Hello, welcome to the Wolters Kluwer half-year results for 2021. My name is Jess, I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, you will be connected to an operator. I will now hand you over to your host, Meg Geldens, Vice President of Investor Relations, to begin today's conference. Thank you.
Thank you, Jess. Hello everyone, and welcome to the Wolters Kluwer half-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. On the call today are Nancy McKinstry, our CEO, and Kevin Entricken, our CFO. Due to the continued restrictions on travel, we are all dialing in remotely from various locations, so we thank you in advance for your understanding in case we experience any disruptions or delays during this event. Nancy and Kevin will shortly discuss the key features of our first half results. Following their comments, we will open the call to your questions. Before we start, I'll just remind you that some statements that we make today may be forward-looking.
We caution that these statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in these statements. Factors that could affect Wolters Kluwer financial results are discussed in the notes of today's release and, of course, in our annual report. As usual, in today's presentation we refer to adjusted profits, which exclude non-benchmark items. We also refer to growth in constant currencies, which excludes the effect of currency movements. We refer to organic growth, which excludes both the effect of currency and the effect of acquisitions and disposals. Reconciliations to IFRS and further information can be found in note 4 of today's release. At this time, I would like to hand the call over to our CEO, Nancy McKinstry.
Thank you, Meg, and welcome everyone. Thank you for joining us on the call. In keeping with our usual practice, I'll start by giving you some of the highlights of our first half achievements, then turn it over to Kevin Entricken, our CFO, who will take you through the financial results in more detail, and then I'll return to talk about divisional developments as well as a brief update on our strategic progress. Let's start with slide 4 and the highlights. I'm pleased to report that we had a good start to the year with a better than expected recovery from the pandemic. We delivered 5% organic growth following a strong second quarter and a significant increase in our adjusted operating profit margin.
We saw a double-digit increase in diluted adjusted EPS in constant currency, and our adjusted free cash flow increased significantly due to working capital movements. Our balance sheet remains strong, allowing us to increase cash returns to shareholders while continuing to invest in the business. We also made progress on a number of our ESG and operational goals, advancing key programs that reduce carbon emissions, launching our first diversity, equity, and inclusion survey, and embedding ESG metrics and targets into management compensation and into our credit facility. Turning now to slide 5. While the pandemic challenged us all and altered our financial trajectory, we have remained very focused on our three strategic priorities. Let me recap these. First, we are focused on growing our expert solutions. Expert solutions now make up 55% of our first half 2021 results.
We've been scaling these solutions by extending the offerings and broadening our distribution. Second, we are working to advance our deep domain expertise, investing to transform our information products and services by enriching them with advanced technologies to create more value for our customers. Third, we are focused on driving operational agility, improving the organization's ability to respond quickly to opportunities and challenges by modernizing and enhancing the efficiencies of our systems and operations. The past year and a half has reinforced and validated many aspects of our strategy. The evolution towards digital and expert solutions, the transition to cloud-based software platforms, and the investment to upgrade our internal systems and our digital marketing capabilities. I'm very proud of our team and the progress we have made while continuing to navigate the challenges of the pandemic.
We are not through it yet, as all of you know, but we are confident that the path that we are on, will continue to create value. With that, I'd now like to turn it over to Kevin, who will take us through our financials in more detail.
Thank you, Nancy. Let me start with the financial highlights on slide 7. First half revenues were EUR 2,280 million, an increase of 6% in constant currencies. Organic revenue growth was 5%. Excluding revenues associated with the U.S. Paycheck Protection Program, referred to as the PPP, organic growth would have been 6%.
Adjusted operating profit was EUR 613 million, an increase of 14% constant currencies. This resulted in an adjusted operating profit margin of 26.9%. This margin increase of 170 basis points was due to operational gearing and both temporary and structural cost savings. Diluted adjusted earnings per share increased 19% in constant currencies, reflecting the increase in adjusted net profit and a 2% reduction in the diluted weighted average number of shares outstanding. Adjusted free cash flow was EUR 476 million, an increase of 54% in constant currencies, driven by favorable working capital movements. Lastly, net debt to EBITDA was 1.7x , slightly higher than a year ago. Now, let's take a brief look at the divisions on slide 8.
Three divisions recorded an improvement in organic re-growth compared to the first half of 2020. If you exclude the revenues associated with the PPP, governance risk and compliance also saw an acceleration in organic revenue growth compared to a year ago. The Health segment stood out this first half, with 8% organic growth compared to 3% a year ago. Steady performance in Clinical Solutions was combined with a strong recovery in learning, research, and practice. This was partially driven by print products and a new journal publishing contract. The Tax & Accounting segment reported 6% organic growth compared to 3% a year ago. Corporate Performance Solutions continued to deliver double-digit growth, while the professional Tax & Accounting side posted a higher growth benefiting from the timing of the U.S. tax season and favorable publishing schedule.
