2021 ANNUAL REPORT
Deep impact
when it
matters most
Every second of every
day, our customers
face decisive moments
that impact the lives
ofmillions of people
andshape society for
the future.
→ Read more about Product Impact on page 40
Wolters Kluwer 2021 Annual Report
When you have to be right
As a global provider of
professional information,
software solutions,
and services, our work
helps to protect people’s
health and prosperity
and contributes to a
safe and just society,
by providing deep
insights and knowledge
to professionals.
→ Read more about our business model and
strategy onpage 6
€4.8bn
total revenues
92%
of revenues from digital products
and services
25.3%
adjusted operating profit margin
€3.38
diluted adjusted earnings per share
80%
of revenues is recurring
13.7%
return on invested capital
2021 FINANCIAL HIGHLIGHTS
TABLE OF CONTENTS
Strategic Report
2 Wolters Kluwer at a Glance
4 Q&A with Nancy McKinstry
6 Business Model and Strategy
8 2022 Full-Year Outlook
10 Stakeholders and Value Creation
12 Organizational Structure and
Executive Team
14 Health
18 Tax & Accounting
22 Governance, Risk & Compliance
26 Legal & Regulatory
30 Group Financial Review
36 Sustainability
Governance
54 Corporate Governance
58 Risk Management
69 Statements by the Executive Board
70 Executive Board and Supervisory
Board
72 Report of the Supervisory Board
76 Remuneration Report
Financial Statements and Other
98 Financial Statements
100 Consolidated Financial Statements
107 Notes to the Consolidated
Financial Statements
194 Company Financial Statements
197 Notes to the Company Financial
Statements
204 Independent Auditor’s Report
215 Articles of Association Provisions
Governing Profit Appropriation
216 Report of the Wolters Kluwer
Preference Shares Foundation
217 Wolters Kluwer Shares and Bonds
223 Five-Year Key Figures
225 Glossary
226 Contact Information
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Wolters Kluwer 2021 Annual Report 1
We help our customers make critical decisions every
day by providing expert solutions that combine deep
domain knowledge with specialized technology
and services.
AREAS OF EXPERTISE
We deliver professional information, software, and services for the healthcare; tax
and accounting; governance, risk and compliance; and legal and regulatory sectors.
10%
of revenues invested in innovation
and product development
72
belonging score, measure of employee
diversity, equity, and inclusion
99%
of active employees completed 2021 ethics,
data privacy, and security training
46%
of employees are female
SUSTAINABILITY HIGHLIGHTS 2021
HEALTH
Trusted clinical technology and evidence-
based solutions that drive effective
decision-making and outcomes across
the continuum of healthcare.
→ Read more about Health on page 16
TAX & ACCOUNTING
Expert solutions that help tax, accounting
and audit professionals drive productivity,
navigate change, and deliver better
outcomes, helping them to grow, manage,
and protect their businesses and their
clients' businesses.
→ Read more about Tax & Accounting
onpage18
GOVERNANCE, RISK & COMPLIANCE
Expert services and solutions for legal
entity compliance, legal operations
management, banking product
compliance, regulatory reporting,
and risk management.
→ Read more about Governance, Risk &
Compliance on page 22
LEGAL & REGULATORY
Evidence-based information, actionable
insights, and integrated workflow
solutions enabling professionals to
adhere to ever-changing regulatory
obligations, manage risk, increase
efficiency, and produce better outcomes.
→ Read more about Legal & Regulatory
onpage 26
55%
of revenues from expert solutions
5.7%
organic growth in revenues
FINANCIAL HIGHLIGHTS 2021
€1.0bn
adjusted free cash flow
52%
total shareholder return
(dividends not reinvested)
2 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Wolters Kluwer at a Glance
Revenues by media format
2018
Services
Print
Digital: Expert Solutions
Digital: Information Products
2019 2020 2021
100%
80%
60%
40%
20%
0%
Adjusted operating profit margin
2018 2019 2020 2021
26%
25%
23%
24%
22%
Organic revenue growth
2018 2019 2020 2021
5.7%
1.7%
6%
5%
4%
3%
2%
1%
0%
4.3%
4.3%
Diluted adjusted EPS
2018 2019 2020 2021
3.50
3.00
2.50
0.50
2.00
1.50
1.00
0.00
Return on invested capital
2018 2019 2020 2021
16%
12%
8%
4%
0%
19,800
employees serving customers in
over 180 countries
Revenues by type
Recurring 80%
Non-recurring 20%
7 flagship offices
significant subsidiaries
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Wolters Kluwer 2021 Annual Report 3
Every day our customers
face decisive moments
that impact the lives of
millions of people and
shape society for the
future. In these crucial
moments we put sound
knowledge, deep expertise,
and usable insight into
their hands.
4 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Q How would you summarize 2021 for
Wolters Kluwer?
It was the final year of our 2019-2021
strategic plan, and despite the many
challenges created by the pandemic over
the past two years, we made significant
progress last year on the priorities we
had set out for that plan. Expert solutions,
which are sophisticated workflow
and software solutions that support
professionals’ decision-making and
enhance outcomes and productivity, grew
6% organically. Our digital information
products and most of our expert services
also performed well.
The financial results benefitted from a
sharp rebound in non-recurring revenues,
but the real highlight for me was the
improved organic momentum in recurring
revenues. Recurring revenues account for
80% of our total revenues and represent
the strategic heart of our company.
We also met or exceeded most of the
environmental, social, and governance
(ESG) goals we set for 2021. Significant
attention was again paid to the well-
being of our employees and I’m thankful
for their never-ending dedication to the
business and our customers. Employee
engagement was kept above the high-
performing norm – a major achievement
given the impact the pandemic is having
on all of our daily lives.
Q Did you achieve the goals that you
set out in your 2019-2021 plan?
The strong recovery in 2021 helped us
reach most of our three-year financial
goals as we pursued our strategic
priorities. Expert solutions grew from 49%
of total revenues in 2018 to 55% in 2021.
This was largely due to their above-
average organic growth rate, but also
the result of a few portfolio changes we
made: selected software acquisitions and
non-core divestments. The second main
goal of the past few years was to enrich
our information-centric products with
advanced technologies. This was the most
difficult part of our strategy, and it’s a
little early to claim complete success, but
I am encouraged by customers' responses
to some of our recently launched
innovations. One example is Ovid
Synthesis, our new cloud-based solution
that streamlines the workflow of medical
researchers, enabling them to manage
Q&A with Nancy McKinstry
GROWTH IN EXPERT SOLUTIONS
GROWTH IN CLOUD SOFTWARE
HIGH EMPLOYEE ENGAGEMENT
6%
organic growth
17%
organic growth
74%
1%-point above the high-performing norm
Employee engagement
was kept above the high-
performing norm – a major
achievement given the impact
the pandemic is having on all
of our daily lives.
Nancy McKinstry
→ Read more about employee engagement
and talent management onpage 42
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Wolters Kluwer 2021 Annual Report 5
projects in one place and ensure that
clinical practice improvements are based
on the latest medical evidence. Our third
priority was to drive operational agility.
The pandemic proved that we have come
a very long way. I attribute that to the
investments we made in infrastructure
and systems over many years, which made
the transition to work from home almost
seamless for us. As part of the recent
plan, we completed several major internal
projects that help drive agility, such as
the implementation of a new global HR
platform and the consolidation of our
many websites into a single global site.
Q Your new three-year strategy for
2022-2024 appears to carry forward many
aspects of the previous plan. What is new?
The new strategy, Elevate Our Value, is
a refinement of the recent plan. Growing
our expert solutions remains our top
priority. We believe that the transition
to cloud and digitization of workflows,
accelerated during the pandemic, will
continue, and this plan aims to capitalize
on those trends. The second goal will
be to expand our reach into adjacencies
along our customers' workflows and
to reposition certain products for new
market segments. The third priority
for the coming years relates to our
own operations: we want to do more
to strengthen central functions, such
as our go-to-market capabilities and
technology, to support our business
units in driving growth.
Q In your new strategy, you include
advancing Environmental, Social, and
Governance: could you elaborate on your
intentions here?
We are proud of our sustainability
accomplishments, but we know there
is scope for improvement. The ESG
factors that are critical to the long-
term sustainability of our business,
such as product innovation, customer
relationships, cybersecurity, data privacy,
and talent management, have long
received management's attention and
consistent investment, and that will
continue.
In the next three years, we want to
move forward in a few key areas. On the
social front, we are widely recognized for
achieving gender diversity, especially
at senior levels of management.
We intend to build on that success by
cultivating diversity more broadly. To be
able to measure and manage this and
set targets, we established a baseline
quantitative score for belonging in
2021. Belonging measures the extent
to which employees believe they can
bring their authentic selves to work
and be accepted for who they are.
Our belonging score is in line with the
average for global companies, but we
want to improve it. A target for this
measure has now been incorporated
into 2022 remuneration for the Executive
Board and all executives globally, and
we have developed specific action plans
to drive progress.
On the environmental front, while we
are not a carbon-intensive business,
we want to play our part. We have
been reporting direct emissions for
many years, but want to improve the
robustness of our data and processes
and extend this effort to quantify
emissions along the value chain. We are
making a commitment to start aligning
our reporting with the recommendations
of the Task Force for Climate-related
Financial Disclosures and to develop
science-based targets.
Q What should we expect from
Wolters Kluwer in coming years?
I am looking forward to 2022 and
beyond. Our new plan should deliver
good organic growth and improvement
in margins and returns, while at the
same time advancing sustainability. It is
exciting to see the progress being made
in professional markets thanks to the
application of advanced technologies.
With our engaged, talented, and
diverse team of domain experts and
technologists, we are well-positioned to
support our customers as they automate
their workflows to improve decisions
and outcomes.
Nancy McKinstry
CEO and Chair of the Executive Board
Wolters Kluwer
Business Model
andStrategy
We support professionals across four
main customer segments: health;
tax & accounting; governance, risk &
compliance; and legal & regulatory.
Every day, our customers face the
challenge of increasing proliferation
and complexity of information and the
pressure to deliver better outcomes at
a lower cost. Many of our customers
are looking for mobility, flexibility,
intuitive interfaces, and integrated open
architecture technology to support their
decision-making. We aim to solve their
problems and add value to their workflow
with our range of digital solutions and
services, which we continuously evolve
to meet their changing needs.
Our expert solutions combine deep
domain knowledge with technology
to deliver both content and workflow
automation to drive improved outcomes
and productivity for our customers. Expert
solutions, which include nearly all of our
software products and certain advanced
information solutions, accounted for
55% of total revenues in 2021. Based on
revenues, our largest expert solutions by
division are:
• Health: clinical decision support tool
UpToDate; clinical drug databases
Medi-Span and Lexicomp; and
Lippincott nursing solutions for practice
and learning.
• Tax & Accounting: corporate
performance solution CCH Tagetik;
corporate internal audit platform
TeamMate; professional tax and
accounting software, including CCH
ProSystem fx and CCH Axcess in North
America and similar software for
professionals across Europe.
• Governance, Risk & Compliance: finance,
risk, and regulatory reporting suite
OneSumX; banking compliance solutions
ComplianceOne, Expere, eOriginal,
and Gainskeeper; and enterprise
legal management software Passport
and TyMetrix.
1
Throughout this document, EHS/ORM refers to environmental,
health&safetyandoperationalriskmanagement.
Strategy
The foundation laid over the past many
years has driven improved organic growth
and operating margins and helped us
navigate the challenge of the global
pandemic. While we were briefly diverted
from our financial trajectory in 2020 due
to the pandemic, the recovery seen in
2021 allowed us to meet nearly all of the
financial goals set for the most recent
strategic plan (2019-2021). We grew expert
solutions from 49% of total revenues in
2018 to 55% of total revenues in 2021,
primarily through organic growth. The
acquisitions of CGE, XCM, Vanguard, and
eOriginal, and the divestment of several
non-core assets also helped increase
our focus on expert solutions. We made
progress on enriching several of our
information products and are now starting
to launch the early results of that effort.
We also made progress on our third goal,
which was to drive operational agility,
by completing several major internal
projects, such as the introduction of a
modernized global HR system in 2019,
the consolidation of 280 customer-facing
websites into a single global site in 2021,
and the implementation of CCH Tagetik
as our new corporate performance
management tool in 2021.
Strategic priorities 2022-2024
In the past two years, we have seen key
market trends accelerate: increased
digitization of professional and corporate
workflows; accelerated transition to cloud-
based solutions; and growing importance
of ecosystems. In response, we have
refined our strategy for the next three
years. The three strategic priorities for
2022-2024 are:
Accelerate Expert Solutions: we intend
to focus our investments on cloud-based
expert solutions while continuing to
transform selected digital information
products into expert solutions. We will
invest to enrich the customer experience
of our products by leveraging advanced
data analytics.
Our mission is to empower our professional customers with the information,
software solutions, and services they need to make critical decisions, achieve
successful outcomes, and save time.
• Legal & Regulatory: Environmental,
Health & Safety/Operation Risk
Management (EHS/ORM)
1
suite Enablon;
and our range of workflow solutions for
European legal professionals, including
Kleos and Legisway.
Business model
Our business model is primarily based
on subscriptions, software maintenance,
and other recurring revenues (80% of
total revenues in 2021), augmented by
implementation services and license fees
as well as volume-based transactional or
other non-recurring revenues. Renewal
rates for our recurring digital information,
software, and services revenues are high
and are one of the key indicators by
which we measure our success. Product
innovation is a key driver of growth. For
the past eighteen years, we have been
re-investing 8% to 10% of our revenues
each year (including capital expenditures)
in developing new and enhanced
products and their supporting technology
platforms.
More than half of our operating costs
relate to our employees, who create,
develop and maintain, sell, implement,
and support our solutions. Our technology
architecture is increasingly based on
globally scalable platforms that use
standardized components. An increasing
proportion of our solutions is built cloud-
first. Many of our solutions incorporate
advanced technologies, such as artificial
intelligence, natural language processing,
robotic process automation, and
predictive analytics. Our development
teams use customer-centric, contextual
design and develop solutions based on
the scaled agile framework. Our solutions
are sold by our own sales teams or
through selected distribution partners.
6 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Expand Our Reach: we will seek to
extend into high-growth adjacencies
along our customer workflows and adapt
our existing products for new customer
segments. We plan to further develop
partnerships and ecosystems for our key
software platforms.
Evolve Core Capabilities: we intend to
enhance our central functions to drive
excellence and scale economies in sales
and marketing (go-to-market) and in
technology. We plan to advance our
environmental, social, and governance
(ESG) performance and capabilities and to
continue investing in diverse and engaged
talent to support innovation and growth.
We expect this strategy to support
good organic growth and improved
margins and returns over the coming
three years. While the strategy remains
centered on organic growth, we may
make selected acquisitions and non-
core disposals to enhance our value and
market positions. Acquisitions must fit
our strategy, strengthen or extend our
existing business, be accretive to diluted
adjusted EPS in their first full year, and,
when integrated, deliver a return on
invested capital above our weighted
average cost of capital (8%) within three
to five years. We expect that group-wide
product development spend will remain
at approximately 10% of total revenues
in the next three years. Our strategy
aims to achieve high levels of customer
satisfaction and an engaged, talented,
and diverse workforce, to maintain strong
corporate governance and secure systems,
and to drive efficient operations that meet
environmentally-sound practices.
Elevate Our
Value
55%
of 2021 revenues from expert solutions
STRATEGY 20222024
We have refined our strategy for the next three years. This
strategy should support good organic growth and enhanced
operating margins and return on invested capital over the
coming three years. The priorities for 2022-2024 are:
• Drive investment in cloud-based
expert solutions
• Transform digital information
products into expert solutions
• Enrich customer experience
leveraging data analytics
• Extend into high-growth adjacencies
• Reposition solutions for new
segments
• Drive revenues through partnerships
and ecosystem development
• Enhance central functions, including
marketing and technology
• Advance ESG performance and
capabilities
• Engage diverse talent to drive
innovation and growth
Accelerate
Expert Solutions
Expand
Our Reach
Evolve
Core Capabilities
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Wolters Kluwer 2021 Annual Report 7
2022 Full-Year Outlook
If current exchange rates persist, the U.S.
dollar rate will have a positive effect on
2022 results reported in euros. In 2021,
Wolters Kluwer generated more than 60%
of its revenues and adjusted operating
profit in North America. As a rule of
thumb, based on our 2021 currency profile,
each 1 U.S. cent move in the average €/$
exchange rate for the year causes an
opposite change of approximately 2 euro
cents in diluted adjusted EPS
1
.
We include restructuring costs in adjusted
operating profit. We currently expect that
restructuring costs will increase to our
normal range of €10-€15 million (2021:
€6 million). We expect adjusted net
financing costs of approximately
€65 million in constant currencies,
including lease interest charges
2
.
We expect the benchmark tax rate on
adjusted pre-tax profits to increase to
approximately 23.0%-24.0% (2021: 21.5%).
Capital expenditure is expected to be
within our normal range of 5.0%-6.0% of
total revenues (2021: 5.0%).
We expect the full-year cash conversion
ratio to be in the range of 100%-105%
(2021: 112%)
3
.
Any guidance we provide assumes no
additional significant change to the scope
of operations. We may make further
acquisitions or disposals which can be
dilutive to margins and earnings in the
near term.
2022 Outlook by division
Health
We expect organic growth to slow from
2021 levels, mainly due to the absence
of a contract win of the size of the ASCO
titles. We expect the adjusted operating
profit margin to improve modestly.
Tax & Accounting
We expect organic growth to improve
slightly from 2021 levels and the adjusted
operating profit margin to improve.
Governance, Risk & Compliance
We expect organic growth to slow from
2021 levels, due to slower growth in
transactional revenues. We expect the
adjusted operating profit margin to
improve.
Legal & Regulatory
We expect organic growth to be in line
with 2021. The adjusted operating profit
margin is expected to decline due to the
absence of the one-off pension plan
amendment gain recorded in 2021.
performance indicators 2022 Guidance 2021
Adjusted operating profit margin (%) 25.5-26.0 25.3
Adjusted free cash flow (€ million) 1,025-1,075 1,010
ROIC (%) Around 14.0 13.7
Diluted adjusted EPS (€) Mid-single-digit growth 3.38
Guidance for adjusted operating profit margin and ROIC is in reported currencies and assumes an average EUR/USD rate in 2022 of €/$ 1.13. Guidance for adjusted free
cash flow and diluted adjusted EPS is in constant currencies (€/$ 1.18). Guidance reflects share repurchases for up to €600 million in 2022.
Our specific guidance for FY2022 adjusted operating profit margin, adjusted free cash flow,
return on invested capital (ROIC), and diluted adjusted EPS is provided below. We expect
good organic growth, albeit slower than in 2021 due to challenging comparables starting
in the second quarter. We expect the adjusted operating profit margin to ease in the first
half but to rise for the full year 2022. We expect growth in diluted adjusted EPS to be
dampened by a return to our historical tax rate.
1
This rule of thumb excludes the impact of exchange rate movements on intercompany balances, which is accounted for in adjusted net financing costs
inreported currencies and determined based on period-end spot rates and balances.
2
Guidance for adjusted net financing costs in constant currencies excludes the impact of exchange rate movements on currency hedging
andintercompanybalances.
3
Cash repayments of lease liabilities are expected to be in line with depreciation of right-of-use assets (2021: €71 million).
8 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
CASE STUDY: CCH AXCESS
CUSTOMERSHARES THE BENEFITS
OFMOVING TO THE CLOUD
We often raise the value and importance of the cloud through platforms like CCH
Axcess, but the impact of the cloud really comes to life when seen through the eyes
of a customer. Lepper & Company, LLC, a tax, accounting, and payroll firm, has been a
valued user of CCH Axcess for many years, and owners Martin and Julie Lepper got the
scare of their lives when they suffered a fire in their office in Pinckney, Michigan, on a
Friday evening in July 2021.
After making sure all of their staff were safe, Martin and Julie shifted to thinking about
their clients and business continuity. “As we walked through the wreckage, we both felt
immediate relief that we had strong business continuity plans. Those plans were based
on all of the mission-critical data and applications living on the cloud. Particularly for
small and mid-sized firms, it’s not a question of can we afford to move, but can we
afford not to move to the cloud?”.
Despitethe total loss of one of their offices reduced to rubble, the services they
provide to their clients, some of whom were also impacted by the building fire, did not
skip a beat. “That is the real-world value and power of the cloud and a cloud platform
likeCCH Axcess. The next Monday we could open from our other office and were
fullyoperational.”
Wolters Kluwer really helped us, and our customers,
whenitmattered most.
Martin and Julie Lepper, Lepper & Company, LLC
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Wolters Kluwer 2021 Annual Report 9
Wolters Kluwer maintains regular contact with a range of stakeholders, including customers, employees, suppliers and partners,
investors, financial and ESG analysts, ratings agencies, government bodies, the media, civil society organizations (CSOs), and
educational and research institutions. Weare a strategic partner or member in industry associations and advocacy organizations,
such as the Healthcare Information Management Systems Society, International Society of Pharmacoeconomics and Outcomes
Research, Accounting Blockchain Coalition, Institute of Internal Auditors, Mortgage Bankers Association, American Financial Services
Association, European Company Lawyers Association, International Legal Technology Association, American Bankers Association, and
European Risk ManagementCouncil.
CUSTOMERS
Year-round dialogue
through sales, marketing,
and customer service
teams; customer
collaboration on product
development
Net promoter scores;
customer satisfaction
scores; customer and
product renewal rates;
market share studies;
product development
spending
Impact when it matters
most: our professional
information, software
andservices provide
insights and workflow
automation to customers
to support their critical
decision-making
EMPLOYEES
Regular engagement at all
levels, including one-on-
one, group and townhall
meetings; check-ins and
performance meetings;
surveys; SpeakUp line;
Global Innovation Awards,
Code Games, and other
employee awards and
events; works council
engagement
Employee turnover rates;
employee engagement and
belonging scores; training
sessions attended
Providing attractive
employment and
career opportunities;
developing skills, talent
andexperience; promoting
diversity, equity, inclusion,
and belonging
SUPPLIERS & PARTNERS
INVESTORS
Regular quality screening,
audits and due diligence;
collaboration
Year-round dialogue
through a global program
of investor relations events
and meetings; regular
engagement with analysts;
Annual General Meeting of
Shareholders
Procurement process
and due diligence
questionnaires; certification
programs; and commitment
to standards in Supplier
Code of Conduct
Financial KPIs, incl. organic
growth, adjusted operating
profit margin, adjusted
free cash flow, and ROIC;
ESG KPIs, incl. employee
engagement, cybersecurity
maturity, ESG ratings
Creating mutually
beneficial economic value
for our suppliers and
partners
Generating Total
Shareholder Return (TSR)
for shareholders through
share price appreciation
and dividends; risk-
adjusted financial returns
for creditors
SOCIETY
Various programs
in support of our
communities around
theworld
Tracking of charitable
contributions
Our employees donate
their time and talents to
community projects; our
work helps protect people’s
health and prosperity, and
contributes to a safe and
just society; we provide
attractive jobs, pay taxes,
and set high standards
Stakeholders and
ValueCreation
Key stakeholders
How we engage
How we measure
How we create value
10 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Value Creation Model
Focus on customer success Make it better Aim high and deliver Win as a team
Elevate Our
Value
• Talented, Engaged, and Diverse
Employees
• Sustained Investment
in Innovation
• Strong Brands
• Strong Customer Retention
• Good Governance
• Disciplined Capital Allocation
• Agile and Secure Operations
• Respect for Society
and Environment
We aim to create long-term value for all of our major stakeholders and for society, by using resources thoughtfully and efficiently,
respecting our company values, and focusing those resources on actions that support our purpose and our strategy.
THE WAY WE DO BUSINESS
OUR RESOURCES
OUR IMPACT
Accelerate
Expert Solutions
Expand
Our Reach
Evolve
Core Capabilities
HUMAN TALENT
• Efforts and skills of
19,800 employees
FINANCIAL CAPITAL
• €2.4bn equity
• €3.1bn gross debt
TECHNOLOGY &
INTELLECTUAL
PROPERTY
• Global brand
• Software and
contentIP
SUPPLIERS &
PARTNERS
• Actively selected and
managed suppliers
NATURAL
RESOURCES
• Energy and water
consumption along
our value chain
CUSTOMERS
• €4.8bn revenues
in professional
information, software
solutions, and services
• Enabling efficient,
effective, and accurate
decision-making
• 80% recurring
revenues
EMPLOYEES
• €2.0bn in personnel
salaries, wages, and
other benefits
• Developing skills,
talent, and careers
• Promoting diversity,
equity, inclusion, and
belonging
SUPPLIERS &
PARTNERS
• €1.5bn spent on third-
party content and
services
• High standards
INVESTORS
• Total shareholder
return 52% in 2021
• €57m net interest paid
to financial credit
institutions
SOCIETY
• €277m income tax paid
• Community efforts
• Our products help
protect people’s
health and prosperity,
and contribute to a
safe and just society
UN Sustainable Development Goals
← →
Wolters Kluwer 2021 Annual Report 11
EXECUTIVE BOARD & CORPORATE OFFICE
GLOBAL BUSINESS SERVICES
GLOBAL GROWTH MARKETS
HEALTH
• Clinical Solutions
• Learning, Research &
Practice
GOVERNANCE, RISK &
COMPLIANCE
• Legal Services
• Financial Services
TAX & ACCOUNTING
• Corporate Performance
Solutions
• Professional Tax &
Accounting
LEGAL &
REGULATORY
• EHS/ORM & Legal Software
• Legal Information Solutions
DIGITAL EXPERIENCE GROUP
• Innovation and product development • Development centers of excellence • Technology assets management
• China, India, and Brazil • Global expert solutions • Local market knowledge
• Technology infrastructure • Operational excellence programs • Procurement and shared services
12 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Organizational Structure
and Executive Team
HEALTH
Stacey Caywood CEO
We provide trusted clinical
technology and evidence-based
solutions that engage clinicians,
patients, researchers, students, and
the next generation of healthcare
providers. With a focus on clinical
effectiveness, research and
learning, clinical surveillance
and compliance, as well as data
solutions, our proven solutions
drive effective decision-making
and consistent outcomes across
the continuum of care.
Customers span a broad scope
of hospitals and healthcare
organizations, individual students
and clinicians, nursing and medical
schools and libraries, payers,
life sciences, and retail pharmacies.
Portfolio includes AudioDigest,
Emmi, Health Language, Lexicomp,
Lippincott, Medi-Span, Ovid,
POC Advisor, Sentri7, Simplifi
797, SoleSource, UpToDate, and
UpToDate Advanced.
TAX & ACCOUNTING
Karen Abramson CEO
We enable professionals in tax
and accounting firms, governing
authorities, and businesses of all
sizes to grow, manage, and protect
their business and their clients’
businesses. Expert solutions – in
compliance, collaboration, internal
and external audit management,
corporate performance
management, and firm management
– integrate deep domain knowledge
with workflows to ensure
compliance, improved productivity,
effective management, and
strengthened client relationships.
Customers include accounting firms,
corporate finance, tax and auditing
departments, government agencies,
libraries, and universities.
Portfolio includes A3 Software,
ADDISON, ATX, CCH, CCH
AnswerConnect, CCH Axcess, CCH
Axcess iQ, CCH Axcess Validate, CCH
Axcess Workflow, CCH iFirm, CCH
Integrator, CCH ProSystem fx, CCH
OneClick, CCH PinPoint, CCH Tagetik,
Genya, PFX Engagement, TeamMate,
and Twinfield.
GOVERNANCE, RISK
&COMPLIANCE
Richard Flynn CEO
We provide legal and banking
professionals with solutions to
ensure compliance with ever-
changing global regulatory and legal
obligations, manage risk, increase
efficiency, and produce better
business outcomes. The portfolio
offers technology-enabled expert
services and solutions focused
on legal entity compliance, legal
operations management, banking
product compliance, and banking
regulatory compliance.
Customers include corporations,
small businesses, law firms,
corporate legal departments,
insurers, compliance professionals,
risk managers, and financial
institutions – including banks, non-
bank lenders, credit unions, and
leasing and securities firms.
Portfolio includes CASH Suite,
CLM Matrix, ComplianceOne, CT
Corporation, eOriginal, Expere,
GainsKeeper, LegalVIEW BillAnalyzer,
Lien Solutions, OneSumX, Passport,
TSoftPlus, TyMetrix 360°, and
Vanceo.
LEGAL & REGULATORY
Martin O’Malley CEO
We enable legal and compliance
professionals and environmental,
health & safety and operational risk
managers to improve productivity
and performance, mitigate risk,
and solve complex problems with
confidence. With expert information,
enriched with advanced
technologies, we help professionals
thrive in the complex and changing
areas of legal and regulatory
compliance.
Customers include law firms,
corporate legal departments,
corporations, environmental,
health, and safety (EHS)
professionals, operational risk
managers, universities, and
government agencies.
Portfolio includes CaseWorx, CGE,
Enablon, InView, Iter, Jogtár, Jura,
Kleos, Legal Intelligence, Legal
Monitoring, Legisway, LEX, Navigator,
NotaioNext, ONE, Progman,
RBSource, Schulinck, Simpledo,
VitalLaw, and Wolters Kluwer Online.
GLOBAL GROWTH MARKETS
Cathy Wolfe EVP
Global Growth Markets (GGM) is
responsible for developing the
company’s strategic presence
in fast-growing geographies,
particularly China, India, and
Brazil. GGM’s mission is to apply
local market knowledge to service
professionals with global expert
solutions.
DIGITAL EXPERIENCE GROUP
Dennis Cahill CTO
The Digital eXperience Group
(DXG) creates state-of-the-art
digital and software solutions
in close collaboration with our
business units around the world.
The DXG mission is to accelerate
innovation and leverage our
technology investments. The group
drives innovation through three
centers of excellence, which focus
on User/Customer Experience,
Artificial Intelligence, and Advanced
Platform Services.
GLOBAL BUSINESS SERVICES
Andres Sadler CEO
Global Business Services (GBS)
is responsible for driving and
enhancing the quality, performance,
and transformation of our internal
technology infrastructure, including IT
operations, workplace technologies,
cybersecurity, IT architecture,
engineering services, network, and
enterprise systems. GBS supports
the company’s digital transformation
across technology, accounting,
strategic sourcing, procurement,
operational excellence, collaboration
services, analytics, and events.
CORPORATE OFFICE
The Corporate Office sets the
global strategic direction for
the company and ensures good
corporate governance. Its mission
is to support and provide an
enabling business and operating
environment, to help realize our
strategy to deliver impact to our
customers, employees, investors,
and society at large.
Full list of management
www.wolterskluwer.com/en/
about-us/management
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Wolters Kluwer 2021 Annual Report 13
IMPACTDRIVEN INNOVATIVE HEALTHCARE SOLUTIONS
Trusted clinical technology
and evidence-based
solutions that drive
effective decision-making
and improved outcomes
across healthcare.
14 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Health
We harness artificial
intelligence and leading
digital technologies
so clinicians can make
better decisions, patients
can stay connected to
care teams, and lives can
be saved.
See our Health overview
www.wolterskluwer.com/en/health
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15Wolters Kluwer 2021 Annual Report
REVIEW OF 2021 PERFORMANCE
• Clinical Solutions revenues grew 8%
organically, led by UpToDate.
• Learning, Research & Practice revenues
were lifted by a new journal contract.
• Margin increase reflects operational
gearing, cost savings, and lower
restructuring charges.
Wolters Kluwer Health revenues increased
7% in constant currencies and 7%
organically (2020: 3%). Adjusted operating
profit increased 9% in constant currencies,
mainly reflecting operational gearing and
lower restructuring charges. The decrease
in operating profit reflects impairments
of acquired identifiable intangible assets,
mainly related to continuing education
unit Learner’s Digest.
Clinical Solutions (53% of divisional
revenues) achieved 8% organic
revenue growth (2020: 6%), with strong
performances in all main geographic
regions. In clinical decision support,
UpToDate delivered high single-digit
organic growth driven by subscription
renewals. Our clinical drug databases,
Medi-Span and Lexicomp, drove high
single-digit organic growth, benefitting
from international customer wins and
higher usage. With U.S. hospitals and
healthcare professionals under pressure
from the pandemic for most of the year,
our smaller clinical solutions products
posted weaker results.
Health Learning, Research & Practice
(47% of divisional revenues) recorded
6% organic growth (2020: 0%), in large
part due to the ASCO journal publishing
contract added at the start of the year.
The unit also benefitted from a rebound
in print book revenues, as distributors and
book retailers restocked in preparation
of the re-opening of medical and nursing
schools. Print book revenues grew 4%
organically (compared to 39% decline in
2020). Our medical research platform,
Ovid, recorded good organic growth driven
by subscription renewals. In January 2022,
the medical research unit launched
Ovid Synthesis Clinical Evidence Manager,
a workflow solution that enables efficient
implementation of new evidence into
practice. Our digital expert solutions for
nursing practice and education, such
as Lippincott CoursePoint+ and vSim,
delivered another year of double-digit
organic growth. In continuing medical
education, Learner’s Digest revenues
were weak.
Our customers
Solutions for hospitals, clinics, and other
healthcare providers, individual clinicians
and students, nursing and medical
schools and libraries, retail pharmacies,
payers, and life sciences organizations.
Top products
Clinical Solutions: UpToDate, Lexicomp,
Medi-Span, Emmi, Sentri7, Simplifi, Health
Language
Learning, Research & Practice: Ovid,
Lippincott Williams & Wilkins books
and journals, Lippincott digital nursing
solutions, Audio Digest
Complete list of Solutions
www.wolterskluwer.com/en/health/
our-solutions
Our teams have equipped
clinicians around the world
with trusted evidence-based
content to deliver the best
care for patients everywhere.
Stacey Caywood, CEO Health
DIVISIONAL AWARDS 2021
• Frost & Sullivan 2021 North
American Company of the Year
Award for Clinical Decision-
Support (six products).
• Lippincott nursing journals win
Crystal Clarion Award 2021.
16 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Health
Health – Year ended December 31
€ million, unless
otherwisestated 2021 2020 CC OG
Revenues 1,234 1,193 +3% +7% +7%
Adjusted operating profit 360 343 +5% +9% +9%
Adjusted operating
profitmargin 29.2% 28.7%
Operating profit 302 307 -2%
Net capital expenditure 33 32
Ultimo FTEs 2,913 2,824
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
2021 Revenues by geographic market
North America 75%
Asia Pacific & ROW 15%
Europe 10%
2021 Revenues by type
Recurring 90%
Other non-recurring 6%
Print books 4%
2021 Revenues by media format
Software 3%
Print 12%
Other digital 85%
MARKET TRENDS
Rise of virtual care
and telemedicine
Demand for solutions to alleviate
pressure on hospitals and staff
Consumerization of healthcare
Demand for nursing and
medicaleducation
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Wolters Kluwer 2021 Annual Report 17
OPTIMIZE TAX, ACCOUNTING & AUDIT PROCESSES
Expert solutions that
integrate domain
knowledge with
workflows to ensure
compliance, improve
productivity, and
strengthen client
relationships.
Strategic Report | Governance | Financial Statements
18 Wolters Kluwer 2021 Annual Report
Tax &
Accounting
We enable professionals
in tax and accounting
firms, governing
authorities, and
businesses of all sizes
to grow, manage, and
protect their business
and their clients’
businesses.
See our Tax & Accounting overview
www.wolterskluwer.com/en/tax-and-
accounting
← →
19Wolters Kluwer 2021 Annual Report
The pandemic has accelerated
many of the trends we
were seeing in our markets,
particularly our customers'
transition to the cloud.
Karen Abramson, CEO Tax & Accounting
DIVISIONAL AWARDS 2021
• CCH Tagetik Predictive Intelligence
wins 2021 Business Intelligence
Group Innovation Award.
• TeamMate+ Agile Audit solution
wins Gold Globee for Audit
Innovation.
20 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
REVIEW OF 2021 PERFORMANCE
• Corporate Performance Solutions grew
10% organically, led by CCH Tagetik.
• Professional Tax & Accounting grew 5%
organically, supported by North America
and Europe.
• Margin decline reflects increased
spending and investment to support
growth.
Wolters Kluwer Tax & Accounting revenues
grew 7% in constant currencies, with the
effect of acquisitions (XCM Solutions
in September 2020 and Vanguard
Software in May 2021) partly offset by the
deconsolidation of certain Brazilian assets
in June 2021. Organic growth recovered
to 6% (2020: 2%). Adjusted operating
profit rose 2% in constant currencies,
as operational gearing and lower
restructuring were offset by increased
investment in cloud software solutions
across the division. Operating profit mainly
reflects a foreign exchange loss related to
the divestment of our Brazilian assets.
Corporate Performance Solutions (16%
of divisional revenues) delivered 10%
organic growth (2020: 8%). Both CCH
Tagetik and TeamMate were buoyed by
continued strong demand for the cloud
versions of their software suites. Financial
performance management platform, CCH
Tagetik, grew 14% organically, driven by
upgrades by existing customers, new
customer wins, and a recovery in software
implementation services. Vanguard
Software, which extends CCH Tagetik into
sales and operations planning, has now
been fully integrated with CCH Tagetik.
Global internal audit solution, TeamMate,
posted mid-single digit organic growth
driven by strong performances in Europe
and Asia Pacific.
North America Professional Tax &
Accounting (49% of divisional revenues)
achieved 5% organic growth (2020:
0%), driven primarily by renewals and
upgrades for our cloud-based solutions,
including the CCH Axcess suite and CCH
Engagement. Fees from ancillary services,
such as e-filing and bank products,
stabilized. Our U.S. publishing business
was broadly stable with trends in print
books and training revenues improving
compared to 2020.
Europe Professional Tax & Accounting
(30% of divisional revenues) sustained
5% organic growth (2020: 5%), with good
performance across all seven European
countries. The European business
continued to invest in cloud and hybrid-
cloud collaboration tools.
Asia Pacific and Rest of World
Professional Tax & Accounting (5% of
divisional revenues) saw positive organic
growth led by China. In June 2021, we
merged certain Brazilian assets with those
of a competitor in exchange for a minority
interest in the combined entity.
Our customers
Solutions for accounting firms, corporate
finance, tax and auditing departments,
government agencies, libraries, and
universities.
Top products
Corporate Performance Solutions:
CCH Tagetik, TeamMate
Professional Firm Solutions:
North America: CCH Axcess,
CCH ProSystem fx, CCH Axcess Engagement,
CCH Axcess Workflow, CCH AnswerConnect,
CCH Axcess Validate
Europe and ROW:
A3 Software, ADDISON, CCH iFirm, CCH
Integrator, CCH OneClick, CCH PinPoint,
Genya, Twinfield
Complete list of Solutions
www.wolterskluwer.com/en/tax-and-
accounting/our-solutions
Tax & Accounting
Tax & Accounting – Year ended December 31
€ million, unless
otherwisestated 2021 2020 CC OG
Revenues 1,510 1,431 +6% +7% +6%
Adjusted operating
profit 430 431 0% +2% 0%
Adjusted operating
profitmargin 28.4% 30.1%
Operating profit 352 387 -9%
Net capital expenditure 72 77
Ultimo FTEs 7,416 7,149
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
2021 Revenues by geographic market
North America 53%
Asia Pacific & ROW 8%
Europe 39%
2021 Revenues by type
Recurring 87%
Other non-recurring 12%
Print books 1%
2021 Revenues by media format
Software 78%
Services 2%
Other digital 17%
Print 3%
MARKET TRENDS
Accelerated adoption of cloud
solutions
Digitization and automation
of workflows
Emergence of connected
eco-systems
Growing regulatory complexity
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Wolters Kluwer 2021 Annual Report 21
Governance,
Risk &
Compliance
TECHNOLOGYENABLED SERVICES AND SOLUTIONS
Expert services and
solutions for legal
entity compliance,
legal operations
management, banking
product compliance,
andregulatory reporting.
22 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
We provide legal and
banking professionals
with solutions to ensure
compliance with ever-
changing regulatory and
legal obligations, manage
risk, increase efficiency,
and produce better
business outcomes.
See our GRC overviews
www.wolterskluwer.com/en/compliance
www.wolterskluwer.com/en/finance
← →
23Wolters Kluwer 2021 Annual Report
REVIEW OF 2021 PERFORMANCE
• Legal Services recorded 12% organic
growth, buoyed by a 21% rise in
transactional revenues.
• Financial Services revenues grew
3% organically, excluding revenues
associated with the PPP.
• Margin increase reflects lower
restructuring and other provisions.
Wolters Kluwer Governance, Risk &
Compliance (GRC) revenues increased
10% in constant currencies, including the
effect of the acquisitions of eOriginal
on December 16, 2020, and LicenseLogix
on October 29, 2021, partly offset by a
small disposal. Organic growth was 6%
(2020: 2%). The adjusted operating profit
margin increased, reflecting substantially
lower restructuring charges, and lower
provisions. These benefits were partly
offset by increased investment in product
and platform development across
the division. Operating profit rose 8%
reflecting the rise in adjusted operating
profit, offset by higher amortization and
impairment of acquired intangibles.
Legal Services (56% of divisional revenues)
recorded 12% organic growth (2020: 2%
decline), led by CT Corporation, which
saw good momentum in recurring service
subscriptions combined with double-digit
organic growth in transactional revenues
(2020: 10% decline). This performance
captures the rebound in U.S. company
formations, M&A activity, and other
transactional volumes in 2021. In October,
CT Corporation acquired LicenseLogix,
a leading provider of U.S. business
licensing services. Enterprise Legal
Management (ELM) Solutions achieved
5% organic growth (2020: 0%) supported
by an increase in law firm transactional
revenues and recurring software revenues.
Financial Services (44% of divisional
revenues) revenues declined 1%
organically (2020: 7%) but rose 3%
excluding revenues associated with the
PPP. Compliance Solutions, excluding the
PPP solution, was broadly stable year
on year. eOriginal, which was acquired
in December 2020, delivered better-
than-expected double-digit revenue
growth (not included in organic growth)
and is being aligned with our digital
loan compliance solutions, Expere and
ComplianceOne. Lien Solutions, a mostly
transactional business, experienced
a strong rebound in revenues driven
by increased UCC search and filing
volumes and continued success with its
motor vehicle title perfection services.
Finance, Risk & Reporting recorded muted
organic growth due to lower professional
services.
Our customers
Solutions and services for legal,
compliance, and risk professionals in
corporations, small businesses, law
firms, insurers, banks, non-bank lenders,
credit unions, leasing companies, and
securities firms.
Top products
Legal Services: CT Corporation, Passport,
TyMetrix 360, LegalVIEW BillAnalyzer
Financial Services: OneSumX,
ComplianceOne, Expere, eOriginal,
GainsKeeper, Lien Solutions
Complete list of Solutions
www.wolterskluwer.com/en/compliance/
our-solutions
www.wolterskluwer.com/en/finance/our-
solutions
I am incredibly proud of how
our team has supported our
legal and financial clients
and helped them navigate
the uncertainties of the last
two years.
Richard Flynn, CEO Governance,
Risk&Compliance
DIVISIONAL AWARDS 2021
• CT Corporation UCC Hub wins
Legal Technology Innovation of
the Year award from The New
World Report.
• Chartis RiskTech100: category
winner for Regulatory Reporting
– Banking, Liquidity Risk, and
Regulatory Intelligence.
24 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Governance, Risk &
Compliance
Governance, Risk & Compliance – Year ended December 31
€ million, unless
otherwisestated 2021 2020 CC OG
Revenues 1,139 1,074 +6% +10% +6%
Adjusted operating profit 351 313 +12% +17% +13%
Adjusted operating profit
margin 30.8% 29.1%
Operating profit 301 279 +8%
Net capital expenditure 82 76
Ultimo FTEs 4,736 4,485
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
2021 Revenues by geographic market
North America 88%
Asia Pacific & ROW 2%
Europe 10%
2021 Revenues by type
Recurring 59%
FS transactional 10%
LS transactional 23%
Other non-recurring 8%
2021 Revenues by media format
Software 54%
Services 36%
Other digital 9%
Print 1%
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Wolters Kluwer 2021 Annual Report 25
MARKET TRENDS
Increasing regulatory complexity
forcorporations and banks
Varying rates of cloud adoption
across customer segments
Growing appetite for technology-led
solutions
Rising expectations for technology
capabilities
Legal &
Regulatory
LEGAL EXPERT INSIGHTS
Evidence-based
information, actionable
insights, and integrated
workflow solutions that
help customers make
the right decisions and
streamline compliance.
26 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
We enable legal
and compliance
professionals, and
environmental, health &
safety, and operational
risk managers to
improve productivity
and performance,
mitigate risk, and solve
complex problems
with confidence.
See our Legal & Regulatory overview
www.wolterskluwer.com/en/legal
← →
27Wolters Kluwer 2021 Annual Report
Among legal professionals,
technology is going to have
the most impact in the
next three years.
Martin O'Malley, CEO Legal
&Regulatory
REVIEW OF 2021 PERFORMANCE
• EHS/ORM & Legal Software (18% of
divisional revenues) grew 8% organically.
• Information Solutions grew 2%
organically driven by strong growth in
digital formats.
• Margin increase reflects operational
gearing and a one-time pension benefit.
Legal & Regulatory revenues declined
1% in constant currencies, reflecting the
effect of a series of disposals completed
in 2020 and 2021. On an organic basis,
revenues grew 3% (2020: 2% decline),
supported by high single-digit growth
in digital product revenues. Adjusted
operating profit increased 26% in constant
currencies and included an €11 million
one-time benefit related to amendments
to the employee pension fund in the
Netherlands. The margin increase
also reflects operational gearing and
substantially lower restructuring costs,
partly offset by increased investment in
product development. Operating profit
increased 93%, due to a €26 million
net gain on the sale of the U.S. legal
education business.
EHS/ORM and Legal Software (18% of
divisional revenues), which includes our
global solutions for environmental, health
& safety and operational risk management
(EHS/ORM) and our European Legal
Software unit, saw organic growth
accelerate to 8% (2020: 5%). In EHS/ORM,
Enablon’s recurring cloud-based revenues
generated double-digit organic growth,
while on-premise software license and
implementation fees declined. Our legal
software solutions, Kleos and Legisway,
drove strong organic growth in both cloud
subscriptions and non-recurring revenues.
Investment in product development was
stepped up in 2021.
Legal & Regulatory Information Solutions
(82% of divisional revenues) recorded 3%
revenue decline in constant currencies
due to divestitures. On an organic basis,
revenues grew 2% (2020: 3% decline).
Digital information solutions grew 7%
organically, but this was partly offset
by a decline in print subscriptions.
Revenues from print books declined in
Europe, but grew in the U.S. as our legal
education business (divested in December
2021) benefitted from a market recovery.
In December 2021, we announced the
receipt of a binding offer from Karnov
Group for our Spanish and French legal
information assets. This transaction is
conditional on anti-trust approval in
Spain and expected to close before the
end of 2022.
Our customers
Solutions for legal, compliance, EHS,
and operational risk professionals in
law firms, corporations, universities,
and government agencies.
Top products
Environmental, Health & Safety/
Operational Risk Management: Enablon
Legal Software: Kleos, Legisway
Legal & Regulatory Information Solutions:
VitalLaw, RBSource, LEX, ONE, Navigator,
Schulinck, Jura, Legal Intelligence, Jogtar
Complete list of Solutions
www.wolterskluwer.com/en-gb/legal/
our-solutions
DIVISIONAL AWARDS 2021
• Enablon Vision wins Business
Intelligence Group award for
Sustainability Product of the Year.
• VitalLaw U.S. COVID-19 Solution
wins 2021 SIAA Business
Technology CODiE Award.
28 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Legal & Regulatory
Legal & Regulatory – Year ended December 31
€ million, unless
otherwisestated 2021 2020 CC OG
Revenues 888 905 -2% -1% +3%
Adjusted operating profit 121 97 +25% +26% +41%
Adjusted operating profit
margin 13.6% 10.7%
Operating profit 114 59 +93%
Net capital expenditure 52 45
Ultimo FTEs 4,262 4,195
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
2021 Revenues by geographic market
North America 24%
Asia Pacific & ROW 2%
Europe 74%
2021 Revenues by type
Recurring 81%
Other non-recurring 11%
Print books 8%
2021 Revenues by media format
Software 21%
Services 2%
Other digital 56%
Print 21%
← →
Wolters Kluwer 2021 Annual Report 29
MARKET TRENDS
Increasing legal and regulatory
intensity
Law firms and corporate legal teams
increasingly adopt technology
Traditional law firms facing
newcompetitors
EHS/ORM tools evolving into
integrated risk platforms
This group financial review
provides a summary of
our 2021 results in IFRS
alongside a discussion
of benchmark figures
offering insight into
organic performance
in constant currencies.
All divisions recorded stronger
organic growth as market
conditions started to recover
from the pandemic.
Kevin Entricken, CFO and member
of the Executive Board
30 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
HIGHLIGHTS
• Revenues up 6% in constant currencies
and up 6% organically.
• Recurring revenues up 6% organically
(80% of total revenues); non-recurring up
6% organically.
• Digital & services revenues up 7%
organically (92% of total revenues); print
down 4% organically.
• Expert solutions revenues up 6%
organically (55% of total revenues).
• Operating profit up 4%.
• Adjusted operating profit up 11% in
constant currencies.
• Adjusted operating profit margin up
90 basis points to 25.3%.
• Margin benefitted from operational
gearing, lower restructuring costs, net
positive one-time items, and from
savings on travel and other expenses
curtailed during the pandemic.
• Impairment charges on acquired
identifiable intangible assets of
€33 million (2020: none).
• Profit for the year up 1%, reflecting the
higher operating profit and a lower
effective tax rate, partly offset by an
increase in net financing costs.
• Diluted adjusted EPS €3.38, up 17% in
constant currencies.
• Adjusted free cash flow €1,010 million,
up 15% in constant currencies.
• Balance sheet remains strong: net-debt-
to-EBITDA 1.4x.
• Return on invested capital improved
to 13.7%.
Group Financial Review
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Wolters Kluwer 2021 Annual Report 31
REVENUES
Group revenues were €4,771 million, up 4% overall and up 6%
in constant currencies. For the group, the effect of acquisitions
was largely offset by the effect of divestments. Organic growth
was 6%, marking a clear recovery on the prior year (2020: 2%).
Excluding revenues associated with the U.S. Paycheck Protection
Program (PPP), organic growth was also 6% (2020: 1%).
All geographic regions experienced a recovery in organic growth.
Revenues from North America, which accounted for 62% of
group revenues, grew 7% organically (2020: 2%). Revenues from
Europe, 31% of total revenues, increased 4% organically (2020:
2%). Revenues from Asia Pacific and Rest of World, 7% of total
revenues, grew 3% on an organic basis (2020: 4% decline).
Total recurring revenues, which include subscriptions and
other renewing revenue streams, accounted for 80% of total
revenues in 2021 (2020: 80%) and grew 6% organically, a clear
improvement on the prior year (2020: 4%). Of this, digital and
service subscriptions grew 7% organically (2020: 6%), while print
subscriptions declined 10% organically (2020: 9% decline). Other
recurring revenues were stable on an organic basis (2020:
1% decline).
Non-recurring revenues increased 6% organically, recovering
from the steep declines seen in 2020 due to the effects of
the pandemic (2020: 8% decline). Legal Services transactional
revenues increased 21% organically after declining 6% organically
in 2020. Financial Services transactional revenues declined
11% organically (2020: 25% increase), reflecting lower revenues
associated with the PPP. Print book revenues ended the year up
1% organically (2020: 26% decline), following a sharp decline in
the fourth quarter, as expected. Other non-recurring revenues,
which include software licenses and implementation services,
recovered to 4% organic growth (2020: 8% decline).
€ million %
Revenues 2020 4,603
Organic change 259 6
Acquisitions 64 1
Divestments (45) (1)
Currency impact (110) (2)
Revenues 2021 4,771 4
OPERATING PROFIT
Operating profit increased 4% to €1,012 million (2020:
€972 million), reflecting the increase in adjusted operating
profit partly offset by a net €33 million impairment of acquired
identifiable intangible assets.
Adjusted operating profit was €1,205 million (2020: €1,124 million),
an increase of 11% in constant currencies and 10% organically.
The adjusted operating profit margin increased 90 basis points
to 25.3% (2020: 24.4%), benefitting from operational gearing, lower
restructuring costs, net positive one-time items (mainly an €11
million positive one-time item related to an amendment to the
Netherlands pension fund), and cost savings related to low levels
of travel and in-person events activity curtailed as a result of the
pandemic.
Restructuring costs, included in adjusted operating profit, were
€6 million, significantly lower than in the prior year (2020:
€49 million). Investments in product development were
maintained at high levels, while investment in sales and
marketing and technology infrastructure was increased.
Key figures
€ million, unless otherwise stated 2021 2020 CC OG
Revenues 4,771 4,603 +4%
Operating profit 1,012 972 +4%
Profit for the year 728 721 +1%
Diluted EPS (€) 2.78 2.70 +3%
Net cash from operating activities 1,292 1,197 +8%
Business performance – benchmark figures
Revenues 4,771 4,603 +4% +6% +6%
Adjusted operating profit 1,205 1,124 +7% +11% +10%
Adjusted operating profit margin 25.3% 24.4%
Adjusted net profit 885 835 +6% +15%
Diluted adjusted EPS (€) 3.38 3.13 +8% +17%
Adjusted free cash flow 1,010 907 +11% +15%
Return on invested capital (ROIC) 13.7% 12.3%
Net debt 2,131 2,383 -11%
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth. Benchmark figures are performance measures used by management. See Note 4
fora reconciliation from IFRS to benchmark figures.
32 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Group Financial Review continued
DIVISIONAL PERFORMANCE
All divisions recorded a recovery in organic growth as market
conditions staged a recovery from the pandemic. Adjusted
operating profit margins increased in all divisions except
Tax & Accounting where operational gearing was outweighed by
increased investment in sales and marketing and technology
infrastructure.
Revenues by type
€ million, unless otherwise stated 2021 2020 CC OG
Digital and service subscription 3,397 3,218 +6% +8% +7%
Print subscription 157 182 -14% -13% -10%
Other recurring 256 280 -9% -5% 0%
Total recurring revenues 3,810 3,680 +4% +6% +6%
Print books 146 150 -2% -2% +1%
LS transactional 266 228 +17% +21% +21%
FS transactional 109 129 -16% -11% -11%
Other recurring 440 416 +6% +7% +4%
Total non-recurring revenues 961 923 +4% +6% +6%
Total revenues 4,771 4,603 +4% +6% +6%
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth. Other non-recurring revenues include software licenses, software implementation
fees, professional services, and other non-subscription offerings. LS = Legal Services; FS = Financial Services.
Divisional summary
€ million, unless otherwise stated 2021 2020 CC OG
Revenues
Health 1,234 1,193 +3% +7% +7%
Tax & Accounting 1,510 1,431 +6% +7% +6%
Governance, Risk & Compliance 1,139 1,074 +6% +10% +6%
Legal & Regulatory 888 905 -2% -1% +3%
Total revenues 4,771 4,603 +4% +6% +6%
Adjusted operating profit
Health 360 343 +5% +9% +9%
Tax & Accounting 430 431 0% +2% 0%
Governance, Risk & Compliance 351 313 +12% +17% +13%
Legal & Regulatory 121 97 +25% +26% +41%
Corporate (57) (60) -5% -5% -5%
Total adjusted operating profit 1,205 1,124 +7% +11% +10%
Adjusted operating profit margin
Health 29.2% 28.7%
Tax & Accounting 28.4% 30.1%
Governance, Risk & Compliance 30.8% 29.1%
Legal & Regulatory 13.6% 10.7%
Total adjusted operating profit margin 25.3% 24.4%
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
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Wolters Kluwer 2021 Annual Report 33
CORPORATE EXPENSES
Net corporate expenses declined by 5% in constant currencies
and organically, reflecting lower spending on various corporate
projects and lower travel expenses.
Corporate
€ million, unless otherwise stated 2021 2020 CC OG
Adjusted operating profit (57) (60) -5% -5% -5%
Operating profit (57) (60) -5%
Net capital expenditure 0 1
Ultimo FTEs 127 132
: % Change; CC: % Change in constant currencies (€/$ 1.14); OG: % Organic growth.
FINANCIAL POSITION
Balance sheet
Non-current assets, mainly consisting of goodwill and acquired
identifiable intangible assets, increased by €123 million to
€6,290 million in 2021, mainly due to continued investments in
software assets, acquisitions through business combinations,
and the positive effect of foreign exchange differences, being
higher than the amortization and impairments recognized during
the year and the divestments of operations.
Total equity increased by €330 million to €2,417 million, mainly
due to the significant comprehensive income achieved for the
year, partly offset by the effect of share buybacks and dividend
payments. During the year, we repurchased 5.0 million shares for
a total consideration of €410 million, including 0.7 million shares
to offset incentive share issuance (2020: 0.9 million). At December
31, 2021, share buybacks have not yet been executed for an
amount of €50 million under the existing mandate.
In September 2021, we completed a reduction in ordinary share
capital by canceling 5.0 million of the shares held in treasury
(2020: 5.5 million shares canceled). As of December 31, 2021, we
held 4.3 million shares in treasury. In 2021, the total weighted
average number of shares was 260.4 million (2020: 265.0 million).
Net debt, leverage, and liquidity position
Net debt at December 31, 2021, was €2,131 million, compared to
€2,383 million at December 31, 2020. Included in net debt was
€331 million of lease liabilities. The net-debt-to-EBITDA ratio was
1.4x (2020: 1.7x).
On March 30, 2021, we issued a new €500 million, 7-year senior
unsecured Eurobond with a coupon of 0.25%. The new bond
provides financing at an attractive rate and has extended the
company’s debt maturity profile. The proceeds will be used for
general corporate purposes.
Balance sheet
€ million, unless otherwise stated 2021 2020 Variance
Non-current assets 6,290 6,167 123
Working capital (318) (968) 650
Total equity 2,417 2,087 330
Net debt 2,131 2,383 (252)
Net-debt-to-EBITDA ratio 1.4 1.7 (0.3)
34 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
In July 2021, we agreed to a one-year extension of our
€600 million multi-currency revolving credit facility. This facility
will therefore now mature in 2024 and still includes a further one-
year extension option. The relevant terms and conditions remain
unchanged. Simultaneously, we executed a sustainability-linked
option that was available under this facility, in order to reinforce
our ESG ambitions by embedding them into our financing. Four
ESG key performance indicators, along with an ESG-linked pricing
mechanism, were agreed, making the facility a sustainability-
linked credit facility. This facility is currently undrawn. We remain
comfortably below the debt covenant on this credit facility.
Our liquidity position remains strong with, as of December 31,
2021, net cash available of €992 million.
Working capital
Operating working capital amounted to €(1,121) million, compared
to €(934) million in 2020, a decrease of €187 million. This decrease
includes the autonomous movements in working capital. Non-
operating working capital and assets/liabilities classified as held
for sale increased to €(198) million, compared to €(757) million in
2020, mainly due to the repayment of the Euro Commercial Paper
program of €100 million and the decrease in bank overdrafts for
cash management purposes.
OTHER DEVELOPMENTS
Financing results
Financing results amounted to a net cost of €84 million (2020:
€41 million), including a €5 million net loss on revaluation
of financial assets through profit and loss (2020: €0 million).
The increase in net costs is mainly due to a €15 million net foreign
exchange loss on the translation of intercompany balances
compared to a €24 million net foreign exchange gain in 2020.
The translation of intercompany balances was impacted by the
movement in the €/$ exchange rate from 1.23 on December 31,
2020, to 1.13 at December 31, 2021. Adjusted net financing costs
increased to €78 million (2020: €46 million).
Equity-accounted investees
Our share of profits of associates, net of tax, was €1 million
(2020: €6 million); the prior period included a one-time higher
result related to Logical Images which was divested in May 2020.
