Relx PLC (NYSE:RELX) Interim Results Call July 28, 2016 4:00 AM ET
Anthony Habgood - Chairman
Erik Engstrom - CEO
Nick Luff - CFO
Sami Kassab - Exane BNP Paribas
Adam Berlin - UBS
Katherine Tait - Goldman Sachs
Chris Collett - Deutsche Bank
Patrick Wellington - Morgan Stanley
Good morning, ladies and gentleman and thank you all for coming to our 2016 Interim Results Presentation on what I know for all of you is a very busy morning. And for those of you on our webcast, thank you for listening in.
I hope you agree with me that this is another good set of results as the groups continue to execute well and consistently on its strategic priorities. This is resulted in a pleasing and slight improvement in our underlying overall revenue growth to 4% with underlying adjusted operating profit growth at 6%. Constant currency EPS is up 8%, reflecting a 6% increase in the euro EPS for NV and a 13% increase in the sterling EPS PLC.
Once again, all the major businesses have contributed to the strong performance and the development of the business over all both organically and by acquisition is very much on-track. You would have already seen that we've decided to increase the dividend per shop by 6% in euros NV and by 39% in sterling PLC. This decision is based on underlying trading on the formulaic results of the rapid movements in the sterling exchange rate including those at the very end of the period. And on the change in the UK tax lower with respect dividend credits.
As Nick will explain to you, this mid-year complexity does not signify any change in our full year dividend policy. So thank you very much. Erik and Nick will now take you through the results in detail. Erik?
Thank you, Anthony. Good morning, everybody thank you for coming and for taking the time to be here today. As you've probably seen from a press release this morning our positive financial performance continued in the first half of 2016 with underlying revenue and profit growth across all four business areas. We made further strategic and operational progress with a slight increase in our revenue growth rate reflecting the continued improvement in our business profile and the organic development of increasingly sophisticated analytics and decision tools.
Our overall financial performance trajectory strengthened slightly when compared to the prior year with underlying revenue growth of 4%, underlying operating profit growth of 6%, and earnings per share growth at constant currencies of 8%. All four business areas again delivered online revenue growth as well as online operating profit growth. As you can see to left our underlying revenue growth rates range from 2% to 8%. And as you can see on the right our underlying operating profit growth rates right from just below mid-single digits to double digits.
So let's look at the results for each business area. Our STM business group 3% with hey business trends remaining positive. Primary research which represents just over half of the division's revenues, so continued strong growth in usage and an article submissions. And we continue to make good progress on journal quality. We saw continued good growth in databases and tools and electronic reference across sections. Print book declines were in line with recent airs and print pharma promotion revenues are stable. Underlying profit growth was again slightly ahead of underlying revenue growth but the margin expansion before currency effects was offset by exchange rate movements.
Going forward our customer environment remains largely unchanged, overall we expect another year modest underlying revenue growth with underlying profit growth continue to exceed underlying revenue growth. Risk in business analytics revenue growth improved slightly to 8 with strong growth across all key segments. Insurance which represents just over a third of the division's revenues continue to achieve strong growth threatened by good take up a new products and services and expansion adjacent articles. Business services which represents about a quarter of division's revenues so strong growth and identity fraud solutions.
The government healthcare segments continue to develop strongly. Major data services maintain strong growth, and remaining other brands of services were stable. Underlying operating profit growth broadly matched online revenue growth. Going forward a fundamental growth drivers remains strong and we expect underlying revenue growth funds to continue and to be broadly matched by operating profit growth. Legal revenue growth improve slightly 2% with key trends essentially unchanged. Continued growth in online revenues was again largely offset by further Print decline. U.S. and European markets remain stable but substitute while revenue from other markets continue to grow while. Rollout adoption and usage of new flight from releases and applications continue to progress well both in the U.S. and international markets.
Online profit growth was strong. The margin improvement of 30 basis points reflects organic process improvements and the ongoing decommission of systems, partly offset by an adverse impact around 100 basis points from portfolios or portfolio facts. Going forward trends in our major customer markets are unchanged. Continue limit the scope for online revenue growth. We expect online profit growth remains strong. Exhibitions achieved online revenue growth of 6% in the first half in line with the growth rate in the first half of 2015. In the U.S. growth was in line with prior year and growth in Europe was marginally ahead prior. Japan continued to grow strongly, china achieved good growth overall and Brazil remained weak. Most other markets continue to grow strongly but slightly below prior year. We launched 14 new events and completed three small acquisitions.
