Annual Report (ESEF) • Mar 8, 2023
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2022 ANNUAL REPORT Expert solutions for an ever-changing world Every second of every day, our customers face decisive moments that impact the lives of millions of people and shape society for the future. → Read more about our solutions on page 13 Wolters Kluwer 2022 Annual Report ← → When you have to be right Strategic Report 2 Wolters Kluwer at a glance 4 Q&A with Nancy McKinstry 6 Business model and strategy 8 2023 full-year outlook 9 Expert solutions 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 63 Corporate Governance 67 RiskManagement 78 Statements by the Executive Board 79 Executive Board and Supervisory Board 81 Report of the Supervisory Board 87 Remuneration Report Financial Statements and Other 110 Financial Statements 111 Consolidated Financial Statements 118 Notes to the Consolidated FinancialStatements 204 Company Financial Statements 207 Notes to the Company FinancialStatements 214 Independent Auditor’s Report 224 Articles of Association Provisions Governing Profit Appropriation 225 Report of the Wolters Kluwer Preference Shares Foundation 226 Wolters Kluwer Shares and Bonds 232 Five-Year Key Figures 234 Glossary 235 Contact Information 2022 FINANCIAL HIGHLIGHTS €5.5bn total revenues 93% of revenues from digital products and services 80% of revenues are recurring 26.1% adjusted operating profit margin €4.14 diluted adjusted earnings per share 15.5% return on invested capital Visit our investors portal www.wolterskluwer.com/en/investors/ 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 ← → Wolters Kluwer 2022 Annual Report 1 SUSTAINABILITY HIGHLIGHTS 2022 11% of revenues invested in product development and innovation 5% reduction in office footprint (square meters) 73 belonging score, measure of employee diversity, equity, and inclusion committed to science- based net-zero; near-term targets submitted to SBTi for validation GLOBAL FOOTPRINT 7 flagship offices significant subsidiaries 20,500 employees worldwide 180 countries where we serve customers 40+ countries from which we operate FINANCIAL HIGHLIGHTS 2022 6.2% organic growth in revenues €1.2bn adjusted free cash flow 56% of revenues from expert solutions ( 4 ) % total shareholder return including dividends (not reinvested) 2 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer ataglance EUROPE 29% of total revenues ASIA PACIFIC & ROW 7% of total revenues NORTH AMERICA 64% of total revenues Revenues by media format 2019 Services Print Digital: Expert Solutions Digital: Information products 2020 2021 2022 100% 80% 60% 40% 20% 0% Adjusted operating profit margin 2019 2020 2021 2022 27% 26% 25% 23% 24% 22% 2022 Revenues by type Recurring 80% Non-recurring 20% Diluted adjusted EPS in € 2019 2020 2021 2022 4.50 4.00 3.50 3.00 0.50 2.50 2.00 1.50 1.00 0.00 Organic revenue growth 2019 2020 2021 2022 6.2% 5.7% 1.7% 7% 6% 5% 4% 3% 2% 1% 0% 4.3% Return on invested capital 2019 2020 2021 2022 18% 12% 15% 6% 9% 3% 0% 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. 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 14 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 ← → Wolters Kluwer 2022 Annual Report 3 We continue to see new opportunities to leverage artificial intelligence to bring even greater value to our customers. Nancy McKinstry CEO and Chair of the Executive Board Wolters Kluwer 4 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements I am proud of the steadfast dedication and ever-inspiring creativity of our teams, working together to support our customers, drive innovation, seek new opportunities, and bring benefits to all of our stakeholders. Q How would you sum up Wolters Kluwer’s financial performance in 2022? 2022 was a very good year financially. We sustained 6% organic growth and delivered substantial improvement in margin and ROIC. Organic growth was supported by our recurring digital and services revenues, in particular subscriptions to our cloud-based expert solutions. We managed to steer through an environment marked by inflation, skills shortages, and downcycles in some of our transactional activities to deliver on our commitments. Q What progress was made on your 2022- 2024 strategic plan? Last year was the first year of our new three-year plan. Our top priority is to grow our expert solutions, which are sophisticated workflow and software applications that enhance professionals’ decision-making and productivity, and facilitate collaboration. In 2022, expert solutions revenues grew 9% organically and now account for 56% of total revenues. We supported this growth with record levels of investment in product development, not only to enhance and extend our existing expert solutions, but also to transform our information products into expert solutions. The journey to the cloud and deployment of advanced technologies are key areas of investment. We continue to see new opportunities to leverage artificial intelligence in a responsible way to bring even greater value to our customers. We made a few carefully selected acquisitions last year, most notably International Document Services, which strengthened our position in the U.S. mortgage compliance software market. We completed the divestment of our French and Spanish publishing assets, putting us in a better position to focus on driving innovation and growth in our Legal & Regulatory division. Our second strategic priority is to extend into high growth adjacencies along our customer workflows and to adapt our products for new customer segments. We are investing in opportunities for which we are well-placed. For example, building out ESG reporting solutions is something our customers need and a logical extension for our businesses that already support corporate compliance. We are also extending geographically. For example, we recently launched our Legisway solution into the U.S. market. The third priority is to evolve our organizational capabilities and performance. Here, we have taken early steps to strengthen key central functions, such as sales, marketing, and technology, so these teams can better support the business units in driving performance. This pillar of our strategy also involves improving our own ESG performance. Sustainability is becoming deeply integrated and measured across our operations and we remain committed to the principles of the UN Global Compact and other frameworks. Q With regard to ESG, you said last year you were aiming to cultivate diversity more broadly. Can you update us? Our aim is to build on our success in fostering gender diversity by advancing diversity, equity, and inclusion in a broader sense, across our workforce and across our products. Looking at our workforce, we now measure employee Q&A with NancyMcKinstry EXPERT SOLUTIONS 9% organic growth in 2022 CLOUD SOFTWARE 17% organic growth in 2022 DIVERSITY, EQUITY, AND INCLUSION 73 belonging score improved by 1 point → Read more about our greenhouse gas footprint onpage 51 → Read our TCFD disclosures onpage 59 ← → Wolters Kluwer 2022 Annual Report 5 belonging annually and have been including a target for this metric in the compensation plans of the Executive Board and all executives globally. Belonging is defined as the extent to which employees believe they can bring their authentic selves to work and be accepted for who they are. We improved our belonging score by 1 point in 2022, meeting our initial target, and we have a wide range of initiatives in place to continue driving improvement. With our products, we have started applying a more rigorous diversity approach to ensure that our content, user interfaces, and functionality are inclusive. Q You made a commitment to set science- based targets. What progress has been made on this front? A year ago, we made a commitment to set science-based targets and to align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). I’m very pleased to report that we made a big step forward in 2022. We completed an assessment of our scope 3 indirect greenhouse gas emissions, covering all relevant upstream and downstream activities along our value chain. We also improved the robustness of our scope 1 and 2 emission data. This work enabled us to establish a baseline for 2019 from which to implement emissions reduction targets and abatement plans. We have committed to reduce our company-wide emissions in line with science-based net-zero, and submitted our near-term emission reduction targets to the Science Based Targets initiative for validation. In this annual report, you will find our first TCFD statement which provides an increased level of climate- related disclosures, moving us closer towards alignment with the TCFD recommendations. Q You announced the creation of a new division. What drove that decision? This new division, to be formed in March 2023, brings together four of our global enterprise software units. Combining these assets will allow us to accelerate synergies and leverage their combined global strengths to pursue a growing market opportunity. We are seeing heightened demand from corporations and banks for integrated financial, operational, and ESG performance management and reporting solutions and we have a unique set of assets with the right capabilities to serve this market. Q Finally, what is your outlook for 2023, especially given the less predictable environment we now find ourselves in? While we remain watchful of how the macro-economic and political environment develops, in particular wage inflation and the U.S. dollar exchange rate, we are confident that for the full year, we can deliver organic revenue growth in line with 2022 and improved operating profit margins. Most importantly, I am confident we are on the right course strategically and in a strong position competitively. Our talented teams are excited and engaged, and very committed to deliver value for all stakeholders. Nancy McKinstry CEO and Chair of the Executive Board Wolters Kluwer 6 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements 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. 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 our software products and certain advanced information solutions, accounted for 56% of total revenues in 2022. Based on revenues, our largest expert solutions are: • Health: global clinical decision support tool UpToDate; clinical drug databases Medi-Span and Lexicomp; and Lippincott nursing solutions for practice and learning. • Tax & Accounting: global corporate performance solution CCH Tagetik; global internal audit platform TeamMate; and professional tax and accounting software CCH Axcess and CCH ProSystem fx 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. • Legal & Regulatory: global environmental, health and safety, and operation risk management (EHS/ORM) 1 suite Enablon; legal workflow solutions Kleos and Legisway; and other software tools for European legal professionals. Business model Our business model is primarily based on subscriptions, software maintenance, and other recurring revenues (80% of total revenues in 2022), 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. 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. Most of our new solutions are 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 follow a customer-centric, contextual design process and develop solutions based on the scaled agile framework. Our solutions are sold by our own sales teams or through selected distribution partners. Strategy 2022-2024 Our strategy aims to deliver good organic growth and improved margins and returns over the three-year period. Our 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. 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. Product innovation is a key driver of organic growth and value creation for our customers. In our three-year plan, we expect product development spending to average approximately 10% of total revenues each year. Business model andstrategy 56% of 2022 revenues from expert solutions ← → Wolters Kluwer 2022 Annual Report 7 All four businesses serve global corporations and banks with cloud and on-premise solutions and have leading market positions in their specific areas of expertise. Our Enterprise Legal Management unit (ELM), currently part of GRC Legal Services, will be transferred to the Legal & Regulatory division where we see opportunities for closer alignment with our Legal Software business. Combining these assets will allow us to accelerate synergies and leverage their combined global strengths to pursue a growing market opportunity. We will report our 2023 results under both the historical reporting segments and the new divisional structure. Creation of new division: Corporate Performance & ESG In March 2023, we intend to bring together four of our global enterprise software businesses to form a new division, Corporate Performance & ESG, to meet the growing demand from corporations and banks for integrated financial, operational, and ESG performance management and reporting solutions. This new division will be comprised of the following global software units: • Corporate Performance (CCH Tagetik, including U.S. Corporate Tax); • EHS/ORM Software (Enablon); • Finance, Risk & Reporting; and our • Internal Audit Solutions (TeamMate). While our strategy remains centered on organic investment and 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, generally 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. Key ESG goals in our strategic plan are to drive an improvement in our belonging score, to align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and to obtain validated science-based targets. STRATEGY 2022-2024 Our strategy, Elevate Our Value, aims to drive good organic growth and improved operating profit margins and return on invested capital over the 2022-2024 period while advancing our ESG performance. Our priorities are: Elevate Our Value Accelerate Expert Solutions Expand Our Reach Evolve Core Capabilities • Drive investment in cloud-based expert solutions • Transform digital information products into expert solutions • Enrich customer experience by 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 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 Adjusted net financing costs include lease interest charges. Guidance for adjusted net financing costs in constant currencies excludes the impact of exchange rate movements on currency hedging and intercompany balances. 8 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements If the current U.S. dollar rate persists, currency will have a slightly negative effect on full-year 2023 results reported in euros. In 2022, Wolters Kluwer generated over 60% of revenues and adjusted operating profit in North America. As a rule of thumb, based on our 2022 currency profile, each 1 U.S. cent move in the average €/$ exchange rate for the year causes an opposite change of approximately 3 euro cents in diluted adjusted EPS 1 . We include restructuring costs in adjusted operating profit. We expect 2023 restructuring costs to be in the range of €10-€15 million (2022: €6 million). We expect adjusted net financing costs in constant currencies to be approximately €40 million 2 . We expect the benchmark tax rate on adjusted pre-tax profits to be in the range of 23.0%-24.0% (2022: 22.6%). Capital expenditure is expected to increase but to remain within our normal range of 5.0%-6.0% of total revenues (2022: 5.4%). We expect full-year cash conversion ratio to be approximately 100% (2022: 107%). Our guidance assumes no additional significant change to the scope of operations. We may make further acquisitions or disposals which can be dilutive to margins, earnings, and ROIC in the near-term. The impact of discontinuing activities in Russia and Belarus is expected to be immaterial to the consolidated financial results in 2023. 2023 OUTLOOK BY DIVISION Health We expect full-year organic growth to be in line with prior year and full-year adjusted operating profit margin to be stable. Tax & Accounting We expect full-year organic growth to be in line with prior year and full-year adjusted operating profit margin to improve modestly. Governance, Risk & Compliance We expect full-year organic growth to be in line with prior year and full-year adjusted operating profit margin to improve modestly. Legal & Regulatory We expect full-year organic growth to be in line with prior year and full-year adjusted operating profit margin to be stable. 2023 full-year outlook performance indicators 2023 guidance 2022 actual Adjusted operating profit margin (%) 26.1-26.5 26.1 Adjusted free cash flow (€ million) Around 1,200 1,220 ROIC (%) Around 16.5-17.0 15.5 Diluted adjusted EPS High single-digit growth 8% growth Guidance for adjusted operating profit margin and ROIC is in reporting currencies and assumes an average EUR/USD rate in 2023 of €/$1.07. Guidance for adjusted free cash flow and diluted adjusted EPS is in constant currencies (€/$ 1.05). Guidance reflects share repurchases of €1 billion in 2023. Our specific guidance for 2023 is provided below. We expect full-year organic growth to be in line with the prior year and the adjusted operating profit margin to improve. In the first and second quarters of 2023, organic growth is expected to be slower compared to the prior year period, most notably in Health and Governance, Risk & Compliance. The adjusted operating profit margin is expected to decline in the first half. UpToDate Leading evidence-based clinical decision support tool used by over 2 million clinicians worldwide and supported by over 7,000 experts 7,000+ authors and peer reviewers 44,000+ institutional customers worldwide → Read more about Health on page 14 OneSumX for Regulatory Change Management Automated, AI-enabled regulatory monitoring and workflow solution to enhance banking regulatory compliance 1,150+ global regulatory bodies tracked 130,000+ global regulatory changes per year → Read more about Governance, Risk & Compliance on page 22 CCH Axcess Integrated cloud-based tax and accounting platform used by tens of thousands of U.S. professional firms including 90% of the top 100 firms 380,000+ users 95%+ renewal rate → Read more about Tax & Accounting onpage18 Enablon Cloud-based, integrated environmental, health and safety, and operational risk management platform 160 used in 160 countries 3,000,000+ users → Read more about Legal & Regulatory onpage 26 ← → Wolters Kluwer 2022 Annual Report 9 Our top strategic priority is to grow our expert solutions. Expert solutions combine deep domain knowledge with technology to deliver both content and workflow automation in order to support our customers’ decision- making and productivity. Expert solutions are embedded in our professional customers’ workflows and are typically used frequently throughout the day to support critical decision- making and to digitize, automate, and streamline processes. Several of our expert solutions leverage artificial intelligence (AI) in order to augment and automate certain tasks, provide new or improved insights, and enable efficiencies. In most markets, we offer cloud- based expert solutions. Several of our expert solutions are integrated, modular platforms that offer third-party connectivity (ecosystems). Our expert solutions are generally sold on a subscription basis or include a recurring license and/or maintenance fee. These solutions generally have high renewal rates and above average organic growth rates. Examples of expert solutions: Expert solutions 10 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements 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. We are 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 Management Council. Stakeholders and valuecreation Key stakeholders How we engage How we measure How we create value CUSTOMERS Year-round dialogue through sales, marketing, and customer service teams; and customer collaboration on product development Net promoter scores; customer satisfaction scores; customer and product renewal rates; market share studies; and product development spending Impact when it matters most: our professional information, software, and services 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; and works council engagement Employee turnover rates; employee engagement and belonging scores; and training sessions attended Providing attractive employment and career opportunities; developing skills, talent, and experience; and promoting diversity, equity, inclusion, and belonging SUPPLIERS & PARTNERS Regular quality screening, audits, and due diligence; and collaboration Procurement process and due diligence questionnaires; certification programs; and commitment to standards in Supplier Code of Conduct Creating mutually beneficial economic value for our suppliers and partners INVESTORS Year-round dialogue through a global program of investor relations events and meetings; regular engagement with analysts; and Annual General Meeting of Shareholders Financial KPIs, including organic growth, adjusted operating profit margin, adjusted free cash flow, and ROIC; and ESG KPIs, including employee engagement, cybersecurity maturity, and ESG ratings Generating Total Shareholder Return (TSR) for shareholders through share price appreciation and dividends; and risk-adjusted financial returns for creditors SOCIETY Various programs in support of our communities around the world 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; and we provide attractive jobs, pay taxes, and set high standards ← → Wolters Kluwer 2022 Annual Report 11 We aim to create long-term value for all stakeholders including society, by using resources thoughtfully and efficiently, respecting our company values, and focusing our efforts on actions that support our purpose and our strategy. OUR RESOURCES HUMAN TALENT • Efforts and skills of 20,500 employees FINANCIAL CAPITAL • €2.3bn equity • €3.6bn gross debt TECHNOLOGY & INTELLECTUAL PROPERTY • Global brand • Software and content IP SUPPLIERS & PARTNERS • Actively selected and managed suppliers NATURAL RESOURCES • Energy and water consumption along our value chain THE WAY WE DO BUSINESS Focus on customer success Make it better Aim high and deliver Win as a team Accelerate Expert Solutions Expand Our Reach Evolve Core Capabilities • Strong customer retention • Sustained investment in innovation • Disciplined capital allocation • Talented, engaged, and diverse employees • Respect for society and environment • Strong brands • Agile and secure operations • Good governance OUR IMPACT CUSTOMERS • €5.5bn revenues in professional information, software solutions, and services • Enabling efficient, effective, and accurate decision-making • 80% recurring revenues EMPLOYEES • €2.3bn in personnel salaries, wages, and other benefits • Developing skills, talent, and careers • Promoting diversity, equity, inclusion, and belonging SUPPLIERS & PARTNERS • €2.2bn third-party spend on content, goods, and services • High standards INVESTORS • Total shareholder return of (4)% in 2022 • €45m net interest paid to financial credit institutions SOCIETY • €289m 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 Value creation model Elevate Our Value 12 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Wolters Kluwer is organized around four customer- facing divisions supported by three centralized teams and a corporate office. Operating costs and FTEs of Global Growth Markets, Digital eXperience Group, and Global Business Services are allocated to the customer-facing divisions. Organizational structure and executive team EXECUTIVE BOARD & CORPORATE OFFICE HEALTH • Clinical Solutions • Health Learning, Research & Practice TAX & ACCOUNTING • Corporate Performance • Professional Tax & Accounting GOVERNANCE, RISK & COMPLIANCE • Legal Services • Financial Services LEGAL & REGULATORY • EHS/ORM & Legal Software • Legal Information Solutions €1.5bn revenues 2022 €1.8bn revenues 2022 €1.3bn revenues 2022 €0.9bn revenues 2022 GLOBAL GROWTH MARKETS DIGITAL EXPERIENCE GROUP GLOBAL BUSINESS SERVICES • China, India, and Brazil • Global expert solutions • Local market knowledge • Innovation and product development • Development centers of excellence • Technology asset management • Technology infrastructure • Operational excellence programs • Procurement and shared services 180+ FTEs 1,600+ FTEs 1,200+ FTEs ← → Wolters Kluwer 2022 Annual Report 13 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. GLOBAL GROWTH MARKETS Cathy Wolfe President & CEO 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 and local expert solutions. 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. Our expert solutions integrate deep domain knowledge and advanced technology 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 OneClick, CCH PinPoint, CCH ProSystem fx, CCH Tagetik, Genya, PFX Engagement, TeamMate, and Twinfield. 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 and customer experience, artificial intelligence, and advanced platform services. GOVERNANCE, RISK &COMPLIANCE Richard Flynn CEO We provide banking and legal professionals with solutions to ensure compliance with ever- changing global regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. Our portfolio offers technology-enabled expert services and solutions focused on banking regulatory and product compliance, legal entity compliance, and legal operations management. Customers include corporations, small businesses, law firms, corporate legal departments, compliance and risk professionals, banks, non-bank lenders, credit unions, insurers, and securities firms. Portfolio includes BizFilings, CASH Suite, ComplianceOne, CT Corporation, eOriginal, Expere, GainsKeeper, LegalVIEW BillAnalyzer, Lien Solutions, OneSumX, Passport, TSoftPlus, and TyMetrix 360°. 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, and network and enterprise systems. GBS supports the company’s digital transformation across technology, accounting, strategic sourcing, procurement, operational excellence, collaboration services, analytics, and events. LEGAL & REGULATORY Martin O’Malley CEO We enable legal and compliance professionals and environmental, health and 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 and health and safety 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. 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 INNOVATIVE SOLUTIONS FOR BETTER HEALTH OUTCOMES Supporting professionals across the healthcare ecosystem with leading technology to provide the best evidence-based patient care. 14 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Health 27% of group revenues Our mission is to advance the best care everywhere through trusted clinical technology and evidence- based medicine. Stacey Caywood CEO Health MARKET TRENDS BUSINESS OVERVIEW Wolters Kluwer Health provides trusted clinical technology and evidence-based solutions that drive effective decision- making and improved outcomes across healthcare. We support millions of clinicians, researchers, and students around the world. Our Clinical Solutions help physicians and other healthcare practitioners improve patient outcomes and safety, reduce clinical variation in care, reduce healthcare costs, manage population health, optimize clinical workflows, facilitate telehealth and virtual care, advance health equity, and drive value-based care. Our Health Learning, Research & Practice business supports the advancement of clinical knowledge and the discovery of new drugs and medical treatments. Our learning solutions help educate millions of doctors, nurses, and other healthcare professionals around the world each year. Growth of virtual care andtelemedicine Demand for solutions toalleviate pressure onhospitals and staff Medical institutions continue to seek cost savings Demand for practice-ready nurses, physicians, and other health professionals Continued growth in open access medical research Shift to consumer-centric care CUSTOMER CASE: MEMORIAL HOSPITAL IMPROVES OUTCOMES WITH EMMI Memorial Hospital at Gulfport, a 328-bed acute care hospital in Mississippi, uses Emmi solutions, digital health technology developed by Wolters Kluwer, as their patient engagement platform. Using EmmiJourneys, Memorial Gulfport saw patients take a more active role in their care. The program helped reduce unnecessary emergency department visits by 26%, which in turn reduced costs by about $89,000 over 1,000 patient discharges. Additionally, 30-day readmission rates dropped between 27% and 65%, depending on patient engagement with prescribed programs. Chris Belmont, Vice President and CIO at Memorial Gulfport, said, “This was so much more effective than anything we’d done before in getting patients to follow their care plan.” 15Wolters Kluwer 2022 Annual Report ← → SELECTED AWARDS 2022 • Sentri7 named Best in KLAS for infection control and monitoring • Health Learning, Research & Practice earns 11th annual NorthFace ScoreBoard CX award for customer care excellence 16 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements REVIEW OF 2022 PERFORMANCE • Clinical Solutions grew 7% organically, driven by UpToDate, drug information, and patient engagement. • Learning, Research & Practice grew 3% organically against a challenging comparable. • Margin increase reflects the continued shift towards Clinical Solutions and a favorable currency mix. Wolters Kluwer Health revenues increased 5% in constant currencies and 5% organically (2021: 7%). Adjusted operating profit increased 6% in constant currencies and 6% on an organic basis, mainly reflecting operational gearing, the mix shift towards Clinical Solutions, and a favorable currency mix. Operating profit increased 25%, reflecting the increase in adjusted operating profit and reduced impairments on the acquired identifiable intangible assets of Learner’s Digest. Clinical Solutions (55% of divisional revenues) delivered 7% organic revenue growth (2021: 8%), slowing modestly compared to 2021. In clinical decision support, UpToDate achieved high single- digit organic growth supported by strong renewals and new customer wins. Drug information (Lexicomp, Medi-Span) delivered good organic growth in line with historical trend. Emmi, our patient engagement solution, delivered high single-digit organic revenue growth driven by strong renewals and upselling. Revenues in clinical surveillance and compliance and medical terminology solutions remained soft on an underlying basis. Health Learning, Research & Practice (45% of divisional revenues) posted 3% organic growth (2021: 6%) against a challenging comparable created by the ASCO journal publishing contract implemented in early 2021. In medical research, the Ovid platform delivered solid organic growth driven by subscription renewals. Print journal subscription revenues were stable on an organic basis, while print and digital journal advertising revenues declined. Our open access offering was expanded with the acquisition of IJS Publishing Group on September 30, 2022. In nursing education and practice, our digital products, including Lippincott CoursePoint+, delivered 6% organic growth. In early 2023, our nursing education business extended its test preparation business with the acquisition of NurseTim. Print book revenues increased 16% organically (2021: 4% increase), driven by distributor ordering patterns and lower book returns. Continuing medical education revenues declined. Our customers Hospitals, clinics, and other healthcare providers, individual clinicians and students, nursing and medical schools and libraries, retail pharmacies, payers, digital health technologies, and life sciences organizations. Top products Clinical Solutions: UpToDate, Lexicomp, Medi-Span, Emmi, Sentri7, Simplifi 797, and Health Language Health Learning, Research & Practice: Ovid, Lippincott books and journals, Lippincott digital nursing solutions, and Audio Digest Complete list of Health solutions https://www.wolterskluwer.com/en/ health/our-solutions Health continued 2022 Revenues by segment Clinical Solutions 53% Health Learning, Research & Practice 47% 2022 Revenues by geographic market North America 75% Asia Pacific & ROW 16% Europe 9% 2022 Revenues by type Recurring 90% Other non-recurring 6% Print books 4% 2022 Revenues by media format Software 3% Print 12% Digital information 85% Health – Year ended December 31 € million, unless otherwisestated 2022 2021 ∆ ∆ CC ∆ OG Revenues 1,448 1,234 +17% +5% +5% Adjusted operating profit 434 360 +20% +6% +6% Adjusted operating profitmargin 29.9% 29.2% Operating profit 376 302 +25% Net capital expenditure 42 33 Ultimo FTEs 3,116 2,913 ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. ORGANIC GROWTH 5% RECURRING 90% recurring revenues as % of division total DIGITAL 88% digital revenues as % of division total ← → Wolters Kluwer 2022 Annual Report 17 EXPERT SOLUTIONS TOOPTIMIZETAX AND ACCOUNTING PROCESSES Software delivering deep domain knowledge and workflow automation to ensure compliance, improve productivity, and strengthen client relationships. 18 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Tax & Accounting 32% of group revenues ← → CUSTOMER CASE: ALCATEL-LUCENT ENTERPRISE DEPLOYS CCH TAGETIK Alcatel-Lucent Enterprise, a leading provider of business communications solutions and services, uses the CCH Tagetik corporate performance management solution for close and consolidation, budgeting and planning as well as reporting on the cloud. CCH Tagetik streamlines financial processes, improves data reliability, and accelerates reporting. Alcatel-Lucent Enterprise now has a unified view of financial and operational data in a single, reliable source of information on the cloud, with a significant €500,000 reduction in operating costs. “With CCH Tagetik, we can set up our monthly reporting in 3 days instead of 8, and we have gained a week on the time needed to standardize all of our reports. Moreover, this solution in the cloud saves us more than 2 months in closing our annual accounts” said Bernd Stangl – Chief Financial Officer at Alcatel-Lucent Enterprise. Investment in product development and the journey to the cloud have helped drive accelerated organic growth for the division. Karen Abramson CEO Tax & Accounting MARKET TRENDS BUSINESS OVERVIEW Wolters Kluwer Tax & Accounting enables professionals in tax and accounting firms, governing authorities, and businesses of all sizes to grow, manage, and protect their business and their clients’ businesses. Our expert solutions support the digitization of workflows and enable collaboration, ultimately driving efficiencies and better results. Corporate Performance serves the corporate office of the CFO with software solutions and services to streamline finance workflows, from consolidation and close, to budgeting and forecasting, to planning, reporting, and analytics. In our Professional Tax & Accounting businesses around the world, we serve tax and accounting firms with cloud-based and on-premise software suites, research solutions, and professional services to support professional workflows, including compliance, audit, and firm management. Our customers also include government agencies and academia. Ongoing regulatory intensity and complexity Cloud-based solutions starting to mature Demand for connectivity andinteroperability Continued demand for digitization and automation ofworkflows Increased adoption of advanced technologies Emerging opportunity toleverage Web 3.0 19Wolters Kluwer 2022 Annual Report SELECTED AWARDS 2022 • CCH Axcess Validate recognized as 2022 Top New Product in the Audit tools category by Accounting Today • CCH Axcess Financial Prep named a winner in BIG Artificial Intelligence Awards 2022 20 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements REVIEW OF 2022 PERFORMANCE • Corporate Performance grew 15% organically, led by CCH Tagetik up 19%. • Professional Tax & Accounting grew 8% organically, with all main regions performing well. • Margin increase reflects operational gearing and favorable currency mix. Wolters Kluwer Tax & Accounting revenues increased 9% in constant currencies. The net effect of divestments and acquisitions was negligible. Organic revenue growth was 9%, an acceleration on the prior year (2021: 6%). Adjusted operating profit rose 11% in constant currencies, driven by operational gearing and favorable currency mix. Operating profit increased 35%, reflecting the increase in adjusted operating profit and the absence of last year’s loss on the ProSoft transaction. Corporate Performance (16% of divisional revenues) grew 15% organically (2021: 14%). CCH Tagetik, our global corporate performance management platform, grew 19% organically, driven by subscription revenues for its cloud solution and non-recurring revenues from implementation services and on-premise software sales. CCH Tagetik, Vanguard, and our U.S. Corporate Tax unit have now been fully integrated bringing greater scale to our North American position. North America Professional Tax & Accounting (52% of divisional revenues) recorded organic growth of 9% (2021: 5%) driven by both recurring and non-recurring revenue streams. CCH Axcess, our cloud-based platform for U.S. professional firms, delivered double-digit organic growth driven by renewals, new sales, and strong uptake of its Document, Practice, Workstream, and Engagement modules. The year also benefitted from a surge in demand for outsourced professional services and stronger than expected filing fees in the first half of the year. Our U.S. publishing units saw muted growth as both print books and print subscription revenues declined in the full year. TeamMate delivered steady mid- single-digit organic growth. Europe Professional Tax & Accounting (27% of divisional revenues) achieved 6% organic growth (2021: 5%) supported by robust growth in recurring cloud-based software subscriptions and software maintenance. All seven countries delivered good organic growth. The European business continues to expand its cloud and hybrid-cloud solutions. Asia Pacific and Rest of World Professional Tax & Accounting (5% of divisional revenues) revenues grew 6% organically (2021: 3%) as modest organic growth in Australia was lifted by double- digit growth in China. Our customers Accounting firms, corporate finance, tax and auditing departments, government agencies, libraries, and universities. Top products Corporate Performance: CCH Tagetik and TeamMate Professional Tax & Accounting: North America: CCH Axcess, CCH ProSystem fx, CCH Axcess Engagement, CCH Axcess Workflow, CCH AnswerConnect, and CCH Axcess Validate Europe and ROW: A3 Software, ADDISON, CCH iFirm, CCH Integrator, CCH OneClick, CCH PinPoint, Genya, and Twinfield Complete list of Tax & Accounting solutions www.wolterskluwer.com/en/tax-and- accounting/our-solutions Tax & Accounting continued Tax & Accounting – Year ended December 31 € million, unless otherwisestated 2022 2021 Δ Δ CC Δ OG Revenues 1,758 1,510 +16% +9% +9% Adjusted operating profit 513 430 +20% +11% +11% Adjusted operating profitmargin 29.2% 28.4% Operating profit 477 352 +35% Net capital expenditure 98 72 Ultimo FTEs 8,040 7,416 Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.18); Δ OG: % Organic growth. 2022 Revenues by segment Corporate Performance 16% Europe Professional Tax & Accounting 27% North America Professional Tax & Accounting 52% Asia Pacific & ROW Professional Tax & Accounting 5% 2022 Revenues by geographic market North America 56% Asia Pacific & ROW 8% Europe 36% 2022 Revenues by type Recurring 87% Other non-recurring 12% Print books 1% 2022 Revenues by media format Software 79% Print 2% Digital information 19% ORGANIC GROWTH 9% RECURRING 87% recurring revenues as % of division total SOFTWARE 79% software revenues as % of division total ← → Wolters Kluwer 2022 Annual Report 21 TECHNOLOGY-ENABLED SERVICES AND SOLUTIONS Expert services and solutions for legal entity compliance, legal operations management, banking product compliance, and banking regulatory reporting. 