Governance risk and compliance reported 2% organic growth. Excluding revenues associated with PPP, however, the division's organic growth would have been 6% compared to 1% a year ago. A strong rebound in transactional volumes helped more than offset the lower PPP revenue. Finally, Legal and regulatory delivered 4% organic growth compared to a decline of 2% a year ago. Digital information solutions for the legal profession performed strongly, and there was some benefit from a favorable publishing schedule. Let's turn to revenues by type on slide 9. Recurring revenues, shown in the chart on the left, made up 81% of total revenues. The largest component of recurring revenues, digital and service subscriptions, shown in dark gray, grew 6% organically.
This was a slight pickup from the second half of last year and is very encouraging to see as it's our most important revenue stream. On the right, you can see our non-recurring revenues, which make up 19% of total revenues. This chart excludes the revenues associated with the PPP, allowing you to see a like-for-like trend. As you can see, excluding PPP, all non-recurring categories rebounded strongly in the first half against steep declines a year ago. Print book revenues, the dashed green line, increased 6% organically as distributors restocked their inventories. Legal services transactional revenues, the light purple line, increased 18% organically. Other non-recurring revenues, the dark purple line, which is mostly software licenses and implementation fees, were up 3% organically.
I'd like to caution that we do not expect these non-recurring revenues to produce the same kind of performance in the second half of the year. In fact, in the case of print books, we expect a decline in the coming quarters. Turning to operational profits on slide 10. 3 divisions recorded an increase in adjusted operating profit margin, driven by operational gearing and temporary and structural cost savings. GRC's margin was stable as the savings were offset by the absence of last year's one time benefits. These temporary cost savings, including categories such as travel expense, in-person events, and promotion, which have largely been put on hold since March of last year. It also includes temporary savings in personnel costs due to the slower pace of hiring during the height of the pandemic.
We expect these costs to start coming back in the 2nd half of the year and next year, which will create more challenges for our margin than we saw in the 1st half. Let's turn to the income statement on slide 11. Adjusted net financing costs were EUR 42 million. The increase was largely due to an EUR 11 million net foreign exchange loss compared to a gain in the prior period related to the translation of intercompany balances. The benchmark tax rate on adjusted profits before tax was 23.5%, in line with the prior year. As a result, adjusted net profit after tax was EUR 437 million, up 3% overall and up 16% in constant currencies.
Diluted adjusted EPS was EUR 1.66, reflecting the increase in adjusted net profit and the 2% reduction in the diluted weighted share count. Let's turn to the cash flow on Slide 12. As you can see on this slide, our cash conversion ratio increased to 107% versus 84% in the prior period. This was due to a significant inflow of working capital compared to an outflow a year ago as cash collections on trade receivables improved. CapEx decreased slightly to EUR 107 million. Cash taxes and cash interest increased. Taxes paid were EUR 127 million, and interest paid, excluding lease interest, was EUR 44 million. All in all, adjusted free cash flow was EUR 476 million, up 42% overall and 54% in constant currencies. A few comments on how we've deployed that cash on Slide 13. Dividends paid to shareholders amounted to EUR 233 million.
We spent EUR 99 million in acquisitions, largely related to the acquisition of Vanguard Software in Tax and Accounting in May. In June, we completed the divestment of our Prosoft assets in Brazil. There were no cash proceeds as we merged those assets with those of a competitor in exchange for a minority stake in the combined entity. Cash deployed for share buybacks in the first six months totaled EUR 201 million. We ended the first half with a modest increase in net debt, leaving our balance sheet in very good condition with a leverage ratio of 1.7x . A few words on the dividend share buyback program for the remainder of the year. Turning to slide 14. As a rule, we set the interim dividend at 40% of the prior year total dividend. This means we will pay out EUR 0.54 per share to shareholders in September.
We're making progress on the EUR 350 million share buyback we announced at the start of the year. As of August 3rd, we've spent EUR 229 million on share repurchases. Turning to slide 15, let me sum up before I hand it back to Nancy. We're very pleased with the strong performance in the first half. Organic growth was better than expected at 5%. We delivered 170 basis point increase in the margin, although, as mentioned, some of this increase was driven by temporary cost savings, which will partially reverse in the second half. Adjusted earnings per share increased 19% in constant currencies, reflecting an increase in adjusted net profit and a lower share count. A higher cash conversion drove a 54% increase in adjusted free cash flow in constant currencies. Our balance sheet and liquidity position remains strong, and year-to-date cash returns to shareholders have increased.
Now I'd like to hand it back to Nancy, who will cover division developments.
Thank you, Kevin. I'll now begin with the divisional review, starting with slide 17. Health achieved 8% organic growth with steady performance in clinical solutions, combined with an upturn at our Learning, Research, and Practice unit. The adjusted operating profit margin increased, reflecting operational gearing and temporary cost savings. Clinical Solutions delivered 6% organic growth. With hospital budgets impacted by the pandemic, growth was led by the two largest expert solutions for the healthcare market. UpToDate delivered high single-digit organic growth driven by renewals, upsells to the advanced module, new customer wins. Our drug databases also delivered high single-digit organic growth supported by successful cross-selling with UpToDate and international sales. Learning, Research, and Practice delivered 11% organic growth, better than we expected. Print book revenues increased 41% against a sharp decline a year ago.
