Welcome. Thank you all for coming to the London Stock Exchange this morning. Good morning, and welcome to also those who are online, on the phone or listening to the webcast. Welcome to our 2018 full year results presentation. Today's results release and slides are available on our website, for download, and you can find them at wolterskluwer.com. With me today are Nancy McKinstry, our CEO, and Kevin Entricken, our CFO. Nancy and Kevin will shortly discuss the key features of our 2018 results, and following their comments, we will be open to your questions. Before we get started, let me remind you that some statements we make today may be forward-looking. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements.
You can find a discussion of the risk factors in our annual report. On today's call, we refer to adjusted profits, which exclude non-benchmark items. We also refer to growth in constant currency, which excludes the effect of currency movements, and we refer to organic growth, which excludes the effect of both currency and the effect of acquisitions and disposals. Reconciliations can be found on our website and in our press release. With that, I'll give it forward to Nancy.
Thank you, Meg, and good morning, everybody. As is our usual practice, I'll start with a few highlights for our 2018 performance. Ask Kevin to come up and talk further about our financial performance. I'll return, give you an overview of the divisions, and then talk about our strategic priorities for the coming year. We had another good year of performance across the group, most notably positive organic growth in all four of our divisions. We achieved further improvement in margins, cash flow, and return on invested capital. Last year, organic revenue growth was 4%, driven by digital products and services revenues, which grew 6% organically. Our adjusted operating profit margin saw 30 basis points in underlying improvement, and we delivered double-digit growth in diluted adjusted earnings per share.
Our adjusted free cash flow also increased, helped by better than expected cash conversion, and our balance sheet remained strong. We concluded our three-year share buyback program last year, spending a total of EUR 550 million. Together, the dividend and the buybacks meant a significant increase in cash returned to shareholders in 2018. Given this good performance and in view of our expectations going forward, today, we are proposing a 15% increase in our 2018 total dividend per share. We are also announcing today our intention to repurchase up to EUR 250 million of shares this year. Our strategy has been successful and is delivering results. We start this year with a refined list of strategic priorities. In our new plan, our focus will be to drive scale in our expert solutions, advance our information products and services, and drive operational agility.
I'll talk about these priorities a bit later in the presentation. Now I'd like to ask Kevin to join us and talk about our financial results.
Thank you, Nancy. I'd like to begin by talking about our headline figures. Total revenues increased 1% in constant currencies, reflecting the effect of net disposals. Excluding both currency and net disposals, organic revenue growth was 4%. Adjusted operating profit was EUR 980 million, up 5% in constant currencies, and our margin increased 80 basis points to 23%. As noted in our press release, there were EUR 23 million of positive one-time items included in adjusted operating profit, compared to EUR 2 million the year before. Without these one-time items, the margin would have increased by 30 basis points. Diluted earnings per share increased 16% in constant currencies. Adjusted free cash flow was EUR 762 million, up 6% in constant currencies. Finally, our leverage ratio improved to 1.7 times net debt to EBITDA. Let's take a brief look at the divisions.
We are very pleased to report positive organic growth in all 4 of our divisions. Health delivered good organic growth of 5%, led by Clinical Solutions. Tax & Accounting recorded 7% organic growth, driven by software globally. Under a like-for-like accounting standards, the division recorded an acceleration in organic growth. This acceleration was primarily due to CCH Tagetik, which was included in organic growth beginning in April 2018. GRC recorded 4% organic growth. Under like-for-like accounting, GRC faced a very tough comparable in the fourth quarter due to record new software license fees booked in the prior year. Legal & Regulatory delivered organic growth of 1%, turning positive for the first time in many years as the business has shifted further away from print and towards digital products. Let's take a look at revenues by type. Recurring revenues, which make up 78% of revenues, increased 5% organically.
Recurring revenues include subscription products and other repeating revenue streams. Non-recurring revenue trends were mixed. Print books declined 6% organically, marking a deterioration over the prior year. Print books are now just 5% of total revenues and are mainly found in our Health and Legal & Regulatory divisions. In the GRC division, legal services transaction revenues were strong, up 10%, while in the financial services, transaction revenues fell 3%. Other non-recurring revenues, which include software licenses and implementation fees, increased 6% organically. This mainly reflects the prior year software license sales in GRC and the strong 2018 organic growth at CCH Tagetik in Tax & Accounting. Turning to adjusted operating profits. Overall, we recorded an 80 basis point increase in our operating margin to 23%. This includes net positive EUR 23 million of one-time items. Without this benefit, the margin would have increased by 30 basis points.
