Wolters Kluwer S/Adr

Let's get right to it on slide six. First half revenues were 3 billion and 52 million euros, an increase of 6% in constant currencies. Organic growth was 5%, slightly lower than the prior period, as we had guided. This was largely due to a downturn in our non-recurring revenues, which I'll come back to in a moment. Adjusted operating profit was 865 billion euros, an increase of 14% in constant currencies. As a result, the margin increased by 190 basis points to 28.4%. The increase in adjusted operating profit drove a 14% rise in diluted adjusted earnings per share in constant currencies. Adjusted free cash flow was 505 million euros, up 13% in constant currencies, reflecting the increase in operating profit and higher cash conversion. Net debt to EBITDA increased to 2.1 times following the recent acquisitions. And lastly, return on invested capital increased to 18.5%. Now let's look at revenues by division on the next slide. Health grew 4% organically, slowing from 6% a year ago due to several factors. These include timing of up-to-date renewals, sharper print decline, and a challenging comparable in medical research. Tax and accounting grew 6% organically compared to 7% a year ago, which was largely due to a decline in non-recurring outsourced professional services against a tough comparable a year ago. Financial and corporate compliance delivered 4% organic growth, similar to the prior period. FCC's recurring revenues grew 6% organically, while FCC's transactional revenues slowed to 1% organic growth. Legal and regulatory achieved 6% organic growth compared to 5% growth a year ago. This reflected steady growth in digital information subscriptions and favorable timing of print subscriptions. And lastly, corporate performance in ESG grew 7% organically compared to 9% a year ago. Recurring cloud-based software revenues continue to see double-digit organic growth. However, as expected, non-recurring revenues, including on-premise software licenses, declined 10% as more of our customers opt for our recurring cloud software solutions. Now let's take a look at revenue by type on slide eight. The chart on the left shows our recurring revenue streams, which represent 84% of total revenues. Total recurring revenues grew 7% organically in line with a year ago. The largest component, digital and service subscriptions, shown by the blue line, also grew 7% organically, slowing slightly from 8% a year ago. This was due to slower subscription growth and health related to the factors I mentioned previously. Total non-recurring revenues turned negative in the first half, declining 4%. This was due to several factors. First was a downturn in other non-recurring revenues. This includes on-premise software licenses and implementation services. This category fell 9% organically compared to 1% growth in the comparable period. This trend is due to market demand, which favors recurring cloud software. Next, we saw a slowdown in FCC transactional revenues from 3% a year ago to 1% this year. This reflects the continued stagnation in U.S. M&A volumes and corporate lending activity. Finally, print book revenue experienced a sharp downturn. Print books were down 11% across the group and down 17% in health. Now let's take a look at divisional margins on slide nine. As noted, the adjusted operating profit margin increased by 190 basis points to 28.4%. This strong performance on the margin was driven by mixed shift towards expert solutions and initiatives to manage discretionary expense and drive long-term efficiencies. The strong start on margin will help us in the second half as we'll face currency headwinds, additional restructuring, and the absence of last year's 27 million euro pension gain in the Netherlands. Now let's cover the rest of the P&L on the next slide. Adjusted debt financing costs increased to 38 million euros, reflecting higher gross debt and higher coupon rates on refinance debt. Included in net financing results was a net foreign exchange gain of 2 million euros compared to a 6 million net foreign exchange loss in the prior year. Adjusted pre-tax profit was 828 million euros, up 11% in constant currencies. The benchmark tax rate on adjusted pre-tax profits increased to 23.8% as guided and was primarily driven by an adverse movement in our deferred tax position. After tax, adjusted net profit was €631 million, up 11% in constant currencies. As a result, the ongoing share buyback program, the weighted average number of shares outstanding decreased by 3%. The lower share count helped offset the increase in interest in tax. As a result, we delivered a 14% increase in diluted adjusted EPS in constant currencies. Let's cover cash flow on slide 11. Adjusted operating cash flow increased 19% in constant currencies, reflecting the increase in adjusted operating profit and higher cash conversion. Networking capital outflows reduced to 110 million euros, reflecting more favorable timing of vendor payments as compared to a year ago. Capital expenditures were stable at 147 million euros, or 4.8% of revenues. We continue to expect full-year CapEx to be in line with our guidance range of 5% to 6% of revenues. Cash conversion improved to 85%. we continue to expect our full-year cash conversion to be in the range of 95% to 100%. Net interest paid more than doubled to €53 million, reflecting the initial coupon payment on the five-year euro bond issued in March of last year. Taxes paid increased to €192 million. This was due to higher net income and the timing of tax refunds and prepayments. All in all, adjusted free cash flow was €505 million, up 13% in constant currencies. Now, let's turn to the use of cash on slide 12. Acquisition spending was significantly higher than a year ago at €833 million. This included the amounts paid for Razzie in March and Bright Flag in June, and a few smaller acquisitions. Dividends paid amounted to 297 million euros. We've spent 509 million euros on the share buyback in the first half. Overall, net debt increased to 4.3 billion euros. This represents an increase of 1.1 billion euros compared to year-end 2024. Our leverage ratio, based on a 12-month rolling EBITDA, increased to 2.1 times, which remains within our target range of 1.5 times to 2.5 times. Now, let me turn to the dividend and provide an update on our 2025 share buyback program as we move to slide 13. In line with our policy, the interim dividend for 2025 was set at 40% of the prior year total dividend, or 93 euro cents per share. This will be paid to shareholders in September. As of this week, we have completed approximately 637 million euros of the up to 1 billion share buyback program, which we announced in February. For the period July 31st, 2025, up to and including November 3rd, 2025, a third-party mandate is now in place to execute approximately 175 million euros on our behalf. Let me sum up the first half results before handing it back to Nancy. Let's go to slide 14. Organic growth was 5% as expected. We delivered a strong improvement on the margin. This helped drive a 14% constant currency increase in diluted adjusted EPS and a 13% constant currency increase in adjusted free cash flow. Return on invested capital reached 18.5%. Acquisitions increased net debt to EBITDA to 2.1 times, but this remains within our target range. I'll now hand back to Nancy to cover divisional developments.

