Hello, and welcome to the Wolters Kluwer full year 2021 results webcast and conference call. My name is Alex, and I will be your coordinator for today's event. Today's conference is being recorded. Please note for the duration of the call, your lines will be on listen only. You will have the opportunity to ask a question at the end of the call. This is done by pressing star one on your telephone keypad. At any time, if you require assistance at any point, please press star zero, and you will be connected to an operator. I will now hand over to your host, Meg Geldens, Vice President of Investor Relations, to begin today's conference. Thank you.
Thank you, and good morning, good afternoon, everyone. Thank you for joining this Wolters Kluwer full year 2021 results call. Today's earnings release and the slides for this presentation are available for download on the investor section of our website, wolterskluwer.com. With me today on the call are Nancy McKinstry, our CEO, and Kevin Entricken, our CFO. We're dialing into this call remotely from various locations around the world, so thank you in advance for your understanding in case we experience any delays or technical issues during this event. In a moment, Nancy and Kevin will discuss the important features of our full year results. Following their comments, we will open the call to your questions. Before we start, I'll remind you that some statements we make today may be forward-looking.
We caution that these statements are subject to risk and uncertainty and may cause actual results to differ materially from those indicated in these statements. Factors that could affect our future financial results are discussed in note two of today's earnings release. As usual, in the presentation today, we will refer to adjusted profits, which exclude non-benchmark items. We also refer to growth in constant currencies, which excludes the effect of currency movements, and we refer to organic growth, which excludes the effect of both currency and acquisitions and divestments. Reconciliations to IFRS can be found in note three of today's release. At this time, I would like to hand the call over to our CEO, Nancy McKinstry.
Thank you, Meg. Hello, everyone, and thank you for joining us on this call. Before I start, I would like to acknowledge our employees, customers, and other stakeholders for their many contributions to our business last year. I will start by giving you the key highlights of 2021, the final year of our most recent three-year strategic plan. Kevin will then take you through the financials in more detail. After that, I'll come back to discuss the divisional developments and our strategy for the coming three-year period. I will then finish with an outlook for 2022. Let's start with the key highlights. I'm pleased to report that we had strong results in 2021, with all four divisions seeing a good recovery. Organic growth was 6%, driven not only by a recovery in non-recurring revenue streams but also by accelerated momentum in recurring revenues.
We saw a significant increase in our adjusted operating profit margin, which reached 25.3% last year. Excluding the effect of currency, we recorded 17% growth in diluted adjusted earnings per share. Adjusted free cash flow reached a new milestone at just over EUR 1 billion, a 15% increase in constant currency. The balance sheet remains very strong, and the results led to a marked improvement in our return on invested capital. This past year, we again returned a substantial portion of our free cash flow to shareholders in the form of dividends and share buybacks. We also made significant progress on the ESG front. Expert Solutions grew very well. Despite our employees facing the continued extraordinary challenges due to the pandemic, I'm proud to report that we maintained our employee engagement above the high-performing norm, a standard based on leading companies.
Last year, we conducted our first diversity, equity, and inclusion survey, which has allowed us to set a baseline quantitative belonging score. We also advanced in other important ESG areas, including cybersecurity and various programs that help reduce our carbon emissions. We have set some new ambitions for these areas that I will come back to later. Turning now to slide five. Looking back at the past three years, which were marked by uncertainty due to the pandemic, I'm pleased to say the strong recovery in 2021 allowed us to meet or exceed nearly all of our strategic and financial goals that we set three years ago. We grew Expert Solutions from 49% of total revenues in 2018 to 55% of total revenues in 2021, primarily through consistent strong organic growth of these products.
The acquisitions of CGE, XCM Solutions, eOriginal, and Vanguard, and the divestment of several non-core assets also helped to enhance our focus on Expert Solutions. We also made progress on enriching several of our information products, adding functionality and automation. We are starting to launch the early results of these efforts to positive customer reaction. A lot of the progress was made on our third goal, which was to drive operational agility. We completed several major infrastructure projects, a modern global HR system, the consolidation of customer-facing websites into a single global site, and the implementation of CCH Tagetik as our new corporate financial performance management tool. With these summary remarks, I now will turn the call over to Kevin Entricken, who will provide more insights into our financial performance. After that, of course, I'll return to give you the divisional highlights and the outlook for 2022.
Thank you, Nancy. Let me start with the financial highlights on slide seven. Full year 2021 revenues were EUR 4,771 million, an increase of 6% in constant currencies. Organic revenue growth was 6%, marking a clear recovery from the prior year. Adjusted operating profit was EUR 1,205 million, an increase of 11% in constant currencies. The adjusted operating profit margin improved by 90 basis points to 25.3%. This increase was driven by operational gearing, lower restructuring costs, a few net positive one-time items, and continued savings on expenses such as travel and events. Diluted adjusted earnings per share increased 17% in constant currencies, partly due to the favorable tax rate last year.
Adjusted free cash flow was EUR 1.01 billion, an increase of 11% overall and 15% in constant currencies. The strong results lead to a step up in our Return on Invested Capital and further strengthening of our balance sheet with the net debt to EBITDA at 1.4x . Let's take a look at the divisional revenues on the next slide. All four of our divisions experienced recovery in organic growth compared to the prior year. Health grew 7% organically compared to 3% in 2020. This was partially driven by a turnaround in print books and the large journal publishing contract we added at the start of the year. Tax & Accounting delivered 6% organic growth compared to 2% the year before.