Online profit growth was 7% with a slight margin improvement largely to exchange rate movements. Going forward we expect online revenue growth trends to continue to be in line with the prior year. For the Full year we expect cycling in effects increase the reported revenue growth rate by round three %age points. Our strategic direction is unchanged. It's still to evolve into company that delivers improved outcomes to professional customers, or professional and business customers across industries. And to get there primarily through organic developed.
Now as you can see at the bottom of this page, we continue to believe that by systematically evolving our business were driving an improvement in our business profile and in the structural quality of our earnings. And as you know from previous discussions by that we mean more predictable revenues, a higher growth profile and improving returns. And let me cover each one of those three. First more predictable revenues, this slide compares our current first half 2016 business profile. To 2007 just prior to the last major economic downturn. As you can see advertising the green section was 15% of our revenues in 2007 this is now below 2%. In addition, within the orange, marketing services and pre-employment screening represented 4 % in 2007, and they're now completely gone. Within the rest of the transactional revenues the rest of the orange Print books have gone from 13% in 2007 to 6% in the first half of 2016. But seasonally adjusted it's probably more like 7% on a full year basis.
Exhibitions have gone from 14% to 17% but adjusting for the cycling effects in no time paired it's really gone from 15% to 16% of our life-for-life basis so not that I think it should. But most importantly, transactional revenues in our risk division have gone from 4% to 17% of our total revenues, and now represent the largest portion of the forums. This revenue streams as you know are often part of multi-year agreements even though their subject primarily to transactional pricing. So taking together we believe that this business profile changes are leading to more predictable revenues for the business as a whole.
Second, a higher growth profile. We've always said that underlying revenue growth -- are underlying revenue growth rate in anyone's 6 or 12 month period will primarily be a reflection of the global macro-economic environment at that time. And its impact on our customer markets in the geographies which we operate. However we continue to believe that the evolution of our business profile is positioning for a structurally higher growth capacity, on average throughout economic or market cycles.
With Print now down to 12% of our revenues our Orient to electronic migration is largely complete, and while the Print track is still a factor, it is becoming less significant. Now we are face to face revenues continue to grow. Our number one priority is now to continue to transition from electronic reference to electronic decision tools to try higher customer value and as a consequence of course higher revenue growth. Now we do this primarily through the organically to develop the -- through the organic development of increasingly sophisticated information based analytics and decision tools. Which as you know was the main focus of our investor seminar last November.
And third, improving returns; with a strong balance sheet an inherently cash generative business is strategic priority order for using our cash is unchanged. We believe that we're generating improving returns by maintaining our primary focus on the organics transformation of our business. Only supported by selective acquisitions when they are natural additions to our existing organic growth strategies, and to our migration towards higher value decision tools.
I will now hand over to Nick Luff our CFO who will talk you through our first half results in more detail. And I will back afterwards for a quick wrap up on our usual Q&A.
Good morning everyone. Erik gave you the financial highlights for the first half which were 4% underlying revenue growth 6% underlying affording profit growth. And 8% growth in constant currency adjusted earnings per share. Conversion was slightly ahead of the prior period 89%. Leverage adjusted to pensions and lease were 2.4 times. A little lower than at this time last year but up from the year end, reflecting the buyers of share buybacks and dividend payments to the first half. As the chairman said the intern dividends up 39% for the PLC and 6% for the NV. I will come back to explain it later.
We reported just over £500 million on the share buyback. Leaving us around £200 million to put on the second half, the same amount as in the second half for each two previous years. Here is the income statement in sterling. Starting at the top, you can see the reported revenue was just over 3.25 billion 4% underlying revenue growth was [indiscernible] affects and slightly benefits to get 5% growth a constant currencies.
With the dollar and the euro both averaging around 6% stronger against the pound. Sterling reported revenue was up 10% in total. Adjusted operating profit came in just over 1 billion, Low profits from businesses we're selling or have already sold, and the constant currency profit growth was 5% will behind the underlying growth. For sterling was certainly boosted by currency resulting in 10% growth over all. Margins were up slightly to 30.8%. Interest charge rose to 83 million due to higher average forums and currency movements. If it's a tax rate was very similar to last year at just over 23%. That left us with just a net profit of just over £700 million of 6% at constant currency. And up 11% over all. Every checkout was down around 2% of the share buyback.
