Wolters Kluwer N.V.

Meg Geldens - Vice President, Investor Relations Nancy McKinstry - Chairman and Chief Executive Officer Kevin Entricken - Chief Financial Officer

Sami Kassab - Exane BNP Paribas Nick Dempsey - Barclays Capital Ian Whittaker - Liberum Katherine Tait - Goldman Sachs Chris Collett - Deutsche Bank Matthew Walker - Credit Suisse Patrick Wellington - Morgan Stanley

Good morning and welcome to the Wolters Kluwer 2017 Full-Year Results Presentation. Hopefully you've had a chance to look our earnings release and you can find all materials on the website www.wolterskluwer.com.

As usual, we will start the day with the presentation of the results by Nancy McKinstry, our CEO and Kevin Entricken, our CFO. After their presentation there will be an opportunity for you to ask questions.

I'll remind everyone that some of the statements we make during today's presentation will be considered forward-looking. We caution that actual results may differ materially from what is contemplated in these statements, due to risks and uncertainties, which you can find detailed in our annual report.

Throughout the presentation, we refer mainly to growth in constant currencies which excludes the impact of exchange rates, movements and organic growth which also excludes the impact of acquisitions and divestitures. We also refer to adjusted figures which exclude a non-benchmark items, you can find a reconciliation to reported figures in our release today.

I would like to hand the floor to Nancy McKinstry.

Good morning, everyone. Thank you, Meg.

Thank you for joining us this morning in London and on the webcasting conference call. As usual I will give you some highlights of our results and then hand it over to Kevin who will talk about the results in more detail than I'll come back up and describe the performance of each of our four divisions as well as our progress against our strategic initiatives and then finish up with the outlook for 2018.

So we delivered solid organic growth of 3% in 2017 with the all four divisions achieving organic growth in line with or better than the prior year. Driving that growth were our digital solutions and services which grew 5% organically.

Over 75% of our revenues are subscription based are recurring in nature and these revenue sustain 4% organic growth. We also had a good year in terms of margin and cash flow, adjusted operating profit increased 8% and adjusted free cash flow increased 7% in constant currencies.

Diluted adjusted earnings per share increased 13% in constant currencies following a strong fourth quarter. Against this backdrop, we are proposing an 8% increase in our total dividends per share, we are also in the second year, we just completed the second year of our three year share buyback program which we expanded with the proceeds of recently completed disposals, which led us to buy back shares worth €300 million in 2017 and we are planning a further program in 2018 of €400 million.

Looking ahead to 2018, we expect another year of good organic growth, margin improvement in EPS growth. We've remained focused on delivering against our strategic priority, so I want to just give you a quick update and then I'll talk a little bit more about that later.

We made significant progress on our first strategic priority which is to expand our global market reach. We continue to invest in global products such as up-to-date, Teammate and OneSumX.

We also acquired Tagetik which is now called CCH Tagetik, which is adding a global software solution that's targeted at a growing market segment which is the office of the CFO. And importantly, we advanced our program of non-core disposals.

We also made headway on our second strategic priority which is to increase our focus on expert solutions. These are solutions that combine expert insights and analytics with technologies to improve our customer's decision-making and productivity.

Around half of our revenues today come from these types of expert solutions, this is where we are investing the vast majority of our capital in order to capture the growth opportunities. And finally, we forged ahead on our third priority which is to drive efficiencies and engagement across the group, we realized cost savings from streamlining both front office and back office systems.

In addition, we are increasing our efforts to share our technology investments, leveraging our global platform organization. And I'll come back later to give you a couple of examples in these areas.

So with those highlights, I now would like to turn it over to Kevin, who well talk about our financial results in more detail.

Thank you, Nancy, and welcome, everyone. Let me start with the summary figures our key metrics.

Revenues increased 5% in constant currencies to €4.4 billion. As Nancy said, organic growth was a solid 3%.

Adjusted operating profit increased 8% in constant currencies to €1.9 billion. The adjusted operating profit margin increased 60 basis points to 22.8%.

Diluted adjusted earnings per share increased 13% in constant currencies to €2.32 cents. This benefited from the reduction of our benchmark tax rate and lower share count.

Adjusted free cash flow rose 7% in constant currencies to €746 million. The net debt-to-EBITDA ratio was stable at 1.7 times.

And finally, return on invested capital improved 40 basis points to 10.2%. Overall good performance with our key metrics meeting or exceeding our guidance.

Now, let's take a look at revenues by division. Our Health and Tax & Accounting divisions achieved good organic growth in line with their prior year and as we expected.

Our GRC and Legal & Regulatory division both finished the year with improved organic growth, which was better than we had expected. Health grew 6% organically, primarily driven by 10% organic growth in Clinical Solutions.

Tax & Accounting delivered 4% organic growth, driven by continued good performance of our software products. Including acquisitions mainly Tagetik, Tax & Accounting revenues increased 10% in constant currencies.