The one-time items were related to favorable settlements on several legal matters and a gain on the sale of real estate. In addition, we impaired our Brazilian business by EUR 16 million, of which EUR 7 million was included in adjusted operating profit. The one-time items had a net positive impact in Health, Legal & Regulatory, and Corporate, and a slight adverse impact to Tax & Accounting. Also included in adjusted operating profit were EUR 30 million of restructuring costs, broadly stable year-over-year. You may recall last October, we announced we would bring forward some restructuring initiatives into the fourth quarter. Having done that, we now expect to spend between EUR 10 million and EUR 20 million on restructuring in 2019. Let's turn to the rest of the income statement. Adjusted financing costs decreased nearly EUR 40 million to EUR 70 million.
This decrease reflects the lower interest costs following the redemption of our EUR 750 million bond in April 2018. Adjusted profit before tax was EUR 912 million, up 6% overall and up 10% in constant currencies. The benchmark tax rate was 25.1%. The tax rate was at the lower end of our expectation for 2018 due to favorable tax credits and deferred tax movements. Including the effect of the lower share count, diluted adjusted earnings per share increased 16% in constant currencies to EUR 2.45. Let's turn to the IFRS income statement. Reporting operating profit rose 16% to EUR 961 million. This includes EUR 159 million in net book gains of the disposals we completed in 2018. The other point to note is that the reported effective tax rate increased to 26.3%, the prior year having benefited from one-time non-cash revaluation of our U.S.
deferred tax position as a consequence of the lower U.S. corporate tax rate that was in effect as of January 1, 2018. Let's take a look at cash flow. Our cash conversion ratio was 104% compared to 100% a year ago. This improvement reflected the stronger working capital inflows in the final months of the year. CapEx was EUR 214 million. This figure includes some real estate disposal benefits in both 2018 and the prior year, which are associated with our ongoing program to rationalize our real estate footprint. If we exclude these real estate gains, the CapEx as a percent of revenue was 5.2% compared to 5.1% in the prior year. Looking forward, we expect CapEx to remain in the range of 5%-6% of revenues in 2019. Cash financing costs were EUR 96 million.
This includes the final coupon payment on our EUR bond redeemed in April 2018. Having refinanced at a lower rate, we will see finance costs reduced meaningfully in 2019. Cash taxes paid increased to EUR 206 million, mainly due to the disposals we made last year. This includes EUR 34 million of taxes paid on disposals, which as you can see on this slide, we back out of our benchmark adjusted free cash flow. All in all, adjusted free cash flow increased 2% overall and 6% in constant currencies to EUR 762 million. I'd like to make a few comments on how we deployed our cash flow. Dividends paid to shareholders during 2018 amounted to EUR 277 million. Acquisition spend was EUR 170 million. The largest acquisition was eVision, the world's leader in operational risk management software, which was completed toward the end of the year in late October.
Cash proceeds from divestitures was EUR 304 million, reflecting the three disposals we made earlier in the year. As you may recall, we added the gross disposal proceeds to our share buyback program last year, leading us to spend a total of EUR 550 million on share buybacks during the year. The bottom line was a reduction in net debt to just under EUR 2 billion. Our balance sheet remains strong, with net debt EBITDA standing at 1.7 times at year-end. Now I'd like to update you on our dividend proposal. We're proposing a dividend distribution and our share buyback program. Having reviewed our strategic plans and expected capital requirements for the coming three years, we are proposing an increase in the total dividend per share for the fiscal year 2018 by 15%. This is the most significant increase we have made in many years.
We will therefore recommend a final dividend of EUR 0.64 per share. This will bring the total 2018 dividend to EUR 0.98. Of course, this is subject to shareholder approval at our annual general meeting in April. With regard to our share buyback plans, we are announcing today our intention to repurchase up to EUR 250 million in shares during 2019. To sum this up, we're pleased to report organic growth of 4%, with all four divisions contributing to that growth. We delivered an increase in margin of 80 basis points in total, or if you exclude the net positive one-time items, an increase of 30 basis points. Adjusted EPS increased 16% in constant currencies, and free cash flow increased 6% in constant currencies. Our return on invested capital improved to 10.9%, and our balance sheet remains strong.