Across the board, cloud-based solutions for corporations, governments, and professional accounting firms experienced strong revenue growth in 2021. Governance, Risk and Compliance also saw organic growth recover to 6% compared to 2% in 2020. This performance was partially supported by a rebound in the legal service transactional revenues. Finally, Legal and Regulatory reported 3% organic growth, recovering from a decline of 2% in the prior year. This was mainly driven by strong performance in digital solutions. Let's turn to slide nine. This slide shows our revenues by media format. Digital revenues, over 80% of the total, grew 6% organically. The trend in print revenues improved. Overall, print revenues declined 4% compared to a double-digit decline in 2020. The trend in services saw the greatest reversal.
Service revenues grew 10% organically, marking a strong recovery over the prior year, which saw a decline of 7%. Moving on to slide 10. The chart on the left of this slide shows our recurring revenues, which together make up 80% of total revenues. On the right, you see our non-recurring revenues, which make up the remaining 20%. Of the recurring revenues, digital and service subscriptions, shown in blue, makes up 71% of total revenues. You can see that this is an important component of revenues and had a strong finish to the year with organic growth of 8% in the second half. Of the non-recurring revenues on the right, the top light purple line represents the transactional revenues and legal services.
You can see the clear improvement in the first half of 2021, which came as a result of the rebound in economically sensitive transactional volumes last year. The lowest dark purple line represents other non-recurring revenues, including on-premise software licenses and implementation fees. You can see that these revenues recovered strongly in the second half. The dashed purple line represents the transactional revenues in Financial Services, shown here excluding the PPP program. You can see that excluding PPP, Financial Services transactional revenues were the least volatile. Finally, the dashed green line represents total print book revenues. You can see that books recorded positive growth in the first half, but then declined in the second half, down 6%, which was as we had expected. Let's turn to divisional margins on slide 11.
As mentioned earlier, the adjusted operating profit margin increased by 90 basis points to 25.3%. Three divisions saw improved margins while Tax and Accounting posted a margin decline due to increased investment. Across the board, margin increase was driven by operational gearing, significantly lower restructuring costs, and cost savings related to low levels of travel and in-person events activity. These factors more than offset increased product development compared to 2020. Restructuring costs were only EUR 6 million compared to EUR 49 million in 2020. Lower restructuring was therefore a major factor in last year's margin increase. We had a few one-time items. The most notable was an EUR 11 million positive one-time benefit related to the amendment of the Netherlands pension fund. Let's turn to the rest of the income statement on slide 12. Here there are two important movements to note, to EUR 78 million.
This is mainly due to a EUR 15 million net foreign exchange loss related to the translation of intercompany balances. The impact of this non-cash item was a swing from the prior year, as we had a EUR 24 million net foreign exchange gain in 2020. This item is always difficult to predict as it is calculated based on period imbalances and exchange rates. Secondly, the benchmark tax rate decreased to 21.5% from 23% in the prior year. This was a result of a one-time release of tax contingencies following the closure of tax audits late last year. We expect the tax rate to return to our normal historic range in 2022, which will have the effect of dampening earnings growth as we indicated in our outlook.
Adjusted net profit after tax was EUR 885 million, up 6% overall and up 15% in constant currencies. Diluted adjusted EPS increased 17% in constant currencies, reflecting also the reduced shares outstanding as a result of our share buybacks. Now turning to the IFRS income statement on the next slide. Reported operating profit increased 4% to EUR 1,012 million. This improvement was driven by the higher adjusted operating profit, partially offset by a net EUR 33 million impairment from acquired intangibles. The impairment relates to Learner's Digest and a few smaller assets which saw trends deteriorate during the pandemic, leading us to update our internal financial projections. The reported effective tax rate decreased to 21.6%, reflecting the one-time release of contingencies mentioned earlier.
Most notable here was the increase in full year Cash Conversion Ratio from 102% in 2020 to 112% in 2021. This was driven by substantially higher working capital inflows. We had EUR 150 million inflows in 2021 compared to EUR 39 million inflows in 2020. This working capital movement reflects the strong organic revenue growth, improved collections on receivables, and a reduction in Days Sales Outstanding. CapEx increased slightly to EUR 239 million, broadly stable at 5% of revenues. Cash taxes and cash interest increased. The cash effect of restructuring reflects the net decrease in provisions of EUR 33 million compared to a net increase in the prior year. All in all, adjusted free cash flow was EUR 1.01 billion, up 11% overall and up 15% in constant currencies.
Now let's turn to the uses of cash on slide 15. The majority of free cash flow was returned to shareholders in the form of dividend payments of EUR 373 million and share buybacks totaling EUR 410 million. Total acquisition spend was EUR 113 million, primarily for the software businesses Vanguard in Tax and Accounting, and License Logics, Governance, Risk, and Compliance. Divestments in 2021 brought in EUR 68 million, which related primarily to the divestment of U.S. legal education assets. At the end of the year, with a decrease in net debt, leaving our balance sheet in good condition with a year-end leverage ratio of 1.4x . Now, let me update you on the proposed final 2021 dividend and our share.