Governance, Risk & Compliance achieved 4% organic growth and improvement from the 3% in the prior year. This improvement was driven by strong fourth quarter performance in legal services transaction and software license sales and financial services.

Legal & Regulatory, saw a 1% organic decline which is an improvement over the prior year, we saw a better than expected this was better than expected due to improvements in market conditions. In constant currencies, Legal & Regulatory revenues were broadly stable as the impact of recent divestments offset the full year inclusion of Enablon which we acquired in 2016.

Now let's examine revenues by geographic region. All three geographic regions delivered positive organic growth.

Revenues in North America sustained 4% organic growth. Strong performance from Legal & Regulatory compensated from slightly slower growth in Health & Governance, Risk & Compliance.

Revenues from Europe grew 2% organically compared to 1% in the prior year. This improvement was driven by our global finance Risk & Reporting business unit which is included in the GRC division.

Lastly, revenues from Asia-Pac and the Rest of the World saw accelerated organic growth of 6% compared to 3% in the prior year. This acceleration was noted in all divisions.

Now let's take a look at revenues by type. Recurring revenues which include subscription and other renewing revenue streams make up 76% of total revenue.

This revenue stream continued to grow at a steady organic rate of 4%. Today only 7% of our recurring revenues relate to print subscriptions.

The remaining 24% of revenues include print books, transactional services, software license sales and other nonrecurring revenue streams. Print books declined 3% organically an improvement on the prior year decline.

In legal, this was mainly due to U.S. legal education textbooks.

In health, we saw stronger international sales. Legal Services transaction revenues ended the year up 8% organically, much stronger than they were in 2016.

The second half saw strong performance in legal filings in CT and transaction volumes and enterprise legal management. Financial services transaction revenues were flat organically against a double-digit growth in 2016.

U.S. mortgage originations declined last year, impacting the transactional revenues linked to our mortgage solutions product.

Lien solutions transactional fees grew despite a slowdown in commercial lending markets. Other nonrecurring revenues which include software licenses, implementation fees posted a 2% organic growth compared to a decline in 2016.

This was mainly driven by software sales for finance Risk & Reporting solution OneSumX. Now let's turn to profits.

Adjusted operating profits increased 8% organically to €1.9 billion resulting in a margin of 22.8% up 60 basis points compared to the prior year. The improved margin was driven by health and Governance, Risk & Compliance.

Health adjusted operating profit margin increased 50 basis points. The diluted effect of Emmi was more than offset by efficiency savings and the ongoing mix shift toward clinical solutions.

Governance, Risk & Compliance achieved a 110 basis point margin improvement, mainly reflecting efficiency savings and the fall through of higher software licensing fees. The adjusted operating profit margin in Tax & Accounting and Legal & Regulatory were stable as expected.

The underlying margin improvement in Tax & Accounting was offset by the diluted effect of Tagetik. In Legal & Regulatory, efficiency programs are delivering savings which are funding wage inflation and higher product development and restructuring costs.

Now let's turn to the rest of the income statement. Adjusted debt financing costs were €109 million in line with our guidance.

As indicated in our outlook for 2018, we expect net financing cost to decline to approximately €70 million. In April, we will be redeeming our €750 million bond carrying a 6.38% coupon, which will bring down our borrowing costs.

Income in equity invest investees doubled to €4 million, mainly due to improved performance in our Austrian publishing affiliate. The benchmark tax rate decreased to 25.9% reflecting reduced state tax charges and the release of tax liabilities for closed tax years.

Now looking forward to 2018 and assessing the impact of the U.S. Tax Cut and Jobs Act, we expect the effective tax rate to be approximately 26% in 2018.

While the corporate tax rate was lowered to 21%, some of the deductions that we were making use of have been restricted or eliminated increasing the taxable base. After tax diluted adjusted EPS increased 11% overall and 13% in constant currencies to €2.32.

This benefit from the reduction in the weighted average shares outstanding due to our share buyback program. And now, let's take a look at reported IFRS figures.

IFRS operating profits increased 13% to €869 million. This includes capital gains of €60 million, mainly from the disposal of transport services and certain U.K.

publishing assets. Reported pretax profit increased 17% to €765 million, reflecting lower financing results which includes a capital gain on the sale of a joint venture.

And finally, reported net profit increased 37% due to a non-cash revaluation of our U.S. deferred tax position, which was offset by a repatriation tax both triggered by the new U.S.

tax of legislation. These tax items are one-off in nature.

Now I'd like to take you through the cash flow. Our cash conversion rate was 97% lower than the prior year but in line with our guidance and in line with our longer term historical average.

The main reason for this was working capital where we had €34 million outflow largely due to a reduction in payables. Depreciation increased to €209 million, capital expenditures was €210 million including €13 million in net proceeds from several real estate disposals.

