Good day, welcome to the Wolters Kluwer half-year 2016 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Meg Geldens, Vice President, Investor Relations. Please go ahead, ma'am.
Good morning, everyone. Welcome to our 2016 half-year results webcast and conference call. Hopefully, you've had a chance to look at our earnings release this morning. The release and the slides for this call are available for download on our website. We will start today with a presentation of the results by Nancy McKinstry, our CEO, and Kevin Entricken, our CFO. We'll lead you through our presentation, at the end, we'll open the call for your questions. As a reminder, the statements we make on this call may be considered forward-looking statements. We caution that actual results may differ materially from what is contemplated in these statements due to a number of risks and uncertainties, which you can find detailed in our annual report. Throughout the presentation, we will mainly refer to constant currency or organic growth rates, which exclude the effect of exchange rate movements.
We also refer to adjusted figures, you can find a reconciliation to IFRS reported figures in our release today. Now, I would like to hand over this call to our CEO, Nancy McKinstry.
Thank you, Meg, welcome everyone. Let me start with the highlights of the first half, a recap of our strategy. Kevin will cover the financial results for you in detail. After that, I'll come back to review our divisional performance and give you an update on our strategic progress. I will finish with an outlook for the full year. I'm very pleased to say we had a positive start to the year. We delivered 3% organic growth and an improvement in adjusted operating profit and free cash flow. Adjusted EPS increased 6% in constant currencies. We also made progress on our strategic priorities. We have continued to invest in and deliver some key product innovations focused on our expert solutions and our leading digital products.
We have made further steps to improve our portfolio, acquiring Enablon and a few smaller companies, while also finalizing another important disposal, this time in France. Thirdly, we've made progress on some key operational excellence initiatives that will produce efficiencies going forward. A positive start to the year, despite some tough comparables and slower growth in Asia, Pacific, and Rest of World. I am confident in reiterating our outlook for the full year with guidance for adjusted free cash flow increased. Let me briefly recap the three pillars of our strategy, which builds on the direction we've been following for some time now. We are continuing to allocate capital towards our fast-growing businesses and digital products through organic investment, but also supplemented by bolt-on acquisitions and disposals.
Second, we are building and increasing our focus on expert solutions, which are products that combine deep domain knowledge with technology and services that help our customers deliver better outcomes and productivity improvements. Third, we remain dedicated to driving efficiencies across all functions, including technology, while fostering a creative and engaged workforce. I will now hand over to Kevin, who will present our financial results in more detail.
Thank you, Nancy. Let me start with a summary of the key figures on slide seven. Our first half revenues increased 1% overall and 2% in constant currencies to EUR 2,042 million. On an organic basis, revenue growth was 3%, continuing the momentum we reported for full year 2015. Adjusted operating profit increased 5% in constant currencies to EUR 408 million. The adjusted operating profit margin rose to 20%, reflecting lower restructuring costs. Diluted adjusted earnings per share were EUR 0.88, up 6% in constant currencies. Adjusted free cash flow increased to EUR 229 million, an increase of 34% in constant currencies. Finally, our net debt to EBITDA ratio improved to 1.7 times as compared to 2.1 times a year ago. Now let's turn to slide eight to review revenues by division. Three of our divisions delivered good underlying revenue growth.
Health grew 5% organically, driven by another strong performance in Clinical Solutions. Tax & Accounting delivered 3% organic growth, driven by the performance in software products in all regions of the world. Governance, Risk & Compliance also achieved 3% organic growth. This was an expected moderation compared to a challenging comparable of 7% organic growth a year ago. Legal & Regulatory revenues declined 1% organically. This was an improvement compared to the 4% decline a year ago. The division benefited from improved growth in digital products, as well as some timing and one-off factors which we expect will reverse in the second half of the year. Now let's look at revenues by geography on slide nine. North America grew 4% organically, slowing modestly as we expected, reflecting the challenging comparable in the Governance, Risk & Compliance division. We noted improved performance in Europe.