In view of the 2021 performance and our strong balance sheet position, we're proposing to increase the total 2021 dividend per share by 15% to EUR 1.57. This will bring the final dividend to EUR 1.03 per share. This proposal is subject to shareholder approval at the annual general meeting in April. We completed the planned 2021 buybacks of EUR 350 million and then increased that to EUR 410 million using the proceeds from the U.S. legal education disposal. Today, we're announcing our plan to repurchase up to EUR 600 million in shares in 2022. This amount includes repurchases to offset incentive share issuance.
Of this EUR 600 million, EUR 50 million has already been completed, and we've engaged a third party to implement a further EUR 120 million starting on Friday and up until May 2nd, 2022. To sum this up, organic growth to 6% and a 90 basis point increase in margin. This plus a favorable benchmark tax rate and a lower share count drove a 17% increase in diluted adjusted earnings per share in constant currencies. We delivered a 15% constant currency increase in adjusted free cash flow. We ended the year in a very strong financial position with a net debt to EBITDA ratio of 1.4x. Over 70% of our adjusted free cash flow was returned to our shareholders in the form of dividends and share buybacks.
I'd now like to turn the presentation back to Nancy to cover our divisional performance.
Thank you, Kevin. I will start with Health on slide 19. Health delivered 7% organic growth with both Clinical Solutions and Health Learning, Research, and Practice posting strong growth. The adjusted operating profit margin increased, reflecting operational gearing, cost savings, and lower restructuring charges. Clinical Solutions delivered 8% organic growth with strong performance in all geographic regions. In clinical decision support, the UpToDate suite saw continued strong growth driven by subscription renewals. Our drug databases delivered high single-digit organic growth, partly reflecting international customer wins and higher usage. Health Learning, Research, and Practice delivered 6% organic growth. As we reported throughout last year, this was mainly due to a large ASCO journal publishing contract, which we added. The unit also benefited from the rebound in print book revenues as distributors and book retailers restocked in anticipation of the reopening of medical and nursing schools.
Our digital expert solutions for nursing, such as Lippincott CoursePoint+, and vSim, generated another year of double-digit organic growth. Turning now to slide 20 to talk about Tax and Accounting. Tax and Accounting delivered 6% organic growth with improvements across the board and excellent growth in cloud revenues. The margin eased as we stepped up for financial performance management, and TeamMate for internal audit achieved 10% organic growth, driven by strong performances in the cloud-based versions of these global software products. Our professional tax and accounting businesses overall recorded 5% organic growth, with good momentum in all geographic regions. Around the world, software continued to perform well, driven by renewals and upgrades for cloud-based software. Our U.S. content business saw improved trends. Moving now to percent organic growth lifted by a recovery in transactional revenues.
The adjusted operating profit margin increased, mainly reflecting lower restructuring charges and lower provisions. Legal and Regulatory posted 12% organic growth led by CT Corporation, our U.S.-registered agent and legal compliance business. CT saw good momentum in service subscriptions and a strong double-digit rebound in transactional revenues. This performance reflects increased company formations, M&A, and other transactional activities in 2021. Financial and Corporate Compliance revenues declined 1% organically, but rose 3% excluding revenues associated with the U.S. PPP. Our compliance solutions unit was broadly stable on a like-for-like basis and M&A transactional revenues, while Finance, Risk and Reporting recorded muted organic growth due to lower professional services. Now let's turn to slide 22 to finish up with Legal and Regulatory. Legal and Regulatory revenues grew 3% organically, supported by high single-digit organic growth in digital revenues.
The margin increased to 13.6% due mainly to the one-time pension fund amendment that Kevin mentioned. Apart from that, the margin also benefited from underlying improvement and lower restructuring costs, accelerating from 5% growth in 2020. The cloud-based version sustained double-digit organic growth, which more than offset declines in our on-premise license revenues. Information services recorded 2% organic growth versus a 3% decline in 2020. Here, the digital solutions performed very well, delivering 7% organic growth as legal professionals continued to migrate away from print. Now I'd like to update you on our strategic priorities for the next three years. As some of you know, every three years, we reassess our strategy and develop a new three-year plan that considers market trends, competitive development, technology change, and other opportunities and challenges.
When we look back at the last three years, we see driving agility has served us very well. Our new plan is therefore a refinement and reinforcement of our prior strategy. Our first priority remains to accelerate the development of Expert Solutions. We will drive further investment here, especially in cloud-based Expert Solutions. At the same time, we plan to continue to invest in selected digital information products to transform them into more sophisticated Expert Solutions. Our plan assumes product development spend will be around 10% of revenues over the next three years. Our second priority is to expand our reach. We are seeking to extend the business into higher growth adjacencies along our customer workflows and to adopt some of our existing products for new customer segments.
We will also look to further develop partnerships and ecosystems for our key software platforms. Finally, our third priority is to evolve our core capabilities. We intend to strengthen certain centralized functions, including sales and marketing and technology, to drive excellence and scale with continued high priority given to attracting and retaining a diverse and engaged workforce. I'd now like to illustrate the plan with a few examples, turning to slide 24. Many of our Expert Solutions are software solutions, and nearly all of these software products are available as a cloud-based solution. In the past few years, we have seen a strong shift to cloud among our customers, and we expect this trend to continue even after the pandemic. To capture this opportunity, we intend to drive significant investments. They have nearly doubled, driven by organic growth and selected acquisitions.
