First quarter developments
In the first quarter, revenues increased 4% at constant currencies and grew 3% on an organic basis. The effect of acquisitions (mainly Datacert acquired April 7, 2014) more than outweighed the impact of small divestitures in the quarter. In reporting currency, revenues rose 17%, reflecting the strength of the U.S. Dollar as well as the impact of other currencies. Organic growth was lifted by non-recurring and transactional revenues which had declined in the first quarter of last year. Organic growth for the first four months of 2015 was 2%. The first-quarter adjusted operating margin improved compared to a year ago, supported by the ongoing shift in business mix, higher non-recurring revenues, cost savings and currency.
- Legal & Regulatory: Corporate Legal Services (CLS) achieved strong organic growth in the quarter, lifted by double-digit growth in transactional revenues against an undemanding comparable in first quarter 2014. Legal & Regulatory Solutions saw organic revenue decline in line with second half 2014 trends, as growth in digital solutions was more than offset by decline in print products and services. As expected, the divisional adjusted operating margin declined due mainly to higher restructuring. For the full year, we expect Corporate Legal Services (CLS) to achieve organic revenue growth, albeit at a more moderate pace in the second half. This is expected to be more than offset by organic decline in Legal & Regulatory Solutions, due to continued weakness in print formats. Margins are expected to contract modestly, due to cost inflation, additional product investment and restructuring.
- Tax & Accounting: Delivered positive organic growth, in line with prior year and with seasonal patterns, and increased its adjusted operating margin in the first quarter. Growth was supported by software solutions (67% of divisional revenues) which performed well in all geographic regions. Trends in print formats, bank products, and training services continue to partly offset growth in software. For the full year, we expect underlying revenue momentum to be similar to 2014, with growth in software solutions more than offsetting ongoing decline in print publishing and bank product revenues. We expect full year margins to improve modestly.
- Health: Achieved good organic growth and increased its adjusted operating margin in the first quarter. Clinical Solutions organic growth moderated, but remained in double-digits, with
UpToDate driving performance. Health Learning, Research & Practice (the new name for our combined Medical Research and Professional & Education unit) delivered positive organic growth, benefitting from favorable timing of distributor orders for print books. For the full year, we continue to expect steady revenue performance for the division, supported by robust growth in Clinical Solutions. Learning, Research & Practice is expected to see growth in digital revenues offset by continued decline in print formats. Margins are expected to rise despite increased product investment and restructuring.
- Financial & Compliance Services: Also delivered good organic growth, against a decline in the comparable quarter. Recurring revenues saw steady growth. FS transactional revenues (mainly related to mortgages in our Originations unit) increased, after posting declines in the first quarter of 2014, while other non-recurring revenues benefitted from stronger software license and professional services implementation fees compared to a year ago. Transport Services saw further abatement in its rate of decline as it continues to develop its subscription base and invest in transport management software. For the full year, we expect the division to achieve positive organic growth driven by our Finance, Risk & Compliance and Audit units, with comparables becoming more challenging in the second half. Market conditions for U.S. mortgage originations remain mixed, but new lending regulations are providing opportunities for growth.
Cash flow, acquisitions, divestitures, and net debt
Cash conversion was broadly stable in the quarter compared to a year ago. Adjusted free cash flow increased in constant currencies, primarily as a result of the absence of last year's additional coupon payment. First quarter net acquisition spending, net of cash acquired, was €27 million, in large part relating to deferred and contingent payments with respect to acquisitions in previous years.
Leverage remains better than our target of 2.5x. Twelve months rolling net-debt-to-EBITDA was 1.9x at the end of March, ahead of our annual cash dividend payment. Following approval at the Annual General Meeting, a dividend of €0.71 per share will be paid on May 13, 2015. In February 2015, we announced our intention to buy back shares for up to €140 million. As of May 12, a total of 0.2 million ordinary shares have been repurchased for a total consideration of €5 million.
Full-year 2015 outlook
We reaffirm our full-year 2015 guidance. We note that comparables become more challenging in the remainder of the year. As indicated in our full-year results announcement in February, this year we intend to further sharpen our portfolio towards our leading high growth businesses, to step up organic investment in digital products, and to continue to drive efficiencies, particularly in low growth or declining operations. We expect the adjusted operating margin to increase in 2015. This includes anticipated restructuring costs of €30-€35 million (2014: €36 million), mainly in Legal & Regulatory Solutions. The table below provides our guidance for the full-year.