Organic growth was 1% compared to a 2% decline a year ago. This improvement was driven by better results in Legal & Regulatory, Governance, Risk & Compliance, and Tax & Accounting. Asia-Pacific and the rest of the world saw organic growth slow to 2%. Trends varied by country. China and India continue to see double-digit growth, but other parts of Asia-Pacific were held back by declining print revenues. In Brazil, Health sales were impacted by public sector spending cuts, and tax software sales were soft. Let's turn to slide 10 now to look at revenues by media type. Digital products, and in particular, our expert solutions, continue to drive organic growth. Digital products grew 5% organically and now make up 73% of our total revenues. Services, which include legal representation, consulting, training, and other services, grew 2% organically.
Our print formats declined 9% organically, in line with our expectations. Print now represents only 14% of our total revenues for the first half. With that, let's turn to profits. As mentioned at the start, adjusted operating profit was EUR 408 million, up 5% in constant currencies. The adjusted operating profit margin increased 60 basis points to 20%. This was driven by lower restructuring costs in Legal & Regulatory and the Health division. The margin was also helped by certain disposals that we made last year. The Health margin increased significantly to 20.9%. Lower restructuring costs, operating leverage, and the effect of mix shift was partially offset by higher investments in marketing and sales and new product enhancements. The Tax & Accounting margin declined to 25.5%. This was as we expected and reflected the phasing of cost savings and investments.
We expect the full year margin in this division to be broadly in line with 2015. Governance, Risk & Compliance margin declined slightly to 26.1%, mainly due to cost phasing. Finally, the Legal & Regulatory margin increased to 9.7% due to lower restructuring costs and disposals. On the next slide, we see adjusted net financing costs were reduced to EUR 51 million. This reduction reflects a substantially lower impact of foreign exchange rate movements as compared to the prior year. Our benchmark tax rate was 27.2%, resulting in an adjusted net profit after tax of EUR 260 million. This results in a 10% growth in overall profit, and 5% increase at constant currencies. The share buybacks we previously announced reduced our average weighted shares outstanding slightly. Diluted adjusted EPS increased to EUR 0.88, up 6% in constant currency. I'll briefly cover our reported earnings on slide 13.
Reported operating profit increased 13% to EUR 317 million, reflecting a decline in amortization of acquired intangibles. The reported tax rate increased to 24.4%, primarily due to higher portion of profits from countries with higher tax rates. As a result, reported profit for the period increased 22% and reported EPS increased 23%. Let's turn to cash flow. The first half cash conversion ratio was 90%. This was slightly better than a year ago. We saw an increase in CapEx offset by a fall in our working capital outflows. The increase in CapEx reflects investments in new products and development, mainly in Tax & Accounting and Governance, Risk & Compliance. We continue to expect CapEx to be 5% of revenues for the full year. Paid financing costs were broadly in line with the prior year. Cash taxes paid declined to EUR 60 million.
As a result, adjusted free cash flow increased 35% overall and 34% in constant currencies to EUR 229 million. Cash flow benefited from higher adjusted operating cash flow and lower taxes paid. Now let's turn to slide 15 for the uses of our cash flow. As you can see, we paid dividends of EUR 167 million related to the final 2015 dividend. Acquisition spend was EUR 32 million. This relates to the acquisition of Triad in Governance, Risk & Compliance, PrepU Technology in Health, and CPE Link in Tax & Accounting. In the first half, we also repurchased EUR 70 million in shares, of which EUR 3 million was settled in July, so that'll fall into the second half. Altogether, we have had a small net outflow, increasing our net debt very slightly to EUR 1,800,000,000 at the end of June. The net debt to EBITDA ratio was 1.7 times, compared to 2.1 times a year ago.