With distributor inventories now restocked, we expect book ordering in the second half to be weak. In medical research, we added a new society publishing contract to publish the American Society of Clinical Oncology journals, and we saw good performance in open access and advertising. The Learning, Research, and Practice unit is continuing to transform itself with 77% of its revenues now coming from digital products. Turning to slide 18 to talk about tax and accounting. Tax and accounting organic growth was 6%, benefiting from the timing of the U.S. tax season and other factors. Adjusted operating profit increased, reflecting operational gearing and temporary cost savings. Corporate Performance Solutions sustained strong organic growth of 11%. Growth in cloud recurring revenues for CCH Tagetik and TeamMate slowed a little, but we saw recovery in implementation services and new software license sales.
The new sales pipeline has improved, and we are stepping up investments to support growth. The acquisition of Vanguard Software creates opportunities to extend CCH Tagetik into integrated financial, sales, and operations planning. Our financial tax and accounting businesses overall recorded 5% organic growth led by North America and Europe. North America had a strong second quarter due to the timing of the U.S. tax season. We expect this to unwind in the second half. In addition, we benefited from favorable timing for key tax publications. In the rest of the world, we saw strong growth in China, offset by weaknesses in other parts of Asia Pacific. Moving now to slide 19. Governance risk and compliance recorded 2% organic growth. Importantly, if we exclude PPP, organic growth was 6% compared to 1% growth a year ago.
The adjusted operating profit margin was stable as temporary and structural cost savings were offset by higher investment and the absence of last year's one-time benefits. Legal Services grew 9% organically, which was better than we expected. CT Corporation saw a sharp rebound in transactional volumes in the second half compared against a sharp decline in the prior year. Financial Services declined 6% organically, as we expected. Excluding PPP, organic growth was 2%. Compliance Solutions is performing well and making progress on the integration of eOriginal. Lien Solutions increased 10% due to a sharp rebound in transactional volumes. Finally, Finance, Risk and Reporting recorded a modest decline in organic revenues, reflecting lower non-recurring revenues. Now let's turn to Legal and Regulatory on slide 20. Legal and Regulatory revenues grew 4% organically.
Adjusted operating profit margins increased largely due to operational gearing as well as temporary and structural cost savings. EHS, ORM, and legal software delivered organic growth of 4% compared to 11% in the first half of 2020. The cloud-based version sustained strong double-digit growth, this was partly offset by a decline in implementation services and on-premise software license fees as the market increasingly favors our cloud solutions. Information Solutions recorded 4% organic growth. Our digital products saw accelerated growth driven by legal research and local software solutions. The rate of decline in print subscriptions moderated, partly due to a favorable publishing schedule. Print trends are expected to deteriorate in the second half. Let me update you on the progress we've made so far this year on our strategic goals and important ESG initiatives. Turning to slide 21.
Responding to the pandemic has absorbed a lot of time. Nevertheless, we've made important progress against our three strategic priorities this year. First, expert solutions have reached 55% of revenues and grew 6% organically if you exclude PPP. We completed the acquisition of Vanguard Software in tax and accounting, which will extend CCH Tagetik into a fast-growing adjacencies. We continue to enhance our expert solutions. For example, UpToDate introduced a content-as-a-service solution for virtual healthcare providers, a segment that's gained prominence during the pandemic. Second, we continue to invest to transform our information products and services. For example, CT launched the UCC Hub, an end-to-end workflow solution for law firm professionals. As another example, Health launched an API-enabled chart review accelerator.
This uses natural language processing to automate the review of patient records by extracting relevant data from unstructured text to provide actionable insights, thereby reducing data processing time from hours to seconds. Thirdly, we made progress on improving our agility. Our finance team successfully migrated our financial performance systems to CCH Tagetik, and we consolidated all of our websites into a single Wolters Kluwer site, bringing benefits in terms of discoverability. Let me tell you a little bit about our progress on ESG. Turning to slide 22. With regard to our efforts to reduce our carbon footprint, I am pleased to say that our server migration and data center consolidation efforts, as well as our real estate rationalization program, are making good progress.
We are on track to reduce the number of on-premise servers again this year. We've reduced our office footprint by 4% by closing several smaller offices. In July, we launched our first global all-employee survey on diversity, equity, and inclusion. We will use the results of this survey to set new goals to ensure we have a diverse workforce that reflects the communities in which we live and work. Finally, we've embedded ESG into our governance by incorporating 6 ESG measures and targets into senior management's short-term incentive plan. We've linked 4 of these ESG measures to our EUR 600 million multi-currency credit facility. Before turning to the outlook for the remainder of the year, I'd like to highlight two areas where we've seen double-digit organic growth in recent years and again in the first half of 2021.
