in the average EUR/USD exchange rate for the year causes an opposite 1.0 euro-cent change in adjusted diluted EPS.
Our guidance assumes no significant change in the scope of operations. We may make further disposals which could be dilutive to margins and earnings in the near term. Additional information underlying our guidance is provided in the table below.
Adjusted net financing costs1 Benchmark effective tax rate Cash conversion ratio
Approximately €100 million 27.5%-28.0% Approximately 95%
1) In constant currencies (EUR/USD 1.33).
Outlook by Division
Legal & Regulatory: we expect Corporate Legal Services to achieve good organic growth, although momentum in CLS transactional revenues is expected to slow this year. For the division as a whole, including Legal & Regulatory Solutions, we anticipate organic revenue decline due to the continued economic uncertainty in large parts of Europe, weakness in print formats, and lower U.S. law school enrollments. Continued softness in revenue combined with additional restructuring costs and the effect of dilutive disposals and transfers is expected to lead to a lower margin in 2014. In 2014, certain European Tax & Accounting publishing activities were transferred to our Legal & Regulatory publishing operations in order to drive further economies of scale.
Tax & Accounting: we expect our software businesses to achieve good organic growth, partly offset by trends in bank products, print publishing, and training. We expect to see some margin contraction in 2014 due to increased restructuring.
Health: we expect another strong year for Clinical Solutions. Market conditions for print journals and books are expected to remain soft. The positive effect from the ongoing mix shift towards Clinical Solutions should benefit the full-year margin despite continued investment in new digital product development and global expansion.
Financial & Compliance Services: we expect positive organic growth in our Finance, Risk & Compliance unit this year, with second-half growth skewed to the fourth quarter. Audit is also expected to grow, with the effect of an ongoing product rationalization still impacting the second half. This positive performance is likely to be partially offset by declines in Originations transactional revenue and Transport Services.
Anti-dilution Policy with regard to Performance Shares
Wolters Kluwer has a policy to offset the dilution of its annual performance share issuance with share repurchases. To accomplish this in 2014, the Company intends to repurchase up to €25 million in shares in the remainder of 2014.