Thank you, Kevin. I will begin with health on slide 16. Health delivered 4% organic growth led by clinical solutions. The adjusted operating profit margin increased to 33% due to the ongoing mixed shift towards clinical solutions, expense management, and long-term efficiency initiatives. Clinical solutions delivered 6% organic growth easing slightly compared to a year ago due to the timing of renewals, the leap year effect and product sunsets. We made good progress moving our U.S. institutional customers to the new up-to-date enterprise edition, which includes data analytics and AI enhanced search. Last month, we began rolling out up-to-date enterprise to European customers. Learning, research and practice slowed to 1% organic growth, compared to 4% in the prior period. Excluding print, organic growth would have been 5%. As anticipated, growth in our medical research unit moderated against a tough comparable, which had benefited from the full-scale distribution of the New England Journal of Medicine. In learning and practice, we delivered strong growth in our digital nursing solutions, which was to a large extent offset by a 17% decline in print books. Now let's turn to tax and accounting on slide 17. In tax and accounting, organic growth was 6%, with recurring cloud software revenues up 17%. The adjusted operating profit margin expanded by 170 basis points, reflecting operational gearing and expense management, which more than offset increased investment. North America delivered 6% organic growth, driven by double-digit organic growth in our cloud, software solutions, CCH Access in the US, and CCH iFirm in Canada. Revenues in our outsourced professional service unit declined against strong double-digit growth in the comparable period. Growth in our US publishing unit was stable. Europe delivered a steady 7% organic growth with good performance across all regions. Growth was driven by double-digit organic growth in our European cloud and hybrid cloud solutions. So now let's turn to finance and corporate compliance on slide 18. Finance and corporate compliance delivered 4% organic growth supported by 6% growth in recurring revenues. The decline in the adjusted operating profit margin reflects increased investment. Legal services delivered a steady 6% organic growth supported by 8% growth in recurring service subscriptions. Transactional revenues slowed to 2%, reflecting still weak M&A deal volumes in the U.S. RASI, which builds on our position in the U.S. mid-market, is performing well. Financial services grew 1% organically as 3% growth in recurring revenues was partially offset by a 4% decline in non-recurring revenues. Our US banking compliance solutions delivered steady growth. However, lean solutions transactional revenues declined compared to growth a year ago. Earlier this month, we announced the divestment of FRR to Regnology for an enterprise value of approximately 450 million euros. Moving now on to legal and regulatory on slide 19. Legal and regulatory posted 6% organic growth led by 7% growth in digital subscription revenues. The adjusted operating profit margin rose by 320 basis points, driven by operational gearing, expense management, and longer term efficiency programs. Legal and regulatory information solutions delivered 6% organic growth, supported by strong subscription renewals. Print products showed mixed performance, We continue to expand generative AI capabilities across key platforms in the first half. Legal and regulatory software posted 5% organic growth, led by continued strong performance in legal practice management solutions. That includes Cleos and Legislay, which grew 9%. ELM solutions reported low single-digit organic growth. In June, legal and regulatory completed the acquisition of BrightFlag, a global provider of AI-enabled legal spend and matter management solutions for midsize corporations. Now turning to corporate performance in ESG on slide 20. Corporate performance in ESG grew 7% organically, with recurring cloud software revenues up 17%. The adjusted operating profit margin was broadly stable, reflecting sustained investment in product development, sales, and marketing. In EHS and ESG, the Enablon suite grew 10% organically with strong growth in Europe and Asia Pacific. Recurring cloud software revenues rose 18% while on-premise license revenues were stable. In corporate performance, tax, and audit, overall organic growth was 5%. The CCH2GetIT corporate performance management platform delivered 5% growth with double-digit growth in recurring cloud software. This was partially offset by a decline in non-recurring revenues, including on-premise licenses. Our tax and audit units posted single-digit growth, supported by continued momentum in our cloud software solutions. Now let me update you on the strategic progress that we are making on slide 21. We made good progress on all three pillars of our strategy. Expert solutions made up 59% of total revenues and grew 6% organically in the first half. Nearly 80% of our expert solutions are software products, which overall also grew 6% organically. Within software, recurring cloud software subscription revenues grew 15% organically. These cloud software revenues now exceed on-premise software revenues at the group level. Driving penetration of our cloud solutions is of strategic importance, not only because market demand is favoring cloud solutions, but also it facilitates the rapid integration of AI, including Angentic AI, to support our customers with their complex daily workflows. Secondly, we also made progress on expanding and extending our presence in higher growth adjacent market segments. The acquisition of Razzie and bright flag increase our opportunities in the mid-size corporate market. We also continue to expand our partnerships or sign new ones. For example, Health has expanded