This is around cloud-based software solutions as well as a virtual learning platform for our nursing customers. Turning now to slide 23. As you know, we've been transitioning applications to the cloud, and this brings environmental benefits, but it also brings greater value and utility for our customers. In the first half of this year, software revenues accounted for 43% of total revenues and grew 5% organically. Of these software revenues, nearly 1/3 related to recurring cloud software revenues, which grew 17% organically, making this one of our fastest growth areas. The pandemic has reinforced the demand for cloud-based software and collaboration tools, and even as we gradually return to office-based or hybrid working environments, we expect the demand for cloud to remain strong, and we plan to continue to invest to capture this growth.
Recent acquisitions have extended our cloud software capabilities, eOriginal and GRC's banking compliance solutions unit, and XCM Solutions in Vanguard Software and Tax and Accounting. Another bright spot in terms of organic growth in recent years has been our virtual learning solution for nurses, Lippincott CoursePoint+. Let's turn to slide 24. This is an integrated digital platform that improves educational outcomes and streamlines the educational workflow for both faculty and students at the same time. Lippincott CoursePoint+ has seen double-digit revenue growth the last few years and was well placed during the height of the pandemic to help nursing schools move their programs online. Growth is likely to slow a little bit in the near term as schools return to learn, to in-person classrooms, over the medium term, we see a bright future for this product.
The platform embeds our trusted Lippincott educational content and brand. It also leverages adaptive quizzing technology, enabling students to address areas of weakness. We recently incorporated mnemonic tools, which can dramatically improve the students' retention of the material. To prepare nurses for the real world, students can participate on the vSim patient simulator tool. We're really proud of the product in terms of the impact that it's having in the marketplace. Now let me wrap up with the outlook of 2021 beginning on slide 26. As indicated in today's release, we have upgraded and raised our outlook for the remainder of the year. We now expect our operating profit margin to be around 25% for the year.
As mentioned, underlying operating costs will increase in the second half as we gradually return to offices and partially restore travel, as well as accelerate hiring and increasing our investments to support growth. We now expect adjusted free cash flow to be between EUR 925 million and EUR 975 million in constant currencies. We expect [turnaround] to improve to around 12.5%. Finally, we expect high single-digit growth in diluted adjusted EPS in constant currencies. Now let me conclude by turning to slide 27 and talking about the outlook by division. With our markets recovering and new sales picking up, and in particular GRC performing better than expected in the first half, we now expect all four divisions to see a year-on-year improvement in organic growth.
In Health, we expect full-year organic growth to improve from 2020 levels. Adjusted operating profit margin is expected to be stable year-on-year as temporary cost savings fade and investments rise in the second half. For Tax and Accounting, we expect organic growth to improve from 2020 levels. Adjusted operating profit margin is expected to decline due to the absence of one-time benefits and the fading of temporary cost savings. In Governance, Risk, and Compliance, we expect organic growth to improve from 2020 levels. This is due to an expected rebound in legal services transaction revenues to more than compensate for lower revenues associated with PPP. The adjusted operating profit margin is expected to improve on the back of lower restructuring and provisions.
Finally, looking at Legal and Regulatory, we expect a return to positive organic growth driven by digital information and software revenues, and the adjusted operating profit margin is expected to improve as lower restructuring costs more than offset increased investments. Thank you all for your attention. Operator, you can now turn to questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Matti Littunen from Bernstein. Please go ahead.
Hello, good afternoon. Three questions if I may. The first one on capital allocation. You have quite a bit of balance sheet headroom. When should we expect to hear the next three-year plan? Do you think the capital allocation priorities will change from the current one? Looking at non-print transactional revenues, should we expect the recovery against 2019 levels, the organic recovery that is, to further improve in H2, or will it stay roughly on the same relative level to that year? Finally, legal and regulatory, you seem to have a strong cloud growth in EHS and ORM, mid-single digits in digital information solutions, and the print drag, presumably getting smaller.
Beyond the recovery, should we expect a slightly faster organic growth for that segment than what we saw in the few years before COVID-19? Thank you very much.
Thank you very much for your questions. I'll take the first and the last, and then ask Kevin to talk about non-print transaction volumes. Just quickly around the three year plan, yes, we are working on the next three year plan, which we'll talk with you, all of you about in February of 2022. You should fully expect sort of an evolutionary focus of building on the strong results we've had from the last several plans. In terms of capital allocation, you know, we've always tried to strike a balance between returns to shareholders and investments in the business. When we talk about the new three year plan, Kevin will, of course, talk about our capital allocation in more detail.
You should not expect, you know, any kind of major departure from the trajectory we've been on over the last several years. Looking at legal and regulatory, we were pleased with the good improvement in organic growth in the 1st half. What you see is that, you know, it's really been a result of couple of things. 1 is, the strong investments in the software businesses taking hold and the continuing good growth there, both on the cloud side in particular, but even on the on-premise side. The digital products, the information products, you know, being very well received in the marketplace and really driving steady growth. We've been remaking the portfolio in terms of making some divestments and acquisitions.