As a result of constant currencies 6% net profit growth converters at 8% growth in adjusted earnings per share. There was a weakness of the pound meant that adjusted earnings per share and sterling was up 13% to £0.34. And Euros it was up 6% to 0.435. Following the elimination of tax credits on UK dividends reported an exposure is now deciding for both PLC and NV, will be expressed in different currencies which impacts the rows of growth rates. The elimination of UK tax credits on dividends, means that the evidence for sure also now the same in both PLC and NV. You will recall how that impacts it last this final dividend, and you can see here how it's impacting this year's intern dividends. There was a paid in different currencies of course with the exchange rate set just before the relevant results are announced.
So with the euro some 18% stronger against the pound compared with this time last year. And a 10% differential -- due to the tax credit adjustment. There is a substantial difference in the growth rates of the two dividends. We are increasing the relics and the Euro entry dividend by 6%, in line with the line with the growth in euro earnings per share, and equalizing the rights PLC sterling from dividends to that, giving growth a 39%. As the Chairman said, for the full year underlying profits rate remains unchanged. We will continue to grow the dividend program along with adjusted earnings per share, subject to exchange rate considerations. While maintaining cover of at least two times in the longer term.
Turning to the business areas as Erik described they are all four contributed to online revenue grows with risk in business analytics being particularly strong. M&A was a slight risk for business analytics, for help both legal and exhibition. Cycling and timing of the 3 %age points through exhibitions revenue growth. For the pound weaker against both the dollar and the euro all business area sold their sterling business revenues, Boosted by between 4% and 6%.
We'll all four business areas is generated on the line profit growth ahead of revenue growth. The highest growth coming from legal up 12% often -- business analytics up 9%. Exhibitions profit growth of 7% benefit from slightly and timing effects. I mentioned earlier the spells were -- profit growth, risk in business analytics and for legal. However, for the sterling figures currency movements were significant placed for all four areas. Margins maintain or improve for all four presences. Sterling margin was unchanged, with an underlying improvement all set for currency effects. Risky business analytics margins were up 10 basis points. While legal was ever try to 30 points improvement, as we continue to achieve underlying cost reductions offset by portfolio effects. Exhibitions also showed 10 basis points improvement.
As you know we are most significantly a U.S. dollar revenue business with substantial revenues also been generating in euro and other currencies. We do have certain of our future cash flows to smooth the year-on-year variation in revenues and profits, primarily STM subscription revenues. As I've mentioned sterling was an average 6% weaker against major currencies in the first half. That converted to a 5% benefits reporting growth of revenue profit and earnings per share instilled in terms. The pound has a growth weakens further from the first off average rate, and if it with a stick current levels for the reminder the year then it would average between10% and 11% weaker against both the dollar and the euro for the year as a whole. If those rates were to reply we would expect an 8% to 9% benefit to sterling reported growth rates for the full year.
So it's a cash flow as a percentage of sales is 5% while the depreciation increased slightly. With the low working capital movement compared to the prior year, cash flow conversion 28% Up from 85% in each one 2016. Cash interest was in line with the prior year was well below the reported interest figure as we have to turn this issues which pay interest annually in the second half. Cash flow was higher in the first call due to the phasing of payments. Overall, free cash flow rose 16% to $587 million.
And here is how we use that free cash flow. The relevant completions of M&A deals in the first half with cash spend of only $33 million. While though taking into account deals nearing completion since the half year, we are pretty close to annualized run rate for acquisitions spend, we have shared buy back to the first half spending just over £500 million of the £700 million planned for the year. With most of our debt denominated in euros or dollars reflecting our cash flows the weaker pound increased the sterling value of the debt, hence the £331 million currency impact you see in the reconciliation. That lessened debt at £4.6 billion as of June 30 with leverage at 1.9 times in U.S. dollars as we always do.
Lower bond yields in the UK and currency translation in relation to the U.S. pushed the pension deficit to £600 billion. Taking that into account when you adjust for pensions and leases, leverage was 2.4 times.
With that I will hand you back to Erik.
Thank you, Nick. So just to summarize what we have covered this morning. During the first half our positive financial performance continued for main further strategic and operational progress. Going forward as we enter the second half of 2016 key trends across our business are unchanged, And we're confident that I continue to execute on strategy we will deliver another year online revenue, profits and earnings growth in 2016.
And with that I think we're ready to go to questions.