While all software grew 6% in 2021, cloud-based versions grew 7% organically. In 2021, cloud software accounted for almost a third of our total software revenues and about 14% of group revenues. Now I'd like to talk about eOriginal, which is a good example of our second pillar, which is around expanding our reach. Our GRC division acquired eOriginal at the end of 2020. This allows us to extend our existing business in lending compliance into the fast-growing areas of digital closing and digital vaulting. eOriginal enables lenders and their partners to create, store, and manage digital assets from close through to the secondary Expere and Wiz. Together, these solutions form an industry-leading end-to-end digital lending platform. Expere produces compliant documentation, eOriginal facilitates digital closing and storage, and our Wiz solution can provide compliance analytics.
Together, we serve over 1,000 banks and other types of lenders across multiple categories, from mortgages to consumer loans to equipment finance. In 2021, eOriginal delivered double-digit revenue growth exceeding our expectations. We plan to continue investing in innovative technologies around the lending workflow, and we see great runway for growth moving forward. Now I'd like to dig a little deeper into the third pillar of our strategy, which is to evolve our core capabilities. This pillar focuses mainly on internal operations. Starting at the left, we intend to enhance our central functions in order to meet the changing operating requirements that come with the shift to Expert Solutions. We will more closely integrate our operations to drive scale. We also want to evolve our capabilities in the area of ESG. Among the many initiatives planned, one is to advance our climate reporting.
As mentioned in today's release, we are committing to align with the guidelines recommended by the TCFD. We plan to continue to invest in diverse and engaged talent to support innovation and drive long-term growth. In 2021, we started to measure belonging, which captures whether employees believe they can bring their authentic selves to work and be accepted for who they are. By tracking our belonging score, we can now start implementing programs to drive improvement. Now let's turn to the outlook for 2022, beginning with the overall outlook and our guidance. As indicated in our earnings release, we expect good organic growth in 2022, albeit slowing modestly due to challenging comparables starting in the second quarter of the year.
We expect to be able to improve our adjusted operating profit margin to be within a range of 25.5% and 27% improvement in the second half of 2022. We do expect the tax rate to return to our historical range, which will dampen earnings growth to some extent. We are therefore guiding to mid-single-digit growth in diluted adjusted EPS in constant currencies. We expect adjusted free cash flow to increase to be between EUR 1.025 billion and EUR 1.075 billion in constant currencies. The higher tax rate will also limit this year's improvement in return on invested capital. Here we expect to land around 14%. Now I'd like to conclude with a brief summary of the trends we expect in each division, starting with Health.
In Health, we currently expect full-year organic growth to slow from 2021 levels, mainly due to the absence of a contract win of the size of the ASCO titles. Adjusted operating profit margin is expected to improve modestly. For Tax & Accounting, we currently expect organic growth to improve moderately from 2021 levels, and adjusted operating profit margin is also expected to improve. For GRC, we currently expect organic growth to slow from 2021 levels, mainly due to our expectation of slower growth in transactional revenues. The adjusted operating profit margin is expected to improve. Finally, in Legal & Regulatory, we currently expect organic growth to be in line with 2021 levels. The adjusted operating profit margin is expected to decline due to the absence of the one-time pension amendment recorded last year.
We have seen a good start to this year, and we look forward to implementing returns and to advance sustainability. With these remarks, operator, we can now open it for Q&A.
Thank you. We will now proceed with the Q&A. If you'd like to ask a question, you can press star one on your telephone keypad. If you'd like to withdraw your question, you can press star two. Please ensure you're unmuted locally when asking your question. Our first question for today comes from Nick Dempsey of Barclays. Nick, your line is now open.
Good morning, guys. I have three questions. First of all, if Expert Solutions were to get up to 75% of group revenues rather than the 55% you pointed to today over a few years, do you think that your group organic would naturally be faster at that point than you're expecting for 2022? Or is it possible that the growth in Expert Solutions would slow as customers become more used to that kind of functionality, everyone delivering that kind of thing, so you'd only end up at kind of the same place as you are in 2022? That's the first question. Second question, when you say the operating profit margins will ease in the first half of 2021, or do you mean lower than the full year 2021 number you've just delivered?
The third question, I'm gonna have a swing at the slightly cheeky Patrick Wellington question, Nancy. You've had good success with your last three-year plan. You're setting out a new one here, taking you through to 2024. Could that be your last three-year plan as CEO?
Okay, great. Yeah, we do miss Patrick. Thanks, Nick. I'll take one and three and then ask Kevin to comment on operating margins. On the Expert Solutions question, we should support continued improvement in organic growth. The reason for that is twofold. One, these solutions are used, you know, every day, you know, throughout the workflow of the customer. The retention, the usage is high, and therefore, the retention is high. That already provides a stronger, you know, installed base of clients. Second, which is really what drives the notion of improved organic growth, is once we're in the customer's office, we then have the opportunity to upsell. All of these cloud products that we described, you know, they're part of a suite.
You know, the typical phrase we use is sort of land and expand, meaning you go in with one component, and then you sell multiple components. As long as we keep investing or to innovate, we should be able to continue to grow even when Expert Solutions get to be 65%. You're growing on top of a bigger installed base. It should support long-term, you know, good expansion and organic growth. On the question of my future, you know, I have no plans at this point to retire. I'm very excited about this next three-year plan. As you know, Expert Solutions really provides us not only with, you know, a stronger organic growth, but really high-quality earnings. It's never been a better time for the company.