Combining the dividends and the share repurchases, we returned over EUR 750 million in cash to shareholders in 2018, and we are proposing a 15% increase in the dividend per share for fiscal year 2018. Now, with that, I'd like to turn it back to Nancy. She will update you on the divisional accomplishments.
Thanks, Kevin. I want to start with Health. Health delivered 5% organic growth led by our Clinical Solutions business, which makes up half of the division's revenues. The divisional margin increased 180 basis points, in part due to one-time benefits. Excluding the one-time items, the margin would have risen 80 basis points, driven by the ongoing shift in the business mix as well as due to cost savings. The Clinical Solutions group grew 9% organically. This growth was led by UpToDate, which enjoyed strong renewals and adding new customers globally. Last year, we integrated three of our Clinical Solutions units and reorganized their sales teams by customer segment. Today, we can more easily market and sell across the continuum of clinical effectiveness tools, including clinical decision support, drug information, and patient engagement. The other important development last year was the launch of UpToDate Advanced in the U.S.
This is a new module that offers guided pathways tailored to the patient's specific conditions. In health learning, research, and practice, we recorded 1% organic growth. Digital revenues grew 3%, but this was partially offset by the continued decline in print, which makes up 31% of the unit's revenues. In medical research, our digital and open access journals did well, but print subscriptions and advertising were weak. In education and practice, we saw strong growth in digital learning and practice solutions for nursing, but this was offset by a 7% organic decline in print books. Turning to Tax & Accounting. Tax & Accounting delivered 7% organic growth driven by software, which makes up 74% of the division's revenues. The divisional margin declined to 25.3% due to the adverse effect of one-time items, increased restructuring, and the dilution from CCH Tagetik.
Our North American group grew 6% organically, driven by growth in software. Our CCH Axcess suite, as well as our audit solution called CCH ProSystem Engagement, did particularly well. Our European group delivered 7% organic growth with good growth across all countries. Here, we continue to build out and launch our cloud collaborative tools for tax advisors and their clients. In Asia-Pacific and rest of world, performance was more mixed. Strong organic growth in China and India was largely offset by weakness in Australia and Brazil. Last but not least, our Corporate Performance Solutions unit delivered 19% organic growth, driven by the excellence performance from CCH Tagetik. CCH Tagetik is profitable, but margins reflect significant investment, explaining part of the margin results for the division overall. Moving on to Governance, Risk & Compliance. This group reported 4% organic growth and delivered a margin increase of 170 basis points.
Efficiency programs and the effect of lower margin disposals have lifted the margin to nearly 30%. Legal services had a good year with 5% organic growth. CT, which provides legal representation services, recorded an acceleration in organic growth to 5%, supported by good growth in service subscriptions and accelerated demand for transactional services. In our enterprise legal management unit, new software sales and early success of LegalVIEW BillAnalyzer helped drive 6% organic growth. Financial services reported 3% organic growth and absorbed overall weakness in transactional revenues. Finance, Risk & Reporting recorded 7% organic growth, driven by the recognition of software license sales that were made in the prior year. Wolters Kluwer Lien Solutions transactional revenues exhibited robust growth, driven by both new customer wins and product innovation.
Finally, Compliance Solutions saw a modest decline as it absorbed a double-digit drop in mortgage origination volumes with steady growth in recurring revenue streams. A look at Legal & Regulatory. Legal & Regulatory saw organic growth turn positive last year, growing 1% compared to a 1% decline in 2017. This improvement is the result of the ongoing shift towards digital and software solutions, helped along by the disposals we've made in the last couple of years. Adjusted operating profit margin included total one-time benefits of EUR 10 million. Excluding these one-time items, the adjusted operating profit margin would've declined by 30 basis points due to the disposal of higher margin businesses. Legal & Regulatory information solutions recorded broadly stable organic growth. Digital information solutions grew 3% organically, driven by improved retention rates and product innovation.
Our U.S. Legal & Regulatory business delivered a second consecutive year of positive organic growth, despite a tough comparable in our legal education unit. Legal & Regulatory software, which includes Enablon, eVision, and our centralized legal software unit, delivered 13% organic growth. Enablon's EHS and operational risk management software achieved double-digit organic growth, driven by growth in our cloud products. Our legal software unit also delivered double-digit organic growth. Now let me update you on our strategy. If we look back over the last three years, I think it's fair to say that a lot has been achieved. We expanded our market reach and improved the quality of the overall business with several important bolt-on acquisitions and a handful of non-core disposals. Investment has been directed towards our most attractive market segments.