A - Erik Engstrom
Why don't we start over here, from the front row, this side.
Thank you, Eirk. Good morning, everyone. I'm Sami from Exane, two questions. First, can you comment on the international initiatives within the risk and be -- and vision what products are you taking abroad, what markets are you targeting a, we heard of India for the first time I heard of India for the first time today. Can you elaborate on that on how big it is and hoping he could get. And second in and it within the exhibitions you are guiding for the last year 5% we have 6% in each one, do we have to read a slowdown in through the second half of the year in the exhibition organic growth profile, thank you.
I'll handle both. The risk international yes as I mean we talk about this now for a while that would lock started to match the opportunities outside the U.S. for the traditional risk side of the business, of course decide that came from the old this is information that's mixed in there always started right with an average international profile came in many different places including the equity business that looks a lot like risk but came from the old side.
So when we talked about our new international initiatives, we really focus on the ones that used to be solely U.S. based historically. And what we have talked about -- the first we lost it's a national was the UK business or UK and Ireland which we launched a few years ago which is now added Fairmount the products and services organically and also added a few small acquisitions and it's going very well is going very well. At the second one I think we've talked about is the Chinese business insurance space the auto insurance space that we set up a while ago, we announced where we own a large part of a local data analytics provider that's here to help the Chinese insurance industry with deregulation and services and risk assessment profiling over time. Early stages are small but it's going very well.
Then we also have a course on global risk related to diligence, risk profiling added business is that we do it across countries but they're not local efforts and have continued to grow well, but we also have small local efforts we've set up a small start-up business to help in Brazil, to help set up for a risk profiling beyond traditional credit risk. That's who we building a data set that and a platform to help them -- to help in Brazil and we set off a platform for insurance in India that's also very, very early and it's not really an off and running commercially scalable business at this point, we have not platform in India today.
So this bit, if you take these together it's not material in the sense of the overall division at this point but it is becoming -- it's becoming something that we think is it really relevant business that's going well and is growing well into double digits. And therefore we think that you look at this in several years down the road you'll be very happy that we started to do this one we started a few years ago. That's the risk international profile.
Can you comment on how being an international within the risk division?
Well, I think we said all of these data streams I think we said -- It's now a year and half or so that I states or from magnitude $15 million. Right at that time and since then it has continued to grow at double digits for a couple years, so we added a couple small ad-ons, so we haven't disclosed a number, but it is bigger than it was two years ago but probably not quite double at this point but for probably getting there soon. Exhibitions you said -- yes, I think it's vital to correctly that this year growth rate in exhibitions if you take if globally for us. It is following a pattern is very similar to a year ago, very similar. And we -- the way -- Global growth, global economic growth this position today seems very similar to a year ago.
And what we saw last year is that the geographies that are slightly heavily weighted than in the first half have slightly higher growth then that geographies that have the exhibitions that are more heavily weighted in the second half. So I don't know exactly what will happen in the second half but because we haven't seen any differences anywhere. And it's just the weighting that's slightly different, we assume the base case is that if the first half grew like first half last year we would assume that overall things might change but at this point we don't see any changes from the overall picture from last year.
Hi, it's Nick Dempsey from Barclays, two questions please. So first of all, if you separated 71% of your business that's electronic into decision tools and electronic reference, can you give us a rough idea of what that split would be and also the kind of differences how it's growth in margin of those two different types of a revenue stream? And second question, I understand that you are pretty focused on avoiding large acquisitions and you make a good point on the attractive returns that you achieve but if you hadn't gotten a choice in size, then back in the day I guess you would be growing at about 2.5% north, 4% given that's a chunk of most of your risk business. So will that come on time when you need another sizeable deal to a kind of push you growth up to next leg?
Well, I may start with the cross around decision tools versus more reference. Well, unfortunately, this is not like a Print to electronic migration well is a physical product selling more than any product use a price - subscribe to differently and price separately and the way when you shift format, it's not that way and as we highlighted in our December also November investor seminar this is a gradual migration toward more sophisticated decision tools, you're adding brought -- gradually adding you're adding more sophisticated analytics, you're leveraging more powerful technology, you push from a look up information to look up next to look up supporting a decision -- you're actually making a decision and that's a very gradual evolution and we had not come up with any define cut-off in this and we tried to illustrate in that seminar how we try to put them in some package.