You can see we have a very strong business, and so I'm happy to continue as CEO. Kevin, do you wanna talk about margin developments over the year?
Absolutely. As you know, Nick, we have guided to an improvement in margin for the full year, but we do expect certainly in the beginning, our investment profile, our investment plans, we will do, you know, some restructuring in the new year as we've indicated, and, you know, some of that will take place in the first quarter. That is what is underlying the guidance on margin phasing over the year.
Sorry, Kevin. Can I just check? When you say easing versus the prior year, I guess my question was easing versus full year 2021 or easing versus first half 2021 in the first half-
First half 2021.
Okay. Thank you. That's great. Thank you, guys.
Thank you. Our next question comes from Katherine Tait of Goldman Sachs. Katherine, your line is now open.
Hi, everyone. Thanks for taking my questions. You've talked a lot about increased investments to support growth across the business. I'm just wondering, you know, is this gonna be sort of talent based and, you know, more sort of software engineers? Is it gonna be more skewed towards marketing? If you could just sort of unpick a bit more in terms of what that sort of increased level investment is going into, that'd be super helpful. Then, as you sort of shift into more of these Expert Solutions, I guess across the board, could you perhaps just give a couple of comments around what you're seeing in the competitive environment here?
Are you seeing a continued sort of pace and evolution in your competitive set? Perhaps just a couple of comments on any sort of latest trends you're seeing from a competitive perspective. Finally, just on, I suppose, the health of the Health end market that you're selling into. I know there were a couple of sort of industry pieces around, particularly in the U.S., the sort of, I think, you know, hospitals being underwater, kind of following all the COVID pressures. What are you seeing in terms of, I suppose, the ability to sell into some of those key clients, and, I suppose more importantly, the ability to sort of cross-sell and upsell to your point on the ground?
Start with the product investment area. It's primarily in people, and it's primarily in technology and salespeople, particularly for our Expert Solutions. What we've done is we've accelerated some of our product roadmaps, and that obviously requires more technical talent. Of course, we wanna increase our market penetration around the globe. We've added a lot of salespeople, largely outside the U.S., but still for some of our solutions in the U.S. market as well. The second question around, you know, the Expert Solutions and the competitive environment. I would say in general, you know, as you know, we see multiple different competitors depending on the market segment we're talking about. In general, the landscape has remained remarkably stable.
Despite all the, obviously leadership in cloud solutions around the world, and we still, you know, have very high Net Promoter Score, which we measure quite rigorously across all of our major products, and that's a good indication of how we see customer satisfaction. We measure not only our own NPS, but also from a relative competitive perspective. I would say we're in very good shape from a market position, and we don't see a lot of, you know, changes in how our competitors are behaving. Then on the Health market, you know, it's been a volatile situation, depending on what region, both in the U.S. you're talking about, but certainly around the world.
We see very high renewal rates, so that speaks to the fact that our products are highly you know, highly valued and used. A significant example in China, when they go into a lockdown mode, you can be locked out of a hospital for, you know, up to four to six weeks, and therefore that will delay the sales. Same thing in the U.S. You know, some hospitals are, as you point out, having financial difficulties. Mostly it's that their staff is so. So I would say the retention environment very strong, and then new selling, you know, varies, you know, region by region. We still expect that to continue in 2022, but we of course have baked that into our guidance for the Health division.
Perfect. Thanks very much.
Thank you. Our next question comes from Matti Littunen of Bernstein. Matti, your line is now open.
Thank you and good afternoon. The first question on disposal plan. How should we think about disposals going forward? Should we expect these to continue for the next years to come, or will you perhaps have fewer assets under review? The second question on also the three-year plan. You mentioned you know get a practical feel for what that means. Would this be similar, for example, to the partnership that UpToDate signed with Doximity and in terms of the economics, what would the contribution margin from these partnerships look like? Final question on sort of the you know M&A pipeline. You've previously consistently said that over the past few years that the private valuations for the kinds of businesses that you like acquiring were quite high. You know, of course now the public signs, yet that something similar is going on in the private markets. Thank you.
Yeah. I'll take the partnership question. Kevin, do you wanna start with the first question around disposals?
Yeah, certainly, Matti. As you know, we have divested the U.S. legal education business in 2021. That's pretty consistent with what you've seen over the last several years. We do always look at our portfolio with a critical eye each year as part of our planning process. There are times when an asset might not fit our future strategy, and that's, I think you've probably seen it in our press release, we do have the intention to dispose of some additional assets in Spain and France in the Legal and Regulatory business. I expect we will be closing on those in the second half of the year. Do expect us to continue to take a critical eye as we look at the portfolio going forward. That will include select smaller divestments, but also include other smaller, you know, bolt-on acquisitions.
Yeah. Just linking that to the last question around the M&A environment, I'll start, and then Kevin, feel free to add some comments, and then I'll talk about partnerships. On the M&A environment, we have not seen any change yet in the valuation. You know, we mostly are buying private companies, and the valuations have been very high. We remain selective in our activities. Our strategy is very focused on organic growth, so M&A is really, you know, bolt-on in nature and sort of an augmentation to the organic plan ecosystems. In some ways, partnerships can lead to an acquisition. If you look at XCM, if you look at eOriginal, those were companies we already had partnerships with.