22 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Governance, Risk & Compliance We have an unwavering commitment to helping our clients enhance compliance and improve performance. Richard Flynn, CEO Governance, Risk & Compliance BUSINESS OVERVIEW Wolters Kluwer Governance, Risk & Compliance provides banking and legal professionals with solutions to ensure compliance with ever-changing global regulatory and legal obligations, increase efficiency, and produce better business outcomes. The division offers technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance. In Legal Services, we provide corporations, small businesses, law firms, and corporate legal departments with registered agent, business licenses and other corporate services, along with spend and matter management software and related services. In Financial Services, we support banks, non-bank lenders, credit unions, insurers, and securities firms with end-to-end lending compliance solutions, lien solutions, and global regulatory and risk reporting solutions. Increasing regulatory complexity forbanks andcorporations Rising emphasis on compliance expertise andcapabilities Accelerating digital adoption trends across banking and legal workflows Growing appetite for cloud- based, integrated solutions Ongoing imperative for operating efficiency CUSTOMER CASE: ENHANCING LEGAL OPERATIONS AT PNC PNC Financial Services Group, a long-time user of Wolters Kluwer’s TyMetrix 360˚ legal spend and matter platform, was able to achieve savings and enhanced insights for its legal operations by deploying our innovative LegalVIEW BillAnalyzer solution. This solution combines patented AI technology with legal and data experts to automate and streamline the legal invoice review process. The solution’s AI engine is trained on a data warehouse of over $155 billion in anonymized legal spend data, empowering legal experts by automatically identifying possible non- compliance with billing guidelines. The solution allowed PNC to achieve immediate savings in its legal operations, while gaining insights such as invoice cycle times and adjustments by law firm. PNC experts commented that LegalVIEW BillAnalyzer has also enabled them to “maintain clear, easy-to-read reporting to our key stakeholders to communicate program benefits, outcomes, and greatest points of success.” MARKET TRENDS 24% of group revenues 23Wolters Kluwer 2022 Annual Report ← → SELECTED AWARDS 2022 • CT Corporation UCC Hub named 2022 Legal Technology Innovation of the Year by Finance Monthly • Expere named Gold Award winner for Information Technology (Software) Innovation in the Golden Bridge Awards 24 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements REVIEW OF 2022 PERFORMANCE • Governance, Risk & Compliance grew 4% organically, supported by recurring subscriptions. • Transactional revenue was flat organically, with mixed trends. • Margin increase mainly reflects operational gearing and favorable currency mix. Governance, Risk & Compliance revenues increased 5% in constant currencies, including the effect of the acquisitions of LicenseLogix on October 29, 2021 and International Document Services (IDS) on April 8, 2022. Organic growth was 4% (2021: 6%). The adjusted operating profit margin increased by 50 basis points, driven by operational gearing and underlying savings. Operating profit rose 24%, largely reflecting the increase in adjusted operating profit and the absence of last year’s impairment of acquired intangible assets. Legal Services (56% of divisional revenues) delivered 3% organic growth against a challenging comparable in the prior year (2021: 12%). Recurring revenues sustained robust organic growth, while Legal Services transactional revenues declined 1% compared to a double-digit increase in the prior year (2021: 21%). CT Corporation recorded low single-digit organic growth, compared to double-digit organic growth the prior year. Enterprise Legal Management (ELM), which provides spend and matter management software, delivered solid organic growth driven by transactional volumes. Financial Services (44% of divisional revenues) achieved 6% organic growth (2021: decline of 1%), driven by recurring revenues up 7%. Compliance Solutions, which includes our banking compliance software, content, and lien solutions businesses, posted 6% organic growth. Our banking compliance software and content business (including Expere, eOriginal, IDS, and other solutions) performed well, with growth in recurring subscription and maintenance revenues more than offsetting the absence of PPP fees and a sharp decline in U.S. mortgage- related volumes. The lien solutions business posted 14% organic revenue growth driven by higher U.S. commercial lending volumes and continued growth in our motor vehicle title perfection solution. Finance, Risk & Reporting, which serves banks globally with regulatory reporting solutions, delivered 4% organic growth (2021: 1%), as good growth in Asia Pacific and Europe outweighted the impact of suspending business in Russia and Belarus. Our customers Corporations, small businesses, law firms, corporate legal departments, banks, non-bank lenders, credit unions, insurers, and securities firms. Top products Legal Services: CT Corporation, Passport, TyMetrix 360°, and LegalVIEW BillAnalyzer Financial Services: OneSumX, ComplianceOne, Expere, eOriginal, GainsKeeper, and Lien Solutions Complete list of Solutions www.wolterskluwer.com/en/compliance/ our-solutions www.wolterskluwer.com/en/finance /our-solutions Governance, Risk & Compliance continued Governance, Risk & Compliance – Year ended December 31 € million, unless otherwisestated 2022 2021 ∆ ∆ CC ∆ OG Revenues 1,333 1,139 +17% +5% +4% Adjusted operating profit 418 351 +19% +6% +6% Adjusted operating profitmargin 31.3% 30.8% Operating profit 374 301 +24% Net capital expenditure 101 82 Ultimo FTEs 4,982 4,736 ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. 2022 Revenues by segment Legal Services 56% Financial Services 44% 2022 Revenues by geographic market North America 89% Asia Pacific & ROW 2% Europe 9% 2022 Revenues by type Recurring 59% FS transactional 10% LS transactional 23% Other non-recurring 8% 2022 Revenues by media format Software 55% Print 0% Digital information 45% ORGANIC GROWTH 4% RECURRING 59% recurring revenues as % of division total NORTH AMERICA 89% North America revenues as % of division total ← → Wolters Kluwer 2022 Annual Report 25 LEGAL AND REGULATORY INSIGHTS AND SOLUTIONS Actionable insights and integrated workflow solutions that support decision-making and streamline compliance. 26 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Legal & Regulatory [x]% of revenue AI will create the greatest value for legal professionals when it is fully embedded in tools and processes. Martin O’Malley CEO Legal & Regulatory BUSINESS OVERVIEW Wolters Kluwer Legal & Regulatory enables legal and compliance professionals, as well as environmental, health and safety, and operational risk managers to improve productivity and performance, mitigate risk, and solve complex problems with confidence. Our legal information solutions support professionals at law firms, in corporate legal departments, and in governments with trusted information, insights, and analytics to enhance their legal research and decision-making. Our legal practice management software enables law firms and corporations to streamline their legal workflow processes, from document management to time keeping and billing. In environmental, health and safety, and operational risk management, we provide an integrated, mobile-enabled software platform for large, global corporations. This platform helps them manage risks across the enterprise, comply with regulations, drive operational performance, and streamline data collection, verification, and reporting. Increasing legal and regulatory complexity Customers increasingly adopt technology to enhanceproductivity Traditional law firms facing newcompetitors EHS/ORM tools evolving into integrated risk platforms Escalating need for ESGguidance and reportingsolutions Increasing demand for connected ecosystems CUSTOMER CASE: GNT GROUP REDUCES RISK WITHLEGISWAY GNT Group, a family-owned global market leader specialized in natural food ingredients, was able to reduce risk and organize its in-house legal activities with the help of Wolters Kluwer’s legal practice management software, Legisway. After a period of rapid growth, the pioneering company decided to appoint its first in-house legal counsel who quickly implemented Legisway in order to organize legal contracts and other important documents and better manage legal processes. “Legisway has helped us formalize contracts, create NDAs, and keep track of our obligations, effectively reducing our risk,” said Koen van Holten, General Counsel of GNT Group. Legisway combines legal and software expertise to empower legal professionals to boost efficiency, increase collaboration, and enable business growth. MARKET TRENDS 17% of group revenues 27Wolters Kluwer 2022 Annual Report ← → SELECTED AWARDS 2022 • Enablon Vision platform wins Environment + Energy Leader Product of the Year award • Kluwer Arbitration wins CODiE Award for Best Legal Solution 28 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements REVIEW OF 2022 PERFORMANCE • Legal & Regulatory grew 5% organically, led by EHS/ORM & Legal Software up 16% organically. • Information Solutions recorded 3% organic growth, with digital revenues up 6% organically. • Margin decline mainly reflects the impact of one-time items related to pension. Legal & Regulatory revenues increased 1% in constant currencies, reflecting the disposal of our U.S. legal education business on December 1, 2021, and the initial impact of the sale of our French and Spanish publishing assets on November 30, 2022. On an organic basis, revenues grew 5% (2021: 3%) and adjusted operating profit increased 13%, as the impact of one-time pension-related items was more than offset by operational leverage and underlying cost savings. Operating profit increased 49%, reflecting a €79 million net disposal gain on the 2022 divestment. EHS/ORM & Legal Software (21% of divisional revenues), grew 16% organically (2021: 8%). Enablon, which provides an integrated environmental, health and safety, and operational risk management platform for corporations, sustained double-digit organic growth in cloud- based recurring revenues alongside an increase in non-recurring software license and implementation fees. Our Legal Software solutions, mainly Kleos and Legisway, also delivered double- digit organic growth driven by strong performance in Germany and France. The Legal Software activities were expanded with the acquisitions of Level Programs on June 28, 2022 and Della AI on December 30, 2022. Legal & Regulatory Information Solutions (79% of divisional revenues) delivered 3% organic growth (2021: 2%). Due to the disposals mentioned above, total revenues declined 3% in constant currencies. Organic growth was driven by 6% organic growth in digital product revenues, now over 75% of the unit’s revenues. Print revenues, 22% of the unit’s revenue, declined 8% organically. Our customers Legal and compliance professionals in law firms, corporations, universities, and government agencies, EHS/ORM, and ESG professionals in corporations. Top products EHS/ORM: Enablon Legal Software: Kleos and Legisway Legal & Regulatory Information Solutions: VitalLaw, RBSource, LEX, ONE, Navigator, Schulinck, Jura, Legal Intelligence, and Jogtár Complete list of Legal & Regulatory solutions www.wolterskluwer.com/en-gb/legal/ our-solutions Legal & Regulatory continued Legal & Regulatory – Year ended December 31 € million, unless otherwisestated 2022 2021 ∆ ∆ CC ∆ OG Revenues 914 888 +3% +1% +5% Adjusted operating profit 123 121 +1% 0% +13% Adjusted operating profitmargin 13.4% 13.6% Operating profit 170 114 +49% Net capital expenditure 54 52 Ultimo FTEs 3,786 4,262 ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. 2022 Revenues by segment EHS/ORM & Legal Software 21% Legal & Regulatory Information Solutions 79% 2022 Revenues by geographic market North America 25% Asia Pacific & ROW 2% Europe 73% 2022 Revenues by type Recurring 84% Other non-recurring 11% Print books 5% 2022 Revenues by media format Software 24% Print 17% Digital information 59% ORGANIC GROWTH 5% RECURRING 84% recurring revenues as % of division total DIGITAL 83% digital revenues as % of division total ← → Wolters Kluwer 2022 Annual Report 29 More than 100% of adjusted free cash flow was returned to shareholders by way of dividends and share buybacks. Kevin Entricken CFO and member of the Executive Board 30 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements This group financial review provides a summary of our 2022 results in IFRS alongside a discussion of adjusted figures which give insight into our underlying performance excluding the effects of currency and one-time disposal gains. REVENUES Group revenues were €5,453 million, up 14% overall, benefitting from a stronger U.S. dollar for most of the year. Excluding the effect of exchange rate movements, revenues increased 5% in constant currencies. The effect of divestments (almost entirely in Legal & Regulatory) outweighed the effect of acquisitions. Organic revenue growth was 6% (2021: 6%). Revenues from North America, 64% of total group revenues, grew 6% organically (2021: 7%). Revenues from Europe, 29% of total revenues, also grew 6% organically (2021: 4%). Revenues from Asia Pacific and Rest of World, 7% of total revenues, grew 10% organically (2021: 3%). Total recurring revenues, which include subscriptions and other renewing revenue streams, accounted for 80% of total revenues in 2022 (2021: 80%) and grew 7% organically (2021: 6%). Digital and services subscriptions grew 8% organically (2021: 7%) while print subscriptions declined 4% organically (2021: 10% decline). Among non-recurring revenue streams, Legal Services (LS) transactional revenues declined 1% on an organic basis (2021: 21% organic growth) while Financial Services (FS) transactional revenues increased 2% (2021: 11% decline). Print books posted 1% organic decline (2021: 1% organic growth) with mixed trends by division. Other non-recurring revenues, which comprise on-premise software license fees, software-related services, professional services, and other non-recurring revenues, increased 7% organically (2021: 4% growth), mainly driven by on-premise licenses and professional services fees. Group financial review HIGHLIGHTS • Revenues up 5% in constant currencies and up 6% organically • Recurring revenues up 7% organically (80% of total revenues); non- recurring up 3% organically • Digital & services revenues up 7% organically (93% of total revenues) • Expert solutions revenues up 9% organically (56% of total revenues) • Operating profit up 32%, including favorable currency impact • Adjusted operating profit up 7% in constant currencies • Adjusted operating profit margin up 80 basis points to 26.1% • Margin benefitted from operational gearing and favorable currency mix • Profit for the year up 41%, reflecting higher operating profit and lower effective tax rate • Diluted adjusted EPS €4.14, up 8% in constant currencies • Adjusted free cash flow €1,220 million, up 7% in constant currencies • Balance sheet remains strong: net- debt-to-EBITDA 1.3x • ROIC improved to 15.5% Key figures € million, unless otherwise stated 2022 2021 ∆ ∆ CC ∆ OG Revenues 5,453 4,771 +14% Operating profit 1,333 1,012 +32% Profit for the year 1,027 728 +41% Diluted EPS (€) 4.01 2.78 +44% Net cash from operating activities 1,582 1,292 +22% Business performance – benchmark figures Revenues 5,453 4,771 +14% +5% +6% Adjusted operating profit 1,424 1,205 +18% +7% +8% Adjusted operating profit margin 26.1% 25.3% Adjusted net profit 1,059 885 +20% +6% Diluted adjusted EPS (€) 4.14 3.38 +22% +8% Adjusted free cash flow 1,220 1,010 +21% +7% Return on invested capital (ROIC) 15.5% 13.7% Net debt 2,253 2,131 +6% ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. Benchmark figures are performance measures used by management. SeeNote 4 – Benchmark Figures fora reconciliation from IFRS to benchmark figures. € million % Revenues 2021 4,771 Organic change 292 6 Acquisitions 15 0 Divestments (44) (1) Currency impact 419 9 Revenues 2022 5,453 14 Wolters Kluwer 2022 Annual Report 31 ← → OPERATING PROFIT Adjusted operating profit was €1,424 million (2021: €1,205 million), up 7% in constant currencies. The related margin increased 80 basis points to 26.1% (2021: 25.3%), reflecting a favorable currency mix (40 basis points), operational gearing, and the ongoing gradual shift in business mix. These factors more than offset an increase in operating costs, including higher product development expenses. Total product development spending, including capitalized expenditures, increased to 11% of total revenues (2021: 10%). Restructuring expenses, which are included in adjusted operating profit, were in line with the prior year €6 million (2021: €6 million). Operating profit increased 32% to €1,333 million (2021: €1,012 million), reflecting the increase in adjusted operating profit and a €75 million net disposal gain on the divestments during the year (most notably the sale of our French and Spanish publishing assets), partly offset by a €20 million impairment of certain Health assets. 32 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Revenues by type € million, unless otherwise stated 2022 2021 ∆ ∆ CC ∆ OG Digital and service subscription 3,950 3,397 +16% +7% +8% Print subscription 157 157 0% -4% -4% Other recurring 281 256 +10% -1% +2% Total recurring revenues 4,388 3,810 +15% +6% +7% Print books 129 146 -12% -17% -1% LS transactional 299 266 +13% 0% -1% FS transactional 134 109 +23% +9% +2% Other non-recurring 503 440 +14% +8% +7% Total non-recurring revenues 1,065 961 +11% +2% +3% Total revenues 5,453 4,771 +14% +5% +6% ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. LS = Legal Services; FS = Financial Services. Other non-recurring revenues include software licenses, software implementation fees, professional services, and other non-subscription offerings. DIVISIONAL PERFORMANCE All four divisions delivered robust organic growth and good adjusted operating profit margins. Divisional summary € million, unless otherwise stated 2022 2021 ∆ ∆ CC ∆ OG Revenues Health 1,448 1,234 +17% +5% +5% Tax & Accounting 1,758 1,510 +16% +9% +9% Governance, Risk & Compliance 1,333 1,139 +17% +5% +4% Legal & Regulatory 914 888 +3% +1% +5% Total revenues 5,453 4,771 +14% +5% +6% Adjusted operating profit Health 434 360 +20% +6% +6% Tax & Accounting 513 430 +20% +11% +11% Governance, Risk & Compliance 418 351 +19% +6% +6% Legal & Regulatory 123 121 +1% 0% +13% Corporate (64) (57) +13% +10% +10% Total adjusted operating profit 1,424 1,205 +18% +7% +8% Adjusted operating profit margin Health 29.9% 29.2% Tax & Accounting 29.2% 28.4% Governance, Risk & Compliance 31.3% 30.8% Legal & Regulatory 13.4% 13.6% Total adjusted operating profit margin 26.1% 25.3% ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. Group financial review continued ← → Wolters Kluwer 2022 Annual Report 33 CORPORATE EXPENSES Net corporate expenses increased 10% in constant currencies and 10% on an organic basis, due to increased personnel costs and increased spending on third-party services relating to various projects. Corporate € million, unless otherwise stated 2022 2021 ∆ ∆ CC ∆ OG Adjusted operating profit (64) (57) +13% +10% +10% Operating profit (64) (57) +13% Net capital expenditure 0 0 Ultimo FTEs 132 127 ∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.18); ∆ OG: % Organic growth. FINANCIAL POSITION Balance sheet Non-current assets, mainly consisting of goodwill and acquired identifiable intangible assets, increased by €243 million to €6,533 million in 2022, 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 impairment recognized during the year. Total equity decreased by €107 million to €2,310 million, mainly due to the effects of share buybacks and dividend payments, partly offset by the comprehensive income achieved for the year. During the year, we repurchased 10.1 million shares for a total consideration of €1 billion, including 0.7 million shares to offset incentive share issuance (2021: 0.7 million). In August 2022, we canceled 5.0 million of the shares held in treasury (2021: 5.0 million shares canceled). As of December 31, 2022, we held 8.8 million shares in treasury. The total weighted- average number of shares was 254.7 million in 2022 (2021: 260.4 million). Balance sheet € million, unless otherwise stated 2022 2021 Variance Non-current assets 6,533 6,290 243 Working capital (892) (318) (574) Total equity 2,310 2,417 (107) Net debt 2,253 2,131 122 Net-debt-to-EBITDA ratio 1.3 1.4 (0.1) Net debt, leverage, and liquidity position Net debt at December 31, 2022, was €2,253 million, compared to €2,131 million on December 31, 2021. The net-debt-to-EBITDA ratio was 1.3 (2021: 1.4). In September 2022, we issued a new €500 million Eurobond with a four-year term and a 3.0% annual coupon. Effective July 2022, we agreed to the final one-year extension of our €600 million multi-currency credit facility, such that the facility will now mature in 2025. The facility is ESG-linked, with pricing tied to four key ESG performance indicators. The facility is currently fully undrawn. Our liquidity position remained strong with net cash available of €1,330 million as of December 31, 2022. 34 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Working capital Operating working capital amounted to €(1,331) million, compared to €(1,121) million in 2021, a decrease of €210 million. This decrease is largely due to the autonomous movements in working capital. Non-operating working capital and assets/ liabilities classified as held for sale decreased to €(907) million, compared to €(198) million in 2021, mainly due to the short-term classification of bonds totaling €700 million. OTHER DEVELOPMENTS Financing results Total financing results decreased to a net cost of €57 million (2021: €84 million cost), mainly due to higher interest rates on cash and cash equivalents. Included in total financing results was a €5 million net foreign exchange loss (2021: €15 million net foreign exchange loss) mainly related to the translation of intercompany balances. Adjusted net financing costs decreased to €56 million (2021: €78 million). Taxation Profit before tax increased 37% to €1,276 million (2021: €929 million). The effective tax rate decreased to 19.5% (2021: 21.6%). The 2022 gain on divestment was not taxable while the prior period included a taxable disposal gain and a disposal- related loss which was not tax-deductible. Adjusted profit before tax was €1,368 million (2021: €1,128 million), up 21% overall and up 8% in constant currencies. The benchmark tax rate on adjusted profit before tax increased to 22.6% (2021: 21.5%) due to newly introduced restrictions on tax deductibility of finance costs in the Netherlands, while 2021 included a one- time benefit following the closure of tax audits. Earnings per share Total profit for the year increased 41% to €1,027 million (2021: €728 million) and diluted earnings per share increased 44% to €4.01 (2021: €2.78). Adjusted net profit was €1,059 million (FY 2021: €885 million), an increase of 20% overall and 6% in constant currencies. Diluted adjusted EPS was €4.14 (2021: €3.38), up 8% in constant currencies, reflecting the increase in adjusted net profit and a 2% reduction in the diluted weighted-average number of shares outstanding to 255.8 million (2021: 261.8 million). Return on invested capital (ROIC) In 2022, the ROIC was 15.5% (2021: 13.7%), mainly due to a higher adjusted operating profit, partly offset by a higher benchmark tax rate. Group financial review continued Working capital € million 2022 2021 Variance Inventories 79 65 14 Current contract assets 153 138 15 Trade receivables 1,088 1,008 80 Current operating other receivables 244 366 (122) Current deferred income (1,858) (1,709) (149) Other contract liabilities (88) (80) (8) Trade and other operating payables (949) (909) (40) Operating working capital (1,331) (1,121) (210) Cash and cash equivalents 1,346 1,001 345 Assets/liabilities classified as held for sale – 27 (27) Non-operating working capital (907) (225) (682) Total (892) (318) (574) ← → Wolters Kluwer 2022 Annual Report 35 Net cash inflow before the effect of exchange differences was €292 million (2021: net cash inflow of €554 million), due to net cash from operating activities outweighing net cash used in financing activities and investing activities. Adjusted operating cash flow was €1,528 million (2021: €1,348 million), up 2% in constant currencies. The cash conversion ratio decreased to 107% (2021: 112%) due to higher net capital expenditure compared to the prior year. Net capital expenditures were €295 million (2021: €239 million), an increase of 16% in constant currencies. Net capital expenditures remained within our guided range at 5.4% of group revenues (2021: 5.0%). Cash payments related to leases, including lease interest paid, increased to €81 million (2021: €77 million), but decreased in constant currencies. Net interest paid, excluding lease interest paid, was €45 million, lower than in the prior period (2021: €57 million). Corporate income tax paid increased to €289 million (2021: €277 million), reflecting higher income before tax and the newly introduced U.S. tax rules on the capitalization of research & development expenses. Net cash outflows related to restructuring were €12 million, lower than in the prior year (2021: outflow of €33 million). Consequently, adjusted free cash flow was €1,220 million (2021: €1,010 million), up 7% in constant currencies. Dividends paid to shareholders amounted to €424 million (2021: €373 million), including the 2021 final dividend and the 2022 interim dividend. Cash spent on share buybacks was €1 billion (2021: €410 million). As such, more than 100% of adjusted free cash flow was returned to shareholders. Acquisitions and divestments Total acquisition spending, net of cash acquired and including transaction costs, was €95 million (2021: €113 million), primarily relating to the acquisition of IDS on April 8, 2022, by the Governance Risk & Compliance division. Total divestment proceeds amounted to €103 million, net of cash divested and divestment-related costs, primarily relating to the divestment of our French and Spanish publishing assets in the Legal & Regulatory division. 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 2.5 remains appropriate for our business given the high proportion of recurring revenues and resilient cash flow. Cash flow € million, unless otherwise stated 2022 2021 Variance Net cash from operating activities 1,582 1,292 290 Net cash used in investing activities (299) (287) (12) Net cash used in financing activities (991) (451) (540) Adjusted operating cash flow 1,528 1,348 180 Net capital expenditure (295) (239) (56) Adjusted free cash flow 1,220 1,010 210 Diluted adjusted free cash flow per share (€) 4.77 3.87 0.90 Cash conversion ratio (%) 107 112 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, and contribute to a safe and just society. 36 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability SECTION OVERVIEW SUSTAINABILITY → Our approach to sustainability page 37 → Sustainability strategy page 38 → 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 47 → Ethics, compliance, and governance page 49 → Responsible artificial intelligence page50 → Environmental responsibility page 51 → Social responsibility page 56 → Task Force on Climate-related Financial Disclosures (TCFD) page 59 → Non-financial information statement page 60 → EU Taxonomy regulation disclosure page61 SUSTAINABILITY RATINGS ← → Wolters Kluwer 2022 Annual Report 37 In this chapter, we describe our approach and performance with regard to key environmental, social, and governance (ESG) matters. OUR APPROACH TO SUSTAINABILITY We have an ongoing commitment to cultivate 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 is fundamental to how we do business and how we respect and create value for our stakeholders. It has been ingrained in our processes, policies, values, and company culture for many years. Advancing our ESG performance and capabilities is a key element of our corporate strategy, Elevate Our Value. We focus on the areas that are the most material to our stakeholders and our business. We have goals for all material ESG topics and have embedded specific ESG targets into executive remuneration and into our sustainability-linked credit facility. 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. 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). Our ESG data reporting We aim to be clear and transparent in our reporting. This annual report includes information and data on material ESG topics. We have consolidated all our ESG disclosures into this document and no longer publish a separate ESG Data Overview. We have reviewed the new EU Corporate Sustainability Reporting Directive (CSRD), which will become applicable as of financial year 2024. In this annual report, we have expanded our ESG disclosures in an effort to start aligning with the CSRD. In 2023, we will further enhance our reporting manuals and design of controls for the collection, processing, review, and validation of ESG data, which will result in improved data quality in the future. For some datapoints, we used third parties to administer surveys or conduct assessments. For scope 1, 2, and 3 GHG emissions, we used a third party to assist us in applying a consistent methodology that is aligned with current best practices and recommendations of emerging climate reporting standards. Our scope 1 and 2 emissions and water consumption data are reported with a one-year lag to ensure a higher data coverage ratio. In 2023, we will continue to assess the impact of CSRD on our organization, with focus on scope 3.1 emissions, as these contribute to the largest share of our GHG emissions and the underlying calculations are mostly based on industry average emission factors. We will engage with our suppliers to obtain more specific emission data. Given the status of our internal controls for ESG data and the judgments and estimates involved in providing this data, the level of accuracy and completeness of this data is less than that of our financial information. Judgments and estimates involved are described below each table throughout this chapter. Our ESG data reporting has been prepared with reference to the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) frameworks. Our 2022 GRI, SASB, and UN Global Compact disclosures are available at www.wolterskluwer.com/en/investors/ financials/annual-reports ← → 38 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements SUSTAINABILITY STRATEGY Our ENGAGE strategy encourages us to focus on six sustainability pillars, including four of the most material topics as identified by stakeholders. Each of the pillars includes a range of initiatives to drive improvement. During 2022, progress was made across all pillars, as described in more detail in this chapter. MATERIALITY We undertake periodic materiality assessments to identify economic, environmental, social, and governance matters 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 matters 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 were validated against the company’s corporate risk assessment. The topics identified as most material are shown in the upper right corner of the matrix diagram. This report focuses on the topics deemed 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. Sustainability continued Importance to stakeholders Impact on business outcome 2 418 1 Low Medium High 17 12 20 3 11 9 19 14 13 23 24 21 7 6 10 22 15 25 5 8 16 Level of materiality: High Medium Low MATERIALITY MATRIX Environmental topics 1 Circular economy 2 Climate resilience 3 Carbon footprint 4 Waste and water management Social topics 5 Employee engagement and talent management 6 Employee compensation 7 Employee health, safety, and well-being 8 Diversity, equity, inclusion, and belonging 9 Labor practices 10 Training and professional development 11 Community involvement 12 Employee volunteering 13 Responsible supply chain management Governance topics 14 Board diversity 15 Cybersecurity and data privacy 16 Ethics, compliance, and governance 17 Executive compensation 18 Public policy 19 Responsible Artificial Intelligence (AI) 20 Tax responsibility Product topics 21 Products design and lifecycle management 22 Customer focus and relationships 23 Editorial quality and integrity 24 IP and copyright protection 25 Product impact and innovation ← → Wolters Kluwer 2022 Annual Report 39 MATERIALITY CONTINUED 2022 review In 2022, we reviewed the 2020 materiality assessment and concluded that this assessment remained valid. The materiality matrix, shown below, highlights the importance of social and governance topics for our business. As a provider of digital information, software, and services, our business is mainly driven by the needs of our customers, progress within industries we serve, and the innovative output of our talented, engaged, and diverse workforce. Since the environmental impact of our industry is relatively low, environmental matters are not viewed as very material by our stakeholders. Nonetheless, we are committed to playing our part in reducing greenhouse gas emissions. The section Environmental Responsibility sets out our objectives and achievements to date. In 2023, we will conduct a new, double materiality assessment that considers both impact materiality and financial materiality. Impact materiality assesses the impact of the company and its value chain on people and/or the environment. Financial materiality assesses the financial risks of sustainability matters for the company. 40 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continued CUSTOMER FOCUS AND RELATIONSHIPS PRODUCT IMPACT AND INNOVATION Why is this topic important? The topic 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 customer 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 2022, renewal rates for our largest subscription-based expert solutions, subscription- based digital information products, and subscription-based services were maintained at high levels (above 90%) and the NPS scores for more than half of our top products were maintained or improved. Why is this topic important? Product impact and innovation are critical to organic growth and to our future as an expert solutions company. Over the years, we have consistently prioritized investment in developing new and enhanced products. Under our current strategic plan, we are redeploying approximately 10% of our annual revenues into product development and innovation. Our approach Our central product development team, the Digital eXperience Group (DXG), works closely with our business units and our customers to drive innovation. DXG uses a customer-centric process and is able to leverage its centers of excellence in user experience design, artificial intelligence, and advanced platform services. We foster idea generation through our annual Global Innovation Awards (GIA), which rewards teams who develop innovative solutions that improve customer outcomes and experiences or transform our own internal processes. Each year, hundreds of employees participate in the challenge, putting their creativity to work in collaboration with colleagues. We also organize an annual software coding competition (Code Games) for our developers around the world. We measure innovation by tracking our product development spending by business unit and we monitor progress against product roadmaps. We track submissions and winners of our employee innovation competitions. We monitor our performance in innovation-oriented industry awards and rankings, such as the Best in KLAS Awards and the Stevie Awards. 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 Analysis 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 and by supporting the decision-making of professionals. Below we highlight the positive societal benefits of a selection of our products. Product Customer benefit Societal benefit Ovid • Enables high-precision search of medical literature • Delivers time savings and accuracy for clinical researchers • Benefits global health by advancing medical knowledge and the discovery of new drugs and treatments • Ovid’s diversity, equity, and inclusion collection helps drive health equity CCH Axcess • Automates and drives efficiencies in tax, audit, and accounting workflows • Facilitates compliance with latest regulations • Contributes to innovation by leveraging advanced technologies, such as blockchain • Supports compliance and transparency Wiz • Helps U.S. lenders manage risk and meet obligations under the Community Reinvestment Act, Equal Credit Opportunity Act, Fair Housing Act, and Home Mortgage Disclosure Act • Advances inclusive credit access by facilitating lender compliance with Community Reinvestment Act, Equal Credit Opportunity Act, and other laws • Proactively identifies risks associated with addressing credit and community development needs InView • Streamlines legal and regulatory research, analysis, and workflow • Improves legal decision-making • Supports transparency and justice • Supports knowledge of, and compliance with, Dutch laws and regulations ← → Wolters Kluwer 2022 Annual Report 41 PRODUCT IMPACT AND INNOVATION CONTINUED In 2022, product development spending increased to 11% of total revenues and we continue to expect it to average approximately 10% over the course of the current strategic plan. The Global Innovation Awards attracted 453 entries, marking a recovery from the prior two years which were affected by the pandemic. Participation was encouraged by a simplified submission process. For the finals, 13 product and process innovation concepts were selected and, of these, five ideas were selected as winners and provided with funding. The 2022 Code Games (CG) saw over 1,100 employees take part to solve a complex coding challenge. Product impact and innovation 2022 2021 2020 Product development spending, % of revenues 11% 10% 9% Global Innovation Awards, number of submissions 453 154 219 Global Innovation Awards, number of finalists 13 16 17 Global Innovation Awards, number of winners 5 6 6 Among the many ideas that were celebrated as part of the GIA and CG processes and were ultimately launched into the market or deployed internally are: Ovid Synthesis (an evidence-based practice workflow solution for clinical research); CCH Axcess (a cloud-based platform for tax, audit and accounting professionals); and Beyond the Score (an internal voice of the customer program). 42 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continuedSustainability continued EMPLOYEE ENGAGEMENT AND TALENTMANAGEMENT Why is this topic important? Our employees are instrumental to the success of our company. Attracting, motivating, developing, and retaining a diverse and high-performing workforce is essential to delivering our strategy. Cultivating an environment in which employees are engaged is critical to driving business results. Our approach We measure our talent management performance by monitoring key metrics such as employee engagement, turnover, internal movement and promotions, participation in performance reviews, and training. Employee engagement Since 2014, we have conducted annual global surveys to measure employee engagement, with the key objective to identify areas of strength and opportunity so that we can make Wolters Kluwer an even better place to work. In 2022, this survey measured both engagement and belonging. See the section Diversity, Equity, Inclusion, and Belonging for a more in-depth discussion on belonging. The results of our 2022 survey showed a 1-point increase in our engagement score compared to 2021. Through the survey, our employees told us that they are treated with dignity and respect, their opinions count, they can be themselves at work, and their managers care about them. The survey also indicated that we continue our efforts to support employee career development and our efforts to connect our employees to our strategy and value we create to society. Talent management We have a comprehensive global talent management program, which includes sourcing, hiring and retaining talent, succession planning, training and career development, regular performance feedback, and an annual performance review process. Despite economic uncertainty, a global shortage of talent remained throughout 2022 which led to a rise in voluntary turnover for our sector. Our voluntary turnover rate remained below the 2022 Gartner Technology Industry Benchmark, in part due to actions we took in 2022. For example, we redesigned our global exit survey to give us better insights for how to increase employee retention. We continue to enhance our succession planning process, which has resulted in an improvement in the readiness and availability of our talent to fill internal job openings. Our learning management system supports company-wide training and development with easy online access to both mandatory and optional training courses. During 2022, the proportion of employees taking advantage of optional learning increased to 83%. We continued our global employee development campaign #Grow, which is designed to incorporate growth and development into daily work life. In addition, we launched a pilot of a global mentoring program in 2022 which we are planning to expand in 2023. We expanded resources for managers, including additional curricula that support managers to coach and develop their teams, reinforce an inclusive work environment, and prepare staff for a safe return to our offices. At our annual Leadership Summit, held in June 2022, our executives engaged on strategy, shared ideas, and networked with colleagues. ← → Wolters Kluwer 2022 Annual Report 43 EMPLOYEE ENGAGEMENT AND TALENTMANAGEMENT CONTINUED Employee engagement and talent management 2022 2021 2020 Employee engagement¹ Employee engagement score 77 76 – Employee engagement relative to global benchmark In line – – Turnover % of total turnover² 15.0% 15.0% 11.2% of which % of voluntary turnover³ 12.5% 11.9% 7.1% % of non-voluntary turnover 2.5% 3.1% 4.1% Performance review % of employees participated in performance and career development reviews 99.1% 98.8% 99.4% of which % of executives⁴ 99.7% 99.7% 99.2% % of managers⁵ 99.4% 99.7% 99.9% % of other employees 99.1% 98.7% 99.3% Optional training⁶ % of employees that accessed optional learning 83% 71% 55% Average number of optional learning hours per employee 2 – – Employees per region, % of total employees⁷ The Netherlands 5.6% 5.6% 5.8% Europe (excluding the Netherlands) 33.0% 36.1% 36.0% U.S. and Canada 42.8% 42.2% 42.1% Asia Pacific 18.2% 15.6% 14.6% Rest of the World 0.4% 0.5% 1.5% 1 In 2021, we transitioned our employee surveys to Glint. The Glint employee engagement score is based on surveys administrated to all employees in 2022 and 2021. The 2022 score is compared to the Glint global benchmark. It is our ambition to reach the Glint top 25% benchmark in coming years. Due to the change in survey provider and methodology, comparison with the 2020 engagement score is not meaningful. 2 Turnover percentages exclude employees of divested operations. 3 Retirees are reported under voluntary turnover. 4 Executives refer to approximately 300 employees that are in the executives career band, meaning that they have a job category role with managerial responsibilities. In this context, executives exclude the Executive Board. 5 In this context, managers are defined as employees with at least one direct report, excluding the Executive Board and the executives. 6 Optional learning is offered through a digital learning management system that is integrated into our global human resources platform. 7 Employees per region percentages are based on the headcount at December 31. Employee health, safety, and well-being The health, safety, and well-being of our employees is of utmost importance at Wolters Kluwer. Supporting the well-being of our colleagues benefits them as individuals, and also benefits the company as a whole and the communities in which we live and work. Our global well-being program (Together We Thrive) includes a robust set of resources, programs, and content for all employees. Its goal is to help employees achieve their personal best, emotionally, physically, socially, and financially. 