Taxation
Profit before tax decreased 1% to €929 million (2020:
€937 million). The effective tax rate decreased to 21.6% (2020:
23.1%), reflecting a one-time release of tax contingencies following
the closure of tax audits.
Adjusted profit before tax was €1,128 million (2020: €1,084 million),
up 12% in constant currencies. The benchmark tax rate on
adjusted profit before tax was 21.5% (2020: 23.0%).
Earnings per Share
Total profit for the year increased 1% to €728 million (2020:
€721 million) and diluted earnings per share increased 3% to
€2.78 (2020: €2.70).
Diluted adjusted EPS was €3.38 (2020: €3.13), up 17% in constant
currencies, reflecting the increase in adjusted net profit, a lower
tax rate, and a 2% reduction in the diluted weighted average
number of shares outstanding to 261.8 million (2020:
266.6 million).
Return on Invested Capital (ROIC)
In 2021, the ROIC was 13.7% (2020: 12.3%), mainly due to a higher
adjusted operating profit and a lower benchmark tax rate.
Group Financial Review continued
Working capital
€ million 2021 2020 Variance
Inventories 65 68 (3)
Contract assets – current 138 111 27
Trade receivables 1,008 986 22
Operating other receivables – current 366 269 97
Deferred income – current (1,709) (1,518) (191)
Other contract liabilities (80) (66) (14)
Trade and other operating payables (909) (784) (125)
Operating working capital (1,121) (934) (187)
Cash and cash equivalents 1,001 723 278
Non-operating working capital and assets/liabilities classified as held for sale (198) (757) 559
Total (318) (968) 650
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Wolters Kluwer 2021 Annual Report 35
The net cash inflow before the effect of exchange differences was
€554 million (2020: net cash inflow of €7 million), due to the net
cash from operating activities far outweighing the net cash used
in financing activities and investing activities.
Adjusted operating cash flow was €1,348 million (2020:
€1,145 million), up 20% in constant currencies. The cash conversion
ratio increased to 112% (2020: 102%), due to substantially higher
working capital inflows compared to the prior year. Working capital
inflows were €150 million (2020: €39 million inflow) driven by
organic revenue growth and improved collections on receivables.
Net capital expenditure increased to €239 million (2020:
€231 million), remaining at 5.0% of revenues (2020: 5.0%).
Cash payments related to leases, including €9 million of lease
interest paid, declined to €77 million (2020: €85 million), due to
reduced real estate footprint.
Net interest paid, excluding lease interest paid, increased to
€57 million (2020: €54 million).
Corporate income tax paid increased to €277 million (2020:
€221 million), due to the timing of tax payments and higher
taxable income.
Restructuring led to a net cash outflow of €33 million, largely
reflecting cash appropriation of provisions amounting to
€34 million (compared to a net increase of €17 million in the
prior year).
As a result, adjusted free cash flow was €1,010 million (2020:
€907 million), up 11% overall and up 15% in constant currencies.
Dividends paid to shareholders amounted to €373 million
(2020: €334 million), while share repurchases totaled €410 million
(2020: €350 million).
Acquisitions and divestments
Total acquisition spending, net of cash acquired and including
€5 million in transaction costs, was €113 million (2020:
€406 million), mainly relating to the acquisitions of Vanguard
Software in Tax & Accounting (€93 million) and LicenseLogix in
Governance Risk & Compliance (€10 million). On a pro-forma
basis, these acquisitions generated revenues of €19 million in
2021, of which €9 million was consolidated in 2021. Earnouts
or deferred payments on acquisitions were €0 million in 2021
(2020: €6 million).
Divestment proceeds, net of cash disposed and transaction
costs, were €68 million (2020: €48 million) and related primarily
to the divestment of the U.S. legal education assets.
Leverage and financial policy
Wolters Kluwer uses its cash flow to invest in the business
organically and through acquisitions, to maintain optimal
leverage, and provide returns to shareholders. We regularly
assess our financial position and evaluate the appropriate level
of debt in view of our expectations for cash flow, investment
plans, interest rates, and capital market conditions.
While we may temporarily deviate from our leverage target
at times, we continue to believe that, in the longer run, a net-
debt-to-EBITDA ratio of around 2.5x remains appropriate for our
business given the high proportion of recurring revenues and
resilient cash flow.
Cash flow
€ million, unless otherwise stated 2021 2020 Variance
Net cash from operating activities 1,292 1,197 95
Net cash used in investing activities (287) (563) 276
Net cash used in financing activities (451) (627) 176
Adjusted operating cash flow 1,348 1,145 203
Net capital expenditure (239) (231) (8)
Adjusted free cash flow 1,010 907 103
Diluted adjusted free cash flow per share (€) 3.87 3.40 0.47
Cash conversion ratio (%) 112 102
36 Wolters Kluwer 2021 Annual Report
Our purpose is to deliver
deep impact when it
matters most. Our products
and services support the
knowledge, decision-
making, and effectiveness
of our professional
customers, protect people’s
health and prosperity,
andcontribute to a safe
and just society.
Sustainability
Wolters Kluwer 2021 Annual Report36
Strategic Report |
Governance |
Financial Statements
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Wolters Kluwer 2021 Annual Report 37
SECTION OVERVIEW
→ Our approach to sustainability page 37
→ Materiality page 38
→ Customer focus and relationships page 40
→ Product impact and innovation page 40
→ Employee engagement and talent
management page 42
→ Diversity, equity, inclusion, and belonging
page 44
→ Cybersecurity and data privacy page 46
→ Ethics, compliance, and governance page 47
→ Environmental responsibility page 48
→ Social responsibility page 49
→ Non-financial information statement page 51
→ EU Taxonomy regulation disclosure page52
OUR APPROACH TO SUSTAINABILITY
We have an ongoing commitment to
cultivating a creative work environment
with highly engaged employees,
harnessing the diversity of our
communities, contributing to society,
and playing our part in protecting
the environment.
Sustainability underpins how we do
business and how we respect and create
value for our stakeholders. It has been
ingrained in our processes, policies,
business values, and company culture for
many years. Today, ESG goals are a key
element of our corporate strategy, with
ESG targets incorporated into executive
remuneration and embedded into our
credit facility. We focus on the areas most
material to our stakeholders and our
business as we manage ESG risks and
opportunities.
Our sustainable approach to creating
long-term value will enable us to deliver
positive outcomes for our stakeholders,
minimize negative impacts, contribute
to society and respect the environment.
In this chapter, we describe our approach and
performance with regard to key Environmental,
Social, and Governance (ESG) issues.
We aim to be clear and transparent
in our reporting. We are guided by
international guidelines, such as the
Organisation for Economic Co-operation
and Development (OECD) Guidelines
for Multinational Enterprises, the
United Nations Guiding Principles on
Business and Human Rights (UNGPs),
and the principles of the United Nations
Global Compact (UNGC).
This annual report includes selected
data on material ESG topics. The full
overview of our ESG data disclosures
can be found in our 2021 ESG Data
Overview. Our ESG data reporting has
been prepared in accordance with the
Global Reporting Initiative (GRI) and
the Sustainability Accounting Standards
Board (SASB) frameworks.
The 2021 ESG Data Overview and
GRI, SASB, and UN Global Compact
disclosures are available at
www.wolterskluwer.com/en/investors/
financials/annual-reports
SUSTAINABILITY RATINGS
38 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Sustainability continued
We undertake periodic materiality assessments to identify economic, environmental,
social, and governance issues that are linked to the interests of our stakeholders and
are relevant to the success of our business. We assess the level of importance of these
issues to our stakeholders and to Wolters Kluwer. This analysis helps us prioritize the
issues that matter most and ensure we remain focused on those that have the most
impact on our business and our stakeholder groups.
Issue identification
In 2020, we performed a comprehensive materiality assessment. The process, led by
a third party, started with research to identify 25 key topics, which were grouped into
four different categories: environmental, social, governance, and product. The research
included a review of market trends, peers and competitors, reporting frameworks, and
previous materiality analyses.
Stakeholder engagement, issue prioritization, and results
We took views on the materiality of these 25 topics from a broad group of internal and
external stakeholders, including customers, employees, senior executives, investors,
business partners, and suppliers, through interviews and surveys. Finally, the topics
were ranked, based on the stakeholder feedback, and the results validated against the
company’s corporate risk assessment. The topics that were identified as most material
are shown in the upper right corner of the matrix diagram. This report focuses on the
six topics most material to our business: customer focus and relationships; product
impact and innovation; employee engagement and talent management; diversity,
equity, inclusion, and belonging; cybersecurity and data privacy; and ethics, compliance,
and governance.
MATERIALITY
Sustainability strategy
Our sustainability strategy ENGAGE encourages our employees to focus on six sustainability pillars,
including four of the most material topics as identified by stakeholders. Each of the pillars in this
strategy includes a range of initiatives and action plans. During 2021, progress was made across all
pillars, described in more detail in the sections below.
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Wolters Kluwer 2021 Annual Report 39
Materiality refresh
In 2021, we performed a consistency check on the 2020 materiality assessment and
concluded that the 2020 assessment remained valid for 2021. The only change made
was to add belonging to diversity, equity, and inclusion. See the section Diversity, Equity,
Inclusion, and Belonging for more information. The materiality matrix highlights the
importance of social and governance factors for our business. As a provider of digital
information, software, and services, our business is mainly driven by the innovation and
commitment of our talented, engaged, and diverse workforce. Since the environmental
impact of our industry is relatively low, environmental factors are generally not seen
as very material to the future of our business. Nonetheless, we believe we have a
responsibility to society at large to contribute to reducing carbon emissions. The
section Environmental Responsibility sets out our plans to improve the quality and
completeness of our emissions data and our ambition to follow the recommendations
of the Task Force on Climate-related Financial Disclosures.
MATERIALITY CONTINUED
Level of materiality:
High
Medium
Low
Environmental topics
Circular economy
Climate resilience
Carbon footprint
Waste and water management
Social topics
Employee engagement and talent
management
Employee compensation
Employee health, safety, and well-being
Diversity, equity, inclusion, and belonging
Labor practices
Training and professional development
Community involvement
Employee volunteering
Responsible supply chain management
Governance topics
Board diversity
Cybersecurity and data privacy
Ethics, compliance, and governance
Executive compensation
Public policy
Responsible Artificial Intelligence (AI)
Tax responsibility
Product topics
Products design and lifecycle management
Customer focus and relationships
Editorial quality and integrity
IP and copyright protection
Product impact and innovation
Importance to stakeholders
Impact on business outcome
2
418
1
Low
Materiality matrix
Medium
High
17
12
20
3
11
9
19
14
13
23
24
21
7
6
10
22
15
25
5
8
16
40 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Why is this topic important?
Our stakeholders recognize that product impact and innovation are critical to organic
growth and to our transformation into an expert solutions company. Over the years,
we delivered on our strategy to consistently invest 8%-10% of our annual revenues in
product development, a large portion of which supports innovation. Our central product
development team, the Digital eXperience Group, plays a key role, working closely with
business units and with customers to drive innovation using a customer-centric process
and leveraging their centers of excellence in advanced technologies.
Our approach
We celebrate innovation through our annual Global Innovation Awards (GIA), which
rewards teams who develop innovative solutions that improve customer experiences
or transform our own internal processes. Each year, hundreds of employees take up
the challenge, demonstrating their sense of purpose and creativity, and fostering
collaboration across the business.
We measure innovation by tracking our product development spend by business
unit and by regularly monitoring progress against product roadmaps. We track GIA
submissions and winners. GIA ideas that were launched in the market include CCH IQ,
LegalVIEW BillAnalyzer, Jurimetria, UCC Manage, Ilien Motor Vehicle, and OneSumX
Proviso. We also monitor our performance in various industry awards and rankings
that focus on innovation, such as the Best in KLAS Awards and the Stevie Awards.
Why is this topic important?
The issue of customer focus and relationships is viewed by internal and external
stakeholders as the single most material factor for the long-term sustainability of our
business. Employees view it as important to our purpose of delivering impact when
it matters most and fundamental to our core value of focusing on our customers’
success. Shareholders consider it critical to the long-term growth and competitiveness
of the company.
Our approach
We build and develop customer relationships through a variety of touchpoints,
especially through our sales, marketing, customer support, professional services, and
product development teams. In addition to regular customer contact, our teams host
user conferences and participate in industry events. We conduct regular customer
surveys and market research. Several of our businesses maintain customer advisory
panels. In designing, building, and enhancing our solutions, we work closely with
customers before, during, and after the product development phase to ensure we
meet user needs.
We measure customer focus and relationships across Wolters Kluwer primarily by
tracking customer retention, product renewal rates, and net promoter scores (NPS).
For our established expert solutions and other leading subscription-based digital
information products and services, we strive to maintain or achieve product renewal
rates of 90% or more and a top-three NPS score.
In 2021, renewal rates for our largest subscription-based digital information products
and services were maintained at high levels (above 90%) and NPS scores for more than
half of our top products were maintained or improved.
CUSTOMER FOCUS AND
RELATIONSHIPS
Sustainability continued
PRODUCT IMPACT AND INNOVATION
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Wolters Kluwer 2021 Annual Report 41
In 2021, product development spend was at the upper end of our stated goal of
8%-10% of total revenues. While the number of GIA submissions were lower than in
2020, the quality of the ideas submitted was high. Six concepts were selected as winners
and provided with start-up funding. We believe that when teams are able to gather and
brainstorm in person, creativity and ideation will recover.
Product impact and innovation 2021 2020 2019
Product development spending, % of revenues 10% 9% 10%
Number of submissions to Global Innovation Awards 154 219 260
Number of Global Innovation Awards winners 6 6 4
Our products and services help to protect people’s health and prosperity and contribute
to a safe and just society by providing deep insights and knowledge to professionals.
Our Product Impact Portfolio analysis, included in the 2021 ESG Data Overview,
highlights the positive impacts that three top expert solutions from each division have
on customers and society. Each product analyzed is scored on whether it has a positive
impact on economic, social, and environmental indicators. Selected highlights of this
analysis are provided below.
We are committed to the United Nations Sustainable Development Goals (SDGs),
which address the economic, social, and environmental challenges the world faces.
We support and contribute to the SDGs through the innovative products and services
we deliver, through our engaged employees, through our sustainable returns, and
by making an impact on society. As shown in our Value Creation Model, we have
identified four SDGs to which we believe we can contribute most, as an investor,
innovator, employer, and provider of products and services.
PRODUCT IMPACT AND INNOVATION
CONTINUED
Product Customer benefit Societal benefit
UpToDate
• Improves medical outcomes
• Enhances efficient use of resources
• Contributes to global health and well-being
• Improves clinical decision-making of
health professionals
• Promotes equality by making expert knowledge
available free of charge to the charity Mercy Ships
and to clinicians who serve vulnerable populations
CCH Tagetik
• Improves efficiency of corporate
finance workflow
• Enables compliance with regulations
• Contributes to innovation by embedding predictive
analytics and machine learning
• Supports regulatory compliance and transparency
OneSumX
• Mitigates risks in banking
• Enables compliance with regulations
• Promotes transparency of regulatory reporting
• Secures institutional assets and reputation
• Enhances the security of banking systems
Enablon
• Helps mitigate environmental, health,
and safety risks
• Improves efficiency of corporate
sustainability data collection and reporting
• Contributes to global health and safety
• Supports regulatory compliance and transparency
42 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Why is this topic important?
Our employees are instrumental to the success of our company. Attracting, developing,
and retaining talented employees is a material issue for our business and a strategic
priority. Employee engagement is a key driver of employee performance and ultimately
of business results. To underscore the importance of this topic, a target for employee
engagement was included in the Executive Board remuneration in 2021. For more
information, see Remuneration Report.
Our approach
We measure our performance in the area of human talent by monitoring employee
engagement, turnover rates, and other data. See table below for selected data.
We conduct annual surveys to measure employee engagement, the key objective of
which is to identify areas of strength and opportunity so that we can make Wolters
Kluwer an even better place to work. In 2021, we conducted an additional survey to
obtain more specific feedback on the diversity, equity, and inclusion aspects of our
workplace culture. See the section Diversity, Equity, Inclusion, and Belonging for
a more in-depth discussion.
The results of our 2021 employee engagement survey indicate that engagement remains
above the high-performing norm, an independently-defined standard based on leading
companies that qualify for Fortune’s World’s Most Admired Companies and Great Place
to Work rankings. Although there was a decrease over 2021, this is in line with market
trend and should be seen in the context of the ongoing impact of the global pandemic.
Through the survey, our employees told us that they are treated with dignity and respect
and that we effectively collaborate with each other, even though we have had to learn
to work differently during the global pandemic. The survey also indicated that while
progress has been made, there remains room for further improvement in the areas
of career development, belonging, and agility, which we plan to address in the coming
years.
With the economic recovery, there was a rise in talent movement globally in 2021; we
also saw an increase in voluntary turnover. We took action to address this and ended
the year with a turnover rate that is lower than the average from the 2021 Gartner
Technology Industry Benchmark.
Employee engagement and talent management 2021 2020 2019
Employee engagement score
1
74% 84% 77%
Engagement relative to high-performing norm Above Above Above
Voluntary turnover 11.9% 7.1% 8.8%
Non-voluntary turnover 3.1% 4.1% 3.8%
Total turnover 15.0% 11.2% 12.6%
Employees that accessed optional learning 71% 55% –
1
Employee engagement score is based on surveys and high-performing norm based on standard from
independent market-leading survey partners. Results are from a shorter pulse survey administered to
20% of employees in 2019 and all employees in 2020, and a full survey administered to all employees
in 2021.
EMPLOYEE ENGAGEMENT AND
TALENTMANAGEMENT
Sustainability continued
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Wolters Kluwer 2021 Annual Report 43
Talent management
We have a comprehensive global talent management program, which includes
recruitment, new employee on-boarding, skills training, career development, annual
performance reviews, and succession planning.
We will be expanding our current focus on developing manager capabilities to provide
more targeted support. In 2021, we performed an assessment of manager needs, which
led to the identification of additional curricula that will be launched in 2022. These
courses will support managers in employee coaching and development, cultivating an
inclusive work environment, and preparation for a safe return to our offices.
Our annual Leadership Summit, held virtually in June 2021, reflected our commitment
to help our leaders engage with each other, exchange ideas, and build the skills and
capabilities to achieve our strategic goals as a company.
We have an annual performance review cycle in place, which includes setting
performance and development goals, regular check-ins, and employee self-evaluations.
Each year, our managers and employees set goals that ensure their work contributes to
our strategy and creates value over the long term.
In 2021, we launched a new learning management system that is integrated into our
global Human Resources platform and offers employees easy access to required training
and a robust library of optional learning opportunities, which support employee growth
and development. We continued our all-employee development campaign #Grow, which
is designed to help make growth and development part of our daily work-life. Over the
year, we saw our employees increasingly engage in discretionary learning, spending an
average of six hours per engaged learner.
Employee health, safety, and well-being
The health, safety, and well-being of our employees is of utmost importance at
Wolters Kluwer, especially as the global pandemic has continued.
In early 2021, we launched an enhanced global well-being program to include an
expanded set of resources, programs, and content focused on building resilience.
The program aims to support employees to achieve their personal best in emotional,
physical, social, and financial well-being. We collaborate with best-in-class vendor
partners to provide content and resources to motivate positive behavior changes
and engagement in whole-self care. Details of this program are provided below.
We also provide our global employees with flexible work arrangements to help balance
the various professional and personal commitments in their lives.
EMPLOYEE ENGAGEMENT AND
TALENTMANAGEMENT CONTINUED
CASE STUDY: WOLTERS KLUWER
GLOBAL WELLBEING PROGRAM
FOREMPLOYEES
Keyresources provided to employees
include:
• A global employee assistance program
that provides confidential individual
counseling 24/7, help with work/life
balance, and support for managers
during critical incidents;
• Courses and webinars on resilience,
mindfulness, and well-being during
challenging times;
• Virtual on-demand well-being
programming, including physical
fitness classes, meditation,
andmindfulness;
• Resources to support personal
resilience with strategies for coping
with work-related stress and burnout;
• A COVID-19 information series,
including an interactive education
program and live Q&A sessions with
experts in the field; and
• Ergonomics program to support the
work-from-home environment.
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DIVERSITY, EQUITY, INCLUSION,
ANDBELONGING
Why is this topic important?
We believe that diversity in our workforce drives better decisions, innovation, and
overall performance. While diversity has always been important at Wolters Kluwer, we
are increasing our focus on diversity, equity, inclusion, and belonging (DEIB). We aim
to provide a welcoming environment and equitable opportunities for all employees
regardless of background, nationality, race, ethnicity, gender, gender identity, age,
sexual orientation, marital status, disability, or religion. This principle is ingrained
in our company values and articulated in our Code of Business Ethics.
Our approach
We have a policy that the Supervisory Board, Executive Board, and the division CEOs
should be at least 30% female and at least 30% male. For many years, our gender
diversity achievements have been ahead of these targets. See Corporate Governance
for more information.
In 2021, a DEIB goal was included in the Executive Board remuneration. For more
information, see Remuneration Report. Also, we established a new executive role
to lead our efforts around DEIB.
In August 2021, we completed our first diversity, equity, and inclusion survey, resulting in
a baseline quantitative measure of belonging. Belonging measures the extent to which
employees believe they can bring their authentic selves to work and be accepted for
who they are. We established a baseline belonging score of 72 which is in line with the
2021 average for global companies. As we advance our DEIB efforts in 2022, we aspire
to improve upon our baseline score over time. The analysis highlighted several areas
of strength and opportunity that are reflected in our integrated action plan for 2022 to
drive stronger belonging and employee engagement. A target to improve the belonging
score will be included in the 2022 remuneration for the Executive Board and senior
executives.
To drive progress, we have stepped up our talent sourcing efforts to increase candidate
flow from under-represented groups, provided enhanced interview training for
hiring managers focused on unconscious bias, and increased our participation in a
variety of diversity recruiting events. We piloted an internship program for female
university students in our Pune, India, technology center. The majority of the interns
from this pilot program ultimately joined Wolters Kluwer as full-time employees. We
also enhanced our health and well-being benefits to be more attractive to diverse
employees and candidates. In addition, our women's networks and diversity councils
within the divisions continued to evolve.
In an effort to be transparent, we are disclosing the ethnicity representation of our
employees in the United States, where it is legally permissible to collect this data.
Sustainability continued
← →
Wolters Kluwer 2021 Annual Report 45
DIVERSITY, EQUITY, INCLUSION,
ANDBELONGING CONTINUED
Diversity, equity, inclusion, and belonging 2021 2020 2019
Belonging score
1
72 – –
Gender ratio, % female
Total workforce 46% 47% 47%
Executive Board 50% 50% 50%
Division CEOs 50% 50% 75%
Managers
2
38% 38% 39%
Non-managers
3
47% 48% 49%
Race/ethnicity ratio, % of U.S. workforce
4
Asian 12.3% – –
Black or African American 6.8% – –
Hispanic or Latino 5.9% – –
White 70.0% – –
Other race or ethnicity
5
1.6% – –
Unknown or not provided 3.4% – –
1
Belonging score is based on a survey by an independent market-leading survey partner.
2
Managers are defined as employees having three or more direct reports.
3
Non-managers are defined as employees having less than three direct reports (0-1-2).
4
Races/ethnicities reported mirror those used for required federal reporting in the United States.
5
Other races/ethnicities include persons who identify as being of two or more races, Native American
orAlaska Native, Native Hawaiian or Other Pacific Islander.
CASE STUDY: WOMEN IN TECHNOLOGY
GRACE HOPPER CELEBRATION
Wolters Kluwer’s Digital eXperience
Group (DXG) participated in the
inaugural virtual gatherings of female
technologists in Europe, Middle East &
Africa in May 2021: the Grace Hopper
Celebration EMEA produced by the
AnitaB organization.
The Grace Hopper Celebration is
the world’s leading event for female
technologists, enabling them to
learn, network, and celebrate their
achievements and to engage with
organizations that view technology
innovation as a strategic imperative.
AnitaB is a non-profit social enterprise
that aims to bring the research and
career interests of women in computing
to the forefront and to highlight the
contributions of women intech.
For DXG, this was an important talent
recruitment event in which several
of our female software engineers
and other technologists took part,
generating exposure for Wolters
Kluwer as a global employer and
digital leader, while raising awareness
of our commitment to diversity.
Wolters Kluwer employees engaged in
positive conversations with conference
attendees and drove interest to the
careers section of our website.
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Why is this topic important?
As a digital company, cybersecurity and data privacy are important to the success of
our business. Customers rely on us to deliver our platforms and services safely and
reliably, while safeguarding their data. We are committed to protecting our employees’
and customers’ personal and professional information. We deliver on this promise by
keeping information secure and respecting the rights of individuals to protect their
personal information.
Our approach
Cybersecurity
Our global information security program is built on people, processes, and technology
collectively protecting the organization, our products, and customers. The program
has a three-tiered management structure, and is overseen by the Security Council,
comprising senior leadership from all our divisions and functional areas. The VP, Global
Information Security is responsible for oversight, management, and monitoring of
the program. We perform regular information security risk assessments to assess and
evaluate the effectiveness of the security program. The program is assessed annually by
an independent third party. In 2020, we adopted the National Institute of Standards and
Technology, Cybersecurity Framework (NIST-CSF) to expand the maturity-based model of
our cybersecurity program into a risk-based model.
To monitor, manage, and respond to potential security threats, we have a cross-functional
global information security incident response team that promptly analyzes potential
security incidents, to assess the impact, determine if any immediate risk exists, and take
immediate actions to mitigate any damage. We maintain a written global information
security program of policies, procedures, and controls aligned to NIST-CSF, ISO 27001,
and other equivalent standards. These govern the processing, storage, transmission,
and security of data.
In 2021, we further advanced our availability, resilience, and cybersecurity position by
rolling out new capabilities. We continued the ongoing security awareness through
phishing email tests and completed a NIST-CSF maturity assessment. Cybersecurity
training was completed by 99% of our active employees. A target for cybersecurity
maturity was included in the Executive Board remuneration in 2021. Our indexed
cybersecurity maturity score increased from 100.0 in 2020 to 105.6 in 2021. For more
information, see Remuneration Report.
We maintain sufficient controls to meet certification and attestation requirements for the
objectives stated in ISO 27001 and in SOC 1 and SOC 2 Type 2 for the security program. For
select systems, applications and services, we receive third-party audits of our compliance
with SOC 2 Type 2 annually.
Data privacy
We foster a culture that respects the data privacy rights of individuals by promoting data
privacy as a core company value. We strive to embed privacy across disciplines. We have
a comprehensive privacy program and a privacy governance organization responsible
for implementing policies and procedures that are designed to ensure compliance with
privacy laws and regulations. We have set the EU General Data Protection Regulation
(GDPR) as our global baseline reference and embed privacy rights in our policies, design,
processes, and training. We train our employees in the safeguarding and processing of
personal information and implement policies relating to the rights of individuals and
privacy by design. We inform our customers about our privacy practices in various ways,
including by means of a Privacy & Cookie notice on our global website and as part of our
marketing practices. We explain what personal information we collect, use, and disclose,
and inform customers of their rights and the choices they can make about the sharing
of their information.
Sustainability continued
CYBERSECURITY AND DATA PRIVACY
99%
of our active employees completed
cybersecurity and data privacy training
← →
Wolters Kluwer 2021 Annual Report 47
Our customers demand a strong and sound data privacy strategy and the secure storage,
handling, and processing of their data – always. A strong data privacy program is therefore
essential to protecting our company’s reputation and to our ability to offer expert
solutions. Our data privacy strategy consists of three focus areas:
• Accelerate the development, implementation, and orchestration of the global privacy
baseline across divisions and key countries to reflect regulatory developments;
• Enhance the level of maturity of the privacy processes; and
• Leverage and strengthen privacy awareness across the company.
In 2021, 99% of our employees completed global data privacy awareness training as part
of our Annual Compliance Training program. We hosted webinars on privacy by design and
provided specialized training on artificial intelligence and data privacy considerations.
Why is this topic important?
We are committed to protecting our people, environment, assets, and reputation. Good
governance is key to upholding our history of high ethical standards and improving our
company’s decision-making processes, and forms the foundation of our sustainability
strategy. Our ethics and compliance policies and procedures form the basis of our
governance framework.
Our approach
Our Code of Business Ethics forms the basis of our commitment to use high standards
of professional conduct and ethics in achieving our goals. Our Code of Business Ethics
is published on our internal communications website in various languages for all our
employees.
In 2021, we launched a new communication plan on our Code of Business Ethics, including
newsletters, case studies, and webinars. We also rolled out a new global Anti-Bribery
and Anti-Corruption Policy that serves as an extension of our Code of Business Ethics.
We implemented enhanced anti-bribery due diligence screening of our partners and
suppliers.
Annual Compliance Training
Our Annual Compliance Training consists of online courses on our Code of Business
Ethics, IT and cybersecurity, and data privacy. The training was provided to all active
employees globally in 2021 and requires employees to certify in writing that they have
read and understood our Code of Business Ethics. New hires receive the training as part
of their on-boarding. In 2021, a target for the Annual Compliance Training was included
in the Executive Board remuneration. See Remuneration Report for more information.
Confidential channels for raising concerns
We aim to create a culture where everyone feels confident to speak up. We encourage
our employees to report any concerns, including suspected violations of the Code of
Business Ethics or other company policies, to their manager, Human Resources, Legal,
or senior management. In addition, SpeakUp – our global reporting system operating
through an external provider – offers our employees a confidential channel available
24/7 for reporting concerns to the Ethics & Compliance Committee in their own language,
with the option to report anonymously where permitted by law. The Ethics & Compliance
Committee reviewed all concerns received in 2021 and took appropriate action. None of
these concerns had a material impact on the company.
CYBERSECURITY AND DATA PRIVACY
CONTINUED
ETHICS, COMPLIANCE, AND
GOVERNANCE
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Ethics and compliance 2021 2020 2019
% of employees who completed Annual Compliance Training 99% 99% 99%
Number of SpeakUp concerns 21 19 29
ETHICS, COMPLIANCE, AND
GOVERNANCE CONTINUED
Sustainability continued
We are committed to minimizing our impact on the environment and to addressing
the challenges of climate change as they relate to our own operations and our value
chain. As a people-centric business, our overall risk related to environmental matters is
relatively low, due to the nature of our business activities and the products and services
we offer. Nonetheless, we have for many years been committed to managing our use of
energy and natural resources in a responsible manner.
In recent times, we have seen climate change and environmental impact take on
increased importance for our employees, investors, customers, and other stakeholders.
This has led us to expand or accelerate programs and policies designed to reduce the
environmental impact of our operations. Our efforts to minimize our environmental
impact support the COP21 Paris Agreement of December 2016 and the last COP26
Glasgow Climate Pact of November 2021 on limiting global warming.
It is our ambition to align our practices and reporting with the guidelines recommended
by the Task Force on Climate-related Financial Disclosures (TCFD) and to set science-
based targets based on robust emissions data. During 2021, we enhanced our
environmental data collection and reporting processes by adding additional checks
and balances to ensure more reliable data. We explored setting targets for our
scope 1 and 2 emissions and scope 3 business travel emissions, which we have been
measuring and reporting on for many years. To achieve our ambition to set science-
based targets, we recently kicked off a project with external experts to help us assess
our complete greenhouse gas (GHG) footprint (including scope 1, 2, and all categories
of scope 3 emissions), evaluate our internally developed targets, support target setting
on additional scope 3 categories, and develop an abatement plan across all scopes.
This project will also include a gap assessment and roadmap to align with the TCFD
recommendations. Once we have determined our GHG footprint and established
a baseline based on robust and complete data, we intend to develop and publish
science-based targets and a roadmap of how to achieve them.
Throughout 2021, we continued to make progress on existing programs to reduce our
emissions, as described below.
Real estate rationalization
Our global Real Estate & Facilities team aims to create sustainable and appealing
workspaces for Wolters Kluwer employees, balancing the demand for space, attractive
design, and employee engagement with environmental impact and spend per square
meter. The team’s real estate rationalization program was stepped up at the start of
2020 in order to help reduce our office-linked consumption of energy and water and
our waste generation. Since 2020, sustainability certificates and green office standards
are part of our selection criteria for new offices. Our offices in Madrid and Barcelona
(Spain), Chennai (India), and Paris (France) are ISO 14001 certified.
During 2021, the total real estate footprint in square meters was reduced by 7% on an
organic basis, mainly by closing smaller offices.
ENVIRONMENTAL RESPONSIBILITY
← →
Wolters Kluwer 2021 Annual Report 49
ENVIRONMENTAL RESPONSIBILITY
CONTINUED
Environmental programs 2021 2020 2019
Real estate rationalization, % reduction in m
2
7% 7% –
Number of data centers closed 21 11 –
Number of on-premise servers decommissioned 2,838 – –
Migration of servers to the energy-efficient cloud hosting providers
Over the past decade, we have been migrating customer applications and internal
systems from on-premise servers to the cloud. Transitioning to the cloud brings not only
customer benefits in terms of improved cybersecurity protection and increased mobility,
availability, and standardization, it also helps reduce our carbon footprint. As our major
cloud providers operate on higher energy efficiency, and in themselves are pursuing
net zero emissions goals, we reduce our emissions by moving our applications to the
cloud and by consolidating and decommissioning our on-premise data centers. In the
selection of new cloud providers, carbon emission is one of the selection criteria.
As part of this program we closed 21 data centers and decommissioned 2,838 servers in
2021. A target for the migration or elimination of on-premise servers to the cloud was
included in the Executive Board remuneration in 2021.
→ See our Remuneration Report onpage 76
Business travel
Our business travel policy considers the needs of customers and other stakeholders
while encouraging employees to question the financial and environmental cost of their
travel compared to conducting virtual meetings. In 2020 and 2021, the global pandemic
severely restricted business mobility, such that our travel activity has been significantly
below historical levels. During the global pandemic, employees made much greater
use of virtual meetings and events to support our global operations. While we expect
travel activity to gradually return (as and when circumstances allow), we now expect
that we can hold travel-related emissions per full-time equivalent below 2019 levels by
encouraging greater use of virtual meetings and events.
We aim to protect people’s health and prosperity and contribute to a safe and just
society. Our overall risk with respect to social and human rights-related matters is
considered relatively low, due to the markets we operate in, the types of products and
services we deliver, our highly qualified employees, and the customers and suppliers
we deal with.
Protecting human rights
We support human rights as outlined in the Universal Declaration of Human Rights,
the core standards of the International Labor Organization, the United Nations Global
Compact, and the United Nations Guiding Principles on Business and Human Rights.
We strive to ensure that our own activities do not infringe on human rights. We expect
our business partners to support the same human rights standards by committing to
our Supplier Code of Conduct or an equivalent standard.
Our approach to human rights is emphasized in our Code of Business Ethics and
our Human Rights Policy, and includes topics, such as equal opportunity and non-
discrimination, health and safety, and fair pay. Feedback from our employees is
very important: we actively engage with works councils and participate in collective
bargaining where applicable. We monitor our employee compensation to ensure that we
provide a living wage to our employees.
SOCIAL RESPONSIBILITY
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Sustainability continued
We periodically compare our wages to the Global Living Wage Coalition (GLWC)
benchmark, in countries where such a benchmark is available. The comparison against
the GLWC’s 2020 benchmarks indicates that our employees are paid above the living
wage standard in countries covered by the Coalition.
Responsible supply chain
We expect our suppliers to meet the same social and environmental standards as we
are committed to. Through our comprehensive third-party risk management program,
we engage with our suppliers to ensure we have a responsible supply chain throughout
our operations. Suppliers who are managed through our central supplier database
are required to complete a due diligence questionnaire providing information on
their policies for data security and data privacy, human rights and labor conditions,
environmental footprint, and more. As part of this, we also request our suppliers to sign
our Supplier Code of Conduct or to have their own equivalent standard, committing
them to following applicable laws and regulations in areas such as human rights, labor
conditions, anti-bribery, and the environment. Based on the supplier risk classification,
this due diligence is repeated every one to three years. In 2021, the number of suppliers
that are centrally managed was increased and more suppliers were invited to the due
diligence questionnaire.
Responsible supply chain 2021 2020 2019
Number of suppliers that have signed our Supplier Code of
Conduct or have an equivalent standard 900 490 261
% of centrally managed suppliers that completed the due
diligence questionnaire 91% 98% 90%
Community involvement and volunteering
We provide knowledge, experience, resources, and funding to support local
communities. Our people, products, and services are available in areas of need to make
a sustainable, long-term positive impact. We support community efforts that are aligned
with our strategy and the UN Sustainable Development Goals we focus on, have a high
degree of local impact and create personal engagement amongst our employees. In
2021, our businesses engaged in over 100 community projects. One of these products
provided over 35,000 clinicians in resource limited areas with free access to UpToDate,
training, and support.
Community contributions
in thousands of euros 2021 2020 2019
Community contributions in cash 1,508 1,136 759
Community contributions in kind 3,586 2,906 813
Management cost related to community contributions 43 35 35
Total 5,137 4,077 1,607
Our Volunteer Day Off program offers all employees up to one day off each year to
spend supporting eligible non-profit organizations. In 2021, 292 days were spent by
employees volunteering under the program.
Our Green is Green program is a voluntary network of employees who champion
environmentally-sound practices. With the majority of offices closed for most of 2021
due to the global pandemic, the Green is Green network focused on raising awareness
by organizing and participating in virtual events, including an all-employee webinar on
the prevention of global warming. Also, several teams around the world participated in
tree planting activities and joined World Cleanup Day by removing litter and waste from
environmental habitats.
SOCIAL RESPONSIBILITY CONTINUED
292
days were spent by employees volunteering
← →
Wolters Kluwer 2021 Annual Report 51
We disclose non-financial information as required under the Non-Financial Information
Decree (Besluit bekendmaking niet-financiële informatie) and section 2:391(1) of the
Dutch Civil Code. As such, we have issued a non-financial information statement.
The table below provides an overview of the relevant sections per topic.
Responsible supplychain Sub-topic Relevant sections of annual report
Business
model
Description of the company’s
businessmodel
Business Model and Strategy
Stakeholders and Value Creation
Environmental matters Description of policies
Outcome of policies
How risks are managed
Non-financial key performance
indicators:
• % revenues from digital and services;
• Number of suppliers that
signedourSupplier CodeofConduct
orhavetheir ownequivalent;
• Real estate rationalization percentage
reduction; and
• Number of servers decommissioned.
Environmental Responsibility
Social Responsibility/Responsible
supply chain
Risk Management/Operational
resilience
Materiality
Social and employee
matters
Description of policies
Outcome of policies
How risks are managed
Non-financial key performance
indicators:
• Percentage of female diversity;
• Percentage of ethnic
diversity (U.S.);
• Employee engagement score;
• Employee belonging score;
• Employee turnover rate; and
• Community contributions.
Employee Engagement and
TalentManagement
Diversity, Equity, Inclusion,
and Belonging
Social Responsibility
Risk Management/People and
organization
Materiality
Human rights matters Description of policies
Outcome of policies
How risks are managed
Non-financial key performance
indicators:
• Number of suppliers that
signedourSupplier CodeofConduct
orhavetheir ownequivalent; and
• Living wage benchmark.
Social Responsibility
Materiality
Risk Management/Regulatory
andcompliance
Anti-corruption and
bribery matters
Description of policies
Outcome of policies
How risks are managed
Non-financial key performance
indicators:
• Percentage of employees that
completed the AnnualCompliance
Training;
• Number of SpeakUp concerns; and
• Number of suppliers that signed
ourSupplier CodeofConduct
orhavetheir own equivalent.
Ethics, Compliance, and Governance
Social Responsibility/Responsible
supply chain
Materiality
Risk Management/Corruption
andbribery
NONFINANCIAL INFORMATION
STATEMENT
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Sustainability continued
We disclose information on how and to what extent our activities are associated with
economic activities that qualify as environmentally sustainable in accordance with
Regulation of the European Union 2020/852 (Taxonomy Regulation). The Taxonomy
Regulation lays out a classification system to define environmentally sustainable
economic activities based on technical screening criteria. During 2021, we reviewed our
economic activities against the technical screening criteria for economic activities with
significant contribution to climate change mitigation and adaptation (as described in
Annex I and Annex II of the Delegated Act supplementing the Taxonomy Regulation), to
determine whether we have any Taxonomy-eligible activities. After careful review of the
technical screening criteria, we have concluded that none of the economic activities
carried out by Wolters Kluwer can be considered as eligible activity under the Taxonomy
Regulation.
EU TAXONOMY REGULATION
DISCLOSURE
Governance
SECTION OVERVIEW
→ Corporate Governance page 54
→ Risk Management page 58
→ Statements by the Executive Board page 69
→ Executive Board and Supervisory Board
page 70
→ Report of the Supervisory Board page 72
→ Remuneration Report page 76
← →
Wolters Kluwer 2021 Annual Report 53
This chapter provides an outline of the broad corporate governance
structure of the company. Wolters Kluwer N.V., a publicly listed
company organized under Dutch law, is the parent company of the
Wolters Kluwer group. The corporate governance structure of the
company is based on the company’s Articles of Association, the Dutch
Civil Code, the Dutch Corporate Governance Code (the ‘Corporate
Governance Code’), and all applicable laws and regulations.
54 Wolters Kluwer 2021 Annual Report
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Corporate Governance
INTRODUCTION
The company has a two-tier board
structure consisting of an Executive
Board and a Supervisory Board. The
Executive Board and the Supervisory
Board are responsible for the corporate
governance structure. This Corporate
Governance chapter includes the
corporate governance statement as
specified in section 2a of the Decree
with respect to the contents of the
annual management report (Besluit
inhoud bestuursverslag). Wolters Kluwer
complies with all Principles and Best
Practice Provisions of the Corporate
Governance Code, unless stipulated
otherwise in this chapter. Potential
future material corporate developments
might after thoughtful considerations,
justify deviations from specific topics
and recommendations as included in
the Corporate Governance Code, which
will always be clearly explained.
The Dutch Corporate Governance Code
is available at www.mccg.nl
Executive Board
The Executive Board consists of the
CEO and CFO and is entrusted with the
management and day-to-day operations
of the company. The Executive Board is
responsible for achieving the company’s
aims, the strategy and associated risk
profile, the development of results, and
sustainability. The responsibilities are
set out in the By-Laws of the Executive
Board, which have been approved by
the Supervisory Board. In fulfilling
its management responsibilities, the
Executive Board takes into account
the interests of the company and its
affiliated business, as well as the relevant
interests of the company’s stakeholders.
The members of the Executive Board
are appointed by the General Meeting
of Shareholders. The full procedure for
appointment and dismissal of members
of the Executive Board is explained in
the company’s Articles of Association.
Information on the members of the
Executive Board is provided in the section
Executive Board and Supervisory Board.
→ See our Executive Board and Supervisory
Board onpage 70
Remuneration
The remuneration of the Executive
Board is determined by the Supervisory
Board based on the remuneration
policy adopted by the General Meeting
of Shareholders. In line with Dutch
law, which implements the amended
European Shareholder Rights Directive,
the Supervisory Board proposed an
amended remuneration policy to the 2021
Annual General Meeting of Shareholders.
The amended policy was adopted by
a majority of 97% of the share capital
represented. The Supervisory Board is
responsible for the execution of the
remuneration policy, based on the
advice of the Selection and Remuneration
Committee. Detailed information
about the remuneration policy and its
application in 2021 can be found in the
Remuneration Report.
Under the Long-Term Incentive Plan
(LTIP), Executive Board members can
earn ordinary shares after a vesting
period of three years, subject to clear and
objective three-year performance criteria
established in advance. In the amended
remuneration policy, the Executive Board
members are required, in line with
Best Practice Provision 3.1.2 (vi) of the
Corporate Governance Code, to hold the
earned shares (net of taxes) after vesting
for two more years (starting with the 2021-
2023 performance period). However, if an
Executive Board member is eligible for
a company-sponsored deferral program
and chooses to participate by deferring
LTIP proceeds upon vesting, then such
Executive Board member will be required
to hold the remaining vested shares
or a minimum of 50% of vested shares
(net of taxes), whichever is higher, for a
two-year period. For the performance
periods up to and including the 2020-2022
cycle, Executive Board members are not
required to retain the shares for a period
of two years post vesting.
Term of appointment
Since the introduction of the first
Corporate Governance Code in 2004,
Executive Board members are appointed
for a period of four years, after which
reappointment is possible, in line
with Best Practice Provision 2.2.1 of the
Corporate Governance Code. The existing
contract with Ms. McKinstry, who was
appointed before the introduction of the
first Corporate Governance Code and has
an employment contract for an indefinite
period, will remain honored.
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Wolters Kluwer 2021 Annual Report 55
Severance arrangements
With respect to future Executive Board
appointments, the company will, as a
policy, comply with Best Practice Provision
3.2.3 of the Corporate Governance Code
regarding the maximum severance
remuneration in the event of dismissal.
In line with this Best Practice Provision,
the contract with Mr. Entricken contains
a severance payment of one year’s base
salary. However, the company will honor
the existing contract with Ms. McKinstry
who was appointed before the
introduction of the first Dutch Corporate
Governance Code.
Change of control
The employment contracts of the
Executive Board members and a small
group of senior executives contain
stipulations with respect to a change
of control of the company. According to
these stipulations, in the case of a change
of control, the relevant persons will
receive 100% of the number of conditional
rights on shares awarded to them with
respect to pending Long-Term Incentive
Plans of which the performance periods
have not yet ended. In addition, they are
entitled to a cash severance payment if
their employment agreements would end
following a change of control.
Supervisory Board
The Supervisory Board supervises the
policies of the Executive Board and
the general affairs of the company
and its enterprise, taking into
account the relevant interests of the
company’s stakeholders, and advises
the Executive Board. The supervision
includes the effectiveness of the
company’s internal risk management
and control systems and the integrity
and quality of the financial reporting.
The Supervisory Board also has due
regard for sustainability matters. In
addition, certain resolutions of the
Executive Board must be approved
by the Supervisory Board.
These resolutions are listed in the
By-Laws of the Supervisory Board
and include:
• Transactions in which there are
conflicts of interest with Executive
Board members that are of material
significance for the company or the
Executive Board member;
• Acquisitions or divestments of which
the value is at least equal to 1% of the
consolidated revenues of the company;
• The issuance of new shares or granting
of rights to subscribe for shares; and
• The issuance of bonds or other external
financing of which the value exceeds
2.5% of annual consolidated revenues.
The responsibilities of the Supervisory
Board are set out in the By-Laws of the
Supervisory Board.
Appointment and composition
The members of the Supervisory Board
are appointed by the General Meeting
of Shareholders. The full procedure of
appointment and dismissal of Supervisory
Board members is explained in the
company’s Articles of Association. The
current composition of the Supervisory
Board can be found in the sections
Executive Board and Supervisory Board,
and Report of the Supervisory Board. The
composition of the Supervisory Board
will always be such that the members are
able to act critically and independently
of one another, the Executive Board, and
any particular interests. As a policy, the
Supervisory Board in principle aims for
all of its members to be independent
of the company, which is currently the
case. The independence of Supervisory
Board members is monitored on an
ongoing basis, based on the criteria of
independence as set out in Best Practice
Provisions 2.1.7 and 2.1.8 of the Corporate
Governance Code and Clause 1.5 of the
Supervisory Board By-Laws.
The number of supervisory board
memberships of all Supervisory Board
members is limited to such extent
that the proper performance of their
duties is assured. The number of board
memberships of all Supervisory Board
members is currently in compliance with
the maximum number of board seats
allowed under Dutch law.
Further information on the Supervisory
Board members can be found in
the section Executive Board and
Supervisory Board.
→ See Executive Board and Supervisory Board
onpage 70
Provision of information
We consider it important that the
Supervisory Board members are well-
informed about the business and
operations of the company. The Chair
of the Supervisory Board, the CEO and
Chair of the Executive Board, and the
Company Secretary monitor, on an
ongoing basis, that the Supervisory
Board receives adequate information. In
addition, the CEO sends written updates
to the Supervisory Board about important
events. The Chair of the Supervisory
Board and the CEO hold several meetings
and calls per year outside of formal
meetings, to discuss the course of events
at the company.
The Supervisory Board also has direct
contact with layers of management
below Executive Board level. Operating
managers, including divisional CEOs,
are regularly invited to present to the
Supervisory Board on the operations
in general and business development.
In addition, the company facilitates visits
to business units and individual meetings
with staff and line managers. Various
members of staff also attend Audit
Committee meetings.
56 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Insider Dealing Policy
The members of the Executive Board
and the Supervisory Board are bound
to the Wolters Kluwer Insider Dealing
Policy and are not allowed to trade in
Wolters Kluwer securities when they
have inside information or during
closed periods. These periods begin
either on the first business day of the
quarter, or 30 calendar days prior to the
publication of Wolters Kluwer’s annual
results, half-year results, first-quarter
trading update, and nine-month trading
update, whichever is earlier. The day after
the announcement of these results or
updates, the Board members can trade
again, with prior approval of the securities
compliance officer, which will be granted
if they do not have inside information at
that point in time.
Culture
Our purpose is to help professionals
deliver deep impact when it matters
most. The Executive Board has adopted
company values that serve as guidelines
for our employees and are at the heart
of the company’s future success. Our
values propel us to put the customer at
the center of everything we do, honor our
commitment to continuous improvement
and innovation, aim high and deliver the
right results, and most importantly: win as
a team. Our values are a key part of our
company culture and are also integrated
into our Code of Business Ethics, that
sets forth the ethical standards that are
the basis for our decisions and actions,
and for achieving our goals. Our Code of
Business Ethics provides more specific
guidance on how we live our values. The
Executive Board and the Supervisory
Board are committed to ensure high
standards of ethics and integrity and
promote openness through our SpeakUp
program. More information on our Code of
Business Ethics and SpeakUp program can
be found in the chapter Sustainability.
→ Read more about our Code of Business
Ethics onpage 47
Risk management
The Executive Board is responsible
for identifying and managing the risks
associated with the company’s strategy
and activities and is supervised by the
Supervisory Board. The Audit Committee
undertakes preparatory work for the
Supervisory Board in this area. Wolters
Kluwer has implemented internal risk
management and control systems which
are embedded in the operations of the
businesses to identify significant risks
to which the company is exposed, and
to enable the effective management of
those risks. The aim of the systems is to
provide a reasonable level of assurance
on the reliability of financial reporting.
For a detailed description of the risks
and the internal risk management and
control systems, reference is made to
Risk Management.
→ See Risk Management onpage 58
Environmental, Social, and
Governance matters
The Executive Board and the Supervisory
Board are committed to Wolters Kluwer’s
sustainability strategy. Throughout
the annual report, the separate 2021
Environmental, Social, and Governance
Data Overview, and a dedicated section
on our website, we report on goals and
progress of our sustainability activities
and accomplishments.
The Environmental, Social, and
Governance Data Overview is available at
www.wolterskluwer.com/en/investors/
financials/annual-reports
Shareholders and the General
Meeting of Shareholders
At least once a year, Wolters Kluwer holds
a General Meeting of Shareholders. The
agenda of the Annual General Meeting of
Shareholders shall in each case contain
the report of the Executive Board, the
report of the Supervisory Board, the
remuneration report, the adoption
of the financial statements, and the
proposal to distribute dividends or other
distributions. Resolutions to release the
members of the Executive Board and the
Supervisory Board from liability for their
respective duties is voted on separately.
Corporate Governance continued
Committees of the Supervisory Board
The Supervisory Board has two standing
committees: the Audit Committee and the
Selection and Remuneration Committee.
The responsibilities of these committees
can be found in their respective Terms
of Reference. A summary of the main
activities of these committees, as well
as the composition, can be found in the
Report of the Supervisory Board.
Remuneration
The remuneration of the Supervisory
Board members is determined by
the General Meeting of Shareholders.
The remuneration does not depend
on the results of the company.
The Supervisory Board members do not
receive shares or stock options by way of
remuneration, nor are they granted loans.
The remuneration policy was adopted
by the General Meeting of Shareholders
in 2020. For more information on
remuneration, see Remuneration Report.
→ See Remuneration Report onpage 76
Diversity
The company’s diversity policy for the
Supervisory Board, Executive Board, and
division CEOs is included as Annex to the
Supervisory Board By-Laws. Elements of
diversity include nationality, gender, age,
and expertise. The target is to have a
representation of at least 30% male and at
least 30% female, both in the Supervisory
Board and the Executive Board, and at the
division CEO level.
Currently, 43% of the Supervisory Board
members are female, 50% of the Executive
Board members are female, and 50% of
the operating division CEOs are female.
The Supervisory Board composition also
comprises expertise within the broad
information industry as well as specific
market segments in which the company
operates. Four nationalities are represented
on the Supervisory Board. The composition
of the Executive Board and the Supervisory
Board is in line with our diversity policy,
Dutch law, and the competency, skills,
and experience requirements.
→ See our Executive Board and Supervisory
Board onpage 70
50%
of the Executive Board members are female
← →
Wolters Kluwer 2021 Annual Report 57
In 2021, shareholders with voting rights for
approximately 79% of the issued capital
of the company were represented at the
Annual General Meeting of Shareholders.
Shareholders who alone or jointly
represent at least half a percent (0.5%) of
the issued capital of Wolters Kluwer shall
have the right to request the Executive
Board or Supervisory Board to put items
on the agenda of a General Meeting of
Shareholders, provided that such requests
are made in writing at least 60 days
before a General Meeting of Shareholders.
Amendment Articles of Association
A resolution to amend the Articles of
Association may only be passed by the
General Meeting of Shareholders at the
proposal of the Executive Board, subject
to the approval of the Supervisory Board.
The most recent amendment of the
Articles of Association took place in 2016.
Issuance of shares
The Articles of Association of the company
determine that shares may be issued at
the proposal of the Executive Board and
by virtue of a resolution of the General
Meeting of Shareholders, subject to
designation of the Executive Board by the
General Meeting of Shareholders. At the
Annual General Meeting of Shareholders
of April 22, 2021, the Executive Board
was granted the authority for a period
of 18 months to issue new shares, with
exclusion of pre-emptive rights, subject
to approval of the Supervisory Board.
The authorization is limited to a maximum
of 10% of the issued capital on the date
of the meeting.
Acquisition of shares in the company
Acquisition of shares in the company
(share buybacks) may only be effected
after authorization by the General Meeting
of Shareholders, and while respecting the
restrictions imposed by the Articles of
Association of the company. At the Annual
General Meeting of Shareholders of
April 22, 2021, the authorization to acquire
shares in the company was granted to the
Executive Board for a period of 18 months.
The authorization is limited to a maximum
of 10% of the issued capital on the date
of the meeting. On December 31, 2021,
Wolters Kluwer N.V. held 4,323,699 shares
in the company (1.65% interest).
Preference shares
Wolters Kluwer N.V. and the Wolters
Kluwer Preference Shares Foundation
(the Foundation) have concluded an
agreement based on which preference
shares can be taken by the Foundation.
This option on preference shares is
at present a measure that could be
considered as a potential protection
at Wolters Kluwer against exercising
influence by a third party on the policy
of the company without the consent of
the Executive Board and the Supervisory
Board, including events that could
threaten the strategy, continuity,
independence, identity, or coherence
between the activities of the company.
The Foundation is entitled to exercise
the option on preference shares in such
a way that the number of preference
shares taken will be no more than 100%
of the number of issued and outstanding
ordinary shares at the time of exercise.
Among others by the exercise of the
option on the preference shares by the
Foundation, the Executive Board and
the Supervisory Board will have the
possibility to determine their position
with respect to, for example, a party
making a bid on the shares of Wolters
Kluwer and its plans, or with respect to
a third party that otherwise wishes to
exercise decisive influence, and enables
the Boards to examine and implement
alternatives. All members of the Board
of the Foundation are independent from
the company.
→ See the Report of the Wolters Kluwer
Preference Shares Foundation onpage 215
Information pursuant to Decree
Clause 10 Take-over Directive
The information specified in both
clause 10 of the Take-over Directive and
the Decree, which came into force on
December 31, 2006 (Decree Clause 10
Take-over Directive), can be found in this
chapter and in Wolters Kluwer Shares
and Bonds.
→ See Wolters Kluwer Shares and Bonds
onpage 216
Legal structure
The ultimate parent company of
the Wolters Kluwer group is Wolters
Kluwer N.V. In 2002, Wolters Kluwer N.V.
abolished the voluntary application of
the structure regime (structuurregime).
As a consequence, the structure regime
became applicable to Wolters Kluwer
Holding Nederland B.V., which is the
parent company of the Dutch operating
subsidiaries. Wolters Kluwer International
Holding B.V. is the direct or indirect parent
company of the operating subsidiaries
outside of the Netherlands.
For additional information and documents
related to the Corporate Governance
structure of Wolters Kluwer, including
the Articles of Association, By-Laws of
the Executive Board, By-Laws of the
Supervisory Board, Terms of Reference of
the Audit Committee, Terms of Reference
of the Selection and Remuneration
Committee, and the Remuneration Policy
for the Supervisory Board, please visit
the Corporate Governance section on our
website.
The Articles of Association, By-Laws
of the Executive Board, By-Laws of
the Supervisory Board, Terms of
Reference of the Audit Committee,
Terms of Reference of the Selection
and Remuneration Committee, and the
Remuneration Policy for the Supervisory
Board are available at
www.wolterskluwer.com/en/investors/
governance/policies-and-articles
This section provides an overview of Wolters Kluwer’s approach
to risk management, the main risks facing the company and the
organization, as well as processes and actions to identify, assess,
and mitigate these risks.
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Risk Management
Responsibility for risk management
The Executive Board is responsible for
overseeing risk management and internal
controls within Wolters Kluwer. The CEO is
responsible for Strategic and Operational
risks, and the CFO is responsible for Legal
& Compliance and Financial & Financial
Reporting risks. See page 60 for an
overview of these risks.
The company has implemented internal
risk management and control processes,
which are generally integrated into the
operations of the businesses. The aim is
to timely identify significant risks to which
the company is exposed, to enable the
effective management of those risks, and
to provide a reasonable level of assurance
on the reliability of the financial reporting
of the Wolters Kluwer group.
The Executive Board reviews an annual
assessment of pertinent risks and
mitigating actions and diligently evaluates
those outcomes against the defined
risk appetite. Based on this assessment,
the Executive Board reviews the design
and effectiveness of the internal risk
management and control systems, taking
into consideration the company’s risk
appetite and the observations and reports
of internal assurance functions and the
Corporate Risk Committee. The internal
risk management and control systems
cannot provide absolute assurance
regarding the achievement of the
company’s objectives or the reliability
of the financial reporting, or entirely
prevent material errors, losses, fraud,
and violation of applicable laws and
regulations.
Managing risks is integrated into the
conduct of business of our divisions and
operating entities, supported by several
staff functions. The Executive Board
is informed by division management
about risks as part of the regular
planning and reporting cycles on
divisional and operational entity levels.
The Corporate Risk Committee, consisting
of representatives of various functional
departments, meets periodically and
monitors material risks and remediating
actions with a focus on company-
wide, non-business specific risks.
This committee also oversees the
mitigation of certain risks that emerge
and require a centralized approach.
Risk management and control
systems
The company has an Internal Control
Framework for financial reporting (ICF),
based on the COSO (Committee of
Sponsoring Organizations of the Treadway
Commission) 2013 framework, which is
designed to provide reasonable assurance
that the results of the business are
accurately reflected in its internal and
external financial reporting.
The ICF is deployed by the operating
business units and central functions: the
Corporate Office, Global Business Services,
and the Digital eXperience Group, and
reviewed and tested by internal control
officers. An annual risk assessment
program for financial and IT general
control risks determines the scope and
controls to be tested. As part of that
scope, key controls are tested annually.