What that meant was that, you know, we were able to offer our customers a broader platform perspective, which is a bit more like the Doximity and some of the other things we're doing with our cloud suite in Tax and Accounting. The notion is that because we have this strong customer base, we provide an opportunity for other software providers to access our customers, and we provide an integrated customer experience. Those do have a revenue, a positive revenue effect, and again, all of that revenue that comes through these kinds of partnerships is very accretive to the margin, so it will again help to add a little bit more on both the top and the bottom and, you know, sort of the customer in terms of extending what we can provide to them.
Very clear. Thank you for answering, Kevin.
Thank you. Our next question comes from Matthew Walker of Credit Suisse. Matthew, your line is now open.
Thanks. Hi, everybody. Just a few questions, please. The first one is, how are you coping with inflation, and hiring in your employee base? You're guiding for margin expansion, so what are the offsets to the wage inflation in order to allow you to get the margin expansion? The second question is, you probably have noticed that RELX and Thomson Reuters have, you know, indicated a sort of permanent, medium term step up in organic growth because of analytics. There hasn't been a similar commitment yet from Wolters Kluwer, but is that something that we should look out for in future reporting periods? The last question was on the print in the Health only up 4%, unless I'm making a mistake, for the full year. What's been happening in print books in Health in the fourth quarter, and what's your outlook for print books in Health for 2022?
Yeah. Great. Can you just repeat the question on RELX and TR? I didn't hear quite the full. It cut out a little bit. One more time, please.
Yeah, sure. Those companies have indicated that because of the increasing proportion of analytics within their sales mix, that they are now permanently able to grow similar commitment to do that from Wolters.
Okay. Thank you for the repetition. Kevin, why don't you start with the last question first around the developments of print products in Health, and I'll cover the other two.
Certainly. We did see a rebound in our print business as compared to the prior year. I think that has everything to do, Matthew, with the fact that 2020 was just a really very, you know, down year for print in general in all of our businesses, Health included. To begin off in the fourth quarter, which is one of our largest print selling seasons as you know. You know, print going forward, while we did see better growth in 2021 overall down 4%. Prior to that, print had been declining in the upper single- digits. I would imagine, you know, that trend will likely continue into the future. That said, print now is a small part of our business, less than 10%, so that overall decline has less and less of a drag on overall results.
Thanks, Kevin. On the hiring process of hiring, it's a very tight labor market, so of course, the cost of people is increasing around the world. The offsets as those have come in, the offsets really come in two flavors. First, as you know, we've always tried to cover wage inflation through pricing in our products, and we have net high Net Promoter Score. We are able to, in most cases, you know, reflect the increased labor costs in our pricing. Very importantly though, however, is we find additional cost savings throughout the business. We have consistently every year operational excellence programs that come through.
I would say finally, Kevin, you know, there are some one-off savings around travel and some other things that certainly have come into play because of the pandemic. Just very importantly to comment is just products are still subscale, right? Meaning that they haven't yet reached a kind of maturity. As these products continue to mature and penetration grows, you will also see higher margins. The, you know, the support of the margin comes not only on the cost side. Kevin, I don't know if you wanna add anything more on inflation or how we are covering it.
No, I would echo that, you know, we are seeing inflation play a part, particularly in wage inflation. That's really where we see the impact of inflation, not so much on raw materials at Wolters Kluwer. You know, we are being aggressive in our hiring practices, you know, to get the right people in, to fill open positions, and we'll continue to do that. As you all know, that usually we try to cover our wage inflation with our price increases, and we'll continue on that tack going forward.
Great. Thank you. On the competitive landscape, I would say, you know, it's for us, you know, you use the word analytics. For us, we use the word Expert Solutions, you know, because we have analytics throughout all of our products, even the content products. With Expert Solutions, again, we fully support stronger growth. You can see, of course, from even 2019 that the growth in 2021 was higher. I think that's a good indication of where the business is headed, again, supported very much by the Expert Solutions strategy.
A quick follow-up for Kevin, please. In terms of the margin for 2021, did you take any provisions, you know, in 2021? 'Cause you did take a large provision in 2020. Was there any kind of provisions taken in 2021?
Well, in 2020, I think the provision you're talking about is some of our restructuring provisions, and we did actually execute on that in 2021. Other provisions we took in 2020, nothing to the extent that you saw in 2020, but we do not have, you know, a significant step-up in restructuring. In fact, we've mentioned that we would probably return to a more normalized level of restructuring in 2022.
Okay. Thanks a lot.
Thank you. Our next question comes from Sarah Simon of Berenberg. Sarah, your line is now open.
Oh, yes. Hi. I have just a couple of questions. First one was on the ASCO contract. Can you give us any idea of how much that benefited growth in Health in 2021? The second one was on slide 24. You've talked about the growth of cloud, which obviously very strong. What should we think about for that 48% that you're essentially kind of moving away from? Finally, just to clarify, the Spain and France assets, you said you're gonna close in the second half. Will their contribution be in the divisional growth numbers for Legal for fiscal 2022? Thanks.
Okay. Kevin, do you wanna talk about the Legal and Regulatory disposals and the effect on the P&L and then also the ASCO, whatever we
came in to divest, although we do have to go through an antitrust evaluation with this particular deal. We do expect that process to continue through the first half. While we still haven't closed on the sale yet, we do expect those results to be in the first-half results. We do expect a closing on that business in the second half. With regard to ASCO, it was a notable contract for the Health division in 2021. You know, approximately $25 million in revenue. So as far as the organic growth, obviously it was flattered by that ASCO contract. That is part of our thinking about the guidance we've given you with the Health division moving forward. We do expect the organic growth to come down a bit because of that.