We have begun to put more attention and investment behind our expert solutions, products that not only deliver high-quality content, but also help our customers achieve better outcomes and improve productivity. We made headway in driving efficiencies, standardizing technologies and processes, and improving our culture and employee engagement. The results over the past year has been a clear improvement in key financial indicators. Our organic growth has continued to rise from 1% in 2013 to 4% in 2018. The adjusted operating profit margin has improved by an average of 30 basis points per year since 2013. Over the same period, our return on invested capital has increased from 8.7% in 2013 to 10.9% last year. The strategy has delivered a higher quality, more digital business with more recurring revenues. We have extended our strong core leading positions into several higher growth adjacencies.
Product development spend has been sustained at between 8% and 10% of revenues, and the level of innovation in the company is the highest we've ever seen. Our employee engagement scores have risen and now exceed the high-performing norm. As we look to the future, we intend to stay on the same strategic course with a refreshed set of priorities for the coming years. If you look at these priorities, we are aiming to deliver good organic growth and further improvement in margins and return on invested capital. We expect to maintain our product development investment at between 8% to 10% of total revenues and to fund the upgrade of infrastructure and back office systems by driving further cost savings. The focus will be on organic growth, although we may make further bolt-on acquisitions and non-core disposals to enhance our value and market positions.
Our priorities over the three years are to grow our expert solutions. We will focus on scaling our expert solutions by extending our offerings and broadening our distribution through existing and new channels, including partnerships. We will invest to build or acquire positions in adjacent market segments. Our second priority is to advance our domain expertise. Here, we intend to continue to transform our information, products, and services by enriching our domain content with advanced technologies to deliver actionable intelligence and deeper integration into our customers' workflow. The third objective is to drive operational agility. We plan to strengthen our global brand, our go-to-market, and digital marketing capabilities to support our organic growth, while at the same time, we want to continue to upgrade our back office systems and IT infrastructure.
As part of this, we are completing the modernization of our HR technology, which will help us in our efforts to attract and nurture talent. Now I wanted to give you two examples of putting this strategy into practice. The first is, what do we mean by an expert solution? We define an expert solution as a product that combines our deep domain expertise with specialized technology and services to deliver answers, analytics, and improve productivity to our customers. Expert solutions tend to be integral to the user's workflow. They are frequently used throughout the day, and they automate part of our customer's work. A good example of this comes from tax and accounting. Here, it's CCH Axcess, which is our cloud-based professional tax suite. What you see is historically this set of capabilities was delivered on-premise, now CCH Axcess is in the cloud.
The beauty of the cloud is that not only does it bring you mobility, but it also has allowed us to create a module integrated ecosystem. We launched this product five years ago, and we've continued to add new features and modules. Today, nearly 40% of our U.S. professional tax customer base is already using one or more of these modules. In 2018, we launched two new components of the system. One is a product called CCH Axcess IQ, which uses predictive analytics to match changes in tax law with the clients of the professional that are affected by those changes. The second new module was CCH Axcess Financial Prep, which employs robotic process automation to automate trial balances for audit preparation.
The beauty of both these modules is it gives significant productivity benefit to the accountant and allows the accountant then to use those hours of time on more higher value-added services for their clients. A second example is around how are we transforming the next generation of our information products. As you all know, the transformation of print to digital is well underway. What I'm really speaking here about is the next generation or the next wave of transformation. What we're focused on is really using new technologies to enhance the power of our digital solutions. This example comes from our Italian team. Our existing digital products in Italy are market leading and growing well organically. Now we're taking the next step to reconceptualize these products and take advantage of advanced technologies and take advantage of our own scalable technology platforms.
ONE, that's the name of the product depicted on this slide, will be a next generation research solution that leverages our global Atlas platform, which is used throughout the company, and Apollo, which is our centralized content management system. ONE has a module design that's focused on end-user segments within corporations and professional firms. In last year, we launched the first module, which was in the tax area, and this year we will launch two modules, one on legal and one on GDPR. These modules all transform our existing successful solutions to make them even more powerful because they can be combined and integrated into the customer's workflow. What this means is that ONE is highly configurable, making it attractive to both generalists and specialists within law firms, tax advisors, and corporations. With that overview of strategy, I now want to conclude with the outlook.