The results of testing are reported to the
Executive Board, the Audit Committee,
and internal auditors on a quarterly
basis. Where needed, remedial action
plans are designed and implemented to
address significant risks as derived from
internal control testing, and internal and
external audits.
Internal audit and risk management
functions
Internal auditing is an independent
and objective assurance and consulting
activity that is guided by a philosophy of
adding value to further improve, where
deemed fit for purpose, the maturity of
operations of Wolters Kluwer. It assists in
accomplishing its objectives by bringing
a systematic and disciplined approach to
evaluate and improve the effectiveness
of the organization’s governance, risk
management, and internal controls.
The global Internal Audit department
works according to an audit plan which is
discussed with the external auditors, the
Executive Board, and the Audit Committee.
The plan is approved by the Executive
Board and the Supervisory Board. The
audit plan is based on risk assessments
and focuses on strategy execution,
financial reporting risks, and operational
risks, including IT-related risks.
The global Risk Management department
facilitates risk prevention, protection,
response, and recovery programs via
procurement of insurance; incident and
related claims management, and business
continuity management; loss control
programs, and other initiatives to mitigate
specific risks. The Internal Audit, Internal
Control, Group Accounting & Reporting,
Law and Compliance, Treasury, Tax, and
Risk Management departments provide
quarterly reports to the Audit Committee
and the Executive Board.
← →
Wolters Kluwer 2021 Annual Report 59
Risk categories and risk appetite
The following pages outline the 22 main
risks the company has assessed up to
the date of this annual report. It is not
the intention to provide an exhaustive
description of all possible risks. There
may be risks that are not yet known or
the company has not yet fully assessed.
It is also possible that existing risks
have been assessed as not significant,
which could in the future develop into a
material exposure for the company and
have a significant adverse impact on its
business. The company’s risk management
and internal control systems have been
designed to identify, mitigate, and respond
to risks in a timely manner. However,
absolute assurance cannot be attained.
The risk appetite of the main risks is
qualified as balanced, conservative, or
minimal. To achieve its strategic goals,
Wolters Kluwer is prepared to take duly
balanced risks in certain strategic areas,
such as acquisitions, expansion in high-
growth countries, and the launch of new
innovative products. With respect to
other risk categories, the approach of the
company towards risks could be qualified
as conservative, and as minimal for
regulatory and compliance and financial
reporting risks. The company carefully
weighs risks against potential rewards.
Actions to prevent and mitigate risks and
uncertainties are summarized for each
of the individual risks on the following
pages. Wolters Kluwer’s risk profile has
been impacted by the global pandemic
that has ramifications across many risk
areas. Although this does not lead to
major changes in risk ratings, there are
shifts in focus within existing risks, mainly
by increasing impact and/or probability.
STRATEGIC
• Economy and markets
• Products
• Competition
• Trends impacting business
models
• Mergers and acquisitions
• Divestments
OPERATIONAL
• IT and cybersecurity
• Supply chain, technological
developments, and projects
• People and organization
• Fraud
• Operational resilience
• Brand and reputation
LEGAL & COMPLIANCE
• Regulatory and compliance
• Corruption and bribery
• Contractual compliance
• Intellectual property
protection
• Third-party claims
• Legislative developments
FINANCIAL & FINANCIAL
REPORTING
• Treasury
• Post-employment benefits
• Taxes
• Misstatements, accounting
estimates and judgments,
and reliability of systems
STRATEGIC RISKS
Risk description and impact Mitigation
Economy and markets
Global and regional economic conditions
may have a negative effect on several
products. The impact of these conditions
on the overall portfolio will depend
on the severity of the economic issue,
the countries or regions affected, and
potential government responses. Our
more cyclical products, which include
training activities, advertising, books
(Health/Legal & Regulatory), and lending-
related and corporate formation-related
transactions (Governance, Risk &
Compliance), may be especially sensitive
to economic conditions.
In 2021, the company continued the progress to shift the company’s portfolio towards
digital and high-growth businesses. Recurring revenues represent 80% of the company’s
consolidated revenues, reinforcing the company’s resilience. Furthermore, revenues
come from a variety of product types, customer segments, and geographic areas,
bringing benefits of diversification. We also monitor our revenue exposure by geography
– the U.S. is our largest market and Europe our second largest. Businesses that are
sensitive to cyclical, transactional, or economic trends use cost optimization levers to
defend margin as revenues shrink. We continue to focus on retention, cross-sell, upsell,
defensive pricing, and pivoting new sales efforts to stronger industries and customer
sub-segments.
We continue to reshape the business through innovation, product development, and
strategic acquisitions and divestments. The company monitors relevant political and
macroeconomic issues (e.g., global pandemic, Brexit, energy markets) in terms of risks
and opportunities.
Products
The rate of decline in our legacy print
revenues (8% of total revenues),
which includes books and print-based
subscriptions, may accelerate. Our print
revenues are mainly in Health and Legal
& Regulatory, with a small amount in Tax
& Accounting.
The company mitigates the decline of print-related revenues by migrating customers
from print to digital products, retention, and upselling opportunities. In addition,
the company continues to assess its portfolio, leading to the divestment of non-
core businesses being offset by acquisitions in growth markets and segments
and organically-driven revenue growth.
Competition
Wolters Kluwer faces competitive
challenges from existing and new
competitors, including free availability
of some sources of information.
The company’s offerings are varied and very specialized, across multiple customer
segments – which is a natural defense against the larger existing or new potential
competitors. Strategically, we continue to invest 8%-10% of revenues annually in product
development to expand offerings in expert solutions and services in order to drive our
competitive positioning and support innovation and growth, as well as the ongoing
transformation of our information products.
60 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Risk Management continued
STRATEGIC RISKS CONTINUED
Risk description and impact Mitigation
Trends impacting business models
Technological, cultural, or demographic
trends might affect current business
models. These developments could
include disruptive technologies, such
as the impact of artificial intelligence
on the activities of professionals. In
addition, new generations of professional
customers might expect a different
approach and different tools and
solutions to support them in their work.
The company actively monitors trends in the markets in which the company operates
and that might affect its business in the future. We focus on evolving customer needs by
closely monitoring net promoter scores, actively engaging via customer advisory boards,
hosting and participating in leading industry conferences, and analyzing competitive
offerings. Further, we have expanded the use of advanced technologies and invested
in cloud readiness/migration throughout the company via our technology centers
of excellence, Global Innovation Awards program, and division-specific initiatives.
Deep understanding of our customers, enabled by strong advanced technological
capabilities, continues to allow the company to transform its portfolio of information,
expert solutions, and services and ensures alignment with longer-term trends. Finally,
maintaining a diverse and technically skilled workforce with a good understanding
of current and future customer needs also contributes to safeguarding future value
creation by the company.
Mergers and acquisitions
Risks with respect to acquisitions
primarily relate to the integration of the
acquired companies, changing economic
circumstances, customer retention,
controls surrounding their information
security and supply chain, competitive
dynamics, retaining key personnel,
and realization of projected sales
and synergies.
The company has strict strategic and financial criteria for acquiring new businesses.
The company’s investment decisions are very selective: the focus is on businesses with
proven track records (relatively lower risk) that are relatively predictable. We conduct
broad-based due diligence of acquisitions, using internal expertise and external due
diligence professionals. We also maintain relationships with preferred due diligence
suppliers who have deep expertise in our targeted sectors, and incorporate lessons
learned from prior transactions. We are incorporating more focus on privacy and IT
security diligence, as well as more standardized IT/software diligence external support.
The company uses contractual indemnities and warranties from the seller, and deal
structures to retain management and assure alignment between the purchase price
and the performance of the acquired company.
Generally, acquisitions are expected to be accretive to adjusted earnings per share
in year one and cover the company’s weighted average cost of capital within three
to five years. Post-merger integration plans are developed with assistance from the
company’s internal corporate integration team. The Executive Board approves an
acquisition integration plan prior to completing an acquisition, which is actively
managed and monitored after completion. In addition, capital allocation to mergers
and acquisitions is balanced across divisions and geographies.
Divestments
Execution of the company’s strategy
is also supported by the divestment
of non-core businesses. The ability
to successfully divest operations can
depend on economic and market
circumstances, competitive dynamics,
contractual obligations, shared costs
within the group, the ability of the
business to operate stand-alone,
retention of key personnel, the buyer’s
ability to realize synergies, and
other factors.
To mitigate risks related to material divestments, the company prepares carve-out
financials, usually carries out a vendor due diligence, and engages external experts
for such due diligence and execution of the transaction.
← →
Wolters Kluwer 2021 Annual Report 61
OPERATIONAL RISKS
Risk description and impact Mitigation
IT and cybersecurity
Wolters Kluwer is exposed to IT-related
risks and cyber threats that could
affect the IT infrastructure and system
availability, applications availability,
and the confidentiality and integrity
of information.
The company takes active steps to mitigate IT and cybersecurity risks by increasing
the investment in a globally managed cybersecurity program to effectively manage
execution of project plans and provide management accountability at various levels.
The company adopted the National Institute of Standards and Technology, Cyber
Security Framework (NIST-CSF) to expand the maturity-based model of our cybersecurity
program into a risk-based model. Further, we matured our controls for industry
requirements by continuously assessing them against industry compliance programs,
i.e., SOC 2 and ISO requirements. Also, we further strengthened IT disaster recovery and
updated our incident management capabilities to account for cyberattacks. The Annual
Compliance Training program for all employees was again provided in 2021, consisting
of policy education and online security modules. We have now updated and aligned all
local policies/standards with global policies.
We implemented a mobile device management solution to protect our mobile devices
and are actively implementing multi-factor authentication to all users accessing
our main internal IT systems. We completed SOC 2 assessments on our cloud-
managed services and conducted risk evaluations for all our critical vendors through
questionnaires, and online and on-site assessments. Further, we improved network
resilience with the implementation of the network peering point, and customer service
availability with the implementation of an additional cloud-based solution.
IT General Controls form an integral part of Wolters Kluwer’s Internal Control Framework
and are aligned with the Global Information Security Policy. Controls over data and
security programs are periodically tested to ensure confidential and sensitive data are
adequately protected.
The company will continue to strengthen its security and incident response plans
throughout 2022. IT and cybersecurity are standing Corporate Risk Committee
agenda items.
Supply chain, technological
developments, and projects
Our businesses could be adversely
affected by the dependency on
our supply chain, including but not
limited to parties delivering cloud
services, outsourced and offshored
data center services, software as a
service, software development, and
maintenance activities, including
back-office transactions processing.
Implementing new technology-related
initiatives for delivering our products
and services, as well as achieving
cost efficiencies through technology/
IT sourcing initiatives, is inherently
complex and is subjected to many
execution risks during the development
and implementation phases.
To mitigate supply chain risks, the company applies third-party risk management
criteria when choosing external partners and ensures detailed operating and
service agreements with these providers. The procurement center of excellence and
our third-party risk management function support our sourcing and procurement
operations. This includes a sourcing and procurement-wide enterprise solution and
streamlined processes to further centralize our supplier onboarding and third-party
risk management activities. We monitor progress and performance of key vendors
during the term of agreement by oversight boards and program management teams.
Centrally managed suppliers are subject to due diligence screening and requested to
sign the Wolters Kluwer Supplier Code of Conduct or provide an equivalent standard.
Over the past years, we have set a roadmap for consolidation and simplification of IT
infrastructure and for implementing more service capabilities to support customers.
62 Wolters Kluwer 2021 Annual Report
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Risk Management continued
OPERATIONAL RISKS CONTINUED
Risk description and impact Mitigation
Supply chain, technological
developments, and projects
continued
In 2021, with the support of a top tier consulting firm, we developed a best-in-class
supply chain risk management design. The design addresses a consistent and compliant
intake process; centralization of third-party data, including service and geographic
information; the assessment of risk prior to contracting, including a formalized
issue management process; tailored contracting to manage customer expectations;
monitoring of service delivery against agreements; and comprehensive population
and third-party level reporting to business leadership, with the ability to respond
quickly to specific inquiries. In 2022, we start to implement the new design, which
is a multi-year project.
In response to market developments caused by the global pandemic (e.g., U.S. vaccine
mandates), geopolitical risks, and cybersecurity threats (e.g., Log4j) our priority is
to ensure business continuity and legal compliance. We are using different types
of supplier base segmentations based on the supplier risk profile and the likelihood
of the risk to occur. To quickly inform business leadership of the most accurate
information, we created specific dashboards that are refreshed daily to share major
insights and exposures.
The Corporate Quality Assurance team aims to improve the success of large change
initiatives by providing assurance that key projects can move to the next stage of
development or implementation, and by transferring lessons learned from one project
to another. This team also supports standardization of change methodologies and
frameworks.
People and organization
The success of the company is highly
dependent on its ability to attract,
develop, and retain talent with the skills
and experience to deliver on current and
future requirements.
The company continues to prioritize the attraction, development, and retention of the
talent we need to support our success. With our new market-leading cloud solutions
in place, we are creating an increasingly enhanced experience for candidates and
employees as we drive efficiency and expand our analytics to support a data-driven
approach to recruiting, better understand our workforce and the opportunities we have
to increase engagement, target our talent development efforts, and better align reward
strategies to market. We continue to expand our rewards infrastructure to maintain
competitiveness, particularly in critical talent segments, and are coupling that with
expanded talent management programs to build out the next generation of career
progression tools, succession planning, and company-sponsored learning programs.
We are expanding our Diversity, Equity, Inclusion, and Belonging (DEIB) focus to ensure
we have a highly engaged workforce and have named an executive leader to drive our
ongoing DEIB efforts. We are continuing our practice of surveying the workforce to
ensure management maintains a current view of employee engagement and insights
for how to continuously improve it, including how to best support employees during the
pandemic, which was and continues to be a priority to ensure all our colleagues stay
safe, productive, and connected.
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Wolters Kluwer 2021 Annual Report 63
OPERATIONAL RISKS CONTINUED
Risk description and impact Mitigation
Fraud
In the conduct of its business, the
company may be exposed to internal or
external fraudulent or related criminal
actions, including cyberfraud/malicious
acts where a bad actor attempts to
take something of value (tangible or
intangible assets) from the company.
With the ongoing global pandemic as
well as the uptick in ransomware attacks
globally, we expect that this risk for both
internal and external/cyberfraud risks
may be amplified and continue to assess
the measures in place.
Governance: The Corporate Risk Committee frequently reviews potential exposure to
fraudulent activities in order to take appropriate and timely action. On an ongoing
basis, the company evaluates and improves anti-fraud related process controls
and procedures to mitigate this risk and build employee awareness across the
organization. We conduct regular reviews of adherence to the Code of Business Ethics,
the Wolters Kluwer Internal Control Framework, and other relevant frameworks and
policies. These include strict policies on segregation of duties, risk-based internal
audits, (fraud) risk assessment activities throughout the business, staff training, and
information sharing.
Identify/protect/detect: We focus on anti-fraud risk awareness at many levels and
through many channels. In addition to the activities undertaken by technology and
information security functions, anti-fraud awareness activities include, among other
things, annual compliance training, company-issued fraud alerts, and anti-fraud/anti-
cybercrime workshops and training sessions within at-risk businesses and functions.
We use case studies and best practices to further raise global fraud awareness and
reduce social engineering risks. We also consider fraud risk and related measures
in our Supplier Code of Conduct and weave anti-fraud protections into vendor
management, payment card, and banking practices.
Respond/recover: Employees (and our vendors) are encouraged to “pause for cause”
and report suspected activities, including fraud, via appropriate channels. For example,
employees may report via SpeakUp or via cybercrime/fraud incident reporting systems,
supported by incident responders who guide matters from intake through conclusion.
Operational resilience
Resilience focuses on how to prepare
for, protect against, respond to, recover,
and learn from risk threats and covers
incident management, business
continuity, operational recovery, and IT
disaster recovery. The company could be
exposed to damages to its tangible assets
(e.g., facilities, IT systems, hardware) and
intangible assets (data, brand, reputation,
and software) which could cause business
interruption and financial or other loss.
During 2021, this risk exposure generally
increased due to the global pandemic
and rises in cybercrime, climate change,
natural catastrophe, and civil unrest
events throughout the world.
Generally, to mitigate operational resilience risks, the company has implemented
a centralized worldwide risk control and business continuity management program.
Regular loss control surveys of key operating companies and supplier locations are
conducted by company risk managers and our insurers. They work with our operating
companies to cost-effectively implement recommendations for continued improvement.
The company maintains a multi-disciplinary Global Incident Management Program to
strengthen the ability to manage crises and incidents, irrespective of the type. Incident
management is a standing agenda topic of the Corporate Risk Committee and incidents
are reported quarterly to the Audit Committee. Likewise, the company continues to
enhance disaster recovery capabilities. More specifically, impacts related to 2021 risks
were mitigated via the company’s operational resilience programs mentioned above, the
continuing evolution of our disaster recovery capabilities, the consolidation/reduction
of global real estate footprint, and our ability to continue business, i.e., virtually conduct
our largely digital business in a safe, interconnected, and productive way. In 2021, we
integrated climate change into our enterprise risk assessment process. Based on our
initial assessment, our business has a limited exposure based on the nature of our
activities and our focus on digital products and services. Our geographically diversified
personnel and support centers have capabilities to cover and adapt between regions.
We continue to further evaluate and monitor developments in this space.
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Risk Management continued
OPERATIONAL RISKS CONTINUED
Risk description and impact Mitigation
Brand and reputation
With the increasing prominence of the
Wolters Kluwer brand, the company
potentially becomes more vulnerable
to brand or reputation risks.
To mitigate brand and reputation risks, the company has established the cross-
functional Global Brand Organization that oversees the brand strategy and
implementation work by the Global Branding & Communications (GBC) team. The GBC
team closely works with other corporate functions and the businesses to grow the
equity and awareness of the brand while monitoring any potential reputational risks.
The GBC team implemented a tool to monitor conversations globally around the brand
and on thought leadership in the media and on social media. The perception of risk
and trust has been heightened by the global pandemic causing customers and society
to rethink and reset. Wolters Kluwer has played a vital role to help manage uncertainty
during these unprecedented times through new solutions, webinars, online classrooms,
and topical pages. Insights are shared with internal stakeholders including the Global
Brand Organization.
LEGAL & COMPLIANCE RISKS
Risk description and impact Mitigation
Regulatory and compliance
The company can be exposed to non-
compliance with laws, regulations,
internal policies, or breach of covenant
in financing and other agreements, and
loss or suspension of business licenses.
Non-compliance could result in fines,
restrictions on business, third-party
claims, and reputational damage.
Compliance with laws and internal policies is an integral part of Wolters Kluwer’s
Internal Control Framework, which includes semi-annual Letters of Representation,
annual internal control testing, annual compliance risk assessments, and regular
internal audits on compliance topics. Pertinent training programs are provided to all
employees to create awareness about compliance subjects and mitigate compliance
related risks. Our global SpeakUp program, which includes a reporting system,
encourages employees to report any suspected non-compliance for investigation and
remediation. We continue to implement a cross-functional enterprise-wide compliance
program for privacy laws. Global data privacy training was provided to all employees.
We continually evaluate whether legislative changes, regulatory developments, new
products, or business acquisitions require additional compliance efforts.
Corruption and bribery
Wolters Kluwer businesses operate
worldwide, which brings a high variety
of business cultures and practices.
In addition, our customers include
governmental and semi-governmental
organizations. These are factors which
could potentially contribute to the risk of
being exposed to corruption and bribery.
In 2021, we rolled out a new global Anti-Bribery and Anti-Corruption Policy. This policy
serves as an extension of our general policy in the Code of Business Ethics, which
prohibits employees, either directly or indirectly, from offering, promising, demanding,
or accepting bribes to obtain or retain business. Our new policy includes an enhanced
process of due diligence, and our employees were trained on the new policy. We
conduct due diligence screening of centrally managed suppliers that includes anti-
bribery safeguards and the requirement to agree to the terms of our Supplier Code
of Conduct or adhere to an equivalent standard. Finally, our global SpeakUp program
encourages employees to report any suspected act of corruption or bribery.
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Wolters Kluwer 2021 Annual Report 65
LEGAL & COMPLIANCE RISKS CONTINUED
Risk description and impact Mitigation
Contractual compliance
The company could be exposed to
claims by its contractual counterparties
based on alleged non-compliance with
contractual terms, such as, but not
limited to, the number of users agreed
upon, price commitments, and/or
service delivery.
The company mitigates contractual compliance risks by negotiating contracts with
attention to risk transfer clauses, representations, warranties, and covenants. For part
of our vendor contracts, we use contract management systems to monitor material
contractual rights and obligations, and software tools to track the use of software for
which licenses are required. We launched a contract lifecycle management initiative
to, among other things, facilitate compliance with third-party agreements. Contract
playbooks assist the company’s internal legal department in standardizing negotiation
positions with respect to customer contracts. Further, our limitation of liability policy
standardizes negotiation of liability provisions in Software as a Service (SaaS) and
software agreements with customers, and establishes an exceptions process to ensure
proper balancing of risks and benefits.
Intellectual property protection
Intellectual property rights could
be challenged, limited, invalidated,
circumvented, or infringed. Technological
developments make it increasingly
difficult to protect intellectual property
rights. Changes in legislation could
have an impact on the ability to protect
intellectual property rights.
Wolters Kluwer actively protects its intellectual property rights to safeguard its portfolio
of information, software solutions, and services. The company relies on trademark,
copyright, patent, and other intellectual property laws to establish and protect its
proprietary rights to these products and services. We monitor legislative developments
with respect to intellectual property rights. Our central trademarks database provides
expert protection and supports the monitoring of our intellectual property. In 2021, a
module on intellectual property protection was included in our annual all-employee
compliance training.
Third-party claims
The company may be exposed to
litigation, administrative actions, and
other claims by third parties, including
claims relating to products, services
(including software and SaaS offerings),
informational content provided or
published by the company, and employee
and vendor relations. Such claims may be
based on legal theories, such as alleged
negligence, product liability, breach of
contract, or infringement of third-party
intellectual property rights.
The company mitigates these risks by striving to produce high-quality products, services,
and content, and by generally including disclaimers and limitations of liability in its
contracts. Our employees are made aware of requirements to ensure compliance with
intellectual property laws and regulations. Further, the company’s limitation of liability
policy standardizes negotiation of liability provisions in software customer agreements.
The company's insurance program covers certain types of exposures. The company
manages a range of insurable risks by arranging insurance coverage for first-party and
third-party liability exposures.
Legislative developments
As a global information, software
solutions, and services provider, changes
in laws, legislation, or (temporary) trade
restrictions could impact the company’s
business in certain jurisdictions.
The company monitors legislative developments and regulatory changes, including
trade restrictions, to assess the potential impact on its businesses. In certain cases, the
company partners with local companies to facilitate compliance with applicable laws.
We monitor and comply with global executive and health agency orders, regulations,
and laws in connection with the global pandemic. In 2021, we implemented enhanced
screening technology for prospects and customers to timely address changes to
sanctions and export controls. Further, we actively monitor developments in privacy
laws and regulations on a global basis.
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Risk Management continued
FINANCIAL & FINANCIAL REPORTING RISKS
Risk description and impact Mitigation
Treasury
Fluctuations in exchange and interest
rates affect Wolters Kluwer’s results.
It is the company’s goal to mitigate the effects of currency and interest rate fluctuations
on net profit, equity, and cash flow. Whenever possible, the company tries to do this by
creating natural hedges, by matching the currency profile of income and expenses and
of assets and liabilities.
When natural hedges are not present, Wolters Kluwer strives to realize the same effect
with the aid of derivative financial instruments. For this purpose, hedging ranges have
been identified and policies and governance are in place, including authorization
procedures and limits. The company purchases or holds derivative financial instruments
only with the aim of mitigating risks and most of these instruments qualify for hedge
accounting as defined in IFRS 9 Financial Instruments. The company does not purchase
or hold derivative financial instruments for speculative purposes. More disclosure and
detailed information on financial risks and policies is provided in Note 30 – Financial
Risk Management. The Treasury Policy on market risks (currency and interest), liquidity
risks, and credit risks is reviewed by the Audit Committee, with quarterly reporting by
the Treasury Committee to the Audit Committee on the status of these financial risks. In
2021, we secured new funding by issuing a new €500 million seven-year Eurobond and
extended the duration of our €600 million multi-currency revolving credit facility for one
year, which diminished liquidity risk.
Post-employment benefits
The company maintains a few post-
employment benefit programs globally.
Generally, these programs are defined
contribution plans, while in some
countries we have defined benefit plans,
the largest of which is an active plan in
the Netherlands, and next in size are
the frozen or closed plans in the United
States, the United Kingdom, Canada,
Belgium, and Australia. In addition, in the
U.S., we maintain a frozen U.S. Retiree
Life Insurance Plan. For most of the active
plans, the company as well as employees
make investments for the future benefit
of participants. For the frozen or closed
plans, the company continues to ensure
they are properly funded to provide
the committed level of benefits to
participants. From a risk point of view,
funding requirements are influenced by
interest rates and the investment returns
on the assets invested in each respective
plan, which are influenced by financial
markets and economic conditions.
The company performs an ongoing evaluation of all plans to ensure we are market
competitive with designs that minimize risk and volatility, while we continuously
monitor opportunities to make the frozen/closed plans more efficient. In 2021, we
executed an annuity buy-in for the Canada pension plan, transferring the liability to an
insurer while protecting the benefits for participants, eliminating the risk and obligation
for the company. We also annuitized our U.S. Retiree Life Insurance Plan, transferring
the liability to an insurer while protecting the benefits for participants, eliminating
the risk and obligation for the company for this plan as well. In the Netherlands, while
there was a delay in the implementation of the Pension Accord, we have continued to
plan for those eventual changes, working with the Pension Fund Board and external
experts. As we have historically done, we continue to partner closely with independent
expert advisors on market competitive plan design, plan performance monitoring, and
defining investment and hedging strategies for all of our plans to maximize returns
while managing downside risk. The accounting for defined benefit plans is based on
annual actuarial calculations in line with IAS 19 Employee Benefits, disclosed in Note 31
– Employee Benefits.
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Sensitivity analysis
Fluctuations in currency exchange, discount, interest, and tax rates affect Wolters Kluwer’s results. The following table illustrates the
sensitivity to a change in these rates for adjusted operating profit and diluted adjusted EPS:
Potential impact
Adjusted
operating profit
€ millions
Diluted
adjusted EPS
€ cents
1% decline of the U.S. dollar against the euro (10) (2)
1% decrease in discount rate in determining the gross service costs for the post-employment benefit plans (9) (3)
1% increase in interest rate assuming same mix of variable and fixed gross debt n/a 0
1% increase in the benchmark tax rate on adjusted net profit n/a (5)
Risk Management continued
FINANCIAL & FINANCIAL REPORTING RISKS CONTINUED
Risk description and impact Mitigation
Taxes
Changes in operational taxes and
corporate income tax rates, laws, and
regulations could adversely affect the
company’s financial results, tax assets,
and liabilities.
Next to income taxes, most taxes are either transactional or employee-related and are
levied from the legal entities in the relevant jurisdictions. Wolters Kluwer maintains a
liability for uncertain tax positions in line with IFRS accounting standards. The adequacy
of this liability is evaluated on a regular basis in consultation with external advisors.
Reference is made to Note 23 – Tax Assets and Liabilities for additional information
about income tax and related risks. As a leader in tax and accounting products, the
company takes its responsibility as a corporate citizen seriously. We provide training
to our tax staff where appropriate. The company reviews its Tax Principles annually
and updated these in 2020.
Misstatements, accounting
estimatesand judgments,
andreliability of systems
The processes and systems supporting
financial reporting may be susceptible
to unintentional misstatements or
manipulation. The preparation of
financial statements in conformity
with IFRS requires management to make
judgments, estimates, and assumptions.
The estimates and underlying
assumptions are based on historical
experience and various other factors that
are believed to be reasonable under the
circumstances. Actual results may differ
from those estimates.
The company mitigates these risks by maintaining an Internal Control Framework for
financial reporting. The Internal Audit and Internal Control departments have a system
in place for the monitoring of progress in resolving any audit findings and performing
follow-up visits and back-testing to determine whether those findings are timely and
adequately resolved. In addition, senior executives in the divisional and operating
companies and senior corporate staff members sign Letters of Representation semi-
annually, certifying compliance with laws and policies. Independent internal audit
reviews are carried out to ensure compliance with policies and procedures and to
ensure that existing controls provide adequate protection against actual risks. Further,
financial results are inquired and reviewed by the Business, Analysis & Control,
Consolidation, Group Accounting & Reporting, Treasury, and Corporate Tax departments
and the Executive Board, and in monthly development meetings as part of regular
business reviews. The Group Accounting & Reporting department periodically provides
updates and webinars outlining changes in policies, accounting standards, and financial
focus areas. Reconciliation of statutory accounts is done by the Group Accounting &
Reporting and Corporate Tax departments, which includes a comparison between group
reported figures, statutory figures, and tax filings.
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Wolters Kluwer 2021 Annual Report 69
Statements by the
ExecutiveBoard
The Executive Board is responsible for the
preparation of the financial statements
in accordance with International Financial
Reporting Standards (IFRS) as adopted
by the European Union and with Part
9 of Book 2 of the Dutch Civil Code.
The financial statements consist of
the consolidated financial statements
and the company financial statements.
The responsibility of the Executive
Board includes selecting and applying
appropriate accounting policies and
making accounting estimates that are
reasonable in the circumstances.
The Executive Board is also responsible
for the preparation of the Report of the
Executive Board (bestuursverslag) which
for this statement includes the Strategic
Report, Corporate Governance, and Risk
Management, included in the 2021 Annual
Report. The Report of the Executive Board
and the Financial Statements are prepared
in accordance with Part 9 of Book 2 of
the Dutch Civil Code. The Executive Board
endeavors to present a fair review of
the situation of the business at balance
sheet date and of the course of affairs in
the year under review. Such an overview
contains a selection of some of the main
developments in the financial year and
can never be exhaustive.
The company has identified the main
risks it faces, including financial reporting
risks. These risks can be found in Risk
Management. In line with the Dutch
Corporate Governance Code and the Dutch
Act on Financial Supervision (Wet op het
financieel toezicht), the company has not
provided an exhaustive list of all possible
risks. Furthermore, developments that are
currently unknown to the Executive Board,
or considered to be unlikely, may change
the future risk profile of the company.
The company must have internal risk
management and control systems that are
suitable for the company. The design of
the company’s internal risk management
and control systems (including the
Internal Control Framework for financial
reporting) has been described in Risk
Management. The objective of these
systems is to manage, rather than
eliminate, the risk of failure to achieve
business objectives and the risk of
material errors to the financial reporting.
Accordingly, these systems can only
provide reasonable, but not absolute,
assurance against material losses or
material errors.
As required by provision 1.4.3 of the Dutch
Corporate Governance Code and Section
5:25c(2)(c) of the Dutch Act on Financial
Supervision (Wet op het financieel
toezicht) and on the basis of the foregoing
and the explanations contained in
Risk Management, the Executive Board
confirms that to its knowledge:
• No material failings in the effectiveness
of the company’s internal risk
management and control systems have
been identified;
• The company’s internal risk management
and control systems provide reasonable
assurance that the financial reporting
over 2021 does not contain any errors
of material importance;
• There is under the current circumstances
a reasonable expectation that the
company will be able to continue in
operation and meet its liabilities for at
least 12 months as from the date hereof,
therefore it is appropriate to adopt the
going concern basis in preparing the
financial reporting;
• There are no material risks or
uncertainties that could reasonably be
expected to have a material adverse
effect on the continuity of the company’s
enterprise in the coming 12 months as
from the date hereof;
• The 2021 Financial Statements give a true
and fair view of the assets, liabilities,
financial position, and profit or loss
of the company and the undertakings
included in the consolidation taken as a
whole; and
• The Report of the Executive Board
includes a fair review of the situation
at the balance sheet date, the course
of affairs during the financial year of
the company, and the undertakings
included in the consolidation taken as a
whole, together with a description of the
principal risks that the company faces.
Alphen aan den Rijn, February 22, 2022
Executive Board
Nancy McKinstry
CEO and Chair of the Executive Board
Kevin Entricken
CFO and member of the Executive Board
Further information can be found on
www.wolterskluwer.com/en/investors/governance/overview
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Nancy McKinstry
American, 1959, Chief Executive Officer and
Chair of the Executive Board since September
2003, and member of the Executive Board
since June 2001.
As CEO and Chair of the Executive Board,
Ms. McKinstry is responsible for division
performance, Global Strategy, Business
Development, Technology, Global Business
Services, Communications, Human
Resources, Corporate Governance, and
Sustainability.
Kevin Entricken
American, 1965, Chief Financial Officer
and member of the Executive Board
since May 2013.
As CFO and member of the Executive
Board, Mr. Entricken is responsible for
Group Accounting & Reporting, Business
Analysis & Control, Internal Audit, Internal
Controls, Investor Relations, Mergers
& Acquisitions, Taxation, Treasury, Risk
Management, Real Estate, and Legal
Affairs.
Frans Cremers
Dutch, 1952, Chair of the Supervisory
Board and Co-Chair of the Selection and
Remuneration Committee dealing with
selection and appointment matters.
Appointed in 2017, and current term until 2022.
Position
Former CFO and member of the Executive
Board of VNU N.V.
Supervisory directorships, other positions
• Member of the Board of Directors of
Stichting Preferente Aandelen Heijmans,
and Stichting Preferente Aandelen B KPN
• Investigator appointed by the Enterprise
Section of the Amsterdam Court of
Appeal in relation to the policy and
course of events in the matter of SNS
Reaal N.V. and SNS Bank N.V.
Executive Board Supervisory
Board
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Wolters Kluwer 2021 Annual Report 71
Ann Ziegler
American, 1958, Vice-Chair of the Supervisory
Board and member of the Selection and
Remuneration Committee. Appointed in 2017,
and current term until 2025.
Position
Former Senior Vice President, Chief
Financial Officer, and Executive Committee
member of CDW Corporation
Supervisory directorships, other positions
• Member of the Board (Non-Executive
Director) of Hanesbrands Inc.
• Member of the Board (Non-Executive
Director) of US Foods Inc.
• Member of the Board (Non-Executive
Director) of Reynolds Consumer
Products Inc.
Jack de Kreij
Dutch, 1959, Chair of the Audit Committee.
Appointed in 2020, current term until 2024.
Position
Former CFO and Vice-Chairman of the
Executive Board of Royal Vopak N.V.
Supervisory directorships, other positions
• Deputy Chairman of the Supervisory
Board and Chairman of the Audit
Committee of Royal Boskalis Westminster
N.V.
• Member of the Supervisory Board and
Chairman of the Audit Committee of
TomTom N.V.
• Chairman VEUO (Vereniging van Effecten
Uitgevende Ondernemingen)
• Member of the Board (Non-Executive
Director) and Chairman of the Audit
Committee, member of Remuneration
Committee and Chairman of Investment
Committee of Oranje Fonds
• Member of the Global Advisory Board of
Metyis
• Member of the Board of Stichting
Preferente Aandelen Philips
Bertrand Bodson
Belgian, 1975. Appointed in 2019, current term
until 2023.
Position
CEO and member of the Board of
Keywords Studios plc, and former Chief
Digital Officer and member of the
Executive Committee of Novartis
Supervisory directorships, other positions
• Member of the Board (Non-Executive
Director) of Tesco PLC
Sophie V. Vandebroek
American, 1962, member of the Audit
Committee. Appointed in 2020, current term
until 2024.
Position
Founder Strategic Vision Ventures LLC and
former Chief Technology Officer of Xerox
and Chief Operating Officer of IBM Research
Supervisory directorships, other positions
• Member of the Board of Directors
(Non-Executive Director) and member
of the Finance and the Nomination
& Governance Committees of IDEXX
Laboratories, Inc.
• Member of the Board of Directors (Non-
Executive Director) and member of the
Compensation and the ESG Committees
of Inari Agriculture, Inc.
• Member of the Board of Trustees of the
Boston Museum of Science
• Member of the Board of Trustees of the
Massachusetts Technology Leadership
Council
• Member of the International Advisory
Board, Flanders AI Research Program
• Strategic Advisor, Safar Partners
Jeanette Horan
British, 1955, Co-Chair of the Selection and
Remuneration Committee dealing with
remuneration matters. Appointed in 2016,
and current term until 2024.
Position
Former Chief Information Officer at IBM
Supervisory directorships, other positions
• Member of the Board (Non-Executive
Director) and member of the Audit and
Technology Committees of Nokia
• Member of Board of Advisors of Jane Doe
No More, a non-profit organization
• Member of the Board of the
Ridgefield Symphony Orchestra,
a non-profit organization
Chris Vogelzang
Dutch, 1962, member of the Audit Committee.
Appointed in 2019, and current term until 2023.
Position
Former CEO of Danske Bank A/S
Supervisory directorships, other positions
• Member of the Supervisory Council
of Rijksmuseum
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INTRODUCTION BY THE CHAIR OF THE
SUPERVISORY BOARD
During 2021, the Supervisory Board
was pleased to see that, despite the
challenges resulting from the global
pandemic, the ambitions of the 2019-
2021 strategy, Accelerate Our Value,
were successfully achieved, providing
a continuing strong foundation for
the future of the company. We worked
together with the Executive Board on
the development of the new three-year
strategy, Elevate Our Value. The increased
focus on further expanding expert
solutions is one of the cornerstones of
this new strategy, which the Supervisory
Board believes addresses attractive
market opportunities and will accordingly
contribute to the future success of the
company. The strategy also focuses on
topics, such as attracting and engaging
diverse talent, maintaining a collaborative
and ethical culture, and other important
Environmental, Social, and Governance
(ESG) topics. These are subjects which
are close at heart for the Supervisory
Board and in conjunction with the
business strategy will contribute to the
aspired long-term value creation for the
company’s stakeholders. The new plan
includes some ambitious new goals and
we are looking forward with confidence
to the execution of this plan under the
leadership of the Executive Board.
Frans Cremers
Chair of the Supervisory Board
Report of the
SupervisoryBoard
This report provides an overview of the supervisory
activities of the Supervisory Board and its
committees during the year. The Supervisory Board
is responsible for supervising the Executive Board
in setting and achieving the company’s strategy,
targets, and policies, as well as the general course of
affairs of the company. The Supervisory Board also
assists the Executive Board with advice.
The new plan contains some
ambitious new goals and we are
looking forward with confidence
to the execution of this plan
under the leadership of the
Executive Board.
Frans Cremers, Chair of the Supervisory
Board
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Wolters Kluwer 2021 Annual Report 73
Meetings
The Supervisory Board held seven
scheduled meetings in 2021. Six of
these meetings took place virtually due
to the global pandemic. Six meetings
included a session for Supervisory Board
members only, without the members of
the Executive Board being present. All
members attended all meetings. There
was one scheduled conference call
between the Executive Board, the Chair
of the Supervisory Board, and the Chair
of the Audit Committee. The Chair of the
Supervisory Board had regular contact
with the Chair of the Executive Board.
Financial statements
The Executive Board submitted the 2021
Financial Statements to the Supervisory
Board. The Supervisory Board also took
notice of the report and the statement
by Deloitte Accountants B.V. (as referred
to in Article 27, paragraph 3 of the
company’s Articles of Association), which
the Supervisory Board discussed with
Deloitte. The members of the Supervisory
Board signed the 2021 Financial
Statements, pursuant to their statutory
obligation under clause 2:101 (2) of the
Dutch Civil Code. The Supervisory Board
proposes to the shareholders that they
adopt these Financial Statements at the
Annual General Meeting of Shareholders
of April 21, 2022.
→ See the Financial Statements onpage 98
Evaluations
The Supervisory Board discussed its own
functioning, as well as the functioning
of the Executive Board and the
performance of the individual members
of both Boards. These discussions
were partly held without the members
of the Executive Board being present.
The composition of the Supervisory Board,
the Audit Committee, and the Selection
and Remuneration Committee was also
discussed in the absence of the Executive
Board. The Supervisory Board members
completed a self-assessment. Overall, the
outcome of the evaluation was positive.
The Supervisory Board remains focused
on a good balance between presentations
and discussions and gave several
suggestions for topics on which it would
like to receive additional information,
such as ESG (in particular diversity, equity,
inclusion, and belonging and climate
change), and the Net Promoter Scores of
key products, which topics were discussed
in more detail in the course of the year.
The composition of the Supervisory
Board represents the relevant skill sets
and the required areas of expertise. The
Supervisory Board meetings take place
in an open and transparent atmosphere
with each of the members actively
participating. The Committees function
well. In addition to the formal evaluation
process, as a standard practice, the Chair
of the Supervisory Board gives feedback
to the Chair of the Executive Board after
every Supervisory Board meeting.
Global pandemic
The Executive Board has kept the
Supervisory Board regularly informed
in detail regarding the impact of the
global pandemic on the company.
The information related, among others,
to the well-being and engagement of
employees, working from home policies,
back-to-office plans, the impact on the
business and its customers, as well as
the financial performance and outlook of
the company. The Supervisory Board was
pleased to see that the company was able
to continue reacting to the situation in an
agile entrepreneurial way, while giving high
priority to the health and well-being of the
employees, and to serving customers with
solutions to help them to effectively deal
with the pandemic.
Strategy
The Supervisory Board was kept well
informed on the execution of the strategy
for 2019-2021, Accelerate Our Value.
This strategy aimed at accelerating the
transformation of the company towards
a global organization which grows
expert solutions, advances deep domain
expertise, and drives operational agility.
The Supervisory Board was also closely
involved in developing the new three-year
strategy for 2022-2024, Elevate Our Value,
and approved the strategy. The strategy
was discussed in two meetings of the
Supervisory Board. The Supervisory Board
believes that the strategy, with a further
reinforced focus on expert solutions,
is a good next step in the evolution of
the company. The Supervisory Board also
supports the strong focus on ESG matters,
including the emphasis on diverse
talent as a key pillar of the strategy. The
Supervisory Board believes the strategy
will contribute to the long-term value
creation for the company’s stakeholders.
As in other years, the divisional CEOs also
presented their Vision & Strategy Plans for
2022-2024 to the Supervisory Board. This
enables the Supervisory Board to obtain
a good view of the opportunities and
challenges for each of the divisions and
to support the Executive Board in making
the right strategic choices and investment
decisions for each business. The
Supervisory Board considers it important
to meet each of the divisional CEOs
periodically and receive an update from
them on performance, key market trends,
strategy, and competitive developments.
Also, with a view on talent management
and having solid replacement plans,
speaking directly to other senior
management levels is deemed important
for the Supervisory Board.
The Supervisory Board was also informed
about the innovation activities and
investments within Wolters Kluwer. 2021
was the eleventh consecutive year in
which Wolters Kluwer rewarded promising
new internal business initiatives via the
Global Innovation Awards. This event
enables teams across the business
to present their innovative ideas. The
awards are ultimately awarded by a
jury consisting of internal and external
experts. Continuing focus on innovation
and investment in new and enhanced
products, including expert solutions, is
an important means for driving long-
term value creation as well as a strong
culture of innovation at Wolters Kluwer.
Two of the awarded teams presented their
business plans to the Supervisory Board.
In line with standard practice,
management of the Global Business
Services organization and the Digital
eXperience Group gave presentations,
updating the Supervisory Board on the
company’s technology strategy and
execution thereof, including cybersecurity
and disaster recovery plans.
The Supervisory Board also considers
it important to be aware of the main
developments with respect to competition
and the markets in which the company
operates. To that end, an overview of
the most important developments
with respect to traditional and new
competitors is discussed during each
Supervisory Board meeting.
74 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Report of the SupervisoryBoard continued
Investor Relations
The Supervisory Board was well informed
about Investor Relations activities, which
is a standing agenda item during the
Supervisory Board meetings. Updates
included share price developments,
communication with shareholders,
shareholders’ views on acquisitions,
analyst research, and the composition of
the shareholder base. The Supervisory
Board also carefully reviewed and
approved the annual report and press
releases regarding the full-year and half-
year results, and the first-quarter and
nine-month trading update.
Audit Committee
The Audit Committee met four times in 2021,
during the preparation of the full-year 2020
and half-year 2021 results, and around the
first-quarter 2021 trading update and nine-
month 2021 trading update. In addition,
there was one scheduled conference
call in December between the auditors,
the Chair of the Audit Committee, and
the CFO. The Audit Committee consisted
of Mr. de Kreij (Chair), Ms. Vandebroek,
and Mr. Vogelzang. Each of the members
attended all meetings. The meetings of
the Audit Committee were held in the
presence of the Executive Board members,
the external auditor, the head of internal
audit, and other corporate staff members.
During 2021, as routine agenda items, the
Audit Committee had discussions with the
external auditors, as well as with the head
of internal audit, without the members
of the Executive Board being present. In
addition, the Chair of the Committee met
with the CFO, the external auditor, the head
of Group Accounting & Reporting, and
the head of Internal Audit in preparation
of the Committee meetings. After every
meeting, the Chair of the Committee
reports back to the full Supervisory Board.
The main items discussed during the Audit
Committee meetings included the financial
results of the company, status updates on
internal audit and internal controls, the
management letter of the external auditor,
the progress on the implementation of the
new corporate performance management
system, accounting topics, pensions, tax
planning, impairment testing, the Treasury
Policy, the financing of the company,
risk management, cybersecurity, hedging,
litigation reporting, incident management,
the quarterly reports of the external
auditor, and their full-year report on
the audit.
Talent management and
organizational developments
Each year, the outcome of the annual
talent review is discussed by the
Supervisory Board. Diversity at Board
and senior management levels is an
important element in that discussion.
Furthermore, as a standing topic during
each Supervisory Board meeting, the
Supervisory Board is informed about
organizational developments, including
appointments at senior positions within
the company. The Supervisory Board fully
supports all initiatives in the company to
enhance the diverse and inclusive culture
within the company. The Supervisory
Board discussed this topic in several
meetings. The Supervisory Board was
also updated on the results of Wolters
Kluwer’s employee engagement survey,
which measures important topics such
as engagement, alignment, agility, career
development, and other components
driving engagement, and supporting a
culture aimed at long-term value creation.
Finance
The Supervisory Board carefully
observes the financing of the company,
including the balance sheet and available
headroom. The Supervisory Board also
closely monitors the development
of, among others, the net-debt-to-
EBITDA ratio, debt/equity ratio, and
liquidity planning. The Supervisory Board
approved the share buyback program
in 2021 of up to €410 million (including
€60 million for which the proceeds
of the divestment of Legal Education
were used). The Supervisory Board also
approved the additional €50 million share
buyback for the period starting January
3, 2022, up to and including February 21,
2022. In addition, the Supervisory Board
approved the first one-year extension of
the €600 million multi-currency revolving
credit facility with an initial maturity of
three years, as well as the activation
of the ESG targets in that facility. Other
financial subjects discussed included
the budget, the financial outlook, the
achievement of financial targets, the
interim and final dividends, the outcome
of the annual impairment test, and annual
and interim financial results.
Acquisitions and divestments
The Executive Board kept the Supervisory
Board informed about all pending
acquisition and divestment activities.
The Supervisory Board approved the
acquisition of Vanguard Software by
the Tax & Accounting division. The
Supervisory Board also discussed in
detail the performance and value creation
of previous acquisitions, taking into
consideration Wolters Kluwer’s financial
and strategic criteria for acquisitions.
Corporate governance and risk
management
The Supervisory Board was kept
informed about developments with
respect to corporate governance and
risk management. The Supervisory Board
and Audit Committee discussed risk
management, including the risk profile
of the company and risk appetite per
risk category, as well as the assessment
of internal risk management and control
systems. The Audit Committee and
Supervisory Board discussed the ongoing
actions the company takes to further
improve the internal risk management
and control systems, including IT security
and cybersecurity. For more information,
see Risk Management.
→ Read more about Risk Management on
page 58
Environmental, Social, and
Governance matters
The Supervisory Board was kept informed
on the developments with respect to
ESG performance and initiatives. The
Supervisory Board is supportive of the
company’s ESG approach. A separate
presentation was given on the actions and
plans the company takes with respect to
diversity, equity, inclusion, and belonging.
The enhanced focus on ESG is also
reflected by the fact that non-financial
targets make up 10% of the Executive
Board’s short-term incentive targets in
2021 and 2022. The Supervisory Board
was informed of the completion rate of
the Annual Compliance Training (99%).
The Supervisory Board believes that these
efforts will contribute to an inclusive
culture of integrity, accountability, and
transparency, aimed at long-term value
creation for all stakeholders.
← →
Wolters Kluwer 2021 Annual Report 75
complies with this ambition. In the course
of 2022, the company will review its
diversity policy and report about it in line
with new Dutch legislation.
All Supervisory Board members comply
with the Dutch law regarding the
maximum number of supervisory board
memberships. Furthermore, all members
of the Supervisory Board are independent
from the company within the meaning of
best practice provisions 2.1.7, 2.1.8, and 2.1.9
of the Dutch Corporate Governance Code.
For more information on each Supervisory
Board member in accordance with the
Dutch Corporate Governance Code, see the
sections Executive Board and Supervisory
Board and Corporate Governance.
→ See Executive Board and Supervisory Board
onpage 70
→ See Corporate Governance onpage 54
The Supervisory Board would like to
thank the Executive Board and all
employees worldwide for their efforts in
the past year. The flexibility of the entire
organization during another year of the
global pandemic, in combination with the
results of the company and ongoing focus
on serving customers and long-term value
creation, were highly appreciated by the
Supervisory Board.
Alphen aan den Rijn, February 22, 2022
Supervisory Board
Frans Cremers, Chair
Ann Ziegler, Vice-Chair
Bertrand Bodson
Jeanette Horan
Jack de Kreij
Sophie Vandebroek
Chris Vogelzang
The Supervisory Board and the Executive
Board would like to thank Mr. Cremers for
his five years as Chair of the Supervisory
Board. He has chaired the Board during
two years of the global pandemic and
his support to management in these
unprecedented circumstances was highly
appreciated. We wish Mr. Cremers all the
best in the years to come.
The members of the Supervisory Board
and the Executive Board.
Supervisory Board composition
In 2021, the first term of Mr. Cremers
and Ms. Ziegler expired. They were both
reappointed by the AGM. Mr. Cremers
was only available for a one-year
reappointment and will retire after the
2022 AGM. The Supervisory Board is
pleased to nominate Ms. Heleen Kersten
as a new member of the Supervisory
Board to the 2022 AGM. Her expertise
in the area of corporate law, corporate
governance, M&A matters, and her
experience on several boards, fit the
profile of the Supervisory Board and the
diversity policy.
The Supervisory Board has appointed
Ms. Ziegler as new Chair of the Supervisory
Board, following the retirement of
Mr. Cremers. Mr. De Kreij has been
appointed as new Vice-Chair. Ms. Kersten
will replace Mr. Cremers as a member of the
Selection and Remuneration Committee.
The composition of the Supervisory
Board is in line with the profile and the
company’s diversity policy, reflecting
a diverse composition with respect
to expertise, nationality, gender, and
age, reflecting the international nature
and geographic scope of the company.
Four nationalities are represented on
the Supervisory Board, with different
talents and relevant areas of expertise.
The Supervisory Board currently has a
female representation of 43%, which
is in line with Dutch law requiring a
representation of at least 30% male
and female. After the appointment of
Ms. Kersten at the AGM of 2022, the
female representation will be 57%.
The composition comprises international
board experience, specific areas of
expertise (including finance, legal, and
technology), as well as expertise within
the broad information industry and
specific market segments in which the
company operates.
The profile, competences matrix,
rotation schedule, and diversity policy
are available on wolterskluwer.com/
en/investors/governance/supervisory-
board-committees
In line with the diversity policy, it is the
aim to have a representation of at least
30% male and female in the Supervisory
Board, Executive Board, and at divisional
CEO level. The company currently
The Audit Committee has reviewed the
performance of the external auditor, the
proposed audit scope and approach, the
audit fees, and the independence of the
external auditor, and has approved the
other assurance services, tax advisory
services, and other non-audit services
provided by the external auditor.
The Auditor Independence Policy is
available on the website.
The Auditor Independence Policy
www.wolterskluwer.com/en/investors/
governance/policies-and-articles
Selection and Remuneration
Committee
The Selection and Remuneration
Committee met six times in 2021.
The Committee consists of Ms. Horan
(who chairs the remuneration-related
discussions), Mr. Cremers (who chairs
the selection and nomination-related
discussions), and Ms. Ziegler. All members
attended all meetings. After every meeting,
the respective chairs of the Committee
report back to the full Supervisory Board.
The resolutions regarding appointments
and remuneration were taken by
the full Supervisory Board, based on
recommendations from the Committee.
At the Annual General Meeting of
Shareholders (AGM) of April 22, 2021, the
amended version of the remuneration
policy of the Executive Board was
adopted. For more information about
the remuneration policy of the Executive
Board and the execution thereof, see
Remuneration Report.
→ See our Remuneration Report onpage 76
The Selection and Remuneration
Committee also reviewed the
remuneration of the Supervisory Board.
It will be proposed during the 2022
AGM to increase the Supervisory Board
remuneration. This proposal is in line
with the remuneration policy for the
Supervisory Board, which was adopted
by the AGM in 2020.
The Selection and Remuneration
Committee also discussed the replacement
of Mr. Cremers as Chair of the Supervisory
Board after the AGM in April 2022 as well as
the composition of the Supervisory Board,
which resulted in the nomination and
appointments set out below.
43%
of the Supervisory Board members are female
This Remuneration Report
provides an overview of our
remuneration policy which
was adopted at the 2021
Annual General Meeting
of Shareholders.
The new remuneration policy
for the Executive Board
was adopted and the 2020
Remuneration Report was
approved, with high levels
of support.
Jeanette Horan, Co-Chair of the Selection
and Remuneration Committee, dealing
with remuneration matters
76 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
LETTER FROM THE COCHAIR OFTHE
SELECTION AND REMUNERATION
COMMITTEE
Dear Shareholders,
On behalf of the Supervisory Board, I am
pleased to present our 2021 Remuneration
Report, in which we provide a summary of
the remuneration policy for the Executive
Board and explain how performance in
2021 translated into remuneration earned.
New remuneration policy adopted
At the 2021 Annual General Meeting, the
new remuneration policy for the Executive
Board was adopted and the 2020
Remuneration Report was approved, with
high levels of support. Both received well
over 95% of the votes in favor, with good
participation in the meeting.
The new remuneration policy established
several important changes. In the short-
term incentive plan (STIP), the weight of
non-financial or environmental, social,
and governance (ESG) measures was
increased (up to a maximum of 20%) and
six strategically important non-financial
or ESG measures were introduced.
In the long-term incentive plan (LTIP),
return on invested capital (ROIC) was
introduced as a new measure and diluted
EPS was replaced by diluted adjusted EPS.
These are two measures that have long
been part of the company’s key financial
performance indicators and are aligned
with how we provide market guidance.
Remuneration Report
6%
organic growth in 2021
← →
Wolters Kluwer 2021 Annual Report 77
The new policy also formalized minimum
share ownership requirements and a two-
year post-vesting holding period.
The other significant change was a
10% reduction in CEO remuneration by
lowering the LTIP pay at target, starting
in 2021. For the LTIP 2021-2023, the target
pay was reduced from 285% to 265% of
base salary, which will be reflected when
this cycle pays out in 2024. For the LTIP
2022-2024, the target pay will be further
reduced to 240% of base salary, which will
be reflected in the payout in 2025 and LTIP
cycles thereafter. The LTIPs vesting in 2021
and 2022 (payout in 2022 and 2023) still
reflect the former remuneration policy. As
in recent years, for the payout of the LTIP
period just completed, the largest driver
of remuneration is the appreciation of the
share price.
A detailed explanation of the new
remuneration policy, how it was applied in
2021, and how it determined remuneration
is provided in this report.
2021 performance and STIP outcome
Despite the continued challenges and
uncertainties posed by the global
pandemic, the business started to see a
recovery in the second quarter of 2021.
This was most visible in the faster-than-
expected recovery of non-recurring
revenues which had been severely
impacted in 2020. More importantly, as
the year progressed, digital and services
subscription revenues picked up pace.
Throughout the year, management kept
their attention on people-related matters:
supporting the well-being of employees;
adapting back-to-office plans following
the emergence of new COVID variants; and
taking steps to address the heightened
and global competition for talent.
In 2021, the group delivered organic
growth of 6%, an increased adjusted
operating profit margin of 25.3%, and
adjusted free cash flow of €1,010 million.
The strong recovery in 2021 meant that all
one-year financial targets were exceeded.
Performance against the six non-financial
objectives that were part of the STIP in
2021 was, in aggregate, ahead of target,
with five of the six measures in line with,
or ahead of, targets set.
2019-2021 performance and
LTIPoutcome
The recovery in 2021 allowed management
to successfully deliver on the 2019-2021
strategic plan and to largely restore
performance back towards the company's
pre-pandemic financial trajectory. The
strategy of focusing on expert solutions
and promoting organizational agility
was key to driving this result. Over the
three-year period, 2019-2021, the actual
compound annual growth rate in diluted
EPS was 15.0% in constant currencies,
exceeding the target of 12.9% set three
years ago.
As a shareholder, you will be pleased
that over the three-year LTIP period, the
share price rose 100.5%. Total Shareholder
Return was 101.4% (using a 60-day
average price at the start and end of the
period), placing Wolters Kluwer in fourth
place among the TSR peer group. As an
important component of management
incentive, this share price performance
drove the final value of the LTIP awards to
management.
Changes for 2022
During 2021, the Supervisory Board
reviewed the effectiveness of the non-
financial or ESG metrics and targets that
were used for the 2021 STIP and concluded
that a shorter list of ESG targets will drive
greater focus. Not only have several of our
shareholders expressed a preference for
fewer ESG metrics, but over the course
of the year, market practice continued to
evolve in favor of fewer measures.
The number of non-financial measures
will therefore be reduced from six to three
in 2022. We are introducing an important
new employee-related ESG measure in
STIP: a quantitative score for belonging.
Belonging is a key driver of employee
engagement and is an indicator of our
progress on nurturing workforce diversity.
Further information on this important ESG
topic can be found in the Sustainability
chapter of this annual report. Two of last
year's ESG measures are being retained:
the indexed cybersecurity maturity score
and the number of on-premise servers
decommissioned as part of our cloud
migration program. The company has now
also extended these three ESG measures
to the short-term incentive plans of
all executives.
Metrics used in the LTIP for 2022-2024
will stay the same: relative TSR; diluted
adjusted EPS; and ROIC. The Supervisory
Board has set targets with additional
stretch applied to the baseline three-year
strategic plan. These prospective three-
year targets are disclosed on page 93.
The Supervisory Board continues to
monitor the TSR peer group in light of
the planned merger of two existing TSR
peers, IHS Markit and S&P Global. When
this merger completes, IHS Markit will
be replaced by another sector peer that
meets our selection criteria.
We trust this report provides a clear
explanation of the drivers of 2021
remuneration and that shareholders
appreciate the enhanced disclosure
that we committed to last year.
The 2022 AGM agenda is available at
www.wolterskluwer.com/agm
Jeanette Horan
Co-Chair of the Selection and
Remuneration Committee, dealing
with remuneration matters
78 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
For 2021, STIP measures were revenues, adjusted net profit, adjusted free cash flow,
and six non-financial, operational, or ESG measures. The achievements on each of
these measures are shown above and discussed in this report (Implementation of
remuneration policy in 2021).
Remuneration at a glance
HOW DID WE PERFORM?
Revenues, € million
4,771
Adjusted free cash flow, € million
1,010
Adjusted net profit, € million
885
55%
of revenues from expert solutions
74%
Employee engagement score, above the
high-performing norm (HPN)
Establish a diversity, equity, inclusion,
and belonging strategy and plan
99%
completion of annual
compliance training
105.6
Indexed cybersecurity
maturity score (2020=100)
2,838
Number of on-premise
servers decommissioned
(reducing carbon footprint)
2021 STIP financial
targets were all
exceeded, while
most non-financial/
ESG targets were met or
exceeded.