A few words on returns to shareholders, let's start with dividends. As indicated in February, we paid an interim dividend of EUR 0.19 per ordinary share. The interim dividend will be paid in September. We remain committed to our progressive dividend policy, under which we aim to increase the absolute dividend per share each year. Let's look at our share buyback program. You will recall back in February, we announced a three-year up to EUR 600 million share buyback program. So far this year, we have bought back two million ordinary shares under this program for a total consideration of EUR 70 million. It remains our intention to spread the repurchase equally over the three-year period. In other words, around EUR 200 million each year. Let me sum up before I turn the presentation back to Nancy. We are pleased with the positive start to the year.
Organic growth was 3%. The adjusted operating profit margin increased by 60 basis points to 20%. Adjusted free cash flow increased 34% at constant currencies, our net debt to EBITDA ratio improved to 1.7 times. With that, I'd like to hand it back to Nancy.
Thanks, Kevin. I'll start with a review of our divisional performance, give you a brief update on our strategic progress, finish with our outlook for 2016. Let's start with Health. Health achieved 5% organic growth and a significant increase in margin. Growth continues to be driven primarily by Clinical Solutions, which achieved 10% organic growth in the first half. UpToDate, our market-leading clinical decision support tool again grew at a double-digit rate. About a third of UpToDate revenues are now coming from outside the U.S. Our drug information group also performed very well, delivering robust organic growth despite some weakness in China. Health learning, research, and practice grew 1% organically. Here we are seeing the growth of digital products start to outweigh the decline in printed journals and books. Ovid delivered good organic growth.
We've been launching new open access titles and adding key society journals to our publishing program, which drove good performance from our journals business. Our medical books business declined due to the migration away from print formats, but we are starting to see this business being transformed by digital products. Our nursing solutions portfolio grew by more than 25% organically in the first half. Another part of learning, research, and practice that will help us build out our digital footprint is Learner's Digest International, which brought us valuable content and a strong mobile platform to deliver continuing medical education for doctors. Now let's move on to Tax & Accounting. Tax & Accounting delivered 3% organic growth, driven by our software product lines around the world. As expected, the margin eased back due to a step-up in product investments, which we started in the second half of last year.
We expect the full year margin to be broadly similar to last year's margin, which was 27.5%. North America saw good organic growth driven by software, which was up 4%. In medium and large firms, we are seeing steady growth in both our on-premise and our cloud-based solutions. In the small firm segment, software renewal rates edged up. We're seeing a good response to our recently launched practice management platform, CCH iFirm. In research and learning, print declined as we expected. We are encouraged by the recent performance of our digital tax research platform, CCH IntelliConnect, following a series of product enhancements. We are seeing improved retention rates and gaining recognition in the market. Tax & Accounting in Europe also saw good organic growth, with all countries delivering positive growth.
Our investments continue to be focused on developing cloud-based collaborative solutions to support tax advisors and their clients in their workflows. Asia Pacific and Rest of World saw organic growth in low single digits. Growth in Australia and New Zealand was subdued, mainly due to weakness in print. Last but not least, TeamMate achieved double-digit organic growth driven by strong performance in Europe. Now let's turn to GRC. Governance, Risk & Compliance achieved 3% organic growth as expected in the face of a demanding comparable in the prior period of 7%. We saw slower growth in transactional volumes and a decline in non-recurring revenues. The margin fell slightly. We are now viewing this division into two major groups, legal services and financial services. Legal services is essentially the former corporate legal services unit, but now excludes CT Lien Solutions, which we've grouped with our financial services business.
Legal services saw organic growth of 3% compared to 7% a year ago. Legal transactional revenues slowed from 12% a year ago to 5% in the current period, driven mainly by a decline in M&A volumes. Financial services, which includes all GRC units serving the financial services sector, delivered 3% organic growth. It also faced a tough comparable 7% organic growth in the first half of last year. CT Lien Solutions delivered better-than-expected double-digit organic growth in UCC search and filing transactions. Origination revenues were stable as a drop in license and implementation fees following the one-time TILA-RESPA event last year was compensated by a sharp rise in mortgage filing volumes in the second quarter. Finance, Risk & R eporting performed well, helped by growth in recurring software maintenance revenues. Now let's turn to Legal & Regulatory.