That combined strategy is what you're seeing in the financial results now. We fully expect as we continue into 2022 and 2023 that those elements will be in play and that the division will have positive organic growth. Kevin, do you wanna talk about anything more on capital allocation and the non-print transactions?
I would say on capital allocation, Nancy, we will continue to follow striking the right balance between investing in the business, reducing debt, and rewarding shareholders. We've made good progress so far to date on our share buyback program, and come February when we release the new three-year strategy, we will have more to say on shareholder returns. With regard to non-print transactional revenues, as you've seen, first half was very positive, particularly in GRC. In our legal service business, we had very strong growth in transactional type of revenues. I do believe some of that is some pent-up demand. A lot of projects were put on hold in 2020 that are now coming through. I think we've seen a similar dynamic in some of our service revenues, such as software implementation.
Certainly very pleased with what we see in the transactional revenues in the first half. We do expect to see a slowdown in those revenues in the second half. As I said, I do think there was some pent-up demand that we filled in the first half. As we've mentioned, print clearly we do expect to decline in the second half. Hopefully that addresses the our expectations for transactional revenues as we move forward.
Very helpful. Thank you, Nancy and Kevin.
The next question comes from the line of Nick Dempsey from Barclays. Please go ahead.
Yeah. Hi, guys. I've got three questions. The first one, just kind of following up on organic growth. I mean, simply looking at the shape of the comps from last year would lead us to imagine that you could do higher organic revenue growth in the second half of 2021 than the first half of 2021. I've listened to some of the things that you've been flagging, like timing in books, growth in various non-recurring lines, timing of tax filings in the U.S. You also did see organic declines at really quite an easy comp in Q4, tax, GRC. Can you give a bit more color on why you won't see at least as good organic revenue growth in the second half of 2021 as the first half? Second question.
Yeah, your guidance on restructuring is unchanged currently for this year. If I look last few years, you tend to have bumped this up a bit at the nine-month stage if it looked like you were going to notably exceed on margins for the year. Can we expect that same thing this year? If everything's going a bit better on margins the next few months, you'll pop in some more restructuring at the nine-month stage for the last few months of the year. The third question, for net interest, just to understand this, your guidance is EUR 65 million at constant FX. You had this EUR 11 million FX loss in the first half. Should we assume something neutral for the second half, therefore we add EUR 11 million to EUR 65 to get the reported number for the year, or is it more complex than that?
Great. Thank you, Nick. Kevin, do you want to take all three of those?
Sure, happy to. With regard to organic growth, Nick, yes, indeed, we do expect that transactional revenues will slow down in the second half as we've discussed. The timing of the tax season is also important to keep in mind, where in 2020, the U.S. government delayed tax filings until the third quarter, where this year in 2021, it was back into the second quarter. That timing shift will play an impact in our growth in the second half of the year. We are expecting a slowdown of those transactional revenues. I think as you've seen from our press release, and we had a few words on that this morning, we are pleased though that our recurring revenues, our subscription revenues, are holding up, and you've seen very consistent growth in those over the last several years.
That informs how we have built up our guidance on what to expect in the second half. You know, consistent recurring revenues, but a slowdown at transactions. With regard to restructuring, we're indeed guiding to the EUR 10 million to EUR 15 million that you've seen in our press release this year. That is our thinking right now, given everything we've seen. As you can imagine, we are still executing on some of the restructuring programs that we launched at the end of last year, so we wanna make sure we do a good job in that. Obviously, if we have anything further to say on restructuring, we will update you. Right now, do expect a normal level of restructuring, which is between that EUR 10 million and EUR 15 million. Most of that will happen in the second half of the year.
Finally, on the net interest, indeed, there is a foreign exchange translation loss of EUR 11 million included in our net interest line. If you assume constant currency rates, you know, there would be, you know, a minimal effect going forward. Obviously, we will have to see what the euro-U.S. dollar rate does. It really does have everything to do with translating our intercompany balances at the different currency rates. Nick, hopefully that gives you some insight into what we expect going forward.
Thank you.
The next question comes from the line of Matthew Walker from Credit Suisse. Please go ahead.
Thanks a lot. Hi, Kevin. Hi, Nancy. A few questions please. First question is on longer term organic growth. Have you changed your thinking at all about the possibility of, you know, whether this is still a sort of long-term 4% kind of company, or is it going to be a more like a 5% kind of company? Second question is on cloud. Can you just remind us of what the pricing dynamic is on cloud versus your on-premise, and also whether it gets a higher margin and lower churn rate? If you could also maybe explain on I know you said you didn't want to say much on capital allocation until the new three-year plan comes out, but could you just address the fact that your share buyback does look quite small relative to history?