Three-year total
shareholder return
performance and
compound annual
growth (CAGR) in diluted
EPS were ahead of LTIP
2019-2021 targets.
2021 financial measures
2021 non-financial/ESG measures
← →
Wolters Kluwer 2021 Annual Report 79
2021 CEO target and realized pay
AEX and STOXX Europe 600 rebased to Wolters
Kluwer share price.
The share price increased 100.5% over
the three-year performance period
for LTIP 2019-2021.
Target pay shown above reflects the
number of LTIP shares conditionally
awarded for LTIP 2019-2021 valued at the
closing share price on December 31, 2018
(€51.66).
Realized actual pay shown above reflects
the number of LTIP shares earned valued
at the closing share price on December 31,
2021 (€103.60). The final actual payout will
be valued at the volume weighted average
price on February 24, 2022.
IMPACT OF PERFORMANCE
ON REMUNERATION
15%
Diluted EPS: Three-year CAGR in
constant currencies
2019-2021 performance Share price over LTIP period
Three-year CAGR in diluted EPS
Three-year CAGR in constant currencies
was 15% over the period 2019-2021.
The company uses a 60-day average of the share price at the beginning and the
end of each three-year performance period to reduce the influence of potential
stock market volatility. In October 2020, McClatchy was replaced by Verisk Analytics.
In February 2021, Axel Springer was replaced by Intertek.
Three-year 2019-2021 total shareholder return
Wolters Kluwer achieved fourth position for TSR performance relative to its TSR
peers. This ranking determines the number of TSR-related shares awarded at the end
of the three-year LTIP period.
Target Actual
60%
7,802
61%
22%
17%
29%
40%
16,270
12%
9%
6%
4%
€0
20,000
in thousands of euros, unless otherwise stated
10,000
15,000
5,000
Increase in value due to share price performance
LTIP EPS outperformance
LTIP TSR outperformance
LTIP
STIP
Base Salary
0
20
40
60
80
100
120
31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21
Wolters Kluwer N.V. AEX rebased
STOXX Europe 600 rebased
Share price over LTIP period
€
€2.35
€2.46
€2.70
€2.78
2018 2019 2020 2021
60-day average price TSR
Reach
S&P Global
Thomson Reuters
Wolters Kluwer
Daily Mail & GT
News Corp
RELX
A Mondadori
Sage Group
Intertek
J Wiley
Lagardère
Informa
Pearson
PRISA
Verisk
0%
+400%
+500%
+100%
+200%
+300%
-100%
OUR NEW REMUNERATION POLICY
At the 2021 Annual General Meeting of Shareholders, the revised Executive Board Remuneration
Policy was adopted. Upon adoption of the policy, the following substantive changes were made to the
remuneration package of the Executive Board members:
The remuneration policy is available at
www.wolterskluwer.com/en/investors/governance/policies-and-articles
Remuneration peer group
Weighting of European companies in the pay peer group was adjusted from 50%
to approximately 60%.
STIP performance
measures(financial)
A pre-defined list of financial measures replaced the previous unlimited flexibility to
select measures; STIP financial measures will have a minimum weighting of 80%. These
measures exclude the effect of currency, accounting changes, and changes in scope
(acquisitions and divestitures) after the annual budget is finalized. The pre-defined
list comprises:
• Revenues
*
• Organic growth
• Adjusted operating profit
• Adjusted operating profit margin
• Adjusted net profit
*
• Adjusted free cash flow
*
• Cash conversion ratio
*
These financial measures will be used for the STIP in 2022.
STIP performance measures
(non-financial, including ESG)
Non-financial measures can include ESG, strategic, or operational metrics, such as
employee engagement score, customer satisfaction scores, measures of good corporate
governance, operational excellence, and/or environmental impact.
The maximum weighting of non-financial measures was established at 20%. In 2021,
the weighting was set at 10%. For 2022, the following three strategically-important
ESG metrics will be used:
• Belonging score (a quantified measure of diversity, equity, and inclusion)
• Indexed cybersecurity maturity score
• Number of on-premise servers decommissioned (reducing carbon footprint)
LTIP performance measures
• Total shareholder return (TSR) was retained at a 50% weighting
• Diluted adjusted EPS
*
replaced diluted EPS with a weighting of 30%
• Return on invested capital (ROIC) was introduced with a weighting of 20%
*
Diluted adjusted EPS aligns more closely with market practice and is the metric we use when giving
guidance on expected financial performance.
CEO remuneration
In consultation with the CEO, the CEO’s total target remuneration was reduced by
approximately 10% by lowering the CEO LTIP conditional share award for performance
on target from 285% of base salary to 240% over two years.
In addition, the CEO’s base salary was not increased in 2021.
Share ownership and
holdingrequirements
Introduction of minimum share ownership requirements: 3x base salary for CEO, 2x base
salary for CFO, and a two-year holding period post-vesting.
80 Wolters Kluwer 2021 Annual Report
Strategic Report | Governance | Financial Statements
Remuneration Report continued
OUR REMUNERATION PHILOSOPHY
Clear alignment between executive rewards and shareholder interests is central to our Executive Board remuneration policy. We have
a robust pay for performance philosophy with strong links between rewards and results for both our short-term incentive plan (STIP)
and long-term incentive plan (LTIP). Variable remuneration outcomes are aligned to stretch targets that measure performance against
Wolters Kluwer’s strategic aims. The Supervisory Board has a clearly defined process for setting stretch targets and a framework for
decision-making around executive remuneration.
In 2020, the Selection and Remuneration Committee engaged an external remuneration advisor to provide recommendations and
information on market practices for remuneration structure and levels. The Committee had extensive discussions, supported by its
external advisor, to review the composition and key drivers of remuneration.
The Supervisory Board historically viewed performance targets as commercially sensitive and therefore did not disclose them in
advance. However, given feedback from our shareholders, we decided that, upon the adoption of our new remuneration policy at our
2021 AGM, we would disclose LTIP performance targets in advance, starting with this 2021 annual report.
In addition, similar to the 2020 report, we have disclosed targets, achievements, and resulting pay outcomes for both the STIP and
LTIP retrospectively in this report.
The Supervisory Board determines Executive Board remuneration on the basis of a set of principles that demonstrate clear alignment
with shareholder and other stakeholder interests. We recognize it is our responsibility to ensure that executive remuneration is
closely connected with financial and strategic performance.
OUR EXECUTIVE BOARD REMUNERATION FRAMEWORK
Our Executive Board remuneration framework comprises the following elements:
Element of remuneration Key feature Alignment to strategy and shareholder interests
Base salary Reviewed annually with reference to pay peer group
andincreases provided to all employees
Set at a level to attract, motivate, and retain the best talent
STIP Paid annually in cash; maximum opportunity: 175%
ofbasesalary
Incentivizes delivery of performance against our annual
strategic, financial, and ESG goals
LTIP Conditional rights on ordinary shares, subject to a three-
year vesting schedule and three-year performance targets
Incentivizes delivery of financial performance and creation
of long-term sustainable value; demonstrates long-term
alignment with shareholder interests
Pension Defined contribution retirement savings plan that is
available to all employees in the country of employment
Provides appropriate retirement savings designed to be
competitive in the relevant market
Other benefits Eligibility for health insurance, life insurance, a car, and
participation in any all-employee plans that may be offered
in the country of employment
Designed to be competitive in the relevant market
Principles of Executive Board
remuneration
Pay for performance and
strategic progress
• Pay is linked to the achievement of key financial and non-financial targets related to our strategy
• Over 75% of on-target pay is variable and linked to performance against stretch targets
• Short-term incentives are linked to annual targets
• Long-term incentives are linked to performance against three-year stretch targets aligned to our strategic plan
Align with long-term
stakeholder interests
• Policy incentivizes management to create long-term value for shareholders and other stakeholders through
achievementofstrategic aims and delivery against financial and non-financial objectives
• Majority of incentive is long-term and paid in Wolters Kluwer shares which are subject to two-year post-vesting holding
requirements
Be competitive in a global
market for talent
• On-target pay is aligned with the median of a defined global pay peer group, comprised of competitors and other
companies in our sectors that are of comparable size, complexity, business profile, and international scope
• TSR peer group companies are additionally screened for financial health, stock price correlation and volatility,
andhistoricalTSR performance
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Wolters Kluwer 2021 Annual Report 81
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Deliver deep impact
when it matters most
FOCUS ON CUSTOMER SUCCESS
AIM HIGH AND DELIVER
MAKE IT BETTER
WIN AS A TEAM
Financial and non-financial metrics
Executive Board remuneration policy (adopted at the 2021 AGM):
Financial measures – short-term incentive plan (STIP) pre-defined list of measures:
Revenues Organic
growth
Adjusted
operating
profit
Adjusted
operating
profit margin
Adjusted
netprofit
Adjusted free
cash flow
Cash
conversion
ratio
Non-financial measures – short-term incentive plan (STIP):
ESG, operational, or strategic measures, including revenues from expert solutions, employee
engagement score, customer satisfaction scores, measures of good corporate governance, measures
ofoperationalexcellence,and measures of environmental impact.
Financial measures – long-term incentive plan (LTIP):
Relative total shareholder return Diluted adjusted EPS
(three-year CAGR)
Return on invested capital
For 2022, STIP financial measures will be revenues, adjusted net profit, and adjusted
free cash flow. STIP non-financial measures will be: employee belonging score; indexed
cybersecurity score; and the number of on-premise servers decommissioned.
• Drive investment in cloud-based
expert solutions
• Transform digital information
solutions into expert solutions
• Enrich customer experience
leveraging data analytics
LINKING PAY TO OUR STRATEGIC GOALS
The largest component of Executive Board remuneration is variable performance-based incentives. This strengthens the alignment
between remuneration and company performance, and reflects the philosophy that Executive Board remuneration should be
linked to a strategy for long-term value creation. Our strategy aims to deliver continued good organic growth, further incremental
improvements to our adjusted operating profit margin and return on invested capital, and seeks to drive long-term, sustainable
value for all stakeholders.
OUR STRATEGIC AIMS
• Enhance central functions, including
marketing and technology
• Advance ESG performance and
capabilities
• Engage diverse talent to drive
innovation and growth
Evolve
Core Capabilities
Accelerate
Expert Solutions
• Extend into high-growth adjacencies
• Reposition solutions for new
segments
• Drive revenue through partnerships
and ecosystem development
Expand
Our Reach
OUR PURPOSE OUR VALUES
ALIGNING WITH OUR RISK PROFILE
The Supervisory Board assesses whether variable remuneration might expose the company to risk, taking into consideration
our overall risk profile and risk appetite, as described in Risk Management. We believe that our remuneration policy provides
management with good incentives to create long-term value, without increasing our overall risk profile.
BENCHMARKING AGAINST OUR PEERS
Pay peer group
We use a pay peer group to benchmark Executive Board pay. This includes direct competitors and other companies in our
sectors of comparable size, complexity, business profile, and international scope. It is made up of companies based in Europe
and North America, to reflect where Executive Board members might be recruited to or from.
In 2021, five additional European companies were included in the pay peer group, making it approximately 60% European.
The most comparable businesses available in Europe are companies in the Application Software and IT Consulting & Services
sectors. In benchmarking pay against the pay peer group, the value of share-based remuneration is standardized to ensure a
like-for-like comparison.
In 2021, the pay peer group consisted of the companies shown in the table below. The third column provides the five European
peers that were added in 2021.
TSR peer group
The TSR peer group consists of 15 companies that are used as the comparator group to determine TSR performance, which is one of
the measures used in the LTIP. The TSR group is screened not only for comparability of the business (see above), but also for share
price correlation and volatility. In 2020, we updated the TSR peer group to reflect the group’s transformation into a digital information,
software and services business. Consumer publishers were replaced by other, more appropriate software and services companies
from the pay peer group. This was in line with feedback received from shareholders. The new TSR peer group was applied to the
LTIP 2020-2022 and LTIP 2021-2023, and will again apply for the LTIP 2022-2024.
In case of the delisting or merger of a TSR peer group company, the Supervisory Board will carefully consider an appropriate
replacement that meets strict pre-determined criteria. These criteria include: industry; geographic focus; size; financial health;
share price correlation and volatility; and historical TSR performance.
Pay and TSR peer groups
North American comparators (2020 and ongoing) European comparators (2020 and ongoing) European comparators (added in 2021)
Equifax
TSR
Bureau Veritas
TSR
Atos
Intuit Experian
TSR
Cap Gemini
MSCI
TSR
IHS Markit
TSR
Dassault Systèmes
News Corporation Informa
TSR
Teleperformance
Nielsen Holdings Intertek Group
TSR
Temenos
NortonLifeLock Pearson
TSR
S&P Global
TSR
RELX
TSR
Thomson Reuters
TSR
SGS
TSR
Verisk Analytics
TSR
The Sage Group
TSR
John Wiley & Sons
*
TSR
*
John Wiley & Sons included in the TSR peer group but not in the pay peer group.
TSR
Companies that are included in the TSR peer group.
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Wolters Kluwer 2021 Annual Report 83
The TSR peer group used for the LTIP 2018-2020 and LTIP 2019-2021 comprised the following companies:
TSR peer group LTIP 2018-2020 and LTIP 2019-2021
North American comparators European comparators European comparators
John Wiley & Sons Arnoldo Mondadori Promotora de Informaciones (PRISA)
McClatchy
*
/Verisk Analytics Axel Springer Reach
News Corporation Daily Mail & General Trust RELX
S&P Global Informa The Sage Group
Thomson Reuters Lagardère
Pearson
*
McClatchy, after being acquired, was replaced by Verisk Analytics in October 2020.
SETTING TARGETS FOR LONGTERM INCENTIVE PLAN MEASURES
The Supervisory Board uses a rigorous process to set stretch targets for the Executive Board.
Process for setting targets for long-term incentive plan measures
The financial plan that is part of our three-year Vision & Strategy Plan (VSP) is the starting point for target setting. This plan is
augmented with assumptions around management actions to arrive at realistic stretch targets.
The process for setting targets for the LTIP starts with our company strategy, which is generally formulated every three years, and our
three-year financial plan (Vision & Strategy Plan or VSP), which is updated annually. The VSP generates a three-year forecast, based
on organic development of the existing business. This plan is reviewed and approved by the Supervisory Board.
For LTIP remuneration targets, this forecast is augmented with anticipated, value-creating management initiatives not accounted for
in the financial plan in order to give realistic but stretch targets that the Supervisory Board feels will maximize the full potential of
the organization. Assumptions for management initiatives are made based on historical patterns and forward-looking strategic plans.
Typical management initiatives are acquisitions, divestitures, restructuring, and share buybacks (including shares repurchased under
our Anti-Dilution Policy). All targets are based on constant currency rates and IFRS accounting standards.
The Supervisory Board compares the stretch targets against external benchmarks, where available, to ensure they represent
a challenging performance in our sector and against other peers. The stretch targets are also tested for sensitivity to various
input factors.
Step 1 Step 2 Step 3 Step 4
Review
VSP three-year
financial plan
=
Finalize
three-year
LTIPtargets
Augment
forecasts for
management
actions not
intheplan
Test targets
for stretch and
payout sensitivity
Determine
three-year
LTIPtargets
The TSR peer group is a sub-set of the pay peer group, with the exception of John Wiley & Sons. John Wiley is not included in the pay
peer group because its revenues and market capitalization are significantly smaller than those of Wolters Kluwer, but as a competitor
whose business is comparable to parts of Wolters Kluwer, its share price performance is viewed as an appropriate comparator for
TSR purposes.
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USE OF DISCRETION IN DETERMINING VARIABLEREMUNERATION
Under Dutch law, the Supervisory Board has the discretionary authority to amend Executive Board payouts, as determined by actual
performance against pre-set targets, if they are considered unreasonable or unfair in relation to stakeholders’ interests.
The Supervisory Board annually assesses the impact of certain management actions, or external events or circumstances, on
results during the performance period, and may use its discretion to adjust for these actions or events. Such actions, events, or
circumstances include, but are not limited to, the impact of restructuring, acquisitions, divestments, and share buybacks beyond that
anticipated in the target-setting process. External events considered could include economic recession, changes in tax rates, and
other events unforeseen in the target-setting process.
Variable remuneration can be clawed back after payout if the payout was based on incorrect information.
IMPLEMENTATION OF REMUNERATION POLICY IN 2021
This section outlines the implementation of the remuneration policy for Executive Board members in 2021, in line with the
remuneration policy and the remuneration framework discussed above. It also describes how the performance measures were
applied in 2021.
During 2021, remuneration was paid in accordance with the remuneration policy adopted in 2021. There were no deviations from the
remuneration policy, nor from the governance process in the execution of the policy. The Supervisory Board carried out a scenario
analysis when determining the structure and level of Executive Board remuneration for 2021, in accordance with the Dutch Corporate
Governance Code.
The Supervisory Board is of the view that management achieved strong results despite the ongoing challenges of the pandemic,
which required the organization to pivot and adapt throughout the year to protect the health and safety of employees, while
continuing to deliver for customers.
2021 STIP financial targets were all exceeded, while most non-financial or ESG targets were met or exceeded. The formulaic outcome
resulted in cash annual STIP payments of €1,959,938 for the CEO and €893,176 for the CFO.
Three-year performance on total shareholder return and CAGR in diluted EPS were both ahead of the LTIP 2019-2021 targets set three
years ago. The performance and shares to be paid out for the LTIP 2019-2021 is discussed below under Long-term incentive plans.
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Wolters Kluwer 2021 Annual Report 85
Remuneration of the Executive Board – IFRS based
Fixed remuneration Variable remuneration
in thousands of euros,
unlessotherwise indicated
Base
salary
Social
security
Pension
contribution
Other
benefits
*
STIP LTIP
2
Sub-total
Proportion
fixed/
variable
Tax
related
cost Total
2021
N. McKinstry
1
1,348 22 93 572 1,960 4,713 8,708 23%/77% 669 9,377
K.B. Entricken 694 22 64 203 893 1,632 3,508 28%/72% (104) 3,404
Total 2,042 44 157 775 2,853 6,345 12,216 25%/75% 565 12,781
2020
N. McKinstry 1,371 22 76 142 1,690 4,463 7,764 21%/79% (252) 7,512
K.B. Entricken 702 22 45 215 716 1,463 3,163 31%/69% 969 4,132
Total 2,073 44 121 357 2,406 5,926 10,927 24%/76% 717 11,644
1
In 2021, Ms. McKinstry’s base salary was $1,461,000 (€1,347,998). The 2021 STIP payout is calculated on a U.S. dollar denominated equivalent of total salary as:
$1,461,000 x 158.7% ($2,318,607 equivalent to €1,959,938).
2
LTIP share-based payments are based on IFRS accounting policies and therefore do not reflect the actual payout or value of performance shares released
upon vesting.
*
Executive Board members are eligible for benefits such as health insurance, life insurance, a car, and to participate in whatever all-employee plans may beoffered at
any given point. Other benefits of Ms. McKinstry include the recognition of a one-time, non-cash accrual of €446,000 to reflect her vesting in the retiree medical plan to
which she is entitled based on her tenure and service with the company.
Base salary
We believe the current CEO pay package is appropriate given the market benchmark data for our pay peer group. However, to be
responsive to the concerns around quantum from some investors, the Supervisory Board resolved not to increase the CEO base
salary for 2021. The Supervisory Board approved an increase in base salary for Mr. Entricken of 2.5% in 2021. This was in line with the
budgeted 2021 salary increase for Wolters Kluwer executives globally.
Short-term incentive plan 2021
The STIP provides Executive Board members with a cash incentive for the achievement of specific annual targets for a set of financial
and non-financial performance measures determined at the start of the year. The STIP payout as a percentage of base salary for
on-target performance is shown in the table below, with the minimum threshold for payout and the maximum payout in the case of
overperformance. There is no payout if performance is less than 90% of the STIP target. Payout is capped at performance that is 110%
or more than the STIP target. The STIP payout percentages have remained unchanged since 2007.
Payout of STIP variable remuneration takes place only after verification by the external auditor of the company’s financial statements,
including the financial KPIs on which the financial STIP targets are based.
STIP percentage payout scenarios for 2021
Minimum payout
(% of base salary)
Minimum threshold: no payout if
performance is below
(% of target)
Target payout
(% of base salary)
Maximum payout
(% of base salary)
Maximum payout if
performance is above
(% of target)
CEO 0% < 90% 125% 175% ≥110%
CFO 0% < 90% 95% 145% ≥110%
The 2021 performance measures, determined by the Supervisory Board, are listed in the table below. They reflect the key performance
indicators (KPIs) on which the company reports and that are important measures of the successful execution of our strategy.
Performance against STIP targets for 2021, together with the resulting STIP payout for the CEO and the CFO for the financial year,
is indicated in the table below.
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Payouts for performance against 2021 STIP targets
in thousands of euros, unless otherwise indicated STIP outcomes
Performance targets Actual performance N. McKinstry
1
K.B. Entricken
2
Performance measures
Weighting
(A) Minimum Target Maximum Performance
As % of
target
Payout,
% of base
salary
(B)
Weighted
(A)x(B)
Payout,
% of base
salary
(C)
Weighted
(A)x(C)
2021
Financial
Revenues 34.0% 4,164 4,627 5,090 4,771 103% 140% 47.6% 110% 37.4%
Adjusted net profit 28.0% 729 810 891 885 109% 170% 47.6% 140% 39.2%
Adjusted free cash flow 28.0% 733 815 896 1,010 124% 175% 49.0% 145% 40.6%
Non-financial/ESG
Average of six measures 10.0% 104% 145% 14.5% 115% 11.5%
Total payout as %
ofbasesalary 158.7% 128.7%
Total payout 1,960 893
1
The 2021 STIP payout is calculated on a U.S. dollar denominated equivalent of total base salary as: $1,461,000 x 158.7% ($2,318,607 equivalent to €1,959,938).
2
The 2021 STIP payout is calculated on a U.S. dollar denominated equivalent of total base salary as: $821,000 x 128.7% ($1,056,627 equivalent to €893,176).
Performance against the individual six STIP non-financial targets for 2021 is detailed in the table below:
Performance against STIP non-financial targets for 2021
Performance targets Actual performance
Performance measures Weighting (A) Minimum Target Maximum Performance As % of target
Non-financial measures
% of revenues from
expertsolutions 1.67% 90% of target 55.3% 108% of target 54.5% 99%
Employee engagement score vs
high-performingnorm (HPN)
1
1.67%
4-5 percentage
points below HPN
HPN ± 1 percentage
point
10 percentage
points above HPN
HPN + 1 percentage
point 100%
A diversity, equity,
andinclusiongoal 1.67% Discretionary
Deliver assessment
and plan Discretionary
Assessment and plan
were delivered 100%
% completion of annual
compliance training 1.67% <98% 98% ≥ 99.01% ≥ 99.01% 110%
Indexed cybersecurity
maturityscore (2020 = 100.0) 1.67% 100.0 103.1 106.3 105.6 105%
Number of on-premise servers
decommissioned (reducing
carbon footprint) 1.67% 808 850 935 2,838 110%
Average of six measures 10.0% 104%
1
High-performing norm (HPN) is an independently-defined standard based on companies that qualify for Fortune’s World’s Most Admired Companies
andGreatPlace to Work rankings.
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Wolters Kluwer 2021 Annual Report 87
LONGTERM INCENTIVE PLANS
The LTIP provides Executive Board members conditional rights on shares (performance shares). The plan aims to align the
organization and its management with the strategic goals of the company and, in doing so, reward the creation of long-term value
for shareholders. The total number of shares that Executive Board members receive depends on the achievement of pre-determined
performance conditions at the end of a three-year performance period. The performance measures for the LTIP 2019-2021 were total
shareholder return (TSR) relative to our group of TSR peer companies (TSR-related shares) and diluted EPS (EPS-related shares).
Payout of the performance shares at the end of the three-year performance period will take place only after verification by the
external auditor of the achievement of the TSR and EPS targets.
Total Shareholder Return
TSR objectively measures the company’s financial performance and assesses its long-term value creation as compared to other
companies in our TSR peer group. It is calculated based on the share price change over the three-year period and assumes ordinary
dividends are reinvested. By using a three-year performance period, there is a clear link between remuneration and long-term value
creation. The company uses a 60-day average of the share price at the beginning and end of each three-year performance period to
reduce the influence of potential stock market volatility.
Wolters Kluwer’s TSR performance compared to the peer group determines the number of conditionally awarded TSR-related shares
allocated at the end of the three-year performance period. These incentive zones are in line with best practice recommendations for the
governance of long-term incentive plans.
TSR performance ranking payout percentage table
Position
Payout as % of conditional shares
awarded for on-target performance
1-2 150%
3-4 125%
5-6 100%
7-8 75%
9-16 0%
Diluted adjusted earnings per share and return on invested capital
Executive Board members can earn 0%-150% of the number of conditionally awarded EPS-related or ROIC-related shares, depending
on Wolters Kluwer’s performance over the three-year performance period.
The Supervisory Board determines the exact targets for the EPS-related and ROIC-related shares for each three-year performance
period.
The EPS targets are based on diluted adjusted EPS performance in constant currencies, to exclude benefits or disadvantages based on
currency effects over which the Executive Board has no control. In addition, diluted adjusted EPS performance is based on consistent
IFRS accounting standards. The ROIC targets are also based on constant currencies.
Using EPS and ROIC as performance measures for LTIP facilitates strong alignment with the successful execution of our strategy to
generate long-term shareholder value.
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Diluted adjusted EPS and ROIC performance incentive table
Achievement Payout %
Less than 50% of target None
On target 100%
Overachievement of target Up to 150%
Performance against targets for TSR and EPS for the 2018-2020 and 2019-2021 performance periods
LTIP measure Weighting Target Achievement Payout %
Period 2019-2021 Vesting
TSR 50% Position 5-6 Position 4 125%
Diluted EPS
*
50% CAGR of 12.6% 15.0% 150%
Period 2018-2020 Vesting
TSR 50% Position 5-6 Position 3 125%
Diluted EPS
*
50% CAGR of 10.4% 11.1% 135%
*
LTIP 2018-2020 and LTIP 2019-2021 were based on the former remuneration policy, which used TSR and diluted EPS. For calculation purposes, we are using the definition
of diluted EPS that can be found in the Glossary.
VESTED LONG-TERM INCENTIVE PLANS
LTIP vesting for the performance period 2019–2021
The LTIP 2019-2021 vested on December 31, 2021. Vested LTIP 2019-2021 shares will be released on February 24, 2022. The volume-
weighted average price for the shares released will be based on the average exchange price traded at Euronext Amsterdam on
February 24, 2022, the first day following the company’s publication of its annual results.
Conditional share awards vested for the period 2019-2021
number of shares, unless otherwise stated
Outstanding at
December 31, 2021
Additional
conditional
number of TSR
shares (25%)
Additional
conditional
number of EPS
shares (50%)
Vested/payout
February 24, 2022
Estimated cash
value of payout
(inthousands
ofeuros)
*
N. McKinstry 92,306 13,347 19,459 125,112 12,962
K.B. Entricken 28,486 4,119 6,005 38,610 4,000
Total 120,792 17,466 25,464 163,722 16,962
Senior Management 353,908 44,259 88,551 486,718 50,424
Total 474,700 61,725 114,015 650,440 67,386
*
Estimated cash value calculated as the number of shares vested multiplied by the closing share price on December 31, 2021 (€103.60).
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Wolters Kluwer 2021 Annual Report 89
LTIP vesting for the performance period 2018-2020
The LTIP 2018-2020 vested on December 31, 2020. A total number of 705,214 shares were released on February 25, 2021. On that day, the
volume-weighted average price of Wolters Kluwer N.V. was €64.9899. The following table indicates the number of shares vested and
the cash equivalent.
LTIP: shares vested for the performance period 2018-2020
number of shares, unless otherwise stated
Outstanding at
December 31, 2020
Additional
conditional
number of TSR-
shares (25%)
Additional
conditional
number of EPS-
shares (35%)
Vested/payout
February 25, 2021
Cash value of
vested shares
*
N. McKinstry 108,117 15,563 16,052 139,732 9,081
K.B. Entricken 34,189 4,922 5,076 44,187 2,872
Total 142,306 20,485 21,128 183,919 11,953
Senior management 400,962 50,148 70,185 521,295 33,879
Total 543,268 70,633 91,313 705,214 45,832
*
Cash value in thousands of euros; calculated as the number of shares vested multiplied by the volume weighted average price on February 25, 2021.
CONDITIONALLY AWARDED SHARES
This section provides information on the conditional share awards under the outstanding (in-flight) LTIPs for Executive Board
members and other senior management.
LTIP awards 2020-2022 and 2021-2023
The Executive Board members and other senior management have been conditionally awarded the following number of shares based
on a 100% payout, subject to the conditions of the LTIP grants for 2020-2022 and 2021-2023:
Conditional LTIP share awards for performance periods 2020-2022 and 2021-2023
number of shares at 100% payout
Conditionally
awarded TSR-
based shares
Conditionally
awarded EPS-
based shares
Conditionally
awarded TSR-
based shares
Conditionally
awarded ROIC and
EPS-based shares
Total conditionally
awarded shares
LTIP 2020-2022 LTIP 2020-2022 LTIP 2021-2023 LTIP 2021-2023 December 31, 2021
N. McKinstry 48,255 32,486 38,618 28,352 147,711
K.B. Entricken 17,523 11,797 15,300 11,233 55,853
Total 65,778 44,283 53,918 39,585 203,564
Senior management
*
144,775 144,774 168,451 168,450 626,450
Total 210,553 189,057 222,369 208,035 830,014
*
Remuneration of senior management consists of a base salary, STIP, and LTIP, and is based on the achievement of specific objective targets linked to creating value
forshareholders, such as revenue and profit performance. The LTIP targets and payout schedule for senior management are similar to those for the Executive Board.
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KEY ASSUMPTIONS FOR LTIP 20202022 AND LTIP 20212023 SHARES
Fair values for LTIP shares are provided in the table below. In the benchmarking process, the fair value of share-based remuneration
is standardized to ensure a like-for-like comparison to peer companies.
LTIP 2021-2023 LTIP 2020-2022
Fair values
Fair value of (Adjusted-) EPS shares at grant date (in €) 64.06 60.68
Fair value of ROIC shares at grant date (in €) 64.06 –
Fair value of TSR shares at grant date (in €) 47.03 40.85
TSR shares – key assumptions
Share price at grant date (in €) 69.06 65.02
Expected volatility 21.8% 16.5%
The fair value of TSR shares is calculated at the grant date using the Monte Carlo model. For the TSR shares granted in the LTIP 2021-
2023, the fair value is estimated to be €47.03 as of January 1, 2021. The inputs to the valuation were the Wolters Kluwer share price of
€69.06 on the grant date (January 1, 2021) and an expected volatility of 21.8% based on historical daily prices over the three years prior
to January 1, 2021. Dividends are assumed to increase annually based on historic trend and management plans. The model assumes a
contractual life of three years and uses the risk-free rate on Dutch three-year government bonds.
PROPOSED REMUNERATION APPROACH FOR 2022
This section describes arrangements that will be put into place for 2022, in line with the remuneration policy as adopted at the
April 2021 AGM.
Base salary
The Supervisory Board approved a regular increase in base salary for the CEO and CFO of 2.5%, in line with the overall budgeted 2022
salary increase for Wolters Kluwer employees globally.
Short-term incentive plan 2022
The STIP percentage payout scenarios for 2022 will be the same as in 2021 (shown in the table on page 86). According to the
remuneration policy, the Supervisory Board can annually select measures from a pre-defined list of financial measures, providing
flexibility for the Supervisory Board and transparency for stakeholders. A full list of financial measures is provided in the summary
table at the front of this Remuneration Report. The financial measures carry a weight of at least 80% under the new remuneration
policy adopted in 2021. The Supervisory Board has selected the following measures from the list for 2022:
Financial performance measures for STIP 2022
Measure Weighting How performance is calculated
Revenues 34%
STIP financial targets are based on the annual budget which
assumes development of the existing business. In calculating STIP
performance results, the effect of changes in currency is excluded
and is based on consistent IFRS accounting standards.
Adjusted net profit 28%
Adjusted free cash flow 28%
Total weighting of STIP financial measures 90%
Non-financial performance measures for STIP 2022
The non-financial measures relate to ESG, strategic, or operational priorities. The policy sets the maximum weight for these non-
financial measures at 20% of the STIP. In 2022, the weight will be set at 10% with each measure equal-weighted and separately
assessed. The measures will apply equally to the CEO and CFO and have been cascaded down to all executives.
In 2022, the following three strategically-relevant ESG measures will be applied. All three measures will be quantifiable and verifiable.
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Wolters Kluwer 2021 Annual Report 91
Non-financial performance measures for 2022
ESG objective Measure Weighting % Description of target and how it is measured
Workforce diversity and
employee engagement
Belonging score 3.33% The annual target aims to achieve an improvement in our overall belonging score.
Belonging measures the extent to which employees believe they can bring their authentic
selves to work and be accepted for who they are. Thescore (on a scale of 0-100) is
determined by an independent third party (2021:Microsoft GLINT).
Secure systems and
processes
Indexed cybersecurity
maturity score
3.33% The annual target is based on a company-wide program designed to maintain and
advance cybersecurity. Our cybersecurity maturity score is assessed annually by a third
party, based on the National Institute of Standards and Technology (NIST) framework.
The score is indexed with a base line of 100.0 in 2020. The annual target aims to achieve
annual improvement on the baseline.
Reduction in carbon
footprint
Number of on-premise
servers decomissioned
3.33% The annual target is based on programs managed by Global Business Services, Digital
eXperience Group, and the four divisions. Decommissioning of on-premise servers by
migrating to energy-efficient cloud platforms reduces our carbon footprint.
Total weighting of STIP non-financial measures 10.0%
0% 20% 40% 60% 80% 100%
Weighting of STIP 2022 performance measures
Financial measures Non-financial measures
Disclosure of STIP targets
The Supervisory Board does not disclose STIP targets in advance due to their commercial sensitivity. In response to shareholder
requests for greater transparency, we have disclosed STIP targets retrospectively in this report.
LONGTERM INCENTIVE PLAN 20222024
Conditional LTIP grants under the new remuneration policy
The CEO’s target remuneration is positioned in line with the median of the pay peer group. However, having listened to shareholder
concerns about the quantum of CEO remuneration, we proposed as part of the new remuneration policy in 2021, in consultation with
the CEO, to reduce the maximum award of conditional shares from 285% to 240% over a two-year period. This change will take place
in two steps (265% for 2021 and 240% for 2022) and will effectively reduce the CEO’s target remuneration by about 10%.
The CFO’s target conditional award is 200%.
Wolters Kluwer uses the fair value method for calculating the number of conditional performance shares to be awarded.
0% 20% 40% 60% 80% 100%
Weighting of LTIP 2022-2024 performance measures
TSR Diluted adjusted EPS ROIC
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For the LTIP 2022-2024 cycle, in accordance with the policy adopted by shareholders at the 2021 AGM, the Supervisory Board
will maintain TSR, measured against 15 peers, as an LTIP measure with a weighting of 50% of the value of the LTIP. In addition, the
Supervisory Board will keep diluted adjusted EPS at 30% of the value and ROIC at 20%. These measures were selected based on
investor feedback and the Supervisory Board's continued desire to incentivize management to drive long-term value creation.
Prospective disclosure of LTIP targets
We committed to disclose the LTIP targets prospectively (in addition to continuing retrospective disclosure of LTIP targets), upon
adoption of the remuneration policy by the 2021 AGM. For plans designed under the new policy, targets are provided below.
LTIP Measure Weighting Target in constant currencies
Period 2022-2024
TSR 50% Position 5-6
Diluted adjusted EPS 30% CAGR of 9.3%
ROIC 20% Final year ROIC of 16.6%
Period 2021-2023
TSR 50% Position 5-6
Diluted adjusted EPS 30% CAGR of 8.5%
ROIC 20% Final year ROIC of 13.9%
Period 2020-2022
TSR 50% Position 5-6
Diluted basic EPS 50% Not disclosed
Conditional LTIP grants 2022-2024
In accordance with the commitment of the Supervisory Board in 2021 upon adoption of the remuneration policy, the LTIP target
level for the 2022-2024 performance period will be 240% for the CEO. The target level for the CFO is 200%. The number of shares
conditionally awarded at the start of the performance period is computed by dividing the amount, as calculated above, by the fair
value of a conditionally awarded share at the start of the performance period. As the fair value of TSR-related shares can be different
from the fair value of EPS- and ROIC-related shares, the number of conditionally awarded TSR-related shares can deviate from the
number of conditionally awarded EPS- and ROIC-related shares.
Proposed 2022 remuneration retains high proportion of performance-driven pay
Maximum +50% share
price appreciation
Maximum
performance
On-target
performance
Minimum
performance
2,0000in thousands of euros 4,000 12,0008,0006,000 10,000
2022 performance-driven CEO remuneration scenarios
Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation
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Wolters Kluwer 2021 Annual Report 93
Proposed 2022 remuneration retains high proportion of performance-driven pay
Maximum +50% share
price appreciation
Maximum
performance
On-target
performance
Minimum
performance
1,0000in thousands of euros 2,000 5,0003,000 4,000
2022 performance-driven CFO remuneration scenarios
Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation
SHARE OWNERSHIP AND HOLDING REQUIREMENTS
According to our remuneration policy, the CEO will be required to own Wolters Kluwer shares valued at three times base salary, with
other Executive Board members required to hold shares valued at twice base salary. Our current Executive Board members are already
in compliance with this ownership requirement, with their personal shareholdings in Wolters Kluwer N.V. shown below:
Shares owned by Executive Board members
number of shares, unless otherwise stated
Actual ownership as multiple of base
salary (as at December 31, 2021)
*
Actual ownership as multiple of base
salary (as at December 31, 2020)
*
December 31,
2021
December 31,
2020
N. McKinstry 28.6x 23.3x 372,131 462,131
K.B. Entricken 6.0x 3.6x 40,036 36,636
*
Number of Wolters Kluwer N.V. shares held at December 31 multiplied by the Wolters Kluwer N.V. share price on that date, divided by base salary.
In addition to these ownership requirements, according to the remuneration policy, performance shares (net of any income taxes due
on vesting) are subject to a two-year holding period requirement, as provided in the Dutch Corporate Governance Code. This two-year
holding period applies to the LTIP 2021-2023 and later plans and extends the total required retention period to five years including the
three-year performance and vesting period.
If the Executive Board member is eligible for a company-sponsored deferral program and chooses to participate by deferring LTIP
proceeds upon vesting, the maximum amount that can be deferred is 50% of the vested value. The remaining vested value in shares
(net of taxes) is subject to the two-year holding period requirement.
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CEO PAYRATIO
The pay-ratio, obtained by dividing the total 2021 remuneration for the CEO by the average of the total 2021 remuneration of all
employees worldwide, was 87 (2020: 79). For this purpose, the total CEO remuneration is based on the remuneration costs as stated in
the table Remuneration of the Executive Board – IFRS based, minus tax-related costs. The average employee remuneration is obtained
by dividing the 2021 total personnel expenses as stated in Note 13 – Personnel Expenses (after subtracting the CEO’s remuneration), by
the reported average number of full-time employees (minus one). As such, both the total CEO remuneration (minus tax-related costs)
and the average total remuneration of all employees (minus the CEO’s remuneration) are based on IFRS standards. The difference
between the 2020 and 2021 pay ratios was due to the one-time non-cash accrual of retiree medical benefits and higher variable pay.
OTHER INFORMATION
The company does not grant any personal loans, guarantees, or the like to Executive Board or Supervisory Board members.
Supervisory Board remuneration
A revised Supervisory Board remuneration policy was adopted at the 2020 AGM. The Supervisory Board had reviewed its own
remuneration and established the new policy on the recommendation of the Selection and Remuneration Committee. This was in line
with the November 2019 Dutch legislation which implemented the amended Shareholder Rights Directive. According to this policy, the
remuneration for the Supervisory Board aims to attract and retain high caliber individuals with the relevant skills and experience to
guide the development and execution of company strategy and facilitate long-term value creation.
Supervisory Board remuneration is not tied to company performance and therefore includes fixed remuneration only. In exceptional
circumstances, ad-hoc committees may be established, for which the Chair and members may receive pro-rated remuneration at the
level of the Audit Committee fee, capped at five times the annual fee of the Audit Committee. Resolutions are always taken by the full
Supervisory Board.
The Supervisory Board seeks advice from an independent external remuneration advisor.
Supervisory Board remuneration
in thousands of euros
Member Selection
and Remuneration
Committee
Member Audit
Committee 2021 2020 2019
F.J.G.M. Cremers, Chair Co-Chair 128 128 114
A.E. Ziegler, Vice-Chair Yes 102 102 95
B.J.F. Bodson
1
82 72 22
J.P. de Kreij
3
Chair 94 92 –
J.A. Horan Co-Chair 91 96 100
S. Vandebroek
3
Yes 93 61 –
C.F.H.H. Vogelzang
2
Yes 88 88 58
Former Supervisory Board members
B.F.J. Angelici
4
– – 20
R.D. Hooft Graafland
6
– 34 97
B.J. Noteboom
4
– – 25
F.M. Russo
5
– – 97
Total 678 673 628
1
Appointed at the AGM of 2019, with effect from September 1, 2019.
2
Appointed at the AGM of 2019.
3
Appointed at the AGM of 2020.
4
Retired after the AGM of 2019.
5
Retired at year-end 2019.
6
Retired after the AGM of 2020.
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Wolters Kluwer 2021 Annual Report 95
Supervisory Board members’ fees
The table below shows the fee schedule for Supervisory Board members. It also shows the proposed new remuneration as of 2022,
which proposal will be submitted to the 2022 Annual General Meeting of Shareholders. This proposal is in line with the Supervisory
Board remuneration policy which was adopted in 2020 by the AGM with 99.11% of votes in favor and reflects the responsibilities
of Supervisory Board members, remuneration levels at other two-tier board Dutch listed (AEX) companies and selected European
companies, and the international composition of the Supervisory Board.
Supervisory Board members’ fees
in euros Annual fee 2020 Annual fee 2021 Proposed new fee
Chair 112,000 112,000 130,000
Vice-Chair 83,500 83,500 95,000
Members 70,000 70,000 75,000
Chair Audit Committee 22,500 22,500 25,000
Members Audit Committee 16,500 16,500 18,000
Chair Selection and Remuneration Committee 17,500
*
17,500
*
20,000
**
Members Selection and Remuneration Committee 11,500 11,500 14,000
Travel allowance for intercontinental travel 5,000 per meeting 5,000 per meeting 5,000 per meeting
*
Due to the co-chair arrangement, each co-chair receives €14,500.
**
Due to the co-chair arrangement, each co-chair will receive €17,000.
Shares owned by Supervisory Board members
At December 31, 2021, Ms. Ziegler held 1,894 American Depositary Receipts (each Depositary Receipt represents one ordinary Wolters
Kluwer share) (2020: none). None of the other Supervisory Board members held shares in Wolters Kluwer (2020: none).
SHAREHOLDER VOTING AT ANNUAL GENERAL MEETING
The following table sets out the voting results in respect of resolutions relating to remuneration at the AGM held on April 22, 2021.
Shareholder voting outcomes at the 2021 AGM
Resolution % of votes for % of votes against votes withheld
2020 Remuneration Report Advisory 95.98% 4.02% 731,864
2021 Proposed Executive Board Remuneration Policy Binding 97.14% 2.86% 24,293
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FIVEYEAR OVERVIEW OF ANNUAL CHANGES IN REMUNERATION IFRS BASED
The table below provides an overview of Executive Board remuneration, Supervisory Board remuneration, company performance,
and average employee remuneration for the past five years.
Five-year overview of annual changes in remuneration (IFRS based)
in thousands of euros, unless otherwise stated 2021 2020 2019 2018 2017
Executive Board remuneration (excluding tax-related cost)
N. McKinstry 8,708 7,764 7,932 7,792 7,661
Change (in %) 12.2 (2.1) 1.8 1.7 15.2
K.B. Entricken 3,508 3,163 3,181 3,298 3,103
Change (in %) 10.9 (0.6) (3.6) 6.3 15.1
Supervisory Board remuneration
*
F.J.G.M. Cremers, Chair
1
128 128 114 117 60
A.E. Ziegler, Vice-Chair
1
102 102 95 95 57
B.J.F. Bodson
4
82 72 22 – –
J.A. Horan
3
91 96 100 91 88
J.P. de Kreij
2
94 92 – – –
S. Vandebroek
2
93 61 – – –
C.F.H.H. Vogelzang
4
88 88 58 – –
R.D. Hooft Graafland
9
– 34 97 100 80
F.M. Russo
5
– – 97 97 87
B.J. Angelici
6
– – 20 85 72
B.J. Noteboom
6
– – 25 82 72
P.N. Wakkie
7
– – – – 25
L.P. Forman
7
– – – – 32
Company performance
Organic growth (in %) 5.7 1.7 4.3 4.3 3.4
Adjusted operating profit margin (in %) 25.3 24.4 23.6 23.1 22.2
Year-end closing share price (€) 103.60 69.06 65.02 51.66 43.48
Share price change (in %) 50 6 26 19 26
Total shareholder return (in %) 52 8 28 21 29
Average remuneration on a full-time equivalent basis of employees
Total personnel cost per FTE, excluding CEO 99.7 98.6 97.6 92.3 93.9
*
Members of the Supervisory Board are independent from the company. Their remuneration is not tied to Wolters Kluwer’s performance and therefore includes
fixedremuneration only.
1
Appointed at the AGM of 2017.
2
Appointed at the AGM of 2020.
3
Appointed at the AGM of 2016.
4
Appointed at the AGM of 2019. Mr. Bodson's appointment was with effect from September 1, 2020.
5
Appointed at the AGM of 2016; retired per year end 2019.
6
Retired after the AGM of 2019.
7
Retired after the AGM of 2017.
9
Retired after the AGM of 2020.
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SECTION OVERVIEW
→ 2021 Financial Statements page 99
→ Consolidated Financial Statements page 100
→ Notes to the Consolidated Financial
Statements page 107
→ Company Financial Statements page 194
→ Notes to the Company Financial statements
page 197
→ Other information on the Financial
Statements page 204
Financial Statements
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Wolters Kluwer 2021 Annual Report 99
Notes to the Consolidated
FinancialStatements
107 Note 1 – General and Basis of Preparation
109 Note 2 – Significant Accounting Policies
111 Note 3 – Accounting Estimates and Judgments
112 Note 4 – Benchmark Figures
118 Note 5 – Segment Reporting
120 Note 6 – Revenues
124 Note 7 – Earnings per Share
125 Note 8 – Acquisitions and Divestments
129 Note 9 – Assets/Liabilities Classified as Held for Sale
131 Note 10 – Sales Costs
132 Note 11 – General and Administrative Costs
132 Note 12 – Other Gains and (Losses)
133 Note 13 – Personnel Expenses
133 Note 14 – Amortization, Impairment, and Depreciation
134 Note 15 – Financing Results
135 Note 16 – Income Tax Expense
137 Note 17 – Non-controlling Interests
138 Note 18 – Goodwill and Intangible Assets other
thanGoodwill
143 Note 19 – Property, Plant, and Equipment
144 Note 20 – Leasing
148 Note 21 – Investments in Equity-accountedInvestees
149 Note 22 – Financial Assets
149 Note 23 – Tax Assets and Liabilities
152 Note 24 – Inventories
153 Note 25 – Contract Assets and Liabilities
156 Note 26 – Other Receivables
157 Note 27 – Cash and Cash Equivalents
157 Note 28 – Trade and Other Payables
158 Note 29 – Long-term Debt
163 Note 30 – Financial Risk Management
172 Note 31 – Employee Benefits
182 Note 32 – Provisions
184 Note 33 – Capital and Reserves
186 Note 34 – Share-based Payments
189 Note 35 – Related Party Transactions
189 Note 36 – Audit Fees
190 Note 37 – Commitments, Contingent Assets,
andContingent Liabilities
191 Note 38 – Remuneration of the Executive Board
and the Supervisory Board
192 Note 39 – Overview of Significant Subsidiaries
193 Note 40 – Events after Balance Sheet Date
100 Consolidated Financial Statements
100 Consolidated Statement of Profit or Loss
101 Consolidated Statement of Comprehensive Income
102 Consolidated Statement of Cash Flows
104 Consolidated Statement of Financial Position
106 Consolidated Statement of Changes in Total Equity
2021 Financial Statements
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Financial Statements
Consolidated Statement of Profit or Loss
in millions of euros, unless otherwise stated, for the year ended December 31 2021 2020
Revenues Note 5/6 4,771 4,603
Cost of revenues Note 5 (1,374 ) (1,359 )
Gross profit Note 5 3,397 3,244
Sales costs Note 10 (806 ) (784 )
General and administrative costs Note 11 (1,550 ) (1,480 )
Total operating expenses Note 5 (2,356 ) (2,264 )
Other gains and (losses) Note 12 (29 ) (8 )
Operating profit Note 5 1,012 972
Financing income 4 10
Financing costs (82 ) (56 )
Other finance income/(costs) (6 ) 5
Total financing results Note 15 (84 ) (41 )
Share of profit of equity-accounted investees, net of tax Note 21 1 6
Profit before tax 929 937
Income tax expense Note 16 (201 ) (216 )
Profit for the year 728 721
Attributable to:
– Owners of the company 728 721
– Non-controlling interests Note 17 0 0
Profit for the year 728 721
Earnings per share (EPS) (€)
Basic EPS Note 7 2.79 2.72
Diluted EPS Note 7 2.78 2.70
Consolidated
FinancialStatements
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Wolters Kluwer 2021 Annual Report 101
Consolidated Statement of
Comprehensive Income
in millions of euros, for the year ended December 31 2021 2020
Comprehensive income
Profit for the year 728 721
Other comprehensive income
Items that are or may be reclassified subsequently to the consolidated statement
ofprofitorloss:
Exchange differences on translation of foreign operations 314 (348 )
Eschange differences on translation of equity-accounted investees Note 21 1 0
Recycling of foreign exchange differences on loss of control Note 8 40 0
Gains/(losses) on hedges of net investments in foreign operations (16 ) 11
Gains/(losses) on cash flow hedges 6 (24 )
Net change in fair value of cash flow hedges reclassified to the consolidated
statementofprofit or loss Note 15 4 6
Items that will not be reclassified to the consolidated statement of profit or loss:
Remeasurement gains/(losses) on defined benefit plans Note 31 16 0
Other comprehensive income/(loss) for the year, before tax 365 (355 )
Income tax on items that may subsequently be reclassified to the consolidated statement
ofprofit or loss 0 1
Income tax on items that will not be reclassified to the consolidated statement of profit
orloss (4 ) 0
Income tax on other comprehensive income Note 23 (4 ) 1
Other comprehensive income/(loss) for the year 361 (354 )
Total comprehensive income for the year 1,089 367
Attributable to:
– Owners of the company 1,088 367
– Non-controlling interests 1 0
Total 1,089 367
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Consolidated Statement
ofCashFlows
in millions of euros, for the year ended December 31 2021 2020
Cash flows from operating activities
Profit for the year 728 721
Adjustments for:
Income tax expense Note 16 201 216
Share of profit of equity-accounted investees, net of tax Note 21 (1 ) (6 )
Financing results Note 15 84 41
Amortization, impairment, and depreciation Note 14 473 442
Book (profit)/loss on disposal of operations and non-current assets 10 (7 )
Fair value changes of contingent considerations Note 12 0 (4 )
Additions to and releases from provisions Note 32 15 42
Appropriation of provisions Note 32 (36 ) (19 )
Changes in employee benefit provisions (9 ) (4 )
Share-based payments Note 34 24 24
Other adjustments (4 ) (2 )
Adjustments excluding autonomous movements in working capital 757 723
Inventories (3 ) 0
Contract assets Note 25 (16 ) (6 )
Trade and other receivables (78 ) 22
Deferred income Note 25 113 44
Other contract liabilities Note 25 14 29
Trade and other payables 120 (50 )
Autonomous movements in working capital 150 39
Total adjustments 907 762
Net cash flows from operations 1,635 1,483
Interest paid (including the interest portion of lease payments) (72 ) (75 )
Interest received 6 10
Paid income tax Note 23 (277 ) (221 )
Net cash from operating activities 1,292 1,197
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Wolters Kluwer 2021 Annual Report 103
in millions of euros, for the year ended December 31 2021 2020
Cash flows from investing activities
Capital expenditure Note 18/19 (240 ) (238 )
Proceeds from disposal of other intangible assets and property, plant, and equipment 1 7
Acquisition spending, net of cash acquired Note 8 (108 ) (395 )
Receipts from divestments, net of cash disposed Note 8 76 50
Dividends received Note 21 0 1
Cash from settlement of net investment hedges (16 ) 12
Net cash used in investing activities (287 ) (563 )
Cash flows from financing activities
Repayment of loans (100 ) (363 )
Proceeds from new loans 500 496
Repayment of principal portion of lease liabilities Note 20 (68 ) (74 )
Collateral paid Note 30 – (2 )
Repurchased shares Note 33 (410 ) (350 )
Dividends paid Note 33 (373 ) (334 )
Net cash used in financing activities (451 ) (627 )
Net cash flow before effect of exchange differences 554 7
Exchange differences on cash and cash equivalents and bank overdrafts 76 (77 )
Net change in cash and cash equivalents and bank overdrafts 630 (70 )
Cash and cash equivalents less bank overdrafts at January 1 364 434
Cash and cash equivalents less bank overdrafts at December 31 Note 27 994 364
Add: Bank overdrafts at December 31 Note 27 9 359
Less: Cash included in assets classified as held for sale at December 31 Note 9 (2 ) –
Cash and cash equivalents in the consolidated statement of financial position
at December 31 Note 27 1,001 723
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Consolidated Statement
ofFinancialPosition
in millions of euros, at December 31 2021 2020
*
Non-current assets
Goodwill Note 18 4,180 3,969
Intangible assets other than goodwill Note 18 1,620 1,669
Property, plant, and equipment Note 19 75 84
Right-of-use assets Note 20 301 319
Investments in equity-accounted investees Note 21 10 8
Financial assets Note 22 5 5
Other receivables Note 26 18 20
Contract assets Note 25 19 21
Deferred tax assets Note 23 62 72
Total non-current assets 6,290 6,167
Current assets
Inventories Note 24 65 68
Contract assets Note 25 138 111
Trade receivables Note 25 1,008 986
Other receivables Note 26 366 272
Current income tax assets Note 23 59 23
Cash and cash equivalents Note 27 1,001 723
Assets classified as held for sale Note 9 101 –
Total current assets 2,738 2,183
Total assets 9,028 8,350
*
Restated for certain reclassifications. See Note 1 – General and Basis of Preparation.
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Wolters Kluwer 2021 Annual Report 105
in millions of euros, at December 31 2021 2020
*
Equity
Issued share capital Note 33 32 32
Share premium reserve 87 87
Legal reserves 215 (118 )
Treasury shares (247 ) (222 )
Retained earnings 2,330 2,308
Equity attributable to the owners of the company Note 47 2,417 2,087
Non-controlling interests Note 17 0 0
Total equity 2,417 2,087
Non-current liabilities
Bonds 2,625 2,126
Private placements 153 157
Lease liabilities 260 276
Other long-term debt 13 17
Total long-term debt Note 29 3,051 2,576
Deferred tax liabilities Note 23 294 305
Employee benefits Note 31 90 115
Provisions Note 32 7 4
Non-current deferred income Note 25 113 112
Total non-current liabilities 3,555 3,112
Current liabilities
Deferred income Note 25 1,709 1,518
Other contract liabilities Note 25 80 66
Trade and other payables Note 28 944 819
Current income tax liabilities Note 23 142 169
Short-term provisions Note 32 27 48
Borrowings and bank overdrafts Note 29 9 459
Short-term lease liabilities Note 29 71 72
Liabilities classified as held for sale Note 9 74 –
Total current liabilities 3,056 3,151
Total liabilities 6,611 6,263
Total equity and liabilities 9,028 8,350
*
Restated for certain reclassifications. See Note 1 – General and Basis of Preparation.
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Consolidated Statement of
Changesin Total Equity
Legal reserves Other reserves
in millions of euros
Issued share
capital
Share premium
reserve
Legal reserve
participations
Hedge reserve
Translation
reserve
Treasury
shares
Retained
earnings
Shareholders’
equity
Non-
controlling
interests
Total equity
Balance at January 1, 2020
*
Profit for the year 721 721 0 721
Other comprehensive income/(loss) for the year (6 ) (348 ) 0 (354 ) 0 (354 )
Total comprehensive income for the year (6 ) (348 ) 721 367 0 367
Transactions with owners of the company,
recognized directly in equity:
Share-based payments 24 24 24
Cancelation of shares (1 ) 346 (345 ) 0 0
Release LTIP shares 61 (61 ) 0 0
Final cash dividend 2019 (210 ) (210 ) 0 (210 )
Interim cash dividend 2020 (124 ) (124 ) (124 )
Repurchased shares (350 ) (350 ) (350 )
Other movements (6 ) 0 6 0 0
Balance at December 31, 2020
*
Balance at January 1, 2021 32 87 133 (116 ) (135 ) (222 ) 2,308 2,087 0 2,087
Profit for the year 728 728 0 728
Other comprehensive income/(loss) for the year (6 ) 354 12 360 1 361
Total comprehensive income for theyear (6 ) 354 740 1,088 1 1,089
Transactions with owners of the company,
recognized directly in equity:
Share-based payments 24 24 24
Cancelation of shares 0 336 (336 ) 0 0
Release LTIP shares 49 (49 ) 0 0
Final cash dividend 2020 (232 ) (232 ) (1 ) (233 )
Interim cash dividend 2021 (140 ) (140 ) (140 )
Repurchased shares (410 ) (410 ) (410 )
Other movements (15 ) 0 15 0 0
Balance at December 31, 2021 32 87 118 (122 ) 219 (247 ) 2,330 2,417 0 2,417
*
Restated for certain reclassifications. See Note 1 – General and Basis of Preparation.
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Wolters Kluwer 2021 Annual Report 107
Note 1 – General and Basis of Preparation
GENERAL
Reporting entity
is a global leader in professional information, software solutions, and services for the health, tax and accounting, finance, risk
The group maintains operations across the U.S. & Canada, Europe, Asia Pacific, and other regions (referred to as ‘Rest of World’) .
The company’s ordinary shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.
The registered office of Wolters Kluwer N.V. is located at Zuidpoolsingel 2, Alphen aan den Rijn, the Netherlands , with its statutory
seat in Amsterdam and a registration with the Dutch Commercial Register under number 33.202.517.
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
and its interpretations, prevailing as of December 31, 2021, as endorsed for use in the European Union by the European Commission.
These financial statements were authorized for issuance by the Executive Board and the Supervisory Board on February 22, 2022.
The adoption of the financial statements and the adoption of the dividend are reserved for the shareholders in the Annual General
Meeting of Shareholders on April 21, 2022.
Consolidated financial statements
The consolidated financial statements of the company at and for the year ended December 31, 2021, comprise the group and
the group’s interest in associates. The significant accounting policies applied in the preparation of these consolidated financial
statements are set out in Note 2 – Significant Accounting Policies and the relevant respective notes to the consolidated financial
statements.
A list of subsidiaries has been filed with the Chamber of Commerce in The Hague, the Netherlands , and is available from the company
upon request. An overview of the significant subsidiaries is included in Note 39 – Overview of Significant Subsidiaries.