Without these real estate disposals CapEx would have remained at around 5% of revenues. For 2108, we expect CapEx to be between 5% and 6% of revenues.

Paid financing costs declined to €87 million due to higher interest income on our cash deposits and currency hedging results. Our cash deposits will be used in a few weeks' time when we redeem our €750 million bond in April.

Paid corporate income taxes increased to €156 million. The prior year had benefited from to take favorable timing on tax payments.

We are now approaching a more normalized cash tax rate and we have almost fully absorbed our deferred tax assets. We expect a further increase from here in 2018.

The net result was an adjusted free cash flow of €746million, up 7% in constant currencies. And now let's have a look at the uses of free cash flow.

We paid dividends of €232 million and we deployed €302 million in our cash flow toward share buybacks in 2107. €2 million of this related to the shares repurchases late in 2016 that were settled in 2017.

Between dividends and share repurchases we have returned over 70% of our free cash flow to our shareholders. Cash spending on acquisitions amounted to €316 million, the majority of this relates to the acquisition of Tagetik in April 2017.

Divestitures raised €83 million in proceeds mainly from the sale of transport services and certain U.K. publishing assets.

Movement in net debt was also impacted by foreign exchange differences in cash and cash equivalents. In total, our net debt increased from €1.9 billion to €2.1 billion.

With EBITDA at with EBITDA up 8%, our net debt EBITDA ratios remain stable at 1.7 times. Next let's talk about return to shareholders starting with dividend.

As announced this morning, we are proposing a full-year dividend of €0.85 per share up €0.06 or 8% compared to the prior year. This of course is subject to approval at the Annual General Meeting in April.

We also announced our intention to set the interim dividend for 2018 at 40% a prior year's total dividend. This rule result in an interim dividend of €0.34 to be paid in September, 2018.

This brings forward the timing of our dividend payments and aligns it closer to our seasonal cash flows. With that, I'd like to update you on the share buyback program.

In 2017, we completed €300 million in share buybacks. This includes €100 million related to the proceeds from the disposal of transport services and certain U.K.

assets helping to mitigate the related earnings dilution. For 2018 currently we intend to repurchase €400 million in shares.

This amount includes proceeds from the disposal of Corsearch and Swedish assets which we completed just a few weeks ago. Of this €400 million, €50 million has all been ready been completed as of this past Monday.

We've recently announced an agreement to sell ProVation medical for $180 million. Our intention is to use these proceeds for additional share buybacks in 2018 and 2019, assuming the sale closes as we expect.

Now I'd like to summarize before we turn it back to Nancy. We're pleased with these results for 2017.

Organic revenue growth was a solid 3%, and our adjusted operating profit was up 8% organically. Adjusted free cash flow was up 7% in constant currencies and our return on invested capital increased to 10.2%.

Our balance sheet remains very healthy. With that, I'd like to turn the floor back to Nancy to give you an update on our strategic priorities and talk about guidance for 2018.

I'd like to remind you that our guidance for 2018 is based on new IFRS 15 standards, there is a note at the end of our press release note 14 which gives you the impact of that change in accounting. Thank you very much.

Thank you, Kevin. So I will now talk about each of our divisions starting with health.

Health delivered 6% organic growth in line with prior year and improved its margin to 25%. Clinical solutions had a good year organic growth was 10% which is actually faster than what we produced in 2016, up-to-date our clinical decision support tool delivered another year of double-digit growth.

Our clinical drug information group delivered robust organic growth. Emmi the patient engagement solution we acquired in 2016 delivered high single-digit growth on a pro forma basis.

We are now bringing together these flagship products so that we are able to offer expert solutions across the continuum of care. Health learning research and practice grew 1% organically driven by 5% growth in our digital products which now account for 66% of the revenues of this unit.

Nursing solutions delivered strong growth while print subscriptions advertising and reprints declined. In education and practice markets digital growth was strong and outweighed the decline in printed books.

In continuing medical education learners digest drove positive organic growth. So now turning to Tax & Accounting.

Tax & Accounting revenues increased 4% organically in line with the prior year as we expected. Growth was again driven by our software products which grew 6% organically for the year.

Including CCH Tagetik which we acquired in April of last year total revenues grew 10% in constant currencies. The adjusted operating profit margin was stable for the full-year at 275.

We drove underlying improvement which compensated for the lower margin of CCH Tagetik. In North America, the division sustain good organic growth.

Professional tax software grew 5% organically supported by strong growth in our cloud based solutions CCH access. Research and learning saw revenue decline but I'm encouraged by our customer's reaction to our newly launched research platform CCH AnswerConnect.

Our European Tax & Accounting group sustain 5% organic growth. We are continuing to invest in and rollout our cloud base collaborative solution in this region.

In Asia Pacific and Rest of World, we saw positive organic growth overall as good growth in Asia Pacific was largely offset by continued weakness in Brazil. Last but certainly not least our newly formed corporate performance solutions unit had a successful first year.