44 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continued DIVERSITY, EQUITY, INCLUSION, ANDBELONGING Why is this topic important? A diverse workforce drives innovation, better decisions, and strong performance, which creates value for all our stakeholders. An inclusive culture ensures all employees are heard and respected for their contributions and helps maintain a rewarding work environment that encourages individual and business success. Our approach We aim to provide a welcoming environment and equitable opportunities for all employees, regardless of demographic characteristics such as background, nationality, race, ethnicity, gender, gender identity, age, sexual orientation, marital status, disability, religion, or other demographic characteristics. This principle is ingrained in our company values and articulated in our Code of Business Ethics. Under the leadership of our Vice President of Diversity, Equity, and Inclusion, we aspire to create an inclusive environment that values authenticity and fairness and respects diversity in all its forms. EMPLOYEE ENGAGEMENT AND TALENTMANAGEMENT CONTINUED A few key features of the Together We Thrive program include: • A global Employee Assistance Program, available to all employees and their household members, providing 24/7 on demand access, free counseling with licensed clinicians, and assistance with personal financial and legal matters; • A clinically validated mindfulness and resilience application to help employees develop strategies to manage and navigate stress, burnout, and other personal challenges; and • Flexible work arrangements, including flexible work hours and the option to work outside the office, to help employees balance their professional and personal commitments. In addition to our well-being program, we offer robust benefits that include competitive health, welfare, and lifestyle options that reflect the practices in the various countries where we have employees. We provide various types of leave programs to ensure employees can care for themselves and those close to them. For example, we offer family planning benefits in various markets including programs such as gender- inclusive parental leave policies, adoption assistance, insurance coverage for fertility services, and support for childcare services. In 2022, we also made changes to our health and well-being benefits in various markets in order to be responsive to the needs of our LGBTQIA+ employees. Work-life balance indications¹ 2022 2021 2020 % of U.S. employees entitled to take family-related leaves 100% – – % of U.S. employees that took family-related leaves 8% – – 1 All U.S. employees are eligible for certain family-related leave programs from their date of hire, with additional leave options available after a full-year of service. Family leave programs reported include maternity leave, parental leave (including paternity leave), caregiver leave (special leave and sick time to care for family), and bereavement leave. ← → DIVERSITY, EQUITY, INCLUSION, ANDBELONGING CONTINUED We measure the impact of our diversity, equity, inclusion, and belonging (DEIB) efforts through a range of metrics in compliance with local laws and regulations. Globally, we assess our performance with an employee belonging score derived from our annual all-employee survey. Belonging is defined as the extent to which employees believe they can bring their authentic selves to work and be accepted for who they are. A target for belonging was included in the 2022 remuneration for the Executive Board and senior management and a new target for belonging will be included in 2023. For more information, see Remuneration Report. Our 2022 survey results show a 1-point increase in the belonging score to 73, which remains broadly in line with the average for global companies. Some of our key initiatives in 2022 included launching a global, twelve-month Inclusive Leadership program for employees; planning for a pilot of global inclusion networks, starting with our female and LGBTQIA+ employees, launching in 2023; and increasing our efforts to source diverse candidates for hiring. We aim to have a workforce that reflects the diversity of our customers and the communities in which we live and work. We have a target to have at least 33% male or female representation on our Supervisory and Executive Boards, which we currently meet. In 2022, we have also set a target to increase the female representation in our executives career band (executives) by 2% by 2028 from a 2022 baseline. In the coming years, we will work towards achieving this target through equitable and inclusive employee practices and experiences that improve female representation in hiring, promotions, and talent retention. See Corporate Governance for more information. We track aggregate candidate diversity slate for all U.S.-based roles, setting specific slate goals to advance gender, race, and ethnic diversity. We aspire to year-over-year improvement and are committed to executing on actions to maintain our positions of strength while improving where we have opportunity. We comply with gender pay reporting where required by local laws and regulations. We also complete an annual, systematic base pay study (including, but not limited, to gender) for our employees in North America, and based on the findings we make any required corrections. We are developing a plan to expand this work beyond North America in accordance with all applicable laws and regulations. CASE STUDY: INCLUSIVE LEADERSHIP TRAINING FOR PEOPLE MANAGERS We strongly believe in the importance of inclusion and are committed to taking action to improve it. In 2022, we launched Inclusive Leadership training for all people managers and employees globally. This three-part, year-long interactive learning journey is designed to drive behavior change within everyday team interactions and our global culture. The first part of the program is focused on key inclusive behaviors, the second on reducing bias in decision making, and the final encourages allyship to reduce inequities within the workplace. We had very high participation in completing the first part and will continue to prioritize participation and behavior change for the second two segments launching in 2023. 45Wolters Kluwer 2022 Annual Report 46 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continued DIVERSITY, EQUITY, INCLUSION, ANDBELONGING CONTINUED Diversity, equity, inclusion, and belonging 2022 2021 2020 Belonging¹ Belonging score 73 72 – Supervisory Board by gender Number of female board members 4 3 3 Number of male board members 3 4 4 Executive Board by gender Number of female board members 1 1 1 Number of male board members 1 1 1 Executives by gender² Number of female executives 91 93 81 Number of male executives 205 212 199 Number of executives not declared and/or not reported 1 1 1 Gender ratio, % female Supervisory Board 57% 43% 43% Total workforce³ 46% 46% 46% Of which: Executive Board 50% 50% 50% Executives² 31% 30% 29% Managers⁴ 39% 39% 39% Other employees⁵ 47% 47% 48% Compensation indicators CEO pay ratio: compensation of the highest paid individual divided by average employee remuneration⁶ 77 87 79 Race/ethnicity ratio, % of U.S. employees⁷ Asian 12.3% 12.3% – Black or African American 7.6% 6.8% – Hispanic or Latino 6.2% 5.9% – White 68.7% 70.0% – Other race or ethnicity⁸ 1.9% 1.6% – Unknown or not provided 3.3% 3.4% – Persons with disabilities⁹ U.S. employees with disabilities, % of U.S. employees 1.8% – – 1 Belonging score is based on a survey by an independent market-leading survey partner and measured since 2021. 2 Executives include employees that are in the executives career band, meaning that they have a job category role with managerial responsibilities. In this context, executives exclude the Executive Board. 3 The % female is calculated as the number of female employees divided by the number of total employees, based on headcount per December 31. 4 In this context, managers are defined as employees having three or more direct reports, excluding the Executive Board and the executives. For all three years, 1% of managers have not declared or not reported their gender. 5 For all three years, 1% of other employees have not declared or not reported their gender. 99% of our active employees completed cybersecurity and data privacy training ← → Wolters Kluwer 2022 Annual Report 47 DIVERSITY, EQUITY, INCLUSION, ANDBELONGING CONTINUED CYBERSECURITY AND DATA PRIVACY 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 the personal and professional information of our employees, customers, and partners. 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 our organization, products, and customers. The cybersecurity program has a three-tiered management structure. The program is overseen by our Security Council which is comprised of senior leadership from divisions and functional areas. Our Chief Information Security Officer is responsible for managing and monitoring of the overall program. Lastly, our Technology Council implements initiatives, together with dedicated taskforce groups, to drive global alignment of the program’s objectives. 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, allowing us to measure our performance each year with a cybersecurity maturity score. Since 2020, the cybersecurity maturity score has been based on the National Institute of Standards and Technology, Cybersecurity Framework (NIST-CSF). This framework expanded our existing maturity-based model into a risk- based model. A target for our cybersecurity maturity score was included in Executive Board and senior management remuneration in 2021 and 2022 and will again be included in 2023. In 2022, the cybersecurity maturity score increased 7.4% compared to 2021, exceeding the target. Over the two-year period since 2020, the indexed score reached 113.4 (2020 = 100.0), significantly ahead of target. For more information, see Remuneration Report. We have a cross-functional global information security incident response team that promptly analyzes security incidents, assesses the potential impact, determines if any immediate risks exist, and takes prompt actions to mitigate any harm to the company. 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 2022, we continued to advance our availability, resilience, and cybersecurity position. We enhanced the ongoing security awareness initiatives, including phishing email tests. We incorporated content in our required cybersecurity training, which was completed by more than 99% of active employees. 6 For calculating the CEO pay ratio, the CEO remuneration is based on the remuneration costs as stated in the table Remuneration of the Executive Board – IFRS based of the Remuneration Report, minus the tax-related costs. The average employee remuneration is obtained by dividing the 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). 7 Races/ethnicities mirror those used for required federal reporting in the U.S. 8 Other races/ethnicities include persons who identify as being of two or more races, Native American, Alaska Native, Native Hawaiian, or Other Pacific Islander. 9 The disability percentage is based on U.S. employees that indicated they have or had a disability. Disability data is not available for employees outside the U.S. 48 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continued CYBERSECURITY AND DATA PRIVACY CONTINUED For select systems, applications, and services, we have achieved over 75 attestations and certifications, most notably SOC 1 Type 1 & SOC 2 Type 2, HITRUST, FedRAMP, CSA STAR, and MSDPR. In addition, some of our locations supporting IT operations and a number of our products have attained ISO 27001 certification. Data privacy We foster a culture that respects the data privacy rights of individuals. Our Data Privacy Commitments guide our company-wide approach and reflect the value we attach to protecting the personal information of our customers, employees, and other stakeholders. Our Corporate Privacy Office leads our global data privacy compliance strategy and reports to the Executive Board. 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, and processes. We train our employees in the safeguarding and processing of personal information and implement policies and procedures relating to the rights of individuals. 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. Our data privacy policies are based upon generally accepted data privacy principles and regulations. We collect personal data only for specific purposes, which are specified and documented. As part of our contracting with third parties, such as vendors, we include standards and requirements for processing of data. We have developed an internal privacy control framework which sets a robust privacy baseline based on the key privacy principles as defined in GDPR. We further maintain a data register and conduct data protection risks assessments to analyze, identify, and minimize privacy and data protection risks of activities that involve personal data. Our internal audit team conducts internal audits covering multiple disciplines, including data privacy, on a regular basis. Potential data privacy incidents and risks are managed in accordance with our Data Privacy Incident Management Plan, which describes how we prepare for and respond to incidents. We regularly review and update our incident management guidance and training. We continue to provide ongoing training and awareness programs to reflect data privacy developments. We incorporate key themes into our annual global data privacy awareness course as part of our Annual Compliance Training program. In 2022, more than 99% of our active employees completed this training. ← → Wolters Kluwer 2022 Annual Report 49 ETHICS, COMPLIANCE, AND GOVERNANCE Why is this topic important? Our values and ethical standards are fundamental to how we interact with our employees, customers, partners, and society at large. Good governance is key to upholding our history of high ethical standards as well as our decision-making processes and forms the foundation of our strategy. Our approach Our Ethics & Compliance Committee has oversight responsibility for our global ethics & compliance program. Key elements of the program include our Code of Business Ethics (Code) and other policies and procedures, training and communication, and the SpeakUp program. On behalf of the Ethics & Compliance Committee, our Chief Compliance Officer reports quarterly on ethics & compliance program matters, including SpeakUp concerns, to the Executive Board and the Audit Committee. Our Code provides guidance on how we live our company values. It sets forth the ethical standards that are the basis for our decisions and actions, and for achieving our business goals. The Code covers multiple topics, such as discrimination and harassment, anti-bribery and anti-corruption, and conflicts of interest, some of which are further detailed in standalone policies. Our Code is published on our internal and external websites in various languages. We have a zero-tolerance policy to any form of bribery and corruption. Our global Anti-Bribery and Anti-Corruption Policy strictly prohibits offering, soliciting, giving, or receiving any bribes. We provide training to all our employees on bribery and corruption, as well as role-based training to specific groups. Our high standards of integrity and legal compliance also apply to business partners. We conduct anti-bribery due diligence screening of our partners and suppliers. In 2022, we did not detect any violations of our anti-bribery policy. We foster our culture of ethics and compliance by raising awareness of our values and the standards in our Code and other policies. Through various communication and training activities, we support employees to understand how these standards apply to their day-to-day work and interactions with colleagues, customers, and business partners. We monitor our culture of ethics and compliance via the annual global employee survey, our SpeakUp program, and through internal audits. These efforts also help us measure the effectiveness of our Code and our SpeakUp program. Annual Compliance Training Our Annual Compliance Training program consists of online courses on our Code of Business Ethics, IT and cybersecurity, and data privacy. The program was provided to all active employees globally in 2022 and new hires receive the training upon their onboarding. As part of the training, employees are asked to certify that they have read and understood our Code of Business Ethics. 50 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements RESPONSIBLE ARTIFICIAL INTELLIGENCE Artificial Intelligence Artificial Intelligence (AI) is used in several of our products where it benefits human experts working in complex professional fields. For example, we use advanced technologies, such as Natural Language Processing (NLP) and Robotic Process Automation (RPA), in our expert solutions in order to augment certain tasks in our customers workflows, provide customers with new or improved insights, and enable them to be more efficient. As a company that holds ethics and good governance in high regard, we are committed to developing artificial intelligence in an ethical and responsible manner. We are developing an artificial intelligence assurance framework and responsible artificial intelligence principles that incorporate key principles such as privacy and data governance, fairness and non-discrimination, transparency, and explainability. In the development of this framework and these principles, we embed good practices throughout the design, development, use, and evaluation of AI. We actively monitor legislative developments such as the EU Artificial Intelligence Act and ethics guidelines issued by organizations and expert working groups to ensure we are aware of evolving best practice in this area. ETHICS, COMPLIANCE, AND GOVERNANCE CONTINUED Confidential channels for raising concerns We maintain a culture of open communication and a safe environment where everyone should feel confident to raise any concerns. We have a zero-tolerance policy for retaliation. We offer several channels for reporting any issues about ethical situations or behavior, including direct managers, Human Resources, Legal, or senior management. In addition, our global SpeakUp 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 2022 and took appropriate action. None of these concerns had a material impact on the company. Ethics and compliance 2022 2021 2020 % of active employees who completed Annual Compliance Training¹ 99% 99% 99% Number of SpeakUp concerns 25 21 19 1 Employees on long-term leave, e.g., sick, maternity, or paternity leave, are not invited for the Annual Compliance Training. Sustainability continued ← → Wolters Kluwer 2022 Annual Report 51 ENVIRONMENTAL RESPONSIBILITY 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, for many years we have 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 COP26 Glasgow Climate Pact of November 2021 on limiting global warming. Progress on climate-related initiatives During 2022, we made progress towards our objective of setting science-based targets and aligning our reporting with the guidelines recommended by the Task Force on Climate-related Financial Disclosures (TCFD). We completed a gap assessment of our alignment with the TCFD recommendations and used the results to develop a roadmap for further implementing them. The roadmap was presented to our Executive Board and Supervisory Board. For more information on our progress, see page 59. We have also completed the assessment of our greenhouse gas (GHG) footprint, including scope 1, 2, and 3 emissions, using the pre-pandemic year 2019 as base year. Based on a screening of all scope 3 categories, we identified six material scope 3 emission categories for which we subsequently performed an inventory. Scope 3.1 – Purchased goods & services is, by far, the most significant within our total scope 3 emissions. The chart below and table on the next page provide a view of our GHG footprint for the base year. Wolters Kluwer GHG emissions distribution (tCO₂e) for pre-COVID baseline year 2019 Scope 1 – 1% Scope 3: Scope 2 – 5% Scope 3.1 – 70% Scope 3.2 – 1% Scope 3.6 – 8% Scope 3.4 – 4% Scope 3.11 – 5% Scope 3.7 – 5% 52 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continued ENVIRONMENTAL RESPONSIBILITY CONTINUED Scope 1, 2, and 3 greenhouse gas (GHG) emissions in mtCO₂e 2019 % of total Scope 1 Direct emissions¹ 4,043 2% Scope 2 Emissions from purchased energy, market- based¹ 14,602 5% Scope 3 3.1 Purchased goods & services² 200,089 70% 3.2 Capital goods² 3,527 1% 3.4 Upstream transportation & distribution² 11,275 4% 3.6 Business travel³ 22,615 8% 3.7 Employee commuting⁴ 13,953 5% 3.11 Use of sold products⁵ 14,175 5% Sub-total Scope 3 265,634 93% Total emissions 284,279 100% 1 Scope 1 and 2 emissions relate to our owned and leased offices and are calculated based on the energy consumption, using country-based IEA conversion factors for electricity andDefra conversion factors for natural gas, district heating, and heating oil. Energy consumption was available for approximately 75% of square meters and extrapolated for the remaining 25%. Extrapolation is performed at country level. 2 Scope 3.1, 3.2, and 3.4 emissions from our supply chain are for 92% based on spend, converted to mtCO 2 e using supply chain industry emission factors of the U.S. Environmental Protection Agency. 6% of supply chain emissions are calculated by converting spend to mtCO 2 e using supplier-specific emission factors, as derived from from publicly available emission data of these suppliers. 2% of supply chain emissions are based on emission data as provided by suppliers to us. In case the group acts as agent between suppliers and customers, associated supplier emissions are included in our scope 3.1, 3.2, or 3.4 emissions. 3 Business travel includes solely flight travel, as other means of business travel are considered immaterial. For the vast majority, flight travel distances are based on travel agent data and converted to mtCO 2 e using Defra emission factors. 4 Employee commuting is based on an employee-wide survey, in which commuting distance, mode of transport, and commuting frequency were the key questions. Survey results were plotted onthe average headcount of the year and converted to mtCO 2 e using Defra emissionfactors. 5 Scope 3.11 emissions originate for approximately 70% from the energy consumption of customers’ devices when using our software. This energy consumption is calculated by multiplying the number of customers’ users by the average user log-in time, corrected for an estimated relative share of our software of the CPU usage of a device. These data points were collected for our largest products, representing approximately 55% of total revenues, and either system-derived or estimated if no system data was available. Extrapolation to 100% is performed at divisional level based on revenues. The remaining 30% of our scope 3.11 emissions relate to the energy consumption of servers at customers’ own premises, whereby we estimated the average number of servers at a customer’s own premise, the average utilization of a server, and the average energy usage of a server. Based on our GHG assessment, we have developed abatement plans and have committed to reduce our emissions in line with a pathway to limit global warming to 1.5°C and reaching net-zero no later than by 2050. Accordingly, early 2023 we have submitted the following emission reduction targets to the Science Based Targets initiative (SBTi) for validation: • Reduce absolute Scope 1 & 2 GHG emissions 50% by 2030 from a 2019 base year • Reduce absolute Scope 3 GHG emissions 30% by 2030 from a 2019 base year Our GHG assessment reinforced the need to continue with our existing decarbonization programs, as described below. Over the coming years, we will implement further initiatives to reduce our emissions and work towards our targets. Decarbonizations of our supply chain will be key to reduce our emissions, implying a greater focus ← → ENVIRONMENTAL RESPONSIBILITY CONTINUED on engaging with our suppliers to obtain supplier-specific emission data, better understand their emission reduction programs, and collaborate on net-zero journeys. Real estate rationalization We aim to create sustainable and appealing workspaces for our employees, balancing the demand for space, attractive design, and employee engagement with environmental impact and spend per square meter. Sustainability is integrated into our real estate and facilities management process and we aim to implement environmentally friendly practices in our building selection, office design, and office operations and services. 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. For several years, we have executed a real estate rationalization program, which has delivered significant reductions in our office footprint through office closures and consolidations. As a result of increased mobility (including working from home) and updated designs, we need less office space to accommodate our employees. In addition to cost savings, this program helps reduce our scope 1 and 2 emissions and our water and waste consumption. This program achieved a 5% organic reduction in square meters in 2022 and aims to achieve a further reduction over the next years. Migration of servers to energy-efficient cloud 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 not only benefits our customers in the form 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. Carbon footprint remains an important criterion in the selection of our cloud providers. A target for the elimination of on-premise servers was included in Executive Board and senior management remuneration in 2021 and 2022. In 2022, this migration program led to the closure of 14 data centers and the decommissioning of 1,032 servers. → See our Remuneration Report onpage 87 CASE STUDY: ENVIRONMENTALLY FRIENDLY PRACTICES IN OUR OFFICES Building selection • LEED, BREEAM, or DGNB certificates included in decision criteria matrix • Building location in close proximity to public transport • Availability of electric charging stations • Availability and accessibility of electricity, gas, and water usage meters Office designand fit out • Eco-friendly and recycled furniture and building materials • Drinkable water sources (water filter, water fountain) • Centralized waste disposal areas including waste separation • LED energy-saving lights with motion sensors Office operations and services • Vendor sustainability certificates as selection criteria for service providers • Usage of eco-friendly cleaning products • Purchasing or replacement of energy- efficient kitchen appliances • Zero single plastics use 53Wolters Kluwer 2022 Annual Report 54 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Sustainability continuedSustainability continued ENVIRONMENTAL RESPONSIBILITY CONTINUED Environmental programs 2022 2021 2020 Real estate rationalization, % organic reduction in m 2 ¹ 5% 7% 7% Number of data centers closed 14 21 11 Number of on-premise servers decommissioned 1,032 2,838 – 1 The organic reduction in m² excludes the effect of acquisitions and divestments. Business travel Our business travel policy encourages employees to make prudent use of resources and to consider both the financial costs and environmental impacts when choosing to travel. During the pandemic, our business travel activity was significantly below historical levels and employees made use of virtual meetings and events to support our global operations. We did see an uptick in travel in 2022 compared to the prior year, as the travel restrictions were gradually lifted globally. At the same time, there has also been an increase in the number of virtual and hybrid meetings, marking a natural downshift in travel compared to pre-pandemic levels. Going forward, we expect a similar trend to continue in 2023. Energy consumption in MWh, unless otherwise stated¹ 2021 2020² 2019² Total energy consumption³ ⁴ 47,482 51,392 68,260 of which Renewable electricity 7,379 7,087 6,206 Non-renewable electricity 19,919 24,964 38,622 Natural gas 16,475 15,778 21,065 District heating 3,084 2,929 1,726 Heating oil 625 634 641 Renewable electricity as % of total electricity⁵ 37% 28% 16% Energy intensity Revenues (in millions of euros) 4,771 4,603 4,612 Energy intensity in MWh/revenues m€ 10.0 11.2 14.8 1 Energy consumption relates to the group’s owned and leased offices. Data is reported with a one-year lag to ensure a higher data coverage ratio. Energy consumption was available for approximately 75% of square meters and extrapolated for the remaining 25%. Extrapolation is performed at country level. 2 2019 and 2020 are restated following an extension of the offices for which data is collected, applied retrospectively. 3 Energy consumption decreased by 8% in 2021, largely due to lower weighted-average squaremeters. 4 Most of our offices were closed for significant parts of 2020 and 2021 due to the COVID-19 pandemic. 5 Renewable electricity is only counted if generated at the office or purchased as renewable from the energy provider. The group did not purchase energy attribute certificates. ← → Wolters Kluwer 2022 Annual Report 55 ENVIRONMENTAL RESPONSIBILITY CONTINUED Scope 1 and 2 greenhouse gas (GHG) emissions in mtCO₂e, unless otherwise stated¹ 2021 2020 2019 Scope 1 3,172 3,057 4,043 Scope 2 market-based 7,783 9,110 14,602 Scope 1 and scope 2 market-based² ³ 10,955 12,167 18,645 Netherlands 587 605 1,063 Europe (excluding the Netherlands) 2,268 2,357 3,095 U.S. and Canada 7,088 8,158 12,665 Asia Pacific 992 1,030 1,792 Rest of World 20 17 30 Scope 1 and scope 2 market-based 10,955 12,167 18,645 Scope 2 location-based 9,849 10,903 16,456 GHG emission intensity Revenues (in millions of euros) 4,771 4,603 4,612 Scope 1 and scope 2 market-based (in mtCO 2 e/revenues m€) 2.3 2.6 4.0 1 Scope 1 and 2 emissions relate to our owned and leased offices and are calculated based on the energy consumption, using country-based IEA conversion factors for electricity andDefra conversion factors for natural gas, district heating, and heating oil. Energy consumption was available for approximately 75% of square meters and extrapolated for the remaining 25%. Extrapolation is performed at country level. 2 Total emissions decreased by 10% in 2021, due to lower weighted-average square meters and ahigher proportion of renewable electricity used. 3 Most of our offices were closed for significant parts of 2020 and 2021 due to the COVID-19 pandemic. Scope 3.6 and 3.7 greenhouse gas (GHG) emissions in mtCO₂e, unless otherwise stated 2022 2021 2020 Scope 3.6 – Business travel¹ ³ 11,649 694 3,503 Scope 3.7 – Employee commuting² ³ 5,705 1,003 1,013 GHG emission intensity Revenues (in millions of euros) 5,453 4,771 4,603 Scope 3.6 – Business travel (in mtCO 2 e/revenues m€) 2.1 0.1 0.8 Scope 3.7 – Employee commuting (in mtCO 2 e/revenues m€) 1.0 0.2 0.2 1 Business travel includes solely flight travel, as other means of business travel are considered immaterial. Flight travel distances are for the vast majority based on travel agent data and converted to mtCO 2 e using Defra emission factors. 2 Employee commuting is based on an employee-wide survey, in which commuting distance, mode of transport, and commuting frequency were the key questions. Survey results were projected onthe average headcount of the year and converted to mtCO 2 e using Defra emissionfactors. 3 The increase in business travel and employee commuting in 2022 is largely explained by the COVID-19- related travel restrictions throughout 2021. 56 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements ENVIRONMENTAL RESPONSIBILITY CONTINUED Water consumption¹ 2021 2020² 2019² Total water withdrawals in cubical meter³ ⁴ 51,734 95,662 139,106 Water intensity in cubical meter/revenues m€ 11 21 30 1 Water consumption relates to our owned and leased offices. Data is reported with a one-year lag to ensure a higher data coverage ratio. Water consumption was available for approximately 60% of square meters and extrapolated for the remaining 40%. In 2021, extrapolation is performed at country level. 2 2019 and 2020 are restated, due to a refinement of the extrapolation methodology. In these years, extrapolation is performed at regional level. 3 Water withdrawals decreased by 46% in 2021, mainly explained by saving water in a few large U.S. offices and lower weighted-average square meters. 4 Most of our offices were closed for significant parts of 2020 and 2021 due to the COVID-19 pandemic. SOCIAL RESPONSIBILITY 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 with whom we deal. 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 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. As a responsible business, we strive to prevent all forms of modern slavery and human trafficking in our supply chains or in any part of our business. We are committed to implementing and enforcing effective systems and controls to ensure modern slavery is not taking place in our supply chains. Where required by law, we have issued Modern Slavery Statements. Feedback from our employees is very important, thus we actively engage with works councils and participate in collective bargaining where applicable. We also monitor our employee compensation to ensure our employees earn a living wage, periodically comparing our wages to existing Global Living Wage Coalition (GLWC) benchmarks. Living wages¹ 2022 2021 2020 % of employees above living wage benchmark² 99.9% 100% 100% 1 Living wages are assessed at December 31 and compared to the Global Living Wage Coalition benchmark for approximately 3,000 employees in Brazil, China, India, Mexico, South Africa and Thailand.In countries where this benchmark is not available, it is assumed that all employees are paida living wage. 2 At December 31, 2022, a very small group of employees based in India and Mexico earned below the living wage benchmark. These employees will receive a raise in 2023 to bring them above the living wage benchmark. Sustainability continued ← → Wolters Kluwer 2022 Annual Report 57 SOCIAL RESPONSIBILITY CONTINUED Responsible supply chain We expect our suppliers to uphold the same social and environmental standards to which we are committed. Through our third-party risk management program, we engage with our suppliers to ensure we have a responsible supply chain throughout our global 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 commit to our Supplier Code of Conduct or to their own equivalent standard, requiring them to follow applicable laws and regulations in areas such as human rights, labor conditions, anti-bribery, and the environment. Based on the assigned supplier risk classification, this due diligence is repeated every one to three years. In 2022, the number of suppliers that are centrally managed was increased and more suppliers were invited to the due diligence questionnaire. Looking forward, we intend to engage more extensively with our suppliers on various sustainability matters to help achieve our own sustainability goals. Responsible supply chain 2022 2021 2020 In the year, number of suppliers that have signed our Supplier Code of Conduct or have an equivalent standard 627 410 229 Cumulative number of suppliers that have signed our Supplier Code of Conduct or have an equivalent standard 1,527 900 490 In the year, % of centrally managed suppliers for which due diligence procedures were completed 98% 91% 98% % of major data center suppliers that are certified according toISO/IEC 27001 standard¹ 100% 100% 100% % of major data center suppliers that have been reviewed perthe Wolters Kluwer Third-Party Risk Management StandardMonitoring schedule¹ 100% 100% 100% % of major print products suppliers that have been reviewed per the Wolters Kluwer Third-Party Risk Management StandardMonitoring schedule² 100% 80% 100% 1 In 2022, major data center suppliers represent approximately 80% of the total server capacity purchased by the group. 2 In 2022, major print product suppliers represent approximately 80% of the total print product spend by the group. ← → Strategic Report | Governance | Financial Statements SOCIAL RESPONSIBILITY CONTINUED 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 select UN Sustainable Development Goals, have a high degree of local impact, and create personal engagement amongst our employees. Our Volunteer Day Off program offers all employees up to one day off each year to support eligible non-profit organizations that align with our mission and company values. Among other things, employees participated in reforestation activities and park, water, and beach clean-ups, partnering with organizations such as American Forests, Chicago Region Tree Initiative, and the Alliance for the Great Lakes. Volunteering days 2022 2021 2020 Number of volunteer days spent by employees under our Volunteer Day Off program 668 292 – We believe in helping employees effectively support the causes that matter most to them. We formalized this by launching the Global Sustainability Awards program for employees. Over 40 entries were submitted, including examples of volunteering in support of communities and the environment, programs to enhance diversity, equity, and inclusion in our workforce and in our products, and examples to improve the sustainability of our customer applications. A panel of internal judges, including our CEO, reviewed all submissions and selected the ENGAGE Impact of the Year and ENGAGE Volunteer of the Year. See the case study below for more information. The winners received a charitable donation or funds towards a sustainability initiative. Our Green is Green program, an employee-led network that helps to raise awareness of, identify, and implement environmentally friendly practices, expanded its activities in 2022. The network hosted a series of webinars focused on four elements – fire, air, earth, and water – highlighting the latest climate studies, drawing attention to the impact of climate change on women, and showcasing organizations that are working to achieve environmental justice. The network also launched a global campaign to decrease the use of single-use plastics at home and in our offices. CASE STUDY: GLOBAL SUSTAINABILITY AWARDS ENGAGE Impact of the Year: DEI Content Guide The DEI Content Guide advances and elevates our shared values of diversity, equity, and inclusion (DEI) by directing the language and images we include in our Health content. The Guide promotes the development of unbiased and culturally sensitive content in the context of health and patient care. The Guide has the potential of improving care of patients worldwide, providing information that is representative of the diverse customers, healthcare providers, students, and patients we serve. ENGAGE Volunteer of the Year: Women’s Initiative Network The first Women’s Initiative Network (WIN) at Wolters Kluwer founded by Global Business Services focuses on four key areas: networking/events, mentorship, learning and development, and communications of initiatives. WIN has hosted several virtual networking/ wellness events, training sessions, Women’s History Month celebrations, and piloted a mentorship program. What is more, this organizational model has been leveraged by other divisions as a blueprint to set up their own WIN groups. Sustainability continued 58 Wolters Kluwer 2022 Annual Report ← → Wolters Kluwer 2022 Annual Report 59 Task Force on Climate-related Financial Disclosures (TCFD) GOVERNANCE OUR APPROACH AND ACTIONS – See also Corporate Governance and Report of the Supervisory Board Describe the board’s oversight of climate-related risks andopportunities. Oversight of climate change impacts resides with our Executive Board and Supervisory Board as part of their overall supervision of sustainability matters. Describe management’s role inassessing and managing climate- related risks and opportunities. The Executive Board and Supervisory Board receive regular formal updates on environmental, social, and governance topics, including climate-related matters. We will further define management’s role as we progress our assessment of climate-related risks and opportunities. STRATEGY OUR APPROACH AND ACTIONS Describe the climate-related risks and opportunities the organization has identified over the short, medium, andlong-term. We are making steady progress in identifying short, medium, and long-term climate-related risks and opportunities. In2022, we identified a range ofpotential climate-related physical and transitional risks to put forward for further assessment through a climatescenario analysis. We intend to disclose more details about the climate-related risks and opportunities that we have identified in our 2023 Annual Report. Describe the impact of climate- related risks and opportunities on the organization’s businesses, strategy, andfinancial planning. In 2022, we started a preliminary qualitative scenario analysis. This analysis indicated that physical climate- related risks are unlikely to have a material impact on our company. We will further develop our climate scenario analysis and assess the impact of climate-related risks and opportunities in 2023. For the impact of climate- related risks on the estimates and judgments applied in the financial statements, refer to Note 3 - Accounting Estimates and Judgments. Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C orlower scenario. We have selected two different climate-related scenarios – Business As Usual and 1.5 degrees warming – to assess and explore our risks and opportunities in a range of potential future states and time horizons. To assess physical risks, we are using Relative Concentration Pathways scenarios from the IPCC. To assess transition risks, we are using World Energy Outlook scenarios from the International Energy Agency. We intend to disclose the outcomes ofthe qualitative climate scenario analysis in our 2023 Annual Report. RISK MANAGEMENT OUR APPROACH AND ACTIONS – See also Risk Management Describe the organization’s processes for identifying and assessing climate- related risks. Starting in 2021, we have been assessing the impacts of climate change annually as part of the risk assessment process led by our Corporate Risk Committee. In 2022, we broadened this process by holding a working session toexamine potential physical and transition climate-related risks for the company. Describe the organization’s processes for managing climate-related risks. Our Corporate Risk Committee monitors material risks and determines mitigating actions with a focus on company-wide, non-business specific risks. These includes risks which may result from climate change, such as the risk of business disruption due to adverse weather conditions. Once we have completed and analyzed the results of the climate impact assessment, we will determine how to monitor and manage the identified risks and opportunities. Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organization’s overall riskmanagement. Climate-related risks have been integrated in our annual risk assessment process since 2021. In 2022, climate change was added as a new risk in our enterprise risk management process, which is led by our Corporate Risk Committee and approved by the Executive Board and Audit Committee. METRICS AND TARGETS OUR APPROACH AND ACTIONS – See also Sustainability – Environmental responsibility Describe the targets used by the organization to manage climate- related risks and opportunities and performance against targets. We have committed to reduce our emissions in line with 1.5°C global warming and reaching net-zero no later than by 2050. Early 2023, we have submitted near-term targets to the Science Based Targets initiative for validation. We also have a target for the elimination of on-premise servers as part of our journey to the cloud program. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. Our metrics to assess climate-related risks are included in the Environmental responsibility section of this Sustainability chapter. Disclose scope 1, scope 2, and, if appropriate, scope 3 greenhouse gas (GHG) emissions, and the relatedrisks. We disclose our scope 1, scope 2, scope 3.6 and 3.7 GHG emissions, as well as 2019 base year GHG emissions of all other material scope 3 emission categories. During 2022, we completed a gap assessment and developed a roadmap to align our reporting with the TCFD over the coming years. Below we set out our current disclosures and plans to further align with the TCFD recommendations. 60 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements NON-FINANCIAL INFORMATION STATEMENT 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: • Energy consumption and water consumption of offices; • Scope 1, 2, 3.6, and 3.7 GHG emissions; • % revenues from digital and services; • Number of suppliers that signed our Supplier Code of Conduct or have an equivalent; • % organic reduction of real estate; and • Number of servers decommissioned. Sustainability – Environmental responsibility Sustainability – Social responsibility – Responsible supply chain Risk management – Business interruption Sustainability – Materiality Social and employee matters Description of policies Outcome of policies How risks are managed Non-financial key performance indicators: • % of gender diversity; • % of ethnic diversity (U.S.); • Employee engagement score; • Employee belonging score; • Employee turnover rate; • Performance review rate; • Optional learning hours; • % of family-related leaves (U.S.); • % of employees with disabilities (U.S.); and • Volunteer days spent by employees. Sustainability – Employee engagement and talentmanagement Sustainability – Diversity, equity, inclusion, and belonging Sustainability – Social responsibility Risk Management – Talent andorganization Sustainability – Materiality Human rights matters Description of policies Outcome of policies How risks are managed Non-financial key performance indicators: • Number of suppliers that signed our Supplier Code of Conduct or have their own equivalent; and • % of employees above living wage benchmark. Sustainability – Social responsibility Sustainability – Materiality Risk Management – Regulatory andcompliance Sustainability continued ← → Wolters Kluwer 2022 Annual Report 61 EU TAXONOMY REGULATION DISCLOSURE 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. 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 immaterial economic activities carried out by Wolters Kluwer can be considered as eligible activity under the Taxonomy Regulation. As we have immaterial eligible activities, we did not disclose the tables as prescribed by Article 2.2 of the Commission Delegated Regulation EU 2021/2178. EU Taxonomy KPIs for 2022 Turnover CapEx OpEx Eligible and aligned 0% 0% 0% Eligible and not aligned 0% 0% 0% Not eligible 100% 100% 100% Total 100% 100% 100% NON-FINANCIAL INFORMATION STATEMENT CONTINUED Responsible supplychain Sub-topic Relevant sections of annual report Anti-corruption and bribery matters Description of policies Outcome of policies How risks are managed Non-financial key performance indicators: • % of employees that completed the Annual Compliance Training; • Number of SpeakUp concerns; and • Number of suppliers that signed our Supplier Code of Conduct or have an equivalent. Sustainability – Ethics, compliance, and governance Sustainability – Social responsibility – Responsible supply chain Sustainability – Materiality Risk Management – Regulatory and compliance SECTION OVERVIEW GOVERNANCE → Corporate Governance page 63 → Risk Management page 67 → Statements by the Executive Board page 78 → Executive Board and Supervisory Board page 79 → Report of the Supervisory Board page 81 → Remuneration Report page 87 62 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Governance ← → Wolters Kluwer 2022 Annual Report 63 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 The company has reviewed the new Corporate Governance Code which was published in December 2022 and will become applicable as of reporting year 2023. The company will work on implementation of the revised Corporate Governance Code during 2023 and report on compliance in its 2023 Annual Report. 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 and environmental, social, and governance (ESG) matters. 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 businesses, 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 79 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 the 2021 Annual General Meeting of Shareholders 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 2022 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. Pursuant to 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 prior 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. Corporate Governance 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 published in 2016 (the ‘Corporate Governance Code’), and all applicable laws and regulations. 64 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements 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 79 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 and Selection and Remuneration Committee meetings. 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 creation strategy, 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 and ESG 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 annual 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 the 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. 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. 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 implementation of the long-term value Corporate Governance continued ← → Wolters Kluwer 2022 Annual Report 65 our Code of Business Ethics and other key compliance policies and SpeakUp. In 2022, 99% of employees completed the Annual Compliance Training. 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 49 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 67 ENVIRONMENTAL, SOCIAL, AND GOVERNANCE MATTERS The Executive Board and the Supervisory Board are committed to and oversee Wolters Kluwer’s sustainability and ESG priorities and performance. The Executive Board discusses the progress on the ESG priorities in quarterly update meetings with the Corporate ESG team, in addition to individual updates as appropriate by relevant functional owners. The Supervisory Board is informed on a regular basis as well. The Executive Board and Supervisory Board provide feedback that shapes the development of relevant ESG initiatives. For a detailed description of our ESG performance, reference is made to Sustainability. → See Sustainability on page 36 the company operates. Four nationalities are represented on the Supervisory Board. The composition of the Supervisory Board is in line with its diversity policy, Dutch law, and the competency, skills, and experience requirements as decribed in its profile. → See our Executive Board and Supervisory Board onpage 79 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 Executive Board is responsible for setting the tone for our culture from the top. 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. The Executive Board and the Supervisory Board are committed to ensure high standards of ethics and integrity and promote openness through our SpeakUp program. Our employees receive Annual Compliance Training about 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 2021. For more information on remuneration, see Remuneration Report. → See Remuneration Report onpage 87 DIVERSITY Diversity, equity, inclusion, and belonging (DEIB) is an important topic for the Supervisory Board and Executive Board. The diversity policy for the Supervisory Board is included as an annex to the Supervisory Board By-Laws. Elements of diversity include nationality, gender, age, and expertise. Based on Dutch law, the Supervisory Board must have a representation of at least 33% male and at least 33% female. For the Executive Board, we also have a target of at least 33% representation of both male and female. These targets are currently met. In accordance with Dutch legislation which became applicable in 2022, we have also set a target to increase the female representation in our executive career band by 2% by 2028 from a 2022 baseline. In the coming years we will work towards achieving this through equitable and inclusive employee practices and experiences that improve female representation in hiring, promotions, and talent retention. Our Chief Human Resources Officer reports into our CEO and Chair of the Executive Board, who as such has ultimate responsibility for the DEIB strategy and the execution thereof. For more information on DEIB, see Sustainability. Currently, the male/ female representation of the Supervisory Board is 43/57% and of the Executive Board 50/50%. The Supervisory Board composition also comprises expertise within the broad information industry as well as specific market segments in which 50% of the Executive Board members are female 66 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements 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 226 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 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 21, 2022, 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, 2022, Wolters Kluwer N.V. held 8,801,532 shares in the company (3.42% 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 225 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. In 2022, 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. 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 21, 2022, 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. Corporate Governance continued ← → Wolters Kluwer 2022 Annual Report 67 Risk Management INTRODUCTION In 2022, the world has seen more and intensifying crises and interlocking risks, including geopolitical tensions, looming recessions, accelerating inflation, pressure on employee welfare, global skills deficits, and an increasingly industrialized cyberattack landscape. While these developments impact us to varying degrees, our overall risk profile remains relatively unchanged. Although the outlook for 2023 is uncertain on many fronts, there is confidence in our ability to execute our strategy and demonstrate its resilience in the face of crises and marketplace challenges. RESPONSIBILITY FOR RISK MANAGEMENT Our Executive Board is responsible for overseeing risk management and internal controls at Wolters Kluwer. Our CEO is responsible for strategic and operational risks and our CFO is responsible for legal & compliance and financial & financial reporting risks. The Supervisory Board supervises the Executive Board regarding the effectiveness of the internal risk management and control systems. On behalf of the Supervisory Board, the Audit Committee monitors the efficiency of our risk management system. It also carries out preparatory work for the annual discussion within the full Supervisory Board around the effectiveness of our internal risk management and control systems. Our Corporate Risk Committee monitors material risks and mitigating 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. The Corporate Risk Committee is chaired by our CFO and comprises representatives of the various functional departments, including Internal Audit, Internal Control, Legal and Compliance, Sustainability, Human Resources, Treasury, Tax, and Global Information Security, and reports quarterly to the Audit Committee and the Executive Board. RISK MANAGEMENT PROCESS We operate internal risk management and control processes, which are generally integrated into the operations of the businesses. The aim is to identify significant risks to which the company is exposed in a timely manner, to manage those risks effectively, and to provide a reasonable level of assurance on the reliability of the financial reporting of the Wolters Kluwer group. Our Executive Board reviews an annual assessment of pertinent risks and mitigating actions. It diligently evaluates that assessment against the pre-defined risk appetite. Based on this assessment, the Executive Board reviews the design and effectiveness of the internal risk management and control systems. In doing so, it considers the company’s risk appetite and the recommendations from internal assurance functions and the Corporate Risk Committee. Our internal risk management and control systems cannot provide absolute assurance for the achievement of our 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 operations of our divisions and operating entities, supported by several staff functions. The Executive Board is informed by divisional management about risks on divisional and operational entity levels as part of the regular planning and reporting cycles. INTERNAL CONTROL SYSTEMS Our Internal Control Framework for financial reporting (ICF) is based on the COSO (Committee of Sponsoring Organizations of the Treadway Commission) 2013 framework. It is designed to provide reasonable assurance that the results of our business are accurately reflected in our internal and external financial reporting. The ICF is deployed by the operating business units and central functions and reviewed and tested by internal control officers. We carry out an annual risk assessment program for financial and IT general control risks to determine the scope and controls to be tested. As part of that scope, key controls are tested annually. The test results 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 Our global Internal Audit department provides independent and objective assurance and advice. It is guided by a philosophy of adding value by continuously improving, where deemed fit for purpose, the maturity of our operations. Internal Audit takes a systematic and disciplined approach to evaluating and improving the effectiveness of our organization’s governance, risk management, and internal controls. This section provides an overview of our approach to risk management. It also includes an overview of the main risks we identify and the actions we take to mitigate these risks. Risk type Balanced Conservative Minimal STRATEGIC OPERATIONAL LEGAL & COMPLIANCE FINANCIAL & FINANCIAL REPORTING 68 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements RISK APPETITE EMERGING RISKS Starting in 2021, climate change has been integrated in our annual risk assessment process. Climate-related risks are recognized as emerging risks that we assess and monitor. See the section Task Force on Climate-related Financial Disclosures on page 59 for more information about climate-related risks. Other risks which emerged in recent years and that we continue to monitor include data privacy (reported under the regulatory and compliance risk) and data governance. The latter area continues to be of interest as we continue to accumulate more and new types of (sensitive) data, and deal with the growing exposure to regulatory, ethical, and data security risks. assessed. Some existing risks may have been assessed as not significant. However, they could develop into a material exposure for our company in the future and have a significant adverse impact on our business. Our risk management and internal control systems have been designed to identify, mitigate, and respond to risks in a timely manner. However, it is not possible to attain absolute assurance. RISK APPETITE We qualify the risk appetite of our main risks as balanced, conservative, or minimal. To achieve our strategic goals, we are 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. For other risk categories, our approach towards risks could be qualified as conservative, and as minimal for certain legal and compliance and financial and financial reporting risk categories. We carefully weigh risks against potential rewards. Our 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, which is approved by the Executive Board and the Supervisory Board, is based on risk assessments. It focuses on strategy execution, financial reporting risks, and operational risks, including IT-related risks. Our 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. RISK TYPES AND CATEGORIES On the following pages, we set out the main risks we have identified up to the date of this annual report and the actions we are taking to prevent or mitigate the occurrence and/or impact of these risks. It is not our intention to provide an exhaustive description of all possible risks. There may be risks that are not yet known or that we have not yet fully Risk Management continued ← → Wolters Kluwer 2022 Annual Report 69 STRATEGIC • Macroeconomic conditions • Competition • Changes in technology, business models, and customer preferences • Mergers and acquisitions • Divestments OPERATIONAL • IT and cybersecurity • Supply chain dependency and project execution • Talent and organization • Fraud • Business interruption • Brand and reputation LEGAL & COMPLIANCE • Regulatory and compliance • Contractual compliance • Intellectual property protection • Legal claims FINANCIAL & FINANCIAL REPORTING • Treasury • Post-employment benefits • Taxes • Misstatements, accounting estimates and judgments, and reliability of systems Emerging risks: climate change and data governance STRATEGIC RISKS Risk description and impact Mitigation Macroeconomic conditions Demand for our products and services may be adversely affected by factors beyond our control, such as economic conditions, pandemics, government policies, political uncertainty, acts of war, and civil unrest. We monitor relevant political and macroeconomic developments (e.g., the Russian- Ukrainian war, the global COVID-19 pandemic, inflation, and energy markets) so we can respond quickly to risks and opportunities. We take steps to minimize the impact on our financial performance while also continuing to support our customers and employees. Recurring revenues represent approximately 80% of our consolidated group revenues, providing visibility and resilience in times of uncertainty. Our exposure to a diverse range of customer segments and geographic markets, with a variety of products and services, reduces the impact of sector- or country-specific uncertainty. Most of our subscription-based digital information and software products are critical to the workflow of our customers, providing further resilience. During times of uncertainty, our business units, in particular those that are exposed to transactional or other non-recurring revenues, can deploy a range of actions to support revenues and defend profits. For example, we can place greater efforts on retention, cross-selling, and upselling to existing customers and take a defensive approach to pricing to support revenues. Where possible, we will pivot new sales efforts towards sectors and customer segments that are less affected by market conditions. At the same time, our businesses can adjust discretionary spending to defend margins. Competition We operate in competitive markets, facing both large established competitors and new market entrants, and may be adversely affected by competitive dynamics. We focus on our customers’ success and on building long-term customer relationships. We carefully evaluate and implement an appropriate response to competitive threats in the markets which we operate in. Our product and service offerings are varied and very specialized, often embedded in the professional’s daily workflow, and span multiple customer segments, forming a natural defense against existing or potential new competitors. Strategically, we invest approximately 10% of revenues each year under our current three-year strategic plan in product development to enhance and expand our expert solutions and to transform our information products so we can maintain or strengthen our competitive positions and support innovation and growth. 70 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements STRATEGIC RISKS CONTINUED Risk description and impact Mitigation Changes in technology, business models, and customer preferences Demand for our products and services could be affected by disruptive new technologies, changes in revenue models, evolving customer preferences, and other market developments. We monitor trends in the markets in which we operate, such as technological developments, and consider how these might affect our businesses in the short term and long term. We also monitor customer needs and preferences by tracking net promoter scores, by engaging with customers through advisory boards, and by hosting and participating in industry conferences. This deep understanding of our customers’ needs and workflows, combined with our understanding of new technologies, helps us align our offerings to long-term market trends. A core tenet of our strategy is to reinvest approximately 10% of group revenues into product development, so we can keep our solutions relevant. This investment includes the deployment of advanced technologies and the development of cloud-based solutions. Mergers and acquisitions We supplement organic growth with selected acquisitions which expose us to a variety of risks that could affect the future revenues and profits of the acquired businesses. These risks are related to factors such as the retention of customers and key personnel, the process of integrating the target, the controls surrounding the target’s IT security and supply chain, and the competitive response. We apply strict strategic and financial criteria in our acquisition process. In general, acquisitions are expected to cover our after-tax weighted-average cost of capital within three to five years and to be accretive to diluted adjusted earnings per share in the first full year of ownership. Investment decisions are very selective. We focus on businesses with proven track records and relatively predictable or recurring revenues that we expect to enhance our growth or margin. We prefer to acquire businesses that present strategic synergies with our existing operations. Capital allocation towards acquisitions is balanced across our divisions and across geographic regions. We conduct extensive due diligence of acquisition targets, using internal expertise and external due diligence professionals, including those with deep expertise in relevant industry verticals. In recent years, we have increased our due diligence efforts around data privacy and IT security and have employed a more standardized approach to IT and software due diligence. We have an annual review process of acquisitions, looking back three years, and incorporate lessons learned from prior transactions into our process. We use contractual indemnities and warranties from the seller and deal structures designed to retain management and we assure alignment between the purchase price and the performance of the acquired company. Post-acquisition plans are developed with the support of our corporate integration team. The Executive Board approves acquisition integration plans prior to completing acquisitions and actively monitors acquisitions after completion. Divestments Occasionally, we choose to divest assets that are no longer core to our strategy. The divestment process entails risks that could have an adverse impact on the performance and valuation of the assets and our ability to complete a divestment process. To mitigate risks related to material divestments, we prepare detailed carve-out plans and financials, covering human resources, technology, supply chains, and other functions. We also perform vendor due diligence prior to negotiations. In many cases, we engage external advisors to execute transactions. Risk Management continued ← → Wolters Kluwer 2022 Annual Report 71 OPERATIONAL RISKS Risk description and impact Mitigation IT and cybersecurity Our business is exposed to IT-related risks and cyber threats that could affect our IT infrastructure, system availability, application availability, and the confidentiality and integrity of information. We operate a global cybersecurity program to protect our organization, products, and customers. This program governs the execution of cybersecurity projects and provides management accountability at various levels. The program is assessed annually by an independent third party and is based on the National Institute of Standards and Technology Cybersecurity Framework (NIST-CSF). We maintain a Global Information Security Policy and work to keep all operations aligned to this standard. IT General Controls form an integral part of Wolters Kluwer’s Internal Control Framework and are aligned with our Global Information Security Policy. We periodically test controls over data and security programs to ensure we protect confidential and sensitive data. We assess controls against industry standards such as American Institute of Certified Public Accountants (AICPA) criteria and International Organization of Standard (ISO) requirements. We complete regular SOC 2 attestations of our cloud-managed services and conduct risk due diligence for all critical vendors. We have IT disaster recovery and incident management capabilities in place to respond to cyberattacks. All employees are required to complete annual online education on our IT security policy and training on security awareness. Our employees’ mobile devices are protected using a mobile device management solution while multi-factor authentication has been implemented for all users with access to our critical internal IT systems. Supply chain dependency and projectexecution Our operations depend on third-party suppliers and could be adversely affected by poor performance. Suppliers include providers of cloud services, outsourced and offshored data center services, software development and maintenance services, back-office transaction- processing services, and other services. Projects to implement new technology- related initiatives or drive cost efficiencies are subject to execution risks. Global Business Services, through its Sourcing & Procurement team, manages all centralized sourcing and procurement activities. This team uses an enterprise- wide solution and a consistent process for supplier onboarding and third-party risk management. We carefully select and screen suppliers using regularly updated criteria. Detailed operating service agreements are put in place with our suppliers and performance during the term of such agreements is monitored by oversight boards and program management teams. We ask suppliers that are managed through Global Business Services to sign the Wolters Kluwer Supplier Code of Conduct or to provide an equivalent standard. In 2022, we began a multi-year project to implement a new, state-of-the-art enterprise- wide supply chain risk management process that ensures a consistent approach to the intake of third-party services globally. This process aims to provide a consistent assessment of risk prior to contracting; a formalized issue management process; tailored contracting to mitigate business risks; monitoring of suppliers against a tiered supplier management model; and comprehensive inherent and residual third-party risk analysis reporting to business leadership, with the ability to respond quickly to specific inquiries. Selected internal implementation projects are monitored by our Corporate Quality Assurance team. The team aims to improve the success rate of large initiatives by providing assurance that these 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 the standardization of change methodologies and frameworks. 72 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements OPERATIONAL RISKS CONTINUED Risk description and impact Mitigation Talent and organization Our ability to execute on our strategic plan, including delivering on product development roadmaps and other investments, is highly dependent on our ability to attract, develop, and retain talent globally. Our extensive global talent management program aims to attract, retain, engage, and develop the diverse talent we need to support our success as a business. This program includes talent development, learning programs, talent recruitment and retention, and succession planning. Our global talent management function is supported by state-of-the-art, cloud-based human resources technology. This facilitates an analytical and data-driven approach and regular internal reporting of HR metrics. We conduct an employee engagement survey each year to measure levels of engagement and belonging and provide management with current insights on how to support and retain our highly engaged, high-performing workforce. We also regularly review and update our reward structures and programs to maintain market competitiveness to ensure we can attract and motivate talent. During 2022, we continued to prioritize the recruitment and retention of talent in a very competitive market in order to have the resources to execute our strategic plan. Fraud We may be exposed to internal or external fraudulent or related criminal actions. These include cyber fraud and theft of tangible or intangible assets from the company. Our Corporate Risk Committee frequently reviews potential exposure to fraudulent activities so we can take appropriate and timely action. 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 policies and anti-fraud controls include effective segregation of duties; defined approvals and delegations of authority; independent internal and external audits; risk- based assessments including fraud; training; information and communication; and an anonymous reporting hotline for concerns. Our anti-fraud prevention, detection, protection, response, and recovery activities include the use of technology to identify threats; annual compliance training for all employees; awareness campaigns by our information security and corporate functions; internal fraud alerts; anti-fraud and anti-cybercrime workshops and training for at-risk businesses and functions; sharing of case studies and best practices; and measures within our Supplier Code of Conduct and anti-fraud protections integrated into our vendor management processes and payment card and banking practices. Employees and vendors are encouraged to “pause for cause” and report suspected activities, including fraud, via appropriate channels. We continuously evaluate and improve our anti-fraud related process controls and procedures, including reviewing manual controls and automating controls where possible. As a consequence of increased work from home and the steady rise in ransomware attacks globally, we expect cyber fraud risks may be amplified and continue to assess and evolve the measures in place. Risk Management continued ← → Wolters Kluwer 2022 Annual Report 73 OPERATIONAL RISKS CONTINUED Risk description and impact Mitigation Business interruption Our business could be affected by major incidents, such as cyberattacks, human events (e.g., civil unrest and riots), and physical risks which may relate to climate change, such as extreme weather or natural catastrophes, causing damage to our facilities, IT systems, hardware, and other tangible assets, or damage to our data, brand, or other intangible assets. This could result in business interruption and financial or other loss. We have a worldwide risk control and business continuity management program that focuses on how to prepare for, protect against, respond to, and recover and learn from major incidents. This program covers incident management, business continuity, operational recovery, and IT disaster recovery. Our multi-disciplinary Global Incident Management Program supports our ability to manage crises and incidents of all types. We internally conduct regular location risk assessments and on-demand loss control surveys of key operating companies and supplier locations with our insurers. These underwriters work with our operating companies to cost-effectively implement recommendations for continued improvement. Our IT infrastructure and flex work policies allow our staff to conduct business effectively from any location. Many of our businesses have diversified personnel and support centers that have capabilities to cover and adapt between regions. See page 59 for more information on climate-related risks. Brand and reputation With the increasing prominence of the Wolters Kluwer brand, the company potentially becomes more vulnerable to brand or reputation risks. The integrity of our brand and reputation is key to our ability to maintain trusted relationships with our stakeholders, including employees, customers, and investors. Our cross-functional global brand organization oversees the brand strategy and implementation work of our Global Branding & Communications (GBC) team. The GBC team closely works with other corporate functions and our businesses to grow the equity and awareness of our brand, while monitoring any potential reputational risks. We monitor conversations taking place globally in the media and on social media relating to our brand and thought leadership. 74 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements LEGAL & COMPLIANCE RISKS Risk description and impact Mitigation Regulatory and compliance Failure to comply with applicable laws, regulations, internal policies, and ethical standards, or breach of covenants in financing and other agreements could result in fines, loss or suspension of business licenses, restrictions on business, third-party claims, and reputational damage. Legal limitations to conduct business in certain countries could affect our revenues. We have established governance structures, policies, and control programs to ensure compliance with laws, internal policies, and ethical standards. Our global ethics & compliance program is designed to mitigate risk of non-compliance with laws, regulations, internal policies, and ethical standards. It includes a set of policies and procedures, annual ethics and compliance risk assessments, ongoing communication and awareness activities, and company-wide and role-based training. Our Code of Business Ethics describes our commitment to acting ethically and complying with our corporate policies and applicable laws. It includes topics such as competing fairly and prohibiting bribery and corruption. Our business partners are expected to adhere to the same ethics and compliance standards through commitment to our Supplier Code of Conduct or an equivalent standard. Some topics, including trade compliance and anti-bribery and anti-corruption, are further detailed in standalone policies. As part of our trade sanctions and anti-bribery and anti-corruption programs, we also conduct risk-based screening and monitoring of vendors, third-party representatives, and customers. Our global SpeakUp program encourages employees to report any suspected breach of laws, regulations, internal policies, and ethical standards for investigation and remediation. We further operate a cross-functional enterprise-wide compliance program for data privacy laws. Where possible, we implement global baseline policies that allow for compliance with new and anticipated laws in multiple jurisdictions. Compliance with laws and internal policies is also an integral part of our Internal Control Framework. This includes semi-annual letters of representation, annual internal control testing, and regular internal audits on compliance topics. We continually evaluate whether legislative changes, regulatory developments, new products, or business acquisitions require additional compliance efforts. We monitor legislative developments and regulatory changes, including those related to data privacy, data protection, and trade sanctions, to assess the potential impact on our businesses, products, and services. Political stability is a factor we consider in our investments. Contractual compliance We could be exposed to claims by our contractual counterparties based on alleged non-compliance with contractual terms. This includes the number of users agreed upon, price commitments, and/or service delivery. We negotiate contracts with particular attention to risk transfer clauses, insurance, limitations on liability, 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 are in the process of implementing a global contract lifecycle management for our significant commercial agreements which will help us manage compliance with third-party agreements, track key dates and milestones, monitor compliance with our contracting policies and standards, and mitigate operating risk by automating contracting processes. We use contract playbooks prepared by our internal legal department to standardize contract language and negotiation positions with respect to customer contracts. Our limitation of liability policy establishes a market-based cap on liability that the company will assume in agreements with customers subject to exceptions that may be approved by a member of the Executive Board after balancing of risks and benefits. Risk Management continued ← → Wolters Kluwer 2022 Annual Report 75 LEGAL & COMPLIANCE RISKS CONTINUED Risk description and impact Mitigation Intellectual property protection Intellectual property rights could be challenged, limited, invalidated, circumvented, or infringed. Our ability to protect intellectual property rights may be affected by technological developments or changes in legislation. We protect our intellectual property rights in order to safeguard our portfolio of information, software solutions, and services. We rely on trademark, copyright, patent, and other intellectual property laws to establish and protect our proprietary rights to these products and services. We also monitor legislative developments with respect to intellectual property rights. We protect and enforce our intellectual property assets by monitoring for potential infringement and then taking appropriate action to safeguard our proprietary rights. Legal claims We may be involved in legal disputes and proceedings in different jurisdictions. This may include litigation, administrative actions, arbitration, or other claims involving our products, services, informational content provided or published by the company, or employee and vendor relations. We have measures in place to mitigate the risk of legal claims, including contractual disclaimers and limitations of liability. We monitor legal developments relevant to our interests to support our business lines in compliance with local laws and fiscal regulations. We manage a range of insurable risks by arranging insurance coverage for potential liability exposures. FINANCIAL & FINANCIAL REPORTING RISKS Risk description and impact Mitigation Treasury We are exposed to a variety of financial risks, including market, liquidity, and credit risks. Our results are subject to movements in exchange rates. Whenever possible, we mitigate the effects of currency and interest rate fluctuations on net profit, equity, and cash flows by creating natural hedges, by matching the currency profile of income and expenses and of assets and liabilities. When natural hedges are not present, we aim to realize the same effect with the aid of derivative financial instruments. We have identified hedging ranges and put policies and governance in place, including authorization procedures and limits. We purchase or hold derivative financial instruments only with the aim of mitigating risks. The cash flow hedges and net investment hedges qualify for hedge accounting as defined in IFRS 9 Financial Instruments. We do not purchase or hold derivative financial instruments for speculative purposes. 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 2022, we diminished liquidity risk by securing additional funding with a new €500 million four-year Eurobond. Furthermore, we agreed to the final one-year extension of the €600 million multi-currency revolving credit facility such that the facility now matures in 2025. Further disclosure and detailed information on financial risks and policies is provided in Note 30 – Financial Risk Management. 76 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements FINANCIAL & FINANCIAL REPORTING RISKS CONTINUED Risk description and impact Mitigation Post-employment benefits Funding of our post-employment benefit programs, including frozen or closed plans, could be adversely affected by interest rates and the investment returns on the assets invested in each respective plan. These are influenced by financial markets and economic conditions. We evaluate all our employee benefit plans to ensure we are market competitive with plan designs that reduce risk and volatility. We also continuously monitor opportunities to make our plans more efficient. We 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. Our aim is 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. 