BASIS OF PREPARATION
Basis of measurement
The consolidated financial statements have been prepared under the historical cost basis except for the following material items
in the consolidated statement of financial position:
• Financial assets and financial liabilities (including derivative financial instruments) measured at fair value;
• Assets and liabilities held for sale;
• Contingent considerations;
• Share-based payments; and
• Net defined employee benefit assets/liabilities.
Functional and presentation currency
The consolidated financial statements are presented in euros, which is the company’s functional and presentation currency. Unless
otherwise indicated, the financial information is in euros and has been rounded to the nearest million.
Use of estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and
assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported amounts of income and expense. Refer to Note 3 – Accounting Estimates and Judgments.
Notes to the Consolidated
Financial Statements
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Note 1 – General and Basis of Preparation continued
Going concern
The Executive Board has assessed the going concern assumption, as part of the preparation of the consolidated financial statements.
The Executive Board believes that no events or conditions, including the COVID-19 pandemic, give rise to doubt about the ability of
the group to continue in operation at least 12 months from the end of the reporting period.
This conclusion is drawn based on knowledge of the group, the estimated economic outlook and related identified risks and
uncertainties. Furthermore, the conclusion is based on a review of the three-year strategic plan and next year’s budget, including
expected development in liquidity and capital, which includes the evaluation of current credit facilities available, contractual and
expected maturities of financial liabilities, and loan covenants. Consequently, it was concluded that it is reasonable to apply the
going concern assumption for the preparation of the consolidated financial statements.
Effect of new accounting standards
Except for the EU-endorsed amendments below, the group has consistently applied the accounting policies set out in Note 2 –
Significant Accounting Policies and the relevant respective notes to the consolidated financial statements, to all periods presented in
these financial statements.
The group has applied the following amendments for the first time for the annual reporting period commencing January 1, 2021:
• Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 7, IFRS 9, IFRS 16, and IAS 39).
In the prior year, the group adopted the Interest Rate Benchmark Reform Phase 1 amendments. These amendments modified specific
hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before
the hedged items or hedging instruments are amended as a result of the interest rate benchmark reform.
In the current year, the group adopted the Interest Rate Benchmark Reform Phase 2 amendments. Adopting these amendments
enables the group to reflect the effects of transitioning from interbank offered rates (IBOR) to alternative benchmark interest rates
without giving rise to accounting impacts that would not provide useful information to users of financial statements.
The fixed interest payments on the group’s private placements denominated in Japanese yen are hedged to euro, via cross-currency
interest rate swaps. Both the Japanese Libor and Euribor are inputs in the fair value determination. The Phase 1 reliefs have allowed
the group to continue its fair value determination during the period of uncertainty. In the group’s other hedging relationships, no
IBOR is used as input in the fair value determinations, nor is there any reference to any IBOR in the hedge contracts.
See Note 30 – Financial Risk Management for further disclosure on the Interest Rate Benchmark Reform.
Agenda decisions by IFRS Interpretations Committee – Configuration or customization costs in a cloud computing agreement
(IAS38Intangible Assets)
The group assessed the impact of this Agenda decision and concluded that it did not have a significant impact on the amounts
recognized in the current or prior periods.
Effect of forthcoming accounting standards
The following forthcoming amendments and new standards are not yet effective for the year ended December 31, 2021, and have not
been early adopted in preparing these financial statements:
• Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments to IFRS 9 and IFRS 16);
• References to the Conceptual Framework (Amendments to IFRS 3);
• Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28);
• IFRS 17 Insurance Contracts;
• Classification of liabilities as current or non-current (Amendments to IAS 1);
• Disclosure of accounting policies (Amendments to IAS 1 and IFRS Practice Statement 2);
• Definition of accounting estimates (Amendments to IAS 8);
• Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12);
• Property, Plant, and Equipment – Proceeds before intended use (Amendments to IAS 16); and
• Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37).
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Wolters Kluwer 2021 Annual Report 109
Note 1 – General and Basis of Preparation continued
The group expects no significant impact from these amendments and new standards.
Comparatives
The comparative disclosures were adjusted as follows:
• In the 2020 consolidated statement of financial position, both deferred tax assets and deferred tax liabilities decreased by €33 million,
due to a change in presentation of certain tax allowances.
• In the consolidated statement of changes in equity, an amount of €19 million is reclassified from the translation reserve to the hedge
reserve, to adjust for an erroneous classification, at January 1, 2020, and December 31, 2020.
In addition, certain immaterial reclassifications have been made to the comparative consolidated statement of cash flows, the
comparative consolidated statement of financial position, and the related notes to conform to the current year presentation and to
improve insights. These reclassifications have had no impact on the comparative shareholders’ equity and comparative profit for the
year.
Note 2 – Significant Accounting Policies
Except for the changes explained in Note 1 – General and Basis of Presentation, the group has consistently applied the significant
accounting policies to all periods presented in these consolidated financial statements. The main principles for the determination
and presentation of results and the valuation and presentation of assets and liabilities are described in the relevant respective notes
to the consolidated financial statements.
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are all entities controlled by the group. The group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and can affect those returns through its power over the entity. The principle of control is
the basis for determining which entities are consolidated in the consolidated financial statements.
Loss of control
Upon loss of control, the group derecognizes the assets and liabilities of the subsidiary, any non-controlling interests, and the other
components of equity related to the subsidiary. Any surplus or deficit arising from the loss of control is recognized in profit or loss.
If the group retains any equity interest in the former subsidiary, then such interest is measured at fair value at the date that control
is lost. Subsequently, the remaining interest is accounted for as an equity-accounted investee or as a financial asset at fair value
through profit or loss or other comprehensive income, depending on the level of influence retained.
Transactions eliminated on consolidation
Intragroup balances, transactions, and any unrealized gains and losses arising from transactions between group companies are
eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions between the group and its equity-accounted investees are eliminated to the extent of the
group’s interest in the equity-accounted investees.
Foreign currency
Functional and presentation currency
Items included in the financial statements of each of the group entities are measured using the currency of the primary economic
environment in which the group entities operate (the functional currency). The consolidated financial statements are presented in
euros, which is the group’s presentation currency.
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Note 2 – Significant Accounting Policies continued
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions during the year and from the
translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates, are recognized in profit
or loss.
Foreign currency differences arising from the following items are recognized in other comprehensive income:
• Qualifying cash flow hedges to the extent that the hedge is effective; and
• Qualifying net investment hedges on foreign operations to the extent that the hedge is effective.
Non-monetary assets and liabilities in a foreign currency that are measured in terms of historical cost are translated using the exchange
rate at the transaction date. Non-monetary assets and liabilities denominated in foreign currencies, that are stated at fair value, are
translated to the functional currency at the foreign exchange rates prevailing on the dates the fair value was determined.
Foreign operations
The assets and liabilities of group companies are translated to euros at foreign exchange rates prevailing at the end of the reporting
period. Income and expenses of group companies are translated to euros at exchange rates on the dates of the transactions.
All resulting exchange differences are recognized as a component of other comprehensive income in the translation reserve.
When a foreign currency-denominated subsidiary or equity-accounted investee is disposed of, exchange differences that were
recognized in other comprehensive income prior to the sale are reclassified to profit or loss as part of the gain or loss on
divestments.
Net investment in foreign operations
Net investment in foreign operations includes equity financing and long-term intercompany loans for which settlement is neither
planned nor likely to occur in the foreseeable future. Exchange differences arising from the translation of the net investment in
foreign operations, and of related hedges, are taken to the translation reserve of foreign operations in other comprehensive income.
MAIN CURRENCY EXCHANGE RATES
rates to the euro 2021 2020
U.S. dollar (average) 1.18 1.14
U.S. dollar (at December 31) 1.13 1.23
PRINCIPLES UNDERLYING THE STATEMENT OF CASHFLOWS
General
Bank overdrafts repayable on demand are included as cash and cash equivalents in the consolidated statement of cash flows to the
extent that they form an integral part of the group’s cash management. However, in the consolidated statement of financial position,
the bank overdrafts are presented separately as the offsetting criteria are not met.
Cash flows from operating activities
Cash flows from operating activities are calculated by the indirect method, by adjusting the consolidated profit for the year for
items that are not cash flows and for autonomous movements in operating working capital (excluding the impact of acquisitions/
divestments, foreign exchanges differences, and reclassifications to assets/liabilities classified as held for sale).
Cash flows from operating activities include receipts from customers, cash payments to employees and suppliers, paid financing costs
of operating activities (including interest paid and received, interest portion of lease payments, paid financing fees, and cash flows
resulting from derivatives not qualifying for hedge accounting), acquisition and divestment-related costs, spending on restructuring
provisions, and income taxes paid.
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Note 2 – Significant Accounting Policies continued
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Financial Statements
Note 4 – Benchmark Figures
Cash flows from investing activities
Cash flows from investing activities are those arising from capital expenditure on and disposal of property, plant, and equipment
and other intangible assets, acquisitions and sale of subsidiaries and equity-accounted investees, dividends received, and cash flows
from the settlement of net investment hedge.
Dividends received relate to dividends received from equity-accounted investees and financial assets measured at fair value through
profit or loss or other comprehensive income.
Cash receipts and payments from the settlement of derivative financial instruments are classified in the same manner as the
cash flows of the hedged items. The group primarily uses derivatives for hedging its net investments in U.S. dollar-denominated
subsidiaries. As a result, cash receipts and payments from the settlement of derivatives are classified under cash flows from investing
activities.
Cash flows from financing activities
The cash flows from financing activities comprise the cash receipts and payments from issued and repurchased shares, long-term
debt instruments, short-term financing, repayment of the principal portion of lease liabilities, and dividends paid. Dividends paid
relate to dividends paid to the owners of the company and the non-controlling interests.
Note 3 – Accounting Estimates and Judgments
General
The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates, and
assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported amounts of income and expense. The estimates and underlying assumptions are based on historical
experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgments about carrying values of assets and liabilities that are not clear from other sources. Actual results may differ
from those estimates and may result in material adjustments in the next financial year(s).
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised if the revision affects only that period, or the period of the revision and future periods if the
revision affects both current and future periods. Judgments made by management in the application of IFRS that have a significant
effect on the financial statements and estimates with a significant risk of material adjustment in future years are further discussed in
the corresponding notes to the consolidated statements of profit or loss and financial position:
• Revenue recognition (see Note 6);
• Accounting for income taxes (see Note 16);
• Valuation, measurement, and impairment testing of goodwill and intangible assets other than goodwill (see Note 18); and
• Employee benefits (see Note 31).
Impact of COVID-19
The ongoing COVID-19 pandemic did not have a significant effect on the accounting estimates and judgments applied in the group’s
consolidated financial statements.
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Note 4 – Benchmark Figures continued
Benchmark figures refer to figures adjusted for non-benchmark items and, where applicable, amortization and impairment
of goodwill and acquired identifiable intangible assets. Adjusted figures are non-IFRS compliant financial figures but are internally
regarded as key performance indicators to measure the underlying performance of the business. These figures are presented as
additional information and do not replace the information in the consolidated financial statements.
BENCHMARK FIGURES
in millions of euros, unless otherwise stated 2021 2021 2020
Change in
actual
currencies (%)
Change in
constant
currencies (%)
*
Revenues 4,771 4,603 4 6
Organic revenue growth (%) 6 2
Adjusted operating profit 1,205 1,124 7 11
Adjusted operating profit margin (%) 25.3 24.4
Adjusted net profit 885 835 6 15
Adjusted net financing costs Note 15 (78) (46) 70 (8)
Adjusted free cash flow 1,010 907 11 15
Cash conversion ratio (%) 112 102
Return on invested capital (ROIC) (%) 13.7 12.3
Net debt Note 29 2,131 2,383 (11)
Net-debt-to-EBITDA ratio 1.4 1.7
Diluted adjusted EPS (€) 3.38 3.13 8
Diluted adjusted EPS in constant currencies (€)
*
3.56 3.03 17
Diluted adjusted free cash flow per share (€) 3.87 3.40 14 17
*
Constant currencies at €/$ 1.14.
REVENUE BRIDGE
€ million %
Revenues 2020 4,603
Organic change 259 6
Acquisitions 64 1
Divestments (45) (1)
Currency impact (110) (2)
Revenues 2021 4,771 4
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Financial Statements
Note 4 – Benchmark Figures continued
RECONCILIATION BETWEEN OPERATING PROFIT AND ADJUSTED OPERATING PROFIT
2021 2020
Operating profit 1,012 972
Amortization and impairment of acquired identifiable intangible assets Note 14 164 144
Non-benchmark items in operating profit Note 12 29 8
Adjusted operating profit 1,205 1,124
RECONCILIATION BETWEEN TOTAL FINANCING RESULTS AND ADJUSTED NET FINANCING COSTS
2021 2020
Total financing results Note 15 (84) (41)
Non-benchmark items in total financing results Note 15 6 (5)
Adjusted net financing costs (78) (46)
RECONCILIATION BETWEEN PROFIT FOR THE YEAR AND ADJUSTED NET PROFIT
2021 2020
Profit for the year attributable to the owners of the company (A) 728 721
Amortization and impairment of acquired identifiable intangible assets 164 144
Tax benefits on amortization and impairment of acquired identifiable intangible assets (44) (37)
Non-benchmark items, net of tax 37 7
Adjusted net profit (B) 885 835
SUMMARY OF NON-BENCHMARK ITEMS
2021 2020
Included in operating profit:
Other gains and (losses) Note 12 (29) (8)
Included in total financing results:
Other finance income/(costs) Note 15 (6) 5
Total non-benchmark items before tax (35) (3)
Tax benefit/(expense) on non-benchmark items (1) (4)
Impact of changes in tax rates (1) 0
Non-benchmark items, net of tax (37) (7)
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Note 4 – Benchmark Figures continued
RECONCILIATION BETWEEN NET CASH FROM OPERATING ACTIVITIES AND ADJUSTED FREE CASH FLOW
2021 2020
Net cash from operating activities 1,292 1,197
Net capital expenditure (239) (231)
Repayment of principal portion of lease liabilities (68) (74)
Acquisition-related costs Note 8 5 11
Paid divestment expenses Note 8 8 2
Dividends received Note 21 0 1
Net income tax charge/(benefit) on divested assets and consolidation of platform technology 12 1
Adjusted free cash flow (C) 1,010 907
RETURN ON INVESTED CAPITAL (ROIC)
in millions of euros, unless otherwise stated 2021 2020
Adjusted operating profit 1,205 1,124
Allocated tax (259) (259)
Net operating profit after allocated tax (NOPAT) 946 865
Average invested capital 6,915 7,053
ROIC (NOPAT/Average invested capital) (%) 13.7 12.3
Allocated tax is the adjusted operating profit multiplied by the benchmark tax rate.
Invested capital is defined as total assets minus current liabilities and non-current deferred income, excluding investments in equity-
accounted investees, deferred tax assets, non-operating working capital, and cash and cash equivalents.
This total summation is adjusted for accumulated amortization on acquired identifiable intangible assets, goodwill amortized pre-
IFRS 2004, and goodwill written off to equity prior to 1996 (excluding acquired identifiable intangible assets/goodwill that have been
impaired and/or fully amortized), less any related deferred tax liabilities. The average invested capital is based on five measurement
points during the year.
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Note 4 – Benchmark Figures continued
PER SHARE INFORMATION
in euro, unless otherwise stated 2021 2020
Total number of ordinary shares outstanding at December 31 (in millions of shares) Note 33 258.2 262.4
Weighted average number of ordinary shares (D) (in millions of shares) Note 7 260.4 265.0
Diluted weighted average number of ordinary shares (E) (in millions of shares) Note 7 261.8 266.6
Adjusted EPS (B/D) 3.40 3.15
Diluted adjusted EPS (B/E) 3.38 3.13
Diluted adjusted EPS in constant currencies 3.56 3.03
Basic EPS (A/D) Note 7 2.79 2.72
Diluted EPS (A/E) Note 7 2.78 2.70
Adjusted free cash flow per share (C/D) 3.89 3.42
Diluted adjusted free cash flow per share (C/E) 3.87 3.40
BENCHMARK TAX RATE
in millions of euros, unless otherwise stated 2021 2020
Income tax expense Note 16 201 216
Tax benefit on amortization and impairment of acquired identifiable intangible assets 44 37
Tax benefit/(expense) on non-benchmark items (1) (4)
Impact of changes in tax rates (1) 0
Tax on adjusted profit (F) 243 249
Adjusted net profit (B) 885 835
Adjustment for non-controlling interests 0 0
Adjusted profit before tax (G) 1,128 1,084
Benchmark tax rate (F/G) (%) 21.5 23.0
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Note 4 – Benchmark Figures continued
CASH CONVERSION RATIO
in millions of euros, unless otherwise stated 2021 2020
Operating profit 1,012 972
Amortization, impairment, and depreciation Note 14 473 442
EBITDA 1,485 1,414
Non-benchmark items in operating profit Note 12 29 8
Adjusted EBITDA 1,514 1,422
Autonomous movements in working capital 150 39
Net capital expenditure (239) (231)
Repayment of principal portion of lease liabilities Note 20 (68) (74)
Interest portion of lease payments Note 20 (9) (11)
Adjusted operating cash flow (H) 1,348 1,145
Adjusted operating profit (I) 1,205 1,124
Cash conversion ratio (H/I) (%) 112 102
NON-BENCHMARK ITEMS IN OPERATING PROFIT
Non-benchmark items relate to income and expenses arising from circumstances or transactions that, given their size and/or nature,
are clearly distinct from the ordinary activities of the group and are excluded from the benchmark figures. Apart from amortization
and impairment of acquired identifiable intangible assets and impairment of goodwill, non-benchmark items in operating profit
include the items below. Refer also to Note 12 – Other Gains and (Losses).
Divestment-related results
Divestment-related results are event-driven gains and losses incurred by the group from the sale of subsidiaries and/or businesses.
These results also include divestment expenses and restructuring of stranded costs, and have been included in other gains and
losses in the consolidated statement of profit or loss.
Acquisition-related costs
Acquisition-related costs are non-recurring costs incurred by the group resulting from acquisition activities. The acquisition-related
costs are directly attributable to acquisitions, such as legal fees, broker/bank costs, and commercial and financial due diligence fees,
and have been included in other gains and losses in the consolidated statement of profit or loss.
Loss on remeasurement of disposal groups
Loss on remeasurement of disposal groups includes losses for any initial or subsequent write-down of the disposal groups to fair
value less costs of disposal.
Fair value changes of contingent considerations
Results from changes in the fair value of contingent considerations are not considered to be part of the ordinary activities of the
group and have been included in other gains and losses in the consolidated statement of profit or loss.
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Financial Statements
Note 5 – Segment Reporting
Additions to acquisition integration provisions
Additions to acquisition integration provisions are those non-recurring costs incurred by the group to integrate activities acquired
through business combinations and have been included in other gains and losses in the consolidated statement of profit or loss.
Other non-benchmark items
Non-benchmark items, which cannot be classified in the categories above, relate to income and expenses arising from circumstances
or transactions that, given their size or nature, are clearly distinct from the ordinary activities of the group and are excluded from the
benchmark figures.
NON-BENCHMARK ITEMS IN FINANCING RESULTS
Non-benchmark items in financing results (total other finance income/(costs)) include the below items. Refer also to Note 15 –
Financing Results.
Divestment-related results on equity-accounted investees
When equity accounting for equity-accounted investees ceases, the group calculates the book gain or loss as the difference between
the sum of the fair value of proceeds less costs of disposal, the fair value of retained investment, and any amount reclassified from
other comprehensive income less the carrying amount of the investment at the date on which significant influence is lost.
Book results and fair value changes of financial assets measured at fair value through profit or loss
Fair value changes of financial assets measured at fair value through profit or loss and any gain or loss on the sale of financial assets
measured at fair value through profit or loss.
Financing component employee benefits
Financing component employee benefits relates to net interest results on the net defined benefit liability or asset of the group’s
defined benefit pension plans and other long-term employee benefit plans.
NON-BENCHMARK TAX ITEMS IN INCOME TAX EXPENSE
This item includes the tax effect on non-benchmark items as defined above, and on the amortization and impairment of acquired
identifiable intangible assets, as well as the income tax expense relating to any material changes in (income) tax laws and (income)
tax rates in the jurisdictions where Wolters Kluwer operates.
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Note 5 – Segment Reporting continued
Health
Tax &
Accounting
Governance,
Risk &
Compliance
Legal &
Regulatory Corporate
*
Total
reporting by segment 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Revenues from third parties 1,234 1,193 1,510 1,431 1,139 1,074 888 905 – – 4,771 4,603
Cost of revenues (379) (364) (418) (396) (307) (300) (270) (299) – – (1,374) (1,359)
Gross profit 855 829 1,092 1,035 832 774 618 606 0 0 3,397 3,244
Sales costs (193) (195) (280) (255) (162) (164) (171) (170) – – (806) (784)
General and administrative costs (360) (326) (413) (388) (365) (330) (355) (376) (57) (60) (1,550) (1,480)
Total operating expenses (553) (521) (693) (643) (527) (494) (526) (546) (57) (60) (2,356) (2,264)
Other gains and (losses) 0 (1) (47) (5) (4) (1) 22 (1) – – (29) (8)
Operating profit 302 307 352 387 301 279 114 59 (57) (60) 1,012 972
Amortization of acquired identifiable
intangibleassets 31 35 36 39 35 33 29 37 – – 131 144
Impairment/(reversal of impairment) of
acquiredidentifiable intangible assets 27 – (5) – 11 – – – – – 33 0
Non-benchmark expense/(income) in
operatingprofit 0 1 47 5 4 1 (22) 1 – – 29 8
Adjusted operating profit 360 343 430 431 351 313 121 97 (57) (60) 1,205 1,124
Amortization of other intangible assets and
depreciation of PPE and right-of-use assets (50) (54) (101) (93) (73) (69) (63) (61) (3) (2) (290) (279)
Impairment of other intangible assets
and right-of-use assets (5) (2) (7) (10) (5) (4) (2) (3) – – (19) (19)
Goodwill and acquired identifiable intangible
assetsat December 31 1,262 1,221 1,761 1,627 1,374 1,316 828 923 – – 5,225 5,087
Net capital expenditure 33 32 72 77 82 76 52 45 0 1 239 231
Assets classified as held for sale at December 31 – – – – – – 101 – – – 101 0
Liabilities classified as held for sale at December 31 – – – – – – 74 – – – 74 0
Number of FTEs at December 31 2,913 2,824 7,416 7,149 4,736 4,485 4,262 4,195 127 132 19,454 18,785
*
The corporate function does not represent an operating segment.
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Note 6 – Revenues
ACCOUNTING POLICIES
An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur
expenses. The four global operating divisions are based on strategic customer segments: Health; Tax & Accounting; Governance,
Risk & Compliance; and Legal & Regulatory. This segment information is based on the group’s management and internal reporting
structure. All operating segments are regularly reviewed by the Executive Board, within Wolters Kluwer defined as the group’s chief
operating decision-maker, to make decisions about resources to be allocated to the segments and to assess their performance to the
extent whereby discrete financial information is available.
The Executive Board reviews the financial performance of the segments and the allocation of resources based on revenues and
adjusted operating profit. Revenues from internal transactions between the operating segments are conducted at arm’s length, with
terms equivalent to comparable transactions with third parties. These internal revenues are limited and therefore excluded from the
segment reporting table.
Segment results reported to the Executive Board include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Costs and net capital expenditure incurred on behalf of the segments by Global Business Services
and Digital eXperience Group and associated FTEs are allocated to the operating segments.
Non-current interest-bearing liabilities and deferred tax liabilities are not considered to be segment liabilities as these are primarily
managed by the corporate treasury and tax functions. Operating working capital is not managed at the operating segment level but at
a country or regional level.
GEOGRAPHICAL INFORMATION
total non-current assets per region*
2021
%
2020
%
Europe (excluding the Netherlands) 1,342 22 1,444 24
U.S. and Canada 4,117 66 3,865 64
Asia Pacific 75 1 77 1
Rest of World 17 0 18 0
Total 6,228 100 6,095 100
*
Non-current assets per region exclude deferred tax assets and derivative financial instruments.
OTHER DISCLOSURES
There are no customers with revenues that exceed 10% of the group’s total revenues.
For the revenues per geographical region, refer to Note 6 – Revenues.
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Note 6 – Revenues continued
2021 2020
Revenues from contracts with third parties 4,771 4,603
ACCOUNTING POLICIES
Revenues represent the amount of consideration the group expects to be entitled to – arising from contracts with customers in the
ordinary course of business – in exchange for transferring promised goods and/or services to customers, excluding amounts collected
on behalf of third parties. Revenue is recognized once the performance obligations are fulfilled (i.e., when the customer obtains
control over those goods and/or services).
Subscriptions
Revenues related to subscriptions are recognized over the period in which the goods are transferred and/or content is made
available online and when the goods and/or content involved are similar in value over time. Subscription income received
or receivable in advance of the delivery of goods and/or content is presented as deferred income (a contract liability) in the
consolidated statement of financial position.
Licenses
License fees paid for the use of the group’s software products and/or services are recognized in accordance with the substance of the
agreement.
Revenues from licenses representing a right to access are recognized over time on a straight-line basis. In case a right-to-access
license is invoiced to the customer as a one-time upfront fee, revenue is recognized between 12 and 60 months depending on the
nature of the license. In case of a transfer of rights (i.e., right-to-use license), which permits the licensee to exploit those rights freely
and the group as a licensor has no remaining obligations to perform after delivery, revenue is recognized at the time the control of
the license is transferred to the customer, considering any significant customer acceptance clauses.
Non-refundable upfront fees charged to the customers are often not considered to be a distinct performance obligation as these
considerations do not result in a transfer of goods and/or services. Instead, these fees are considered an advance payment for
future goods and/or services and therefore these payments are recognized as revenue when those future goods and/or services are
transferred.
Goods
Revenues from the sale of goods are recognized upon shipment or upon delivery when control is transferred to the customer,
provided that the ultimate collectability and final acceptance by the customer is reasonably assured.
When goods are sold with a right to return the goods, the group recognizes the revenues of the transferred goods for the amount
the group expects to be entitled to, a refund contract liability in the consolidated statement of financial position, and an asset for its
right to recover goods on settling the refund contract liability.
Services
Revenues from providing services are recognized in the period in which the related performance obligations are satisfied. For fixed-
price contracts, revenue is recognized based on the actual service provided up to the end of the reporting period as a proportion
of the total services to be provided because the customer receives and uses the benefits simultaneously. In case of fixed-price
contracts, the customer pays the fixed amount based on a payment schedule. If the value of the services rendered by the group
exceeds the invoiced amounts, a contract asset (unbilled revenue) is recognized. If the invoiced amounts exceed the value of services
rendered, a contract liability (deferred income) is recognized. If the contract includes an hourly fee, revenue is recognized in the
amount to which the company has a right to invoice. Customers are invoiced on a periodic basis and consideration is payable when
invoiced.
Implementation services
Revenues from the sale of implementation services are based on input or output methods, subject to the contractual arrangements,
and are recognized when the related performance obligations are satisfied or upon full completion of the promise to the customer,
depending upon which method faithfully depicts the group’s performance towards completion.
122 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 6 – Revenues continued
Multi-element contracts
There are arrangements that include various combinations of performance obligations, such as software licenses, services, training,
hosting, and implementation. A performance obligation is only distinct if the customer can benefit from the goods and/or services
on its own or together with other resources that are readily available to the customer, and the promise to transfer goods and/or
services is separately identifiable from other promises in the contract. Goods and/or services that are not distinct are bundled with
other goods and/or services in the contract, until a bundle of goods and/or services is created that is distinct, resulting in a single
performance obligation.
Where performance obligations are satisfied over different periods of time, revenues are allocated to the respective performance
obligations based on relative stand-alone selling prices at the inception of the arrangement, and revenues are recognized as each
performance obligation is satisfied.
Agent/principal arrangements
If the group acts as an agent, whereby the group sells goods and/or services on behalf of a principal, the group recognizes the
amount of the net consideration as revenues. If the group acts as a principal, the group recognizes the gross amount of consideration
for the specific goods and/or services transferred once the performance obligations are satisfied.
Variable consideration
Discounts (including volume discounts), return of goods and/or services, usage-based prices, and pricing based on index are the
most common forms of variable considerations within the group. A discount is often contractually agreed and allocated to all distinct
performance obligations, unless there is a specific discount policy for that performance obligation. Volume-related discounts, return
of goods, and usage-based prices are estimated at contract inception and periodically reassessed during the contract term. The
group considers normal price increases based on local inflation rates or customary business practices as compensation for cost price
increases and not as variable consideration. Any pricing that is beyond compensation for cost price increases is estimated at contract
inception, periodically reassessed and recognized over the term of the contract.
Contract modifications
A contract modification is a change in the scope and/or price of a contract that is approved by both the customer and the group.
The group accounts for a contract modification retrospectively:
• If the modification only affected the transaction price and the remaining goods and/or services are not distinct; or
• If the modification affected the scope, but no distinct goods and/or services are added.
The group accounts for a contract modification prospectively:
• If the modification only affected the transaction price and the remaining goods and/or services are distinct; or
• If the modification affected the scope, distinct goods and/or services are added, but the additional consideration did not reflect the
stand-alone selling price.
The group accounts for a contract modification as a separate contract if the modification affected the scope, distinct goods and/or
services are added, and the additional consideration reflected the stand-alone selling price.
Financing components
As a practical expedient, the group does not adjust the consideration for the effects of a significant financing component if the group
expects that the period between the transfer of the promised goods and/or services to the customer and payment by the customer
is one year or less. The group has no significant contracts with periods of one year or more between the transfer of goods and/or
services and the payment of the consideration. Consequently, the group does not adjust any of the transaction prices for the time
value of money.
Warranty
In most cases, any warranty given in connection with the sale of products and/or services does not qualify as a distinct service and
therefore these general warranties are not considered to be a separate performance obligation. Consequently, no warranty provisions
are recognized.
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Wolters Kluwer 2021 Annual Report 123
Note 6 – Revenues continued
Cost of revenues
Cost of revenues comprises directly attributable costs of goods and/or services sold.
For digital products and services, cost of revenues may include data maintenance, hosting, license fees, royalties, product support,
personnel expenses, subcontracted work, training, and other costs incurred to support and maintain the products, applications, and/
or services.
For print products, these costs may include cost for paper, printing and binding, royalties, personnel expenses, subcontracted work,
shipping costs, and other incurred costs.
CRITICAL ESTIMATES AND JUDGMENTS
Revenue recognition requires estimates and judgments. IFRS 15 Revenue from Contracts with Customers requires management to
make judgments on the characteristics of a performance obligation, (un)bundling of multi-element arrangements, and assessment
whether the revenue should be recognized over time or at a point in time. In addition, management makes estimates of the stand-
alone selling prices of performance obligations, variable considerations, and the product and contract life.
Also, when another party is involved in providing goods and/or services to a customer, management makes a judgment whether the
promise to the customer is a performance obligation by the group (i.e., acting as a principal), or by another party (i.e., acting as an
agent). The group acts predominantly as the principal in its customer contracts.
For the judgments applied to the incremental cost to obtain a contract, refer to Note 25 – Contract Assets and Liabilities.
DISAGGREGATION OF REVENUES
Health
Tax &
Accounting
Governance,
Risk &
Compliance
Legal &
Regulatory Total
reporting per segment 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Revenue recognition
At a point in time recognition 223 212 214 210 411 382 209 237 1,057 1,041
Over time recognition 1,011 981 1,296 1,221 728 692 679 668 3,714 3,562
Revenues from third parties 1,234 1,193 1,510 1,431 1,139 1,074 888 905 4,771 4,603
Revenue per contract
Contracts one year or less 821 797 1,292 1,228 851 817 684 730 3,648 3,572
Multi-year contracts 413 396 218 203 288 257 204 175 1,123 1,031
Revenues from third parties 1,234 1,193 1,510 1,431 1,139 1,074 888 905 4,771 4,603
REVENUES BY MEDIA FORMAT
Health
Tax &
Accounting
Governance,
Risk &
Compliance
Legal &
Regulatory Total
reporting per segment 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Digital 1,089 1,055 1,434 1,348 723 680 684 653 3,930 3,736
Services 1 2 35 38 410 384 14 30 460 454
Print 144 136 41 45 6 10 190 222 381 413
Revenues from third parties 1,234 1,193 1,510 1,431 1,139 1,074 888 905 4,771 4,603
124 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 7 – Earnings per Share
REVENUES BY TYPE
2021 2020
Digital and service subscription 3,397 3,218
Print subscription 157 182
Other recurring 256 280
Total recurring revenues 3,810 3,680
Print books 146 150
Legal Services transactional 266 228
Financial Services transactional 109 129
Other non-recurring
*
440 416
Total non-recurring revenues 961 923
Total revenues 4,771 4,603
*
Other non-recurring revenues include software licenses, software implementation fees, professional services, and other non-subscription offerings.
RECURRING/NON-RECURRING REVENUES
Health
Tax &
Accounting
Governance,
Risk &
Compliance
Legal &
Regulatory Total
reporting per segment 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Recurring revenues 1,112 1,086 1,313 1,257 669 619 716 718 3,810 3,680
Non-recurring revenues 122 107 197 174 470 455 172 187 961 923
Revenues from third parties 1,234 1,193 1,510 1,431 1,139 1,074 888 905 4,771 4,603
GEOGRAPHICAL INFORMATION
revenues generated per region
2021
%
2020
%
The Netherlands 196 4 193 4
Europe (excluding the Netherlands) 1,274 27 1,238 27
U.S. and Canada 2,946 62 2,818 61
Asia Pacific 277 5 278 6
Rest of World 78 2 76 2
Total revenues 4,771 100 4,603 100
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Wolters Kluwer 2021 Annual Report 125
Note 8 – Acquisitions and Divestments
The group presents basic and diluted earnings per share data for its ordinary shares.
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year of €728 million (2020: €721 million) attributable to the
ordinary equity holders of the company, by the weighted average number of ordinary shares outstanding during the year of 260.4
million (2020: 265.0 million), after adjusting for own ordinary shares held (treasury shares).
Profit for the year
2021 2020
Profit for the year attributable to the owners of the company (A) 728 721
Weighted average number of ordinary shares for the year
in millions of shares, unless otherwise stated 2021 2020
Outstanding ordinary shares at January 1 Note 33 267.5 273.0
Effect of cancelation of shares (1.5) (1.7)
Effect of repurchased shares (5.6) (6.3)
Weighted average number of ordinary shares (B) 260.4 265.0
Basic EPS (A/B) (€) 2.79 2.72
DILUTED EARNINGS PER SHARE
Diluted earnings per share is determined by dividing the profit for the year of €728 million (2020: €721 million) attributable to
ordinary shareholders of the company, by the diluted weighted average number of ordinary shares outstanding of 261.8 million
(2020: 266.6 million), after adjustments for treasury shares and for the effects of all dilutive potential ordinary shares which consist
of LTIP shares granted.
Diluted weighted average number of ordinary shares for the year
in millions of shares, unless otherwise stated 2021 2020
Weighted average number of ordinary shares (B) 260.4 265.0
Effect of Long-Term Incentive Plan (LTIP) 1.4 1.6
Diluted weighted average number of ordinary shares (C) 261.8 266.6
Diluted EPS (A/C) (€) 2.78 2.70
126 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 8 – Acquisitions and Divestments continued
ACQUISITIONS
ACCOUNTING POLICIES
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the group.
Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
CRITICAL ESTIMATES AND JUDGMENTS
The fair value of the assets, liabilities, and contingent liabilities of a business combination should be measured within 12 months
from the acquisition date. For some acquisitions, provisional fair values have been included in the consolidated statement of
financial position. The final valuation of the acquired identifiable intangible assets and liabilities assumed is still pending but will be
completed within the 12-month timeframe. Actual valuation of these assets, liabilities, and contingent liabilities may differ from the
provisional valuation.
When a business combination agreement provides for an adjustment to the cost of the transaction, contingent on future events (such
as earnouts), the group includes an initial fair value of that adjustment in the cost of the transaction at the acquisition date if the
adjustment is probable and can be measured reliably. The initial and subsequent measurement will usually be based on estimates of
future results of the business combination. Actual results may differ from those estimates and may result in material adjustments in
the next financial year(s). Subsequent changes to the fair value are recognized in profit or loss, based on a periodic reassessment of
the contingent consideration.
General
On May 14, 2021, Wolters Kluwer Tax & Accounting completed the acquisition of 100% of the shares of Vanguard Software, a global
provider of cloud-based integrated business planning solutions for €93 million in cash. The transaction had no deferred and
contingent considerations. The acquisition offers an opportunity to extend the CCH Tagetik financial performance management
platform into sales and operations planning, including supply chain planning and predictive analytics. Vanguard Software serves
companies of all sizes across every major industry in more than 60 countries, helping them to improve forecasting, reduce overstocks,
optimize inventory distribution, and reduce supply chain costs. Vanguard Software revenues derive from subscription-based cloud
software (averaging approximately 55% of total revenues in recent years) and software-related professional implementation and
consulting services. Vanguard Software recorded unaudited revenues of €9 million in 2021, with the majority being from North
America. We expect the acquisition to achieve a return on invested capital above our after-tax weighted average cost of capital of 8%
within three to five years. The near-term impact on the group’s adjusted net profit is immaterial. Vanguard Software is headquartered
in Cary, North Carolina, U.S., and had approximately 40 employees at acquisition date. The fair values of the identifiable assets and
liabilities of Vanguard Sofware, as reported at December 31, 2021, are provisional.
On October 29, 2021, Wolters Kluwer Governance, Risk & Compliance (GRC) acquired 100% of the shares of LicenseLogix LLC, a provider
of U.S. business licensing services for €9 million in cash and a deferred consideration of €2 million. LicenseLogix is a premier provider
of comprehensive business license services, including research, filing and ongoing compliance management. LicenseLogix has been
a strategic partner of GRC’s CT Corporation for over five years and today serves more than 800 corporate customers of all sizes and
across all industries. LicenseLogix services are highly complementary to those of CT Corporation and will form an integral component
of CT’s end-to-end legal entity compliance and managed services offerings. The acquisition is expected to deliver a return on invested
capital (ROIC) above Wolters Kluwer’s after tax weighted average cost of capital (8%) within three to five years from completion.
The transaction is expected to have an immaterial impact on the group's adjusted earnings in the first full year. LicenseLogix is
headquartered in White Plains, New York, U.S., generated annualized unaudited revenues of €4 million in 2021, and had approximately
75 employees at acquisition date. The fair values of the identifiable assets and liabilities of LicenseLogix, as reported at December 31,
2021, are provisional.
In addition, other smaller acquisitions were completed, with a combined total consideration of €9 million (2020: €5 million), including
deferred and contingent considerations, and combined annualized unaudited revenues of €6 million (2020: €2 million).
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Wolters Kluwer 2021 Annual Report 127
Note 8 – Acquisitions and Divestments continued
Acquisition spending
In 2021, total acquisition spending, net of cash acquired, was €108 million (2020: €395 million), including deferred and contingent
consideration payments of €0 million (2020: €6 million). In 2020, the group acquired CGE, XCM Solutions, eOriginal, and a few smaller
businesses.
In 2021, acquisition-related costs amounted to €5 million (2020: €11 million).
The goodwill relating to the 2021 acquisitions represents future economic benefits specific to the group arising from assets that do
not qualify for separate recognition as intangible assets. This includes expected new customers who generate revenue streams in
the future, revenues generated because of new capabilities of the acquired product platforms, as well as expected synergies that will
arise following the acquisitions.
Of the goodwill recognized in 2021, €68 million was deductible for income tax purposes (2020: €73 million).
The following tables provide information in aggregate for all business combinations in 2021:
Acquisitions
2021 2020
Carrying
amount
Fair value
adjustments
Recognized
values
Recognized
values
Consideration payable in cash 111 406
Deferred and contingent considerations at fair value:
Non-current 1 0
Current 1 0
Total consideration 113 406
Intangible assets other than goodwill Note 18 0 47 47 183
Other non-current assets Note 20 2 – 2 6
Current assets 8 – 8 27
Current liabilities (9) – (9) (27)
Non-current liabilities Note 29 (2) – (2) (4)
Deferred tax assets/(liabilities) 2 (3) (1) (19)
Fair value of net identifiable assets 1 44 45 166
Goodwill on acquisitions Note 18 68 240
Cash effect of acquisitions:
Consideration payable in cash 111 406
Cash acquired (3) (17)
Deferred and contingent considerations paid Note 30 0 6
Acquisition spending, net of cash acquired 108 395
Of the 2021 fair value adjustments of €44 million, €23 million related to Vanguard Software, €11 million related to LicenseLogix,
and €10 million related to the other acquisitions.
128 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 8 – Acquisitions and Divestments continued
Contribution of 2021 acquisitions
in millions of euros, unless otherwise stated Revenues
Adjusted
operating
profit
Profit for
the year
FTEs at
December 31,
2021
Totals excluding the impact of 2021 acquisitions 4,762 1,204 742 19,309
Contribution of 2021 acquisitions 9 1 (1) 145
Totals for the year 2021 4,771 1,205 741 19,454
Pro forma contribution of 2021 acquisitions for the period January 1, 2021, up to
acquisitiondate (unaudited) 10 0 (3)
Pro forma totals for the year 2021 4,781 1,205 738
The above information does not purport to represent what the actual results would have been, had the acquisitions been concluded
on January 1, 2021, nor is the information necessarily indicative for future results of the acquired operations. In determining the
contributions by the acquisitions, management has assumed that the fair value adjustments that arose on the date of the acquisition
would have been the same if the acquisition had occurred on January 1, 2021.
Deferred and contingent considerations
The acquisitions completed in 2021 resulted in a maximum achievable undiscounted deferred and contingent consideration of €2
million. The fair value of this deferred and contingent consideration amounted to €2 million at acquisition date and at December 31,
2021.
For further disclosure on deferred and contingent considerations, refer to Note 30 – Financial Risk Management.
Provisional fair value accounting
The fair values of the identifiable assets and liabilities will be revised if new information, obtained within one year from the
acquisition date about facts and circumstances that existed at the acquisition date, causes adjustments to the above amounts, or for
any additional provisions that existed at the acquisition date. Subsequent changes in purchase price accounting for 2020 acquisitions
resulted in a reduction of goodwill of €2 million. Reference is made to Note 18 – Goodwill and Intangible Assets other than Goodwill.
DIVESTMENTS
ACCOUNTING POLICIES
The amount of goodwill allocated to a divested business is based on its relative value compared to the value of the group of cash-
generating units to which the goodwill belongs.
General
On June 1, 2021, Wolters Kluwer Tax & Accounting completed the combination of certain Prosoft assets in Brazil with those of Alterdata
Tecnologia em Informática Ltda in exchange for an 11.8% non-controlling interest in the combined entity. On completion, the group
incurred a €42 million divestment-related loss on the Prosoft transaction. The loss on divestment was mainly due to the recognition
of an unrealized foreign exchange loss of €40 million (non-cash) related to the historical devaluation of the Brazilian real against the
euro. Prior to this transaction, there was a €5 million reversal of an impairment of Prosoft’s acquired identifiable intangible assets.
The business was deconsolidated from June 1, 2021. At this date, the business had 225 FTEs. In 2021 up to this date, Prosoft generated
revenues of €3 million. The share in the combined entity is recognized as a financial asset at fair value through profit or loss. Refer to
Note 22 – Financial assets.
On December 1, 2021, Wolters Kluwer Legal & Regulatory completed the sale of its U.S. legal education business for €75 million
in cash. The divestment will allow Wolters Kluwer Legal & Regulatory to further advance its focus in the U.S. on supporting legal
professionals with the domain expertise and state-of-the-art solutions that they need. The U.S. legal education business, which
mainly produces textbooks and innovative digital educational solutions for law students, recorded revenues of €32 million in 2021 up
to divestment date and is profitable. The business had approximately 55 FTEs at divestment date. The group deployed the post-tax
proceeds towards additional share repurchases to mitigate the adjusted EPS dilution resulting from the disposal.
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Wolters Kluwer 2021 Annual Report 129
Note 8 – Acquisitions and Divestments continued
In 2021, net divestment proceeds amounted to €76 million, including deferred considerations received.
In 2020, net divestment proceeds amounted to €50 million and included the divestment of Belgian training assets, the sale of the
minority stake in Logical Images, the divestment of certain German businesses, the sale of the investment in Medicom, the sale of
ComplyTrack, the sale of the Flood Determinations Solution, and the sale of the French legal notices business Annonces & Formalités
Légales.
Divestment-related results on operations, equity-accounted investees, and financial assets
2021 2020
Divestments of operations:
Consideration receivable in cash 75 41
Financial assets at fair value through profit or loss Note 22 6 –
Deferred divestment consideration receivable Note 26 – 1
Consideration receivable 81 42
Intangible assets Note 18 47 24
Other non-current assets Note 19 2 0
Current assets (including assets held for sale) 17 32
Current liabilities (including liabilities held for sale) (8) (19)
Employee benefits Note 31 – (1)
Deferred tax assets/(liabilities) (7) (1)
Net identifiable assets/(liabilities) 51 35
Reclassification of foreign exchange differences on loss of control, recognized in other
comprehensive income (40) 0
Book profit/(loss) on divestments of operations (10) 7
Divestment expenses (8) (2)
Restructuring of stranded costs following divestments Note 32 (2) (4)
Divestment-related results included in other gains and (losses) Note 12 (20) 1
Divestments of equity-accounted investees and financial assets:
Consideration receivable in cash – 17
Carrying value of equity-accounted investees – (10)
Divestment-related results included in total financing results Note 15 0 7
Cash effect of divestments:
Consideration receivable in cash 75 58
Cash included in divested operations 0 (8)
Deferred divestment consideration receivable 1 –
Receipts from divestments, net of cash disposed 76 50
130 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 9 – Assets/Liabilities Classified as Held for Sale
continued
Effect of 2021 divestments
Revenues
Adjusted operating
profit
Totals for the year 2021 4,771 1,205
Minus: Contribution of 2021 divested operations (35) (12)
Pro forma totals for the year 2021 4,736 1,193
At their divestment dates, the 2021 divested operations jointly had approximately 280 FTEs.
Note 9 – Assets/Liabilities Classified as Held for Sale
2021 2020
Assets of disposal groups classified as held for sale 101 –
Liabilities of disposal groups classified as held for sale (74) –
Net assets of disposal groups classified as held for sale 27 0
ACCOUNTING POLICIES
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale
transaction rather than through continuing use. This condition is met only when the sale is highly probable, and the asset or disposal
group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within 12 months from the date of classification.
When the group is committed to a sale plan involving a loss of control of a subsidiary, all assets and liabilities of that subsidiary are
classified as held for sale when the criteria described above are met, regardless of whether the group will retain a non-controlling
interest in its former subsidiary after the sale.
When the group is committed to a sale plan involving a divestment of an investment in an equity-accounted investee, or a portion
thereof, the investment, or the portion, is classified as held for sale when the criteria described above are met. The group then ceases
to apply the equity method in relation to the portion that is classified as held for sale. Any retained portion of an investment in an
equity-accounted investee that has not been classified as held for sale continues to be accounted for using the equity method.
The amount of goodwill allocated to a disposal group is based on its relative value compared to the value of the group of cash-
generating units to which the goodwill belongs.
Non-current assets and disposal groups classified as held for sale are measured at the lower of the carrying amount and fair value
less costs of disposal.
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Wolters Kluwer 2021 Annual Report 131
Note 10 – Sales Costs
DISPOSAL GROUPS – GENERAL
2021 2020
Legal & Regulatory – French and Spanish legal information businesses 27 –
Net assets of disposal groups classified as held for sale 27 0
On December 9, 2021, Wolters Kluwer Legal & Regulatory announced that it has entered into exclusive discussions to sell its legal
information businesses in France and Spain following receipt of a binding offer. Upon completion of the transaction, the group
will receive €120 million in cash for its assets, subject to certain working capital adjustments. The intended divestment will sharpen
the Legal & Regulatory division’s focus on businesses where it has the strongest market positions and the best opportunities to
drive future growth. Signing of a final agreement is conditional upon completion of the consultation with the European and French
works councils. Completion of the transaction would be conditional upon antitrust approval in Spain and is expected during 2022.
The French and Spanish legal information units to be sold employ approximately 650 FTEs. In 2021, the units generated revenues
of approximately €85 million and were profitable. The units primarily support law firms, corporations, and the public sector with
information products in digital and print formats. In France, the business includes Lamyline for legal professionals and Liaisons
Sociales for labor law and HR specialists, among other offerings including training. In Spain, the business includes La Ley for legal
professionals, CISS for tax and HR specialists, as well as online training services.
ASSETS AND LIABILITIES OF DISPOSAL GROUPS
The assets and liabilities of the disposal groups can be specified as follows at December 31:
2021 2020
Non-current assets 73 –
Cash and cash equivalents 2 –
Other current assets 26 –
Non-current liabilities (14) –
Deferred income (27) –
Other current liabilities (33) –
Net assets of disposal groups classified as held for sale 27 0
RESULTS OF DISPOSAL GROUPS
2021 2020
Revenues 85 85
Adjusted operating profit 11 12
Operating profit 11 12
132 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 11 – General and Administrative Costs
2021 2020
Research, development, and editorial costs 466 433
General and administrative operating expenses 920 903
Amortization and impairment of acquired identifiable intangible assets Note 14 164 144
Total 1,550 1,480
ACCOUNTING POLICIES
General and administrative costs include costs that are neither directly attributable to cost of revenues nor to sales costs. These
costs include product development cost, information technology cost, general overhead cost, amortization of acquired identifiable
intangible assets, amortization of other intangible assets (if not part of cost of revenues), depreciation of property, plant, and
equipment, depreciation of right-of-use assets, and impairment of goodwill, intangible assets other than goodwill, property, plant,
and equipment, and right-of-use assets.
Note 12 – Other Gains and (Losses)
2021 2020
Divestment-related results Note 8 (20) 1
Acquisition-related costs Note 8 (5) (11)
Fair value changes of contingent considerations Note 30 0 4
Additions to acquisition integration provisions Note 32 (4) (2)
Total (29) (8)
ACCOUNTING POLICIES
Other gains and losses relate to items which are different in their nature or frequency from operating items. These include
divestment-related results (including directly attributable divestment costs), additions to provisions for restructuring of stranded
costs following divestments, acquisition-related costs, additions to acquisition integration provisions, and subsequent fair value
changes of contingent considerations. See also Note 4 – Benchmark Figures.
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Wolters Kluwer 2021 Annual Report 133
Note 13 – Personnel Expenses
2021 2020
Salaries and wages and other benefits 1,715 1,633
Social security charges 148 148
Costs of defined contribution plans 80 77
Expenses related to defined benefit plans Note 31 11 17
Equity-settled share-based payments Note 34 24 24
Total 1,978 1,899
Employees
Headcount at December 31 19,827 19,169
In full-time equivalents at December 31 19,454 18,785
Thereof employed in the Netherlands 1,155 1,200
In full-time equivalents average per annum
*
19,741 19,180
*
Average full-time equivalents per annum include temporary help and contractors, whereas headcount and its full-time equivalent only relate to staff on the payroll
ofthe group.
Note 14 – Amortization, Impairment, and Depreciation
2021 2020
Amortization of acquired identifiable intangible assets Note 18 131 144
Impairment of acquired identifiable intangible assets Note 18 38 –
Reversal of impairment of acquired identifiable intangible assets Note 8/18 (5) –
Amortization of other intangible assets Note 18 194 180
Impairment of other intangible assets Note 18 18 17
Depreciation of property, plant, and equipment Note 19 25 26
Depreciation of right-of-use assets Note 20 71 73
Impairment of right-of-use assets Note 20 1 2
Total 473 442
For further disclosure on critical estimates and judgments, refer to Note 18 – Goodwill and Intangible Assets other than Goodwill.
134 Wolters Kluwer 2021 Annual Report
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Financial Statements
Note 15 – Financing Results
2021 2020
Financing income
Interest income for financial assets, measured at amortized cost:
Interest income on short-term bank deposits 2 5
Interest income on bank balances and other 2 5
Other financing income:
Derivatives – foreign exchange contracts, not qualifying as hedge 0 0
Total financing income 4 10
Financing costs
Interest expense for financial liabilities, measured at amortized cost:
Euro Commercial Paper program and bank borrowings 0 0
Bonds and private placements (50) (57)
Amortization of fee expense for debt instruments Note 29 (1) (2)
Interest expense on bank overdrafts and other (5) (7)
Other financing expense:
Unwinding of discount of lease liabilities Note 29 (9) (11)
Net foreign exchange gains/(losses) (15) 24
Derivatives – foreign exchange contracts, not qualifying as hedge 0 (1)
Items in hedge relationships:
Interest rate swaps (2) (2)
Foreign exchange gains/(losses) on loans subject to cash flow hedge 4 6
Net change in fair value of cash flow hedges reclassified from other comprehensive income (4) (6)
Total financing costs (82) (56)
Net financing results (78) (46)
Other finance income/(costs)
Divestment-related results on equity-accounted investees Note 8 – 7
Fair value changes of financial assets Note 22 (5) 0
Financing component employee benefits Note 31 (1) (2)
Total other finance income/(costs) (6) 5
Total financing results (84) (41)
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Wolters Kluwer 2021 Annual Report 135
Note 16 – Income Tax Expense
2021 2020
Current income tax expense 209 226
Adjustments previous years 6 2
Deferred tax expense:
Changes in tax rates 1 0
Origination and reversal of temporary differences (15) (12)
Movements in deferred tax assets and liabilities Note 23 (14) (12)
Total Note 23 201 216
ACCOUNTING POLICIES
Income tax on the result for the year is made up of current and deferred tax. Income tax is recognized in profit or loss except to the
extent that it relates to business combinations and/or items directly recognized in equity or other comprehensive income.
Current income tax is the expected tax payable or tax receivable on the taxable income for the year, using the tax rates and tax
laws that have been enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable or tax
receivable in respect of previous years. The group recognizes deferred tax assets and liabilities for all taxable temporary differences
between the carrying amounts of assets or liabilities in the consolidated statement of financial position for financial reporting
purposes and their tax base for taxation purposes.
Deferred tax assets and liabilities are not recognized for temporary differences arising from:
• Initial recognition of goodwill;
• Investments in subsidiaries to the extent that the parent can control the timing of the reversal of the temporary differences, and it is
probable that they will not reverse in the foreseeable future; and
• Initial recognition of an asset or liability in a transaction, which is not a business combination and that, at the time of the transaction,
affects neither accounting profit nor taxable profit.
A deferred tax asset is recognized for deductible temporary differences and for the carry-forward of unused tax losses and unused
tax credits, to the extent that it is probable that future taxable profits will be available against which these can be utilized. Deferred
tax assets are reviewed at the end of each reporting period and are remeasured to the extent that it is no longer probable that the
related tax benefits will be realized.
Deferred tax assets and liabilities are not discounted and are measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the
reporting period. The effect of changes in income tax rates on the deferred tax position is recognized in profit or loss if, and to the
extent that, the deferred tax position was originally formed through profit or loss.
Deferred tax assets and liabilities, including those associated with right-of-use assets and lease liabilities, are offset if there is a
legally enforceable right to offset current income tax assets and liabilities, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle current income tax assets and liabilities on
a net basis or their tax assets and liabilities will be realized simultaneously.
Uncertain tax positions are assessed at a fiscal unity level. If it is probable that a tax authority will accept an uncertain tax position
in the income tax filing, then the group determines its accounting tax position consistent with the tax treatment used or planned to
be used in its income tax filing. If this is not probable, then the group reflects the effect of uncertainty in determining its accounting
tax position using either the most likely amount or the expected value method, depending on which method better predicts the
resolution of the uncertainty.
CRITICAL ESTIMATES AND JUDGMENTS
Income tax is calculated based on income before tax, considering the local tax rates and regulations. For each operating entity, the
current income tax expense is calculated and differences between the accounting and tax base are determined, resulting in deferred
tax assets or liabilities. These calculations may deviate from the final tax assessments.
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Note 16 – Income Tax Expense continued
A deferred tax asset is recognized for deductible temporary differences and the carry-forward of unused tax losses and unused tax
credits to the extent that it is probable that future taxable profit will be available. Management assesses the probability that taxable
profit will be available against which the unused tax losses or unused tax credits can be utilized.
In determining the amount of current and deferred tax, the group considers the impact of uncertain tax positions and whether
additional taxes, penalties, and interest may be due. The group believes that its current income tax liabilities are adequate for all
open tax years based on its assessment of many factors, including interpretations of tax laws, rules, and prior experience. The group
operates in several countries with different tax laws and rules. Considering this complex multinational environment in which the
group operates, global transfer pricing policies are implemented for transactions between members of the group. These transactions
are documented as required by international standards. However, local tax authorities might challenge these transactions. The group
considered potential challenges and accounted for potential uncertain tax positions.
The assessment for uncertain tax positions relies on estimates and assumptions, based on the judgments of tax professionals within
the group, supplemented by external tax advisors and may involve a series of estimates about future events. New information may
become available that causes the group to change its estimate regarding the adequacy of existing income tax liabilities. Such changes
to income tax liabilities will impact the income tax expense, positively or negatively, in the consolidated statement of profit or loss in
the period that such a determination is made.
Changes in tax rates are considered if these tax rate changes are substantially enacted before year end.
Governments are expected to introduce changes in tax law following Organisation for Economic Co-operation and Development
(OECD), EU, and other international guidelines. Reported income tax amounts will therefore be subject to continued judgment,
estimation uncertainty, and measurement adjustments.
Refer also to Note 23 – Tax Assets and Liabilities.
RECONCILIATION OF THE EFFECTIVE TAX RATE
The group’s effective tax rate in the consolidated statement of profit or loss differs from the Dutch statutory income tax rate of 25%.
The table below reconciles the statutory income tax rate with the effective income tax rate in the consolidated statement of profit or
loss:
2021 2020
in millions of euros, unless otherwise stated % %
Profit before tax 929 937
Income tax expense at the Dutch statutory income tax rate 25.0 232 25.0 234
Tax effect of:
Rate differential (2.5) (23) (2.6) (24)
Tax incentives, exempt income, and divestments 0.1 1 (2.3) (21)
Recognized and unrecognized tax losses (0.3) (3) 0.1 1
Adjustments previous years 0.7 6 0.2 2
Changes in income tax rates 0.1 1 0.0 0
Other taxes 1.0 9 0.8 7
Non-deductible costs and other items (2.5) (22) 1.9 17
Total 21.6 201 23.1 216
Rate differential indicates the effect of the group’s taxable income being generated and taxed in jurisdictions where tax rates differ
from the Dutch statutory income tax rate.
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Wolters Kluwer 2021 Annual Report 137
Note 16 – Income Tax Expense continued
The effective tax rate decreased to 21.6% (2020: 23.1%), resulting from a favorable impact of finalization of tax audits, partly offset by
taxable divestments.
For income tax recognized directly in the consolidated statements of changes in total equity and other comprehensive income,
reference is made to Note 23 – Tax Assets and Liabilities.
Note 17 – Non-controlling Interests
The group’s shares in significant consolidated subsidiaries that were not fully owned at December 31 are:
ownership in % 2021 2020
Akadémiai Kiadó Kft. (Budapest, Hungary) 74 74
ACCOUNTING POLICIES
Non-controlling interests reflect the portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are
not owned, directly or indirectly through subsidiaries, by the group. Losses applicable to the non-controlling interest in a subsidiary
are allocated to the non-controlling interest even if these losses cause the non-controlling interest to have a debit balance.
Remeasurements of non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.
The movements in non-controlling interests are as follows:
2021 2020
Position at January 1 0 0
Dividends paid (1) 0
Share of profit in non-controlling interests, net of tax 0 0
Foreign exchange differences 1 0
Position at December 31 0 0
Non-controlling interests in the equity of consolidated participations, totaling €0 million (2020: €0 million), are based on third-party
shareholdings in the underlying shareholders’ equity of the subsidiaries.