its list of partnerships with a new collaboration with Microsoft to integrate up-to-date into their Dragon co-pilot for ambient listening and other healthcare workflows. And thirdly, we are making progress in upgrading our systems and capabilities to support sales effectiveness, customer support functions, and go to market. Journey to the next slide. I'm proud to report that we have made enormous progress in proliferating generative AI features across products in the last two years. A significant majority of our revenues are AI enabled, and most major product suites now also include generative AI capabilities. This slide highlights examples of products that incorporate customer-facing GenAI features. These GenAI features are, of course, only in our digital offerings, which are highlighted in the color part of the chart. These GenAI features enhance customer workflows in many ways. Tools such as summarization, drafting, Q&A, and virtual assistance save time, raise productivity, and improve outcomes. These key AI features are supporting subscription renewals and attracting new customers. This week, we are announcing an enhanced version of UpToDate to early access customers. This version will have full GenAI enabled capabilities and will draw not only upon UpToDate's content, but also our drug databases. As always, we build responsible, expert-validated AI leveraging our trusted proprietary expert content. This upgraded version will significantly increase the speed at which doctors can get a concise, accurate, and transparent answer to their complex medical questions. So now let's take a look at some of the first angetic AI solutions that we have in market for testing on the next slide. We have several angetic AI solutions in development or in customer beta. I want to just highlight two examples. In tax and accounting, we're building AI agents into our cloud-based CCH access platform. This technology will empower our customers, which are CPA and tax advisors, to focus even more of their time on higher value work as the software will not only automate tasks, but also anticipate needs, reason through problems, and offer recommendations tailored by the customer in real time. In corporate performance in ESG, we built and recently launched Teammate AI Editor. This is an energetic gen AI writing engine that helps internal auditors improve the quality and consistency of their audit documentation. It includes a variety of pre-built prompts tailored to audit workflows and is built with advanced data protection measures and safeguards to ensure the output is relevant, accurate, and free from biased language. The development of AI agents is accelerated by our proprietary AI enabled platform, which was created by our DXGT. This platform is being used across all division and it helps us speed our development and drives economy of scale. Now, let me talk about a few of the recent portfolio changes. This year, we made a number of moves that strengthen our market positions and increase our strategic focus. In March, we completed the acquisition of Razzie, a U.S. provider of registered agent and other compliance services to midsize corporations. Razzie builds on our existing position serving the U.S. mid-market, which is a higher growth segment than our traditionally large corporate space. Razzie is performing well, and the integration is well underway. In June, we acquired Brightflag, a global provider of legal spend and matter management, software that extends our ELM solutions business into mid-size corporations and brings us a significant position in Europe. Bright Flag is far proving to be a great addition to our portfolio, and we are working to drive additional revenue synergies with ELM solutions. And as I mentioned, we agreed to divest our FRR reporting unit. This disposal will take some time to complete due to regulatory processes, and employee consultations. Ultimately, this move will allow the FCC Division to focus its efforts on developing its U.S. banking compliance, business, and corporate legal services. So now let's take a look at the outlook on the next slide. As indicated in today's release, we have updated our guidance for the full year. We continue to expect full-year 2025 organic growth to be broadly in line with prior year's growth. Despite the unfavorable US dollar exchange rate movement, the absence of last year's pension gain, and additional restructuring costs, we now expect the adjusted operating profit margin in reported currencies to be near the top end of our guidance range. Our guidance for adjusted free cash flow is unchanged. We continue to expect between 1.25 and 1.3 billion euros in constant currencies. Underpinned by the improved view on margin, we now expect mid to high single-digit growth in diluted adjusted EPS in constant currencies. Finally, due to the adverse dollar exchange rate, we now expect ROIC in reporting currencies to be around 18%. And now let's conclude with the divisional guidance on the next slide. We expected health organic growth to be in line with or slightly below prior year In tax and accounting, we expect organic growth to be in line with the prior year. For finance and corporate compliance, organic growth is expected to be below the prior year due to weaker non-recurring revenues. In legal and regulatory, we expect organic growth to be in line with the prior year. And lastly, in corporate performance and ESG, organic growth is expected to be above the prior year, reflecting higher growth for the CCH to get a platform. Thank you very much for your attention, and now I'll be happy to take questions.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 1 on your telephone keypad. To withdraw your question, please press star 1 1 again. We will now take the first question. From the line of George Webb from Morgan Stanley, please go ahead.