We expect to deliver another year of solid organic growth supported by all four divisions. We expect our operating profit margin between 23%-23.5%. We believe we can overcome the one-time benefits we had in 2018 and deliver incremental margin improvement in 2019. We expect adjusted free cash flow between EUR 750 million-EUR 775 million in constant currencies. We expect return on invested capital, again, to show incremental improvement to land between 10.5%-11.5%. Finally, we expect around 10% growth in diluted adjusted EPS in constant currencies. Now to finish off and give you a flavor of our expectations by division. In Health, we expect organic growth to be in line with 2018 and the adjusted operating profit margin to decline due to the absence of prior year one-time benefits and increased investments in sales and marketing.
In Tax & Accounting, we expect organic growth to moderate from 2018 levels, but margins to improve on the back of lower restructuring costs and the absence of prior year one-time charges. In Governance, Risk, and Compliance, we expect transactional revenue trends to moderate, but recurring revenues to show improved organic growth. We expect the division to deliver further improvement in margin due to efficiency initiatives. Finally, for Legal & Regulatory, we expect organic growth to be in line with 2018 and the adjusted operating profit margin to decline due to the absence of the prior year one-time benefits, higher investments, and the full inclusion of eVision in the results. With those comments, I'd now like to turn it over to Q&A. Sami, yeah.
Thank you, Nancy. Good morning, everyone. I have the usual three questions to start with, please. Why is the organic revenue growth in tax expected to moderate in 2018? In other words-
Yeah.
What pushed-
Do you want me to list them all or you want to go one by one?
I would like you to write down the three of them or to remind me.
Okay. Go ahead. Keep going.
Whatever.
Yeah.
The second one is on the governance risk and compliance. You gave an organic revenue growth guidance for the sub-segments, can we have an aggregated impact at the divisional level? Do you expect growth to remain at four or to slow down? Lastly, you reorganized the sales force within the Clinical Solutions. Was that disruptive to the new sales performance of the division, or can you report any pickup in the new sales activity of Clinical Solutions that would suggest that the high single-digit organic revenue growth can be maintained in that division, please, Nancy? Thank you.
Okay. First on tax. Tax for 2018, just to remind everybody, rounded to 7% organic growth, which obviously we are very pleased with. Why are we indicating a moderation? It really has to do, in that 7% organic growth, there were a couple of things that were one-time in nature. For example, we had a good books year because of the U.S. tax reform. That's a one-time event that will not get repeated in 2019, and there were a few of those kinds of things. We still expect good performance out of that unit. For GRC, as you know, this is the most difficult unit to forecast. About 40% of the unit is transactional revenues. Within the legal services group, transactional revenues did really well in 2018, so we clearly expect that to moderate. We are seeing also good growth in recurring revenues.
I cannot give you any more insight than that, because as I say, it is the most difficult unit to forecast. As it relates to Clinical Solutions, we are excited about the reorganization because we are now very focused on the customer segments, and the salespeople can sell the multiple lines of UpToDate, our drug database, and patient engagement, supported of course, by product specialists. That occurred in the latter part of 2018. We started this year with all the territories in place, all the incentives in place. The reps have gotten out of the gate well, and our expectation is clearly that we will see greater cross-selling. Even last year, we delivered very good growth in Clinical Solutions. We continue to see the future of that unit in a positive way.
What you are seeing is, as we have talked on many occasions, still have a lot of room to grow outside the U.S. Within the U.S., I would say more of the growth will come from the cross-selling activities, because we are highly penetrated in U.S. hospitals. Outside the U.S., we are continuing to, again, grow that business nicely.
Thank you, Nancy.
Yeah, please. You want to start, Alistair? Yeah. Then Nick. Oh, sorry. Matt. I called you Alistair. I was looking at you and that's why. Okay.
I think it's the hair. You could've had Nick as well in there.
Yeah. Exactly. You sort of blend together here.
Yeah, they say it's only 1.5% gingers.
Yeah
there's obviously more in this room.
There's more.
A couple of questions. First of all, growth would've been three under the old accounting standard.
Yeah.