Financial information of non-controlling interests based on 100% ownership, is as follows:
2021 2020
Revenues 5 5
Adjusted operating profit 2 2
Net profit 1 2
Total assets 1 1
Total liabilities 1 1
Total equity 0 0
Total cash and cash equivalents 0 0
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Financial Statements
Note 18 – Goodwill and Intangible Assets
otherthanGoodwill
Goodwill
Acquired
identifiable
intangible
assets
Other
intangible
assets 2021 2020
Position at January 1
Purchase value 3,978 2,344 1,801 8,123 8,223
Accumulated amortization and impairment (9) (1,226) (1,250) (2,485) (2,529)
Book value at January 1 3,969 1,118 551 5,638 5,694
Movements
Investments – – 223 223 213
Acquired through business combinations Note 8 68 47 0 115 423
Divestments of operations Note 8 (41) (5) (1) (47) (24)
Disposals of assets – – (1) (1) 0
Net expenditures 27 42 221 290 612
Amortization Note 14 – (131) (194) (325) (324)
Impairment Note 14 – (38) (18) (56) (17)
Reversal of impairment Note 8/14 – 5 0 5 –
Reclassifications Note 8 (2) – – (2) 0
Transfer to assets classified as held for sale Note 9 (50) 0 (9) (59) –
Foreign exchange differences 236 49 24 309 (327)
Total movements 211 (73) 24 162 (56)
Position at December 31
Purchase value 4,189 2,367 1,942 8,498 8,123
Accumulated amortization and impairment (9) (1,322) (1,367) (2,698) (2,485)
Book value at December 31 4,180 1,045 575 5,800 5,638
At both December 31, 2021, and December 31, 2020, the book value of other intangible assets relates for the vast majority to
development of software.
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Wolters Kluwer 2021 Annual Report 139
Note 18 – Goodwill and Intangible Assets
otherthanGoodwill continued
ACCOUNTING POLICIES
Goodwill
The group measures goodwill at the acquisition date as the sum of the fair value of the consideration transferred (including deferred
and contingent consideration) and the recognized amount of any non-controlling interests in the acquiree, less the net recognized
fair value amount of the identifiable assets acquired and liabilities assumed. Any contingent consideration payable (such as earnout
arrangements) is recognized at fair value at the acquisition date.
Costs related to acquisitions which the group incurs in a business combination are expensed as incurred.
Goodwill associated with divested operations is allocated and measured on the basis of the relative value of the divested operation
and the portion of the cash generating unit (CGU) retained.
Acquired identifiable intangible assets
Identifiable intangible assets acquired through business combinations mainly consist of customer relationships (subscriber
accounts), technology (databases, software, and product technology), trademarks, brand names, and titles.
Other intangible assets
Other intangible assets mainly relate to purchased and self-developed information systems and software.
Software development costs are capitalized if the group can demonstrate the technical feasibility of completing the software project
so that it will be available for use or sale, the intention to complete the development project, the ability to sell or use the end-
product, how the end-product will yield probable future economic benefits, the availability of adequate technical/financial/other
resources to complete the project, and the ability to reliably measure the expenditure attributable to the project.
Capitalization of software depends on several judgments. While management has procedures in place to control the software
development process, there is uncertainty regarding the outcome of the development process (timing of technological developments,
technological obsolescence, and/or competitive pressures).
Useful lives of assets
The useful lives of assets are estimated in line with common market practice. The group reviews the remaining useful lives of its assets annually.
If the expected remaining useful lives of assets are different from previous estimates, the amortization period shall be changed accordingly,
which will impact the amortization in profit or loss prospectively.
Apart from goodwill (which has an indefinite useful life), intangible assets are amortized on a straight-line basis over their estimated useful
lives from the day they are available for use. The estimated useful lives are as follows:
• Acquired identifiable intangible assets, based on nature of the underlying asset: five to 30 years; and
• Other intangible assets: three to five years.
Impairment
At the end of each reporting period, it is assessed whether there is an indication that an intangible asset may be impaired. If any
such indication exists, then the group estimates the recoverable amount of the asset. If the recoverable amount is below the carrying
value, the asset is impaired.
Goodwill is tested for impairment annually, at July 1, and when an impairment trigger has been identified.
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Note 18 – Goodwill and Intangible Assets
otherthanGoodwill continued
CRITICAL ESTIMATES AND JUDGMENTS
Measurement
Upon acquisition, the values of intangible assets acquired are estimated, mostly applying one of the methodologies below:
• Relief from royalty approach: this approach assumes that if the identifiable intangible asset was not owned, it would be acquired
through a royalty agreement. The value of owning the asset equals the benefits from not having to pay royalty fees;
• Multi-period excess earnings method: under this approach, cash flows associated with the specific acquired identifiable intangible
assets are determined. Contributory charges of other assets that are being used to generate the cash flows are deducted from these
cash flows. The net cash flows are discounted to arrive at the value of the asset; or
• Cost method: the cost method reflects the accumulated cost that would currently be required to replace the asset.
These valuations are usually performed by management of the acquiring CGU in close cooperation with an external consulting firm.
These calculations require estimates like future cash flows, royalty rates, discount rates, useful life, churn rate, and rate of return. The
methodologies applied in this respect are in line with common market practice.
Impairment test
Impairment tests require estimates of a discount rate, future cash flows, and a perpetual growth rate. These estimates are made by
management that manages the business to which the assets belong. The future cash flows cover a five-year period and are based on
Vision & Strategy Plans (VSPs), prepared by management, and approved by the Executive Board.
The annual goodwill impairment test did not result in the recognition of an impairment. The outcome of the group’s sensitivity
analysis was that no reasonably possible change in any of the key assumptions would cause the carrying amount to exceed the
recoverable amount. The allowed change in growth, discount rate, and adjusted operating profit margin was at least 300 basis
points for each of the groups of cash generating units.
On top of the annual goodwill impairment test, the group performed an in-depth impairment triggering event analysis on its other
non-current assets. In this analysis, the development of new sales, attrition rates of existing customers, growth rates, and cost
measures were the main drivers. The group concluded that there was no impairment trigger for the majority of the other non-current
assets, consisting mainly of acquired identifiable intangible assets. For Learner's Digest and certain assets in the Health operating
segment, and for certain assets in the Governance, Risk & Compliance operating segment, we identified a triggering event in 2021. For
these three U.S.-based units, expectations of market growth, new sales, and pipelines deteriorated and there was downward pressure
on renewals. Following a value-in-use scenario analysis, whereby the critical key assumptions were new sales, attrition rates, and the
effectiveness of cost measures, the group recognized an impairment on these three units’ acquired identifiable intangible assets of
€38 million in total.
CARRYING AMOUNTS OF GOODWILL AND ACQUIRED IDENTIFIABLE INTANGIBLE ASSETS PER OPERATING SEGMENT
Goodwill
Acquired
identifiable
intangible assets 2021 2020
Health 1,058 204 1,262 1,221
Tax & Accounting 1,492 269 1,761 1,627
Governance, Risk & Compliance 1,029 345 1,374 1,316
Legal & Regulatory 601 227 828 923
Total 4,180 1,045 5,225 5,087
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Note 18 – Goodwill and Intangible Assets
otherthanGoodwill continued
IMPAIRMENT TESTING OF GOODWILL
The group performs an annual impairment test by comparing the carrying amount of the groups of CGUs to which the goodwill
belongs, net of related deferred taxes, to the recoverable amount of the groups of CGUs. The groups of CGUs for goodwill impairment
testing represent the lowest level at which goodwill is monitored by management, whereby management considers the integration of
the group’s business operations, and the global leverage of assets, capital, and staff. Acquisitions are integrated into existing business
operations and the goodwill arising from a business combination is allocated to the groups of CGUs that are expected to benefit from
the synergies of the acquisition. The total number of groups of CGUs for goodwill impairment testing purposes was six in 2021 (2020:
six groups of CGUs).
The recoverable amount is determined based on the higher of the value-in-use and the fair value less costs of disposal. If there is
sufficient headroom, the group only determines the value-in-use. The recoverable amount is determined by discounting the future
cash flows to be generated from the continuing use of the groups of CGUs. These valuations are based on non-observable market
data. The recoverable amount calculations in 2021 were determined in a consistent manner with prior years. The cash flow projections
are based on actual operating results and the long-term VSPs, as approved by the Executive Board.
The 2021 annual impairment test showed that the recoverable amount for all identified groups of CGUs for goodwill impairment
testing exceeded their carrying amounts.
Key assumptions
The group’s key assumptions include assumptions that are based on non-observable market data (level 3 input). The period over
which the group estimates its cash flow projections is five years. After five years, cash flow projections are extrapolated using an
appropriate perpetual growth rate that is consistent with the long-term average market growth rate. The 2021 weighted average long-
term growth rate is 2.2% for the U.S. and 0.3% for Europe (2020: 1.4% for the U.S. and 0.0% for Europe). In addition, the following key
assumptions were used in the projections:
• Revenue growth: based on actual experience, an analysis of market growth, and the expected development of market share; and
• Adjusted operating profit margin development: based on actual experience and management’s long-term projections. Adjusted
operating profit is deemed the best approximation for future cash flows.
The estimated pre-tax cash flows are discounted to their present value using a pre-tax weighted average discount rate for the
individual groups of CGUs between 7.7% and 8.7% (2020: between 8.0% and 8.6%), with a weighted average of 8.5% (2020: 8.2%).
In determining the discount rate, the group used a risk-free rate based on the long-term yield on Dutch government bonds with a
maturity of 20 years, adjusted for country risk premiums and country-specific inflation differentials. In determining the discount rate,
the group applied the following assumptions:
2021 2020
Risk-free rate United States (in %) 2.2 1.4
Risk-free rate Europe (in %) 0.3 0.0
Market risk premium (in %) 7.0 7.3
Tax rate (in %) 25.0 21.7
Re-levered beta 0.77 0.81
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Note 18 – Goodwill and Intangible Assets
otherthanGoodwill continued
Sensitivity analysis
The impairment testing includes an assessment if a reasonably possible change in a key assumption would cause the carrying
amount of goodwill to exceed the recoverable amount. The outcome of the sensitivity analysis was that no reasonably possible
change in one of the key assumptions would cause the carrying amount to exceed the recoverable amount.
The sensitivity per group of CGUs for the 2021 and 2020 goodwill impairment test, respectively, is as follows:
Applied
weighted
average
growth
rate
Allowed change (in basis points)
Allocated
goodwill at
December 31,
20212021 sensitivity per group of CGUs
Decline
in growth
Increase
in discount
rate
Decrease
in adjusted
operating
profit margin
Health Learning, Research & Practice 1.4% >300 >300 >300 534
Clinical Solutions 2.3% >300 >300 >300 524
Tax & Accounting Americas and Asia Pacific 1.9% >300 >300 >300 1,076
Tax & Accounting Europe 0.3% >300 >300 >300 416
Governance, Risk & Compliance 2.1% >300 >300 >300 1,029
Legal & Regulatory 1.6% >300 >300 >300 601
Total 1.9% 4,180
Applied
weighted
average
growth
rate
Allowed change (in basis points)
Allocated
goodwill at
December 31,
20202020 sensitivity per group of CGUs
Decline
in growth
Increase
in discount
rate
Decrease
in adjusted
operating
profit margin
Health Learning, Research & Practice 0.8% >300 >300 >300 494
Clinical Solutions 1.4% >300 >300 >300 484
Tax & Accounting Americas and Asia Pacific 1.1% >300 >300 >300 943
Tax & Accounting Europe 0.0% >300 >300 >300 411
Governance, Risk & Compliance 1.3% >300 >300 >300 958
Legal & Regulatory 0.8% >300 >300 >300 679
Total 1.1% 3,969
IMPAIRMENT TESTING OF ACQUIRED IDENTIFIABLE INTANGIBLE ASSETS AND OTHER INTANGIBLE ASSETS
The following impairments were recognized on the acquired identifiable intangible assets and other intangible assets:
2021 2020
Acquired identifiable intangible assets – Learner's Digest and certain assets within Health 27 –
Acquired identifiable intangible assets – certain assets within GRC 11 –
Other intangible assets 18 17
Total 56 17
The impairment of other intangible assets relate to a small portion of the group’s internally-developed software initiatives.
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Wolters Kluwer 2021 Annual Report 143
Note 19 – Property, Plant, and Equipment
Land and
buildings
Other fixed
assets 2021 2020
Position at January 1
Purchase value 124 251 375 485
Accumulated depreciation and impairment (84) (207) (291) (390)
Book value at January 1 40 44 84 95
Movements
Investments 4 13 17 25
Acquired through business combinations Note 8 0 0 0 2
Divestments of operations Note 8 (2) 0 (2) 0
Disposals of assets 0 0 0 (7)
Net expenditures 2 13 15 20
Depreciation Note 14 (6) (19) (25) (26)
Transfer to assets classified as held for sale Note 9 (1) (2) (3) –
Foreign exchange differences 2 2 4 (5)
Total movements (3) (6) (9) (11)
Position at December 31
Purchase value 125 255 380 375
Accumulated depreciation and impairment (88) (217) (305) (291)
Book value at December 31 37 38 75 84
In 2020, the group entered into a sale and lease back transaction for property in the Netherlands. This transaction resulted in a net
book gain of €0 million and a cash inflow of €7 million.
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Note 20 – Leasing
ACCOUNTING POLICIES
Property, plant, and equipment, consisting of land, buildings, and other assets such as office equipment and vehicles, are valued at
cost less accumulated depreciation and any impairment. Leasehold improvements are presented as part of land and buildings.
Depreciation is recognized in the consolidated statement of profit or loss on a straight-line basis over the estimated useful life
of each part of an item of property, plant, and equipment. Land is not depreciated.
The estimated useful lives for property, plant, and equipment are as follows:
• Buildings: 20 to 40 years;
• Leasehold improvements: equal to the lease term, unless the economic life of the leasehold improvement is shorter; and
• Other assets: three to ten years.
ACCOUNTING POLICIES
The group leases primarily real estate and, to a lesser extent, IT equipment and cars. The fixed rental periods mostly vary from one
year to 15 years, but may have renewal and/or termination options. For real estate and IT equipment, lease terms are negotiated on
an individual basis and contain a wide range of different terms and conditions.
Leases are recognized as a right-of-use asset and a corresponding liability at the same date at which the leased asset is available for
use by the group. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line
basis. The lease liability is discounted based on the incremental borrowing rate, because the rate implicit in the lease cannot readily
be determined. The finance cost is charged to profit or loss over the lease period in order to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The group elected to apply the practical expedients to exclude all short-term leases and all leases for which the underlying asset is
of low value, and not to apply IFRS 16 to leases of intangible assets (such as software). For IT equipment and car leases, the group
elected to apply the practical expedient to not separate non-lease components from lease components, and instead to account for
these components as a single lease component.
Payments associated with short-term leases and low-value leases are recognized on a straight-line basis as an expense in profit or
loss. Short-term leases are leases with a lease term of 12 months or less, considering any reasonably certain optional lease periods.
Low-value leases comprise small items of office furniture and IT equipment. The total expenses arising from short-term leases and
low-value leases are insignificant.
The group is to a very limited extent a lessor.
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Note 20 – Leasing continued
ESTIMATES AND JUDGMENTS
IFRS 16 requires management to use estimates for setting the discount rate and to apply judgment in the assessment of renewal and
termination options (i.e., optional lease periods) in the lease contracts.
Discount rate
The discount rate applied is based on the incremental borrowing rate for the respective leases considering the primary economic
environment of the lease, the currency, the credit risk premium, the lease term, and the nature of the leased asset.
At December 31, 2021, the weighted average discount rate is 2.4% (2020: 2.8%
).
Renewal and termination options
Renewal and termination options are included in several real estate and other lease contracts. These terms are used to maximize
operational flexibility in terms of managing contracts. Most contract-specific renewal and termination options are exercisable only by
the group and not by the respective lessor.
In determining the lease term, the group considers all facts and circumstances that create an economic incentive to use the optional
lease period. Optional lease periods are only included in the lease term if it is reasonably certain that the optional lease period will
be used. The assessment is reviewed if a significant change in circumstances occurs which affects this assessment and that is within
the control of the group.
Real estate leases that are annually renewed or that have an indefinite contract term are on average leased for five years. Optional
periods arising from renewal options of other real estate leases are mostly not considered to be reasonably certain, since the rent is
often reset at the market price at the renewal option date. Optional periods after termination option dates are often considered in
the lease term, due to termination penalties included in the contract.
Impairment of right-of-use assets
A lessee should apply IAS 36 Impairment of Assets to determine whether there is an impairment trigger regarding the right-of-
use asset and account for any impairment loss identified. In the group, this primarily may apply to the asset class real estate.
The impairment of a real estate right-of-use asset becomes relevant in case of vacant office space.
If vacant office space is identified, this space is considered a CGU on its own, when that space can contractually and practically be
sublet. An impairment is recognized when the recoverable amount is lower than the carrying value. Mostly, the recoverable amount
will be based on expected future sublease receipts, estimated by an external real estate broker. The carrying value may not only
include the right-of-use asset, but also any directly related associated assets such as leasehold improvements.
The group’s real estate rationalization program resulted in impairments on right-of-use assets of €1 million (2020: €2 million).
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Note 20 – Leasing continued
MOVEMENT SCHEDULE OF RIGHTOFUSE ASSETS
Real estate Other leases 2021 2020
Position at January 1
Purchase value 589 74 663 673
Accumulated depreciation and impairment (305) (39) (344) (332)
Book value at January 1 284 35 319 341
Movements
Additions from new leases 12 12 24 71
Additions from sale and leaseback Note 19 – – – 5
Acquired through business combinations Note 8 2 – 2 4
Contract modifications and reassessments of options 17 3 20 (4)
Net additions 31 15 46 76
Depreciation Note 14 (52) (19) (71) (73)
Impairment Note 14/18 (1) – (1) (2)
Transfer to assets classified as held for sale Note 9 (9) (1) (10) –
Foreign exchange differences 16 2 18 (23)
Total movements (15) (3) (18) (22)
Position at December 31
Purchase value 578 80 658 663
Accumulated depreciation and impairment (309) (48) (357) (344)
Book value at December 31 269 32 301 319
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CONTRACTUAL MATURITIES OF LEASE LIABILITIES
2021 2020
Within one year 70 72
Between one and two years 61 60
Between two and three years 51 52
Between three and four years 42 44
Between four and five years 33 37
Between five and ten years 91 103
Ten years and more 17 24
Effect of discounting (34) (44)
Total lease liabilities at December 31 Note 29 331 348
CASH OUTFLOW FOR LEASES
2021 2020
Interest portion of lease payments 9 11
Repayment of principal portion of lease liabilities 68 74
Total 77 85
OTHER DISCLOSURES
At December 31, 2021, the future undiscounted cash outflow arising from leases not yet commenced and to which the group is
committed amounted to €0 million (2020: €0 million).
The group’s lease agreements do not impact any covenants.
Note 20 – Leasing continued
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The group’s shares in equity-accounted investees at December 31 are:
ownership in % 2021 2020
HaoYisheng (Beijing, China) 22 22
ACCOUNTING POLICIES
Interests in equity-accounted investees (associates) are accounted for using the equity method and are initially recognized at cost,
which includes goodwill identified upon acquisition and transaction costs. Associates are recognized from the date the group has
significant influence, and recognition ceases the date the group has lost its significant influence over the equity investment.
When an interest in an associate is increased to a controlling interest, the equity interest previously held is treated as if it was
disposed of and reacquired at fair value on the acquisition date. Any resulting gain or loss compared to the carrying amount is
recognized in profit or loss. Any amount that has previously been recognized in other comprehensive income, and that would be
reclassified to profit or loss following a divestment, is similarly reclassified to profit or loss.
MOVEMENT SCHEDULE OF EQUITYACCOUNTED INVESTEES
2021 2020
Position at January 1 8 8
Divestments – (5)
Dividends received – (1)
Share of profit in equity-accounted investees, net of tax 1 6
Foreign exchange differences 1 0
Position at December 31 10 8
In 2020, the group sold its 40% equity shareholding in Logical Images, Inc. Refer also to Note 8 – Acquisitions and Divestments.
For the equity-accounted investees at December 31, 2021, and December 31, 2020, respectively, the financial information (at 100%)
and the group’s weighted proportionate share is as follows:
Total equity-accounted investees Group’s share
2021 2020 2021 2020
Total assets 28 25 6 5
Total liabilities 16 20 3 4
Total equity 12 5 3 1
Revenues 24 23 5 5
Net profit for the year 5 6 1 1
Note 21 – Investments in Equity-accounted Investees
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Wolters Kluwer 2021 Annual Report 149
Note 22 – Financial Assets
2021 2020
Financial assets at fair value through profit or loss 0 0
Finance lease receivables 0 1
Other non-current financial assets 5 4
Total 5 5
The exposure to credit risk of the financial assets is considered immaterial. Refer to Note 30 – Financial Risk Management.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2021 2020
Position at January 1 0 0
Financial assets arising from divestment of operations Note 8 6 –
Revaluation gain/(loss) on financial assets at fair value through profit or loss Note 15 (5) 0
Foreign exchange differences (1) 0
Position at December 31 0 0
Note 23 – Tax Assets and Liabilities
DEFERRED TAX ASSETS AND LIABILITIES
temporary differences arising from: Assets Liabilities 2021 2020
Intangible assets 9 (399) (390) (403)
Property, plant, and equipment and right-of-use assets 6 (5) 1 5
Employee benefits 37 0 37 42
Tax value of loss carry-forwards recognized 38 – 38 43
Other items 123 (41) 82 80
Total before set-off of tax 213 (445) (232) (233)
Set-off of tax (151) 151 0 0
Position at December 31 62 (294) (232) (233)
The actual recognition of deferred tax assets depends on the generation of future taxable income during the periods in which the
temporary differences become deductible. Based on projected future taxable income and available strategies, the group considers the
future realization of these deferred tax assets as being probable.
Other items mainly include recognition of deferred tax assets and liabilities for temporary differences on working capital items.
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Note 23 – Tax Assets and Liabilities continued
MOVEMENTS IN TEMPORARY DIFFERENCES, 2021
Balance at
January 1, 2021
Acquisitions/
divestments
Transfer to assets
and liabilities
classified as held
for sale (Note 9)
Recognized in
profit or loss
(Note 16)
Recognized in
equity and other
comprehensive
income
Foreign exchange
differences
Balance at
December 31, 2021
Intangible assets (403) 4 0 34 – (25) (390)
PPE and right-of-use assets 5 – 0 (4) – 0 1
Employee benefits 42 0 0 (4) (4) 3 37
Tax value of loss carry-forwards recognized 43 – – (8) – 3 38
Other items 80 4 (1) (4) 0 3 82
Total (233) 8 (1) 14 (4) (16) (232)
MOVEMENTS IN TEMPORARY DIFFERENCES, 2020
Balance at
January 1, 2020
Acquisitions/
divestments
Transfer to assets
and liabilities
classified as held
for sale (Note 9)
Recognized in
profit or loss
(Note 16)
Recognized in
equity and other
comprehensive
income
Foreign exchange
differences
Balance at
December 31, 2020
Intangible assets (414) (33) – 24 – 20 (403)
PPE and right-of-use assets 6 – – (1) – 0 5
Employee benefits 40 0 – 3 0 (1) 42
Tax value of loss carry-forwards recognized 39 14 – (8) – (2) 43
Other items 83 1 – (6) 1 1 80
Total (246) (18) 0 12 1 18 (233)
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Wolters Kluwer 2021 Annual Report 151
Note 23 – Tax Assets and Liabilities continued
MOVEMENTS IN OVERALL TAX POSITION
2021 2020
Position at January 1
Current income tax assets 23 22
Current income tax liabilities (169) (163)
Deferred tax assets 72 86
Deferred tax liabilities (305) (332)
Overall tax position (379) (387)
Movements
Total income tax expense Note 16 (201) (216)
Deferred tax from acquisitions and divestments 8 (18)
Current income tax from acquisitions and divestments 0 0
Deferred tax on items recognized directly in other comprehensive income (4) 1
Paid income tax 277 221
Transfer to assets and liabilities classified as held for sale Note 9 1 –
Foreign exchange differences (17) 20
Total movements 64 8
Position at December 31
Current income tax assets 59 23
Current income tax liabilities (142) (169)
Deferred tax assets 62 72
Deferred tax liabilities (294) (305)
Overall tax position (315) (379)
The current income tax liabilities include, to a large extent, uncertain tax positions, of which most of the liabilities are expected to
be settled beyond one year. For the critical estimates and judgments applied to uncertain tax positions, refer to Note 16 – Income Tax
Expense.
The group paid income taxes for the amounts of €166 million (2020: €126 million) in North America, €104 million (2020: €89 million) in
Europe, and €7 million (2020: €6 million) in Asia Pacific and Rest of World.
The amount of deferred tax assets arising from recognized tax loss carry-forwards, which relate to tax jurisdictions where the group
continued to incur tax losses in the current and/or preceding year, was €11 million at December 31, 2021 (2020: €44 million). It is
considered probable based on forecasts that future taxable profits will be available.
UNRECOGNIZED TAX LOSSES AND TEMPORARY DIFFERENCES
The group has not recognized deferred tax assets that relate to unused tax losses and temporary differences amounting to
€253 million (2020: €255 million), as it is not probable that future taxable profit will be available against which the group can use the
benefits. Of these unused tax losses and temporary differences, 11% expire within the next five years (2020: 10%), 13% expire after five
years (2020: 17%), and 76% carry forward indefinitely (2020: 73%).
In addition, the group has not recognized net deferred tax assets of €20 million (2020: €15 million), relating to unused state tax losses in
the U.S. Of these unused state tax losses, 21% expire within the next five years (2020: 34%), and 79% expire after five years (2020: 66%).
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Note 23 – Tax Assets and Liabilities continued
DEFERRED TAX ON ITEMS RECOGNIZED IMMEDIATELY IN OTHER COMPREHENSIVE INCOME AND EQUITY
2021 2020
Amount
before tax Tax
Amount
net of tax
Amount
before tax Tax
Amount
net of tax
Exchange differences on translation of foreign operations, recycling of foreign
exchange differences on loss of control, and net investmenthedges 339 0 339 (337) 1 (336)
Gains/(losses) on cash flow hedges 10 – 10 (18) – (18)
Remeasurement gains/(losses) on defined benefit plans 16 (4) 12 0 0 0
Recognized in other comprehensive income 365 (4) 361 (355) 1 (354)
Share-based payments 24 – 24 24 – 24
Recognized in equity 24 – 24 24 – 24
Note 24 – Inventories
2021 2020
Work in progress 21 19
Finished products and trade goods 44 49
Total 65 68
ACCOUNTING POLICIES
Inventories are valued at the lower of cost and net realizable value. The cost of inventories includes all costs incurred in bringing
the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of
business less the estimated cost of completion and the estimated cost necessary to complete the sale.
Inventories also include internally developed commercial software products. The cost of internally produced goods includes the
developing, manufacturing, content, and publishing costs. Trade goods purchased from third parties are valued at the purchase price.
At December 31, 2021, the provision for obsolescence deducted from the inventory carrying values amounted to €18 million (2020:
€18 million). In 2021, an amount of €2 million was recognized as an expense for the change in the provision for obsolescence (2020: €2
million) and is presented as part of cost of revenues in the consolidated statement of profit or loss.
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Note 25 – Contract Assets and Liabilities
2021 2020
Trade receivables 1,008 986
Non-current contract assets 19 21
Current contract assets 138 111
Non-current deferred income 113 112
Current deferred income 1,709 1,518
Other current contract liabilities 80 66
ACCOUNTING POLICIES
Contract assets and contract liabilities
The group recognizes the following contract-related assets: unbilled revenues, cost to obtain a contract, and cost to fulfill a contract.
The group recognizes the following contract-related liabilities: deferred income and the provisions for returns, refunds, and other liabilities.
In general, when either party to a customer contract has performed, the group recognizes unbilled revenues or deferred income,
depending on the relationship between the group’s performance and the timing of the customers’ payment.
Where the group has performed by transferring a good and/or service to the customer and the customer has not yet paid the related
consideration, unbilled revenues or a receivable is presented in the consolidated statement of financial position, depending on
the nature of the group’s right to consideration.
For contracts whereby neither party has performed, trade receivables and deferred income balances are presented on a net basis.
A contract asset is recognized when the group’s right to consideration is conditional on something other than the passage of time, for
example future performance of the entity. A receivable is recognized when the group’s right to consideration is unconditional except for
the passage of time.
Cost to obtain a contract
Incremental cost for obtaining a contract (primarily sales commissions) will be capitalized and amortized if the contract term is
expected to be longer than 12 months, as the practical expedient of IFRS 15 is applied. The amortization period will usually be one to
five years, or the underlying contract life if longer, subject to the nature of the underlying performance obligations.
Cost to fulfill a contract
If the group incurs cost to fulfill a revenue contract with a customer (e.g., costs that are explicitly chargeable to the customer under the
contract, set-up cost, or pre-contract costs), an asset is recognized if these costs directly relate to a contract, generate or enhance resources
that will be used in satisfying performance obligations in the future, and are expected to be recovered. The amortization of set-up and pre-
contract costs is recognized as an expense over the term of the associated contract.
Impairment
Any impairment of assets relating to contracts with customers is measured, presented, and disclosed in accordance with IFRS 9.
Deferred income
Deferred income is presented in the consolidated statement of financial position when a customer has paid an amount of consideration
prior to the group performing. It represents the part of the amount invoiced to customers that has not yet met the criteria for revenue
recognition and thus still must be earned as revenue by means of the delivery of goods and/or services in the future. Deferred income
is recognized at its nominal value.
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Note 25 – Contract Assets and Liabilities continued
Provisions for returns, refunds, and otherliabilities
The group recognizes a contract liability if the group receives consideration from a customer and expects to refund some or all of that
consideration to the customer or for transferred goods and/or services with a right of return. The contract liability is measured as the
amount of the consideration for which the group does not expect to be entitled to.
ESTIMATES AND JUDGMENTS
The assessment of the nature of sales commission plans for meeting the capitalization criteria requires judgment. The applicable
amortization period of the incremental cost to obtain a contract is estimated by the group, by matching the useful life of the
capitalized sales commissions with the expected benefits of the underlying contract.
GENERAL
In general, the group applies payment terms in line with common industry practice. There are no contracts with a material financing
component. There are contracts with variable consideration, but the related estimates are almost never constrained. To a very limited
extent, the group acts as an agent in its contracts with customers.
Most of the goods and/or services require prepayment of the consideration. However, the group also has contracts with customers
where invoicing occurs after delivery of the goods and/or services.
Trade receivables and unbilled revenues are shown net of impairment losses amounting to €83 million (2020: €84 million). The fair
value of the receivables approximates the carrying amount. Impairment losses on trade receivables and unbilled revenues are
presented as part of sales costs in the consolidated statement of profit or loss.
LOSS ALLOWANCE
2021 2020
Position at January 1 84 72
Divestment of operations (1) –
Transfer to assets classified as held for sale (1) –
Additions to loss allowances Note 10 20 36
Usage of loss allowances (25) (19)
Foreign exchange differences 6 (5)
Position at December 31 83 84
For further information on credit risk, refer to Note 30 – Financial Risk Management.
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Wolters Kluwer 2021 Annual Report 155
Note 25 – Contract Assets and Liabilities continued
CONTRACT ASSETS
current and non-current
Unbilled
revenues
Cost to
obtain a
contract
Cost to
fulfill a
contract 2021 2020
Position at January 1 75 32 25 132 157
Recognized as revenues in the year 331 – – 331 321
Newly recognized cost to fulfill a contract – – 391 391 322
Transferred to trade receivables (315) – (397) (712) (637)
Newly recognized cost to obtain a contract – 29 – 29 21
Amortization of capitalized sales commissions Note 10 – (23) – (23) (21)
Autonomous movements in contract assets 16 6 (6) 16 6
Acquired through business combinations 0 1 – 1 0
Divestments of operations – – – 0 (4)
Transfer to assets classified as held for sale (1) – – (1) –
Foreign exchange differences 5 1 3 9 (27)
Position at December 31 95 40 22 157 132
The group did not recognize an impairment loss on the unbilled revenues during the year (2020: nil).
DEFERRED INCOME
current and non-current 2021 2020
Position at January 1 1,630 1,679
New and existing contracts with customers 3,683 3,434
Recognized as revenues from opening balance (1,518) (1,550)
Recognized as revenues in the year on new and existing contracts (2,007) (1,810)
Change in netting against trade receivables (45) (30)
Autonomous movements in deferred income 113 44
Acquired through business combinations 6 21
Divestments of operations (2) (11)
Transfer to liabilities classified as held for sale Note 9 (27) –
Foreign exchange differences 102 (103)
Position at December 31 1,822 1,630
No material amount of revenues was recognized in 2021 from performance obligations satisfied or partially satisfied in previous years,
because of events such as changes in transaction price. Furthermore, we did not have material changes in deferred income because
of changes in our estimates or because of contract modifications.
The aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied at year-end
2021 was €3,727 million (2020: €3,133 million), of which €1,822 million was included in deferred income (2020: €1,630 million). The
unfulfilled performance obligations not recognized in deferred income relate to multi-year contracts agreed with customers, whereby
we expect to satisfy these performance obligations for a large part within one year and for the remainder between one to five years.
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Note 25 – Contract Assets and Liabilities continued
OTHER CONTRACT LIABILITIES
2021 2020
Position at January 1 66 39
Additions to provision for returns, refunds, and other 90 108
Usage of provision for returns, refunds, and other (76) (79)
Autonomous movements in other contract liabilities 14 29
Transfer to liabilities classified as held for sale (4) –
Foreign exchange differences 4 (2)
Position at December 31 80 66
Note 26 – Other Receivables
2021 2020
Prepaid royalties 18 20
Non-current other receivables 18 20
Prepaid royalties 81 74
Other prepayments 251 160
Miscellaneous receivables 34 35
Interest receivable 0 2
Deferred divestment consideration receivable Note 8 – 1
Current other receivables 366 272
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Note 27 – Cash and Cash Equivalents
2021 2020
Deposits 610 112
Cash and bank balances 391 611
Total cash and cash equivalents in the consolidated statement of financial position 1,001 723
Minus: Bank overdrafts used for cash management purposes Note 29 (9) (359)
Plus: Cash included in assets held for sale Note 9 2 –
Total cash and cash equivalents including cash included in assets held for sale in the
consolidated statement of cash flows 994 364
ACCOUNTING POLICIES
Cash and cash equivalents comprise cash and bank balances and call deposits.
Bank overdrafts predominantly result from cash pool arrangements and are presented within borrowings and bank overdrafts in
current liabilities. The group discloses the financial assets and financial liabilities within these arrangements on a gross basis.
An amount of €0 million (2020: €0 million) relates to cash and cash equivalent balances of entities that the group does not fully own
(see Note 17 – Non-controlling Interests).
All deposits are on-demand deposits that are readily convertible into cash.
At December 31, 2021, bank balances include an amount of approximately €45 million (2020: €36 million) of restricted cash, primarily
due to local exchange control regulations that provide for restrictions on exporting cash and/or capital from the relevant country.
Note 28 – Trade and Other Payables
2021 2020
Trade payables 123 133
Salaries and holiday allowances 284 220
Social security premiums and other taxation 88 75
Pension-related payables 24 17
Royalty payables 90 87
Other accruals and payables 300 252
Interest payable 34 35
Deferred and contingent acquisition payables Note 29 1 0
Total 944 819
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Note 29 – Long-term Debt
Nominal
value
Effective
interest
rate in %
Nominal
interest
rate in %
Repayment
commitments
1-5 years
Repayment
commitments
>5 years 2021 2020
Bonds 2008-2028 (100.00
*
) €36 6.812 6.748 – 36 36 36
Bonds 2013-2023 (99.709
*
) €700 2.950 2.875 699 – 699 699
Bonds 2014-2024 (99.164
*
) €400 2.640 2.500 399 – 399 398
Bonds 2017-2027 (99.659
*
) €500 1.575 1.500 – 498 498 498
Bonds 2020-2030 (99.292
*
) €500 0.862 0.750 – 495 495 495
Bonds 2021-2028 (99.958
*
) €500 0.307 0.250 – 498 498 –
Bonds, measured at amortized cost 1,098 1,527 2,625 2,126
Private placement 2008-2038, measured at
amortizedcost ¥20,000 3.330 3.330 – 153 153 157
Deferred and contingent acquisition payments,
measured at fair value 1 – 1 0
Other debt, measured at amortized cost 10 – 10 9
Derivative financial instruments, measured
atfairvalue – 2 2 8
Other long-term debt 11 2 13 17
Total long-term debt (excluding lease liabilities) 1,109 1,682 2,791 2,300
Lease liabilities
**
260 276
Total long-term debt 3,051 2,576
*
Issue price of the financial instrument.
**
For the repayment commitments of lease liabilities, refer to Note 20 – Leasing.
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Note 29 – Long-term Debt continued
RECONCILIATION LONGTERM DEBT TO NET DEBT
2021 2020
Total long-term debt 3,051 2,576
Borrowings and bank overdrafts:
Euro Commercial Paper program – 100
Bank overdrafts, measured at amortized cost Note 27 9 359
Total borrowings and bank overdrafts 9 459
Short-term lease liabilities 71 72
Deferred and contingent acquisition payables, measured at fair value Note 28 1 0
Total short-term debt 81 531
Gross debt 3,132 3,107
Minus:
Cash and cash equivalents Note 27 (1,001) (723)
Deferred divestment consideration receivable Note 26 – (1)
Net debt 2,131 2,383
ACCOUNTING POLICIES
Financial instruments
Financial instruments comprise the following:
• Non-derivative financial assets and liabilities: financial assets designated at fair value through profit or loss, trade and miscellaneous
receivables, cash and cash equivalents, borrowings and bank overdrafts, trade payables, and short- and long-term debt; and
• Derivative financial assets and liabilities: currency forwards and cross-currency interest rate swaps.
Financial assets and liabilities are offset and presented as net in the consolidated statement of financial position when the group
has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the asset and settle the
liability simultaneously.
The group recognizes non-derivative financial assets and liabilities on the trade date.
Non-derivative financial assets
Trade and miscellaneous receivables are measured at amortized cost, less accumulated impairment.
Impairment of non-derivative financial assets
The determination of the provision for impairment is based on the group’s historical average of three years of credit losses, which is
used as a proxy for expected losses on trade receivables with similar characteristics and credit profile. Trade receivables longer than
one year overdue and trade receivables with specific risk with no reasonable expectation of recovery, are impaired and provided for
in full, unless reliable supporting information to conclude otherwise is available. The group does not present its impairment losses
separately in the consolidated statement of profit or loss, but in the notes thereto.
Non-derivative financial assets designated at fair value throughprofit orloss
Non-derivative financial assets designated at fair value through profit or loss comprise equity investments and are measured at fair
value. Fair value changes are recognized in profit or loss.
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Note 29 – Long-term Debt continued
Non-derivative financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost are bonds, the Euro Commercial Paper program, private placements, other long-term
and short-term debt, and trade payables.
The group initially recognizes non-derivative financial liabilities at fair value less any directly attributable transaction costs.
After initial recognition, these financial liabilities are measured at amortized cost with any difference between cost and redemption
value being recognized in profit or loss over the period of the borrowings, using the effective interest method.
Non-derivative financial liabilities designated at fair value through profit orloss
Non-derivative financial liabilities designated at fair value through profit or loss comprise contingent considerations and are
measured at fair value. Changes therein are recognized in profit or loss.
Derivative financial instruments and hedging activities
The group holds derivative financial instruments to hedge risk exposures.
Derivative financial instruments are initially recognized at fair value on the date a derivative contract is concluded and are
subsequently remeasured at fair value. The method of recognizing gains or losses depends on whether the derivative is designated as
a hedging instrument and if so, the nature of the item being hedged.
The group designates certain derivatives as either:
• Hedges of a risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge);
• Hedges of a net investment in a foreign operation (net investment hedge); or
• Currency forward instruments to protect the group’s net profit (not qualifying for hedge accounting).
With respect to foreign currency forwards used in the cash flow hedges and the net investment hedges, the group designates as
a hedging instrument only the change in the value of the spot component of a forward contract (and not the forward element).
The differential between the contracted forward rate and the market spot rate, defined as forward points, is recognized in other
comprehensive income, and accumulated in the hedge reserve within total equity.
Cash flow hedge
The effective part of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in
other comprehensive income. Amounts accumulated in the hedge reserve are reclassified to profit or loss in the same period the
hedged item affects the profit or loss within the line where the result from the hedged transaction is recognized.
The gain or loss relating to the ineffective part of the hedging relationship is recognized in profit or loss within financing results.
Reclassification of hedge reserve to profit or loss
When a hedging instrument matures or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative
gain or loss existing in the hedge reserve at that time remains in the hedge reserve and is reclassified when the hedged transaction
is ultimately recognized in profit or loss. When a hedged transaction is no longer expected to occur, the cumulative gain or loss in the
hedge reserve is reclassified to profit or loss.
Net investment hedge
Fair value changes of derivative financial instruments that are used to hedge the net investment in foreign operations, which are
determined to be an effective hedge, are recognized directly in other comprehensive income in the translation reserve. Gains and
losses accumulated in the translation reserve are reclassified to profit or loss when the foreign operation is disposed. If a hedging
relationship is terminated and the derivative financial instrument is not sold, future changes in the fair value of the derivative
financial instrument are recognized in profit or loss.
The gain or loss relating to the ineffective part of the hedging relationship is recognized in profit or loss within financing results.
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Note 29 – Long-term Debt continued
Derivatives that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized in profit or
loss within financing results.
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Gross debt, excluding lease liabilities, derivative financial instruments, and bank overdrafts
Balance at
January 1,
2021
Net cash
flows
Acquisitions/
Divestments
Unwinding of
discount
Foreign
exchange
differences
Other
non-cash
movements
Balance at
December 31,
2021
Bonds 2,126 500 – 1 – (2) 2,625
Private placements 157 – – 0 (4) – 153
Other gross debt 109 (100) 2 – 1 – 12
Total 2,392 400 2 1 (3) (2) 2,790
Balance at
January 1,
2020
Net cash
flows
Acquisitions/
Divestments
Unwinding of
discount
Foreign
exchange
differences
Other
non-cash
movements
Balance at
December 31,
2020
Bonds 1,629 496 – 2 – (1) 2,126
Private placements 413 (250) – 0 (6) – 157
Other gross debt 238 (121) 0 – (4) (4) 109
Total 2,280 125 0 2 (10) (5) 2,392
Lease liabilities
current and non current 2021 2020
Position at January 1 348 368
Additions from new leases 24 71
Additions from sale and leaseback – 6
Acquired through business combinations Note 8 2 4
Transfer to liabilities classified as held for sale (11) –
Contract modifications and reassessments of options 19 (4)
Repayment of lease liabilities (interest and principal portion) (77) (85)
Unwinding of discount of lease liabilities Note 15 9 11
Foreign exchange differences 17 (23)
Position at December 31 331 348
For accounting policies, estimates, and judgments on lease liabilities, refer to Note 20 – Leasing.
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Financial Statements
Note 29 – Long-term Debt continued
LOAN MATURITY
The following amounts of gross debt (excluding lease liabilities) at December 31, 2021, are due within and after five years:
2021
2023 704
2024 405
2025 0
2026 0
Due after 2026 1,682
Long-term debt 2,791
Short-term debt (2022) 10
Total (excluding lease liabilities) 2,801
FINANCIAL LIABILITIES MEASURED AT AMORTIZED COST
Bonds
The group has senior bonds outstanding for an amount of €2,625 million at December 31, 2021 (2020: €2,126 million). The nominal
interest rates on the bonds are fixed until redemption.
On March 30, 2021, the group issued a €500 million seven-year senior unsecured Eurobond. The bonds were sold at an issue price
of 99.958 percent and carry an annual coupon of 0.250 percent. The senior unsecured bonds will mature on March 30, 2028. The net
proceeds of the offering will be used for general corporate purposes.
Private placements
The group holds private placements in Japanese yen. These private placements (¥20,000 million) are converted to and hedged
against euro via cross-currency interest rate swaps. These swaps have been collateralized for credit risk in line with the treasury risk
management policies. There is no collateral outstanding at December 31, 2021 (2020: no collateral outstanding).
Multi-currency revolving credit facility
Effective July 2021, the group concluded a one-year extension to its €600 million multi-currency revolving credit facility from July 2023
to July 2024, retaining an option to extend by another year. Furthermore, in July 2021, multi-year sustainability or Environmental, Social,
and Governance (ESG) targets are introduced in our credit facility, which links these targets to the interest rates in the credit facility.
The interest rates on the multi-currency revolving credit facility are variable. The credit facility is for general corporate purposes.
At December 31, 2021, no amounts were drawn under the facility (December 31, 2020: no amounts drawn). The multi-currency revolving
facility is subject to customary conditions, including a financial credit covenant. The credit facility covenant requires that the
consolidated net senior borrowings (excluding fully subordinated debt) to adjusted EBITDA shall not exceed 3.5. In 2021 and 2020, the
group was comfortably within the thresholds stipulated in the financial covenant of the credit facility.
Euro Commercial Paper program
The group has a Euro Commercial Paper (ECP) program in place, under which it may issue unsecured, short-term debt (ECP notes) for
a maximum of €1.0 billion. The program provides flexible funding for short-term cash needs at attractive rates. At December 31, 2021,
no ECP notes were outstanding (2020: €100 million outstanding, included in borrowings and bank overdrafts).
DEFAULTS AND/OR BREACHES
There were no defaults or breaches on the loans and borrowings during 2021 and 2020.
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Note 30 – Financial Risk Management
RISK MANAGEMENT FRAMEWORK
The group’s activities are exposed to a variety of financial risks, including market, liquidity, and credit risk. Identification and
management of financial risks are carried out by the central treasury department (Corporate Treasury), whereby the treasury
operations are conducted within a framework of policies and guidelines (Treasury Policy), which have been approved by the Executive
Board and the Supervisory Board. The Treasury Policy is reviewed at least annually, considering market circumstances and market
volatility, and is based on assumptions concerning future events, subject to uncertainties and risks that are outside of the group’s
control. The Treasury Committee, comprising the Vice President Group Accounting & Reporting, Controller Corporate Office, Executive
Vice President Treasury & Risk, and representatives of the Corporate Treasury and Treasury Back-Office, meets quarterly to review
treasury activities and compliance with the Treasury Policy, and reports directly to the Executive Board and the Audit Committee.
The Treasury Back-Office reports deviations directly to the CFO and the Executive Vice President Treasury & Risk.
Under the Internal Control Framework, the financial reporting controls, including policy and procedures, of the Corporate Treasury
Department are periodically reviewed. Corporate Treasury reports quarterly to the Audit Committee on its compliance with the
Treasury Policy.
The group’s funding activities are carried out by Corporate Treasury, using long-term capital market instruments and committed credit
facilities to ensure optimal financial flexibility and capital efficiency. The borrowings, together with cash generated from operations,
are lent or contributed as equity to the operating companies. The group targets a net-debt-to-EBITDA ratio of approximately 2.5.
However, the group could temporarily deviate from this relative indebtedness ratio. At December 31, 2021, the net-debt-to-EBITDA ratio
was 1.4 (2020: 1.7).
All treasury activities – in particular, the use of derivative financial instruments – are subject to the principle of risk minimization
and are executed by specialist treasury personnel. For this reason, financial transactions and risk positions are managed in a central
treasury management and payment system. It is the group’s policy that material currency translation and variable interest exposures
are partially hedged by Corporate Treasury, in accordance with the annual treasury plan approved by the Audit Committee. The group
does not purchase or hold derivative financial instruments for speculative purposes. The group’s risk profile is defined and reviewed
regularly. Although the economic environment has become more challenging because of the volatility in financial markets, the
exposure to financial risks for the group has not significantly changed, nor the approach to these risks.
MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the group’s profit or
loss or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimizing the return.
CURRENCY RISK
The group has identified transaction and translation risks as the main currency risks. The transaction risk exposure within
individual group entities is relatively immaterial. The transaction prices invoiced to customers for goods and/or services are mainly
denominated in the customers’ local currencies. Given the nature of the business, almost all related costs are also incurred in those
local currencies. Derivative financial instruments to hedge transaction risks are therefore not frequently used.
HEDGE ACCOUNTING
Translation risk is the risk that exchange rate gains or losses arise from translating the statement of profit or loss, statement of
financial position, and statement of cash flows of foreign subsidiaries to the group’s presentation currency (euro) for consolidation
purposes.
The group’s risk management strategy practice is that material currency translation exposures (including U.S. dollar net investments)
are partially hedged by Corporate Treasury. Currency exposures, which impact the statements of financial position and/or profit or
loss by 10% or more, are considered material. The translation exposure on the statement of cash flows is partly mitigated by matching
cash inflows and outflows in the same currency. The group’s main translation risk is its exposure to the U.S. dollar.
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Note 30 – Financial Risk Management continued
In line with its risk management strategy, the group manages the translation risk using three types of risk mitigating actions, of which
two types of transactions are designated as a hedge and for which the group applies hedge accounting.
Net investment hedge
The group partially protects total equity for foreign exchange differences using U.S. dollar currency forward contracts qualifying as
net investment hedges, which partially offset the translation risk on U.S. dollar-denominated subsidiaries and long-term receivables
of the U.S. operations, being the hedged item. The fair value changes of the net investment hedge partially offset the currency
differences on translation of U.S. dollar-denominated subsidiaries and long-term receivables from U.S. operations, both being
recognized in other comprehensive income.
The group had U.S. dollar forward contracts outstanding for a total notional amount of €177 million ($200 million) at December 31,
2021 (2020: €163 million or $200 million). These hedges create a U.S. dollar balance sheet cover with a future settlement date and had
a carrying value of €0 million at December 31, 2021.
The group had U.S. dollar liabilities outstanding for a total notional amount of €406 million ($460 million) at December 31, 2021 (2020:
€385 million or $472 million). The U.S. dollar liabilities include net investment hedges and other U.S. dollar-denominated liabilities.
The U.S. dollar balance sheet cover of 10% (2020: 11%) is defined as the sum of U.S. dollar net investment hedges and other U.S. dollar
liabilities outstanding, divided by the group’s net investment in U.S. dollar-denominated assets.
Cash flow hedge
The group protects against the translation differences on the Japanese yen private placement (2021 and 2020: ¥20,000 million) and the
related interest payments, using cash flow hedges by means of four cross-currency interest rate swaps. The fair value changes of the
cash flow hedges are recognized in equity until the hedging relationship with the corresponding hedged instrument is terminated. At
that moment the translation differences are reclassified to profit or loss.
Currency forwards
The group partially protects net profit for foreign exchange differences using U.S. dollar and other currency forwards not qualifying
for hedge accounting. The fair value changes of these currency forwards are recognized in financing results and partially offset any
translation risk on profit or loss elements.
In 2021, the group swapped 50% (2020: 95%) of the net financing results of €78 million (2020: €46 million) into U.S. dollars, using
foreign exchange derivatives of $40 million (2020: $40 million).
Sensitivity
Based on the percentage of 50% for net financing results payable in U.S. dollars, an instantaneous 1% decline of the U.S. dollar
against the euro at December 31, 2021, with all other variables held constant, would result in a decrease of approximately €0.4 million
in net financing results (2020: €0.3 million).
Hedge effectiveness
Before applying hedge accounting, the group assesses, in accordance with the group’s risk management policies and the parameters
of the hedge, whether the designated hedge is highly effective. In 2021, the group did not record ineffectiveness because of hedging
activities (2020: no ineffectiveness). The group measures hedge effectiveness on a forward-looking basis at the inception of the
hedging relationship, and on an ongoing basis at reporting dates through a qualitative assessment of the critical terms of the hedging
instrument and the hedged item. The hedge values will generally move in the opposite direction because of the same risk and hence
an economic relationship exists. The results of these effectiveness tests all satisfied the effectiveness criterion during the year.
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Note 30 – Financial Risk Management continued
INTEREST RATE BENCHMARK REFORM PHASE 2
The fixed interest payments on the Japanese Yen private placements are converted to and hedged against euro via cross-currency
interest rate swaps. The Interest Rate Benchmark Reform did not impact these fixed interest payments. However, both the Japanese
Libor and Euribor were inputs in the fair value determination. Therefore, the group had some exposure to the Japanese yen Libor and
Euribor. As from 2022, the Japanese yen Libor will be replaced by the Tokia Overnight Rate (TONA) in the fair value determination. The
Euribor reference will only be replaced once this rate is discontinued. In addition, the Euro Overnight Index Average (EONIA) reference
in the Credit Support Annex will be amended to the Euro Short-Term Rate (€STR) in the first quarter of 2022.
In 2020, a corporate IBOR-reform work group was set up in response to the announcements regarding the required transition to
alternative benchmark rates. This work group assessed which contracts had a reference to an IBOR, both for third-party contracts and
internal contracts. IBOR references were primarily used in internal financing-related contracts. At December 31, 2021, all U.K., Swiss and
Japanese IBOR references in these internal contracts were replaced by alternative benchmark rates. Other IBOR references will only be
replaced once such IBORs are discontinued.
The IBOR-reform did not result in changes to the group’s risk management strategy.
CURRENCY RISK SENSITIVITY
The following table details the group’s sensitivity to a 1% weakening of the U.S. dollar against the euro:
2021 2020
Revenues (31) (30)
Adjusted operating profit (10) (9)
Operating profit (10) (8)
Adjusted net profit (6) (5)
Profit for the year (6) (4)
Shareholders’ equity at December 31 (35) (32)
Adjusted free cash flow (9) (8)
SENSITIVITY ANALYSIS
A sensitivity analysis on the derivative financial instruments portfolio yields the following results, assuming an instantaneous
1% decrease of the U.S. dollar and Japanese yen against the euro from their levels at December 31, 2021, and an instantaneous 1%
increase of the U.S. dollar, Japanese yen, and euro interest rates respectively:
in millions Hedged risk Amount
Type of
instrument
Exchange
rate
movement
€
Interest
rate
movement
€
Cash flow hedge
Changes in ¥ floating
interest payments and
¥ exchange rates
¥20,000
Cross-currency
interest
rate swaps
(2) (1)
Net investment hedge
Changes of the U.S. dollar
net investments due to
fluctuations of U.S. dollar
exchange rates
$200
Forward
contracts
2 0
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Note 30 – Financial Risk Management continued
INTEREST RATE RISK
The group is exposed to interest rate risk. The group aims to mitigate the impact on its results and cash flows of interest rate
movements, both by arranging fixed or variable rate funding and by use of derivative financial instruments. At December 31, 2021, the
group’s interest rate position (excluding cash and cash equivalents and lease liabilities) was 100% (2020: 97%) carried at a fixed rate.
The credit facility and the Euro Commercial Paper program have a variable interest rate.
Assuming the same mix of variable and fixed interest rate instruments, an instantaneous increase of interest rates of 1% compared to
the rates on December 31, 2021, with all other variables held constant, would hardly result, on an annual basis, in an increase of net
financing results (2020: €1 million).
LIQUIDITY RISK
Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The group’s approach to manage liquidity is to ensure, as far as possible,
that it will have enough liquidity to meet its liabilities when they are due.
The group actively manages liquidity risk by maintaining enough cash and cash equivalents, and by the availability of committed
borrowing capacity. To reduce liquidity risk, the group has established the following minimum requirements:
• No more than 25% of outstanding gross debt minus available cash should be repayable within a 12-month period;
• Acquiring of funding to start at least one year in advance of all maturing debt or alternative committed funding should be in place;
and
• Minimum headroom of €500 million (sum of unused committed credit facilities, cash and cash equivalents, and receivable derivative
financial instruments, minus other short-term debt, current deferred acquisition payables, current payable derivative financial
instruments, and bank overdrafts).
Per December 31, 2021, the group has access to the unused part of the committed credit facilities of €600 million in total
(2020: €600 million) and has cash and cash equivalents of €1,001 million (2020: €723 million), minus other short-term debt, current
deferred acquisition payables, bank overdrafts, Euro Commercial Paper, and current payable derivative financial instruments totaling
€10 million (2020: €459 million). The headroom was €1,591 million at year-end 2021 (2020: €864 million).
No assets have been collateralized or in any other way secured under debt contracts.
Exposure to liquidity risk
The following tables relate to the remaining contractual cash flows of financial liabilities at the reporting date.
These tables show net
cash flow amounts for derivative financial instruments that have simultaneous cash settlements.
The amounts for the non-derivative
financial instruments are gross and undiscounted and include estimated interest payments and exclude the impact of netting
agreements. For the remaining contractual cash flows of lease liabilities, refer to Note 20 – Leasing.
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Note 30 – Financial Risk Management continued
CONTRACTUAL CASH FLOWS 2021
Carrying
amount
Contractual
undiscounted
cash flows
Less
than
1 year
1-2
years
2-5
years
More than
5 years
Non-derivative financial liabilities (excl. lease liabilities)
Bonds:
Bonds 2008-2028 36 52 2 2 7 41
Bonds 2013-2023 699 740 20 720 – –
Bonds 2014-2024 399 430 10 10 410 –
Bonds 2017-2027 498 547 8 8 23 508
Bonds 2020-2030 495 534 4 4 11 515
Bonds 2021-2028 498 509 1 1 4 503
Private placements:
Private placement 2008-2038 153 237 5 5 15 212
Long- and short-term deferred and contingent acquisition payables 2 2 1 1 – –
Other debt 10 10 – 5 5 –
Borrowings and bank overdrafts 9 9 9 – – –
Trade payables 123 123 123 – – –
Total 2,922 3,193 183 756 475 1,779
Derivative financial instruments
(Receipts) (175) (175) – – –
Payments 177 177 – – –
Foreign exchange derivatives 0 2 2 0 0 0
(Receipts) (237) (5) (5) (15) (212)
Payments 253 8 8 23 214
Cross-currency interest rate swaps 2 16 3 3 8 2
Total 2 18 5 3 8 2
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Note 30 – Financial Risk Management continued
CONTRACTUAL CASH FLOWS 2020
Carrying
amount
Contractual
undiscounted
cash flows
Less
than
1 year
1-2
years
2-5
years
More than
5 years
Non-derivative financial liabilities (excl. lease liabilities)
Bonds:
Bonds 2008-2028 36 54 2 2 7 43
Bonds 2013-2023 699 760 20 20 720 –
Bonds 2014-2024 398 440 10 10 420 –
Bonds 2017-2027 498 554 8 8 23 515
Bonds 2020-2030 495 538 4 4 11 519
Private placements:
Private placement 2008-2038 157 250 5 5 16 224
Long- and short-term deferred and contingent acquisition payables 0 0 0 0 – –
Other debt 9 9 – 5 4 –
Borrowings and bank overdrafts 459 459 459 – – –
Trade payables 133 133 133 – – –
Total 2,884 3,197 641 54 1,201 1,301
Derivative financial instruments
(Receipts) (164) (164) – – –
Payments 163 163 – – –
Foreign exchange derivatives 0 (1) (1) 0 0 0
(Receipts) (250) (5) (5) (16) (224)
Payments 260 8 8 23 221
Cross-currency interest rate swaps 8 10 3 3 7 (3)
Total 8 9 2 3 7 (3)
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Note 30 – Financial Risk Management continued
CREDIT RISK
Credit risk represents the loss that would be recognized if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the group’s receivables from customers and investments in debt securities.
The carrying amount of non-derivative financial assets represents the maximum credit exposure and amounted to €2,138 million
at December 31, 2021 (2020: €1,822 million).