I think, you know, just below 200 basis points of growth is what you-
And then on the cloud-
Yeah. Thanks.
Sarah, on the cloud question, you know, what you would see across the board today is that most new customers are selecting cloud. Most of our software, you can buy it either on-premise or cloud. To the on-premise deal, you see the effect building over time on the SaaS product line. There is some migration, but there's also a lot of new logos that we're adding. I think we are well positioned to continue to see strong growth in cloud in the medium term because of both the new logos and some migration.
The thing that's really important to understand is what we see is when customers move, you know, everything again is sold as suites, meaning there's modules that customers take. In the on-premise world, customers also would add modules to what they already had. In the cloud world, what we see is that they are adding more modules. We're getting a step up in the upselling opportunity once we get customers into the cloud. We do wanna migrate on-prem customers. Value is higher as we add customers into the cloud suite. Why is that? It's because the customer experience is enhanced. They get more productivity from these tools in the cloud than they typically would get in an on-premise world. Hopefully that-
On-premise revenues.
Yeah.
Do you think we should work on the basis those revenues gradually decline?
Yes. Over time, yes. Right? We have maintenance, but we're not-
Yeah.
...selling, you know, lots of new logos. Of course, it varies by product.
Yeah.
Over time, yes, you should expect that.
Thank you. Our next question comes from Tom Singlehurst of Citigroup. Tom, your line is now open.
Thanks very much. Yeah, it's Tom here from Citi. A couple of questions if it's okay. First one on the cash returns, I mean, the buyback stepping up to another level. I know you were asked earlier on, but I think I might have missed the answer, but I just wanna work out whether that means that there's gonna be less sort of bolt-on M&A activity, or whether you can do both buybacks and M&A. Once again, apologize because I'm sure you answered it, but I missed it for whatever reason. Did you comment on the multiple profile of smaller bolt-on deals with eye-popping multiples?
I'm interested to see whether you're seeing the same thing among the sort of targets that you're looking at. Then the other question was on visibility on health. Obviously, the step up in growth is very encouraging. Is that partly a follow through from ASCO? Or can you just clarify what the moving parts are that give you that sort of confidence at this early stage in the year to talk about accelerating growth? That would be wonderful. Thank you.
Yeah, just to clarify, I'll start with Health, and then Kevin, if you could take the cash and the multiple. So, our guidance is that the growth will slow modestly, right? Because of that ASCO deal, right? The restocking of the books products that we expect print books will kind of return to normal. So the underlying good growth in UpToDate and in drugs and in our nursing solutions, all of, and Ovid, which is our online digital product in Health, all of those trends, again, are positive. But the step up you saw on the growth side in 2022 was partially favored by this big ASCO. Talk about cash and-
Certainly
...multiples.
Yep.
Tom, you are right with the good cash conversion and strong cash free cash flow in 2021. That does give us the confidence to step up the share buyback to EUR 600 million in 2022, and that program is already underway. We've already finished about EUR 50 million, and we'll do another EUR 120 million over the next couple months. With regard to future M&A, we still have a very strong balance sheet. I would say that even though we are stepping up the share buyback, and we are proposing an increased dividend by 15%, that does leave us room to do bolt-on acquisitions that help support the strategy going forward. Quite comfortable there. As Nancy mentioned before, multiples indeed are those assets that are growing very well.
As you know, we are always looking to make sure that we meet our financial criteria on any M&A, which is EPS accretive in the first year and covering our weighted average cost of capital in years three to five. I expect we will continue to see those valuations be strong. You know, when we look at our strategy, organic growth is the preferred method, but acquisitions do have a part in building out that strategy. I do expect that we will continue to evaluate this.
Apologies for the brain freeze on which division is meant to be accelerating or not, but thank you very much.
Yeah. No, no worries.
Thank you. Our next question comes from Henk Slotboom of The Idea-Driven Equities Analysis Company. Henk, your line is now open.
Thanks. Good afternoon. Thanks for taking my questions. I've got two left. Nancy, I'm aware that print is an increasingly smaller part of your portfolio. One of your predecessors told me the difference between nice to have and need to have. When does print become of a size that it is no longer need to have and that you could review your presence in that area? Perhaps another one I think for Kevin. Kevin, there was quite a difference between the level of R&D costs in 2020 and 2021. Now, you may have said last year exactly how the EUR 49 million broke down over the various divisions, but I couldn't find it in my notes. Apologies for that. Those were my questions. Thank you.
Sure. I'll start with print. You know, let's divide print into print subscriptions and printed books. First, I wanna remind everybody that everything we produce in print, we also produce in the online form. Many customers on the print subscription side, they have both. They have printed products, and they have the exact same content online. They use the products in different ways. On the subscription side, it's become really what I would describe as the luxury product, meaning that the customers who can afford to have both formats continue to do that. We will, you know, continue to produce print subscriptions, you know, very cost efficiently. You know, we'll do that as long as customers want, and then at some point, you know, it's only available of a different case.