I mean, if you go back to 2017, it was EUR 300 million, and that's sort of you know, four or five years ago, and it's now EUR 350 million, and your EBIT is roughly 20% higher in absolute terms than it was then. Shouldn't we expect a much larger, you know, share buyback program? Thanks.
Thanks, Matthew. I'll take the first two, Kevin, you can talk about the capital allocation share buyback. In terms of longer term organic growth, as you know, we don't give the forecast for that. What I can say, right, is a couple things, is that as we've been really embarking on this next transformation, right? We finished the print to digital transformation, that is largely complete, has been for a couple of years. That was a big kind of lift from an investment perspective, but it didn't really, as you know, increase, you know, sort of our profit opportunity or the profit pools. This next transformation that we've been on towards expert solutions, where today we're at 55%, is a very exciting next step.
Because then what we're really talking about is delivering workflow tools to our customers that renew at higher rates than information products, even in digital form. Therefore, when we get these products at scale, they have higher margin characteristics. What does all of this mean? What this means is that as we continue to tilt the portfolio towards expert solutions, you should expect a continuous improvement in organic growth and also a continuous improvement margin. That's been the plan, you know, pre-pandemic. Of course, the pandemic changed a number of elements, but you can now see in the first half results as we are recovering from the pandemic that those same, you know, kind of assumptions about the portfolio remain.
We are really excited about this next phase of the company, in part because these expert solutions, and you can see that even in the half year, grow at a higher rate. They deliver more value to customers, and again, therefore, when we get to scale, we get that higher profitability. In terms of cloud pricing, in most cases, our on-premise software was charged as an annual license fee, so not a typical license maintenance model. There are some products we have that operate that, but tax being the biggest on-premise software line that we have, that is an ongoing recurring revenue. As we move to the cloud, you know, that model, the basic business model doesn't change. We do expect that we will capture more value with cloud pricing over time relative to on-premise.
Right now, we're still building out cloud, so today our on-premise products would be more profitable, because they are fully at scale, and we're still scaling some of our cloud solutions. Customers, you can see, are really leaning in on cloud. We have great solutions in the marketplace, and again, it's one of our fastest growing areas. With that, Kevin, do you wanna talk about Capital allocation?
Certainly, Nancy. With regards to capital allocation, as I mentioned, we're currently about EUR 229 million through the EUR 350 million program that we announced at the beginning of the year. We have given a mandate to a bank for another EUR 70 million. That'll go through, you know, November 1st. You know, at the end of the year, I do expect that we will complete the EUR 350 million program by the close of December this year. With regard to future capital allocation, clearly we'll have more to say about that when we come out with full year results and our three-year strategy in February.
You know, to remind you, when we think about capital allocation, we think about investment in the business, and we're very pleased that we continue to invest between 8% and 10% of our revenues in good years and bad years, during a pandemic, during a financial downturn. That 8%-10% is something that we hold very sacred because we do believe that drives future growth. Also paying down debt. Now as you've seen, our leverage ratio is at 1.7, so we are below our target. Probably comfortable being below that target as we emerge from a pandemic. You know, that certainly is part of our thinking. Then we will decide on, you know, future share buybacks and the dividend.
Just to remind you, the dividend is progressive dividend, and you should absolutely expect that dividend to increase every year regardless of what the currency is doing. We will increase that Euro dividend. Matthew, hopefully that gives you a little bit more insight.
Okay. Thanks both. Thank you.
The next question comes from the line of Rajesh Kumar from HSBC. Please go ahead.
Hi, good afternoon. The first question is on thinking on the competitive landscape in the legal space. How do you see that evolving over the next two or three years? The second one is around wage inflation, staff churn. How are you thinking strategically about that going forward? We've had a bit of a lull in the labor market in 2020. I'm assuming a lot of people would want talent, and companies like Wolters Kluwer who have retained their staff, trained them, they might be attractive to other employers. What is your thinking on that piece? Finally, just a very hypothetical question. Suppose you had a magic wand, and you could get to the cloud penetration level you want it to in the future.
What sort of implications it would have for your margins and return on capital employed if you could do the transformation overnight? How would we see that transformation come through?
Yeah. Okay, good questions. I'll start and then Kevin, feel free to add to my commentary. On the competitive landscape in legal, you know, we have seen very few shifts over in any kind of, you know, share, any kind of major positioning, both in Europe and North America, in the past. I think all players are, you know, continuing to invest in their products to make them better, to have technology, features in them, et cetera. I don't anticipate over the next two or three years that changing. I think that, you know, people will retain their relative, place.
I think in Europe where we're more prominent in the legal market, I think that's what's distinguishing us is not just our investments in digital information, but also the fact that we have a full suite of legal practice management software in multiple countries. That does give us a competitive advantage when we go to market and can combine, you know, sort of the software with the information products. I truly don't see much shifting from a competitive perspective. On wage inflation and talent, that is, you know, I think what we are seeing is a very robust labor market right now. It's always been challenging to hire qualified technical folks, and that remains true today and then some. I would say there's quite a war for talent.