Financial instruments and excess cash at financial institutions
The group is exposed to credit risks due to its use of derivatives and because of excess cash deposited at banks. It is the group’s
policy to conclude financial transactions under ISDA (International Swap Dealers Association) master agreements. Cash invested
and financial transactions are only concluded with financial institutions with strong credit ratings (at least a credit rating of A-/A3).
Furthermore, credit limits per counterparty are in place and are monitored periodically.
At December 31, 2021, there were no material credit risk concentrations outstanding while the average weighted credit rating of
counterparties was A (2020: A+). The aim is to spread transactions among counterparties. No credit limits were materially exceeded
during the reporting period and management does not expect any losses from non-performance by these counterparties on current
outstanding contracts.
Trade receivables
The group has a natural exposure to credit risk in its operational business. This exposure of the group’s operating companies
to credit risk is inherently limited, considering the diversified customer portfolio of the group, and since a substantial part of the
transactions is prepaid by customers. The group’s operating companies actively monitor the solvency of their key accounts and assess
creditworthiness of customers before concluding a contract.
The group determines the impairment on trade receivables and unbilled revenues using the lifetime expected credit loss model,
whereby the historical credit losses on trade receivables (a credit event) are used as a base for the future expected credit losses.
The accounting policy and the assumptions are periodically evaluated by the group using macroeconomic data and historical back-
testing of the assumptions.
The trade receivables that are neither past due nor impaired have sound creditworthiness and meet the credit rating grades as
defined in the internal policy for assessing the impairment of financial assets.
For estimates and judgments applied in determining the loss allowance on trade receivables, refer to Note 10 – Sales Costs.
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FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table shows the carrying amounts and fair values of financial assets and liabilities (excluding lease liabilities),
including their levels in the fair value hierarchy.
2021 2020
Carrying
value
Fair
value
Level
1
Level
2
Level
3
Carrying
value
Fair
value
Non-derivative financial instruments:
Financial assets at fair value through profit or loss 0 0 0 0 0
Unbilled revenues
*
95 95 75 75
Trade receivables
*
1,008 1,008 986 986
Miscellaneous receivables
*
34 34 35 35
Interest receivable
*
0 0 2 2
Deferred divestment consideration receivable
*
– – 1 1
Cash and cash equivalents
*
1,001 1,001 723 723
Total non-derivative financial assets 2,138 2,138 1,822 1,822
Bonds 2008-2028 36 50 50 36 54
Bonds 2013-2023 699 727 727 699 748
Bonds 2014-2024 399 422 422 398 434
Bonds 2017-2027 498 529 529 498 547
Bonds 2020-2030 495 503 503 495 523
Bonds 2021-2028 498 493 493 – –
Private placement 2008-2038 153 206 206 157 218
Long and short-term deferred and contingent acquisition payables 2 2 2 0 0
Other debt
*
10 10 9 9
Borrowings and bank overdrafts
*
9 9 459 459
Trade payables
*
123 123 133 133
Interest payable
*
34 34 35 35
Total non-derivative financial liabilities 2,956 3,108 2,724 206 2 2,919 3,160
Derivative financial instruments:
Non-current payable 2 2 2 8 8
Total derivative financial instruments 2 2 2 8 8
*
Fair value approximates the carrying amount.
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Wolters Kluwer 2021 Annual Report 171
FAIR VALUE HIERARCHY
The fair value has been determined by the group based on market data and appropriate valuation methods/quotes. Valuation
methods include:
• Level 1: reference to quoted prices (unadjusted) in active markets for similar assets and liabilities;
• Level 2: inputs other than quoted prices that are observable for the asset or liability and that may have a significant impact on the fair
value, either directly (i.e., as prices) or indirectly (i.e., derived from prices) based on discounted cash flow analysis, using data input of
observable financial markets and financial institutions; and
• Level 3: inputs for the asset or liability that are not based on observable market data. The valuation method can be based on
discounted cash flow analysis, or other models that are substantially identical.
There has been no change in the fair value hierarchy compared to 2020.
The Level 3 fair value movements in non-derivative financial liabilities are as follows:
2021 2020
Balance at January 1 0 11
Acquired through business combinations Note 8 2 0
Settlements Note 8 0 (6)
Fair value changes of contingent considerations Note 12 0 (4)
Foreign exchange differences 0 (1)
Balance at December 31 2 0
DEFERRED AND CONTINGENT ACQUISITION PAYABLES
ACCOUNTING POLICIES
The contingent considerations are based on a discounted cash flow model, which considers the present value of expected payments,
using a risk-adjusted discount rate. The expected payment is determined by considering possible scenarios, the amount to be
paid under each scenario, and the probability of each scenario. The estimated fair value could potentially increase (or decrease)
if assumptions change.
The fair value of the deferred and contingent acquisition payables balance amounted to €2 million (2020: €0 million) and can be
presented as follows:
Fair value
December 31, 2021
Of which:
short term
Of which:
long term
Maximum exposure
(undiscounted)
Fair value
December 31, 2020
Total 2 1 1 2 0
Note 30 – Financial Risk Management continued
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Note 31 – Employee Benefits
2021 2020
Retirement plans 28 45
Other post-employment benefit plans 52 58
Other long-term employment benefits 10 12
Total 90 115
ACCOUNTING POLICIES
Defined contribution plans
Obligations for contributions to defined contribution plans are recognized as personnel expenses in profit or loss in the period during
which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or
reduction in future payments is available.
Defined benefit plans
The group’s net obligation in respect of defined employee benefit plans is calculated separately for each plan by estimating the
amount of future benefits that employees have earned in the current and prior periods, discounting that amount, and deducting the
fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method.
When the calculation results in a potential asset for the group, the recognized asset is limited to the present value of economic
benefits available in the form of any future refunds from the plan, or reductions in future contributions to the plan. To calculate the
present value of economic benefits, consideration is given to any applicable minimum funding requirements.
All remeasurement gains and losses of the net defined benefit liabilities or assets, which consist of actuarial gains and losses, return
on plan assets (excluding interest), and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other
comprehensive income, in the period in which they occur.
The group determines the net interest expense or income on the net defined benefit liability or asset for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability
or asset, considering any changes in the net defined benefit liability or asset during the period resulting from contributions and
benefit payments. Net interest expense and other expenses related to defined benefit plans, such as fund administration costs, are
recognized in profit or loss, when incurred.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in the defined benefits that relates to
past service or the gain or loss on curtailment is recognized directly in profit or loss. The group recognizes gains and losses on the
settlement of a defined benefit plan when the settlement occurs. A curtailment occurs when an entity significantly reduces the
number of employees covered by a plan. Amendments to the terms of a defined benefit plan will be considered plan amendments
and will be fully accounted for as past service costs. If a plan amendment, curtailment, or settlement occurs, the current service cost
and the net interest for the period after the remeasurement are determined using the assumptions applied for the remeasurement.
Long-term service benefits
The group’s net obligation in respect of long-term service benefits, such as jubilee benefits, is the amount of future benefits that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected
unit credit method and is discounted to its present value, with the fair value of any related assets deducted.
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Note 31 – Employee Benefits continued
CRITICAL ESTIMATES AND JUDGMENTS
The net plan assets or liabilities of the defined employee benefit plans and the costs related to the pension and post-retirement
medical plans are based on actuarial and economic assumptions. The main economic assumptions are:
• Discount rate;
• Rate of pension increase;
• Inflation; and
• Medical trend rate.
For actuarial assumptions, the group uses generally accepted mortality rates (longevity risk). The withdrawal rates and retirement
rates are based on statistics provided by the relevant entities based on past experiences.
RETIREMENT PLANS AND OTHER POSTEMPLOYMENT BENEFIT PLANS
The provisions for retirement and other post-employment plans relate to defined employee benefit plans. The group has arranged
pension schemes in various countries for most of its employees in accordance with the legal requirements, customs, and local
situation of the countries involved. These retirement schemes are partly managed by the group itself and partly entrusted to
external entities, such as company pension funds and insurance companies. In addition, the group provides certain employees with
other benefits upon retirement. These benefits include contributions towards medical health plans in the United States, where the
employer refunds part of the insurance premiums for retirees, or, in the case of uninsured schemes, bears the medical expenses while
deducting the participants’ contributions.
CHARACTERISTICS OF MATERIAL PLANS
The Netherlands United States United Kingdom
Retirement plans
Type of benefits Pensions Pensions Pensions
Type of plan Career average Final salary Final salary
Status of plan Open Frozen Frozen
Service costs Yes No No
Status of plan funding Funded Funded Funded
Other post-employment plans
Type of benefits Post-retirement medical plan
Type of plan Annual insurance premium
coverage
Status of plan Closed
Service costs Yes
Status of plan funding Unfunded
There are open retirement plans for new entrants in the Netherlands and Belgium. The group has closed plans in Belgium, Canada,
and Australia. A closed plan means that no new members can join the pension plans. However, current participants in the plan can
still accrue for future service benefits, and therefore the plan incurs service costs for the active participants.
If a plan is frozen, the plan is closed to new entrants and existing participants do not build up future service benefit accruals.
The group has frozen plans in the U.S., the U.K., and Canada. These plans will have an annual service cost of zero.
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Note 31 – Employee Benefits continued
In addition to the retirement plans and other post-employment plans, the group has other long-term employment benefit plans
in the Netherlands, the U.S., Belgium, Germany, France, India, Poland, Japan, Mexico, Australia, and New Zealand.
RETIREMENT PLANS
The group has its largest defined benefit retirement plan in the Netherlands with defined benefit obligations of €1.3 billion as
of December 31, 2021, followed by the United Kingdom and the United States with defined benefit obligations of €129 million and
€92 million respectively. There are also retirement plans in Belgium, Canada, and Australia. All plans are funded schemes. The defined
benefit plans in the Netherlands, the U.S., and the U.K. are insured with the company’s self-administrated pension funds, which are
separate legal entities with plan assets being held independently of the group.
The Netherlands
In the Netherlands, the scheme is a career average salary scheme. Members accrue a portion of their current salary at a rate
calculated to enable them to reach a pension level based on their average salary. The Dutch pension plan is subject to the
supervision of the Dutch Central Bank (DNB). The scheme funding level is determined by the new Financial Assessment Framework
(nFTK), whereby funding liabilities are determined based on a 120-month moving average of the 20-year forward rate. Benefit
reductions, if necessary, will be smoothed over time when recovery to full funding within eight years is not expected. Reductions will
amount to one-eighth of the deficit at the measurement date. Indexation of pension entitlements will not be allowed at funding
ratios below 110%, while full indexation will be allowed only at funding ratios higher than approximately 125% (these are year- and
plan-specific).
The Dutch pension scheme has an unaudited 12-month rolling average coverage ratio of 120.2% at December 31, 2021 (2020: 106.0%).
If this ratio is below 104%, a rolling eight-year recovery plan should be submitted to the DNB, on an annual basis. The pension
premiums are in general based on contributions by the employer (two-thirds) and employees (one-third). The total annual pension
contribution has been determined at 31.7% of base salary for 2021, of which the employer contributed the excess above the 24.0%
basic premium. The pension base is capped but will be corrected for inflation annually.
United States
The U.S. retirement scheme has an annual statutory valuation which forms the basis for establishing the employer contribution each
year (subject to ERISA and IRS minimums). The U.S. scheme was a final salary-based scheme, based on years of credited service, but is
now a frozen plan. The pay and benefit accruals are frozen.
The plan fiduciaries of the U.S. scheme are required by law to act in the interest of the fund’s beneficiaries. The fiduciary duties for
the scheme are allocated between committees which are staffed by senior employees of the group. The investment committee has
the primary responsibility for the investment and management of plan assets.
United Kingdom
The U.K. retirement scheme is a final salary-based scheme, but it is a frozen plan. The trustees of the pension fund are required by
law to act in the interest of the fund’s beneficiaries and are responsible for the investment policy regarding the assets of the fund.
The board of trustees consists of an equal number of company-appointed and member-nominated directors.
The level of funding is determined by statutory triennial actuarial valuations in accordance with pension legislation. Where the
scheme falls below 100% funded status, the group and the scheme trustees must agree on how the deficit is to be remedied.
Pension rate increase is usually a fixed promise and is built into the funding requirement. The U.K. Pensions Regulator has significant
powers and sets out in codes and guidance the parameters for scheme funding. At December 31, 2021, the future deficit contribution
commitments were no longer larger than the surplus in the U.K. plan and therefore there was no additional balance sheet liability
(2020: €2 million) recognized in respect of these contributions.
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Note 31 – Employee Benefits continued
OTHER POSTEMPLOYMENT PLANS
Other post-employment plans exist in the United States, Canada, and Italy. These plans have no plan assets and are unfunded.
The main plan is the post-employment medical plan in the U.S., which has been closed to new entrants in 2021. The group funds
the U.S. post-employment medical plan obligations on a pay-as-you-go basis. If healthcare costs in the future increase more than
anticipated, the actuarially determined liability – and as a result the related other post-employment benefit plan expense – could
increase along with future cash outflows.
FUNDING REQUIREMENTS
Funding requirements of the plans are based on local legislation and separate actuarial valuations for which the assumptions
differ from the assumptions used under IAS 19. The funding requirements are based on each pension fund’s actuarial measurement
framework set out in the funding policies of the individual plans.
In the Netherlands, there is no formal requirement to fund deficits of the plan by the employer.
In the United States, there are minimum contribution requirements. In case the statutory funded status falls below certain thresholds,
the U.S. Pension Protection Act requires the deficit to be rectified with additional minimum employer contributions, spread over a
seven-year period, to avoid restrictions on the ability to pay some accelerated benefit forms, such as lump sums. These funding levels
are reassessed annually.
The trustees of the U.K. plan and the group finalized the latest triennial valuation in 2020 for funding purposes in 2021. The U.K.
Pensions Regulator has the power to demand more funding and support where a pension scheme has been exposed to an
unacceptable level of risk. As part of the 2017 actuarial funding valuation, the parent company issued a guarantee of £18 million,
with a negative pledge issued by a Wolters Kluwer U.K. group company. Both guarantees remain effective under the new valuation. In
addition, it has been agreed that there will be no planned deficit contribution until 2024, unless the coverage ratio will fall under 97%.
The funding will be reassessed based on a new triennial valuation to be finalized in 2024.
RISK MANAGEMENT OF MAIN PLANS IN THE GROUP
The retirement and other post-employment plans expose the group to actuarial risks, such as longevity risks, interest rate
risks, investment and market risks, and currency risks.
The group has restructured employee benefit plans in the past by moving existing and newly hired employees to defined contribution
plans or by freezing the plans (either with no future service benefit accruals and/or no new participants entering the plan). These
redesigns reduce or cancel future benefit accruals in the plans and consequently reduce the pace of liability growth. The group also
reviews periodically its financing and investment policies (liability-driven investments) and its liability management (lump-sum
offerings).
The various plans manage their balance sheet to meet their pension promise. By using asset liability management (ALM) studies,
major risk sources are identified, and the impact of decisions is assessed by quantifying the potential impact on elements like future
pensions, contributions, and funded ratio. These ALM studies also determine risk and return measures that consider the interests of
all stakeholders. The outcome of these studies results in a risk-return trade-off, taking the duration of pension liabilities into account,
which will be an integral part of the investment strategy. The investment strategy covers the allocation of asset classes and hedging
strategies, and also decisions on new and alternative asset classes, passive versus active investments, leverage, and the use of
derivatives.
ACTUARIAL ASSUMPTIONS FOR RETIREMENT AND OTHER POSTEMPLOYMENT BENEFIT PLANS
The discount rate is the yield rate at the end of the reporting period on high-quality corporate bonds that have maturity dates
approximating the terms of the group’s obligations and that are denominated in the same currency in which the benefits are
expected to be paid. The calculation is performed annually by qualified actuaries.
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Financial Statements
Note 31 – Employee Benefits continued
The following weighted average principal actuarial assumptions were used to determine the pension expense and other post-
employment plans’ expense for the year under review, and defined benefit obligations at the end of the reporting period:
in % 2021 2020
Retirement plans
Discount rate to discount the obligations at year end 1.3 0.8
Discount rate for pension expense 0.8 1.3
Expected rate of pension increases (in payment) at year end 2.2 1.5
Expected rate of pension increases (in deferral) at year end 2.2 1.4
Expected rate of inflation increase for pension expense 2.2 1.9
Other post-employment benefit plans
Discount rate to discount the obligations at year end 2.1 1.6
Discount rate for pension expense 1.6 2.4
Medical cost trend rate 3.0 3.0
For most of the retirement and other post-employment schemes, the discount rate is determined or validated using a general
accepted methodology in selecting corporate bonds by the group advisory actuary. For the U.S. plans, the discount rate is based
on the yield curve/cash flow matching approach which uses spot yields from the standard FTSE and the timing of the cash flows
of the plan.
Mortality assumptions for the most important plans are based on the following retirement mortality tables:
• The Netherlands: AG projection table 2020, including fund specific 2019 experience loading (2020: AG projection table 2020, including
fund-specific 2019 experience loading);
• U.S.: Pri-2012 Mortality Table with MP 2021 projections, being the current standard mortality table (2020: Pri-2012 Mortality Table with
MP 2020 projections); and
• U.K.: SAPS S3 (Year of Birth) CMI 2019 projections with 1.25% long-term improvement rate (2020: SAPS S3 (Year of Birth) – CMI 2019
projections with 1.25% long-term improvement rate).
Assumptions regarding future mortality experience are set based on actuarial advice and best estimate mortality tables in the
applicable countries.
The current life expectancies underlying the value of the defined benefit retirement obligations at December 31, 2021, are as follows:
in years The Netherlands United States United Kingdom
Life expectancy at age of 65 now – Male 21.6 20.5 22.2
Life expectancy at age of 65 now – Female 24.0 22.5 23.9
Life expectancy aged 65 in 20 years – Male 23.5 22.7 23.2
Life expectancy aged 65 in 20 years – Female 25.8 25.0 25.2
Given the nature of the defined benefit obligations in Belgium, Italy, and Australia, with lump-sum benefit payments at retirement
date instead of annuity payments, the impact of changing life expectancy after the retirement age on the plan liabilities is limited in
these countries.
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Note 31 – Employee Benefits continued
SENSITIVITY RETIREMENT PLANS
in millions of euros Gross service cost Defined benefit obligations
2021 Baseline 23 1,645
Change compared to baseline
Decrease of
assumption
Increase of
assumption
Decrease of
assumption
Increase of
assumption
Discount rate (change by 1%) 9 (6) 349 (266)
Pension increase rate (change by 0.5%) (3) 3 (126) 143
Inflation increase rate (change by 0.5%) (3) 4 (132) 150
Mortality table (change by one year) – 1 – 74
Gross service cost represents the annual accrual of liability due to another year of service, excluding any interest or offsetting
employee contributions, and therefore differs from the current service cost included in the calculation of the pension expense.
SENSITIVITY OF THE DEFINED BENEFIT OBLIGATIONS DBO OF RETIREMENT PLANS IN THE CONSOLIDATED STATEMENT
OF FINANCIALPOSITION AND THE DEFINED BENEFIT EXPENSE OF THE RETIREMENT PLANS IN THE CONSOLIDATED
STATEMENT OF PROFIT ORLOSS P&L
The Netherlands United States United Kingdom
DBO P&L DBO P&L DBO P&L
Discount rate sensitivity
– –
Pension increase sensitivity
– – –
Inflation rate sensitivity
– – –
Mortality sensitivity
– –
Pension rate increases are only applicable for the plans in the Netherlands and the United Kingdom. Pension increases in the
Netherlands are related to price inflation. However, these increases are conditional and depend on the funding position of the Dutch
pension fund. Pension increases are therefore capped. The pension increase assumption is based on the liability ceiling approach
and determined as the rate of increase such that the present value of vested benefits, including the assumed rate of pension
increases, is not greater than the fair value of plan assets. For 2021, this resulted in a Dutch pension increase assumption of 2.11%
compared to 1.36% at year-end 2020.
Since the retirement plans in the United States and the United Kingdom are frozen, the service cost is zero and not sensitive
for changes in discount rate, pension increases, inflation, or longevity.
SENSITIVITY OF OTHER POSTEMPLOYMENT PLANS
in millions of euros Gross service costs Defined benefit obligations
2021 Baseline 1 52
Change compared to baseline
Discount rate (by -1%) 0 6
Discount rate (by +1%) 0 (5)
The actual medical cost trend rate in the United States exceeds the applied medical cost trend rate for its main medical plan,
which is capped at 3% (2020: 3%) according to the plan rules. The main U.S. medical plan is therefore hardly sensitive to medical
cost increases.
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Note 31 – Employee Benefits continued
PLAN LIABILITIES AND PLAN ASSETS
Defined benefit
retirement plans
Other post-
employment plans
2021 2020 2021 2020
Plan liabilities
Fair value at January 1 1,652 1,565 58 61
Settlements (23) – (4) –
Employer service cost 19 16 1 1
Interest expense on defined benefit obligations 14 20 1 1
Administration costs and taxes 2 2 – –
Benefits paid by fund (52) (52) – –
Benefits paid by employer – – (3) (3)
Remeasurement (gains)/losses 24 122 (4) 1
Divestments of operations – (5) – –
Contributions by plan participants 3 3 – –
Plan amendments and curtailments (11) (2) 0 0
Foreign exchange differences 17 (17) 3 (3)
Fair value at December 31 1,645 1,652 52 58
Plan assets
Fair value at January 1 1,621 1,533 0 0
Settlements (23) – (4) –
Interest income on plan assets 14 19 – –
Return on plan assets greater than discount rate 45 122 – –
Benefits paid by fund (52) (52) (3) (3)
Contributions by employer 14 18 7 3
Contributions by plan participants 3 3 – –
Divestments of operations – (4) – –
Foreign exchange differences 19 (18) – –
Fair value at December 31 1,641 1,621 0 0
Funded status
Deficit/(surplus) at December 31 4 31 52 58
Irrecoverable surplus 24 14 – –
Net liability at December 31 28 45 52 58
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Wolters Kluwer 2021 Annual Report 179
Note 31 – Employee Benefits continued
Defined benefit
retirement plans
Other post-
employment plans
2021 2020 2021 2020
Pension expenses
Employer service cost 19 16 1 1
Settlement gain 0 – 0 –
Past service costs – plan amendment (11) 0 0 0
Past service costs – curtailment 0 (2) – –
Interest expense on irrecoverable surplus 0 0 – –
Interest expense on defined benefit obligations 14 20 1 1
Interest income on plan assets (14) (19) – –
Administration costs and taxes 2 2 – –
Total pension expense 10 17 2 2
Of which is included in:
Personnel expenses Note 13 10 16 1 1
Other finance (income)/costs Note 15 0 1 1 1
In 2021, there was an asset ceiling in the U.K. pension plan of €24 million (2020: €12 million). The surplus is not recognized as a
pension asset as there is no unconditional right to a refund of this surplus from the U.K. scheme. The U.K. pension fund has no
liability in respect of minimum funding requirements (2020: €2 million).
Plan amendments/curtailments/settlements
In 2021, there was one plan amendment gain (2020: €2 million curtailment gains). The Dutch pension fund will decrease the accrual
rate as of January 1, 2022, from 1.875% to 1.58%. The 2021 decision on the lower accrual rate resulted in a plan amendment gain of
€
11 million on the defined benefit obligations.
In May 2021, there was a retiree life insurance buyout of the U.S. other post-retirement benefit plan. As a result, the plan has been
remeasured which resulted in a small gain following the settlement of the defined benefit obligations and the associated payments of
€
4 million each.
In October 2021, there was a small plan amendment loss following the extension of the participation in the executive retiree medical
plan to Nancy McKinstry upon her retirement.
In November 2021, the group announced the annuity buyout of the defined benefit obligations in the Canadian pension fund. The
Canadian pension and flex plans will wind up as of April 30, 2022 and a small curtailment gain was realized from the earnings freeze
upon wind-up of the plan. The annuity buyout resulted in settlement reductions of the defined benefit obligations and plan assets by
€23 million.
Employer contributions
The group’s employer contributions to be paid to the defined benefit retirement plans in 2022 are estimated at €12 million (2021:
actual employer contributions of €14 million).
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Note 31 – Employee Benefits continued
REMEASUREMENTS
The pre-tax cumulative amount of remeasurement gains/losses recognized in the consolidated statement of comprehensive income
is as follows:
2021 2020
Position at January 1 (154) (154)
Recognized in other comprehensive income 16 0
Cumulative amount at December 31 (138) (154)
REMEASUREMENT GAINS/LOSSES FOR THE YEAR
2021 2020
Remeasurement gains due to experience adjustments 24 12
Remeasurement gains/(losses) due to changes in demographic assumptions (2) 30
Remeasurement losses due to changes in financial assumptions (42) (166)
Remeasurement losses on defined benefit obligations (20) (124)
Return on plan assets greater than discount rate 45 122
Change in irrecoverable surplus, other than interest and foreign exchange differences (9) 2
Recognized remeasurement gains on defined benefit plans in other comprehensive income 16 0
Experience adjustments result from changes, such as changes in plan populations, data corrections, and differences in cash flows.
Changes in demographic assumptions relate to differences between the current and previous actuarial assumptions in mortality
tables, rate of employee turnover, disability, and early retirement.
Changes in financial assumptions relate to differences between the current and previous actuarial assumptions, such as discount
rate, pension rate increase, price increases, and future salary and benefit levels.
In 2021, the overall remeasurement losses were mainly due to the increase in the pension increase assumption in the Dutch pension
fund for active and inactive participants, partly offset by financial assumption gains in all retirement plans following the increase in
discount rates compared to the prior year, and experience gains.
The actual consolidated return on plan assets for the year ended December 31, 2021, was a gain of €59 million (2020: gain of
€141 million).
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Note 31 – Employee Benefits continued
DURATION
Duration is an indicator of the plan liabilities’ sensitivity for changes in interest rates. The liability-weighted duration for the defined
benefit plan liabilities at year end is as follows:
number of years 2021 2020
Retirement plans
The Netherlands 19.0 19.1
United Kingdom 15.2 15.6
United States 12.0 12.4
Other post-employment plans
United States 9.2 9.4
INVESTMENT MIX
The breakdown of plan assets as of December 31 is as follows:
2021 Quoted Unquoted 2020 Quoted Unquoted
Equity
Equity 494 494 – 424 424 –
Private equity 3 – 3 3 – 3
Bonds
Government bonds 435 435 – 532 532 –
Corporate bonds 348 348 – 425 424 1
Asset-backed securities 108 108 – – – –
Other
Insurance contracts 67 – 67 70 – 70
Real estate 108 56 52 87 42 45
Derivatives and other securities 28 28 – 52 52 –
Cash 50 50 – 28 28 –
Total 1,641 1,519 122 1,621 1,502 119
At December 31, 2021, 93% of the plan assets relate to quoted financial instruments (2020: 93%). Plan assets do not include any direct
investments in the group or financial instruments issued by the group, nor do they include any property or other assets used by the
group. However, pension plans invest in index funds and as a result these plans may indirectly hold financial instruments issued by
the group.
PROPORTION OF PLAN ASSETS
in % 2021 2020
Equity 30 26
Bonds 55 59
Other 15 15
Total 100 100
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Note 32 – Provisions
2021 2020
Provision for restructuring commitments 12 39
Provision for acquisition integration 0 1
Restructuring provisions 12 40
Legal provisions 16 7
Other provisions 6 5
Total 34 52
Of which short term 27 48
ACCOUNTING POLICIES
A provision is recognized when: the group has a present legal or constructive obligation because of a past event; it is probable that an
outflow of resources in the form of economic benefits will be required to settle the obligation; and the amount of the obligation can
be reliably estimated.
Restructuring provision
The provisions for restructuring include liabilities arising from changes in the organizational structure, integration of activities,
expected redundancy payments, and onerous contracts. A provision for restructuring is recognized only when the general recognition
criteria are met. Redundancy payments are recognized as an expense when the group is demonstrably committed – without realistic
possibility of withdrawal – to a formal detailed plan to either terminate employment before the normal retirement date, or to provide
termination benefits as a result of an offer made to encourage voluntary redundancy.
Acquisition integration provision
The acquisition integration provisions relate to non-recurring expenses to be incurred for the integration of activities acquired
through business combinations, and mainly consists of expected redundancy payments, IT migration costs, and onerous contracts.
Legal provisions
For legal and judicial proceedings against the company and its operating entities, a legal provision is recognized only if an adverse
outcome is probable and the amount of the loss can be reliably estimated. If one of these conditions is not met, the proceeding or
claim is disclosed as a contingent liability, if material.
Other provisions
Other provisions primarily include provisions for dilapidation commitments on real estate.
ESTIMATES AND JUDGMENTS
Legal provisions
The group is involved in legal and judicial proceedings in the ordinary course of business. Provisions and contingencies relating to
these matters are periodically assessed based on the latest information available, usually after consultation and with the assistance
of lawyers and other specialists.
The actual outcome of a proceeding or claim may differ from the estimated liability and consequently may affect the actual result.
The prediction of the outcome and the assessment of a possible loss by management are based on management’s judgments
and estimates.
Refer to Note 37 – Commitments, Contingent Assets, and Contingent Liabilities.
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Note 32 – Provisions continued
MOVEMENTS IN PROVISIONS
Restructuring
provisions
Legal
provisions
Other
provisions 2021 2020
Non-current provisions at January 1 1 1 2 4 5
Add: short-term provisions 39 6 3 48 24
Total provisions at January 1 40 7 5 52 29
Movements
Additions for restructuring of stranded costs Note 8 2 – – 2 4
Additions for acquisition integration Note 12 4 – – 4 2
Other additions 3 8 1 12 43
Total additions 9 8 1 18 49
Appropriation of provisions (34) (1) (1) (36) (19)
Release of provisions (2) (1) 0 (3) (7)
Transfer to liabilities classified as held for sale Note 9 (1) – 0 (1) –
Exchange differences and other movements 0 3 1 4 0
Total movements (28) 9 1 (18) 23
Total provisions at December 31 12 16 6 34 52
Less: short-term provisions (11) (14) (2) (27) (48)
Non-current provisions at December 31 1 2 4 7 4
Other additions to the restructuring provision of €3 million mainly relate to restructuring programs announced in Tax & Accounting
and Legal & Regulatory.
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Financial Statements
Note 33 – Capital and Reserves
SHARE CAPITAL AND NUMBER OF SHARES
The authorized share capital amounts to €143.04 million, consisting of €71.52 million in ordinary shares (596 million of ordinary shares
with a nominal value of €0.12 per ordinary share) and €71.52 million in preference shares (596 million of preference shares with a
nominal value of €0.12 per preference share).
ORDINARY SHARES
The issued share capital consists of ordinary shares.
On September 10, 2021, the company completed the reduction in ordinary share capital approved by shareholders at the Annual
General Meeting of Shareholders held on April 22, 2021. In 2021, the company canceled 5,000,000 ordinary shares previously held as
treasury shares (2020: 5,500,000 ordinary shares were canceled). Consequently, in 2021, the total number of issued ordinary shares is
reduced to 262,516,153, with a nominal value of €32 million (2020: 267,516,153 shares, with a nominal value of €32 million).
Shares repurchased by the company are added to and held as treasury shares. Part of these treasury shares is retained and used to
meet future obligations under share-based incentive schemes. At December 31, 2021, share buybacks have not yet been executed for
an amount of €50 million under the existing mandate.
Incremental costs directly attributable to the issuance of ordinary shares are recognized as a deduction from equity, net of any
tax effects.
PREFERENCE SHARES
Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the company’s option, and any
dividends are discretionary. There are no preference shares issued.
REPURCHASE AND REISSUE OF SHARE CAPITAL TREASURYSHARES
When share capital recognized as equity is repurchased (treasury shares), the amount of the consideration paid, including directly
attributable costs, is recognized as a change in equity.
For a reconciliation of the weighted-average number of shares and earnings per share, see Note 7 – Earnings per Share.
NUMBER OF SHARES
Number of
ordinary shares
Minus: number of
treasury shares
Total number of ordinary
shares outstanding
in thousands of shares,
unless otherwise stated 2021 2020 2021 2020 2021 2020
At January 1 267,516 273,016 (5,072) (6,361) 262,444 266,655
Cancelation of shares (5,000) (5,500) 5,000 5,500 0 0
Repurchased shares – – (4,957) (5,116) (4,957) (5,116)
Long-Term Incentive Plan – – 705 905 705 905
At December 31 262,516 267,516 (4,324) (5,072) 258,192 262,444
Issued share capital at €0.12 (€’000) 31,502 32,102
Proposed dividend per share (€) 1.57 1.36
Proposed dividend distribution (€’000) 405,362 356,924
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Note 33 – Capital and Reserves continued
TREASURY SHARES
Treasury shares are measured at cost, representing the market price on the acquisition date. This reserve is not available
for distribution. Treasury shares are deducted from retained earnings. The group will offset the dilution of its performance share
issuance annually via share repurchases.
In 2021, the group executed a share buyback of €410 million (2020: €350 million), originally consisting of a share buyback of
€350 million and subsequently expanded to €410 million following the divestiture of the U.S. legal education business in Wolters
Kluwer Legal & Regulatory. The group repurchased 5.0 million (2020: 5.1 million) of ordinary shares under this program at an average
stock price of €82.62 (2020: €68.41). In 2021, the group used 0.7 million shares held in treasury for the vesting of the LTIP grant 2018-20.
LEGAL RESERVE PARTICIPATIONS
Legal reserve participations contain appropriations of profits of group companies, which are allocated to a legal reserve based on
statutory and/or legal requirements. The legal reserve is not available for distribution.
HEDGE RESERVE
Hedge reserve relates to the effective portion of the changes in fair value of the hedging instruments used for cash flow hedging and
net investment hedging purposes. The hedge reserve is a legal reserve and not available for distribution.
TRANSLATION RESERVE
Translation reserve contains foreign exchange differences arising from the translation of the net investments in foreign operations.
When a foreign operation is sold, accumulated exchange differences that were recognized in equity prior to the sale are reclassified
from equity to profit or loss as part of the gain or loss on divestment. The translation reserve is a legal reserve and is not available
for distribution.
DIVIDENDS
Dividends are recognized as a liability upon being declared. Pursuant to Article 29 of the Articles of Association, and with the approval
of the Supervisory Board, a proposal will be submitted to the Annual General Meeting of Shareholders to make a total distribution of
€1.57 per share over financial year 2021 (dividend over financial year 2020: €1.36 per share).
The group applies a semi-annual dividend frequency. On February 21, 2021, the Supervisory Board and the Executive Board resolved
to distribute an interim dividend of €0.54 per share, equal to 40% of prior year’s dividend (2020 interim dividend: 40% of prior year’s
dividend). The interim dividend was paid on September 23, 2021. Subject to the approval of the Annual General Meeting of Shareholders,
a final dividend of €1.03 per ordinary share will be paid in cash on May 18, 2022. Refer also to Note 50 – Profit Appropriation.
The group has a progressive dividend policy under which it expects to increase the total dividend per share each year.
Dividend distributions
2021 2020 2019
Originally proposed 405 357 315
Actual payments:
Interim dividend 140 124 105
Final dividend 232 210
Total dividend distribution 356 315
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Note 33 – Capital and Reserves continued
FREE DISTRIBUTABLE RESERVES
The share premium reserve, retained earnings, and undistributed profit for the year are available for dividend distribution.
OPTION PREFERENCE SHARES
The company has granted an option to purchase preference shares to the Wolters Kluwer Preference Shares Foundation (Stichting
Preferente Aandelen Wolters Kluwer). The dividend on these shares would equal a normal market rate of return, based on a weighted
average interest rate applied by the European Central Bank. Therefore, the fair value of the option is deemed to be zero.
SHAREHOLDER’S EQUITY MOVEMENT SCHEDULE
For the equity movement schedule, refer to Note 47 – Shareholders’ Equity.
Note 34 – Share-based Payments
ACCOUNTING POLICIES
The Long-Term Incentive Plan (LTIP) qualifies as an equity-settled share-based payments transaction. Executive Board members and
senior management are awarded shares under the LTIP with performance conditions based on Diluted Earnings per Share (EPS)
at constant currencies and Total Shareholder Return (TSR) for the LTIP awards 2019-21 and 2020-22. For the LTIP 2021-23 award, the
diluted EPS performance measure has been replaced by diluted adjusted EPS, and a new performance measure of Return on Invested
Capital (ROIC) has been introduced.
The fair value of shares awarded is recognized as an expense with a corresponding increase in equity. The fair value is measured at
the grant date and spread over the period during which the employees become unconditionally entitled to the shares. The amount
recognized as an expense is adjusted for the actual forfeitures due to participants’ resignations before the vesting date.
TSR-condition
The fair value of the shares based on the TSR performance condition, a market condition under IFRS 2 – Share-based Payment, is
measured using a Monte Carlo simulation model, considering the terms and conditions upon which the shares were awarded.
(Adjusted) EPS-condition and ROIC-condition
The fair values of the shares based on the non-market performance conditions of (adjusted) EPS and ROIC are equal to the opening
share price of the Wolters Kluwer shares of the year of the grant, adjusted by the present value of the future dividend payments
during the three-year performance period.
The amount recognized as an expense in each year is adjusted to reflect the number of share awards for which the related service
and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based
on the number of awards that meet the related service and non-market conditions at the vesting date.
LONGTERM INCENTIVE PLAN
General
For the Executive Board, the LTIP 2019-21 and 2020-22 awards depend partially on the TSR performance (50% of the value of the
conditionally awarded rights on shares) and partially on the EPS performance (50% of the value of the conditionally awarded rights
on shares). For senior management, the LTIP 2019-21 and 2020-22 awards depend partially on the TSR performance (50% of the
conditionally awarded rights on shares) and partially on the EPS performance (50% of the conditionally awarded rights on shares).
The LTIP 2021-23 award is based on the TSR performance (weighting of 50%), diluted adjusted EPS performance (weighting at 30%),
and ROIC performance (weighting of 20%). The TSR-related LTIP awards for the Executive Board and senior management are based on
the same payout schedules.
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Note 34 – Share-based Payments continued
In 2021, €24 million has been recognized within personnel expenses in profit or loss (2020: €24 million) related to the total cost of the
LTIP grants for 2019-21, 2020-22, and 2021-23. Refer to Note 13 – Personnel Expenses.
Conditionally awarded TSR-related LTIP shares
For the conditional TSR awards that were awarded up to and including 2021, the payout of shares after three years fully depends on
the group’s TSR relative to a pre-defined group of 15 peer companies. Vesting of these conditional grants is subject to the condition
that the participant stays with the group until the plan’s maturity. The performance period of the LTIP is three years, at the beginning
of which a base number of shares (norm payout) is conditionally awarded to each beneficiary.
The expense of the TSR-related LTIP is recognized ratably in profit or loss over the performance period. Actual awards at the end
of the performance period will range from 0% to 150% of the norm payout.
There will be no payout for the Executive Board and senior management if the group ends below the eighth position in the TSR
ranking, while other payouts will be made as follows: 150% for first or second position, 125% for third or fourth position, 100% for fifth
or sixth position, and 75% for seventh or eighth position.
Conditionally awarded (adjusted) EPS- and ROIC-related LTIP shares
The amount recognized as an expense in a year is adjusted to reflect the number of share awards for which the related service and
non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on
the number of awards that meet the related service and non-market conditions at the vesting date. For the (adjusted) EPS and ROIC-
related shares, there will be no payout if the performance over three years is less than 50% of the target. In case of overachievement
of the target, the Executive Board members and senior management can earn up to a maximum of 150% of the conditionally awarded
shares.
KEY ASSUMPTIONS TO THE TSR SHARES
The fair value of TSR shares is calculated at the grant date using a Monte Carlo simulation model. For the TSR shares granted in the
LTIP 2021-23, the fair value is estimated to be €47.03 as of January 1, 2021. The inputs to the valuation were the Wolters Kluwer share
price of €69.06 on the grant date (January 1, 2021) and an expected volatility of 21.8% based on historical daily prices over the three
years prior to January 1, 2021. Dividends are assumed to increase annually (from the 2020 dividend) based on historical trend and
management plans. The model assumes a contractual life of three years and uses the risk-free rate on Dutch three-year government
bonds.
Fair value summary of conditionally awarded LTIP shares
The fair value of each conditionally awarded share under the running LTIP grants for the Executive Board and senior management
of the group, as determined by an external consulting firm, is as follows:
in euros
Fair value of
Adjusted EPS and
ROIC shares at grant
date
Fair value
EPS shares
at grant date
Fair value
TSR shares
at grant date
LTIP 2021-23 64.06 – 47.03
LTIP 2020-22 – 60.68 40.85
LTIP 2019-21 – 48.18 35.12
The fair values of the conditionally awarded shares under the LTIP 2021-23 grants increased compared to the prior year plan, mainly
because of the higher share price of Wolters Kluwer at January 1, 2021, compared to January 1, 2020.
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Note 34 – Share-based Payments continued
LTIP 201820
The LTIP 2018-20 vested on December 31, 2020. On Total Shareholder Return (TSR), Wolters Kluwer ranked fourth relative to the peer
group of 15 companies, resulting in a payout of 125% of the conditional base number of shares awarded to the Executive Board and
senior management. The EPS-related shares resulted in a payout of 135%.
A total of 705,214 shares were released on February 25, 2021. At that date, the volume-weighted average price of Wolters Kluwer N.V.
was €64.9899.
LTIP 201820: NUMBER OF SHARES VESTED AND THE CASH EQUIVALENT THEREOF
number of shares,
unless otherwise stated
Outstanding
at December 31,
2020
Increase in
conditional
number of TSR
shares (25%)
Increase in
conditional
number of EPS
shares (35%)
Payout/
vested shares
February 25,
2021
Cash value
vested shares
*
Executive Board 142,306 20,485 21,128 183,919 11,953
Senior management 400,962 50,148 70,185 521,295 33,879
Total 543,268 70,633 91,313 705,214 45,832
*
Cash value in thousands of euros; calculated as the number of shares vested multiplied by the volume average price on February 25, 2021.
LTIP 201921
The LTIP 2019-21 vested on December 31, 2021. On Total Shareholder Return (TSR), Wolters Kluwer ranked fourth relative to its peer
group of 15 companies, resulting in a payout of 125% of the conditional base number of shares awarded to the Executive Board
and senior management. The EPS-related shares resulted in a payout of 150%. The shares will be released on February 24, 2022.
The volume weighted average price for the shares released will be based on the average exchange price of the shares traded on
Euronext Amsterdam N.V. on February 24, 2022, the first day following the company’s publication of its annual results.
NUMBER OF PERFORMANCE SHARES OUTSTANDING
LTIP 2019-21
number of shares Total EPS-condition TSR-condition
Conditionally awarded grant 2019 563,283 272,172 291,111
Forfeited in previous years (36,121) (18,060) (18,061)
Shares outstanding at January 1, 2021 527,162 254,112 273,050
Forfeited during the year (52,462) (26,231) (26,231)
Effect of 125% vesting based on TSR-ranking 61,725 – 61,725
Effect of 150% vesting based on EPS-ranking 114,015 114,015 –
Vested at December 31, 2021 650,440 341,896 308,544
LTIP 2020-22
base number of shares at 100% payout Total EPS-condition TSR-condition
Conditionally awarded grant 2020 448,223 213,365 234,858
Forfeited in previous years (4,733) (2,367) (2,366)
Shares outstanding at January 1, 2021 443,490 210,998 232,492
Forfeited during the year (43,880) (21,941) (21,939)
Shares outstanding at December 31, 2021 399,610 189,057 210,553
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Wolters Kluwer 2021 Annual Report 189
Note 34 – Share-based Payments continued
LTIP 2021-23
base number of shares at 100% payout Total
Adjusted EPS-
condition ROIC-condition TSR-condition
Conditionally awarded grant 2021 456,649 132,695 88,463 235,491
Forfeited during the year (26,245) (7,874) (5,249) (13,122)
Shares outstanding at December 31, 2021 430,404 124,821 83,214 222,369
OVERVIEW OF OUTSTANDING PERFORMANCE SHARES: LTIP 202022 AND LTIP 202123
base numbers of shares at 100% payout LTIP 2020-22 LTIP 2021-23 Total
Conditionally awarded grant 2020 448,223 – 448,223
Forfeited in previous years (4,733) – (4,733)
Shares outstanding at January 1, 2021 443,490 0 443,490
Conditionally awarded grant 2021 – 456,649 456,649
Forfeited during the year (43,880) (26,245) (70,125)
Shares outstanding at December 31, 2021 399,610 430,404 830,014
Note 35 – Related Party Transactions
The company has a related party relationship with its subsidiaries, equity-accounted investees, the pension funds, and members
of the Supervisory Board and the Executive Board.
Wolters Kluwer N.V. has filed a list of the subsidiaries at the Dutch Commercial Register in The Hague, the Netherlands. Related party
transactions are conducted at arm’s length with terms comparable to transactions with third parties.
For transactions with key management, refer to Note 38 – Remuneration of the Executive Board and the Supervisory Board and
the Remuneration Report.
The group has no significant transactions or outstanding balances with its equity-accounted investees other than its equity-
interest holdings.
Note 36 – Audit Fees
With reference to Section 2:382a (1) and (2) of the Dutch Civil Code, the following fees for the financial year have been charged by
Deloitte Accountants B.V. to the company, its subsidiaries, and
other consolidated entities. Deloitte is not involved in most of the
statutory audits of operating companies that are outside the scope of the group audit.
AUDIT FEES 2021
Deloitte Accountants B.V.
Other Deloitte member
firms and affiliates Total Deloitte
Statutory audit of annual accounts 1.0 2.0 3.0
Other assurance services 0.1 0.0 0.1
Tax advisory services – 0.0 0.0
Other non-audit services 0.0 0.2 0.2
Total 1.1 2.2 3.3
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Note 36 – Audit Fees continued
AUDIT FEES 2020
Deloitte Accountants B.V.
Other Deloitte member
firms and affiliates Total Deloitte
Statutory audit of annual accounts 0.9 2.0 2.9
Other assurance services 0.1 0.1 0.2
Tax advisory services – 0.0 0.0
Other non-audit services – – 0.0
Total 1.0 2.1 3.1
The audit fees for 2021 and 2020 include final invoicing with respect to the statutory audits of 2020 and 2019, respectively.
Note 37 – Commitments, Contingent Assets,
andContingent Liabilities
GUARANTEES
The group has the following outstanding guarantees at December 31:
2021 2020
Parental performance guarantees to third parties 12 12
Guarantee to the trustees of the U.K. retirement plan Note 31 21 20
Other guarantees (mainly real estate) 12 19
Drawn bank credit facilities 1 1
Royalty guarantees to health societies 4 3
Total 50 55
At December 31, 2021, the total guarantees issued for bank credit facilities on behalf of several subsidiaries amounted to €113 million
(2020: €101 million), of which €112 million was not utilized (2020: €100 million).
CONTINGENT ASSETS
A part of the 2020 divestment-related consideration is contingent on future events. The related contingent asset amounted to
a maximum of €3 million in total at December 31, 2021 (2020: €3 million).
LEGAL AND JUDICIAL PROCEEDINGS
The group is involved in legal and judicial proceedings in the ordinary course of business. Provisions and contingencies relating
to these matters are periodically assessed based upon the latest information available, usually with the assistance of lawyers and
other specialists. While it is not practically possible to estimate the success-rate of claims against the group, the group has a policy
to insure the operating units against such claims.
OTHER COMMITMENTS
For any commitments with respect to the group’s share buybacks, refer to Note 33 – Capital and Reserves.
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Wolters Kluwer 2021 Annual Report 191
Note 38 – Remuneration of the Executive Board
andthe Supervisory Board
REMUNERATION EXECUTIVE BOARD
The table below provides the total compensation of the Executive Board recognized in the consolidated statement of profit or loss:
in thousands of euros 2021 2020
Fixed compensation:
Salary 2,042 2,073
Social security 44 44
Defined contribution plan 157 121
Other benefits 775 357
Total fixed compensation 3,018 2,595
Variable compensation:
STIP 2,853 2,406
LTIP
*
6,345 5,926
Total variable compensation 9,198 8,332
Sub-total fixed and variable compensation 12,216 10,927
Tax-related costs 565 717
Total remuneration Executive Board 12,781 11,644
*
LTIP share-based payments are based on IFRS accounting policies and therefore do not reflect the actual payout or value of performance shares released upon vesting.
SHARES OWNED BY EXECUTIVE BOARD MEMBERS
At December 31, 2021, the Executive Board jointly held 412,167 shares of the company (2020: 498,767 shares).
REMUNERATION SUPERVISORY BOARD
The total remuneration of the Supervisory Board members was €678 thousand in 2021 (2020: €673 thousand).
SHARES OWNED BY SUPERVISORY BOARD MEMBERS
At December 31, 2021, Mrs. A.E. Ziegler held 1,894 American Depositary Receipts of shares of the company (2020: none of the members
owned shares).
For further details, refer to the Remuneration Report.
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Note 39 – Overview of Significant Subsidiaries
Below is a list of significant subsidiaries at December 31, 2021, in alphabetical order (legal entity name
and the division it belongs to). The group has a 100% interest in all these subsidiaries.
AUSTRALIA
• Wolters Kluwer Australia Pty Limited (Tax & Accounting)
BELGIUM
• Wolters Kluwer Belgium NV (Tax & Accounting and
Legal & Regulatory)
• Wolters Kluwer Financial Services Belgium NV
(Governance, Risk & Compliance)
CANADA
• Wolters Kluwer Canada Limited (Tax & Accounting)
FRANCE
• Enablon S.A.S. (Legal & Regulatory)
• Holding Wolters Kluwer France S.A.S. (Legal & Regulatory)
• Wolters Kluwer France S.A.S. (Legal & Regulatory)
GERMANY
• Wolters Kluwer Deutschland GmbH (Legal & Regulatory)
• Wolters Kluwer Software und Service GmbH (Tax & Accounting)
IRELAND
• Wolters Kluwer Finance Ireland DAC (Corporate Office)
• Wolters Kluwer Ireland Holding Limited (Corporate Office)
ITALY
• Tagetik Software S.r.l. (Tax & Accounting)
• Wolters Kluwer Italia S.r.l. (Tax & Accounting and
Legal & Regulatory)
LUXEMBOURG
• Wolters Kluwer Financial Services Luxembourg S.A.
(Governance, Risk & Compliance)
POLAND
• Wolters Kluwer Polska SP. z o.o. (Legal & Regulatory)
SPAIN
• Wolters Kluwer Tax and Accounting España, S.L.
(Tax & Accounting)
THE NETHERLANDS
• eVision Industry Software B.V. (Legal & Regulatory)
• Wolters Kluwer Global Business Services B.V. (Global Business
Services)
• Wolters Kluwer Holding Nederland B.V. (Legal & Regulatory)
• Wolters Kluwer International Holding B.V. (Corporate Office)
• Wolters Kluwer Nederland B.V. (Legal & Regulatory)
• Wolters Kluwer Technology B.V. (Digital eXperience Group)
• Wolters Kluwer USA Holding B.V. (Corporate Office)
UNITED KINGDOM
• Wolters Kluwer Holdings (UK) PLC (Tax & Accounting)
• Wolters Kluwer (UK) Limited (Tax & Accounting)
UNITED STATES
• CCH Incorporated (Tax & Accounting and Legal & Regulatory)
• C T Corporation System (Governance, Risk & Compliance)
• Emmi Solutions, LLC (Health)
• eOriginal, Inc. (Governance, Risk & Compliance)
• Health Language, Inc. (Health)
• National Registered Agents, Inc. (Governance, Risk &
Compliance)
• Ovid Technologies, Inc. (Health)
• Universal Tax Systems, Inc. (Tax & Accounting)
• UpToDate, Inc. (Health)
• Wolters Kluwer DXG U.S., Inc. (Digital eXperience Group)
• Wolters Kluwer ELM Solutions, Inc. (Governance, Risk
& Compliance)
• Wolters Kluwer Financial Services, Inc. (Tax & Accounting and
Governance, Risk & Compliance)
• Wolters Kluwer Health, Inc. (Health)
• Wolters Kluwer North America, Inc. (Corporate Office)
• Wolters Kluwer R&D U.S. LP (Digital eXperience Group)
• Wolters Kluwer United States Inc. (Global Business Services
and Corporate Office)
• Wolters Kluwer U.S. Corporation (Corporate Office)
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Wolters Kluwer 2021 Annual Report 193
Note 39 – Overview of Significant Subsidiaries
continued
In addition to these significant subsidiaries, the group has other consolidated entities in the countries listed, and also in the
following countries: Austria, Brazil, China, Czech Republic, Denmark, Hong Kong, Hungary, India, Indonesia, Japan, Malaysia,
Mexico, New Zealand, Norway, Portugal, Qatar, Romania, Russia, Singapore, Slovakia, South Africa, South Korea, Sweden, Switzerland,
and Ukraine.
The group also has branches in Finland, Saudi Arabia, Taiwan, Thailand, and United Arab Emirates.
Apart from certain cash restrictions, (refer to Note 27 – Cash and Cash Equivalents), there are no significant restrictions on the
group’s ability to access or use assets, or to settle liabilities within these subsidiaries. There are no interests in consolidated
structured entities.
Refer to Note 8 – Acquisitions and Divestments for the consequences of losing control of subsidiaries during 2021 and 2020.
The financial statements of the parent and the subsidiaries used in the preparation of the consolidated financial statements have
the same reporting date.
Note 40 – Events after Balance Sheet Date
Subsequent events were evaluated up to February 22, 2022, which is the date the consolidated financial statements were authorized
for issuance by the Executive Board and the Supervisory Board. There are no events to report.
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Company Financial Statements
195 Statement of Profit or Loss of Wolters Kluwer N.V.
196 Statement of Financial Position of Wolters Kluwer N.V.
197 Note 41 – Significant Accounting Policies
198 Note 42 – Financial Assets
198 Note 43 – Other Receivables
198 Note 44 – Cash and Cash Equivalents
199 Note 45 – Borrowings and Bank Overdrafts
199 Note 46 – Personnel Expenses
200 Note 47 – Shareholders’ Equity
202 Note 48 – Commitments and Contingent Liabilities
202 Note 49 – Details of Participating Interests
202 Note 50 – Profit Appropriation
203 Authorization for issuance
Notes to the Company
FinancialStatements
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Wolters Kluwer 2021 Annual Report 195
Company
FinancialStatements
Statement of Profit or Loss of Wolters Kluwer N.V.
in millions of euros, for the year ended December 31 2021 2020
General and administrative (costs)/income 61 78
Operating profit 61 78
Financing income third parties 3 8
Financing income related parties 2 5
Financing costs third parties (75) (52)
Financing costs related parties (1) (4)
Total financing results (71) (43)
Profit/(loss) before tax (10) 35
Income tax expense (23) (28)
Profit/(loss) after tax (33) 7
Results from subsidiaries, net of tax Note 42 761 714
Profit for the year 728 721
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Statement of Financial Position of
Wolters Kluwer N.V.
in millions of euros and before appropriation of results, at December 31 2021 2020
Non-current assets
Financial assets Note 42 7,352 6,838
Other intangible assets 2 –
Deferred tax assets 7 12
Total non-current assets 7,361 6,850
Current assets
Other receivables Note 43 250 202
Cash and cash equivalents Note 44 599 109
Total current assets 849 311
Total assets 8,210 7,161
Equity
Issued share capital Note 33 32 32
Share premium reserve 87 87
Legal reserves 215 (118)
Other reserves 1,355 1,365
Undistributed profit 728 721
Shareholders’ equity Note 47 2,417 2,087
Non-current liabilities
Bonds Note 29 2,625 2,126
Private placements Note 29 153 157
Derivative financial instruments Note 29 2 8
Total non-current liabilities 2,780 2,291
Current liabilities
Debts to subsidiaries 2,959 2,283
Borrowings and bank overdrafts Note 45 3 450
Other payables 51 50
Total current liabilities 3,013 2,783
Total liabilities 5,793 5,074
Total equity and liabilities 8,210 7,161
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Wolters Kluwer 2021 Annual Report 197
Note 41 – Significant Accounting Policies
GENERAL
Unless otherwise indicated, the amounts in these financial statements are in millions of euros.
ACCOUNTING POLICIES
The company financial statements of Wolters Kluwer N.V. are prepared in accordance with the Dutch Civil Code, Book 2, Title 9, with
the application of the regulations of section 362.8 allowing the use of the same accounting policies as applied for the consolidated
financial statements. These accounting policies are described in the Notes to the Consolidated Financial Statements.
Subsidiaries are valued using the equity method, applying the IFRS accounting policies as endorsed by the European Union.
The company will, upon identification of a credit loss on an intercompany loan and/or receivable, eliminate the carrying amount of
the intercompany loan and/or receivable for the value of the identified credit loss.
Any related party transactions between Wolters Kluwer N.V. and its subsidiaries, equity-accounted investees, the pension funds,
or with members of the Supervisory Board and the Executive Board are conducted at arm’s length with terms comparable to
transactions with third parties.
For the following disclosures, reference is made to the notes to the consolidated financial statements:
• Note 29 – Long-term Debt;
• Note 33 – Capital and Reserves;
• Note 34 – Share-based Payments;
• Note 35 – Related Party Transactions;
• Note 38 – Remuneration of the Executive Board and the Supervisory Board;
• Note 39 – Overview of Significant Subsidiaries; and
• Note 40 – Events after Balance Sheet Date.
COMPARATIVES
The comparative disclosures were adjusted as follows:
• Within shareholders' equity, an amount of €19 million is reclassified from the translation reserve to the hedge reserve, to adjust for an
erroneous classification, at January 1, 2020, and December 31, 2020. Refer to Note 47 – Shareholders' Equity.
Certain immaterial reclassifications have been made to the comparative statement of financial position and the related notes to
conform to the current year presentation and to improve insights. These reclassifications have had no impact on the comparative
shareholders’ equity and comparative profit for the year.
Notes to the Company
FinancialStatements
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Note 42 – Financial Assets
2021 2020
Equity value of subsidiaries 7,352 6,838
Total 7,352 6,838
MOVEMENT EQUITY VALUE OF SUBSIDIARIES
2021 2020
Position at January 1 6,838 6,846
Results from subsidiaries, net of tax 761 714
Dividends received from subsidiaries (615) (374)
Remeasurement gains/(losses) on defined benefit plans, net of tax 14 0
Foreign exchange differences 354 (348)
Position at December 31 7,352 6,838
Note 43 – Other Receivables
2021 2020
Receivables from subsidiaries 235 195
Current income tax assets 8 0
Miscellaneous receivables and prepayments 7 7
Total 250 202
Note 44 – Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and on demand deposits that are readily convertible into cash. There is no
restricted cash.
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Wolters Kluwer 2021 Annual Report 199
Note 45 – Borrowings and Bank Overdrafts
2021 2020
Euro Commercial Paper program – 100
Bank overdrafts 3 350
Total 3 450
Note 46 – Personnel Expenses
2021 2020
Salaries and wages and other benefits 30 29
Social security charges 2 2
Costs of defined contribution plans 1 0
Expenses related to defined benefit plans 1 1
Equity-settled share-based payments Note 34 24 24
Total 58 56
Employees
In full-time equivalents at December 31 135 139
Thereof employed outside the Netherlands 20 20
In full-time equivalents average per annum
*
137 138
*
Average full-time equivalents per annum include temporary help and contractors, whereas full-time equivalents at December 31 only relate to staff on the payroll
ofthe company.