You've only given divisional guidance, it looks like if you add all those up, you're estimating sort of four again in 2019. It looks like 2019 is going to be the year that you, on an underlying like-to-like basis, accelerate from three to four rather than last year, if you see what I mean. Could you just confirm that? On UpToDate, could you give us a breakdown of the doctors between U.S., Asia, and Europe? Lastly, on cloud, could you tell us what % of revenues in the group come from cloud, and what % of your revenues come from cloud in tax? Any indication of how that compares with last year so we can get a sense of trajectory?
Do you want to take those?
Sure.
Yeah. Okay.
I would say that we don't give overall organic revenue guidance, but the comments on the divisions that we put in the press release, I think you're seeing it the right way as far as adding up the different divisions. With regard to UpToDate is certainly growing on an accelerated rate in both Asia and Europe, but it is still very much a U.S.-dominated product. We do have a lot of high hopes that business will become even larger throughout Europe and throughout Asia. As far as cloud computing goes, I don't think we've given that estimate.
Tax & Accounting is the furthest ahead.
It is. Absolutely. With CCH Axcess. That is probably something that we can speak more on in the future.
I would say cloud is growing really well, high single digits across the group, still as a percentage of our overall revenues is going to be small. Again, what's working for us is often we are the first player in the market with a cloud solution. We're gaining new customers in that regard, that's been part of our strategy. We expect that the whole migration from on-premise to cloud is just going to take a number of years.
Thank you.
Yeah.
Hi. Nick Dempsey from Barclays. I've got two questions. First of all, Thomson Reuters posted the Blackstone deal. They've reorganized a bit in tax. They've got a whole division focused on, I think they call it tax professionals, but they mean accountants, as you'd call it. They're also talking about small firms being a big focus for them in terms of where they have white space, where they could grow. They've got a lot of money to invest if they want to. To what extent could they temper your growth in tax and accounting by catching up competitively? Second question, in GRC, that 40% of revenues that's transactional, I think we remember from last time that some of them were cyclical, some of them were countercyclical, like mortgage refis. To what extent would those 40% of revenues fall heavily in a U.S. downturn?
On the competitive landscape in tax, we feel we've always seen Thomson as a formidable competitor. As you know, we've been competing head-to-head with them for decades. We feel very good about our market position. What's underlying that confidence is both that we still are the only player in the professional market with a cloud solution. The whole CCH Axcess that I talked about in my presentation, we're really the only game in town. That's allowed us to gain new customers, and that continues to be really a big opportunity for us in the U.S. The second thing is that we continue to innovate well in the unit. Again, launching something like CCH IQ and the Financial Prep module just continues to extend our point of differentiation.
I think in U.S. tax, we're well-positioned not only at the large and medium segment, but in the small firms as well. On the downturn, again, this is a very difficult question to answer in that some of the trends are counter-cyclical. What you saw last year, I think, was a good illustration of that. Legal transactions were up 10%, the mortgage transactions were down. Right? We are managing these trends in the best way that we can, having been in the business for many, many years. It's extremely difficult to give a projection on what would happen in a slowdown, because it depends on what is driving a slowdown, right? As you know, that can come from a lot of different angles. Yes, Chris.
Good morning. It's Chris Collett from Deutsche. I just had 2 questions. One was on margins, I appreciate that the margin guidance that you've given is sort of specifically for the year ahead, just taking it a little bit further. You're guiding to sort of improvement in GRC, where the margin is already up, sort of pushing 30%, also improvement in Tax & Accounting, where, appreciate the margin has been higher there previously, perhaps there's a sort of a requirement for investment and has had to come down, or certainly you don't want to push that margin too high given that Thomson does run at a lower margin. Just wondering, is that enough to really drive your ambitious margin improvements for this year, and is that sort of something we should think about sustainably?
The second question was just about some of the acquisitions that you've made in the past. What about Learners' Digest ? I noticed there's a comment there about sort of continuing medical education having been down. CME, you said that trends had improved, you had some fairly ambitious targets for both of those businesses. Wondering, are they still going to hit your ROIC targets and the acquisition cases?
Why don't you take the second one, but I'll start with the margins. We feel a great deal of confidence in being able to continuously improve our margins over time. The reason I can say that is it has really to do with the mix shift, right? As you all have seen, as we've become almost 90% digital, the margins have improved, right? Now this next wave of transformation really focused on expert solutions will be the driver of the margin improvement. Why are we so focused on scaling these expert solutions? We know when they get at scale, the margins are much more attractive than what you would see in a classic information product. Today, things like Enablon and Tagetik and even CCH Axcess are not fully at scale, right?