Legal & Regulatory recorded an 8% decline in revenues in constant currencies, primarily due to disposals we made in the latter part of 2015. Organic growth was -1%, benefiting from timing and one-off factors as we expected. The adjusted operating margin increased mainly due to lower restructuring costs. Very importantly, digital products grew 4%, improving from a year ago and now account for 55% of the division's revenues. Our key digital research offerings in Europe and the U.S. improved following investments and product upgrades that we rolled out in 2015 and 2016. Print formats contracted 8% organically, and services were flat. Both these formats benefited from one-off factors and timing, which we expect will reverse in the second half of 2016. Importantly, we also completed the sale of our French trade media assets on July 1st.
This means that in the past 12 months, we have divested assets with annualized revenues of approximately EUR 100 million, about 10% of last year's divisional revenues. Now let me update you on some early progress on the strategic plan that we outlined at the beginning of this year. As mentioned, the first pillar of our strategy is to expand our market coverage by allocating our capital towards the leading growing parts of our portfolio. We expanded our position in the fast-growing EHS software market with the acquisition of Enablon. We are also investing more in sales and marketing for key global products such as UpToDate and CCH iFirm. The second pillar of our strategy is to deliver expert solutions.
We continued supporting the product launches of recent years, such as CCH Axcess and UpToDate for China, and we added a few new and exciting innovations in the past few months. One example I'd like to mention is ADDISON OneClick, which we launched in our German tax software market. The product provides an end-to-end collaborative workflow environment that enables tax advisors and their clients to work together in a seamless and very efficient way. Finally, the third pillar is to drive efficiencies and engagements. We continue to execute on our ongoing efficiency programs across editorial, production, IT, and other areas. On July 1st, we completed the acquisition of Enablon, one of the leading providers of EHS software. Enablon helps corporations collect, analyze, and make decisions around their environmental, health, safety, and sustainability areas, enabling them to manage risks and comply with reporting requirements.
This reporting could be around emissions, hazardous materials, energy consumption, and workplace incidents. Strategically, this is a very good fit with Wolters Kluwer. The company's growing rapidly, and as it scales up, we expect margins to expand. Financially, we expect the acquisition to cover our after-tax cost of capital of 8% within three to five years and to be earnings enhancing in 2017. We are increasing our focus on expert solutions, tools that combine deep domain knowledge with technology to support our customers to deliver superior results and greater productivity. I wanted to take a moment to highlight two of our expert solutions. The first one is Medi-Span, a core part of our clinical drug information business. Medi-Span offers authoritative drug databases and software for hospitals, retail pharmacies, and insurance companies, providing customers with information such as drug dosing, drug interactions, therapy, or pricing.
The solution can be easily integrated into electronic medical records or pharmacy management systems and delivers significant productivity to users. The second example is CCH iQ in Tax & Accounting. We just launched this innovative predictive intelligence tool in Australia. Essentially, CCH iQ is able to automatically identify which of a professional's clients are impacted by tax or accounting changes, and then it alerts the professional and provides relevant, actionable content. It's a very unique offering in its early days, but we're excited because it has the potential to automate what is today a very time-consuming part of the accountant's workflow. Now with that, I'd like to talk about our outlook for 2016. Again, I'll start with each division. In Health, we foresee another year of good organic growth. Margins are expected to improve slightly for the full year.
For Tax & Accounting, we expect revenue growth to improve slightly in 2016, driven by a continued mix shift towards software solutions. We expect margins to be maintained for the full year, despite higher investments. We expect Governance, Risk & Compliance to deliver positive but slower organic growth in the full year, facing challenging comparables from the prior year. We expect margins to improve slightly for the full year. In Legal & Regulatory, we expect to see continued organic revenue decline similar to 2015. Margins, however, are expected to improve due to lower restructuring cost. Finally, summing up with our financial guidance for 2016, we expect our full year adjusted operating profit margin to improve and to be between 21.5% and 22%. This includes restructuring costs of approximately EUR 15 million-EUR 25 million.