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 are continuing to plan for those expected changes, working with the Pension Fund Board and external experts. Taxes Changes in operational taxes and corporate income tax rates, laws, and regulations could adversely affect our financial results, and 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. We have tax policies in place and tax matters are dealt with by a professional tax function, supported by external advisors. We monitor legislative developments in the jurisdictions in which we operate and consider the potential impacts of proposed regulatory changes. We maintain a liability for uncertain income tax positions in line with IAS 12 Income Taxes and IFRIC 23 Uncertainty over Income Tax Treatments. The adequacy of this liability is evaluated on a regular basis in consultation with external advisors. Note 16 – Income Tax Expense and Note 23 – Tax Assets and Liabilities set out further information about income tax and related risks. As a leader in tax and accounting products, we take our responsibility as a corporate citizen seriously. We provide training to our tax staff where appropriate. Our approach to tax matters is explained in our Tax Principles that are reviewed annually and updated as appropriate. Wolters Kluwer also subscribes to the principles of the VNO-NCW Tax Governance Code that was issued in 2022. Further information on this will be available on our website in the course of 2023. For the full version of the Code, visit www.vno-ncw.nl/taxgovernancecode. Risk Management continued ← → Wolters Kluwer 2022 Annual Report 77 FINANCIAL & FINANCIAL REPORTING RISKS CONTINUED Risk description and impact Mitigation Misstatements, accounting estimates and judgments, and reliability ofsystems 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 estimates, judgments, 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. We maintain an Internal Control Framework for financial reporting. Our Internal Audit and Internal Control departments monitor progress in resolving any audit findings and perform follow-up visits and remediation testing to determine whether those findings are timely and effectively resolved. Senior executives in our divisional and operating companies and senior corporate staff members sign letters of representation semi-annually, certifying compliance with applicable financial reporting regulations and accounting policies. Independent internal audit reviews are carried out to ensure compliance with policies and procedures. These reviews also ensure that existing controls provide adequate protection against actual risks. Financial results are inquired and reviewed by our 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. Our Group Accounting & Reporting department periodically provides updates and training to our businesses about 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. 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 (12) (3) 1% decrease in discount rate in determining the gross service costs for the post-employment benefit plans (5) (2) 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) 78 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements 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, that is included in the 2022 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 2022 does not contain any errors of material importance; • Under the current circumstances, there is 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 2022 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 21, 2023 Executive Board Nancy McKinstry CEO and Chair of the Executive Board Kevin Entricken CFO and member of the Executive Board Statements by the ExecutiveBoard 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. 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 divisional performance, Global Strategy, Business Development, Technology, Global Business Services, Communications, Human Resources, Corporate Governance, and Sustainability. ← → Wolters Kluwer 2022 Annual Report 79 Executive Board 80 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Supervisory Board Ann Ziegler American, 1958, 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 2025. Former Senior Vice President, CFO, and Executive Committee member of CDW Corporation 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. Heleen Kersten Dutch, 1965, member of the Selection and Remuneration Committee. Appointed in 2022, and current term until 2026. Partner and Lawyer at Dutch law firm Stibbe N.V. Other positions: • Member Supervisory Board, Chair Nominating and Corporate Governance Committee, and member Audit Committee and Compensation Committee of STMicroelectronics N.V. • Chair of the Board of the Dutch Red Cross • Member Advisory Board Dutch Institute of Internal Auditors • Vice-Chair Supervisory Council and Member Financial Committee of Stichting Het Rijksmuseum Jack de Kreij Dutch, 1959, Vice-Chair of the Supervisory Board, and Chair of the Audit Committee. Appointed in 2020, and current term until 2024. Former CFO and Vice-Chair of the Executive Board of Royal Vopak N.V. Other positions: • Member Supervisory Board, Chair Audit Committee and member ESG Committee of Royal Boskalis Westminster N.V. • Vice-Chair Supervisory Board and Chair Audit Committee of TomTom N.V. • Member of the Board (Non- Executive Director) and Chair Audit Committee of Oranje Fonds • Member of the Global Advisory Board of Metyis • Member of the Board of Stichting Preferente Aandelen Philips • Chair VEUO (Dutch Association of Securities-Issuing Companies) Bertrand Bodson Belgian, 1975. Appointed in 2019, and current term until 2023. CEO and member of the Board of Keywords Studios PLC, and former Chief Digital Officer and member of the Executive Committee of Novartis 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. Founder Strategic Vision Ventures, LLC and former CTO of Xerox Other positions: • Member Board of Directors (Non-Executive Director) and member Finance and Governance & Corporate Responsibility Committees of IDEXX Laboratories, Inc. • Member Board of Directors (Non-Executive Director) and member Compensation and ESG Committees of Inari Agriculture • Member Board of Trustees and member Compensation and Nomination Committees of the Boston Museum of Sciences • Honorary Professor, KU Leuven Faculty of Engineering Science • Chair of the International Advisory Board, Flanders AI Research Program • Strategic Advisor, Safar Partners Chris Vogelzang Dutch, 1962, member of the Audit Committee. Appointed in 2019, and current term until 2023. Former CEO of Danske Bank A/S Other positions: • Member of the Supervisory Council of Het Rijksmuseum Jeanette Horan British, 1955, Co-Chair of the Selection and Remuneration Committee, dealing with remuneration matters. Appointed in 2016, and current term until 2024. Former Chief Information Officer at IBM Other positions: • Member of the Board (Non-Executive Director) and member Audit and Technology Committees of Nokia • Member of the 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 Further information can be found on www.wolterskluwer.com/ en/investors/governance/ supervisory-board- committees While the world faces a confluence of challenges just as we emerge from the pandemic, Wolters Kluwer continues from a strong position. Ann Ziegler Chair of the Supervisory Board ← → Wolters Kluwer 2022 Annual Report 81 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. INTRODUCTION BY THE CHAIR OF THESUPERVISORY BOARD In April 2022, I succeeded Frans Cremers as Chair of the Supervisory Board of Wolters Kluwer. My intention is to follow the line that was set out by my predecessor. Having been a member of this Board for several years now, I have a good understanding of the business and our priorities, and was closely involved in assessing the current strategic plan, Elevate our Value. While the world faces a confluence of challenges – economic, financial, and political – just as we emerge from the pandemic, Wolters Kluwer continues from a strong position. We are very fortunate that we have a highly experienced management team, a clear strategy, a transformed, well-invested and future- ready business, a talented and engaged workforce, and a strong balance sheet. In the latter part of 2022, I met with several of our shareholders, allowing me to hear their views and questions on governance and ESG topics at the company. It was clear we have many supportive shareholders who know our global business well, understand how we are creating value, and agree with us which ESG risks are relevant. We will continue to make progress on all fronts. I am delighted the company has completed an assessment of its greenhouse gas footprint along the value chain and recently submitted its well- considered emission reduction plans to the Science Based Targets initiative for validation. I look forward to guiding the Supervisory Board and management team as they execute on the current strategic plan, even as we navigate through more challenging economic conditions. Ann Ziegler Chair of the Supervisory Board MEETINGS The Supervisory Board held seven scheduled meetings in 2022 and one additional meeting to discuss a potential acquisition. Six meetings included a session for Supervisory Board members only, without the members of the Executive Board being present. 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 2022 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 2022 Financial Statements, pursuant to their statutory Report of the SupervisoryBoard 82 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Report of the SupervisoryBoard continued to the long-term value creation for the company’s stakeholders. As in other years, the divisional CEOs presented their Vision & Strategy Plans (VSP) for 2023-2025 to the Supervisory Board. These presentations enable 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 the performance, key market trends, strategy, and competitive developments. In addition, with a view on talent management and having solid replacement plans, speaking directly to senior management is deemed important for the Supervisory Board. In September, the Supervisory Board visited Boston where management of the Health division presented its business. In addition to the divisional VSP, several managers of the Health division presented their business and gave product demos, which also included early stage innovations. The Supervisory Board, together with management, also met with customers of the Health division. This interaction with several layers of management and customers contributes significantly to the Supervisory Board’s deep understanding of the business. The Supervisory Board therefore is happy that, after the travel restrictions due to COVID in 2020 and 2021, it was possible to pick up the routine of annual visits to business units again. Innovation is a key component of the company’s strategy. The Supervisory Board was informed about the innovation activities and investments within Wolters Kluwer and strongly supports this. As part of the strategy, the company annually reinvests approximately 10% of the group revenues into product development. 2022 was the twelfth consecutive year in which Wolters Kluwer rewarded promising new internal business initiatives via the Global Innovation Awards. This event enables teams across 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 May 10, 2023 (AGM 2023). → See the Financial Statements onpage 110 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 feedback of the Supervisory Board members, which was given early in 2022, included the request to spend more time on environmental, social, and governance (ESG) topics. As a follow up, a presentation was given to the Supervisory Board, which focused on climate reporting and regulatory developments, as well as a fit for purpose governance structure and allocation of responsibilities with respect to ESG topics. In addition, the Supervisory Board and Audit Committee were kept informed on a regular basis with respect to ESG developments, including diversity, equity, inclusion, and belonging (DEIB). A deep dive on the data gathering process, reporting, and target setting was presented to the Audit Committee in January 2023, and summarized for the full Supervisory Board. Based on feedback in the evaluations, it was also agreed to continue holding a number of Board meetings virtually post-COVID. This contributes to the ambition to reduce the company’s greenhouse gas emissions, cost reduction, and meeting efficiency. The Supervisory Board remains focused on a good balance between presentations and discussions, as it is considered important to have interactive discussions with several layers of management. In line with Supervisory Board feedback, the company also continued with offering business unit presentations and product demos to the Supervisory Board during 2022. The evaluation confirmed that 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. As suggested in the evaluation, the Supervisory Board members continue having discussions without the Executive Board members being present during part of the meetings. Around the in-person Board meetings, the Board members also meet informally, which benefits the open and transparent culture between the Board members and gives them an additional opportunity to reflect on all aspects of the business which they may consider of interest. 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. Throughout the year, all members can come up with requests for additional information and suggestions to further improve the quality of the meetings. STRATEGY The Supervisory Board was kept closely informed on the first year of execution of the new three-year strategy for 2022-2024, Elevate Our Value, which was announced in February 2022 and had previously been approved by 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. Based on their knowledge and experience, the Supervisory Board members advise the Executive Board and divisional management throughout the year on strategic topics. The Supervisory Board also supports the increasing strong focus on ESG topics within Wolters Kluwer, including the emphasis on diverse talent as a key pillar of the strategy. The Supervisory Board believes the strategy will contribute 57% of the Supervisory Board members are female ← → Wolters Kluwer 2022 Annual Report 83 of crisis management teams. The company has acted upon all international sanctions that have been imposed against entities and individuals in the region. The business impact for Wolters Kluwer is not material. For more information on risks, see Risk Management. → Read more about Risk Management on page 67 ENVIRONMENTAL, SOCIAL, AND GOVERNANCE MATTERS The Supervisory Board has oversight of and actively discussed the ESG strategy, performance, and reporting. The Supervisory Board is supportive of the company’s ESG approach and the increased focus on this topic. The Supervisory Board strongly supports and approved the recent submission of near-term science-based targets and the net-zero commitment. The enhanced focus on the depth and quality of ESG data positions the company well for compliance with the EU Corporate Sustainability Reporting Directive, which will apply as of financial year 2024. In addition to presentations on selected ESG-related topics such as the governance structure of ESG activities and the engagement of employees, the Supervisory Board received regular updates regarding ESG priorities. The deep dive session with the Audit Committee on the progress with respect to ESG data gathering, reporting, and target setting in January 2023, confirmed the strong progress the company is making in this area. The enhanced focus on ESG is also reflected by the fact that since 2021, non-financial targets make up 10% of the Executive Board’s short-term incentive targets. The Supervisory Board continues to support the ESG activities of the company and believes that these efforts will contribute to an inclusive culture of integrity, accountability, and transparency, creating long-term value for all stakeholders. Finally, the Supervisory Board’s focus on ESG and good governance was also evidenced by the introduction meetings of the new Chair with some of our largest shareholders in the second half of 2022. ACQUISITIONS AND DIVESTMENTS The Executive Board kept the Supervisory Board informed about all pending acquisition and divestment activities. The Supervisory Board approved the acquisition by the GRC division of International Document Services, Inc. (IDS), a U.S.-based provider of compliance and document generation software solutions for the mortgage and real estate industry. This company has a strong strategic fit with GRC’s Compliance Solutions business, which provides compliance software for U.S. banks, lenders, credit unions, insurers, and securities firms, and will be fully integrated in that business. GRC management and business development presented this acquisition to the Supervisory Board, which enabled the Board to ask questions to the responsible teams directly. The Supervisory Board also discussed the performance and value creation of previous acquisitions, taking into consideration Wolters Kluwer’s financial and strategic criteria for acquisitions. The lessons learned from these annual reviews are taken into consideration for future 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 the risk appetite per risk category, as well as the assessment of internal risk management and control systems and ongoing actions to improve these systems. The Supervisory Board was informed about the efforts of the company to assess climate related risks and the plans to further mature this assessment in the future. The Supervisory Board supports the actions the company took with respect to the situation in the Ukraine, which include the support of Ukrainian employees, community support, internal and external communication, and the organization the business to present their innovative ideas. The awards are ultimately awarded by a jury consisting of internal and external experts. Two of the awarded teams presented their business plans to the Supervisory Board. Driving a strong culture of innovation and continuing investment in new and enhanced products, including expert solutions, is an important means for driving long-term value creation at Wolters Kluwer. In line with standard practice, management of Global Business Services and Digital eXperience Group (DXG) gave presentations, updating the Supervisory Board on the company’s technology strategy and execution thereof, including cybersecurity and disaster recovery plans, as well as the company’s approach towards artificial intelligence. DXG plays an important role in the company’s innovation by offering scalable services and technology to the divisions, which can be used in business units across the company. Two Supervisory Board members had a separate meeting with DXG management to get additional insight in the activities of this group and to share ideas. The Supervisory Board was also informed about an assessment of the strategic business opportunities in the ESG market. With companies such as Enablon and Tagetik in its portfolio, Wolters Kluwer is well positioned to leverage on the interesting growth opportunities in this space. The Global Brand & Communications team gave a presentation on the design and execution of the brand strategy. Increased brand recognition can contribute to the execution of the strategy. In relation to the strategy, 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. 84 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Report of the SupervisoryBoard continued AUDIT COMMITTEE The Audit Committee met four times in 2022, during the preparation of the full-year 2021 and half-year 2022 results, and around the first-quarter 2022 trading update and nine-month 2022 trading update. In addition, there was one scheduled conference call in December between the external auditor, the Chair of the Audit Committee, and the CFO. In 2022, the Audit Committee also started the practice of occasionally organizing deep dive sessions on certain topics. The Audit Committee consisted of Mr. de Kreij (Chair), Ms. Vandebroek, and Mr. Vogelzang. The regular 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 2022, as routine agenda items, the Audit Committee had discussions with the external auditor, as well as with the head of internal audit, without the members of the Executive Board being present at the end of two meetings. 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. Key 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, accounting topics, ESG, pensions, tax planning, impairment testing, the Treasury Policy, the financing of the company, risk management, restructuring plans, cybersecurity, hedging, litigation reporting, incident management, and the quarterly reports and the full-year report on the audit of the external auditor. During the visit to Boston, the Audit Committee had a deep dive session with the head of Internal Controls and Compliance. In January 2023, in addition to the deep dive session focused on ESG, the Audit Committee was informed on operational excellence and restructuring initiatives. the divestment. The Supervisory Board also approved the additional €100 million share buyback for the period starting January 2, 2023, up to and including February 20, 2023. With respect to the funding of the company, the Supervisory Board approved the new €500 million four-year senior bonds, which were issued in September 2022. In addition, the Supervisory Board approved the second and final one-year extension of the €600 million multi- currency revolving credit facility with an initial maturity of three years. This facility includes ESG targets. 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 the annual and interim financial results. The dividend increase of 15% over 2021, which was approved by the AGM in 2022, and the proposed dividend increase of 15% over 2022 (to be approved by the AGM in 2023), are a sign of the strong confidence the Executive Board and Supervisory Board have in the future and financial stability of the company. Together with the share buyback programs, the cash-return to shareholders is well balanced with the annual investment of approximately 10% of group revenues in innovation and the opportunity for acquisitions. 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, ESG developments, 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 updates. The Supervisory Board approved the increase of the Full-Year 2022 guidance in the Half-Year Results Press Release which was issued in August. 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. DEIB is close at heart of the Supervisory Board and is integrated in presentations and discussions on various topics. 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. In 2022, Wolters Kluwer was named one of America’s best employers for diversity by Forbes, for the fifth straight year. This recognition demonstrates the great strides the company continues to make in its commitment to DEIB. The Supervisory Board was also updated on and discussed the results of Wolters Kluwer’s employee engagement survey, which measures important topics such as engagement, belonging, alignment, agility, career development, and other components driving engagement, and supporting a culture aimed at long-term value creation. Overall, these results were positive. The company continues executing action plans to further improve in these areas. FINANCE The Supervisory Board and Audit Committee carefully observe the financing of the company, including the balance sheet and available headroom. The Supervisory Board also closely monitors the development of, among others, net-debt-to-EBITDA ratio, debt-to- equity ratio, and liquidity planning. The Supervisory Board approved the share buyback program in 2022 of up to €1 billion, as well as the announcement to use the proceeds of the sale of Wolters Kluwer’s legal information assets in France and Spain to buy back shares in order to mitigate the earnings dilution caused by ← → Wolters Kluwer 2022 Annual Report 85 The Supervisory Board is currently conducting a search for the replacement of Mr. Bodson as member of the Supervisory Board. The composition of the Supervisory Board is in line with its profile and 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 male/female representation of 43/57%, which is in line with the diversity policy and Dutch law, requiring a representation of at least 33% male and female. 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 www.wolterskluwer.com/ en/investors/governance/supervisory- board-committees SELECTION AND REMUNERATION COMMITTEE The Selection and Remuneration Committee met four times in 2022. Following the retirement of Mr. Cremers in April 2022, the Committee consists of Ms. Horan (who chairs the remuneration-related matters), Ms. Ziegler (who chairs the selection and nomination- related matters), and Ms. Kersten. After every meeting, the respective chairs of the Committee report back to the full Supervisory Board. The resolutions regarding nominations and remuneration were taken by the full Supervisory Board based on recommendations from the Committee. For more information about the remuneration policy of the Executive Board and the Supervisory Board and the execution thereof, see Remuneration Report. → See our Remuneration Report onpage 87 The Selection and Remuneration Committee discussed the replacement of Mr. Bodson as member of the Supervisory Board after the AGM in 2023. SUPERVISORY BOARD COMPOSITION In 2022, Mr. Cremers resigned as Chair and member of the Supervisory Board. He was succeeded as Chair by Ms. Ziegler. Mr. De Kreij in turn succeeded Ms. Ziegler as Vice-Chair. Ms. Kersten was appointed as a new member. In 2023, Mr. Bodson’s first term expires. He has informed the Supervisory Board that regretfully he is not available for reappointment due to the workload of his other activities. The Supervisory Board would like to thank Mr. Bodson for his knowledgeable and much appreciated contributions during his tenure as member of the Board. During its meetings in 2022, the Audit Committee has extensively discussed the request for proposal (RFP) for the auditor rotation, which is required under Dutch law every ten years. In addition, as part of the process, the members of the Audit Committee interviewed representatives of all four candidate firms. Important criteria included the audit approach, international and sector experience, composition and fit of the team (including diversity), the transition approach, independence resolution, and proposed fees. The final recommendation to the full Supervisory Board to nominate KPMG Accountants N.V. as the new external auditor was discussed during the additional Audit Committee session in January 2023, in the presence of the Executive Board and corporate staff and was approved by the full Supervisory Board. The appointment of KPMG as of financial year 2025 will be submitted to the AGM in 2023. This gives the company sufficient time to phase out the non-audit services carried out by KPMG. The Audit Committee has reviewed the performance of the current 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 86 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements The Supervisory Board would like to thank the Executive Board and all employees worldwide for their efforts in the past year. The strong results of the company and ongoing focus on serving customers and long-term value creation, within an innovative, diverse, and transparent culture, were highly appreciated by the Supervisory Board. Alphen aan den Rijn, February 21, 2023 Supervisory Board Ann Ziegler, Chair Jack de Kreij, Vice-Chair Bertrand Bodson Jeanette Horan Heleen Kersten Sophie Vandebroek Chris Vogelzang 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 Boardonpage 79 → See Corporate Governance onpage 63 MEETING ATTENDANCE Supervisory Board Audit Committee Selection & Remuneration Committee Number of meetings held 8 * 4 4 A.E. Ziegler 8 – 4 J.P. de Kreij 7 4 – B.J.F. Bodson 8 – – J.A. Horan 8 – 4 H.H. Kersten ** 4 – 2 S. Vandebroek 8 4 – C.F.H.H. Vogelzang 8 4 – F.J.G.M. Cremers *** 3 – 2 * Seven regular meetings and one ad-hoc meeting. ** Ms. Kersten missed one Board meeting and attended all Selection and Remuneration Committee meetings since her appointment in April 2022. *** Mr. Cremers attended all meetings until his retirement in April 2022. Report of the SupervisoryBoard continued Management’s early actions to address inflation and steadfast approach to investment bore fruit in 2022. Jeanette Horan Co-Chair of the Selection and Remuneration Committee, dealing with remuneration matters ← → Wolters Kluwer 2022 Annual Report 87 This Remuneration Report outlines our philosophy and framework for management pay, provides a summary of our remuneration policy, and lays out how the policy was applied in 2022. We discuss how last year’s financial and ESG performance drove the final remuneration outcome for 2022 and how the policy will be applied in 2023. LETTER FROM THE CO-CHAIR OFTHE SELECTION AND REMUNERATION COMMITTEE Dear Shareholders, On behalf of the Supervisory Board, I am pleased to present our 2022 Remuneration Report, in which we outline our pay-for- performance philosophy and our strategy- linked remuneration framework, provide a summary of our remuneration policy, and explain how 2022 performance translated into the remuneration earned. We also set out how the policy will be applied in 2023. 2022 performance and STIP outcome In early 2022, just as pandemic lockdowns were starting to be lifted, new challenges arose, most notably the war in Ukraine and the disruption in energy markets, followed by unprecedented levels of inflation and a rapid rise in interest rates. Combined with the continued global shortage of talent in our industry sector, which relies so much on human capital, this created a challenging set of circumstances through which to steer a course. Given the environment, we began the year with a degree of caution. As the various sections of this annual report discuss, it turned out to be a good year with strong financial performances across all four divisions. The long- term strategy of driving towards expert solutions was fundamental to the financial achievements made in 2022 and the last three years. In addition, management’s early action to address inflation and steadfast approach to investment bore fruit in 2022. For a business with a very significant proportion of revenues tied to annual or multi-year subscription contracts, decisions around pricing need to be well thought through and implemented in a careful but timely manner. In 2022, the company delivered solid 6% organic growth, resulting in an absolute revenue achievement that exceeded the target by 1%. Even in the uncertain environment, management chose to invest, increasing product development spending to 11% of revenues. This investment went towards supporting our faster-growing businesses, pursuing new market opportunities, and adhering to multi-year product roadmaps. Management also continued to prioritize actions and investments to address the heightened global competition for talent. Due mainly to the strong revenue performance and a favorable currency mix, the adjusted operating profit margin rose by 80 basis points, resulting in an 8% increase in adjusted pre-tax profit and a 6% increase in adjusted net profit in constant currencies. Adjusted net profit (€1,059 million) thereby exceeded the absolute target by 4%. Adjusted free cash flow (€1,220 million) increased 7% in constant currencies, exceeding the target by 2%. To provide incentives for advancing our ESG performance, which is now firmly embedded in the company’s strategy, the Remuneration Report 6% organic growth in 2022 88 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Last year’s Remuneration Report received strong shareholder support with over 94% of votes approving the report. We trust this report provides a clear explanation of the drivers of 2022 remuneration and clear disclosure on future goals and that shareholders can again support this report at our AGM on May 10, 2023. Jeanette Horan Co-Chair of the Selection and Remuneration Committee, dealing with remuneration matters The 2023 AGM agenda is available at www.wolterskluwer.com/agm Supervisory Board had selected three non-financial measures for 2022, which together carried a weight of 10% in the STIP. Employee belonging was an important new measure used for the first time in 2022. This is the indicator we have chosen to measure our global performance on diversity, equity, and inclusion. The score, measured by a third party, increased by 1 point in 2022, meeting the target. The other two ESG measures, an indexed cybersecurity maturity score and the number of on-premise servers decommissioned, had been used in 2021 and were carried forward with new targets for 2022. For these two ESG measures, performance for the year was significantly ahead of target as detailed in this report. 2020-2022 performance and LTIPoutcome It is important to note up front that the LTIP which vested in 2022 for payout in 2023 still reflects the previous remuneration policy. As such, it was linked to performance on relative TSR and diluted EPS. Over the three-year LTIP period, 2020- 2022, the share price rose 50.35%, outperforming the broader market indices, STOXX Europe 600 and the AEX. Total Shareholder Return, including dividends and using a 60-day average price at the start and at the end of the period, was 67.2%. This TSR performance placed Wolters Kluwer in third place, ahead of 13 TSR peers. For the second measure, diluted EPS, the compound annual growth rate was 15.9% in constant currencies over the three-year period, exceeding the target of 10.8% set three years ago. The IFRS-based diluted EPS benefitted from the net gain on divestments completed in 2022. The relative TSR and diluted EPS performance resulted in above target payout. The realized value of course also reflects the over 50% appreciation of the share price over the period. Looking ahead: STIP 2023 During the past two years, the Supervisory Board has monitored the effectiveness of the ESG metrics that were used in the short-term incentive. The Board is of the opinion that the three measures used in 2022 continue to be not only quantifiable and verifiable, but also appropriate incentives for the Executive Board to advance our near-term ESG objectives. These near-term ESG objectives are to continue building a diverse, equitable, and inclusive culture; to maintain high levels of cybersecurity; and to make further progress on reducing our direct emissions by continuing to migrate applications from on-premise servers to energy-efficient cloud infrastructure. Enormous strides have been made in advancing our cybersecurity maturity in recent years. We are now well-positioned compared to our industry benchmark and are focused on maintaining our maturity score, which in itself requires constant effort. Programs to migrate servers to the cloud have also made significant progress, but there still remains some work to be done. Looking ahead: LTIP 2023-2025 The LTIP for 2023-2025, which reflects the new policy that was adopted by shareholders in 2021, will include relative TSR at 50%, diluted adjusted EPS at 30%, and return on invested capital (ROIC) at 20%. The Supervisory Board has set three- year targets for compound annual growth in diluted adjusted EPS and for ROIC, applying additional stretch to the underlying financial plan that underpins the three-year strategy. These forward- looking three-year targets are disclosed on page 104. While we did not make any changes to the TSR peer group in 2022, the Supervisory Board continues to monitor this group given the periodic delistings and mergers that have been occurring in our sector. Remuneration Report continued HOW DID WE PERFORM? 2022 FINANCIAL MEASURES 5,453 1,220 revenues, € million adjusted free cash flow, € million 1,059 adjusted net profit, € million 2022 NON-FINANCIAL (ESG) MEASURES 1,032 number of on-premise servers decommissioned 73 belonging score, an increase of 1 point 7.4% percent improvement in cybersecurity maturity score over 2021 For 2022, STIP financial measures were revenues, adjusted net profit, and adjusted free cash flow, while STIP non-financial (ESG) measures were employee belonging score, an indexed cybersecurity maturity score, and the number of on-premise servers decommissioned. The achievements on each of these measures are shown above and discussed in this report. See Implementation of remuneration policy in 2022. ← → Wolters Kluwer 2022 Annual Report 89 2022 STIP financial targets were exceeded, while non-financial (ESG) targets were met or exceeded. Three-year relative total shareholder return performance and compound annual growth (CAGR) in diluted EPS were ahead of target. Remuneration at a glance THREE-YEAR 2020-2022 TOTAL SHAREHOLDER RETURN Wolters Kluwer achieved third 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. Thomson Reuters CGI Wolters Kluwer Pearson Equifax News Corp S&P Global RELX Verisk Experian Sage Group Bur. Veritas Wiley SGS Intertek Informa -20% +60% +80% 0% +20% +40% 40% 60-day average price TSR 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. IMPACT OF PERFORMANCE AND SHARE PRICE ON REMUNERATION Target Actual 8,488 62% 21% 17% 37% 25% 14,079 14% 10% 25% 8% 6% €0 €15 ,000 in thousands of euros, unless otherwise stated €10 ,000 €5,000 2022 CEO target and realized pay Increase in value due to share price performance LTIP TSR outperformance LTIP STIP Base Salary LTIP EPS outperformance Target pay shown above reflects the number of LTIP shares conditionally awarded for LTIP 2020-2022 valued at the closing share price on December 31, 2019 (€65.02). Realized actual pay shown above reflects the number of LTIP shares earned valued at the closing share price on December 31, 2022 (€97.76). The final actual payout will be valued at the volume-weighted- average share price on February 23, 2023. 2020-2022 PERFORMANCE 15.9% Diluted EPS: Three-year CAGR in constant currencies €2.46 €2.70 €2.78 €4.01 2019 2020 2021 2022 Diluted EPS Three-year CAGR in constant currencies was 15.9% over the period 2020-2022. SHARE PRICE 2020-2022 0 20 40 60 80 100 120 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 Wolters Kluwer N.V. AEX rebased STOXX Europe 600 rebased € AEX and STOXX Europe 600 rebased to Wolters Kluwer share price. The share price increased 50.35% over the three-year performance period for LTIP 2020-2022. 90 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued ← → Wolters Kluwer 2022 Annual Report 91 OUR REMUNERATION POLICY Below we provide a high level summary of the Executive Board remuneration policy which was adopted in 2021. The remuneration policy is available at www.wolterskluwer.com/en/investors/governance/policies-and-articles REMUNERATION PEER GROUP The policy provides for a remuneration peer group that is weighted towards European companies at approximately 60%. Current pay peers are shown on page 94. STIP PERFORMANCE MEASURES(FINANCIAL) The policy provides a pre-defined list of financial measures from which the Selection & Remuneration Committee can select. The STIP financial measures 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 have been applied for the past few years and will be used in 2023. STIP PERFORMANCE MEASURES (NON-FINANCIAL) 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 is 20%. In 2022 and 2023, the weighting is 10%. For 2023, as in the prior year, 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 The policy stipulates the following measures for the LTIP: • Relative total shareholder return is weighted at 50% • Diluted adjusted EPS has a weighting of 30% • Return on invested capital has a weighting of 20% SHARE OWNERSHIP AND HOLDINGREQUIREMENTS The policy has minimum share ownership requirements: 3x base salary for CEO, 2x base salary for CFO, and a two-year holding period post vesting. 92 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued OUR REMUNERATION PHILOSOPHY Clear alignment between executive rewards and stakeholder 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. The Selection and Remuneration Committee engages 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. We disclose targets, achievements, and resulting pay outcomes for both the STIP and LTIP retrospectively in this report. In addition, we disclose prospective LTIP targets. The Supervisory Board determines Executive Board remuneration on the basis 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. Principles of Executive Board remuneration Key feature 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 achievement of strategic aims and delivery against financial and non-financial objectives • Majority of incentives are 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, and historical TSR 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; maximum opportunity 240% of base salary (CEO) 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 ← → Wolters Kluwer 2022 Annual Report 93 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 and incremental improvement to our adjusted profit margins and return on invested capital, as we seek to drive long-term sustainable value for all stakeholders. OUR PURPOSE Deliver deep impact when it matters most OUR STRATEGIC AIMS Accelerate Expert Solutions • Drive investment in cloud-based expert solutions • Transform digital information products into expert solutions • Enrich customer experience by leveraging data analytics Expand Our Reach • Extend into high-growth adjacencies • Reposition solutions for new segments • Drive revenues through partnerships and ecosystem development Evolve Core Capabilities • Enhance central functions, including marketing and technology • Advance ESG performance and capabilities • Engage diverse talent to drive innovation and growth OUR VALUES FOCUS ON CUSTOMER SUCCESS MAKE IT BETTER AIM HIGH AND DELIVER 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, strategic, or operational measures, including 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 2023, STIP measures will be the same as in 2022. Financial measures will be revenues, adjusted net profit, and adjusted free cash flow. STIP non-financial measures (ESG) will be employee belonging score, indexed cybersecurity maturity score, and the number of on-premise servers decommissioned. 94 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued 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 most likely would be recruited to or from. The pay peer group includes 9 North American and 14 European companies, making it approximately 60% European. The most comparable businesses 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 2022, the pay peer group consisted of the companies shown in the table below. Companies included in the TSR peer group are marked ‘TSR’. TSR Pay and TSR peer groups North American comparators (2020 and ongoing) European comparators European comparators (continued) CGI 1,4 TSR Atos Teleperformance Equifax TSR Bureau Veritas TSR Temenos Gen Digital 2 Capgemini The Sage Group TSR Intuit Clarivate MSCI Dassault Systèmes News Corporation TSR Experian TSR Nielsen Holdings 3 Informa TSR S&P Global TSR Intertek Group TSR Thomson Reuters TSR Pearson TSR Verisk Analytics TSR RELX TSR Wiley 4 TSR SGS TSR 1 CGI Inc replaced IHS Markit in the TSR peer group after the latter was acquired by S&P Global. 