Teammate delivered double-digit organic growth and successfully launched the new cloud version of the product called TeamMate+. CCH Tagetik also deliver double-digit growth year-on-year in its first nine months as part of the Wolters Kluwer's family this was driven very much by new customer acquisitions.

So now let's turn to our Governance, Risk & Compliance group. Our GRC division delivered organic growth of 4% and improvement on the 3% recorded in the prior year.

The operating profit margin improved significantly due to efficiency savings and the impact of higher license revenues. Legal services delivered improved organic growth of 4%, our leading legal representation business CT delivered 4% organic growth supported by high single-digit growth in M&A related transactions.

Enterprise legal management delivered good organic growth driven by improved software license sales as well as higher transaction volumes. Financial services, organic growth improved 3% from 2% in the prior year.

Our finance Risk & Reporting unit achieved 10% organic growth following a strong fourth quarter in software license sales for our OneSumX product line. Lien Solutions which is in a tiredly transactional business sustain robust single-digit organic growth despite the slowdown in the U.S.

commercial lending market. And finally, our compliance Solutions Group was impacted by the market wide decline in mortgage originations but drove an increase in recurring revenue from its investment compliance tools product line.

So now to finish up with Legal & Regulatory. Legal & Regulatory delivered top line improved top line performance declining 1% compared to a decline of 2% in the prior year.

The division adjusted operating profit margin was stable, despite an increase in restructuring costs as we fast tracked a number of initiatives in the final quarter. Across the division, digital revenues grew 4% organically while print formats declined 7% organically.

Legal & Regulatory information solutions in Europe saw continue 2% decline organically, which was in line with the prior year. Across Europe, we've increased our efforts to drive efficiencies, we streamlined marketing and sales and generated cost savings in back office functions.

Our U.S. Legal & Regulatory unit achieved 2% organic growth, a marked improvement on the trend of recent years.

This was driven by good performance in our Digital Research Solutions and workflow tools which we sell into law firms and corporate legal departments as well as a strong upturn in legal education. Our Legal & Regulatory software group delivered high single-digit organic growth.

Enablon delivered positive organic growth, driven by 20% pro forma growth in recurring revenues for our cloud solutions. Kleos and Effacts, our workflow products for law firms and corporate legal departments delivered double-digit growth.

So now with those highlights, I would like to give you an update on our progress against our three year strategy. Over the past two years, we've been focused on expanding the global market reach of our business.

We have made significant investment in key global products where our investments can be leveraged across a worldwide marketplace. So I just wanted to highlight two examples.

The first is within Tax & Accounting, we launched TeamMate+ in February, 2017. This is the cloud based version of our very successful on-premise audit product.

The cloud version is being targeted at selected new customer segments who might not have been willing to make the investment in the on-premise product. As a result of this, we are now attracting and expanding the customer reach that we had with the on-premise solution.

The second example I'd like to mention is our legal practice management tool called Kleos. Last October we launched Kleos into Germany, after new regulations were introduced it to allow attorneys to store data in the cloud.

We also made a significant investment to enter the corporate performance management arena with the acquisition of Tagetik. We've now brought together Tagetik with our TeamMate product line and we are leveraging this combined offering to expand our market share in the office of the CFO.

Hoping to reshape our portfolio to make it more focused in global is also our program of non-core disposals. We made significant progress in the last twelve months completing four divestments and we most recently announced an agreement to sell ProVation in medical.

We also made headway on our second priority, which is to deliver expert solutions. Today I'd like to talk about two of our more established expert solutions that have sizable customer bases and significant revenues.

The first is CCH access. This is our cloud based Tax & Accounting software for CPA firms which we launched back in 2013.

Five years since the launch, this product is driving double-digit organic growth. Many of our existing customers are now using CCH access and we've attracted new customers as well.

Each year, we innovate and add new features to create a better user experience and to improve the productivity and client collaboration for our customers. One of our recent innovations to this tool was to automate the transfer data from brokerage accounts into the taxpayer's web based organizer.

This makes it far easier for our CPA customers to get the information and the documentation that they need from their clients. The second solution that I'd like to highlight is OneSumX which is in our GRC division.

OneSumX is the market leader in integrated regulatory compliance and reporting software for banks. OneSumX helps financial institutions meet their regulatory obligation as well as provide insights into all types of financial risk.

The product establishes a single source of data from multiple departments within the bank and as a result creates a trusted source of information. This data is enhanced with value added content from our in-house experts to keep our customers up-to-date.

We were very pleased with the performance of this product line in 2017. We won a number of new customers and the result of that this unit grew 10% organically in 2017.

So I'd like to turn to our third priority which is to drive efficiency and scales economy. Across both front and back office functions, we've been streaming operations to work more efficiently.

For example, in marketing and sales, we rolled out new tools to increase our sales effectiveness as well as our cross selling performance and we provided a more rich end-to-end digital experience for our customers. In the area of technology, we are taking steps to standardize processes, tools and platforms.

