I believe that improved market conditions and the sharp focus, which Erik and his team have brought on value creation and the operational execution should sustain a continued improvement in performance. Mark will now take you through the results, and Erik will then go through the businesses and outlook in more detail.Mark Armour Thank you, Chairman. Good morning. Well, the first half results reflect the financial progress of Reed Elsevier. We saw underlying revenue growth in each of our businesses, as the Chairman mentioned, excluding the net cycling out of biennial exhibitions, reflecting the improved market environment, new product introduction, expanded sales and marketing and the other actions taken to improve the business. Underlying revenue growth was 1% or 3%, excluding the biennials, and the underlying operating profit growth was 2%. Taking to account net disposals and currency translation effects over weaker U.S. dollar, revenues were 3% lower, both in sterling and in euros. The adjusted operating margin was up 130 basis points at 26.6% and adjusted earnings per share were up 5%, both for Reed Elsevier PLC and Reed Elsevier NV, and also up 5% at constant currencies. As the Chairman mentioned, our reported earnings per share, which include amortization of acquired intangibles, acquisition-related costs, gains and disposal losses and all deferred tax effects were up 20% for each of Reed Elsevier PLC and Reed Elsevier NV. Cash flow was good with 93% conversion of operating profit into cash in the last 12 months to 30 June, and our financial position is strong with net debt-to-EBITDA of 2.4x at 30 June on a pension and lease-adjusted basis. I'm presenting the figures today in sterling. The same charts with the euro figures can be found in the appendices to the presentation. With the average euro sterling exchange rate unchanged between the first half and the comparative period, the growth rates for profit and loss items are, in fact, the same in both sterling and in euros. The first chart sets out the adjusted profit and loss figures with a 3% decline in revenues at the reported sterling exchange rates, a 2% increase in adjusted operating profit, adjusted pretax profit up 6%, adjusted net profit up 5%. I'll talk more about these items as we go through the presentation, and I'll mostly be focusing on growth at constant currencies.
Looking at the components in turn, starting in the right-hand column, underlying revenue growth was 1% with profit growth of 2% and an underlying margin improvement of 20 basis points in the first half. Including disposals and acquisitions at constant currencies, revenues were down 1% with profits up 3%. The margin up 19 basis points, mostly reflecting the disposal of low margin or unprofitable assets, particularly the RBI U.S.-controlled circulation [indiscernible] sold last year. At reported exchange rates, revenues declined 3%, which included a 2 percentage point currency translation effect of a weaker U.S. dollar. The currency translation effect is only 1% on an adjusted operating profit and that includes hedging benefits from our multiyear subscription currency hedging program and other currency translation effects, which added 40 basis points to the reported margin. It's perhaps worth reiterating that in our definition of underlying, we exclude all acquisitions and disposals made both in the year and in the prior year to give us a clearer like-for-like comparison. A number of other companies include small acquisitions in the definition of underlying, which can distort growth comparisons.The next 2 charts summarize the constant currency growth rates across our businesses for revenue and adjusted operating profit, both in total and underlying. Erik will go into more detail later on the performance of each business and outlook. Elsevier saw underlying line growth of 2%; LexisNexis Risk Solutions was up 4%; Legal & Professional up 1%; Reed Exhibitions down 4%; and RBI up 2%, giving the overall 1% underlying revenue growth for Reed Elsevier. Excluding the biennial show cycling affects, Reed Exhibitions saw underlying growth of 10%. And as noted earlier, without these effects, Reed Elsevier first half underlying revenue growth would have been 3%. The difference between the total and underlying growth figures is most marked at RBI and reflects the portfolio restructuring in that business. For adjusted operating profit, underlying profit growth was 4% at Elsevier; 6% at Risk Solutions; down 2% in Legal & Professional; down 8% in Exhibitions driven by cycling; and up 12% at RBI to give the overall Reed Elsevier underlying profit growth of 2%. Again the main difference between the total and underlying figures is in RBI and reflecting the portfolio changes.
My next chart sets out how the underlying operating profit performance is derived from changes in revenue and in the cost base. In Elsevier, underlying cost grew 1% against revenues up 2% to deliver the 4% profit growth. Cost increases from business growth and spending on new product and market initiatives were largely offset by tight cost control. At Risk Solutions, underlying cost growth was 2%, also reflecting the business growth and continued investment in new product initiatives offset by further cost savings, particularly in technology integration. This converted the 4% underlying revenue growth to 6% profit growth. In Legal & Professional, underlying profits were 2% lower on 1% revenue growth with underlying cost growth of 1% with increased spending on new product initiatives and in sales and marketing mitigated by continuing cost actions. In Reed Exhibitions, lower revenues and profits were driven by the next cycling out of biennial exhibitions. The cost reduction of 2% would have been greater, but for the accelerated launch program and higher show spend as markets recover.At RBI, underlying costs were flat reflecting the cost actions taken to streamline the business while the business returned to revenue growth at 2%. This gave underlying profit growth of 12%. Overall, underlying cost growth for Reed Elsevier in the first half was 1%. Taking into account the disposal of marginal and unprofitable businesses, total cost for Reed Elsevier declined 2% first half-on-first half at constant currencies to deliver the 3% overall profit increase on slightly lower revenues. Read the rest of this transcript for free on seekingalpha.com