We do a lot within the company to focus on retention, so we're not seeing our turnover be higher than the ranges that we expect. We continue to really focus a lot on engagement and investing in our employees' career development so that we can continue to have them stay with us. I think right now one of our biggest challenges is hiring. I know we're not alone in that. I hear that from most of my colleagues in other companies. That remains a really critical point for us.
In the short term, we expect wage inflation to sort of be in line with historical levels, but it is clearly an intention point for us to look at what's happening with inflation, and is that going to have a material effect on labor costs. Right now, nothing more to say on that, but certainly an attention point. In terms of, you know, as more and more of our customer base moves to cloud. First, I will tell you our experience is always that these migrations take longer than anyone expects, we are fully investing today, both in our, we call them foundation products, which are on-premise solutions, as well as investing in cloud.
As we move to the cloud, the benefits are really more around growth and margin because our on-premise software products tend to be high margin, and the growth comes by really creating, you know, a much overused word, but these ecosystems where you can invite other players into your, you know, kind of, product offering, and therefore, capture more wallet share from clients. We see that now beginning in some of the tax areas. That's where we're furthest along on cloud. We really see the promise of cloud more on the growth side than on the margin side. Hopefully that answered your questions.
Yes, it does. Thank you.
Yep.
The next question comes from the line of Tom Singlehurst from Citi. Please go ahead.
Yeah, thanks very much for taking the question. Tom here from Citi. The first question was on growth and the sort of revenue growth profile on a two year basis between, I suppose the legal service and financial service non-recurring revenues and the recurring revenues. Publicis introduced this idea of a revenue re-recovery ratio. If I mean, with legal services and financial services, your sort of recovery ratio, if that's the right way of putting it, versus 2019 is massive. It's. You're 10% higher for legal services transactional. You're 23% higher for financial services. That's actually higher than the sort of recurring businesses. I'm just wondering what's behind this.
I mean, when we look at financial services, which was up 56% last year, only down 21 this year, legal services six last year, up 18 this year. What is that just a structurally higher level of activity? I mean, it has I'm trying to work out how we square that with pent-up demand. That's the first question. Are we just have we just passed, you know, any long-term trough in terms of transactional, now it's gonna grow at least as fast as, if not faster than recurring? That was the first question. The second question was on cloud software growth, which is obviously fantastic, plus 17%. I was just wondering how much of that is sort of genuinely additive and how much of it is sort of cannibalistic?
You know, whether we can distinctly say that cloud software is sort of growing the available pie at this stage. That'd be great. Thank you.
Yeah. I'll start and then ask maybe Kevin, you can chime in on the non-recurring. I think to echo what Kevin said earlier, what you're seeing in the first half is a lot of pent-up demand, right? People are doing more tax planning now. They're doing corporate maybe they're doing an IPO that they couldn't get done in the pandemic. There clearly is demand that was perhaps there pre-pandemic and got put on hold that's now coming through. Obviously, it reflects PPP, which is a one-time program that's not gonna come back. That's all true.
I would say within both the financial services business and legal services, you know, we are continuing to build new services, launch those in the marketplace, continue to invest in growth. It's still over the long term, it will be an area that we hope we will, you know, continue to see good growth in the business. Very hard to predict the rate of growth relative to pre-pandemic levels, to be honest. We need to see things sort of stabilize. On cloud software, you know, it actually grew 19% last year for the full year, 17% through the first half, so an important growth area for us.
Some of it is migration, the vast majority is new customer wins because our fastest-growing areas of cloud are in places like CCH Tagetik and the EHS and legal software space, and that has been largely, you know, growing, you know, growing our penetration. Where the migration is mostly is in the core tax business. There you're seeing a bit more migration. One of the reasons we've had sort of this strategic mindset in the last, say, five years around cloud first, when we can be cloud first, it's because of our experience with CCH Axcess in the US, where we've been first in the market for seven years now, and we've gained brand-new customers. That's hard to do, right? I mean, again, everybody has high retention rates on on-premise software.
If you can position yourselves with the cloud products first, gain some brand-new customers, that's been a very good strategy for us in terms of growth. Kevin, do you wanna add anything on non-recurring?
I would say I certainly agree with you, Nancy, that the non-recurring revenues are harder to forecast than the recurring revenues. Tom, what I would ask you just to recognize is that on the non-recurring revenues in legal services, a lot of those volumes do have to do with new legal entity formations. Whenever a new legal entity is formed through, say, a merger or acquisition transaction. Or through tax planning. That's when we see those volumes go up, and that's when we see very strong revenue growth. Similarly, on the financial services side of the business, one of the metrics that you can look at is corporate lending.
Whenever we see a robust corporate lending market, that's when there are a lot of lien searches, that's when there are a lot of liens placed on equipment, that is part of the lending transaction. If you can kind of correlate those volumes in corporate lending and legal entity formation, that gives you an idea on how we would expect to see the transaction revenue grow or contract going forward.