We believe that this is not only increasing the quality of our products but also delivering cost savings in terms of product development and maintenance. And finally, we're making progress on integrating our recent acquisitions and setting the stage for continued revenue performance in 2018.

So with that, I'd like to now move to the outlook. As Kevin mentioned the outlook that I'm about to present is based on IFRS 15.

Let's start with the divisional outlook. In Health, we expect again a good year of organic revenue growth in line with 2017 and a stable adjusted operating profit margin for the full-year.

We do expect that the first half margin will decline due to the timing of investments. For Tax & Accounting, we expect improved organic growth and a stable operating profit margin for the full-year.

Again we expect margins to decline in the first half due to the timing of investments. GRC should deliver good organic revenue growth and an improved operating margin for the full-year.

In Legal & Regulatory we expect organic revenue to be broadly flat in 2018. Margins are expected to be in line with 2017 levels as we will use cost savings to fund wage inflation as well as to support investments in new products.

So now let's take a look at the overall guidance for Wolters Kluwer for 2018. We expect our full-year adjusted operating profit margin to be between 22.5% and 23%.

We expect our adjusted free cash flow to be between €725 and €750 million in constant currencies. We expect it to be between 10% and 10.5%.

And finally, we expect deluded adjusted - our diluted EPS to grow between 10% and 15% in constant currencies. So all-in-all, we are well positioned to achieve our goals for 2108 and we remain confident in our growth prospects.

So thank you very much now. And we will now move to Q&A.

Yeah, Sami, you want to start?

Thank you, Nancy. Good morning, everyone.

It's Sami at Exane. Three questions to start with please.

First, can you elaborate on what is driving the acceleration in organic revenue growth in net tax division, has it to do with the tax reform in U.S. or more with your specific investments in Germany Teammate+ and so on?

Secondly, the legal education business was revert to growth last year, is that due to one-off restocking returns importing or is there more sustainable return to growth you foresee in that segment? And lastly, financial services transaction is hard to forecast, what is included in your guidance for 2018 in that respect please?

Okay. So what's the first question what's driving the better performance of organic growth in Tax & Accounting, it's really coming from kind of two primary areas.

So first is we continue to get good growth in our software businesses around the globe, so they continue to produce 5%, 6% organic growth consistently. A lot of that has to do with the investments we're making in our cloud solutions, they are growing significantly faster again around the globe.

Second thing is of course the creation of our Corporate Performance Solutions Group, TeamMate which had historically been growing more in sort of the high single-digits is now moving into double-digit growth, again very much driven by our focus on expanding our sales force around the globe, as well as the introduction of Teammate+ which is the SAS solution, that in combination with Tagetik which not well not yet organic in obviously in that we will have some months of organic performance from Tagetik in 2018, those two units again growing double-digits. So it's both the software growth in combination with the corporate performance management group.

Legal education, none of the performance related at all to distribution in legal, it was really driven by two things, one is market conditions are improving, more students are taking it for the first time after many years as you know a decline and more students are ultimately attending a law school. That in combination with our we have a digital product called Connected Casebook which we bundle in with the printed product and that's been doing very well and helping again to support the performance there.

And finally we have a decent front list which of course always matters. So this it's a relatively small part of our business I wouldn't expect that the rate of growth will continue perhaps at the same level it did in 2017 but clearly the market is getting better which is good news.

And then finally, on financial services, as you pointed out it's probably one of our more difficult parts of the business to forecast because it relates to mortgage largely to mortgage lending and most of the predictions around mortgage lending that are done by industry experts have proven over many years to not be very accurate. So we are assuming no recovering in the mortgage lending business as you all know interest rates as they continue to rise that dampens in particular this part of the business.

But again it's not a very big part of the overall Wolters Kluwer results.

Thank you, Nancy.

Yeah, Nick.

Yeah, hi. It's Nick Dempsey from Barclays.

So just a kind of follow-up on legal in terms of the outlook, will Enablon, are you expecting Enablon to accelerate the overall in Enablon not just the cloud overall in Enablon going to accelerate inside your flattish organic growth guidance for 2018 in legal? And then for Group margins, if you take the midpoint of your margin guidance into it like-for-like, you're guiding to about around 50 bps of increase year-on-year.

Got three divisions flattish one going up, so that kind of implies other one GRC is going up a lot. Is any of that related to unwind for IFRS 15 as in you start to get some help on the margin in the different way that account for your contracts?

Okay. I'll let Kevin take this the second one.

On Enablon, we do expect a step-up in performance on the top line. Part of that is if you remember we've been mostly selling the SAS version of Enablon and so we're now in year in 2018 will be sort of year three, so you're getting the benefit of all the contracts we sold in the prior two years that come into the fully recognized in the 2018 time period.