As we continue to grow the top line, that will drive the underlying improvement. This year we happen to indicate that the margin improvement will come largely from tax and GRC, but we expect that the other divisions have that potential as the mix continues to shift. Kevin, you want to talk about the acquisitions in general?
Yeah.
Yeah.
With regard to acquisitions in general, we did mention in the press release that there was a bit of a slowdown in continuing education. However, we are continued to be very positive in the LDI business. I will say that in the aggregate, our acquisitions over the last several years, we still have confidence that they will reach the return on invested capital exceeding the WACC in years three to five. We're committed. I will say that several of the acquisitions, we are delighted with their performance. We see double-digit growth in Tagetik. We see double-digit growth in Enablon. We're very happy to be combining Enablon with the most recent acquisition, eVision. We think that will help us to be a very strong player in a very attractive market. All in all, we do believe that the acquisitions have helped strengthen the portfolio.
Yes.
Morning. It's Katherine Tait from Goldman Sachs. Two questions from me. Firstly, just on cash returns, obviously a healthy bump to the dividend announced today. Can you just talk about your decision, I suppose, to allocate cash in that way versus perhaps the share buybacks that have been more prominent in the past? Second question, part of the strategic priorities that you lay out for 2019 to 2021 talks about cost savings. I know that's been a sort of ongoing, quite a factor within the group operating. Can you perhaps give us a little bit more color? Will it just be steady as she goes in terms of those ongoing cost savings? Is there an opportunity to do something that is perhaps more sizable within, as you say, transition to this beyond digital aspect of the group?
Okay. You want to talk about cash allocation?
Sure.
I'll cover.
Sure. We did make a decision to increase the dividend in a meaningful way. I think that is attributable to the good performance and the strong balance sheet of the business. We've also announced a share buyback program that is now EUR 250 million for the year 2019. That also is a slight step up from the last three years. We were guiding to about EUR 200 million a year, excluding any buybacks done as a result of the disposal. With the strong performance of the business, with the strong balance sheet, that has certainly allowed us to step up that return. As you know, that is one of our priorities for allocating cash.
On cost savings, really, if you go back in time, right, the whole digital transformation, we've done a lot of restructuring, right? I think many of you are familiar with those historical programs. As we go forward, really what we're doing is using the cost savings to continue the modernization of the infrastructure. To close data centers, to move applications from hosted environments to the cloud. All of that actually takes investment in the beginning to ultimately reap the benefits down the road. What we do is we have started on this journey of several years ago, we take the savings we're getting, and then we reinvest it back to do more. I think that we will be able to continue that journey quite nicely.
That's helping to support not only the long-term goal of getting the more modern back office and infrastructure, also helping to enhance the margins. I would say it's kind of a steady incremental program every year versus some kind of, there's just not that big bang there, though I would've said that's very much in the past. Patrick.
Hi. It's Patrick Wellington from Morgan Stanley. Got a few questions, actually. The three-year plan talks about the importance of renewal rates.
Yeah.
Do we actually have a renewal rate for the group and how that's shifting? One for Kevin. Tagetik, Enablon, eVision, Emmi, do you have an estimate of how much of a margin drag those are? We've just heard how beneficial they're going to be to margins. At this stage, how much of a drag are they? Expert systems, domain systems, I'm never quite sure what the difference is, but what does that do to your price ambitions? Normally you just recover inflation, but do you have a greater ambition for that? Then the fourth one is a sort of slightly personal one for you, Nancy. I mean, slide 22.
Yeah.
Nice chart of everything going up over the last five years. When you mentally project that forward to the end of your three-year plan, does it have that similar trajectory across those measures? Related to that, you've been in charge of Wolters Kluwer for a quarter of your life now. 15 years.
Yeah.
I remember the old ambition used to be to get back to the 4% organic revenue growth of 2007. Now you've done it. Well done. I get a few clients asking whether you've got the continued appetite to be there at the end of the next three-year plan and the three-year plan beyond that. I always say yes, but maybe you want to give the correct answer.