2 Gen Digital is the new name for NortonLifeLock which was merged with Avast. 3 Nielsen Holdings was part of the pay peer group in 2022, but was delisted in October 2022. It will be replaced in the next benchmarking exercise. 4 CGI and Wiley (John Wiley & Sons) are included in the TSR peer group but not in the pay peer group. 5 Clarivate plc replaced IHS Markit in the pay peer group after the latter was acquired by S&P Global. TSR Companies that are included in the TSR peer group. TSR peer group The TSR peer group consists of 15 companies that are used as the comparator group to determine relative TSR performance, which is one of the measures used in the LTIP. 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 updated TSR peer group was applied to the LTIP 2020-2022, LTIP 2021-2023, and LTIP 2022-2024, and will again apply for the LTIP 2023-2025. ← → Wolters Kluwer 2022 Annual Report 95 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. The TSR peer group is a sub-set of the pay peer group, with the exception of Wiley and CGI. The TSR peer group used for the LTIP 2019-2021 comprised the following companies: TSR peer group LTIP 2019-2021 North American comparators European comparators European comparators (continued) McClatchy * /Verisk Analytics Arnoldo Mondadori Pearson News Corporation Axel Springer Promotora de Informaciones (PRISA) S&P Global Daily Mail & General Trust Reach Thomson Reuters Informa RELX Wiley Lagardère The Sage Group * McClatchy, after being acquired, was replaced by Verisk Analytics in October 2020. SETTING TARGETS FOR LONG-TERM 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. Step 1 Review VSP three-year financial plan = Finalize three-year LTIP targets Step 2 Augment forecasts for management actions not in the plan Step 4 Test targets for stretch and payout sensitivity Step 3 Determine three-year LTIP 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, 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, apart from relative TSR, 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. 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. 96 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued 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 2022 This section outlines the implementation of the remuneration policy for Executive Board members in 2022, in line with the remuneration policy and the remuneration framework discussed above. It also describes how the performance measures were applied in 2022. For the performance period ending in 2022, remuneration was 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 2022, in accordance with the Dutch Corporate Governance Code. The Supervisory Board is of the view that management achieved strong results and delivered for customers despite the challenges of the war in Ukraine, high inflation, rising interest rates, and the shortage of skilled talent in a year that was still impacted by the pandemic. 2022 STIP financial targets were exceeded, while two of the three non-financial (ESG) targets were exceeded. Performance on belonging score was in line with target. The formulaic outcome will result in cash annual STIP payments of €1,957,500 for the CEO and €860,391 for the CFO. Three-year performance on total shareholder return and CAGR in diluted EPS were both ahead of target. The performance and shares to be paid out for the LTIP 2020-2022 are discussed below under Long-term incentive plans. ← → Wolters Kluwer 2022 Annual Report 97 Remuneration of the Executive Board – IFRS based Fixed remuneration Variable remuneration in thousands of euros, unlessotherwise stated Base salary Social security Pension contribution Other benefits 2 STIP LTIP 3 Sub-total Proportion fixed/ variable Tax- related costs4 Total 2022 N. McKinstry 1 1,460 101 102 194 1,958 4,616 8,431 22%/78% (530) 7,901 K.B. Entricken 800 22 74 191 860 1,789 3,736 29%/71% 5 3,741 Total 2,260 123 176 385 2,818 6,405 12,167 24%/76% (525) 11,642 2021 N. McKinstry 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 1 In 2022, Ms. McKinstry’s base salary was $1,498,000 (€1,460,301). The 2022 STIP payout is calculated on a U.S. dollar denominated equivalent of total salary as: $1,498,000 x 137.6% ($2,061,248 equivalent to €1,957,500). 2 Executive Board members are eligible to receive benefits such as health insurance, life insurance, a car, and to participate in any plans offered to all employees at any given time. In 2021, other benefits of Ms. McKinstry included 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. 3 LTIP share-based payments are based on IFRS accounting standards and therefore do not reflect the actual payout or value of performance shares released upon vesting. 4 Tax-related costs are costs to the company pertaining to the Executive Board members ex-patriate assignments. The 2022 tax-related costs decreased compared to 2021 mainly due to the cumulative tax impact of spending less time in the Netherlands from 2020 through 2022, lowering Ms. McKinstry’s effective global tax rate. Base salary The Supervisory Board approved an increase of 2.5% in base salary for the CEO and CFO in 2022. This was in line with the budgeted 2022 salary increase for Wolters Kluwer employees globally. Short-term incentive plan 2022 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 Financial Statements, including the financial KPIs on which the financial STIP targets are based. STIP percentage payout scenarios for 2022 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 2022 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. 98 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued Performance against STIP targets for 2022, together with the resulting STIP payout for the CEO and the CFO for the financial year, are indicated in the table below. Payouts for performance against 2022 STIP targets in millions of euros, unlessotherwisestated Performance targets Actual performance STIP outcomes 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) 2022 Financial Revenues 34.0% 4,859 5,399 5,939 5,453 101% 130% 44.2% 100% 34.0% Adjusted net profit 28.0% 916 1,018 1,120 1,059 104% 145% 40.6% 115% 32.2% Adjusted free cash flow 28.0% 1,076 1,196 1,315 1,220 102% 135% 37.8% 105% 29.4% Non-financial (ESG) Average of three measures 10.0% 105% 150% 15.0% 120% 12.0% Total payout as % ofbasesalary 137.6% 107.6% Total payout, in thousands of U.S. dollars 2,061 906 1 The 2022 STIP payout is calculated on a U.S.-dollar-denominated equivalent of total base salary as: $1,498,000 x 137.6% ($2,061,248 equivalent to €1,957,500). 2 The 2022 STIP payout is calculated on a U.S.-dollar-denominated equivalent of total base salary as: $842,000 x 107.6% ($905,992 equivalent to €860,391). Performance against the individual three STIP non-financial targets for 2022 is detailed in the table below: Performance against STIP non-financial targets for 2022 Performance targets Actual performance Performance measures Weighting Minimum Target Maximum Performance As % of target Non-financial measures Employee belonging score 3.33% Maintain the same score as 2021 +1 point +3 or more points +1 point 100% Indexed cybersecurity maturityscore 3.33% +1.0% improvement over 2021 +2.0% improvement over 2021 +4.5% improvement over 2021 +7.4% improvement over 2021 110% Number of on-premise servers decommissioned (reducing carbon footprint) 3.34% 275-399 600-999 1,600+ 1,032 105% Average of three measures 10.0% 105% ← → Wolters Kluwer 2022 Annual Report 99 LONG-TERM 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. 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. Reflective of the previous remuneration policy in effect before 2021, the performance measures for the LTIP 2020-2022 were total shareholder return (TSR) relative to our group of TSR peer companies (TSR-related shares) and CAGR in 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 vested 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 percentages 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- or ROIC-related shares, depending on Wolters Kluwer’s performance compared to targets set for the three-year performance period. The Supervisory Board determines the exact targets for the EPS- and ROIC-related shares for each three-year performance period at the start of the 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. 100 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued 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 2019-2021 and 2020-2022 performance periods LTIP measure Weighting Target Achievement Payout % Period 2020-2022 Vesting TSR 50% Position 5-6 Position 3 125% Diluted EPS * 50% CAGR of 10.8% 15.9% 150% Period 2019-2021 Vesting TSR 50% Position 5-6 Position 4 125% Diluted EPS * 50% CAGR of 12.6% 15.0% 150% * LTIP 2019-2021 and LTIP 2020-2022 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 2020–2022 The LTIP 2020-2022 vested on December 31, 2022. Vested LTIP 2020-2022 shares will be released on February 23, 2023. The volume- weighted-average price for the shares released will be based on the average exchange price traded at Euronext Amsterdam on February 23, 2023, the first day following the company’s publication of its annual results. Conditional share awards vested for the period 2020-2022 number of shares, unless otherwise stated Outstanding at December 31, 2022 Additional conditional number of TSR shares (25%) Additional conditional number of EPS shares (50%) Vested/payout February 23, 2023 Estimated cash value of payout (inthousands ofeuros) * N. McKinstry 80,741 12,064 16,243 109,048 10,661 K.B. Entricken 29,320 4,381 5,899 39,600 3,871 Total 110,061 16,445 22,142 148,648 14,532 Senior management 280,967 35,139 70,309 386,415 37,776 Total 391,028 51,584 92,451 535,063 52,308 * Estimated cash value calculated as the number of shares vested multiplied by the closing share price on December 31, 2022 (€97.76). ← → Wolters Kluwer 2022 Annual Report 101 LTIP vesting for the performance period 2019-2021 The LTIP 2019-2021 vested on December 31, 2021. A total number of 649,774 shares were released on February 24, 2022. On that day, the volume-weighted-average price of Wolters Kluwer N.V. was €88.0883. The following table indicates the number of shares vested and the cash equivalent. LTIP: shares vested for the performance 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 Cash value of vested shares * N. McKinstry 92,306 13,347 19,459 125,112 11,021 K.B. Entricken 28,486 4,119 6,005 38,610 3,401 Total 120,792 17,466 25,464 163,722 14,422 Senior management 353,908 43,956 88,188 486,052 42,815 Total 474,700 61,422 113,652 649,774 57,237 * Cash value in thousands of euros; calculated as the number of shares vested multiplied by the volume-weighted-average price on February 24, 2022. 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 2021-2023 and 2022-2024 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 2021-2023 and 2022-2024: Conditional LTIP share awards for performance periods 2021-2023 and 2022-2024 number of shares at 100% payout Conditionally awarded TSR- based shares Conditionally awarded ROIC- and EPS-based shares Conditionally awarded TSR- based shares Conditionally awarded ROIC- and EPS-based shares Total conditionally awarded shares LTIP 2021-2023 LTIP 2021-2023 LTIP 2022-2024 LTIP 2022-2024 December 31, 2022 N. McKinstry 38,618 28,352 23,129 16,955 107,054 K.B. Entricken 15,300 11,233 9,925 7,276 43,734 Total 53,918 39,585 33,054 24,231 150,788 Senior management * 162,599 162,638 122,708 122,698 570,643 Total 216,517 202,223 155,762 146,929 721,431 * 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 revenues and profit performance. The LTIP targets and payout schedule for senior management are similar to those for the Executive Board. 102 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued KEY ASSUMPTIONS FOR LTIP 2021-2023 AND LTIP 2022-2024 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 2022-2024 LTIP 2021-2023 Fair values Fair value of EPS shares at grant date (in €) 97.82 64.06 Fair value of ROIC shares at grant date (in €) 97.82 64.06 Fair value of TSR shares at grant date (in €) 71.71 47.03 TSR shares – key assumptions Share price at grant date (in €) 103.60 69.06 Expected volatility 21.2% 21.8% 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 2022- 2024, the fair value is estimated to be €71.71 as of January 1, 2022. The inputs to the valuation were the Wolters Kluwer share price of €103.60 on the grant date (January 1, 2022) and an expected volatility of 21.2% based on historical daily prices over the three years prior to January 1, 2022. Dividends are assumed to increase annually based on historical trends 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 2023 This section describes arrangements that will be put into place for 2023, 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 3.9%, which is less than the overall budgeted 2023 salary increase of 4.4% for Wolters Kluwer employees globally. Short-term incentive plan 2023 For the CEO, the STIP percentage payout scenarios for 2023 will be the same as in 2022 (shown in the table on page 97). For the CFO, based on the most recent benchmarking study, the Supervisory Board has resolved to increase the STIP percentage payout from 95% to 100% of base salary for on-target performance and from 145% to 150% for the maximum payout. 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 remuneration policy adopted in 2021. The Supervisory Board has selected the following measures from the list for 2023: Financial performance measures for STIP 2023 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 and IFRS accounting standards is excluded. Adjusted net profit 28% Adjusted free cash flow 28% Non-financial (ESG) 10% Total weighting of STIP financial measures 100% ← → Wolters Kluwer 2022 Annual Report 103 Non-financial performance measures for STIP 2023 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 2023, 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 2023, the following three strategically relevant, quantifiable, and verifiable ESG measures will be applied. Non-financial performance measures for 2023 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 (2022: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 cybersecurity at or above the industry standard benchmark for high-tech companies. The cybersecurity maturity score is assessed annually by a third party, based on the National Institute of Standards and Technology (NIST) framework. For 2023, the minimum payout requires the score to be in line with the industry standard for high-tech companies. Reduction in carbon footprint Number of on-premise servers decommissioned 3.34% The annual target is based on programs managed by Global Business Services, Digital eXperience Group, and the customer-facing 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 2023 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. LONG-TERM INCENTIVE PLAN 2023-2025 Conditional LTIP grants under the remuneration policy approved in 2021 The CEO’s target remuneration has historically been 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 remuneration policy adopted in 2021, in consultation with the CEO, to reduce the maximum award of conditional shares from 285% to 240% of base salary over a two-year period. This change took place in two steps (265% for 2021 and 240% for 2022) and effectively reduced the CEO’s target remuneration by about 10%. The CFO’s target conditional award is 200% of base salary. Wolters Kluwer uses the fair value method for calculating the number of conditional performance shares to be awarded. 104 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued 0% 20% 40% 60% 80% 100% Weighting of LTIP 2023-2025 performance measures TSR Diluted adjusted EPS ROIC For the LTIP 2023-2025 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 provide incentives for 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 shareholders at the 2021 AGM. For plans reflecting this policy, targets are provided below. LTIP Measure Weighting Target in constant currencies Period 2023-2025 TSR 50% Position 5-6 Diluted adjusted EPS 30% CAGR of 10.9% ROIC 20% Final year ROIC of 19.2% 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% Conditional LTIP grants 2023-2025 In accordance with the commitment of the Supervisory Board in 2021 upon adoption of the remuneration policy, the LTIP target level for the 2023-2025 performance period will be 240% of base salary for the CEO. The target level for the CFO is 200% of base salary. 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 aggregate number of conditionally awarded EPS- and ROIC-related shares. ← → Wolters Kluwer 2022 Annual Report 105 P roposed 2023 remuneration retains high proportion of performance-driven pay Maximum +50% share price appreciation Maximum performance On-target performance Minimum performance in thousands of euros 2023 performance-driven CEO remuneration scenarios Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation 2,0000 4,000 14, 000 8,0006,000 12,00010,000 P roposed 2023 remuneration retains high proportion of performance-driven pay Maximum +50% share price appreciation Maximum performance On-target performance Minimum performance in thousands of euros 2023 performance-driven CFO remuneration scenarios Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation 1,0000 2,000 7,0005,000 6,0003,000 4,000 SHARE OWNERSHIP AND HOLDING REQUIREMENTS According to our remuneration policy, the CEO is 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 continue to be 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, 2022) * Actual ownership as multiple of base salary (as at December 31, 2021) * December 31, 2022 December 31, 2021 N. McKinstry 24.9x 28.6x 372,131 372,131 K.B. Entricken 4.9x 6.0x 40,036 40,036 * 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. 106 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements Remuneration Report continued 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. CEO PAY RATIO The pay ratio, obtained by dividing the total 2022 remuneration for the CEO by the average of the total 2022 remuneration of all employees worldwide, was 77 (2021: 87). 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 2022 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 accounting standards. The difference between the 2021 and 2022 pay ratios was due to the increase in the average pay per employee in 2022, while the CEO’s total remuneration (minus tax-related costs) was lower in 2022. The decline in CEO total remuneration was mainly due to the one- time non-cash accrual of retiree medical benefits in 2021. 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. 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 2022 2021 2020 F.J.G.M. Cremers, Former Chair Former Co-Chair 45 128 128 A.E. Ziegler, Chair, Former Vice-Chair Co-Chair 139 102 102 B.J.F. Bodson 85 82 72 J.P. de Kreij, Vice-Chair Chair 120 94 92 J.A. Horan Co-Chair 99 91 96 S. Vandebroek Yes 110 93 61 C.F.H.H. Vogelzang Yes 100 88 88 H.H. Kersten Yes 68 – – Former Supervisory Board members R.D. Hooft Graafland – – 34 Total 766 678 673 ← → Wolters Kluwer 2022 Annual Report 107 Supervisory Board members’ fees The table below shows the fee schedule for Supervisory Board members, including the remuneration proposed for 2022, which was adopted by 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 2022 Annual fee 2021 Chair 130,000 112,000 Vice-Chair 95,000 83,500 Members 75,000 70,000 Chair Audit Committee 25,000 22,500 Members Audit Committee 18,000 16,500 Chair Selection and Remuneration Committee 20,000 ** 17,500 * Members Selection and Remuneration Committee 14,000 11,500 Travel allowance for intercontinental travel 5,000 per meeting 5,000 per meeting Fixed cost reimbursement 1,500 1,500 * Due to the co-chair arrangement, each co-chair received €14,500. ** Due to the co-chair arrangement, each co-chair received €17,000. Shares owned by Supervisory Board members At December 31, 2022, Ms. Ziegler held 1,894 American Depositary Receipts (each Depositary Receipt represents one ordinary Wolters Kluwer share) (2021: 1,894). None of the other Supervisory Board members held shares in Wolters Kluwer (2021: 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 21, 2022. Shareholder voting outcomes at the 2022 AGM Resolution % of votes for % of votes against votes withheld 2021 Remuneration Report Advisory 94.38% 5.62% 737,720 2022 Proposed Supervisory Board Remuneration Binding 98.91% 1.09% 668,133 108 Wolters Kluwer 2022 Annual Report ← → Strategic Report | Governance | Financial Statements FIVE-YEAR 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 2022 2021 * 2020 * 2019 * 2018 * Executive Board remuneration N. McKinstry 7,901 9,377 7,512 8,089 4,724 Change (in %) (15.7) 24.8 (7.1) 71.2 (49.2) K.B. Entricken 3,741 3,404 4,132 4,589 3,968 Change (in %) 9.9 (17.6) (10.0) 15.7 3.8 Supervisory Board remuneration ** F.J.G.M. Cremers (appointed 2017), Former Chair 1 45 128 128 114 117 A.E. Ziegler (appointed 2017), Chair, Former Vice-Chair 2 139 102 102 95 95 B.J.F. Bodson (appointed 2019) 3 85 82 72 22 – J.A. Horan (appointed 2016) 99 91 96 100 91 H.H. Kersten (appointed 2022) 68 – – – – J.P. de Kreij (appointed 2020), Vice-Chair 4 120 94 92 – – S. Vandebroek (appointed 2020) 110 93 61 – – C.F.H.H. Vogelzang (appointed 2019) 100 88 88 58 – R.D. Hooft Graafland 5 – – 34 97 100 F.M. Russo 6 – – – 97 97 B.J. Angelici 7 – – – 20 85 B.J. Noteboom 7 – – – 25 82 Company performance Organic growth (in %) 6.2 5.7 1.7 4.3 4.3 Adjusted operating profit margin (in %) 26.1 25.3 24.4 23.6 23.1 Year-end closing share price (€) 97.76 103.60 69.06 65.02 51.66 Share price change (in %) (6) 50 6 26 19 Total shareholder return (in %) (4) 52 8 28 21 Average remuneration on a full-time equivalent basis of employees Total personnel cost per FTE, excluding CEO 109.0 99.7 98.6 97.6 92.3 * The Executive Board remuneration for the years 2018 to 2021 has been restated to include tax-related costs. ** 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 Retired after the 2022 AGM. 2 Succeeded Mr. Cremers as Chair after the 2022 AGM. 3 Mr. Bodson’s appointment was with effect from September 1, 2019. 4 Mr. de Kreij succeeded Ms. Ziegler as Vice-Chair after the 2022 AGM. 5 Retired after the 2020 AGM. 6 Retired per year-end 2019. 7 Retired after the 2019 AGM. Remuneration Report continued ← → Wolters Kluwer 2022 Annual Report 109 Strategic Report | Governance | Financial Statements SECTION OVERVIEW FINANCIAL STATEMENTS → 2022 Financial Statements page 110 → Consolidated Financial Statements page 111 → Notes to the Consolidated Financial Statements page 118 → Company Financial Statements page 204 → Notes to the Company Financial Statements page 207 → Other information on the Financial Statements page 214 Financial Statements Wolters Kluwer 2022 Annual Report 109 ← → 110 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Notes to the Consolidated FinancialStatements 118 Note 1 – General and Basis of Preparation 119 Note 2 – Significant Accounting Policies 122 Note 3 – Accounting Estimates and Judgments 123 Note 4 – Benchmark Figures 129 Note 5 – Segment Reporting 131 Note 6 – Revenues 135 Note 7 – Earnings per Share 136 Note 8 – Acquisitions and Divestments 140 Note 9 – Assets/Liabilities Classified as Held for Sale 141 Note 10 – Sales Costs 142 Note 11 – General and Administrative Costs 142 Note 12 – Other Gains and (Losses) 143 Note 13 – Personnel Expenses 143 Note 14 – Amortization, Impairment, and Depreciation 144 Note 15 – Financing Results 145 Note 16 – Income Tax Expense 147 Note 17 – Non-controlling Interests 148 Note 18 – Goodwill and Intangible Assets other thanGoodwill 153 Note 19 – Property, Plant, and Equipment 154 Note 20 – Leasing 157 Note 21 – Investments in Equity-accountedInvestees 158 Note 22 – Financial Assets 158 Note 23 – Tax Assets and Liabilities 161 Note 24 – Inventories 162 Note 25 – Contract Assets and Liabilities 165 Note 26 – Other Receivables 166 Note 27 – Cash and Cash Equivalents 166 Note 28 – Trade and Other Payables 167 Note 29 – Net Debt 171 Note 30 – Financial Risk Management 181 Note 31 – Employee Benefits 191 Note 32 – Provisions 193 Note 33 – Capital and Reserves 195 Note 34 – Share-based Payments 198 Note 35 – Related Party Transactions 199 Note 36 – Audit Fees 200 Note 37 – Commitments, Contingent Assets, andContingent Liabilities 201 Note 38 – Remuneration of the Executive Board and the Supervisory Board 202 Note 39 – Overview of Significant Subsidiaries 203 Note 40 – Events after the Reporting Period 111 Consolidated Financial Statements 111 Consolidated Statement of Profit or Loss 112 Consolidated Statement of Comprehensive Income 113 Consolidated Statement of Cash Flows 115 Consolidated Statement of Financial Position 117 Consolidated Statement of Changes in Total Equity 2022 Financial Statements ← → Wolters Kluwer 2022 Annual Report 111 Consolidated Statement of Profit or Loss in millions of euros, unless otherwise stated, for the year ended December 31 2022 2021 Revenues Note 5/6 5,453 4,771 Cost of revenues Note 5 (1,578) (1,374) Gross profit Note 5 3,875 3,397 Sales costs Note 10 (914) (806) General and administrative costs Note 11 (1,697) (1,550) Total operating expenses Note 5 (2,6 11) (2,356) Other gains and (losses) Note 12 69 (29) Operating profit Note 5 1,333 1,012 Financing income 21 4 Financing costs (77) (82) Other finance income and (costs) (1) (6) Total financing results Note 15 (57) (84) Share of profit of equity-accounted investees, net of tax Note 21 0 1 Profit before tax 1,27 6 929 Income tax expense Note 16 (249) (201) Profit for the year Note 7 1,027 728 Attributable to: – Owners of the company 1,027 728 – Non-controlling interests Note 17 0 0 Profit for the year 1,027 728 Earnings per share (EPS) (€) Basic EPS Note 7 4.03 2.79 Diluted EPS Note 7 4.01 2.78 Consolidated FinancialStatements 112 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Consolidated Statement of Comprehensive Income in millions of euros, for the year ended December 31 2022 2021 Comprehensive income Profit for the year 1,027 728 Other comprehensive income Items that are or may be reclassified subsequently to the consolidated statement ofprofitorloss: Exchange differences on translation of foreign operations 231 314 Exchange differences on translation of equity-accounted investees Note 21 1 1 Recycling of foreign exchange differences on loss of control Note 8 1 40 Gains/(losses) on hedges of net investments in foreign operations (17) (16) Gains/(losses) on cash flow hedges 18 6 Net change in fair value of cash flow hedges reclassified to the consolidated statementofprofit or loss Note 15 11 4 Items that will not be reclassified to the consolidated statement of profit or loss: Remeasurement gains/(losses) on defined benefit plans Note 31 18 16 Other comprehensive income/(loss) for the year, before tax 263 365 Income tax on items that are or may be reclassified subsequently to the consolidated statement ofprofit or loss 4 0 Income tax on items that will not be reclassified to the consolidated statement of profit orloss (5) (4) Income tax on other comprehensive income Note 23 (1) (4) Other comprehensive income/(loss) for the year 262 361 Total comprehensive income for the year 1,289 1,089 Attributable to: – Owners of the company 1,289 1,088 – Non-controlling interests 0 1 Total comprehensive income for the year 1,289 1,089 ← → Wolters Kluwer 2022 Annual Report 113 Consolidated Statement ofCashFlows in millions of euros, for the year ended December 31 2022 2021 Cash flows from operating activities Profit for the year 1,027 728 Adjustments for: Income tax expense Note 16 249 201 Share of profit of equity-accounted investees, net of tax Note 21 0 (1) Financing results Note 15 57 84 Amortization, impairment, and depreciation Note 14 466 473 Book (profit)/loss on disposal of operations and non-current assets Note 8 (84) 10 Fair value changes of contingent considerations Note 12/30 0 0 Additions to and releases from provisions Note 32 5 15 Appropriation of provisions Note 32 (15) (36) Changes in employee benefit provisions 11 (9) Share-based payments Note 13/34 28 24 Other adjustments 3 (4) Adjustments excluding autonomous movements in working capital 720 757 Inventories (11) (3) Contract assets Note 25 (5) (16) Trade and other receivables 96 (7 8) Deferred income Note 25 73 113 Other contract liabilities Note 25 4 14 Trade and other payables 24 120 Assets/liabilities classified as held for sale (3) – Autonomous movements in working capital 178 150 Total adjustments 898 907 Net cash flows from operations 1,925 1,635 Interest paid (including the interest portion of lease payments) (70) (72) Interest received 16 6 Paid income tax Note 23 (289) (277) Net cash from operating activities 1,582 1,292 114 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → ions of euros, for the year ended December 31 2022 2021 Cash flows from investing activities Capital expenditure Note 18/19 (295) (240) Proceeds from disposal of other intangible assets and property, plant, and equipment 0 1 Acquisition spending, net of cash acquired Note 8 (92) (108) Receipts from divestments, net of cash disposed Note 8 106 76 Dividends received 0 0 Cash used for settlement of net investment hedges (18) (16) Net cash used in investing activities (299) (287) Cash flows from financing activities Repayment of loans (126) (100) Proceeds from new loans 631 500 Repayment of principal portion of lease liabilities Note 20 (72) (68) Repurchased shares Note 33 (1,000) (410) Dividends paid Note 17/33 (424) (3 73) Net cash used in financing activities (991) (451) Net cash flows before effect of exchange differences 292 554 Exchange differences on cash and cash equivalents and bank overdrafts 44 76 Net change in cash and cash equivalents and bank overdrafts 336 630 Cash and cash equivalents less bank overdrafts at January 1 994 364 Cash and cash equivalents less bank overdrafts at December 31 Note 27 1,330 994 Add: Bank overdrafts at December 31 Note 27 16 9 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 1,346 1,001 Consolidated Statement ofCashFlows continued ← → Wolters Kluwer 2022 Annual Report 115 Consolidated Statement ofFinancialPosition n millions of euros, at December 31 2022 2021 Non-current assets Goodwill Note 18 4,394 4,180 Intangible assets other than goodwill Note 18 1,648 1,620 Property, plant, and equipment Note 19 79 75 Right-of-use assets Note 20 283 301 Investments in equity-accounted investees Note 21 11 10 Financial assets Note 22 23 5 Non-current other receivables Note 26 16 18 Non-current contract assets Note 25 17 19 Deferred tax assets Note 23 62 62 Total non-current assets 6,533 6,290 Current assets Inventories Note 24 79 65 Contract assets Note 25 153 138 Trade receivables Note 25 1,088 1,008 Other receivables Note 26 250 366 Current income tax assets Note 23 61 59 Cash and cash equivalents Note 27/29 1,346 1,001 Assets classified as held for sale Note 9 – 101 Total current assets 2,977 2,738 Total assets 9,5 10 9,028 116 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Consolidated Statement ofFinancialPosition continued ions of euros, at December 31 2022 2021 Equity Issued share capital Note 33 31 32 Share premium reserve 87 87 Legal reserves 466 215 Treasury shares (735) (247) Retained earnings 2,46 1 2,330 Equity attributable to the owners of the company Note 47 2,310 2,417 Non-controlling interests Note 17 0 0 Total equity 2,310 2,417 Non-current liabilities Bonds 2,426 2,625 Private placements 142 153 Lease liabilities 244 260 Other long-term debt 18 13 Total long-term debt Note 29 2,830 3,051 Deferred tax liabilities Note 23 299 294 Employee benefits Note 31 85 90 Provisions Note 32 5 7 Non-current deferred income Note 25 112 113 Total non-current liabilities 3,331 3,555 Current liabilities Deferred income Note 25 1,858 1,709 Other contract liabilities Note 25 88 80 Trade and other payables Note 28 990 944 Current income tax liabilities Note 23 129 142 Short-term provisions Note 32 19 27 Borrowings and bank overdrafts Note 27/29 16 9 Short-term bonds Note 29 700 – Short-term lease liabilities Note 29 69 71 Liabilities classified as held for sale Note 9 – 74 Total current liabilities 3,869 3,056 Total liabilities 7 ,200 6,611 Total equity and liabilities 9,5 10 9,028 ← → Wolters Kluwer 2022 Annual Report 117 Consolidated Statement of Changesin Total Equity Legal reserves Other reserves share premium ve icipations reser Shareholders’ y Issued capital Share rese Legal reser part Hedge ranslation reserve u Retained earnings equity Non- controlling interests q in millions of euros T Tr To 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 Balance at January 1, 2022 32 87 118 (122) 219 (247) 2,330 2,417 0 2,417 Profit for the year 1,027 1,027 0 1,027 Other comprehensive income/(loss) for the year 16 233 13 262 0 262 Total comprehensive income for theyear 16 233 1,040 1,289 0 1,289 Transactions with owners of the company, recognized directly in equity: Share-based payments 28 28 28 Cancelation of shares (1) 4 51 (450) 0 0 Release LTIP shares 61 (61) 0 0 Final cash dividend 2021 (264) (264) 0 (264) Interim cash dividend 2022 (160) (160) (160) Repurchased shares (1,000) (1,000) (1,000) Other movements 2 0 (2) 0 0 Balance at December 31, 2022 31 87 120 (106) 452 (735) 2,46 1 2,310 0 2,310 shares 118 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 1 – General and Basis of Preparation GENERAL Reporting entity Wolters Kluwer N.V. (the company) with its subsidiaries (together referred to as ‘the group’ and individually as ‘group entities’) is a global leader in professional information, software solutions, and services for the health, tax and accounting, finance, risk and compliance, and legal and regulatory sectors. The group helps its customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with technology and services. 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, amongst others. 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, 2022, 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 21, 2023. 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 May 10, 2023. Consolidated financial statements The consolidated financial statements of the company at and for the year ended December 31, 2022, 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. Presentation currency The consolidated financial statements are presented in euros and rounded to the nearest million, unless otherwise indicated. Use of estimates and judgments The preparation of financial statements in conformity with IFRS requires management to make estimates, judgments, and assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosed amounts 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 ← → Wolters Kluwer 2022 Annual Report 119 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 give rise to doubt about the ability of the group to continue in operation for 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 developments in liquidity and capital, which includes the evaluation of current credit facilities available, contractual and expected maturities of financial liabilities, and 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, 2022: • References to the Conceptual Framework (Amendments to IFRS 3); • Proceeds before intended use (Amendments to IAS 16); • Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37); and • Annual improvements to IFRS Standards 2018-2020 (Amendments to IFRS 9 and IFRS 16). The application of the abovementioned amendments has not had any material impact on the amounts reported or disclosed in these financial statements. Effect of forthcoming accounting standards The following forthcoming amendments and new standards are not yet effective for the year ended December 31, 2022, and have not been early adopted in preparing these financial statements: • IFRS 17 Insurance Contracts; • Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28); • 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); and • Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12). The group expects no significant impact from these amendments and new standards. Comparatives Certain immaterial reclassifications have been made to certain notes to conform to the current year presentation and to improve insights. These reclassifications have had no impact on the comparative shareholders’ equity or 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. 120 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 2 – Significant Accounting Policies continued 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, 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, intragroup 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. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the group entities using the exchange rates prevailing at the transaction dates. 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 rates at the transaction dates. 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 transaction dates. 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 . ← → Wolters Kluwer 2022 Annual Report 121 Note 2 – Significant Accounting Policies continued 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 2022 2021 U.S. dollar (average) 1.05 1.18 U.S. dollar (at December 31) 1.07 1.13 PRINCIPLES UNDERLYING THE STATEMENT OF CASH FLOWS 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 using the indirect method by adjusting the consolidated profit for the year for items that are not cash flows and for autonomous movements in 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, the 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. Cash flows from investing activities Cash flows from investing activities are those arising from capital expenditure on and disposal of other intangible assets and property, plant, and equipment, acquisitions and sale of subsidiaries and equity-accounted investees, dividends received, and cash flows from the settlement of net investment hedges. Dividends received are 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, repayments of the principal portion of lease liabilities, and dividends paid. Dividends paid are to the owners of the company and the non-controlling interests. 122 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 2 – Significant Accounting Policies continued FINANCIAL INSTRUMENTS Financial instruments comprise the following: • Non-derivative financial assets and liabilities: financial assets 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: cross-currency interest rate swaps, net investment hedges, and currency forwards. 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. Note 3 – Accounting Estimates and Judgments General The preparation of the financial statements in conformity with IFRS requires management to make estimates, judgments, and assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosed amounts of contingent assets and liabilities, and the reported amounts of income and expense, that are not clear from other sources. The estimates, judgments, and underlying assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from those estimates and may result in material adjustments in the next financial year(s). The impact of climate-related matters on estimates and judgments, including those related to the impairment of non-financial assets, has been assessed by management based on the emission reduction targets and associated abatement plans developed by the group. Management concluded that the impact of climate-related matters on estimates and judgments is not material. 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 could have an effect on the financial statements and estimates with the risk of a 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); and • Valuation, measurement, and impairment testing of goodwill and intangible assets other than goodwill (see Note 8 and Note 18). Management believes that these risks are adequately covered in its estimates and judgments. Impact of Russian-Ukrainian war Revenues generated in Russia, Belarus, and Ukraine represented less than 0.5% of group revenues in 2022 and in 2021. Per company policy, there shall be no new business conducted in Russia, Belarus, or the embargoed regions of Ukraine unless an exception applies. Such exceptions generally apply only to certain Health products provided for humanitarian reasons and in all cases must comply with applicable sanctions and export restrictions. The Russian-Ukrainian war did not result in an impairment trigger on the group’s non-current assets. The group has one subsidiary in Russia as of December 31, 2022. The activities of the subsidiary were ceased and the group is in the process of bringing the subsidiary into liquidation. ← → Wolters Kluwer 2022 Annual Report 123 Note 4 – Benchmark Figures Benchmark figures refer to figures adjusted for non-benchmark items and, where applicable, amortization and (reversal of) 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 2022 2021 Change in actual currencies (%) Change in constant currencies (%) * Revenues 5,453 4,771 14 5 Organic revenue growth (%) 6 6 Adjusted operating profit 1,424 1,205 18 7 Adjusted operating profit margin (%) 26.1 25.3 Adjusted net profit 1,059 885 20 6 Adjusted net financing costs Note 15 (56) (78) (28) (20) Adjusted free cash flow 1,220 1,010 21 7 Cash conversion ratio (%) 107 112 Return on invested capital (ROIC) (%) 15.5 13.7 Net debt Note 29 2,253 2,131 6 Net-debt-to-EBITDA ratio 1.3 1.4 Diluted adjusted EPS (€) 4.14 3.38 22 Diluted adjusted EPS in constant currencies (€) * 3.73 3.45 8 Diluted adjusted free cash flow per share (€) 4.77 3.87 24 10 * Constant currencies at €/$ 1.18. REVENUE BRIDGE € million % Revenues 2021 4,771 Organic change 292 6 Acquisitions 15 0 Divestments (44) (1) Currency impact 419 9 Revenues 2022 5,453 14 124 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 4 – Benchmark Figures continued RECONCILIATION BETWEEN OPERATING PROFIT AND ADJUSTED OPERATING PROFIT 2022 2021 Operating profit 1,333 1,012 Amortization and (reversal of) impairment of acquired identifiable intangible assets Note 14 160 164 Non-benchmark items in operating profit Note 12 (69) 29 Adjusted operating profit 1,424 1,205 RECONCILIATION BETWEEN TOTAL FINANCING RESULTS AND ADJUSTED NET FINANCING COSTS 2022 2021 Total financing results Note 15 (57) (84) Non-benchmark items in total financing results Note 15 1 6 Adjusted net financing costs (56) (78) RECONCILIATION BETWEEN PROFIT FOR THE YEAR AND ADJUSTED NET PROFIT 2022 2021 Profit for the year attributable to the owners of the company (A) 1,027 728 Amortization and (reversal of) impairment of acquired identifiable intangible assets 160 164 Tax benefits on amortization and impairment of acquired identifiable intangible assets (41) (44) Non-benchmark items, net of tax (87) 37 Adjusted net profit (B) 1,059 885 SUMMARY OF NON-BENCHMARK ITEMS 2022 2021 Included in operating profit: Other gains and (losses) Note 12 69 (29) Included in total financing results: Other finance income and (costs) Note 15 (1) (6) Total non-benchmark items before tax 68 (35) Tax benefits/(charges) on non-benchmark items 19 (1) Impact of changes in tax rates Note 16 0 (1) Non-benchmark items, net of tax 87 (37) ← → Wolters Kluwer 2022 Annual Report 125 Note 4 – Benchmark Figures continued RECONCILIATION BETWEEN NET CASH FROM OPERATING ACTIVITIES AND ADJUSTED FREE CASH FLOW 2022 2021 Net cash from operating activities 1,582 1,292 Net capital expenditure (295) (239) Repayment of principal portion of lease liabilities (72) (68) Paid acquisition-related costs Note 8 3 5 Paid divestment expenses Note 8 3 8 Dividends received Note 21 0 0 Income tax paid/(received) on divested assets and consolidation of platform technology (1) 12 Adjusted free cash flow (C) 1,220 1,010 RETURN ON INVESTED CAPITAL (ROIC) in millions of euros, unless otherwise stated 2022 2021 Adjusted operating profit 1,424 1,205 Allocated tax (322) (259) Net operating profit after allocated tax (NOPAT) 1,102 946 Average invested capital 7,120 6,915 ROIC (NOPAT/Average invested capital) (%) 15.5 13.7 Allocated tax is the adjusted operating profit multiplied by the benchmark tax rate. Invested capital is defined as the summation of total assets excluding investments in equity-accounted investees, deferred tax assets, non-operating working capital, and cash and cash equivalents, minus current liabilities and non-current deferred income. 