We now expect our adjusted free cash flow to be between EUR 650 million and EUR 675 million in constant currencies. We raised this guidance by EUR 50 million. We will continue to expect our ROIC to be above 9% and EPS growth in mid-single digits in constant currencies for the full year. All in all, we are well on track to achieve our 2016 goals and remain confident in our growth prospects. Thanks all of you for your attention, and now we'll take some questions. Operator, if you would please open the call for Q&A. Thank you.
Thank you. If you would like to ask a question, please press the star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We will pause for just a moment to allow everyone to signal for questions. We will now take our first question from Sami Kassab from Exane. Please go ahead.
Good morning, everyone. Two questions, please. Can you elaborate on the EUR 50 million free cash flow upgrade? To what extent are these lower cash tax payments sustainable, or is it a one-off for 2016?
Secondly, in the GRC division, what's the outlook for H2 in terms of organic revenue growth? Do you expect it to accelerate or decelerate versus the H1, given the comp base in H2? Thank you, Nancy.
Thank you, Sami. I'll take the second question and ask Kevin to talk about cash flow. In terms of GRC as we guided, we expect the division for the full year to deliver positive growth, although at a lower level than 2015 due to the very tough comparables that we have, particularly in the transaction product lines. We are expecting kind of similar trends continuing from the first half into the second half for that division. Kevin, do you want to talk about cash flow?
Sure. With regard to the upgrade in our free cash flow guidance, we did have a very strong first half. We saw free cash flow increase 34% in constant currencies. That was due to some good work in capital management, but also lower cash tax payments. We do expect our prepaid tax payments this year to be less than they were a year ago. Those are the main drivers behind that EUR 50 million increase in the guidance.
Is the tax payment sustainable, or is it a one-off settlement that you benefited from this year?
Like I said, the prepayments this year were less than they were next year. Obviously, in the future, we will evaluate that again, and the prepayments could go up depending on our situation moving forward.
Thank you, Kevin.
We will now take our next question from Nick Dempsey from Barclays. Please go ahead.
Good morning, guys. I've got two questions. First of all, are you expecting to accelerate your buyback significantly in the second half, looking at what you've done so far? Second question, if you were to look at the Legal & Regulatory division in H1 2016 pro forma for Enablon, what would the division's organic revenue growth have been?
Yeah. I'll ask Kevin to take both of those, although we may have to come back to you on Enablon, depending. Kevin, if you-
Yeah. I would say that first with the share buyback, Nick, we do expect to spend roughly EUR 200 million a year on share buybacks. I would say in the second half, we will probably do a little bit more than we did in the first half. First half, we did about EUR 70 million, my goal is to spread that out evenly over the three years. With Enablon, as you've seen, Enablon is a fast-growing business. I believe in the back of the press release, you'll see what growth rates or what revenue was for 2015, as well as what we believe the company would deliver on a pro forma basis in 2016. You can use that, and it would certainly enhance our growth in that division because it is a faster-growing business.
Yeah. Nick, if I can just elaborate a little bit on what's going on in Legal & Regulatory. We clearly see the division moving in the right direction, really coming from two major activities, right? One is all around the portfolio, not just acquiring some of these bolt-on acquisitions like Enablon that are fast-growing in fast-growing market segments within legal, but also getting the disposals underway. Very importantly, we're encouraged by the digital revenue growth of 4% in the division. That's really coming from a lot of the investments we've made in our platforms over the last couple of years. Again, encouragingly, we see that today, 55% of the division's revenues are coming from digital. That really has been the major contrasting factor between Legal & Regulatory and the rest of the portfolio, is the percentage of digital. We're encouraged by that.
I guess you can see where my question was going, which was, if you factored in the disposals and Enablon, would you no longer be shrinking organically in this division?