It's mostly in the textbook arena. You know, a lot of our printed books are in health and you know, medicine and nursing and even some you know, kind of textbooks in the legal and regulatory side. I think there'll be a role for books for quite some time in printed form. Kevin, do you wanna-
Sure.
Add anything? Yeah.
Yeah. On restructuring, we did have a larger impact in restructuring in, you know, 2020. We recruited in 2021 and executed some of those plans in 2020. We're probably a little bit heavier weighted to Legal and Regulatory and GRC in the execution in 2021, but each of our divisions did execute on a number of restructuring plans. There was no clear bias for one of the divisions. Little bit more in Legal and Regulatory, a little bit more in GRC.
Okay.
You know, Health, Tax and Accounting also have restructuring efforts going on.
Okay. Thank you very much. Have a nice day.
Yeah. Likewise.
Sami, your line is now open.
Thank you, and good afternoon, everyone. I have three questions, please. The first one, can you discuss what your guidance assumes in terms of transactional revenues? And in particular, do you see legal services transactional revenues growth? I think Thomson and Karnov were quite bullish on how they exited the year 2021 in terms of new sales growth. Did you see the momentum accelerate in Q4? And lastly, I think you reported 5.6% organic revenue growth in 2021. You guided for a modest slowdown, as I think your comments just said, Nancy. Do we think that 2022 may be rounded up to a 5% organic revenue growth, or more like 4%?
We're looking at the transaction part of GRC, and then I'll take the other two. Yeah.
Certainly, you know, Sami, you know, 2021 was an exceptional year in transactional revenues, particularly in legal services. Some of that is a bounce back effect from, you know, the weaker results in 2020. Frankly, 20% growth in legal service transactions, you know, don't expect to repeat that in 2022. We do expect that to come down. As you know, that is the hardest part of our revenue to predict going forward. However-
On the new sales. Yeah. Sami, on the new sales question, you know, we clearly saw new sales build throughout 2021. Fourth quarter was strong. We came into this year with a very strong portfolio value, which is, as you know, in a recurring model, a very important metric for us. We feel good about the new sales activity. You know, that is supporting you know, growth in 2022. You know, as you know, we line up with your own estimate really by you know, recognizing that there was a one-off in Health from the ASCO titles and recognizing what Kevin just said, that transactional revenues you know, had a spectacular year in GRC last year.
I think, you know, if you sort of normalize for that and then look at the good underlying growth of the other product lines, you can sort of figure out the number. I would say, you know, we feel good about where we are in terms of starting 2022.
Nancy, within GRC, the compliance solution and the financial risk and regulatory reporting businesses-
Yeah.
...had muted growth, if at all. What's going on there? And what's the guidance assuming for 2022? Do we think that growth can accelerate excluding the PPP base effect and so on, the underlying and the line? Do we think that within FRR and the compliance solution business growth can pick up or do we see perhaps flat growth as the norm going forward?
Yeah. Let me just talk about what's going on in the business. In compliance solutions, you know, we had PPP in 2020. We had a bit in 2021, the programs now, you know, stop, so that has to come out of the numbers. But we do have good underlying growth, and that's a very nice growth asset for us. On the FRR side, what we saw in 2021 is good new customer acquisitions and good upselling, but professional services was way down, you know, because we still could not happen in 2020. That muted the professional services. The way you should think about FRR is professional services softness sort of offset new sales growth. Keep in mind, again, these are largely SaaS contracts, so it's really about the revenue building in 2022 and 2023. Hopefully that gave you color, but not specific numbers.
Thank you very much, Nancy. Thank you, Kevin.
Thank you. Our last question.
Hi, good afternoon. One question, if I may. When you say you guide to margin expansion, quite a lot of your revenues must be accruing based on the contracts you've won last year. What level of inflation are you factoring in when thinking of that guidance? And is margin expansion, you know, harder fixed target for you than, you know, staff churn? Would you be okay to miss the target if inflation was higher than what you have budgeted, but do the right thing for the business in the longer term?
Yeah. I'll start and then Kevin, maybe you add some specifics. You know, first of all, you know, the near-term target, so that goes without saying. I think specifically on the margin, you know, we understand the moving parts very well at Wolters Kluwer, and so we, you know, some things are gonna be higher in terms of, you know, labor costs, but then there's offsets elsewhere in the. Took a hard look in 2021 anticipating inflation, so that was certainly factored into how we went about price increases, that again flow into 2022. I would say we have a high degree of confidence in our guidance, and it certainly does reflect some insights into what we would anticipate inflation looking like. I don't know, Kevin, if you wanna add anything.
I would echo that, Nancy. You know, we're very thoughtful when we provide you guidance at the beginning of the year. I would say, you know, the 25.5%-26% margin guidance, we do expect is the reasonable guide. I think we have confidence on what the revenue outlook can be for those subscription revenues. That also trickles down into, you know, our thoughts around guidance. I would echo Nancy's comments.
What level of inflation we would have this year, last year? I don't know.
Specifically, I don't know that it would be appropriate for us to give specifics on that, but we have factored in a higher level of wage inflation when we prepared guidance for you this year.
Yeah.
Brilliant.
We have no further questions for today. I will hand back to Nancy for any closing remarks.
Yeah, just wanna thank you again for joining us today. If you have any additional questions, feel free to reach out to Kevin and I through Meg, and have a good rest of your morning and afternoon. Thank you.
Thank you for joining today's call. You may now disconnect.