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. 126 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 4 – Benchmark Figures continued PER SHARE INFORMATION in euro, unless otherwise stated 2022 2021 Total number of ordinary shares outstanding at December 31 (in millions of shares) Note 33 248.7 258.2 Weighted-average number of ordinary shares (D) (in millions of shares) Note 7 254.7 260.4 Diluted weighted-average number of ordinary shares (E) (in millions of shares) Note 7 255.8 261.8 Adjusted EPS (B/D) 4.16 3.40 Diluted adjusted EPS (B/E) 4.14 3.38 Diluted adjusted EPS in constant currencies 3.73 3.45 Basic EPS (A/D) Note 7 4.03 2.79 Diluted EPS (A/E) Note 7 4.01 2.78 Adjusted free cash flow per share (C/D) 4.79 3.89 Diluted adjusted free cash flow per share (C/E) 4.77 3.87 BENCHMARK TAX RATE in millions of euros, unless otherwise stated 2022 2021 Income tax expense Note 16 249 201 Tax benefits on amortization and impairment of acquired identifiable intangible assets 41 44 Tax benefits/(charges) on non-benchmark items 19 (1) Impact of changes in tax rates 0 (1) Tax on adjusted profit (F) 309 243 Adjusted net profit (B) 1,059 885 Adjustment for non-controlling interests 0 0 Adjusted profit before tax (G) 1,368 1,128 Benchmark tax rate (F/G) (%) 22.6 21.5 ← → Wolters Kluwer 2022 Annual Report 127 Note 4 – Benchmark Figures continued CASH CONVERSION RATIO in millions of euros, unless otherwise stated 2022 2021 Operating profit 1,333 1,012 Amortization, impairment, and depreciation Note 14 466 473 EBITDA 1,799 1,485 Non-benchmark items in operating profit Note 12 (69) 29 Adjusted EBITDA 1,730 1,514 Autonomous movements in working capital 178 150 Net capital expenditure (295) (239) Book (profit)/loss on sale of non-current assets (4) 0 Repayment of principal portion of lease liabilities Note 20 (72) (68) Interest portion of lease payments Note 20 (9) (9) Adjusted operating cash flow (H) 1,528 1,348 Adjusted operating profit (I) 1,424 1,205 Cash conversion ratio (H/I) (%) 107 112 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 (reversal of) 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). 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 are included in other gains and losses in the consolidated statement of profit or loss. 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. 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 are included in other gains and losses in the consolidated statement of profit or loss. 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 are 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 disposal groups to fair value less costs of disposal, and are included in other gains and losses in the consolidated statement of profit or loss. 128 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 4 – Benchmark Figures continued 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. Book results and fair value changes of financial assets measured at fair value through profit or loss This includes 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 includes the income 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. ← → Wolters Kluwer 2022 Annual Report 129 Note 5 – Segment Reporting Health Tax & Accounting Governance, Risk & Compliance Legal & Regulatory Corporate * Total reporting by segment 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Revenues from contracts with third parties 1,448 1,234 1,758 1,510 1,333 1,139 914 888 – – 5,453 4,771 Cost of revenues (444) (379) (500) (418) (370) (307) (264) (270) – – (1,578) (1,374) Gross profit 1,004 855 1,258 1,092 963 832 650 618 0 0 3,875 3,397 Sales costs (231) (193) (315) (280) (188) (162) (180) (171) – – (914) (806) General and administrative costs (396) (360) (463) (413) (396) (365) (378) (355) (64) (57) (1,697) (1,550) Total operating expenses (627) (553) (778) (693) (584) (527) (558) (526) (64) (57) (2,611) (2,356) Other gains and (losses) (1) 0 (3) (47) (5) (4) 78 22 0 – 69 (29) Operating profit 376 302 477 352 374 301 170 114 (64) (57) 1,333 1,012 Amortization of acquired identifiable intangible assets 37 31 33 36 39 35 31 29 – – 140 131 Impairment/(reversal of impairment) of acquired identifiable intangible assets 20 27 – (5) – 11 – – – – 20 33 Non-benchmark items in operating profit 1 0 3 47 5 4 (78) (22) 0 – (69) 29 Adjusted operating profit 434 360 513 430 418 351 123 121 (64) (57) 1,424 1,205 Amortization of other intangible assets and depreciation of PPE and right-of-use assets (46) (50) (103) (101) (84) (73) (59) (63) 0 (3) (292) (290) Impairment of other intangible assets, PPE, and right-of-use assets (6) (5) (5) (7) (3) (5) 0 (2) – – (14) (19) Goodwill and acquired identifiable intangible assets at December 31 1,300 1,262 1,783 1,761 1,487 1,374 824 828 – – 5,394 5,225 Net capital expenditure 42 33 98 72 101 82 54 52 0 0 295 239 Assets classified as held for sale at December 31 – – – – – – – 101 – – 0 101 Liabilities classified as held for sale at December 31 – – – – – – – 74 – – 0 74 Number of FTEs at December 31 3,116 2,913 8,040 7,416 4,982 4,736 3,786 4,262 132 127 20,056 19,454 * The corporate function does not represent an operating segment. 130 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 5 – Segment Reporting continued 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 associated FTEs) and net capital expenditure incurred on behalf of the segments by Global Business Services and Digital eXperience Group 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. GEOGRAPHIC INFORMATION total non-current assets per region 2022 % 2021 % The Netherlands 676 11 677 11 Europe (excluding the Netherlands) 1,336 21 1,342 22 U.S. and Canada 4,338 67 4,117 66 Asia Pacific 85 1 75 1 Rest of World 19 0 17 0 Total 6,454 100 6,228 100 * 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 geographic region, refer to Note 6 – Revenues. ← → Wolters Kluwer 2022 Annual Report 131 Note 6 – Revenues 2022 2021 Revenues from contracts with third parties 5,453 4,771 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. Revenues are 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 to the customer 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 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 a customer as a one-time upfront fee, revenue is recognized over a period of 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, revenues are recognized at the time the control of the license is transferred to a customer, considering any significant customer acceptance clauses. Goods Revenues from the sale of goods are recognized at a point in time upon shipment or upon delivery when control is transferred to a customer, provided that ultimate collectability and final acceptance by the customer are reasonably assured. When goods are sold with a right to return, the group recognizes the revenues of the transferred goods for the amount the group expects to be entitled to, a refund contract liability, and an asset for the group’s 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, revenues are recognized based on the actual service provided 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 contract includes an hourly fee, revenues are recognized in the amount to which the group has a right to invoice. Implementation services Revenues from providing implementation services are based on input or output methods, subject to contractual arrangements, and are recognized over the implementation period, or upon full completion of the implementation, depending on when the customer can benefit from the service. 132 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | 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 goods and/or services on their 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 contract inception, 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 consideration for the specific goods and/or services transferred. Variable consideration Discounts, return of goods and/or services, usage-based prices, and index-based pricing are the most common forms of variable considerations within the group. Discounts are often contractually agreed and allocated to all distinct performance obligations, unless there is a specific discount policy for a performance obligation. Volume-related discounts, return of goods and/or services, 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. Considerations are recognized pro rata over the term of the contract in case the group estimates at contract inception that price increases are beyond compensation for cost price increases. 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 • The modification affected the scope, but no distinct goods and/or services were 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 • The modification affected the scope and distinct goods and/or services were 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 were 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 a period 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 transaction prices for the time value of money . ← → Wolters Kluwer 2022 Annual Report 133 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, cost of revenues may include cost for paper, printing and binding, royalties, personnel expenses, subcontracted work, shipping costs, and other incurred costs. ESTIMATES AND JUDGMENTS IFRS 15 Revenue from Contracts with Customers requires management to make estimates and judgments on the characteristics of a performance obligation, (un)bundling of multi-element arrangements, and whether revenues 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 product and contract lives. 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 mostly 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 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Revenue recognition At a point in time recognition 253 223 242 214 465 411 180 209 1,140 1,057 Over time recognition 1,195 1,011 1,516 1,296 868 728 734 679 4,313 3,714 Revenues from contracts with third parties 1,448 1,234 1,758 1,510 1,333 1,139 914 888 5,453 4,771 Revenue per contract Contracts one year or less 953 821 1,482 1,292 977 851 677 684 4,089 3,648 Multi-year contracts 495 413 276 218 356 288 237 204 1,364 1,123 Revenues from contracts with third parties 1,448 1,234 1,758 1,510 1,333 1,139 914 888 5,453 4,771 REVENUES BY MEDIA FORMAT Health Tax & Accounting Governance, Risk & Compliance Legal & Regulatory Total reporting per segment 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Digital 1,281 1,089 1,686 1,434 843 723 745 684 4,555 3,930 Services 1 1 34 35 485 410 13 14 533 460 Print 166 144 38 41 5 6 156 190 365 381 Revenues from contracts with third parties 1,448 1,234 1,758 1,510 1,333 1,139 914 888 5,453 4,771 134 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 6 – Revenues continued REVENUES BY TYPE 2022 2021 Digital and service subscription 3,950 3,397 Print subscription 157 157 Other recurring 281 256 Total recurring revenues 4,388 3,810 Print books 129 146 Legal Services transactional 299 266 Financial Services transactional 134 109 Other non-recurring * 503 440 Total non-recurring revenues 1,065 961 Revenues from contracts with third parties 5,453 4,771 * 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 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Recurring revenues 1,307 1,112 1,524 1,313 793 669 764 716 4,388 3,810 Non-recurring revenues 141 122 234 197 540 470 150 172 1,065 961 Revenues from contracts with third parties 1,448 1,234 1,758 1,510 1,333 1,139 914 888 5,453 4,771 GEOGRAPHIC INFORMATION revenues generated per region 2022 % 2021 % The Netherlands 204 4 196 4 Europe (excluding the Netherlands) 1,356 25 1,274 27 U.S. and Canada 3,476 64 2,946 62 Asia Pacific 333 6 277 5 Rest of World 84 1 78 2 Revenues from contracts with third parties 5,453 100 4,771 100 ← → Wolters Kluwer 2022 Annual Report 135 Note 7 – Earnings per Share 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 attributable to the ordinary equity holders of the company by the weighted-average number of ordinary shares outstanding during the year after adjusting for treasury shares. Profit for the year 2022 2021 Profit for the year attributable to the owners of the company (A) 1,027 728 Weighted-average number of ordinary shares for the year in millions of shares, unless otherwise stated 2022 2021 Outstanding ordinary shares at January 1 Note 33 262.5 267.5 Effect of cancelation of shares (1.9) (1.5) Effect of repurchased shares (5.9) (5.6) Weighted-average number of ordinary shares (B) 254.7 260.4 Basic EPS (A/B) (€) 4.03 2.79 DILUTED EARNINGS PER SHARE Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the company by the diluted weighted-average number of ordinary shares outstanding during the year after adjusting 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 2022 2021 Weighted-average number of ordinary shares (B) 254.7 260.4 Effect of Long-Term Incentive Plan (LTIP) 1.1 1.4 Diluted weighted-average number of ordinary shares (C) 255.8 261.8 Diluted EPS (A/C) (€) 4.01 2.78 136 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 8 – Acquisitions and Divestments 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 . 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. If the final valuation of the acquired assets and liabilities assumed is still pending at year-end, it 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 earnout arrangements), 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 April 8, 2022, Wolters Kluwer Governance, Risk & Compliance completed the acquisition of 100% of the shares of International Document Services, Inc. (IDS), a leading U.S. provider of compliance and document generation software solutions for the mortgage and real estate industry, for €64 million in cash. The transaction had no deferred and contingent considerations. IDS serves over 450 clients, including U.S. mortgage lenders, banks, and law firms. IDS’s services include initial disclosures, electronic signatures, closing documents, and document fulfillment. The IDS flagship document preparation solution, idsDoc, is a cloud-based platform that is recognized across the industry for its superior capabilities, customer service, and integrations with many of the leading loan origination systems and eClosing platforms. Revenues are based on transactional pricing linked to mortgage volumes. IDS is headquartered in Draper, Utah, and employs approximately 75 employees. On June 28, 2022, Wolters Kluwer Legal & Regulatory completed the acquisition of 100% of the shares of Level Programs S.L. (Level Programs), a provider of legal practice management software in Spain, for €5 million in cash and deferred consideration of €1 million. Level Program’s principal product is Kmaleon, which is a platform used by mid-sized law firms in Spain to efficiently manage their cases and documents, billing, accounting, and time control. Level Programs is headquartered in Terrassa and employs approximately 25 employees. On September 30, 2022, Wolters Kluwer Health completed the acquisition of 100% of the shares of IJS Publishing Group (IJSPG), a UK-based provider of peer-reviewed medical journals supporting scientists and authors, for €13 million in cash. The IJSPG portfolio consists of ten journal titles, including the International Journal of Surgery, IJS Case Reports, and Annals of Medicine and Surgery. IJSPG is headquartered in London, United Kingdom. No employees were acquired. On December 30, 2022, Wolters Kluwer Legal & Regulatory completed the acquisition of 100% of the shares of Della AI Ltd (Della AI), a UK-based provider of leading artificial intelligence technology based on advanced natural language processing, for €10 million in cash and deferred consideration of €1 million. Della AI will become part of the legal software unit of Wolters Kluwer Legal & Regulatory. Della AI is headquartered in London, United Kingdom, and employs 16 employees. In addition, other smaller acquisitions were completed, with a combined total consideration of €1 million (2021: €9 million), including deferred and contingent considerations. The fair values of the identifiable assets and liabilities of the abovementioned acquisitions, as reported at December 31, 2022, are provisional, but no material deviations from these fair values are expected. ← → Wolters Kluwer 2022 Annual Report 137 Note 8 – Acquisitions and Divestments continued Acquisition spending In 2022, total acquisition spending, net of cash acquired, was €92 million (2021: €108 million), including deferred and contingent consideration payments of €1 million (2021: €0 million). In 2021, the group acquired Vanguard Software, LicenseLogix, and a few smaller businesses. In 2022, acquisition-related costs amounted to €3 million (2021: €5 million). The goodwill relating to the 2022 acquisitions represents future economic benefits specific to the group arising from assets that do not qualify for separate recognition as intangible assets. These benefits include revenues from expected new customers and from new capabilities of the acquired product platforms, as well as expected synergies that will arise following the acquisitions. Of the goodwill recognized in 2022, none was deductible for income tax purposes (2021: €68 million). Acquisitions 2022 2021 Carrying amount Fair value adjustments Recognized values Recognized values Consideration payable in cash 92 111 Deferred and contingent considerations at fair value: Non-current 2 1 Current 1 1 Total consideration 95 113 Intangible assets other than goodwill Note 18 0 77 77 47 Other non-current assets Note 20 2 2 2 Current assets 4 4 8 Current liabilities (2) (2) (9) Non-current liabilities Note 29 (2) (2) (2) Deferred tax assets/(liabilities) 0 (19) (19) (1) Fair value of net identifiable assets 2 58 60 45 Goodwill on acquisitions Note 18 35 68 Cash effect of acquisitions: Consideration payable in cash 92 111 Cash acquired (1) (3) Deferred and contingent considerations paid Note 30 1 0 Acquisition spending, net of cash acquired 92 108 Of the 2022 fair value adjustments of €58 million, €29 million related to IDS, €6 million related to Level Programs, €12 million related to IJSPG, €10 million related to Della AI, and €1 million related to the other acquisitions. 138 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 8 – Acquisitions and Divestments continued Contribution of 2022 acquisitions in millions of euros, unless otherwise stated Revenues Adjusted operating profit Profit for the year FTEs at December 31, 2022 Totals excluding the impact of 2022 acquisitions 5,443 1,423 1,029 19,965 Contribution of 2022 acquisitions 10 1 (2) 91 Totals for the year 2022 5,453 1,424 1,027 20,056 Pro forma contribution of 2022 acquisitions for the period January 1, 2022, up to acquisition date (unaudited) 6 0 (5) Pro forma totals for the year 2022 5,459 1,424 1,022 The above information does not purport to represent what the actual results would have been, had the acquisitions been concluded on January 1, 2022, nor is the information necessarily indicative for future results of the acquired operations. In determining the contribution of 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, 2022. Deferred and contingent considerations The acquisitions completed in 2022 resulted in a maximum achievable undiscounted deferred and contingent consideration of €3 million. The fair value of this deferred and contingent consideration amounted to €3 million at acquisition date and at December 31, 2022. 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 2021 acquisitions resulted in a reduction of goodwill of €0 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 November 30, 2022, Wolters Kluwer Legal & Regulatory completed the divestment of its legal information units in France and Spain to Karnov Group AB for €114 million in cash, which is subject to a working capital settlement. This divestment was originally announced on December 9, 2021. The units employed 624 FTEs at divestment date. In addition, other smaller divestments were completed. In 2022, net divestment proceeds amounted to €106 million. In 2021, net divestment proceeds amounted to €76 million and mainly included the divestment of the U.S. legal education business. ← → Wolters Kluwer 2022 Annual Report 139 Note 8 – Acquisitions and Divestments continued Divestment-related results on operations 2022 2021 Divestment of operations: Consideration receivable in cash 114 75 Financial assets at fair value through profit or loss Note 22 – 6 Consideration receivable 114 81 Intangible assets Note 18 0 47 Other non-current assets Note 19 0 2 Current assets (including assets held for sale) 110 17 Current liabilities (including liabilities held for sale) (77) (8) Deferred tax assets/(liabilities) 0 (7) Net identifiable assets/(liabilities) 33 51 Reclassification of foreign exchange differences on loss of control to profit or loss, previously recognized in other comprehensive income (1) (40) Book profit/(loss) on divestments of operations 80 (10) Divestment-related costs (3) (8) Restructuring of stranded costs following divestments Note 32 (2) (2) Divestment-related results included in other gains and (losses) Note 12 75 (20) Cash effect of divestments: Consideration receivable in cash 114 75 Cash included in divested operations (8) 0 Deferred divestment consideration receivable – 1 Receipts from divestments, net of cash disposed 106 76 In the consolidated statement of cash flows, the book profit/(loss) on divestment of operations is reported under book (profit)/loss on divestment of operations and non-current assets. Effect of 2022 divestments Revenues Adjusted operating profit Totals for the year 2022 5,453 1,424 Minus: Contribution of 2022 divested operations (84) (8) Pro forma totals for the year 2022 5,369 1,416 At their divestment dates, the 2022 divested operations jointly had 632 FTEs. 140 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 9 – Assets/Liabilities Classified as Held for Sale 2022 2021 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 0 27 ACCOUNTING POLICIES Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally 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 plan, 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. 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. DISPOSAL GROUPS – GENERAL 2022 2021 Legal & Regulatory – French and Spanish legal information businesses – 27 Net assets of disposal groups classified as held for sale 0 27 In 2022, the disposal groups were all divested. Refer to Note 8 – Acquisitions and Divestments. ASSETS AND LIABILITIES OF DISPOSAL GROUPS The assets and liabilities of the disposal groups can be specified as follows at December 31: 2022 2021 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 0 27 ← → Wolters Kluwer 2022 Annual Report 141 Note 10 – Sales Costs 2022 2021 Marketing and promotion costs 263 228 Sales-related costs – sales commissions directly expensed 162 155 Sales-related costs – amortization of capitalized sales commissions Note 25 29 23 Other sales-related costs 359 304 Customer support costs 80 76 Additions to and releases from loss allowance on trade receivables and unbilled revenues Note 25 21 20 Total 914 806 ACCOUNTING POLICIES Sales costs relate to direct internal personnel expenses and direct external costs, incurred for marketing and sales activities. Sales costs include sales commissions directly expensed as incurred and the amortization of capitalized sales commissions that qualify as cost to obtain a contract. As a practical expedient, the group recognizes the incremental cost of obtaining a contract as an expense if the amortization period of the asset that the group otherwise would have recognized is one year or less. If sales commissions are granted for bundled and/or multi-element contracts in which the predominant consideration element is recognized for performance obligations satisfied at a point in time (e.g., the sale of a book, training, or the sale of a right-to-use license), the sales commissions are expensed when incurred. In addition, sales commissions that are commensurate or based on generic performance indicators and/or net targets are expensed when incurred. For all other commission plans on new sales targets, the amortization period ranges between one and five years, depending on the nature of the underlying promise in the contract with the customer, unless the underlying non-cancellable contract period for a right-to-access license is longer than five years. In those situations, the longer non-cancellable contract period of the license contract prevails as the amortization period. Sales costs also include the additions to and releases from loss allowance on trade receivables and unbilled revenues. The loss allowance is determined as an amount equal to the lifetime expected credit losses . ESTIMATES AND JUDGMENTS The group determines the additions to and releases from loss allowance on trade receivables and unbilled revenues by making assumptions and estimating the risk of default and expected loss rates at contract inception over the expected life of the financial instrument, using the group’s historically incurred losses and existing market conditions, as well as forward-looking information at the end of each reporting period. Please refer to Note 25 – Contract Assets and Liabilities for more information. 142 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 11 – General and Administrative Costs 2022 2021 Research, development, and editorial costs 541 466 General and administrative operating expenses 996 920 Amortization and (reversal of) impairment of acquired identifiable intangible assets Note 14 160 164 Total 1,697 1,550 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 research and development costs, editorial costs, information technology costs, general overhead costs, 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) 2022 2021 Acquisition-related costs Note 8 (3) (5) Additions to acquisition integration provisions Note 32 (3) (4) Fair value changes of contingent considerations Note 30 0 0 Divestment-related results Note 8 75 (20) Total 69 (29) 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. ← → Wolters Kluwer 2022 Annual Report 143 Note 13 – Personnel Expenses 2022 2021 Salaries and wages and other benefits 1,855 1,641 Social security charges 159 148 Medical cost benefits 94 74 Expenses related to defined contribution plans 89 80 Expenses related to defined benefit plans Note 31 29 11 Equity-settled share-based payments Note 34 28 24 Total 2,254 1,978 Employees Headcount at December 31 20,451 19,827 In full-time equivalents at December 31 20,056 19,454 Thereof employed in the Netherlands 1,214 1,155 In full-time equivalents average per annum * 20,616 19,741 * Average full-time equivalents per annum include temporary staff and contractors, whereas headcount and its full-time equivalent only relate to staff on the payroll of the group. Note 14 – Amortization, Impairment, and Depreciation 2022 2021 Amortization of acquired identifiable intangible assets Note 18 140 131 Impairment of acquired identifiable intangible assets Note 18 20 38 Reversal of impairment of acquired identifiable intangible assets Note 18 – (5) Amortization of other intangible assets Note 18 195 194 Impairment of other intangible assets Note 18 13 18 Depreciation of property, plant, and equipment Note 19 26 25 Impairment of property, plant, and equipment Note 19 1 0 Depreciation of right-of-use assets Note 20 71 71 Impairment of right-of-use assets Note 20 – 1 Total 466 473 For further disclosure on estimates and judgments, refer to Note 18 – Goodwill and Intangible Assets other than Goodwill and Note 20 - Leasing. 144 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 15 – Financing Results 2022 2021 Financing income Interest income for financial assets measured at amortized cost: Interest income on short-term bank deposits 20 2 Interest income on bank balances and other 1 2 Other financing income: Derivatives – foreign exchange contracts, not qualifying as hedge 0 0 Total financing income 21 4 Financing costs Interest expense for financial liabilities measured at amortized cost: Interest expense on bonds and private placements (54) (50) Amortization of fee expense for debt instruments Note 29 (3) (1) Interest expense on bank overdrafts and other (3) (5) Other financing expense: Unwinding of discount of lease liabilities Note 29 (9) (9) Net foreign exchange gains/(losses) (5) (15) Items in hedge relationships: Interest rate swaps (3) (2) Foreign exchange gains/(losses) on loans subject to cash flow hedge 11 4 Net change in fair value of cash flow hedges reclassified from other comprehensive income (11) (4) Total financing costs (77) (82) Net financing results (56) (78) Other finance income and (costs) Fair value changes of financial assets Note 22 0 (5) Financing component employee benefits Note 31 (1) (1) Total other finance income and (costs) (1) (6) Total financing results (57) (84) ← → Wolters Kluwer 2022 Annual Report 145 Note 16 – Income Tax Expense 2022 2021 Current income tax expense 286 209 Adjustments previous years (13) 6 Deferred tax expense: Changes in tax rates 0 1 Origination and reversal of temporary differences (24) (15) Movements in deferred tax assets and liabilities Note 23 (24) (14) Total Note 23 249 201 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, 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, 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. 146 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 16 – Income Tax Expense continued 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. 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 and 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 considers potential challenges and accounts 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 25.8%. The table below reconciles the statutory income tax rate with the effective income tax rate in the consolidated statement of profit or loss: 2022 2021 in millions of euros, unless otherwise stated % % Profit before tax 1,276 929 Income tax expense at the Dutch statutory income tax rate 25.8 329 25.0 232 Tax effect of: Rate differential (2.7) (35) (2.5) (23) Tax incentives, exempt income, and divestments (2.4) (31) 0.1 1 Recognized and unrecognized tax losses (0.1) (1) (0.3) (3) Adjustments previous years (1.0) (13) 0.7 6 Changes in income tax rates 0.0 0 0.1 1 Other taxes 0.9 11 1.0 9 Non-deductible costs and other items (1.0) (11) (2.5) (22) Total 19.5 249 21.6 201 ← → Wolters Kluwer 2022 Annual Report 147 Note 16 – Income Tax Expense continued Rate differential indicates the effect of the group’s taxable income generated and taxed in jurisdictions where tax rates differ from the Dutch statutory income tax rate. The effective tax rate decreased to 19.5% (2021: 21.6%), resulting from closure of old tax years and tax neutral gains on the divestment of the legal information units in Spain and France. 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 share in consolidated subsidiaries not fully owned at December 31 is: ownership in % 2022 2021 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: 2022 2021 Position at January 1 0 0 Dividends paid 0 (1) Share of profit of non-controlling interests, net of tax 0 0 Foreign exchange differences 0 1 Position at December 31 0 0 Non-controlling interests in the equity of consolidated participations, totaling €0 million (2021: €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: 2022 2021 Revenues 5 5 Adjusted operating profit 2 2 Net profit 2 1 Total assets 1 1 Total liabilities 1 1 Total equity 0 0 Total cash and cash equivalents 0 0 148 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 18 – Goodwill and Intangible Assets other than Goodwill Goodwill Customer relationships Technology Brand names Other Acquired identifiable intangible assets Other intangible assets 2022 2021 Position at January 1 Cost value 4,189 1,036 812 471 48 2,367 1,942 8,498 8,123 Accumulated amortization and impairment (9) (475) (407) (395) (45) (1,322) (1,367) (2,698) (2,485) Book value at January 1 4,180 561 405 76 3 1,045 575 5,800 5,638 Movements Investments * – – – – – 0 264 264 223 Acquired through business combinations Note 8 35 39 35 3 0 77 0 112 115 Divestment of operations Note 8 – – – – – 0 0 0 (47) Disposal of assets – – – – – 0 – 0 (1) Net expenditures 35 39 35 3 0 77 264 376 290 Amortization Note 14 – (62) (65) (10) (3) (140) (195) (335) (325) Impairment Note 14 – (5) (13) (2) – (20) (13) (33) (56) Reversal of impairment Note 8/14 – – – – – 0 – 0 5 Reclassifications Note 8 0 2 – – – 2 – 2 (2) Transfer to assets classified as held for sale Note 9 – – – – – 0 – 0 (59) Foreign exchange differences 179 20 14 2 0 36 17 232 309 Total movements 214 (6) (29) (7) (3) (45) 73 242 162 Position at December 31 Cost value 4,394 1,134 808 494 3 2,439 2,011 8,844 8,498 Accumulated amortization and impairment – (579) (432) (425) (3) (1,439) (1,363) (2,802) (2,698) Book value at December 31 4,394 555 376 69 0 1,000 648 6,042 5,800 * Investments in 2022 exclude capital expenditure by the disposal groups classified as held for sale of €3 million. At both December 31, 2022, and December 31, 2021, the vast majority of the book value of other intangible assets relates to development of software. In both 2022 and 2021, the amortization and impairment of intangible assets are for the vast majority reported under general and administrative costs in the consolidated statement of profit or loss. ← → Wolters Kluwer 2022 Annual Report 149 Note 18 – Goodwill and Intangible Assets other than Goodwill continued ACCOUNTING POLICIES Goodwill The group measures goodwill at the acquisition date as the sum of the fair value of the consideration (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 deferred and 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), and brand names. Other intangible assets Other intangible assets mainly relate to purchased and internally developed information systems and software. Development costs are capitalized if the group can demonstrate the technical feasibility of completing the asset so that it will be available for use or sale, the intention to complete the asset, the ability to sell or use the asset, how the asset will yield probable future economic benefits, the availability of adequate technical, financial, and other resources to complete the asset, and the ability to reliably measure the expenditure attributable to the asset. 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 and the amortization methods 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: • Customer relationships: five to 29 years; • Technology: five to 29 years; • Brand names: five to 20 years; • Other acquired identifiable intangible assets: five to ten 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, 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. 150 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 18 – Goodwill and Intangible Assets other than Goodwill continued ESTIMATES AND JUDGMENTS Measurement Upon acquisition, the values of intangible assets acquired are estimated, usually 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 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, requiring estimates such as future cash flows, royalty rates, discount rates, useful lives, churn rates, and rates of return. The methodologies applied in this respect are in line with common market practice. Impairment test Impairment tests require estimates of discount rates, future cash flows, and perpetual growth rates. These estimates are made by management of 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, consisting mainly of acquired identifiable intangible 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 were no impairment triggers for the majority of the other non-current assets. For the continuing medical education solutions for physicians (Learner’s Digest), the group identified a triggering event in 2022 as expectations of market growth deteriorated. The group recognized an impairment on the acquired identifiable intangible assets of €20 million and on other intangible assets of €3 million and shortened the remaining useful lives. CARRYING AMOUNTS OF GOODWILL AND ACQUIRED IDENTIFIABLE INTANGIBLE ASSETS PER OPERATING SEGMENT Goodwill Acquired identifiable intangible assets 2022 2021 Health 1,124 176 1,300 1,262 Tax & Accounting 1,542 241 1,783 1,761 Governance, Risk & Compliance 1,122 365 1,487 1,374 Legal & Regulatory 606 218 824 828 Total 4,394 1,000 5,394 5,225 ← → Wolters Kluwer 2022 Annual Report 151 Note 18 – Goodwill and Intangible Assets other than Goodwill 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 2022 (2021: 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 2022 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 2022 annual impairment test showed that the recoverable amount exceeded the carrying amount for all identified groups of CGUs for goodwill impairment testing. 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 2022 weighted-average long- term growth rate is 3.6% for the U.S. and 2.1% for Europe (2021: 2.2% for the U.S. and 0.3% 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 9.6% and 10.2% (2021: between 7.7% and 8.7%) with a weighted average of 9.9% (2021: 8.5%). 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: 2022 2021 Risk-free rate United States (in %) 3.6 2.2 Risk-free rate Europe (in %) 2.1 0.3 Market risk premium United States (in %) 6.0 7.0 Market risk premium Europe (in %) 6.8 7.0 Tax rate (in %) 25.8 25.0 Re-levered beta 0.79 0.77 152 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 18 – Goodwill and Intangible Assets other than Goodwill 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 sensitivity per group of CGUs for the 2022 and 2021 goodwill impairment tests, respectively, is as follows: Applied weighted- average growth rate Allowed change (in basis points) Allocated goodwill at December 31, 20222022 sensitivity per group of CGUs Decline in growth rate Increase in discount rate Decrease in adjusted operating profit margin Health Learning, Research & Practice 2.1% >300 >300 >300 567 Clinical Solutions 2.2% >300 >300 >300 557 Tax & Accounting Americas and Asia Pacific 2.1% >300 >300 >300 1,131 Tax & Accounting Europe 2.0% >300 >300 >300 411 Governance, Risk & Compliance 2.2% >300 >300 >300 1,122 Legal & Regulatory 2.2% >300 >300 >300 606 Total 2.2% 4,394 Applied weighted- average growth rate Allowed change (in basis points) Allocated goodwill at December 31, 20212021 sensitivity per group of CGUs Decline in growth rate 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 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: 2022 2021 Acquired identifiable intangible assets – Learner’s Digest and certain assets within Health 20 27 Acquired identifiable intangible assets – certain assets within GRC – 11 Other intangible assets – Learner’s Digest and certain assets within Health 3 4 Other intangible assets – other CGUs 10 14 Total 33 56 ← → Wolters Kluwer 2022 Annual Report 153 Note 19 – Property, Plant, and Equipment Land and buildings Other PPE 2022 2021 Position at January 1 Cost value 125 255 380 375 Accumulated depreciation and impairment (88) (217) (305) (291) Book value at January 1 37 38 75 84 Movements Investments 3 25 28 17 Divestment of operations Note 8 0 0 0 (2) Disposal of assets 0 0 0 0 Net expenditures 3 25 28 15 Depreciation Note 14 (6) (20) (26) (25) Impairment Note 14 (1) 0 (1) 0 Transfer to assets classified as held for sale Note 9 – – 0 (3) Foreign exchange differences 1 2 3 4 Total movements (3) 7 4 (9) Position at December 31 Cost value 121 196 317 380 Accumulated depreciation and impairment (87) (151) (238) (305) Book value at December 31 34 45 79 75 ACCOUNTING POLICIES Property, plant, and equipment, consisting of land, buildings, and other assets such as office and IT equipment, are valued at cost less accumulated depreciation and 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 component 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 PPE: three to ten years. 