Yeah. That's what we'll ask you to figure out from the press release then.
Right.
Yeah. Nick, you do see in the press release on page 28 that revenues were EUR 45 million in 2015. We expect that it will grow to approximately EUR 55 million this year. That is a very healthy double-digit growth rate, and that will help you add that into your pro forma calculation.
Right. Thank you.
We will now take our next question from Joseph Barnet-Lamb from Credit Suisse. Please go ahead.
Hi, folks. Joe from Credit Suisse. Two from me, please. Firstly, with regards to margins in Health and Legal & Regulatory, obviously, you guide to margin expansion. Specifically, with regards to 100 basis points seen in Health and the 280 seen in Legal & Regulatory, do you believe that they're sustainable through for the full year? Secondly, with regards to cash tax rate, where do you think that will come out for the full year? Thank you.
Kevin.
Sure. I'll take that one, Nancy. I would say with the margins in both in Health and in Legal & Regulatory, they were certainly benefited by lower restructuring costs. This year, for the half year, we spent about EUR 8 million in restructuring. Last year at this time, it was closer to EUR 22 million. That certainly did contribute to the improved margins in those areas. Your second question, I believe, was on cash tax, what we expect it to be. I think usually our cash tax is around 20%, sometimes a little bit less, and that's what we would expect moving forward.
Thank you.
We will now take our next question from Chris Collett from Deutsche Bank. Please go ahead.
Good morning. Yes, it's Chris at Deutsche. Just one question just on Tax & Accounting. I know you said you expect the growth to be broadly, I think, similar to last year. Given some of the products that you've got in the pipeline, and the fact that the second half is typically a more important selling season there, just wondering if we should expect the possibility of stronger growth in the second half. Secondly, just in Legal & Regulatory, I know over the last six, nine months, you have made some very good disposals of businesses there. Just wondering, without obviously naming names, is there more scope for you to prune back that Legal & Regulatory portfolio?
Starting with Tax & Accounting, you'll note in the press release, Chris, that we are guiding to underlying revenue growth slightly improved on 2015 levels. As you know, we typically have stronger performance in the second half than the first half because of largely the tax season in the U.S. in the first half of the year. You should see us overall deliver on that guidance. We are very encouraged by some of the new products that we've been investing in over the last couple of years in Tax & Accounting. What you see is that we continue to have good growth on the software side of our business, that is a bit tempered.
We grew 5% organically in software around the world, that's a bit tempered by both the continued decline in print as well as certain product lines like bank products that also are in structural decline. We're encouraged by what we see in Tax & Accounting, particularly some of the new Cloud Solutions that we've got either coming to market or building scale within the market. Legal & Regulatory, we'll continue to prune the portfolio. As we've mentioned in prior calls, we find the legal market itself to be an attractive market for us over the near and medium term. Within our portfolio, we have a lot of other kinds of products that fall more into the category of regulatory type products, those are the things that we've been disposing, we'll continue to look to prune those out of the business.
Great. Thank you.
We will now take our next question from Katherine Tait from Goldman Sachs. Please go ahead.
Morning. This is Katherine from Goldman. Just two questions from me, please. You mentioned that mortgage filing volumes in Q2 boosted your GRC growth. Can I just confirm that that was mostly driven by the U.S.? Also, interested in whether or not this is a trend you expect to continue into the second half, or whether that's sort of driven by one-off factors. Then secondly, clearly one of the headlines was that Europe saw an improved performance. Again, just curious to see if that's an improvement in the underlying markets, and how we should think about that going into the second half. Thank you.
Okay. Why don't I take the first one, and then Kevin, if you want to talk about Europe. You can see on page 29 of the press release, just to frame the relative size of the financial service transaction revenue in the first half of this year, it's EUR 62 million, so just to give you a sense of the scope. We did see a sharp increase in mortgage filing volumes in the second quarter. Those are very difficult to predict always, the level, and the industry also has a hard time predicting that. We are not taking a prediction of that particular line of business in the second half.