Good. Thank you, Patrick. Renewal rates. We absolutely track renewal rates at the product level. We don't give a composite, because frankly, the composite is a meaningless number. What I would say is that, again, it ties very much back to the strategy around expert solution, is what you would see in a traditional information product, whether it's in print or in digital form, you're going to have sort of mid 80% kind of retention rates. When you move into expert solutions, you're into the 90+, and we know customers that buy two modules renew at a higher rate than one. Those that buy three renew at a higher rate than those that buy two. Our whole goal is to get the customers to buy the entire suite or all of the modules that exist within a particular category of products.
Once we get there, tying it back to your question around price, we clearly have far more pricing power in the expert solution products than we do in the more traditional information-based products. The whole strategy around expert solution will result in a higher quality of earnings for the group, right? It will result in better organic growth, and when they reach scale, they will get to higher margins. If you look at the margin you mentioned, Enablon, Tagetik, I would put eVision in that group, Emmi in the group. Those margins are well below the group average. We knew that obviously when we bought those companies, and the goal again is to scale. Those margins are improving quite nicely, even between 2018 and 2019 as we scale them. On me personally, I am very committed to continue to run Wolters Kluwer.
As you point out, we are very proud of the fact that we have been able to transform the business. I would say the energy inside the company is the highest I've ever seen, and it's really rewarding for me to continue the effort. I'm still going to I hadn't recognized it was a quarter of my life, but I'm still very enthusiastic about our future. Thanks. Yeah. Any more?
I have one interesting one from the web. Maybe this is an opportunity for you to talk a bit about the technology organization within Wolters Kluwer. Somebody's asking, "Would the executive board consider getting a CTO?" is the question, I think it's maybe also be interesting to hear more about the whole technology organization and the people we do have at quite senior levels.
Yeah. We do have a CTO. First of all, we have two technology organizations. We have our Global Business Services group, which basically manages all of the infrastructure and back-office systems around the world. That is led by Andres Sadler. He carries the title of CEO, into his organization, we have a CTO, and we are organized, pretty much kind of split between infrastructure and application and cybersecurity, et cetera. We have our Global Platform Organization, which is led by Dennis Cahill, and they are responsible for both delivering product, they build information products, they build some of our software products, and at the same time, they are a curator of tools.
A lot of what we do is If you look at all of the things we're doing with artificial intelligence and robotic process automation, natural language processing, all of that is done through licensing third-party technology tools. The Global Platform Organization is the curator. They pick and choose the things that make sense for us, and then each of the units can take the tools out of that toolbox and develop specific applications. As a result of that approach, we've been able to accelerate our innovation because the units themselves don't have to go out and sort of figure out, "Okay, what's the best AI tool to use?" That is all done for them by the Global Platform Organization. Those two organizations sit side by side and are used collectively across the four divisions.
Okay.
Other-
Any more questions from here? There's none from the web.
I'll ask one more, as we haven't finished our hour. A lot of people worry about the effect of artificial intelligence, the sort of collapse of the middle-class job.
Yeah.
Doctors being out, diagnosed by artificial intelligence, Google Health.
Yeah
Matters like that. Do you want to give us a perspective on how you see Wolters Kluwer fitting into that, I'm going to call it a paradigm?
Yeah, no. I tend to be much more optimistic about these new technologies. The reason for that is we've done a lot of examination. We've talked to, obviously, a lot of our customers, and we see that these tools are going to assist the professional, not replace the professional. It will automate some of the lower-value tasks. What all of our professional customers are doing and will need to continue to do is shift their focus. If you were spending most of your time actually doing the tax return for your clients and that becomes easier to do, you can free up those hours to start advising your clients on where they might invest their money or some other activity.
That's where we see the future going, which is that each of the professionals will have more time to spend on things that they consider higher value. Inside the company, what's really interesting is, one of the things that's probably the single most important way to increase the velocity of innovation is to define additional pain points of the customer. We call them use cases, right? A customer has a pain point. How can we bring forth a solution that solves that problem? If you look at the employees within Wolters Kluwer, the people that hold the most knowledge about our customers' workflow are the editors. These people that are our domain experts in all the various fields. We are now going through and training all of those employees on advanced technology. What is the potential of AI?
What is the potential of robotic process automation? By helping them see the potential, we believe they will help us identify further opportunities for new product development. Again, I see it as a positive overall, both for our customers and our employees, you have to be willing, as a company, to make those kinds of investments in your people, et cetera, to be able to make sure that it doesn't go in the opposite way that others are worried about. Good. Thank you all very much.
Thank you.
Please join us for coffee and sweets, I think outside. Thanks.