So therefore because the products don't necessary have product cost or platform cost, it's very hard to try to break them so we are not even trying to do that internally, we haven't even attempted that the way I would describe it is that we've clearly gone very far down this path in our risk in business analytics division, where the majority of our revenues are -- we would think of decision tools -- decision support tool. We are in the early stages of migrating that in legal and in some size. Some of us will argue while some of the decisions they are used for cases like that -- it is probably another way to describe it, but we're in very early stages in legal and science. And in exhibitions, we're just piloting them some exhibitions here and there. So I would put as very far down in one division, early stages in two, piloting in the fourth; that's the best I can do.
In terms of organic versus acquisitions; the one thing I would disagree with you on is that if had not filled these acquisition we would have been like this, that assumes that there is no organic transformation for your core business. If you look at some of the business where we have not made acquisitions and we've done a successful organic transformation, there are several of those inside the risk and business analytics division. They have exactly same organic growth as the business we bought ten years ago and have continued to transform and are growing today.
So the successfully transformed old RBI businesses inside risk and business analytics -- when you manage to transform them organically, they have the same growth rates as the ones that we bought ten years and have continued to evolve. If you buy something and don't continue to evolve it, it's going to slow down; if you own something forever and you don't evolve it, it's going to slow down but if you keep evolving it and driving it in this direction you can get higher organic growth. Of course the growth rate in any one segment at any one point in time depends on the market you're serving and the customer markets and how fast they're growing, and the economic environment they are in.
Both in the near-term any 6 or 12 months period is driven by the market you're selling into and overtime of course. If you're selling into a market that is growing it's easier. Next, let's keep going down this side and then we will move over there.
Thanks. Hi, it's Adam Berlin from UBS; just to keep you the theme, I've also got two questions. Firstly, can you say a bit more about what is being spent up in growth rates with an RBI and within legal? And secondly can you think why you've been able to stay in the 2% growth rate in STM where we have seen some of the competitors numbers start to drop.
So let me see, you said first why is there an increase in the growth rate risk in business analytics. Let's get one at a time, if you just look at risk in business analytics that is the best example of how we have managed to do this gradual business profile evolution. And within that group you have a combination of the two things I mention before, the fastest evolving business because that's probably the one who changed at least 10 years ago, the old business information magazine publishing that we moving very quickly in to faster growing decision tools, and in the old risk business the analytics group and insurance on, we also continue to move down that continue, we're adding significantly broader datasets, with constantly evolving the analytical models and mathematical models there. Becoming better and better all the time and we're leveraging more powerful technology, we can do things now we couldn't do three years ago or five years ago, that's called continues to evolve right, and become significantly faster, less expensive and therefore more value.
So what we're doing here is when you make the decision tools, like slightly more valuable to the customer and it's embedded, they can actually see what that -- what they do, how they do with our tool compact without the tool, they can see how much more money they make, how much better off they are and when they can see that it's quantify it's a real improvement they want more of it they use more. so it's no surprise to me that over the last few years number one that is our fastest growing division, and it's no surprise to me that this division where revenue growth has gone from six to seven to eight over the last three years, because when you add more value to customer, they see more value, they will use it more, they will want more and our revenue growth goes up. It's that simple is actually a reflection of this concept.
When you ask in legal, we often talk about the fact that in the legal industry the biggest driver in the near term, even in the medium term is actually a health and the growth rate of the legal services industry, because we have such a big business but a subscription based and driven by the traditional some research subscription and therefore, we cope with the market fundamentally a base there. Even in legal we're trying to move toward more sophisticated analyze and better decision tools. We had -- adding some new features and functions on top platform rule the rule that -- we are rolling out new applications and some of that is coming through, but fundamentally in the legal markets we really don't see any difference from a year ago or two years ago in the overall broader legal market is probably the main driver of that in the near term. But it is a little bit of improvement in in the product sets and tools that we've been providing. But it is not as significant as what you've seen in risk off of six to seven to eight last three years or over longer time period in the older information business.
In STM I am not sure I know exactly what you're referring to, I can tell you what's going on in our STM business which is that and metrics that we see so far this year are very similar to metric to year ago a few years ago, which is that we continue to see the strong underlying volume growth in the world -- number of researchers from the amount of research conducted, the number of submissions to us of articles, the amount of usage and all -- of our information to all those growth trends are very strong and they continue very much in line two years ago. Of course as we say there are some that there's always a little bit of a softness, that an ongoing softness in there in Prints environments, I think the declines have continued over the last few years, sometimes there is a couple of points higher, couple points lower but that we put down to sit a lumpiness in the rate of decline, there is no fundamental trends that are any different now from a year or two ago.