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Note 47 – Shareholders’ Equity
Legal reserves Other reserves
Issued share
capital
Share
premium
reserve
Legal reserve
participations
Hedge reserve
Translation
reserve
Treasury
shares
Retained
earnings
Undistributed
profit
Shareholders’
equity
Balance at January 1, 2020
*
33 87 139 (110) 213 (279) 1,628 669 2,380
Items that are or may be reclassified subsequently to the statement
ofprofitor loss:
Exchange differences on translation of foreign operations (348) (348)
Exchange differences on translation of equity-accounted investees 0 0
Net gains/(losses) on hedges of net investments in foreign operations 11 11
Effective portion of changes in fair value of cash flow hedges (24) (24)
Net change in fair value of cash flow hedges reclassified to the statement
ofprofit or loss 6 6
Items that will not be reclassified to the statement of profit or loss:
Remeasurements on defined benefit plans 0 0
Tax on other comprehensive income:
Income tax on other comprehensive income 1 0 0 1
Other comprehensive income for the year, net of tax (6) (348) 0 (354)
Profit for the year 721 721
Total comprehensive income for the year (6) (348) 0 721 367
Appropriation of profit previous year 669 (669) 0
Transactions with owners of the company, recognized directly in equity:
Share-based payments 24 24
Cancelation of shares (1) 346 (345) 0
Release LTIP shares 61 (61) 0
Final cash dividend 2019 (210) (210)
Interim cash dividend 2020 (124) (124)
Repurchased shares (350) (350)
Other movements (6) 0 6 0
Balance at December 31, 2020
*
32 87 133 (116) (135) (222) 1,587 721 2,087
*
Restated for certain reclassifications. See Note 41 – Significant Accounting Policies.
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Wolters Kluwer 2021 Annual Report 201
Note 47 – Shareholders’ Equity continued
Legal reserves Other reserves
Issued share
capital
Share
premium
reserve
Legal reserve
participations
Hedge reserve
Translation
reserve
Treasury
shares
Retained
earnings
Undistributed
profit
Shareholders’
equity
Balance at January 1, 2021 32 87 133 (116) (135) (222) 1,587 721 2,087
Items that are or may be reclassified subsequently to the statement
ofprofitor loss:
Exchange differences on translation of foreign operations 313 313
Exchange differences on translation of equity-accounted investees 1 1
Recycling of foreign exchange differences on loss of control 40 40
Net gains/(losses) on hedges of net investments in foreign operations (16) (16)
Effective portion of changes in fair value of cash flow hedges 6 6
Net change in fair value of cash flow hedges reclassified to the statement
ofprofit or loss 4 4
Items that will not be reclassified to the statement of profit or loss:
Remeasurements on defined benefit plans 16 16
Tax on other comprehensive income:
Income tax on other comprehensive income 0 (4) (4)
Other comprehensive income/(loss) for the year, net of tax (6) 354 12 360
Profit for the year 728 728
Total comprehensive income for the year (6) 354 12 728 1,088
Appropriation of profit previous year 721 (721) 0
Transactions with owners of the company, recognized directly in equity:
Share-based payments 24 24
Cancelation of shares 0 336 (336) 0
Release LTIP shares 49 (49) 0
Final cash dividend 2020 (232) (232)
Interim cash dividend 2021 (140) (140)
Repurchased shares (410) (410)
Other movements (15) 0 15 0
Balance at December 31, 2021 32 87 118 (122) 219 (247) 1,602 728 2,417
The legal reserves and treasury shares reserve are not available for dividend distribution to the owners of the company.
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Note 48 – Commitments and Contingent Liabilities
GUARANTEES
Pursuant to section 403 of the Dutch Civil Code, Book 2, the company has assumed joint and several liability for the debts arising
out of the legal acts of several subsidiaries in the Netherlands. The relevant declarations have been filed with and are open for
inspection at the Dutch Commercial Register for the district in which the legal entity respective to the liability has its registered office.
The company has the following outstanding guarantees at December 31:
2021 2020
Parental performance guarantees to third parties 12 12
Guarantee to the trustees of the U.K. retirement plan 21 20
Drawn bank credit facilities 1 1
Total guarantees outstanding 34 33
At December 31, 2021, the total guarantees issued for bank credit facilities on behalf of several subsidiaries amounted to €113 million
(2020: €101 million), of which €112 million was not utilized (2020: €100 million).
At December 31, 2021, share buybacks have not yet been executed for an amount of €50 million under the existing mandate.
The company forms part of a Dutch fiscal unity and pursuant to standard conditions has assumed joint and several liability for the
tax liabilities of the fiscal unity.
Note 49 – Details of Participating Interests
A list of subsidiaries and affiliated companies, prepared in accordance with the relevant legal requirements (Dutch Civil Code, Book 2,
Part 9, Section 379) is filed at the offices of the Chamber of Commerce of The Hague, the Netherlands.
An overview of significant subsidiaries is included in Note 39 – Overview of Significant Subsidiaries.
Note 50 – Profit Appropriation
2021 2020
Proposed dividend distribution Note 33 405 357
Proposed additions to retained earnings 323 364
Profit for the year 728 721
At the 2022 Annual General Meeting of Shareholders, the company will propose a final dividend distribution of €1.03 per share, to be
paid in cash on May 18, 2022. This will bring the total dividend for 2021 to €1.57 per share (2020: €1.36 per share), an increase of 15%
over the prior year.
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Wolters Kluwer 2021 Annual Report 203
Authorization for Issuance
Alphen aan den Rijn, February 22, 2022
Executive Board
N. McKinstry, CEO and Chair of the Executive Board
K.B. Entricken, CFO and Member of the Executive Board
Supervisory Board
F.J.G.M. Cremers, Chair
A.E. Ziegler, Vice-Chair
B.J.F. Bodson
J.A. Horan
J.P. de Kreij
S. Vandebroek
C.F.H.H. Vogelzang
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To the shareholders and the Supervisory Board of Wolters Kluwer N.V.
Report on the audit of the financial statements for the year ended December 31, 2021, included in
the 2021 Annual Report.
OUR OPINION
We have audited the accompanying financial statements for the year ended December 31, 2021, of Wolters Kluwer N.V., based in
Alphen aan den Rijn, the Netherlands. The financial statements include the consolidated financial statements and the company
financial statements as set out on pages 99 to 203 of the annual report.
In our opinion:
• The accompanying consolidated financial statements give a true and fair view of the financial position of Wolters Kluwer N.V. as
at December 31, 2021, and of its result and its cash flows for the year ended December 31, 2021, in accordance with International
Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part 9 of Book 2 of the Dutch Civil Code; and
• The accompanying company financial statements give a true and fair view of the financial position of Wolters Kluwer N.V. as at
December 31, 2021, and of its result for the year ended December 31, 2021, in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise:
1. The consolidated statement of financial position as at December 31, 2021;
2. The following statements for the year ended December 31, 2021: the consolidated statement of profit or loss, the consolidated
statements of comprehensive income, changes in total equity and cash flows; and
3. The notes to the consolidated financial statements, comprising a summary of the significant accounting policies and other
explanatory information.
The company financial statements comprise:
1. The company statement of financial position as at December 31, 2021;
2. The company statement of profit or loss for the year ended December 31, 2021; and
3. The notes to the company financial statements, comprising a summary of the significant accounting policies and other explanatory
information.
BASIS FOR OUR OPINION
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those
standards are further described in the Our responsibilities for the audit of the financial statements section of our report.
We are independent of Wolters Kluwer N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit
of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de
onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with
respect to independence), and other relevant independence regulations in the Netherlands. Furthermore, we have complied with
the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion
thereon. The following information in support of our opinion was addressed in this context, and we do not provide a separate opinion
or conclusion on these matters.
Materiality
Based on our professional judgment, we determined the materiality for the financial statements as a whole at €60 million (2020:
€50 million). The materiality is based on 6.5% of profit before tax (2020: 5.3%). We have also taken into account misstatements and/or
possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
Other Information on the
Financial Statements
Independent Auditor’sReport
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Wolters Kluwer 2021 Annual Report 205
Materiality overview
Materiality for the financial statements as a whole €60 million
Basis for materiality 6.5% of profit before tax
Threshold for reporting misstatements €3 million
Audits of the group entities (components) were performed using materiality levels determined by the judgment of the group
engagement team, considering the materiality for the consolidated financial statements as a whole and the reporting structure within
the group. For the significant components (i.e, business units Corporate Legal Services U.S., UpToDate U.S., and Tax & Accounting U.S.),
the audits are performed using a materiality level of €26.4 million (2020: €19.3 million). For the other components, the materiality
levels are in the range of €14.4 million to €24.0 million (2020: €10.5 million to €17.5 million).
We agreed with the Supervisory Board that misstatements in excess of €3 million, which are identified during the audit, would be
reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
SCOPE OF THE GROUP AUDIT
Wolters Kluwer N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated
financial statements of Wolters Kluwer N.V.
Our group audit mainly focused on significant group entities. Our assessment of entities that are significant to the group was done as
part of our audit planning and was aimed to obtain sufficient coverage of the risks of material misstatement for significant account
balances, classes of transactions, and disclosures that we have identified. In addition, we considered qualitative factors as part of our
assessment. In establishing the overall group audit strategy and plan, we determined the type of work that needed to be performed
at the components by the group engagement team and by component auditors. We responded to changes relevant to the group in
2021 in determining the components in our scope and the nature of procedures to be performed. Where the work was performed by
component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able to
conclude whether sufficient and appropriate audit evidence had been obtained as a basis for our opinion on the financial statements
as a whole. With the exception of two, all component auditors are Deloitte member firms. The group engagement team directed
the planning, reviewed the work performed by component auditors, and assessed and discussed the results and findings with the
component auditors. Due to the COVID-19 pandemic, similar as in the prior year, the direction and supervision of the component
auditors was performed remotely. The group engagement team held multiple virtual meetings with all the individual component
auditors and management of the relevant group entities, and participated at a minimum in the component auditor closing calls.
For selected component auditors (in North America, Germany, and Spain), remote file reviews were conducted to evaluate the work
undertaken and to assess their findings.
The group consolidation, financial statement disclosures, and a number of central accounting and/or reporting items were audited by
the group engagement team. These items include impairment testing on goodwill and acquired identifiable intangible assets, audit
procedures on the acquisition and divestment of certain assets and businesses (including assets and liabilities classified as held
for sale), group accounting for current and deferred income taxes, share-based payments, the implementation of CCH Tagetik, the
group’s new corporate performance management tool used for consolidation, the Wolters Kluwer N.V. company financial statements,
and certain critical accounting positions subject to management estimates. Specialists were involved, amongst others, in the areas of
information technology; accounting and reporting; pensions; forensic; environmental, social, and governance; and valuation.
As part of our year-end audit procedures, we have considered our assessment of significant group entities in order to ensure we have
obtained appropriate coverage of the risks of material misstatement for significant account balances, classes of transactions, and
disclosures that we have identified.
In summary, the group engagement team has:
• Performed procedures at a group level on centralized key audit matters;
• Performed audit procedures at Wolters Kluwer N.V. company-only;
• Used the work of Deloitte component auditors, or performed specific audit procedures ourselves, when auditing the components in
the Netherlands (2), Europe (9), and North America (10), and used the work of non-Deloitte component auditors in Europe (1) and the
Netherlands (1); and
• Performed (extended) analytical procedures at group level on the other group entities.
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The group entities subject to full-scope audits and audits of specified account balances and classes of transactions comprise
approximately 80% of consolidated revenues and approximately 90% of consolidated total assets. For the remaining entities, we
performed a combination of specific audit procedures and analytical procedures at group level relating to the risks of material
misstatement for significant account balances, classes of transactions, and disclosures that we have identified.
Audit coverage
Audit coverage of consolidated revenues 80%
Audit coverage of consolidated total assets 90%
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been
able to obtain sufficient and appropriate audit evidence about the group's and company’s financial information to provide an opinion
on the consolidated and company financial statements.
SCOPE OF AUDIT APPROACH ON FRAUD RISKS AND
NON-COMPLIANCE WITH LAWS AND REGULATIONS
In accordance with Dutch Standards on Auditing, we are responsible for obtaining reasonable assurance that the financial statements
taken as a whole are free from material misstatements, whether due to fraud or error. Non-compliance with law and regulation may
result in fines, litigation, or other consequences for the group that may have a material effect on the financial statements.
Audit approach on fraud risks
In identifying potential risks of material misstatements due to fraud, we obtained an understanding of the group and its environment,
including the entity’s internal controls. We evaluated the group’s fraud risk assessment and made inquiries with management, those
charged with governance and others within the group, including but not limited to the Corporate Risk Committee and Internal Control
department. We evaluated several fraud risk factors to consider whether those factors indicated a risk of material misstatement due
to fraud. We involved our forensic specialists in our risk assessment and in determining the audit responses.
Following these procedures, and the presumed risk under the prevailing auditing standards, we considered the fraud risks in relation
to management override of controls, including evaluating whether there was evidence of bias by the Executive Board, the executive
leadership team, and other members of management, which may represent a risk of material misstatement due to fraud.
As part of our audit procedures to respond to these fraud risks, we evaluated the design and relevant aspects of the system
of internal control and in particular the fraud risk assessment, as well as among others the code of conduct, whistleblower
procedures and incident registration. We evaluated the design and implementation and, where considered appropriate, tested the
operating effectiveness of the internal controls relevant to mitigate these risks. As part of our process of identifying fraud risks,
we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption in
close collaboration with our forensic specialist. We evaluated whether these factors indicate that a risk of material misstatement
due fraud is present. Further, we performed substantive audit procedures, including detail testing of journal entries and supporting
documentation in relation to post-closing adjustments. Data analytics, including analyses of high risk journals, are part of our audit
approach to address fraud risks, which could have a material impact on the financial statements. The procedures prescribed are in
line with the applicable auditing standards and are not primarily designed to detect fraud.
We identified the following fraud risks:
• Management Override of Controls; and
• Manual entries to revenue outside the fulfillment system.
We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and
evaluated whether any findings were indicative of fraud or non-compliance.
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We considered available information and made inquiries of relevant executives, directors (including internal audit, internal control,
legal, corporate tax, and divisional CFOs) and the Supervisory Board.
We evaluated whether the selection and application of accounting policies by the group, particularly those related to subjective
measurements and complex transactions, may be indicative of fraudulent financial reporting.
We evaluated whether the judgments and decisions made by management in making the accounting estimates included in the
financial statements indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights,
estimates and assumptions that might have a major impact on the financial statements are disclosed in Note 3 of the financial
statements. We performed a retrospective review of management judgments and assumptions related to significant accounting
estimates reflected in prior year financial statements. We refer to the audit procedures as described in the separate section Our key
audit matters below in addressing fraud risks in connection with revenue recognition and potential management override on specific
estimates, such as those applied in the valuation of goodwill and acquired identifiable intangible assets. Our procedures did not lead
to indications for fraud potentially resulting in material misstatements.
Audit approach on non-compliance with laws andregulations
We assessed the laws and regulations relevant to the group through discussions with management, reading minutes and reports
of internal audit, and inspection of selected documents regarding compliance with laws and regulations. We involved our forensic
specialist in this evaluation.
As a result of our risk assessment procedures on laws and regulations, and while realizing that the effects from non-compliance
could considerably vary, we considered the adherence to (corporate) tax law and financial reporting regulations, the requirements
under the International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and Part 9 of Book 2 of the Dutch
Civil Code with a direct effect on the financial statements as an integrated part of our audit procedures, to the extent material for the
related financial statements. We obtained sufficient appropriate audit evidence regarding stipulations of those laws and regulations
generally recognized to have a direct effect on the financial statements.
Apart from these, the group is subject to other laws and regulations where the consequences of non-compliance could have a
material effect on amounts and/or disclosures in the financial statements, for instance through imposing fines or litigation. Given the
nature of the group’s business and the complexity of the applicable laws and regulations, we considered data and privacy legislation
and there is a risk of non-compliance with the requirements of such laws and regulations. In addition, we considered major laws
and regulations applicable to listed companies, including the Dutch Corporate Governance Code, the EU taxonomy for sustainable
activities, and the European Single Electronic Reporting Format.
Our procedures are more limited with respect to these laws and regulations that do not have a direct effect on the determination
of the amounts and disclosures in the financial statements. Compliance with these laws and regulations may be fundamental to the
operating aspects of the business, the group’s ability to continue its business, or to avoid material penalties (e.g., compliance with
the terms of licenses, permits, or intellectual property rights) and therefore non-compliance with such laws and regulations may
have a material effect on the financial statements. Our responsibility is limited to undertaking specified audit procedures to help
identify non-compliance with those laws and regulations that may have a material effect on the financial statements. Our procedures
are limited to (i) inquiry of management, the Supervisory Board, the Executive Board, and others within the group as to whether
the group is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing
or regulatory authorities to help identify non-compliance with those laws and regulations that may have a material effect on the
financial statements.
Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit.
Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and
regulations have been disclosed to us.
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Audit approach on going concern
Our responsibilities, as well as the responsibilities of the Executive Board and the Supervisory Board, related to going concern
under the prevailing standards are outlined in the Description of responsibilities regarding the financial statements section below.
The Executive Board has assessed the going concern assumption, as part of the preparation of the consolidated financial statements,
and as disclosed in Note 1. The Executive Board believes that no events or conditions, including the COVID-19 pandemic, give rise to
doubt about the ability of the group to continue in operation at least 12 months from the end of the reporting period.
We have obtained management’s assessment of the entity’s ability to continue as a going concern, and have assessed the going
concern assumption applied. As part of our procedures, we evaluated whether sufficient appropriate audit evidence has been
obtained regarding, and have concluded on, the appropriateness of management’s use of the going concern basis of accounting in
the preparation of the consolidated financial statements. Based on these procedures, we did not identify any reportable findings
related to the entity’s ability to continue as a going concern.
OUR KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive
reflection of all matters discussed.
Management evaluated the impact of the COVID-19 pandemic on the group’s business in Note 3. We assessed the impact of COVID-19
on our audit approach. For our specific considerations regarding our group audit, refer to Scope of the group audit above. Our specific
considerations related to the valuation of goodwill and acquired identifiable intangible assets and internal controls over financial
reporting are included in the respective key audit matters below. In 2021, we considered the purchase price allocation for significant
new business combinations no longer a key audit matter, since no significant business combinations were completed during the
financial year.
The key audit matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Independent Auditor’sReport continued
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Key audit matters
Description How the key audit matter was addressed in the audit
Valuation of goodwill and acquired
identifiable intangible assets
The group has €4,180 million of goodwill
and €1,045 million of acquired identifiable
intangible assets (December 31, 2020:
€3,969 million and €1,118 million
respectively), as disclosed in Note 18.
Goodwill and acquired identifiable
intangible assets represent 58% (2020: 61%)
of consolidated total assets and 216% (2020:
244%) of consolidated total shareholders’
equity. Goodwill is subject to an annual
impairment test.
The value-in-use of goodwill and acquired
identifiable intangible assets is dependent
on expected future cash flows from the
underlying group of Cash Generating Units
(CGUs) for goodwill and individual CGUs for
acquired identifiable intangible assets.
The impairment assessment prepared
by management includes a variety of
internal and external factors. In connection
with these factors, management made
significant estimates that require the use of
valuation models and a significant level of
management judgment, potentially subject
to management override, particularly the
assumptions related to the weighted average
cost of capital, the perpetual growth rates,
and the adjusted operating profit margin.
For goodwill, an annual impairment test was
performed. The annual impairment test for
goodwill did not result in an impairment.
During the year, management performed
triggering event analyses for its assets,
including acquired identifiable intangible
assets. For acquired identifiable intangible
assets in the individual CGU Learner's
Digest (Health) and individual CGUs within
the Governance, Risk & Compliance and
Health operating segment, triggers for
impairment were identified. The impairment
tests performed resulted in impairment
adjustments to the acquired identifiable
intangible assets of €38 million.
The sensitivity analysis has been disclosed
in Note 18.
We obtained an understanding of the process in place and identified controls in
the impairment assessment of the group for goodwill and acquired identifiable
intangible assets as a basis for our mainly substantive audit approach.
We obtained management’s triggering event analysis, also including the
impact of the COVID-19 pandemic, and for the individual CGUs where a
trigger for impairment was identified, we obtained the respective impairment
assessment and have evaluated the impairment test models. We involved
valuation specialists to assess the models used and the key assumptions applied
as outlined in Note 18. Our valuation specialists assisted us specifically in
evaluating the weighted average cost of capital, the perpetual growth rates, and
other rates applied by benchmarking against independent data and peers in the
industry.
We evaluated management’s key assumptions used for cash flow projections
(including adjusted operating profit margins), weighted average cost of capital,
and perpetual growth rates. We compared rates in use with historical trends and
external data and performed sensitivity analyses. We reconciled forecasted cash
flows per group of CGUs to authorized budgets and obtained an understanding
how these budgets were compiled. For the individual CGU Learner's Digest
(Health operating segment) and individual CGUs within the Governance, Risk
& Compliance and Health operating segment where impairment triggers were
identified for acquired identifiable intangible assets, these procedures were
performed for the individual CGUs.
We also evaluated the adequacy of the disclosures provided by the group in
Note 18 in relation to its impairment assessment.
Observations
We did not identify any reportable matters in management’s valuation of
goodwill and acquired identifiable intangible assets and the respective
impairment adjustments recorded, as well as the corresponding disclosures
included in Note 18.
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Key audit matters continued
Description How the key audit matter was addressed in the audit
Revenue recognition
Revenue (transactions) may be subject
to manual adjustments outside the
fulfillment systems. There is a risk of
material misstatement that these revenue
adjustments are based on manual journal
entries that are non-valid, inaccurate, and/or
that allocate revenue to the improper period.
The group’s revenue recognition policies are
disclosed in Note 6.
Significant complex new and/or amended
revenue arrangements may also require
careful consideration and judgment in
determining the correct revenue recognition
pattern in accordance with IFRS 15. For
such contracts, the group may fail to defer
revenue recognition, or allocate the incorrect
selling price to the different elements in
the arrangements in accordance with IFRS
15 requirements, potentially resulting
in inaccurate and improper revenue
recognition.
Component auditors were involved in performing audit procedures on the
identified risk on revenue recognition.
The revenue recognition audit procedures performed on existing contracts were
focused on manual adjustments, which could impact the accuracy, occurrence,
and cut-off of recorded revenue, especially around period-end. We obtained an
understanding of the revenue processes, and tested design and implementation
of controls in place, including segregation of duties, relevant to our audit.
Manual entries to revenue recorded were evaluated with authorized source
documents such as the underlying contract, customer acceptance form, and/or
third-party delivery confirmation.
The recognition of revenue, contract assets, and contract liabilities, including
deferred income, was evaluated with the underlying contract, customer
acceptance form, and/or third-party delivery confirmation. We evaluated proper
allocation of the contract value to the different performance obligations and
evaluated the revenue recognition patterns applied, in accordance with IFRS
15. For significant acquisitions completed in the prior year (eOriginal and XCM
Solutions), we specifically evaluated the accounting treatment of the material
revenue streams (primarily Software as a Service) in accordance with IFRS 15.
Our risk assessment in connection with revenue recognition did not change,
since the overall product portfolio of the group remained materially unchanged
as compared to the prior year.
We also evaluated the adequacy of the disclosures provided by the group in
Note 6.
Observations
Based on our procedures performed, we did not identify any reportable matters
in manual adjustments to revenue, significant new and/or amended revenue
arrangements, and corresponding disclosures included in Note 6.
Independent Auditor’sReport continued
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Key audit matters continued
Description How the key audit matter was addressed in the audit
Internal controls over financial
reporting
The group has its businesses in a large
number of countries and locations.
The group operates various IT systems,
processes, and procedures locally that are
important for the continuity of its business
operations and for the reliability of its
financial reporting.
In addition, the group is exposed to IT-
related risks and cyber threats that could
affect their IT infrastructure and system
availability, applications, and company and
customer data.
During 2021, the group completed the
implementation of CCH Tagetik, the group’s
new corporate performance management
tool used for consolidation.
As a result of the COVID-19 pandemic,
substantially all of the group’s employees
have been working remotely since March
2020 and during the full 2021 financial year.
Local Internal Control officers were involved
in evaluating the implications on a day-to-
day basis.
We have considered the group’s internal controls over financial reporting as
a basis for designing and performing the audit activities that are deemed
appropriate for our audit. We are, however, not required to perform an audit on
internal controls over financial reporting and accordingly we do not express an
opinion on the effectiveness of the group’s controls over financial reporting.
We have tailored our audit procedures to the diverse (local) IT landscapes and
the implemented internal controls. We have included specialized IT auditors
in our audit teams to test the reliability and continuity of the automated data
processing, solely to the extent necessary within the scope of the financial
statements audit. Where relevant to the audit, we have tested the operating
effectiveness of (IT) controls and performed additional audit procedures. Also,
we have involved specialized IT auditors to evaluate the group’s annual cyber
assessment, and we have held inquiries with key stakeholders addressing IT-
related risks and cyber threats.
Also, in conjunction with our component audit teams and specialized IT auditors,
we have specifically considered the implementation of CCH Tagetik in our audit.
Observations
The impact of the COVID-19 pandemic on the remote execution of controls
remains limited, since many controls were already executed digitally. We have
reported our observations on internal controls over financial reporting to the
Audit Committee and have performed additional audit procedures, where
deemed needed, with satisfactory results.
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REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT 2021
In addition to the financial statements and our auditor's report thereon, the annual report 2021 contains other information that
consists of:
• Strategic Report;
• Governance; and
• Other Information as required by Part 9 of Book 2 of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:
• Is consistent with the financial statements and does not contain material misstatements; and
• Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard
on Auditing 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the
financial statements.
Management is responsible for the preparation of the other information, including the Report of the Executive Board in accordance
with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Engagement
We were appointed by the General Meeting of Shareholders as auditor of Wolters Kluwer N.V. on April 23, 2014, for the audit of the
financial year 2015 and have operated as statutory auditor ever since that financial year. In the General Meeting of Shareholders on
April 19, 2018, we were re-appointed for a period of four years for the financial years 2019 through 2022.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements
regarding statutory audit of public-interest entities.
European Single Electronic Reporting Format (ESEF)
The group has prepared its annual report in ESEF. The requirements for this are set out in the Commission Delegated Regulation (EU)
2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the
RTS on ESEF).
In our opinion, the annual report, prepared in XHTML format, including the partially marked-up consolidated financial statements, as
included in the reporting package by the group, complies in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report including the financial statements in accordance with RTS on ESEF,
whereby management combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies
with the RTS on ESEF.
Our procedures, taking into account Alert 43 of the NBA (the Netherlands Institute of Chartered Accountants), included amongst
others:
• Obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package;
• Obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL
instance and the XBRL extension taxonomy files has been prepared in accordance with the technical specifications as included in the
RTS on ESEF; and
• Examining the information related to the consolidated financial statements in the reporting package to determine whether all
required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.
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DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
IFRS-EU and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as
management determines is necessary to enable the preparation of the financial statements that are free from material misstatement,
whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the group's ability to continue as a
going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using
the going concern basis of accounting unless management either intends to liquidate the group or to cease operations or has no
realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the group's ability to continue as a going
concern in the financial statements.
The Supervisory Board is responsible for overseeing the group's financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors
and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the
nature, timing, and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with
Dutch Standards on Auditing, ethical requirements, and independence requirements. Our audit included among others:
• Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and
performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Concluding on the appropriateness of management's use of the going concern basis of accounting, and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the group to cease to continue as a going concern.
• Evaluating the overall presentation, structure, and content of the financial statements, including the disclosures.
• Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising, and performing the group
audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive
were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit
or review had to be carried out on the complete set of financial information or specific items.
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Independent Auditor’sReport continued
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant findings in internal control that we identified during our audit. In this respect we
also submit an additional report to the Audit Committee in accordance with Article 11 of the EU Regulation on specific requirements
regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit
opinion in this auditor's report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of most
significance in the audit of the financial statements. We describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the
public interest.
Amsterdam, February 22, 2022
Deloitte Accountants B.V.
B.E. Savert
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ARTICLE 29 OF THE ARTICLES OF ASSOCIATION
Paragraph 1
From the profit as it appears on the annual accounts adopted by the General Meeting, a dividend shall be distributed on the
preference shares, whose percentage – calculated on the paid part of the nominal amount – is equal to that of the average of the
interest rate on Basis Refinancing Transactions (Refi interest of the European Central Bank). These are weighted according to the
number of days over which this rate of interest applies during the financial year over which the dividend was paid, increased by a
debit interest rate to be determined by the large Dutch banks and also increased by a margin determined by the Executive Board and
approved by the Supervisory Board of one percentage point (1%) minimum and four percentage points (4%) maximum. The dividend
on the preference shares shall be calculated on an annual basis on the paid part of the nominal amount. If in any financial year the
distribution referred to in the first full sentence cannot be made or can only be made in part because the profits are not sufficient,
the deficiency shall be distributed from the distributable part of the company’s equity. No further dividend shall be distributed
on the preference shares.
Paragraph 2
Subsequently such allocations to reserves shall be made as the Executive Board shall determine, subject to the approval of the
Supervisory Board.
Paragraph 3
Any balance remaining after that shall be distributed at the disposal of the General Meeting of Shareholders.
Paragraph 5
Distribution of profit shall be made after adoption of the annual accounts showing that it is permitted.
Paragraph 6
Subject to approval of the Supervisory Board, the Executive Board may resolve on distribution of interim dividend, provided the
requirements of paragraph 4 have been met, according to an interim statement of assets and liabilities. It shall relate to the
position of the assets and liabilities no earlier than on the first day of the third month before the month in which the resolution on
distribution of interim dividend is made known. It shall be drawn up with observance of valuation methods considered generally
acceptable. The statement of assets and liabilities shall include the amounts to be reserved by virtue of the law.
It shall be signed by the Members of the Executive Board; if the signature of one or more of them is lacking this shall be stated with
reasons. The statement of assets and liabilities shall be deposited at the office of the Commercial Register within eight days after the
day on which the resolution on distribution is made known.
Paragraph 7
If a loss is suffered for any year, that loss shall be transferred to a new account for set-off against future profits, and for that year
no dividend shall be distributed. Based on the proposal of the Executive Board that has been approved by the Supervisory Board,
the General Meeting of Shareholders may resolve, however, to delete such a loss by writing it off on a reserve that need not be
maintained, according to the law.
ARTICLE 30 OF THE ARTICLES OF ASSOCIATION
Paragraph 1
On the proposal of the Executive Board that has been approved by the Supervisory Board, the General Meeting of Shareholders may
resolve that a distribution of dividend on ordinary shares shall be made entirely or partially not in money but in ordinary shares in
the capital of the company.
Paragraph 2
On the proposal of the Executive Board that has been approved by the Supervisory Board, the General Meeting of Shareholders may
resolve on distributions in money or in the manner as referred to in Paragraph 1 to holders of ordinary shares against one or more
reserves that need not be maintained under the law.
Articles of Association Provisions
GoverningProfitAppropriation
Other Information
216 Wolters Kluwer 2021 Annual Report
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Financial Statements
ACTIVITIES
The Board of the Wolters Kluwer Preference Shares Foundation (the Foundation) met twice in 2021. Due to the global pandemic, the
meetings were virtual. The matters discussed included the company’s results, the execution of the strategy, the impact of the global
pandemic, the financing of the company, acquisitions and divestments, developments in the market, and the general course of events
at Wolters Kluwer. Representatives of the Executive Board of the company, the chair of the Supervisory Board, and corporate staff
attended the meetings to give the Board of the Foundation information about the developments within Wolters Kluwer.
The Board of the Foundation also followed developments of the company outside of board meetings, among other through receipt
by the board members of press releases. As a result, the Board of the Foundation has a good view on the course of events at Wolters
Kluwer. The Board of the Foundation also closely monitored the developments with respect to corporate governance and relevant
Dutch legislation and discussed that topic during the meeting. Furthermore, the financing of the Foundation and the composition of
the Board of the Foundation were discussed. The Foundation acquired no preference shares during the year under review.
EXERCISE OF THE PREFERENCE SHARES OPTION
Wolters Kluwer N.V. and the Foundation have concluded an agreement based on which preference shares can be taken by the
Foundation. This option on preference shares is at present a measure that could be considered as a potential protection at Wolters
Kluwer against exercising influence by a third party on the policy of the company without the consent of the Executive Board and
Supervisory Board, including events that could threaten the strategy, continuity, independence, identity, or coherence between the
activities of the company. The Foundation is entitled to exercise the option on preference shares in such a way that the number
of preference shares taken will be no more than 100% of the number of issued and outstanding ordinary shares at the time of
exercise. Among other things by the exercise of the option on the preference shares by the Foundation, the Executive Board and
the Supervisory Board will have the possibility to determine their position with respect to, for example, a party making a bid on the
shares of Wolters Kluwer, and its plans, or with respect to a third party that otherwise wishes to exercise decisive influence, and
enables the boards to examine and implement alternatives.
COMPOSITION OF THE BOARD OF THE WOLTERS KLUWER PREFERENCE SHARES FOUNDATION
Mr. Voogd retired in 2021, due to the expiration of his final term. The Board of the Foundation appointed Mr. Bouw as new Chair and
Mr. Tiemstra as Vice-Chair. In addition, the Board of the Foundation appointed Mr. Visser as new member.
The Foundation is a legal entity that is independent from the company as stipulated in clause 5:71 (1) sub c of the Act on financial
supervision (Wet op het financieel toezicht). All members of the Board of the Foundation are independent from the company.
Alphen aan den Rijn, February 22, 2022
Board of Wolters Kluwer Preference Shares Foundation
P. Bouw, Chair
J.S.T. Tiemstra, Vice-Chair
J.H.M. Lindenbergh
G.W.Ch. Visser
Report of the Wolters Kluwer
Preference SharesFoundation
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Wolters Kluwer 2021 Annual Report 217
Additional information regarding Wolters Kluwer shares andbonds is provided in this chapter.
ORDINARY SHARES AND ADRS
Wolters Kluwer N.V. ordinary shares are listed on Euronext Amsterdam under the symbol WKL. During 2021, the average daily trading
volume of Wolters Kluwer shares on Euronext Amsterdam was 521,131 shares (2020: 677,347), according to Euronext.
American Depositary Receipt (ADR) program
Wolters Kluwer has a sponsored Level I American Depositary Receipt (ADR) program. Each Wolters Kluwer ADR represents one ordinary
share (ADR ratio 1:1). Wolters Kluwer ADRs are denominated in U.S. dollars and are traded on the over-the-counter (OTC) securities
market in the United States. Wolters Kluwer ADRs receive the same dividends as the ordinary shares converted into U.S. dollars at the
prevailing €/$ exchange rate. For more information contact our ADR depositary bank: Deutsche Bank Trust Company Americas, c/o
American Stock Transfer & Trust Company, Peck Slip Station, P.O. Box 2050 New York, N.Y. 10272-2050, United States, or visit www.adr.
db.com.
Securities codes and ticker symbols
System Ordinary shares ADRs
ISIN NL0000395903 US9778742059
Sedol 5671519 2977049
Bloomberg WKL:NA WTKWY:US
Reuters RIC WLSNc.AS WTKWY
CUSIP – 977874205
Exchange Euronext Over-the-counter (OTC)
SHARE PRICE PERFORMANCE
Wolters Kluwer shares ended the year 2021 up 50%, closing the year at €103.60. Over the five-year period ending December 31, 2021,
Wolters Kluwer shares have increased by 201%, significantly outperforming the Amsterdam AEX index and the STOXX Europe 600,
which increased 65% and 35%, respectively. Wolters Kluwer ADRs (quoted in U.S. dollars) appreciated 225% over this five-year period,
significantly outperforming the S&P 500, which rose 113%.
Five-year share price performance 2017-2021
€
2017 2018 2019 20212020
110
90
100
80
70
60
50
40
30
20
10
Wolters Kluwer N.V. AEX (rebased)
STOXX Europe 600 (rebased)
Source: Nasdaq/FactSet data. Indices rebased to Wolters Kluwer share price.
Wolters Kluwer Shares andBonds
218 Wolters Kluwer 2021 Annual Report
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Wolters Kluwer Shares andBonds continued
DIVIDEND POLICY AND DIVIDEND PROPOSAL
Dividend policy
Wolters Kluwer is committed to a progressive dividend policy. Proposed annual increases in the dividend per share take into
account our financial performance, market conditions, and our need for financial flexibility. The policy takes into consideration
the characteristics of our business, our expectations for future cash flows, and our plans for organic investment or for external
investment in acquisitions.
Proposed 2021 dividend
We are proposing to increase the total dividend for the financial year 2021 by 15% (2020: 15% increase) to €1.57 per share (2020: €1.36).
We will therefore recommend a final dividend of €1.03 per share, subject to approval of shareholders at the Annual General Meeting in
April 2022.
For 2022, we intend to maintain the interim distribution at 40% of prior year total dividend.
Shareholders can choose to reinvest interim and final dividends by purchasing additional Wolters Kluwer shares through the Dividend
Reinvestment Plan (DRIP) administered by ABN AMRO Bank N.V.
SHARE BUYBACK PROGRAMS
As a matter of policy since 2012, Wolters Kluwer offsets the dilution caused by our annual incentive share issuance with share
repurchases (Anti-Dilution Policy). In addition, when appropriate, we return capital to shareholders through further share buyback
programs. Shares repurchased by the company are added to and held as treasury shares. Treasury shares are either canceled or are
held to meet future obligations under share-based incentive plans.
During 2021, we repurchased 5.0 million shares for a total consideration of €410 million, including 0.7 million shares to offset incentive
share issuance (2020: 0.9 million). As of December 31, 2021, we held 4.3 million shares in treasury. A summary of amounts repurchased
and cancelations over the past few years is shown below.
Share repurchases and cancelations 2017-2021
Shares
repurchased
million
Total
consideration
€ million
Average
share price
€
Treasury shares
canceled
million
Treasury shares
released for LTIP
million
2021 5.0 410 82.62 5.0 0.7
2020 5.1 350 68.41 5.5 0.9
2019 5.5 350 63.80 6.7 1.0
2018 11.5 550 47.81 10.6 1.3
2017 7.8 300 38.62 11.6 1.4
Share buyback 2022
On February 23, 2022, we will announce our intention to spend up to €600 million on share repurchases during 2022, including
repurchases to offset incentive share issuance. As of February 22, 2022, €50 million of this 2022 buyback had already been completed.
We believe this level of cash return leaves us with ample headroom to support our dividend plans, to sustain organic investment,
and to make selective acquisitions. The share repurchases may be suspended, discontinued, or modified at any time. At the Annual
General Meeting in April 2022, we will propose canceling any or all treasury shares that are not used for share-based incentive plans.
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Wolters Kluwer 2021 Annual Report 219
SHARE CAPITAL AND MARKET CAPITALIZATION
Shares issued and outstanding
The number of issued ordinary shares on December 31, 2021, was 262.5 million (2020: 267.5 million), of which 4.3 million were held in
treasury. In September 2021, 5.0 million treasury shares were canceled.
During 2021, 5.0 million shares were repurchased and added to treasury, while 0.7 million shares were released for long-term incentive
plans. The diluted weighted average number of ordinary shares used to compute the diluted earnings per share figures was 261.8
million in 2021.
Market capitalization
Based on issued ordinary shares (including 4.3 million treasury shares), the market capitalization of Wolters Kluwer as of December 31,
2021, was €27.2 billion (December 31, 2020: €18.5 billion).
Shares issued and outstanding
number of shares in millions 2021 2020
Issued ordinary shares (December 31) 262.5 267.5
Treasury shares (December 31) 4.3 5.1
Issued ordinary shares outstanding (December 31) 258.2 262.4
Weighted average number of ordinary shares outstanding 260.4 265.0
Diluted weighted average number of ordinary shares 261.8 266.6
SHAREHOLDER STRUCTURE
Wolters Kluwer has 100% free float and a widely distributed,
global shareholder base. Approximately 92% of the issued
ordinary shares of Wolters Kluwer is held by institutional
investors. The remaining 8% is held by retail investors,
broker-dealers, or held in treasury by Wolters Kluwer.
As of October 2021, nearly half of our issued share capital is
held by investors in North America, mainly the United States
and Canada. Institutions based in the United Kingdom held
23%, while institutions based in continental Europe owned 18%.
Institutions in Asia Pacific & Rest of World own approximately
3% of our issued share capital. Approximately 20% of issued
share capital is held in passive, index, or quant funds. Based
on a broad definition of sustainable investing, ESG funds hold
approximately 30% of our issued share capital.
Shareholders who have notified the Dutch Authority for the
Financial Markets (AFM) indicating a capital interest exceeding
the AFM’s reporting thresholds can be found on the AFM website
(www.afm.nl).
Geographical distribution of issued share capital
United States 40%
Canada 8%
United Kingdom 23%
France 5%
Switzerland 3%
Germany 3%
Netherlands 2%
Rest of Europe 5%
Asia Pacific & ROW 3%
Retail 4%
Broker/Dealers/Other 3%
Treasury shares 1%
Source: Nasdaq Corporate Solutions, as of October 2021.
220 Wolters Kluwer 2021 Annual Report
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Wolters Kluwer Shares andBonds continued
Some of the most widely followed indices that include Wolters Kluwer shares are shown below.
Wolters Kluwer weight in selected indices
Index Weight %
AEX
®
3.18%
Euronext
®
100 0.71%
Euronext
®
Eurozone ESG Leaders Select 40 2.43%
EURO STOXX
®
0.49%
EURO STOXX
®
MEDIA 35.86%
STOXX
®
Europe 600 0.25%
STOXX
®
Europe 600 Media 14.74%
STOXX
®
Europe 600 ESG-X 0.26%
MSCI Europe Commercial & Professional Services 12.96%
Sources: Euronext, STOXX, MSCI. Weights as of December 31, 2021.
INDUSTRY CLASSIFICATIONS AND INDICES
Wolters Kluwer is currently classified in different industry sectors by the global index providers.
Industry classification by main index providers
Main index provider System used Wolters Kluwer Industry Classification (Code)
Bloomberg BICS Technology: Software & Technology Services (1814)
STOXX, FTSE Russell ICB Consumer Discretionary: Media: Media: Publishing (5557)
MSCI, S&P, Dow Jones GICS Industrials: Commercial & Professional Services: Research &
ConsultingServices(20202020)
Sources: Bloomberg, FTSE Russell, MSCI, S&P Global, STOXX.
RESEARCH RATINGS
Wolters Kluwer is covered by over 20 sell-side analysts. Of those who regularly publish research, as of January 12, 2022, five have a
Buy rating, eleven have a Hold rating, and two rate the shares a Sell. A diverse range of firms produce environmental, social, and
governance (ESG) research and ratings on Wolters Kluwer. A selection of publicly available ESG ratings is shown below.
A list of analysts can be found on our Investor Relations website
www.wolterskluwer.com/en/investors/analysts/analyst-coverage
Selected ESG ratings
ESG rating 2021 2020 Description
MSCI ESG Rating AAA AAA MSCI rating uses a scale of AAA – CCC. AAA is the top score.
ISS Governance Quality Score 1 1 ISS quality scores (introduced 2020) are on a scale of
1 – 10, with a lower score denoting lower risk.
ISS Social Quality Score 2 4
ISS Environment Quality Score 3 3
Sustainalytics ESG Risk Score 9.5 9.6 Sustainalytics risk score (introduced in 2020) is on a scale of
0–100. A lower score signals lower unmanaged ESG risk. A score
of 9.5 is considered negligible risk.
Sources: MSCI, ISS, Sustainalytics, as of January 12, 2022.
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Wolters Kluwer 2021 Annual Report 221
BONDS AND OTHER FIXED INCOME SECURITIES
Wolters Kluwer has six Eurobonds listed on the Luxembourg exchange, with a total face value of €2,636 million.
Wolters Kluwer listed fixed-income issues
Debt security Due
Amount
€ million Listing ISIN
2.875% senior bonds March 2023 €700 Luxembourg XS0907301260
2.500% senior bonds May 2024 €400 Luxembourg XS1067329570
1.500% senior bonds March 2027 €500 Luxembourg XS1575992596
0.250% senior bonds March 2028 €500 Luxembourg XS2324836878
6.748% senior bonds August 2028 €36 Luxembourg XS0384322656
0.750% senior bonds July 2030 €500 Luxembourg XS2198580271
Euro Commercial Paper
Wolters Kluwer has a Euro Commercial Paper (ECP) program (established May 7, 2019) under which the company may issue unsecured,
short-term debt (ECP notes) up to a maximum of €1.0 billion. The outstanding amount (included in borrowings and bank overdrafts)
per December 31, 2021, is nil (December 31, 2020: €100 million).
Type As of
Issued
€ million
Total facility
€ million
Euro Commercial Paper (ECP) December 31, 2021 Nil 1,000
Sustainability-linked multi-currency revolving credit facility
In July 2021, a one-year extension was agreed on our €600 million multi-currency revolving credit facility such that the facility now
matures in July 2024 and still includes a further one-year extension option. At the same time, four ESG measures were linked to the
credit facility.
Type Term
Drawn
€ million
Total facility
€ million
Multi-currency revolving credit facility July 2020 – July 2024 Nil 600
Credit ratings
Maintaining investment grade credit ratings is a core policy of Wolters Kluwer. See the table below for current credit ratings
and outlook.
Agency Long-term Short-term Outlook Date of rating Date affirmed
Moody’s Baa1 – Stable September 12, 2013 March 8, 2021
S&P BBB+ A-2 Stable March 7, 2013 April 30, 2021
Source: Moody’s, S&P Global.
222 Wolters Kluwer 2021 Annual Report
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INVESTOR RELATIONS
Shareholder engagement
Wolters Kluwer places great importance on a constructive dialogue with the investment community. We manage a comprehensive
investor relations program designed to maintain regular interaction with investors and sell-side analysts. We communicate through
our half-year and full-year earnings releases and presentations, trading updates, the annual report, and other information published
on our investor relations website. We host live webcast presentations of our half-year and full-year results, hold the Annual General
Meeting of Shareholders, and interact with investors on roadshows and at conferences. In December 2021, we hosted a virtual teach-in
on our Health division and our central technology development team, Digital eXperience Group. During the year, the Executive Board
met with shareholders representing around 40% of our issued share capital.
Investor Relations is focused on helping the market understand our business, our strategy, our markets, as well as our financial
performance. We aim to be responsive and proactive and welcome direct feedback from investors. Wolters Kluwer is committed to a high
degree of transparency in its financial reporting and strives to be open with its shareholders and the wider investment community.
Investor Relations website
www.wolterskluwer.com/en/investors
Investor relations policy
Wolters Kluwer is strict in its compliance with applicable rules and regulations on fair disclosure to shareholders. Presentations are
posted publicly on the company’s website at the same time as they are made available to analysts and investors. In adherence with
fair disclosure rules, meetings and presentations do not take place during ‘closed periods’ before the publication of annual and
quarterly financial information. The company does not assess, comment upon, or correct, other than factually, any analyst report or
valuation prior to publication. The company is committed to helping investors and analysts become better acquainted with Wolters
Kluwer and its management, as well as to maintaining a long-term relationship of trust with the investment community at large.
Financial calendar 2022-2023
2022
April 21 Annual General Meeting of Shareholders
April 25 Ex-dividend date: 2021 final dividend
April 26 Record date: 2021 final dividend
May 4 First-Quarter 2022 Trading Update
May 18 Payment date: 2021 final dividend, ordinary shares
May 25 Payment date: 2021 final dividend, ADRs
August 3 Half-Year 2022 Results
August 30 Ex-dividend date: 2022 interim dividend
August 31 Record date: 2022 interim dividend
September 22 Payment date: 2022 interim dividend, ordinary shares
September 29 Payment date: 2022 interim dividend, ADRs
November 2 Nine-Month 2022 Trading Update
2023
February 22 Full-Year 2022 Results
March 8 Publication of 2022 Annual Report
Wolters Kluwer Shares andBonds continued
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Wolters Kluwer 2021 Annual Report 223
in millions of euros, unless otherwise stated 2021 2020 2019 2018
*
2017
**
Revenues 4,771 4,603 4,612 4,259 4,368
Operating profit 1,012 972 908 967 830
Profit for the year, attributable to owners of the company 728 721 669 656 636
Adjusted EBITDA 1,514 1,422 1,382 1,274 1,179
Adjusted operating profit 1,205 1,124 1,089 986 970
Adjusted net financing costs 78 46 58 77 109
Adjusted net profit 885 835 790 682 639
Adjusted free cash flow 1,010 907 807 762 746
Proposed dividend distribution 405 357 315 266 239
Acquisition spending 108 395 34 166 313
Net capital expenditure 239 231 226 214 210
Amortization/impairment of other intangible assets and depreciation/impairment
of PPE and right-of-use assets 309 298 293 288 209
Amortization/impairment of acquired identifiable intangible assets 164 144 182 175 187
Shareholders’ equity 2,417 2,087 2,380 2,254 2,228
Guarantee equity 2,417 2,087 2,380 2,254 2,232
Net debt 2,131 2,383 2,199 2,249 2,069
Capital employed 5,859 5,087 4,966 5,013 4,845
Total assets 9,028 8,350 8,775 8,544 8,477
Ratios
As % of revenues:
Operating profit 21.2 21.1 19.7 22.7 19.0
Profit for the year, attributable to owners of the company 15.3 15.7 14.5 15.4 14.6
Adjusted EBITDA 31.7 30.9 30.0 29.9 27.0
Adjusted operating profit 25.3 24.4 23.6 23.1 22.2
Adjusted net profit 18.6 18.1 17.1 16.0 14.6
ROIC (%) 13.7 12.3 11.8 10.6 10.0
Dividend proposal in % of adjusted net profit 45.8 42.8 39.8 39.0 37.4
Dividend proposal in % of profit for the year, attributable to owners of the company 55.7 49.5 47.1 40.5 37.6
Cash conversion ratio (%) 112 102 96 104 100
Net interest coverage 15.5 24.5 18.7 12.8 8.9
Net-debt-to-EBITDA 1.4 1.7 1.6 1.8 1.8
Net gearing 0.9 1.1 0.9 1.0 0.9
Shareholders’ equity to capital employed 0.41 0.41 0.48 0.45 0.46
Guarantee equity to total assets 0.27 0.25 0.27 0.26 0.26
Five-Year Key Figures
224 Wolters Kluwer 2021 Annual Report
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Governance |
Financial Statements
2021 2020 2019 2018
*
2017
**
Information per share (€)
Total dividend proposal in cash per share 1.57 1.36 1.18 0.98 0.85
Basic earnings per share 2.79 2.72 2.47 2.37 2.23
Adjusted earnings per share 3.40 3.15 2.92 2.47 2.24
Adjusted free cash flow per share 3.89 3.42 2.98 2.75 2.62
Based on fully diluted:
Diluted earnings per share 2.78 2.70 2.46 2.35 2.21
Diluted adjusted earnings per share 3.38 3.13 2.90 2.45 2.22
Diluted adjusted free cash flow per share 3.87 3.40 2.96 2.73 2.59
Weighted average number of shares issued (millions) 260.4 265.0 270.3 276.7 285.1
Diluted weighted average number of shares (millions) 261.8 266.6 272.2 278.8 287.7
Stock exchange (€)
Highest quotation 105.25 78.22 67.72 55.68 44.80
Lowest quotation 63.88 52.04 49.98 39.19 34.25
Quotation at December 31 103.60 69.06 65.02 51.66 43.48
Average daily trading volume Wolters Kluwer on Euronext Amsterdam N.V.
(thousands of shares) 521 677 643 755 719
Employees
Headcount at December 31 19,827 19,169 18,979 18,553 18,830
In full-time equivalents at December 31 19,454 18,785 18,361 18,134 18,315
In full-time equivalents average per annum 19,741 19,180 18,883 18,687 18,982
*
Restated for IFRS 16, IFRIC 23, and certain reclassifications.
**
Restated for IFRS 15.
Five-Year Key Figures continued
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Wolters Kluwer 2021 Annual Report 225
Glossary
Adjusted
‘Adjusted’ refers to figures from
continuing operations, adjusted for
non-benchmark items and amortization
and impairment of goodwill and
acquired identifiable intangible assets.
‘Adjusted’ figures are non-IFRS
compliant financial figures but are
internally regarded as key performance
indicators to measure the underlying
performance of the business.
Adjusted earnings per share
Adjusted net profit divided by the
weighted average number of ordinary
shares outstanding.
Adjusted EBITDA
EBITDA adjusted for non-benchmark
items in operating profit.
Adjusted free cash flow
Net cash from operating activities
less net capital expenditure, plus paid
acquisition and divestment expenses,
plus dividends received, and one-off
cash tax items. Adjusted free cash
flow is the cash flow available for
payments of dividends to shareholders,
acquisitions, repayments of debt, and
repurchasing of shares.
Adjusted net financing costs
Total financing results adjusted for
non-benchmark items in total financing
results.
Adjusted net profit
Profit for the period from continuing
operations attributable to the owners
of the company, excluding the after-
tax effect of non-benchmark items,
amortization of acquired identifiable
intangible assets, and impairment of
goodwill and acquired identifiable
intangible assets.
Adjusted operating cash flow
Adjusted EBITDA plus or minus
autonomous movements in working
capital, less net capital expenditure,
repayments of lease liabilities, and
lease interest paid.
Adjusted operating profit
Operating profit before amortization
and impairment of acquired identifiable
intangible assets and impairment
of goodwill, and adjusted for non-
benchmark items.
Adjusted operating profit margin
Adjusted operating profit as a
percentage of revenues.
Adjusted profit before tax
Sum of adjusted operating profit,
adjusted net financing costs, income
from investments, and share of profit of
equity-accounted investees (net of tax).
Allocated tax
Adjusted operating profit multiplied by
benchmark tax rate.
Basic earnings per share
The profit or loss attributable to the
ordinary shareholders of the company,
divided by the weighted average
number of ordinary shares outstanding
during the period.
Benchmark tax rate
Income tax on adjusted profit, divided
by adjusted profit before tax.
Capital employed
Total assets, minus current liabilities
and non-current deferred income.
Cash conversion ratio
Adjusted operating cash flow divided by
adjusted operating profit.
Constant currencies
Income, expense, and cash flows in
local currencies are recalculated to
euros, using the average exchange rates
of the previous calendar year.
Continuing operations
The results of the group, excluding
the results of those components that
have been presented as discontinued
operations.
Diluted adjusted earnings per
share
Adjusted earnings per share amended
for the effects of all dilutive potential
ordinary shares.
Shares conditionally awarded under
LTIP-plans are included in the
calculation of the diluted weighted
average number of ordinary shares
outstanding if the vesting conditions
are satisfied.
Diluted earnings per share
Basic earnings per share amended
for the effects of all dilutive potential
ordinary shares.
Shares conditionally awarded under
LTIP-plans are included in the
calculation of the diluted weighted
average number of ordinary shares
outstanding if the vesting conditions
are satisfied.
EBITA (Earnings before interest,
tax, and amortization)
Operating profit before amortization
and impairment of acquired identifiable
intangible assets and impairment of
goodwill.
EBITDA (Earnings before
interest, tax, depreciation,
andamortization)
Operating profit before amortization
and impairment of acquired identifiable
intangible assets and impairment of
goodwill, and before amortization and
impairment of other intangible assets
and depreciation and impairment of
PPE, and right-of-use assets.
Guarantee equity
Sum of total equity, subordinated
(convertible) bonds, and perpetual
cumulative bonds.
Invested capital
Total assets minus current liabilities
and non-current deferred income,
excluding investments in equity-
accounted investees, deferred tax
assets, non-operating working capital,
and cash and cash equivalents.
This total summation is adjusted
for accumulated amortization on
acquired identifiable intangible assets,
goodwill amortized pre-IFRS 2004, and
goodwill written off to equity prior to
1996 (excluding acquired identifiable
intangible assets/goodwill that have
been impaired and/or fully amortized),
less any related deferred tax liabilities.
The average invested capital is based
on five measurement points during
the year.
Net capital expenditure
Sum of capitalized expenditure on PPE
and other intangible assets, less any
cash inflows arising from disposal of
PPE and other intangible assets.
Net debt
Sum of long-term debt, borrowings
and bank overdrafts, and deferred and
contingent acquisition payments, minus
cash and cash equivalents, divestment
receivables, collateral deposited,
and the net fair value of derivative
financial instruments.
Net-debt-to-EBITDA ratio
Net debt divided by EBITDA, adjusted
for divestment-related results on
operations.
Net gearing
Net debt divided by total equity.
Net interest coverage
Adjusted operating profit, divided by
adjusted net financing costs.
Non-benchmark items
Non-benchmark items relate to
expenses arising from circumstances
or transactions that, given their size
or nature, are clearly distinct from the
ordinary activities of the group, and are
excluded from the benchmark figures.
Non-benchmark items in operating
profit include amortization and
impairment of acquired identifiable
intangible assets, impairment of
goodwill, results from divestments
(including directly attributable
divestment costs), additions to
and releases from provisions for
restructuring of stranded costs
following divestments, acquisition-
related costs, additions to and releases
from acquisition integration provisions,
subsequent fair value changes on
contingent considerations, and loss
on remeasurement on assets classified
as held for sale.
Non-benchmark items in total financing
results are financing component
employee benefits, gains and losses
on financial assets at fair value through
profit or loss, and divestment-related
results on equity-accounted investees.
NOPAT
Net operating profit after allocated
tax. Adjusted operating profit less
allocated tax.
Operating other receivables
Operating other receivables consist
of prepayments and miscellaneous
receivables.
Operating other payables
Operating other payables consist
of salaries and holiday allowances,
social security premiums and other
taxation, pension-related payables,
royalty payables, and other accruals
and payables.
Organic revenue growth
Calculated as revenue of the period,
excluding the impact of acquisitions
above a minimum threshold, divided by
revenue of the period in the previous
reporting period, adjusted for the
impact of divestments of operations
above a minimum threshold, all
translated at constant currencies.
Tax on adjusted profit
Income tax expense adjusted for
tax benefits on amortization and
impairment of acquired identifiable
intangible assets and impairment
of goodwill, tax on non-benchmark
items, and the income tax effect of
any material changes in (income) tax
laws and (income) tax rates in the
jurisdictions where the group operates.
Working capital
Current assets less current liabilities.
Working capital: non-operating
working capital
Total of receivables/payables of
derivative financial instruments,
collateral, the short-term part
of the restructuring provision,
deferred and contingent acquisition
payables, interest receivable/
payable, current income tax assets/
liabilities, divestment receivables, and
borrowings and bank overdrafts.
Working capital: operating
working capital
Working capital minus non-operating
working capital minus cash and
cash equivalents.
226 Wolters Kluwer 2021 Annual Report
Strategic Report |
Governance |
Financial Statements
Wolters Kluwer N.V.
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FORWARDLOOKING STATEMENTS AND OTHER IMPORTANT
LEGALINFORMATION
This report contains forward-looking statements. These statements may be identified
by words such as "expect", "should", "could", "shall", and similar expressions. Wolters
Kluwer cautions that such forward-looking statements are qualified by certain risks
and uncertainties that could cause actual results and events to differ materially from
what is contemplated by the forward-looking statements. Factors which could cause
actual results to differ from these forward-looking statements may include, without
limitation, general economic conditions; conditions in the markets in which Wolters
Kluwer is engaged; behavior of customers, suppliers, and competitors; technological
developments; the implementation and execution of new ICT systems or outsourcing;
and legal, tax, and regulatory rules affecting Wolters Kluwer’s businesses; as well as
risks related to mergers, acquisitions, and divestments. In addition, financial risks
such as currency movements, interest rate fluctuations, liquidity, and credit risks
could influence future results. The foregoing list of factors should not be construed
as exhaustive. Wolters Kluwer disclaims any intention or obligation to publicly update
or revise any forward-looking statements, whether as a result of new information,
future events, or otherwise.
Contact Information
ABOUT THIS REPORT
Sustainability information is integrated
within the 2021 Annual Report.
More information on sustainability is
available at www.wolterskluwer.com/en/
about-us/sustainability
This annual report is available as a PDF
on www.wolterskluwer.com/en/investors/
financials/annual-reports