We would just ask you to go back to the overall guidance we've given for the whole division, which is that we should see positive organic growth, but below 2015 levels, largely because of the strong comparables we had, both coming from the TILA-RESPA one-time change in the financial service area and from the very strong transactional volumes we saw in the M&A part of our legal services business. Then Europe? Yeah.
With regard to Europe, I would say that we were certainly encouraged by seeing an improvement in organic growth there. I would say that the market conditions are largely unchanged. We were happy to see improvement in our digital products, certainly in Legal & Regulatory, GRC, and in Tax & Accounting as well. I will remind you that in Legal & Regulatory, some of that growth that we saw in the first half was timing related and one-off related. I do expect some of that to reverse in the second half of the year, and I think we've given you guidance in Legal & Regulatory specifically that full-year growth will likely be in line with what we saw last year.
Fantastic. Thank you.
We will now take our next question from Tom Singlehurst from Citi. Please go ahead.
Yeah, good morning. It's Tom here from Citigroup. I had one question, actually. Last few quarters, certainly the last sort of half year and interim, full year and interim, I should say, you've given both the growth and the proportion of the business from the sort of leading growth areas. I was wondering whether you could just give us those figures for the first half of this year.
Yeah. We've moved away from that with the new strategy that we've launched. We decided to sort of retire that framework largely because we're really focused now on both those positions plus expert solutions. We don't have that figure right here, Tom, but we'll try and post something maybe on our website. I can say the leading growth positions continue to grow well above the average. As you might imagine, they're mostly digital solutions. The digital products and services revenues grew 5%, so you should anticipate that it's roughly in line with what we showed in prior year of around 7% or so.
No, that makes perfect sense. Part of the reason I ask is across the second half of the last year, full year versus 1H, the proportion went up of leading growth businesses. Actually, I think it went slightly down a bit. I'm just trying to get to the bottom of how much of the growth is coming from potentially one-off transactional revenue boosts, and whether there's any change in the trend for those leading growth businesses, which we're tracking at about 7, I think, across last year.
Yeah. We'll come back to you, Tom. I would say that in general, the leading growth positions continue to be very much in line with, in terms of their growth profiles, what they've done in the past. Now we're going to talk more going forward, and we'll start to figure out how to communicate this financially, but we'll be talking more about our expert solution, product lines that fit all across the portfolio, and in terms of both what their growth rates look like, as well as the percentage that they represent of the portfolio.
Got it. That's very kind. Thank you very much.
We will now take our next question from Konrad Zomer from ABN AMRO. Please go ahead.
Hi. Good morning. It's Konrad Zomer, ABN AMRO. Just on Clinical Solutions, it's a business that has shown consistent double-digit growth for the last few years. I was wondering, the market share of that business, how long do you think that double-digit revenue growth could be sustainable? Particularly now that you keep rolling out the UpToDate business very successfully. Just to give us a feel for how big that business is in terms of the overall market.
Yeah. The business, just to frame, the two major lines of business that we have within Clinical Solutions, one is the UpToDate business, and the second is really all of our drug businesses, and then we have a smaller portfolio in clinical software. If you look at UpToDate, really since our ownership of the business, it's been growing double-digit levels. We now have 30% of the revenues from UpToDate coming outside the U.S. That was a big focus point for us. We continue to bring out new innovations in the area. UpToDate, we expect that it will continue to grow well. I think that what you should anticipate, however, is that Clinical Solutions is getting very big in terms of its absolute size.
We are guiding that overall in this part of Health, that you will see the rate of growth decline a bit because of the size of the business. In terms of share, I would say that we're about 50%-60% penetrated with UpToDate in the hospital market in the U.S., but really just scratching the surface, so to speak, outside the U.S., particularly in the more emerging parts of the world. The drug business, again, pretty good penetration in the U.S. The opportunity is both around growing the wallet share in the U.S. and really beginning to extend into non-U.S. markets.