So that is a big contributor to the improved outlook for Legal & Regulatory in combination with still good digital growth overall. We are well positioned in all of the markets with strong digital products.

So the digital growth plus the contribution from Enablon are the two big factors.

Good. And with regard to the margin, I do think that the efficiency programs that we've been running around the organization are having a significant positive impact particularly in GRC if we said last year that they did a restructuring effort that improved their margins this year by 110 basis points.

We'll see that carry forward into the future there. With regard to IFRS 15, if you take a look at the table at the back of press release, you'll notice that the impact is rather minimal on IFRS 15 on revenues and on our margins.

So it will not have any kind of material impact on margin.

Yeah. Please.

Thanks very much. It's Ian Whittaker with Liberum.

Two questions. First of all just sort of thinking about the sort of revenues for medium to longer term perspective.

You've got a similar policy to your peers in terms of disposing of low growth assets making on acquisitions and sort of all things being equal that by logic should lead to the acceleration of organic revenue growth, would be fair to assume that sort of within a two to three year period, you would expect your 3% organic revenue growth to step up to the 4% level and again that's what all of the things being equal? Second thing just in terms of your margins, sort of a and again come back on some of the points before, the sort of flattish margins that you've got within three of your divisions seems to have more by investments.

Again from a sort of medium term perspective, should we expect that to be the sort of policy that you sort of follow moving on i.e. essentially we shouldn't assume much margin growth in those divisions again all things being equal over the medium term?

Yeah, good questions. So we don't give long term guidance around growth, but what I can tell you is, what are the factors that drive growth momentum in a subscription business like Wolters Kluwer.

The first is the performance of the digital business. Digital products and services are now almost 90% of our total revenues.

So those have been growing sort of 4% to 6% depending on which division you're talking about and that is a consistently strong contributor to the overall growth that's factor number one. Conversely print is now a little bit more than 10%, still going to decline but it's not having the impact that it had years ago when it was a larger percentage of the revenue.

Second thing is we are scaling some of our software businesses particularly some of the more recently acquired businesses. So two things occur there, they contribute a disproportionate amount of the growth to the business.

And secondly, they will also begin to contribute more on the margin side where today most of those recently acquired business are dilutive to the margin of the respective units. So it's really the combination of the digital products and all the investments we're making organically in the business, we continue to reinvest 8% to 10% and driving a lot of new products.

So it's that organic investment around the digital products, pushing them more and more into the global arena coupled with some of the more newly acquired businesses getting to scale. That is what will underpin the momentum on growth.

And then on margins, we certainly - it would expect that as we continue to see the mix shift again to digital and we continue to get stronger top line growth, the margins will come along and continue to improve. We are in some divisions making a trade-off to invest a little bit more in some of the newer solutions that we have, add some more sales people et cetera.

But I think in the broad if you look at Wolters Kluwer overall, we have been demonstrating improved operating margins over the last couple of years and you should certainly expect that in the future.

Thanks.

Yeah, please.

Morning. It's Katherine Tait from Goldman Sachs.

And just a question on the CapEx guidance of 5% to 6%, if I look over 2017 at the sort of CapEx by division, we saw Health down a little bit, Tax & Accounting broadly flat, GRC up a little bit, Legal & Regulatory down a little bit. I mean from thinking into 2018, can you talk about the sort of way that you're thinking about CapEx by division and the sort of relative investments you are making?

I would say we do expect somewhere between that 5% and 6% in 2018. One thing I'll point out in 2017, we did sell a couple of owned real estate buildings and the proceeds from that are offsetting some of the CapEx.

So particularly in Tax & Accounting if I pulled out the real estate development and in Legal & Regulatory, you would see a modest increase in the CapEx. On the Health CapEx, it's really just a matter of timing on some of our investment priorities, so I do think that the 5% to 6% for 2018 is a reasonable place for you to think about CapEx going forward.

Yeah, Chris.

Good morning. Chris Collett from Deutsche.

Just a couple of questions. One was on Health and within the learning research and practice.

The growth rate there is still a little bit subdued and I think in the hope overtime that should pick up in the time when inevitably almost growth from clinical solutions perhaps has to come down a little bit. So just wondering about what's happening there, why the growth is staying so subdued, and you said within a learner's digest was positive but which sounds like it wasn't particularly growing well.

So just wondering what were drivers that flipping over to, talk about the Lien Solutions given reference the slowdown in commercial lending activity in the U.S. should we expect that to slow somewhat?

And then, just lastly was just to clarify the proceeds from ProVation, when it is sold, those proceeds then going to be on top of the 400 million buyback into 2018 and then some more in 2019?

You want to take that one first and then I'll come back?

Sure. On the ProVation sale we have signed an agreement to divest ProVation, we do expect that to close late first quarter perhaps second quarter.

With those proceeds, we would expect to do an additional share buybacks above the 400 million that we've discussed this morning. So assuming that sale closes as we expect we do expect to use the proceeds offset ProVation.