So I'm not sure exactly what you're comparing to referring to, but we haven't seen any material trend changes very similar to the growth that we see. Okay, let's go over this way starting the front.
Hi, Anik [ph] from Liberum. My question is actually how much of the UK academic budget is funded by the EU? And how much of that is dedicated to hard sciences verses soft sciences?
I'm actually not sure I have those numbers with me right now, I mean we can help we can probably get you something that's a good approximation of that later calling can help you out, I don't have those exact numbers with me right now. But I think its important point to our total geographic profile as a company. Overall, as a company 8% of our revenues are in the UK and that was at the old exchange rate last year, and 8% of our global runners in the UK we have customers in 180 countries.
And if you look specifically at the STM division probably close to 40% of our businesses in North America, less than a third is in all of Europe and the UK of course small portion of that and then rest of world is more than a third. So outside U.S. and Europe, so that's the broad picture that you've seen for us, so anyone changing funding is always material to us, always material how it is we help our customers and help them and help our value to our customers. But as these shifts take place we try to align and adjust to them and we also try to help the different communities figure it out as matter fact they were recently involved are elsewhere division was recently involved in a panel of to decide how do we track the evolution and the potential changes to UK research with the UK research group here probably about 10 days ago.
So we are very involved in trying to map how it might change but I can't tell you the exact numbers right now.
Good morning. Katherine Tait from Goldman Sachs, and just two questions for me. Firstly, on your legal business you talked about and the 30 basis points of Martindale-Hubbell to invest portfolio effects. I just wonder if you can talk on that, or you are just phasing up some of the last put outs or is there something else going in the mix there. And then secondly probably was Nick, thank you very much further, right clear sort of the currency overview you gave. I wonder if there is anything for us to consider from a cost perspective whether any of your costs in any of the divisions and more align to the UK assets of the market, I think we should consider that thank you.
Well, I'm actually going to ask Nick to talk about both of those.
So the legal portfolio effect, the biggest single item that is actually the joint venture on the Martindale-Hubbell joint venture that we formed a few years ago. So we moved the business into a joint venture where you don't stop counting the revenue, you count the profits and that was little -- if you boosted revenues, that was always intended to fade out over time so that is gradually fading out. so that's the most significant impact on the portfolio, they get to buy businesses last year and first year tend out the profits necessary right out list some of that as well, so it's the big thing, only at the currency question. So over the group as a whole -- after we've done a bit of hedging is broadly the sterling revenues and costs are about the same proportion as a whole, off hedging that is so if we put forward any hedging they would actually would cost proportionately higher in the UK than our revenues because we'll see is that -- and you can see where it fits well in countries.
So if you look through what happen with currencies, what's likely to happen if rates stay roughly where they are, you can see that this - the sterling effects will be similar to what you're seeing in the first half and go over a third of the for the group as a whole it didn't actually affect margins very much at all. It helped STM it helped exhibitions and it helps risking and analytics. And so the group as whole gets margins, but it's actually reasonably mutual if you just get on sterling against the other currencies.
Okay, we will keep going over there.
Good morning. It's Chris Collett from Deutsche Bank. I've just got two questions relates to legal business, one was just on late last year in the acquisition of Lex Machina rolling out some news legal analytical products, you mentioned earlier that some of those decision tools and analytics aren't particularly big factor in legal but should we expect them to become more meaningful just in the market just in the meantime is hoping driven rather - is your growth in the daytime really driven by the overall market. Seconds Bloomberg recently said that they were growing deep into double digits obviously office more based but are you seeing them being more active in market?
If you look at where you specifically mention one of our acquisitions last year Lex, the small -- the organic developments like that and the small plugins that we put in from the outside, they are helping us move along that continuum that I've talked about before sort of from traditional electronic reference to electronic decision tools. And this is one small addition component of that but if you look at the current revenue growth for the near term impact growth, it is not related to like [indiscernible] or any of the other acquisitions from last year they don't they don't really count at this point that are small enough that even if they were included they wouldn't have a material impact right at the beginning.