Okay. Thank you very much.
We will now take our next question from Giasone Salati from Macquarie. Please go ahead.
Hi. Good morning. Just a couple of questions, top-down, please. Can you update us on Cloud Solutions? If you can just cut off Cloud Solutions supported products from the total and identify growth and potential targets. Secondly, also similar update on direct online sales, something which doesn't involve any sort of sales representative meeting from your side. Thank you.
Yeah. Kevin, maybe you can take the Cloud Solutions, and I'll talk about digital online.
Sure. I think Cloud Solutions, we're very encouraged about the products we see in Cloud Solutions, particularly in Tax & Accounting. We have rolled out the first cloud solution in the industry in North America. We're also seeing good growth in our cloud solution businesses around the world. I would say that we don't finally cut out the growth rate in those, but they're a smaller part of the business today, but growing very well. We will continue to invest in those solutions because we do see that demand from our customer base and the functionality that brings being a great aid to them. It continues to be an important part of our business moving forward.
I think what we are all most encouraged by some of the Cloud Solutions is they're also bringing in new customers, which as you can imagine, when we have high retention rates, as do our competitors, to be able to use those solutions as a way to acquire new customers has been important for us as part of the overall growth of the business. On direct online sales, just a couple of things to remind you is we've always sold a portion of our portfolio from what I would call indirect sales, meaning not salespeople, but telesales, direct mail, distributors, and that remains as it has been in terms of the channel mix. If you're referring specifically to the digital marketing efforts, where the customer kind of has an end-to-end experience without any human interaction, that's just really getting underway.
In terms of the amount of revenues going through that type of channel, relatively small today. Of course, we're investing there, and we expect that channel to grow.
Thank you.
As a reminder to ask a question today, please press star one. We will now take our next question from Henk Slotboom from The Idea. Please go ahead.
Good morning, and thanks for taking my question. I'm trying to get a better feel for the moving parts of the adjusted operating margin. You're guiding for 21.5%-22%, whereas the margin was 21.4% a year ago. You've been very open in saying that the restructuring costs will be anywhere between EUR 15 million and EUR 25 million, as opposed to EUR 46 million last year. Basically, that creates a margin tailwind, if I may express myself in that way, of around anywhere between 40 and 70 basis points. If you're disposing of businesses, for example, in Legal that are loss-making, you're outgrowing the portfolio in terms of digital products, where I assume that the average margin is higher than on the company as a whole. Could you perhaps highlight what I'm missing here? Because underlying, it's sort of flat-ish, yeah, if I take out the one-off elements.
Is this the, for example, in GRC, the transactional component? It realizes a higher margin than the company average, or is it something else? What am I missing here?
Well, I think that you're touching on all the right things. If you look at the margin development of our business, we clearly do expect restructuring charges this year to be between EUR 15 million and EUR 25 million. That's a reduction from last year, where we spent approximately EUR 46 million. We also have operational excellence programs, which we're continually executing to try to improve the efficiencies of our business. We do get a benefit from the mix shift as we move more of our revenue to digital formats. Also, we are making investments. Investments in new products, investments in SaaS solutions, as well as investments in sales and marketing, particularly around the world. I would say that the good benefit that we're seeing from some of the operational excellence programs and reduced restructuring, we are reinvesting that in new products to drive growth into the future.
I would bring you back to the guidance that we've given you. We've guided to 21.5%-22% on the adjusted operating margin, which obviously will be a step up from what we reported last year.
Okay. Thank you, Kevin.
Again, as a reminder, to ask a question today, please press star one. If there are no further questions, I would like to turn the call back to the speaker for any additional or closing remarks.
Great. Thank you, everyone, for joining us on the call this morning. I know you have a very, very busy day today. Great questions. We'll follow up with some of the questions you had on Leading Growth Positions, and look forward to speaking to you again the next time. That closes our call.
That will conclude today's conference.