So one learning research and practice, we continue to believe in the medium term that the growth rate of this unit will progress and that's partially because of the mix between digital and print, today 66% is digital. So we still have some weighting of the print both on print subscription and some books that dampen the overall growth.

So as that transformation continues, we should see progression there. What occurred in particular in 2017, which what took us from the 2% growth rate to a 1% was really the impact on advertising and reprints.

Advertising was well below what the market expected and we did a little bit better than the market but still a negative number and that had - even though it's still a relatively small amount, it had a dampening effect on the overall growth rate. But the core content business and now more and more of these solutions that we're building in nursing and medicine are in fact continuing to drive good growth.

And then in Lien, again a fully transactional revenue business. So as always a bit difficult to fully project out what it looks like.

But what we're assuming in 2018 is that will have a growing business, it may not grow quite as fast as it did in 2017 but still positive contribution on growth. And that's in part because in that particular business, it's not just driven by lending, there's also you have these different kinds of UCC products where you have to filed, so there is some installed base of business that you will get year-on-year in addition to the fact that we're entering a new asset type.

So there is some new product development going on there and we expect some contribution from that. Okay.

Yeah. Sure.

Hi. It's Matthew from Credit Suisse.

A few questions please. The first is, you've done around 3.3%, 3.4% organic growth in 2017.

The definition of solid growth, does that mean roughly similar number for 2018? Second question related to that, you probably done a little bit better than on organic growth this year than that I expected.

I remember you were somewhat concerned around transaction levels in the fourth quarter having to close transactions. Is there any pull forward from 2018 into 2017 in terms of transactions that we should be concerned about when we're looking at 2018?

And last question is up-to-date, you invested a lot behind up-to-date. Can you update us on the situation versus IBM Watson and do we expect another double-digit growth rate from up-to-date due to globalization et cetera in 2018?

Okay. You want to take the first one and I'll talk about up-to-date.

Sure. On the organic growth, when we say solid organic growth it's not a rounded up to three, it's a solid three and slightly above that so that's why we're characterizing solid organic growth.

And if you look at there was no pull forwards in the fourth quarter. The fourth quarter was very much characterized by good overall new sales season across each of the four divisions, as well as some stronger transactional revenues associated in the legal business also a good books selling season.

So that is what drove some good growth at the end of the year. And we also sold some large contracts in some of our software businesses.

If you look at our up-to-date business, again double-digit performance in 2017. Now that as we have said a couple of times right, this is getting to be a sizable business, it's over 50% of the total divisions revenues.

So we should fully expect that the rate of growth will come down at some point. However, we've remained very well positioned in the marketplace.

And what's really exciting for us is that with the addition of Emmi, we now have a very strong decision support product line both up-to-date plus all of our drug businesses which have consistently delivered solid single-digit organic growth levels in combination with Emmi. So the future of this area for us is that we're bringing those products together and we can go into a hospital and show them how we can add value across the continuum of healthcare.

And that really helps them save money and improve the outcomes. So we're really optimistic about this business as it continues to grow.

The other thing that's interesting in that market relative to say a Watson solution is that the products that we're offering are very proven, so we have a lot of statistics, a lot of third party studies that have been done on our products that prove that if you use these products you will get better and better outcomes or better cost performance. More and more we're investing in what we call the next generation up-to-date which is called up-to-date advance.

That next step is actually bringing in patients specific information from the electronic medical record to again get even more precise in how you diagnose the patient. And the goal behind that is to reduce the variability of care.

And that really is if you look at what drives a lot of the cost problems in healthcare, it's that two doctors looking at the same patient may come up with totally different tests, totally different approaches and that actually drives a lot of cost. So the next version of up-to-date is really focused on narrowing that variability of care.

So we're well positioned, Watson is kind of focused on other things we don't see it as really being that competitive threat to the core business of what we're doing in Health. Sorry long answer, sorry Patrick, you can now.

Hi, it's Patrick Wellington of Morgan Stanley. Actually have got a clutch of questions.

Kevin, the net debt to EBITDA was 1.7 times, your target is 2.5, are you can do anything about or we should kick the can down the road again this year? Secondly, on Legal & Regulatory, you talked about improved market conditions, we have that improved conditions in Legal & Regulatory for years so what exactly referring to that?

And the third question on the sort of detail side is you saw a ProVation and Corsearch, they're both quite growth businesses and can you explain why you did that no there is any other growth businesses you're planning to sell? And then some more strategic questions I think the I think already Matthew was kind of looking for an upgrade in your organic revenue growth, but you're over three and if you look at your legal business and the health and learning practice business that is about a third of the revenues, the digital element is about 60%, 65% in each which would kind of imply you're going to get a tick up in that third of revenues.

So is that what's going to drive you to the next single in organic growth? And then on the margin side, it strikes me you've got a perfectly good business with some really good products and you've got a margin for the group which is 23% or something, whereas you look at your peers and I know they have not adjusted IFRS 15, but Thomson Reuters is 28, Informer in its data businesses which aren't that great, does about 33.