That's, that's very clear. I mean, as I say, it's very, it's very positive because legal services only down 6%, to be then up 16% suggests that there's a bit more than just pent-up demand. It's bouncing back more than it went down in the first place. Yeah, I understand the point. Thank you very much.
Well, Tom, do remember we came to a screeching halt in the end of the second quarter last year, too. We do also have a bit of the benefit of a more forgiving comparable in the second quarter.
Got it. Thank you.
Before we go to the next question, as one last reminder, please press star one if you would like to ask a question. The next question comes from the line of Henk Slotboom from The IDEA!. Please go ahead.
Good morning, everybody. Good afternoon. I don't know where you are exactly, but in any case, it's a good morning or good afternoon. Well, I had a lot of questions about GRC as well, which have been answered in the meantime. A couple of other questions left. First of all, when I read through the press release, I see a lot of times the being used structural versus and temporary cost savings. Could you perhaps highlight a little bit more what the temporary cost savings are? So basically put a number to it that we know what, how the comps look like when looking into the second half of this year. The second one is on print and then on subscription revenues.
If I go back to 2019, then in the first half year you had EUR 102 million of sales. Last year it was EUR 90 million. This year it is EUR 81 million. Could you perhaps provide some more color as to what's driving it? Is it a transformation to electronic, or are there other drivers? Which areas, sorry, are that exactly? The last question I had is you mentioned in the press release under the health section that you added 5 titles of the American Society of Clinical Oncology. Are these print titles? And if so, why further invest in print? I thought the whole strategy was about migrating everything to e- electronic. Those were my questions. Thank you.
Okay, thanks. I will take the health question, and then Kevin, if you could talk about savings and, the print, numbers in terms of the reduction. On health, we are a major society partner, and generally the way these contracts work is that most societies still have their medical journals available in print, but obviously we also put that content on Ovid, and Ovid is a major platform in the health market. Yes, we do publish the printed journal, but the real source of, revenue, for the society comes from Ovid, and then we do a lot of other kinds of work with the societies, to promote other kinds of services around the, you know, the Ovid content.
It's still primarily revenues coming from digital, but it is kind of a hybrid offering for physicians in this medical area. We're very excited to win this relationship and it's been going, you know, very well. Kevin, do you wanna take the next two?
Sure. As far as structural versus temporary cost savings, Henk, are gonna be things like we're not traveling the way we had hoped we would be traveling at this stage of the game. Obviously our T&E expenses are down significantly to where they were before the pandemic. We do expect that to change. We do expect to start traveling, to start getting back to the offices in the second half of the year. That is gonna be on a case-by-case basis or a geography-by-geography basis. Obviously, the situation in India is different than it is in the U.K., is different than it is in the United States, so we are monitoring that. Nonetheless, we expect travel to come back. We do expect promotion expenses will come back as well.
We were being very cautious, as many people were during the pandemic in 2020. We do expect to spend more on promotion going forward, and in-person events obviously. We'd like to get back out there and see our customers and hold in-person events. We do expect those expenses will increase. With regard to structural cost savings, that has a lot to do with some of the restructuring programs we announced at the end of last year. In particular, in our GRC division, we did announce a voluntary retirement program that a number of employees took advantage of. There we will see a step-down in head count, and we will see the cost savings of that flowing through.
Programs such as that, just as one example, those will be structural cost savings and those will benefit the times going forward. With regard to the print subscription decline, I do expect we're gonna see that decline continue, both print and books. I do believe during the pandemic, one of the things that we've seen, a lot of customers who are continuing to hold onto print realize, "Hey, I can get my job done just as efficiently, maybe even more efficiently with the digital component." We're gonna offer print as long as somebody would like to buy a printed version, no question about that. The decline that I see in the future does have everything to do with people will migrate to digital.
They're just finding the user experience very rich, and I think the pandemic may have convinced a lot of folks who were hanging on to the print. Henk, I hope that answers your questions.
Yeah, not entirely. Let me be stubborn. Could you attach some numbers to the cost savings, please? Is it tens of millions? Could you give some more color there, please?
Certainly it's tens of millions EUR in the sense that, you know, we're not traveling at all, and travel was a part of the P&L in the past that, you know, as you know, we go out and we visit customers. We hold in-person events. The cost savings is certainly going to be significant from those temporary cost savings. I do expect they will come back in the future. They may not necessarily come back to where they were pre-pandemic levels, just because we are becoming much more efficient working remotely. It's not a replacement for face-to-face, but, you know, I do think we've realized we can get the job done and collaborate with each other in different working environments. We haven't given specifics on that, but clearly, you know, the cost savings have been material.
Okay. Thank you.
There are no further questions in the queue. I will hand the call back to your host to close today's call.
Great. Thank you very much, Jess. With that, we're gonna close the call. Thank you all for joining and listening today, and thank you for your great questions. If you have any further questions, feel free to reach out, and we will get back to you in the coming days and weeks. Thank you again.
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