Overtime, so -- in the near term which is what you ask the market environment the customer environment will be that the main influence on our growth rate in the near term. We of course believe continue to believe that over time what we are doing to add more value to our solutions that will in the medium to long term have an impact and drive increased value to the customer and therefore increase demand an increase growth rates on average throughout an economic cycle. And with following the model that we done in other parts are just as we believe we continued to believe that a medium to long term and in near term it's more around how we're operating -- how the markets are doing how we operate in the marked. Let's see -- What was the other question you had?
Bloomberg yes sorry, Bloomberg we have not seen any change that market dynamics or the competitive dynamics in the legal business over the last year I wouldn't say couple years or even in the last six months, I am aware of the specifics that you're mentioning but we have not seen any change in the dynamics with our customers or what we see as the competitive environment. I think we have one more down here.
Good morning, it's Patrick Wellington, Morgan Stanley. It seems a remarkable reluctance to us celebrate the doubling of the growth rate. In your largest single business which has 25% of group revenues and which is going to 1% since time began it seems only six years. So why are you so reluctant to celebrate that it's the market actually improving even of the -- monitor it suggests that maybe there's a little bit not take indeed it is very meeting last year I think you almost lent towards an underlying improvement in the legal market and then you seem to etch away. And then I don't think that's it Catherine's question in your also putting on 130 basis points of underlying margin growth in this business, except for the fact that margin seems to be making less than it did before but if that Martindale-Hubbell effect is over, should we also be looking for your larger single business which is double digit growth rate to be pushing up its margins by more than 100 basis points a year which will be quite a good story if it were true? So Erik, what do you think?
Well, the way we look at it is that we have signaled for a while that we working on -- so that the structural growth capacity of this business and the inherent structural quality of the business. And we showed you some of that on the charts today and we've said for many years that if we do that right you'll continue to see more predictable revenues, a higher growth profile and improving returns in the business and we've seen it come through here and there in different parts of the business. And some of those measures come through and we don't think it should be a big surprise that would gradually improving a little bit in one area, one year and a little bit in the another area another year, if the environment around us is roughly similar to what it was. And this year it happens to be that we continue the improvement trajectory and risk in business analytics and we got a little bit of a step up in legal. I guess I'm still a little bit of the old school I think that you don't really celebrate 2% organic revenue growth even though it is an improvement as you say a doubling.
And so that's the issue on the legal side, on the quest of market indicators illegal the PMI as you mentioned is one of the indicators of the market, one everybody watches, one that we watch if you look at that over the last one, three or five years it always tends to go up a little bit in one quarter and then it has to go down one or two quarters later and if you look at where we are today on those measures, the last one I looked at would indicate that, we continue that so volatility but pretty much along a sort of flat trend line so I do -- I try not to get excited or upset when it so fluctuates up a little bit or down a little bit, and then and I think that's basically where we are today that I can't judge if there is a trend in the legal market that's starting or not, to me it looks very similar to 6 months ago or 12 months ago.
Now, I forgot what was the last question -- margins, I'll let Nick cover the margins.
So in legal because we are going through quite transition with a new the new leases platform rollout and the double overhead costs, double infrastructure costs that go with that. And we're now eliminating some of those costs which is why we're able to keep bringing the costs down quite quickly. I think you should read too much into one single half year -- any half year as a few million dollar customer from one house to another half, and then you can see big variations in the margin I think we stick by the 50 to 70 basis points, what we've indicated is a steady improvement, we can we can achieve in the legal business looking for the next few years unless you know that's a good guide we've done a bit better than that in the first half of this year, but I wouldn't read too much into this one half's number.
On a different subject, the NV dividend is going to despite that chart movement in sterling. Are we saying that under the equalization process, if you like the NV dividend or if it were the other way around, the sterling dividend would never be allowed fall assuming the underlying businesses growing its earnings, so you always arrange that dividends so you don't get an official drop if you like in one or another dividends.
We would never be categoric about exactly -- I don't know what exchange rate movements you may be dealing with but you've see what we've been able to do in this first half. We are talking interim dividends which are only between 25% and 30% of the total. So we have a bit of room for maneuver in terms what the interim is relative to the final. So we've been out to accommodate what was quite a significant exchange rate movement, we've been accommodating that and still increase the euro dividend in line with earning per share. As you said that does mechanically then drive the PLC dividend to what is quite high growth, but we can also manage that within the overall dynamics of the numbers.
Okay, well I think that that brings us to the end of our question-and-answer session. So thank you again very much for coming and look forward to seeing you again soon.
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