So miles behind the pack, doesn't this mean we've got masses of margin growth room says in a leading question for the next few years?

Okay. Why don't we dividing conquer, Kevin you want to answer the net debt the EBITDA?

Net debt to EBITDA was stable at 1.7 times, indeed we've said our target is 2.5 times. We're comfortable with that target because of the predictable nature of our revenues and our cash flow.

We've also said that we will deviate from that target and I'm happy to be slightly below that target and that's where we are today.

And then on Legal & Regulatory in terms of improved market conditions, we are seeing improved market conditions. And what we mean by that is as you will recall over the many years that that business has been in decline, retention rates have always held up well, right, it's really been a question of can we get our customers to buy and spend new money.

And what we saw in 2017 was some progression around our new selling productivity coupled with good performance in the U.S. which is a combination of they've been doing a lot of innovation in the U.S.

and that's been well received by customers. So I think we are gaining some new money in the U.S.

market plus the legal business that I commented on earlier. So both in Europe and North America, we're seeing overall some better new sales market conditions.

And then on ProVation Corsearch, each one is a different scenario but with ProVation, you're right to point out, it is a growth business. But as we have made changes in where we're investing in health and with the acquisitions, particularly of Emmi and some other product lines, our focus is squarely in the provider space, really helping healthcare providers deliver good quality care at a reasonable price.

And so what ProVation does is really a revenue cycle management, right. So ProVation is around documenting procedures and making sure you're getting reimbursed in the appropriate way.

So it's really not in the same world as the clinical focus that we have. So it made sense at this time to find a better home for it where they can some parties that want to build out in revenue cycle management, that's not a space that we have interest in.

And then Corsearch, kind of a different scenario, Corsearch the market is shifting very much from sort of traditional trademark registrations and searching to more and more digital brand management. We didn't have a big portfolio there.

So we were going to have to invest capital and we believe there's better places to put our capital. So again an appropriate time to find a different home for that.

So we did do a number I think as we've talked in the past we are always evaluating our portfolio, we do that as part of our annual planning cycle, so you should always expect some amount of change in the portfolio. I will say 2017, we did a number of disposals, I don't think you should expect that level of activity in 2018.

And then margins, I think that we clearly as we talked with Matthew's question, we clearly believe that as revenue growth continues to improve, we will be able to expand margins. Now again we are trading off in some cases additional investments where we need to but we fully expect that our margins will be able to expand as revenue growth strengthens.

In Health and Legal?

Yeah. Those businesses, I think you've characterized them well Patrick which is it's really the mix, the mix is still the issue in both those businesses.

So while they're in sort of the 60% to 65% level of digital. Digital in both cases is growing well, so that's not the issue.

We continue to invest in having strong products in the marketplace. It's continuing to manage the kind of print and in some cases like in HLRP that we do have some elements that are very transactional that are more difficult to forecast.

But as the mix continues to shift digital, you should expect and we expect that that growth will come with that. Are there question?

Yeah, Chris.

Thanks. So could I just ask one follow-up question, it was just on across the different parts of the subscription business way if you saw any changes in the retention and renewal rates, you referenced earlier that the growth was really being driven more by the new sales but just wondering if you're also seeing improvement in retention.

Yeah. I would say in general our retention rates have always been high and so in the software kinds of businesses are these experts solutions normally our retention rates are 90% or above.

So there the focus for us is on driving new innovation. So we can go out to customers and grab more share of wallet, it's more difficult to actually get customers to switch.

Now that is one thing that's quite interesting if you look at TeamMate+, you look at CCH access is because we've been first to market with our SAS solutions, we are in fact even with those higher retention rates able to add some new clients. But it's largely, the strategy is largely around drive innovation, get the cross selling and drive wallet share.

In the core content businesses, there I would say we are improving year-on-year. The retention rates as we drive that our digital products into the marketplace but really you measure those in sort of decimal points right.

I mean this is again overall the retention rates are pretty high. So our focus has really been around innovation, cross selling, driving wallet share.

That is clearly the - how we're getting better growth in the portfolio. Anything else from the floor otherwise Meg I think…

We are coming to the end of the questions here. I just want to throw in a question from Tom Singlehurst at Citi.

This is probably more for Kevin, why given revenues expected to grow, margins expected to go up and interest costs coming down, do you expect free cash flow to be at best flat in constant currencies?

That's largely to do with our cash tax payments. I expect in 2018, we will wind down our deferred tax related to interest carry forward.

So moving on from there I do expect that the cash tax will be higher in 2018 perhaps a little bit higher beyond that but I think it will get into a more normalized level.

I think we can wrap it up.

Any other questions, so before. Okay.

Great. Thank you all very much.

There's coffee and goodies outside, so help yourself.