154 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 20 – Leasing ACCOUNTING POLICIES The group primarily leases real estate and, to a lesser extent, IT equipment and cars. The fixed rental periods mostly vary from one year to 15 years and 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 on 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 be readily determined. The finance cost is charged to profit or loss over the lease term to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The group elected 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 have a 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. ESTIMATES AND JUDGMENTS IFRS 16 requires management to make estimates for setting the discount rate and to apply judgments 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, 2022, the weighted-average discount rate is 2.8% (2021: 2.4% ). 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 periods 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. Usually, optional periods arising from renewal options of other real estate leases are not considered to be reasonably certain, since the rent is often reset at the market price on the renewal option date. Optional periods after termination option dates are often included in the lease term due to termination penalties included in the contract. ← → Wolters Kluwer 2022 Annual Report 155 Note 20 – Leasing continued Impairment of right-of-use assets The group determined whether there were impairment triggers regarding the right-of-use asset and accounts for any impairment loss identified. This primarily applies to real estate leases. The impairment of a real estate right-of-use asset becomes relevant in case of vacated office space. If vacated office space is identified, this space is considered a CGU on its own when that space can 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 include not only the right-of-use asset, but also any directly related associated assets such as leasehold improvements. MOVEMENT SCHEDULE OF RIGHT-OF-USE ASSETS Real estate Other leases 2022 2021 Position at January 1 Cost value 578 80 658 663 Accumulated depreciation and impairment (309) (48) (357) (344) Book value at January 1 269 32 301 319 Movements Additions from new leases 21 6 27 24 Acquired through business combinations Note 8 2 – 2 2 Contract modifications and reassessment of options 6 7 13 20 Net additions 29 13 42 46 Depreciation Note 14 (51) (20) (71) (71) Impairment Note 14 – – 0 (1) Transfer to assets classified as held for sale Note 9 – – 0 (10) Foreign exchange differences 11 0 11 18 Total movements (11) (7) (18) (18) Position at December 31 Cost value 596 89 685 658 Accumulated depreciation and impairment (338) (64) (402) (357) Book value at December 31 258 25 283 301 156 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 20 – Leasing continued CONTRACTUAL MATURITIES OF LEASE LIABILITIES 2022 2021 Within one year 69 70 Between one and two years 59 61 Between two and three years 50 51 Between three and four years 40 42 Between four and five years 34 33 Between five and ten years 86 91 Ten years and more 10 17 Effect of discounting (35) (34) Total lease liabilities at December 31 Note 29 313 331 CASH OUTFLOW FOR LEASES 2022 2021 Interest portion of lease payments 9 9 Repayment of principal portion of lease liabilities 72 68 Total 81 77 OTHER DISCLOSURES At December 31, 2022, the future undiscounted cash outflows arising from leases not yet commenced and to which the group is committed amounted to €9 million (2021: €0 million). The group’s lease agreements do not impact any covenants. ← → Wolters Kluwer 2022 Annual Report 157 Note 21 – Investments in Equity-accounted Investees The group’s share in equity-accounted investees at December 31 is: ownership in % 2022 2021 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 on 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 EQUITY-ACCOUNTED INVESTEES 2022 2021 Position at January 1 10 8 Dividends received – – Share of profit of equity-accounted investees, net of tax 0 1 Foreign exchange differences 1 1 Position at December 31 11 10 For the equity-accounted investees at December 31, 2022, and December 31, 2021, the financial information (at 100%) and the group’s weighted proportionate share is as follows: Total equity-accounted investees Group’s share 2022 2021 2022 2021 Total assets 34 28 8 6 Total liabilities 17 16 4 3 Total equity 17 12 4 3 Revenues 31 24 7 5 Net profit for the year 1 5 0 1 158 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 22 – Financial Assets 2022 2021 Financial assets at fair value through profit or loss 0 0 Finance lease receivables 1 0 Derivative financial instruments Note 30 17 – Other non-current financial assets 5 5 Total 23 5 The credit risk exposure of the financial assets is considered immaterial. Refer to Note 30 – Financial Risk Management. ACCOUNTING POLICIES Financial assets at fair value through profit or loss comprise equity investments. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 2022 2021 Position at January 1 0 0 Financial assets arising from divestment of operations Note 8 – 6 Fair value changes of financial assets Note 15 0 (5) Foreign exchange differences 0 (1) Position at December 31 0 0 Note 23 – Tax Assets and Liabilities DEFERRED TAX ASSETS AND LIABILITIES temporary differences arising from: Assets Liabilities 2022 2021 Intangible assets 7 (402) (395) (390) Property, plant, and equipment, right-of-use assets, and lease liabilities 20 (3) 17 1 Employee benefits 38 0 38 37 Tax value of loss carry-forwards recognized 31 – 31 38 Other items 103 (31) 72 82 Total before set-off of tax 199 (436) (237) (232) Set-off of tax (137) 137 0 0 Position at December 31 62 (299) (237) (232) 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 probable. Other items mainly include recognition of deferred tax assets and liabilities for temporary differences on working capital items. ← → Wolters Kluwer 2022 Annual Report 159 Note 23 – Tax Assets and Liabilities continued MOVEMENTS IN TEMPORARY DIFFERENCES, 2022 Balance at January 1, 2022 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, 2022 Intangible assets (390) (19) – 31 – (17) (395) PPE, right-of-use assets, and lease liabilities 1 – – 16 – 0 17 Employee benefits 37 – – 4 (5) 2 38 Tax value of loss carry-forwards recognized 38 – – (9) – 2 31 Other items 82 0 – (18) 4 4 72 Total (232) (19) 0 24 (1) (9) (237) 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, right-of-use assets, and lease liabilities 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) 160 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 23 – Tax Assets and Liabilities continued MOVEMENTS IN OVERALL TAX POSITION 2022 2021 Position at January 1 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) Movements Total income tax expense Note 16 (249) (201) Deferred tax from acquisitions and divestments (19) 8 Current income tax from acquisitions and divestments (1) 0 Deferred tax on items recognized directly in other comprehensive income (1) (4) Paid income tax 289 277 Transfer to assets and liabilities classified as held for sale Note 9 – 1 Foreign exchange differences (9) (17) Total movements 10 64 Position at December 31 Current income tax assets 61 59 Current income tax liabilities (129) (142) Deferred tax assets 62 62 Deferred tax liabilities (299) (294) Overall tax position (305) (315) The current income tax liabilities include, to a large extent, uncertain tax positions. For most of these uncertain tax positions, it is expected that the audit by tax authorities will finalize beyond one year. For the estimates and judgments applied to uncertain tax positions, refer to Note 16 – Income Tax Expense. The group paid income taxes for the amounts of €162 million (2021: €166 million) in North America, €119 million (2021: €104 million) in Europe, and €8 million (2021: €7 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 €0 million at December 31, 2022 (2021: €11 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 €293 million (2021: €253 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, 14% expire within the next five years (2021: 11%), 10% expire after five years (2021: 13%), and 76% carry forward indefinitely (2021: 76%). In addition, the group has not recognized net deferred tax assets of €21 million (2021: €20 million), relating to unused state tax losses in the U.S. Of these unused state tax losses, 23% expire within the next five years (2021: 21%) and 77% expire after five years (2021: 79%). ← → Wolters Kluwer 2022 Annual Report 161 Note 23 – Tax Assets and Liabilities continued DEFERRED TAX ON ITEMS RECOGNIZED IMMEDIATELY IN OTHER COMPREHENSIVE INCOME AND EQUITY 2022 2021 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 investment hedges 216 4 220 339 0 339 Gains/(losses) on cash flow hedges 29 – 29 10 – 10 Remeasurement gains/(losses) on defined benefit plans 18 (5) 13 16 (4) 12 Recognized in other comprehensive income 263 (1) 262 365 (4) 361 Share-based payments 28 – 28 24 – 24 Recognized in equity 28 0 28 24 0 24 Note 24 – Inventories 2022 2021 Work in progress 27 21 Finished products and trade goods 52 44 Total 79 65 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 development, manufacturing, content-creation, and publishing costs. Trade goods purchased from third parties are valued at the purchase price. At December 31, 2022, the provision for obsolescence deducted from the inventory carrying values amounted to €18 million (2021: €18 million). In 2022, an amount of €5 million was recognized as an expense for the change in the provision for obsolescence (2021: €2 million) and is presented as part of cost of revenues in the consolidated statement of profit or loss. 162 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 25 – Contract Assets and Liabilities 2022 2021 Trade receivables 1,088 1,008 Non-current contract assets 17 19 Current contract assets 153 138 Non-current deferred income 112 113 Current deferred income 1,858 1,709 Other current contract liabilities 88 80 ACCOUNTING POLICIES Trade receivables Trade receivables are recognized at transaction price and subsequently measured at amortized cost minus loss allowance. A receivable is recognized when the group’s right to consideration is unconditional except for the passage of time. 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. Unbilled revenues and deferred income 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 customer's payment. If the value of the services rendered by the group exceeds the invoiced amounts, unbilled revenues are recognized. If the invoiced amounts exceed the value of services rendered, deferred income is recognized. Unbilled revenues are 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. Deferred income 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 revenues by means of the delivery of goods and/or services in the future. Deferred income is recognized at its nominal value. For contracts whereby neither party has performed, trade receivables and deferred income balances are presented on a net basis. Cost to obtain a contract Incremental costs 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 costs to fulfill a revenue contract with a customer (e.g., costs that are explicitly chargeable to the customer under the contract, set-up costs, 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. ← → Wolters Kluwer 2022 Annual Report 163 Note 25 – Contract Assets and Liabilities continued Impairment Any impairment of assets relating to contracts with customers is measured, presented, and disclosed in accordance with IFRS 9. 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, adjusted as appropriate to reflect the current conditions and estimates of future economic conditions. 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 is available to conclude otherwise. The group presents its impairment losses in the notes to the consolidated financial statements. Provisions for returns, refunds, and other liabilities 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 significant 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 contracts with customers require prepayment of the consideration. Trade receivables and unbilled revenues are shown net of impairment losses amounting to €85 million (2021: €83 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 2022 2021 Position at January 1 83 84 Divestment of operations Note 8 0 (1) Transfer to assets classified as held for sale Note 9 – (1) Additions to loss allowances Note 10 33 28 Releases from loss allowances Note 10 (12) (8) Usage of loss allowances (22) (25) Foreign exchange differences 3 6 Position at December 31 85 83 For further information on credit risk, refer to Note 30 – Financial Risk Management. 164 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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 2022 2021 Position at January 1 95 40 22 157 132 Recognized as revenues in the year 465 – – 465 331 Newly recognized cost to fulfill a contract – – 473 473 391 Transferred to trade receivables (463) – (469) (932) (712) Newly recognized cost to obtain a contract – 28 – 28 29 Amortization of capitalized sales commissions Note 10 – (29) – (29) (23) Autonomous movements in contract assets 2 (1) 4 5 16 Acquired through business combinations Note 8 1 – – 1 1 Transfer to assets classified as held for sale Note 9 – – – 0 (1) Foreign exchange differences 3 2 2 7 9 Position at December 31 101 41 28 170 157 The group did not recognize an impairment on the unbilled revenues during the year (2021: nil). DEFERRED INCOME current and non-current 2022 2021 Position at January 1 1,822 1,630 New and existing contracts with customers 3,944 3,683 Recognized as revenues from opening balance (1,709) (1,518) Recognized as revenues in the year on new and existing contracts (2,137) (2,007) Change in netting against trade receivables (25) (45) Autonomous movements in deferred income 73 113 Acquired through business combinations Note 8 0 6 Divestment of operations Note 8 0 (2) Transfer to liabilities classified as held for sale Note 9 – (27) Foreign exchange differences 75 102 Position at December 31 1,970 1,822 No material amount of revenues was recognized in 2022 from performance obligations satisfied or partially satisfied in previous years because of events such as changes in transaction price. Furthermore, the group did not have material changes in deferred income because of contract modifications or changes in estimates. The aggregate amount of the transaction price allocated to the remaining performance obligations that are unsatisfied at year-end 2022 was €4,055 million (2021: €3,727 million), of which €1,970 million was included in deferred income (2021: €1,822 million). The unfulfilled performance obligations not recognized in deferred income relate to multi-year contracts agreed with customers, whereby the group expects to satisfy these performance obligations for a large part within one year and for the remainder between one to five years. ← → Wolters Kluwer 2022 Annual Report 165 Note 25 – Contract Assets and Liabilities continued OTHER CONTRACT LIABILITIES 2022 2021 Position at January 1 80 66 Additions to provision for returns, refunds, and other 140 90 Usage of provision for returns, refunds, and other (136) (76) Autonomous movements in other contract liabilities 4 14 Acquired through business combinations Note 8 1 – Transfer to liabilities classified as held for sale Note 9 – (4) Foreign exchange differences 3 4 Position at December 31 88 80 Note 26 – Other Receivables 2022 2021 Prepaid royalties 16 18 Non-current other receivables 16 18 Prepaid royalties 55 81 Other prepayments 157 251 Miscellaneous receivables 32 34 Interest receivable 5 0 Derivative financial instruments 1 – Current other receivables 250 366 166 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 27 – Cash and Cash Equivalents 2022 2021 Deposits 909 610 Cash and bank balances 437 391 Total cash and cash equivalents in the consolidated statement of financial position 1,346 1,001 Minus: Bank overdrafts used for cash management purposes Note 29 (16) (9) Plus: Cash included in assets held for sale Note 9 – 2 Total cash and cash equivalents minus bank overdrafts, including cash included in assets held for sale in the consolidated statement of cash flows 1,330 994 ACCOUNTING POLICIES Cash and cash equivalents comprise cash and bank balances and 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 (2021: €0 million) relates to cash and cash equivalent balances of entities that the group does not fully own (see Note 17 – Non-controlling Interests). Cash equivalents include bank deposits that are held as part of the group’s cash management for the purpose of meeting short-term cash commitments. At December 31, 2022, bank balances include an amount of €38 million (2021: €45 million) of restricted cash, primarily due to local exchange control regulations that restrict exporting cash and/or capital from the relevant country. Note 28 – Trade and Other Payables 2022 2021 Trade payables 147 123 Salaries, holiday allowances, and other benefits 276 284 VAT, sales tax, social security premiums, and other taxation 95 88 Pension-related payables 28 24 Royalty payables 88 90 Other accruals and payables 315 300 Interest payable 39 34 Deferred and contingent acquisition payables Note 30 2 1 Total 990 944 ← → Wolters Kluwer 2022 Annual Report 167 Note 29 – Net Debt Nominal value Effective interest rate in % Nominal interest rate in % Repayment commitments 1-5 years Repayment commitments >5 years 2022 2021 Bonds 2008-2028 (100.00 * ) €36 6.812 6.748 – 36 36 36 Bonds 2013-2023 (99.709 * ) ** €700 2.950 2.875 – – 0 699 Bonds 2014-2024 (99.164 * ) €400 2.640 2.500 399 – 399 399 Bonds 2017-2027 (99.659 * ) €500 1.575 1.500 499 – 499 498 Bonds 2020-2030 (99.292 * ) €500 0.862 0.750 – 496 496 495 Bonds 2021-2028 (99.958 * ) €500 0.307 0.250 – 498 498 498 Bonds 2022-2026 (99.922 * ) €500 3.096 3.000 498 – 498 – Bonds, measured at amortized cost 1,396 1,030 2,426 2,625 Private placement 2008-2038, measured at amortized cost ¥20,000 3.330 3.330 – 142 142 153 Deferred and contingent acquisition payables, measured at fair value 2 – 2 1 Other debt, measured at amortized cost 16 – 16 10 Derivative financial instruments, measured at fair value *** – – 0 2 Other long-term debt 18 0 18 13 Total long-term debt (excluding lease liabilities) 1,414 1,172 2,586 2,791 Lease liabilities 244 260 Total long-term debt 2,830 3,051 * Issue price of the financial instrument. ** These bonds are classified as short-term bonds. Refer also to the table on the following page. *** For further details on these debt-related derivative financial instruments, refer to Note 30 – Financial Risk Management. * For the repayment commitments of lease liabilities, refer to Note 20 – Leasing . 168 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 29 – Net Debt continued RECONCILIATION LONG-TERM DEBT TO NET DEBT 2022 2021 Total long-term debt 2,830 3,051 Borrowings and bank overdrafts: Bank overdrafts, measured at amortized cost Note 27 16 9 Total borrowings and bank overdrafts 16 9 Bonds 2013-2023 700 – Short-term lease liabilities 69 71 Deferred and contingent acquisition payables measured at fair value Note 30 2 1 Total short-term debt 787 81 Gross debt 3,617 3,132 Minus: Cash and cash equivalents Note 27 (1,346) (1,001) Derivative financial instruments: Non-current assets Note 22 (17) – Current assets Note 26 (1) – Net debt 2,253 2,131 ACCOUNTING POLICIES 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. Subsequently, these financial liabilities are measured at amortized cost using the effective interest method with any difference between cost and redemption value recognized in profit or loss over the period of the borrowings. ← → Wolters Kluwer 2022 Annual Report 169 Note 29 – Net Debt continued RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES Gross debt, excluding lease liabilities, derivative financial instruments, and bank overdrafts Balance at January 1, 2022 Net cash flows Acquisitions/ Divestments Unwinding of discount Foreign exchange differences Other non-cash movements Balance at December 31, 2022 Bonds 2,625 500 – 3 – (2) 3,126 Private placements 153 – – 0 (11) – 142 Other gross debt 12 5 2 – 1 – 20 Total 2,790 505 2 3 (10) (2) 3,288 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 Lease liabilities current and non current 2022 2021 Position at January 1 331 348 Additions from new leases 27 24 Acquired through business combinations Note 8 2 2 Contract modifications and reassessments of options 10 19 Repayment of lease liabilities (interest and principal portion) * (80) (77) Unwinding of discount of lease liabilities Note 15 9 9 Transfer to liabilities classified as held for sale Note 9 – (11) Foreign exchange differences 14 17 Position at December 31 313 331 * Repayment of lease liabilities in 2022 excludes payments by the disposal groups classified as held for sale, amounting to €1 million. For accounting policies, estimates, and judgments on lease liabilities, refer to Note 20 – Leasing. 170 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 29 – Net Debt continued LOAN MATURITY The following amounts of gross debt (excluding lease liabilities) at December 31, 2022, are due within and after five years: 2022 2024 409 2025 8 2026 498 2027 499 Due after 2027 1,172 Long-term debt 2,586 Short-term debt (2023) 718 Total (excluding lease liabilities) 3,304 At December 31, 2021, €10 million was short-term debt, €1,109 million was due in 2023 and 2024, and €1,682 million was due after 2026. FINANCIAL LIABILITIES MEASURED AT AMORTIZED COST Bonds The group has senior bonds outstanding for an amount of €3,126 million at December 31, 2022 (2021: €2,625 million). The nominal interest rates on the bonds are fixed until redemption. On September 23, 2022, the group issued a €500 million four-year senior unsecured Eurobond. The bonds were sold at an issue price of 99.922 percent and carry an annual coupon of 3.000 percent. The senior unsecured bonds will mature on September 23, 2026. The net proceeds of the offering are 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, 2022 (2021: no collateral outstanding). Multi-currency revolving credit facility Effective July 2022, the group agreed to the final one-year extension of the €600 million multi-currency revolving credit facility, such that the facility will now mature in 2025. This facility has multi-year environmental, social, and governance (ESG) KPIs, which are linked to the interest rates in the facility. The interest rates in the facility are variable. The facility is used for general corporate purposes. At December 31, 2022, no amounts were drawn under the facility (December 31, 2021: no amounts drawn). The facility is subject to customary conditions, including a financial credit covenant. The facility covenant requires that the consolidated net senior borrowings (excluding fully subordinated debt) to adjusted EBITDA shall not exceed 3.5. In 2022 and 2021, the group was comfortably within the thresholds stipulated in the financial covenant of the 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, 2022, no ECP notes were outstanding (2021: no ECP notes outstanding). DEFAULTS AND/OR BREACHES There were no defaults or breaches on the loans and borrowings during 2022 or 2021. ← → Wolters Kluwer 2022 Annual Report 171 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 are 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 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 group’s Internal Control Framework, the financial reporting controls, including policies 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, 2022, the net-debt-to-EBITDA ratio was 1.3 (2021: 1.4). All treasury activities, in particular the use of derivative financial instruments, are subject to the principle of risk minimization and are executed by specialized 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 exposures 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's activities has not significantly changed, nor has 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 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 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. 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 translation exposures which impact the consolidated statements of financial position and/or profit or loss by 10% or more are considered material. The currency translation exposure on the consolidated 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. 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. 172 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 30 – Financial Risk Management continued HEDGE ACCOUNTING ACCOUNTING POLICIES 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 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, and accumulated in the hedge reserve within total equity. Amounts accumulated in the hedge reserve are reclassified to profit or loss within the line where the result from the hedged transaction is recognized, in the same period the hedged item affects the 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. 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 only 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 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. 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. ← → Wolters Kluwer 2022 Annual Report 173 Note 30 – Financial Risk Management continued Net investment hedge The group partially protects total equity from 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 items. 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 recognized in other comprehensive income. The group had U.S. dollar forward contracts outstanding for a total notional amount of €258 million ($275 million) at December 31, 2022 (2021: €177 million or $200 million). These hedges created a U.S. dollar balance sheet cover with a future settlement date, recognized as a financial asset with a fair value of €1 million at December 31, 2022. The group had U.S. dollar liabilities outstanding for a total notional amount of €473 million ($505 million) at December 31, 2022 (2021: €406 million or $460 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 11% (2021: 10%) 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 (2022 and 2021: ¥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 from 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 2022, the group swapped 74% (2021: 50%) of the net financing results of €56 million (2021: €78 million) into U.S. dollars using foreign exchange derivatives of $40 million (2021: $40 million). Sensitivity Based on the percentage of 74% for net financing results payable in U.S. dollars, an instantaneous 1% decline of the U.S. dollar against the euro at December 31, 2022, with all other variables held constant, would result in a decrease of approximately €0.4 million in net financing results (2021: €0.4 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 2022, the group did not record ineffectiveness because of hedging activities (2021: 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. 174 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 30 – Financial Risk Management continued CURRENCY RISK SENSITIVITY The following table details the group’s sensitivity to a 1% weakening of the U.S. dollar against the euro: 2022 2021 Revenues (37) (31) Adjusted operating profit (12) (10) Operating profit (11) (10) Adjusted net profit (8) (6) Profit for the year (7) (6) Shareholders’ equity at December 31 (38) (35) Adjusted free cash flow (12) (9) 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, 2022, and an instantaneous 1% increase of the U.S. dollar, Japanese yen, and euro interest rates: 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 (1) (4) Net investment hedge Changes of the U.S. dollar net investments due to fluctuations of U.S. dollar exchange rates $275 Forward contracts 2 0 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, 2022, the group’s interest rate position (excluding cash and cash equivalents and lease liabilities) was 100% (2021: 100%) 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, 2022, with all other variables held constant, would hardly result, on an annual basis, in an increase of net financing results (2021: identical at December 31, 2021). Interest rate benchmark transition for non-derivative financial instruments For non-derivative third-party contracts and internal contracts, IBOR references were primarily used in internal financing-related contracts. At December 31, 2022, 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. During 2022, the group has transitioned its €600 million credit facility agreement from LIBOR to risk-free rates. ← → Wolters Kluwer 2022 Annual Report 175 Note 30 – Financial Risk Management continued Interest rate benchmark transition for derivative financial instruments 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. During 2022, the input in the fair value determination was changed to the Tokia Overnight Rate (TONA) curve and the Euro Short-Term Rate (€STR). In addition, the Euro Overnight Index Average (EONIA) reference in the Credit Support Annex was amended to the Euro Short-Term Rate (€STR). The IBOR-reform did not result in changes to the group’s risk management strategy. 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 derivative financial assets, minus other short-term debt, current deferred acquisition payables, current derivative financial liabilities, and bank overdrafts). Per December 31, 2022, the group has access to the unused part of the committed credit facilities of €600 million in total (2021: €600 million), cash and cash equivalents of €1,346 million (2021: €1,001 million), and has derivative financial assets totaling €18 million (2021: none), minus other short-term debt, current deferred and contingent acquisition payables, bank overdrafts, Euro Commercial Paper, and current derivative financial liabilities totaling €18 million (2021: €10 million). The headroom was €1,946 million at year-end 2022 (2021: €1,591 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. 176 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 30 – Financial Risk Management continued CONTRACTUAL CASH FLOWS 2022 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 49 2 2 7 38 Bonds 2013-2023 700 720 720 – – – Bonds 2014-2024 399 420 10 410 – – Bonds 2017-2027 499 539 8 8 523 – Bonds 2020-2030 496 530 4 4 11 511 Bonds 2021-2028 498 507 1 1 4 501 Bonds 2022-2026 498 560 15 15 530 – Private placements: Private placement 2008-2038 142 216 5 5 14 192 Long- and short-term deferred and contingent acquisition payables 4 4 2 2 – – Other debt 16 16 – 8 8 – Borrowings and bank overdrafts 16 16 16 – – – Trade payables 147 147 147 – – – Total 3,451 3,724 930 455 1,097 1,242 Derivative financial instruments (Receipts) (260) (260) Payments 258 258 Foreign exchange derivatives (1) (2) (2) 0 0 0 (Receipts) (216) (5) (5) (14) (192) Payments 245 8 8 23 206 Cross-currency interest rate swaps (17) 29 3 3 9 14 Total derivative financial liabilities/(assets) (18) 27 1 3 9 14 ← → Wolters Kluwer 2022 Annual Report 177 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 derivative financial liabilities/(assets) 2 18 5 3 8 2 178 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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, unbilled revenues, and investments in debt securities. The carrying amount of non-derivative financial assets represents the maximum credit exposure and amounted to €2,572 million at December 31, 2022 (2021: €2,138 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, 2022, there were no material credit risk concentrations outstanding while the average weighted credit rating of counterparties was A (2021: 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 and unbilled revenues 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. At December 31, 2022, the loss allowance on trade receivables and unbilled revenues amounted to €85 million. The majority of this loss allowance relates to trade receivables that are overdue for more than one year, as legislation in various countries do not allow a write-off until a certain number of years is passed. The trade receivables and unbilled revenues that are not overdue for more than one year or have no specific impairment risk have sound creditworthiness and meet the credit rating grades as defined in the internal policy for assessing the impairment of financial assets. For each trade receivable less than one year overdue, there is a loss allowance of at least 0.5% of the outstanding balance. For accounting policies, estimates, and judgments applied in determining the loss allowance on trade receivables and unbilled revenues, refer to Note 10 – Sales Costs and Note 25 – Contract Assets and Liabilities. ← → Wolters Kluwer 2022 Annual Report 179 Note 30 – Financial Risk Management continued 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. 2022 2021 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 * 101 101 95 95 Trade receivables * 1,088 1,088 1,008 1,008 Miscellaneous receivables * 32 32 34 34 Interest receivable * 5 5 0 0 Cash and cash equivalents * 1,346 1,346 1,001 1,001 Total non-derivative financial assets 2,572 2,572 2,138 2,138 Bonds 2008-2028 36 41 41 36 50 Bonds 2013-2023 700 701 701 699 727 Bonds 2014-2024 399 396 396 399 422 Bonds 2017-2027 499 459 459 498 529 Bonds 2020-2030 496 399 399 495 503 Bonds 2021-2028 498 417 417 498 493 Bonds 2022-2026 498 489 489 – – Private placement 2008-2038 142 172 172 153 206 Long- and short-term deferred and contingent acquisition payables 4 4 4 2 2 Other debt * 16 16 10 10 Borrowings and bank overdrafts * 16 16 9 9 Trade payables * 147 147 123 123 Interest payable * 39 39 34 34 Total non-derivative financial liabilities 3,490 3,296 2,902 172 4 2,956 3,108 Derivative financial instruments: Non-current assets 17 17 17 – – Current assets 1 1 1 – – Total derivative financial assets 18 18 18 0 0 Non-current liabilities – – – 2 2 Total derivative financial liabilities 0 0 0 2 2 * Fair value approximates the carrying amount. 180 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 30 – Financial Risk Management continued FAIR VALUE HIERARCHY The fair values have 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 analyses, using data input of observable financial markets and financial institutions; and • Level 3: inputs that are not based on observable market data. The valuation method can be based on discounted cash flow analyses, or other models that are substantially identical. There has been no change in the fair value hierarchy compared to 2021. The Level 3 fair value movements in non-derivative financial liabilities are as follows: 2022 2021 Balance at January 1 2 0 Acquired through business combinations Note 8 3 2 Settlements Note 8 (1) 0 Fair value changes of contingent considerations Note 12 0 0 Foreign exchange differences 0 0 Balance at December 31 4 2 DEFERRED AND CONTINGENT ACQUISITION PAYABLES ACCOUNTING POLICIES Non-derivative financial liabilities at fair value through profit or loss comprise deferred and contingent considerations and are measured at fair value. Changes therein are recognized in profit or loss. 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 increase (or decrease) if assumptions change. The fair value of the deferred and contingent acquisition payables balance amounted to €4 million (2021: €2 million) and can be presented as follows: Fair value December 31, 2022 Of which: short term Of which: long term Maximum exposure (undiscounted) Fair value December 31, 2021 Total 4 2 2 4 2 ← → Wolters Kluwer 2022 Annual Report 181 Note 31 – Employee Benefits 2022 2021 Retirement plans 34 28 Other post-employment benefit plans 44 52 Other long-term employment benefits 7 10 Total 85 90 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. 182 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 31 – Employee Benefits continued 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 POST-EMPLOYMENT 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 U.S., 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 (wound up in 2022). These plans have no more annual service costs. ← → Wolters Kluwer 2022 Annual Report 183 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 Australia, Belgium, France, Germany, India, Japan, Mexico, the Netherlands, New Zealand, Poland, and the U.S. RETIREMENT PLANS The group has its largest defined benefit retirement plan in the Netherlands with defined benefit obligations of €1.0 billion as of December 31, 2022, followed by the United Kingdom and the United States with defined benefit obligations of €83 million and €70 million respectively. There are also retirement plans in Belgium, Canada (wound up in 2022), 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-based 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 129.4% at December 31, 2022 (2021: 120.2%). 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 28.0% of base salary for 2022, 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 interests 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 interests 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. A 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, 2022, the future deficit contribution commitments were not larger than the surplus in the U.K. plan and therefore there was no additional balance sheet liability recognized in respect of these contributions (2021: no additional balance sheet liability). 184 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 31 – Employee Benefits continued OTHER POST-EMPLOYMENT PLANS Other post-employment plans exist in the U.S., 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 was 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 – Employee Benefits. 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 (or €20 million at December 31, 2022), 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 POST-EMPLOYMENT 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. ← → Wolters Kluwer 2022 Annual Report 185 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 % 2022 2021 Retirement plans Discount rate to discount the obligations at year end 3.9 1.3 Discount rate for pension expense 1.3 0.8 Expected rate of pension increases (in payment) at year end 3.1 2.2 Expected rate of pension increases (in deferral) at year end 3.1 2.2 Expected rate of inflation increase for pension expense 2.3 2.2 Other post-employment benefit plans Discount rate to discount the obligations at year end 4.6 2.1 Discount rate for pension expense 2.1 1.6 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 2022, including fund specific 2022 experience loading (2021: 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 (2021: Pri-2012 Mortality Table with MP 2021 projections); and • U.K.: SAPS S3 (Year of Birth) CMI 2019 projections with 1.25% long-term improvement rate (2021: 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, 2022, are as follows: in years The Netherlands United States United Kingdom Life expectancy at age of 65 now – Male 21.8 20.6 22.2 Life expectancy at age of 65 now – Female 24.2 22.6 24.0 Life expectancy aged 65 in 20 years – Male 23.8 22.7 23.3 Life expectancy aged 65 in 20 years – Female 26.2 25.0 25.3 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. 186 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 31 – Employee Benefits continued SENSITIVITY RETIREMENT PLANS in millions of euros Gross service cost Defined benefit obligations 2022 Baseline 16 1,263 Change compared to baseline Decrease of assumption Increase of assumption Decrease of assumption Increase of assumption Discount rate (change by 1%) 5 (4) 226 (176) Pension increase rate (change by 0.5%) (2) 2 (85) 95 Inflation increase rate (change by 0.5%) (3) 3 (116) 136 Mortality table (change by one year) – 0 (72) 49 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 FINANCIAL POSITION AND THE DEFINED BENEFIT EXPENSE OF THE RETIREMENT PLANS IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS (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 2022, this resulted in a Dutch pension increase assumption of 3.11% compared to 2.11% at year-end 2021. 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 POST-EMPLOYMENT PLANS in millions of euros Gross service costs Defined benefit obligations 2022 Baseline 1 44 Change compared to baseline Discount rate (by -1%) 0 4 Discount rate (by +1%) 0 (3) ← → Wolters Kluwer 2022 Annual Report 187 Note 31 – Employee Benefits continued 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% (2021: 3%) according to the plan rules. The main U.S. medical plan is therefore hardly sensitive to medical cost increases. PLAN LIABILITIES AND PLAN ASSETS Defined benefit retirement plans Other post- employment plans 2022 2021 2022 2021 Plan liabilities Fair value at January 1 1,645 1,652 52 58 Settlements (2) (23) – (4) Employer service cost 19 19 1 1 Interest expense on defined benefit obligations 24 14 1 1 Administration costs and taxes 2 2 – – Benefits paid by fund (50) (52) – – Benefits paid by employer – – (4) (3) Remeasurement (gains)/losses (386) 24 (8) (4) Contributions by plan participants 3 3 – – Plan amendments and curtailments 7 (11) – 0 Foreign exchange differences 1 17 2 3 Fair value at December 31 1,263 1,645 44 52 Plan assets Fair value at January 1 1,641 1,621 0 0 Settlements (2) (23) – (4) Interest income on plan assets 24 14 – – Return on plan assets greater than discount rate (390) 45 0 – Benefits paid by fund (50) (52) (4) (3) Contributions by employer 13 14 4 7 Contributions by plan participants 3 3 – – Foreign exchange differences 1 19 – – Fair value at December 31 1,240 1,641 0 0 Funded status Deficit/(surplus) at December 31 23 4 44 52 Irrecoverable surplus 11 24 – – Net liability at December 31 34 28 44 52 188 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 31 – Employee Benefits continued Defined benefit retirement plans Other post- employment plans 2022 2021 2022 2021 Pension expenses Employer service cost 19 19 1 1 Settlement gain 0 0 – 0 Past service costs – plan amendment 7 (11) – 0 Past service costs – curtailment – 0 – – Interest expense on irrecoverable surplus 0 0 – – Interest expense on defined benefit obligations 24 14 1 1 Interest income on plan assets (24) (14) – – Administration costs and taxes 2 2 – – Total pension expense 28 10 2 2 Of which is included in: Personnel expenses Note 13 28 10 1 1 Other finance (income)/costs Note 15 0 0 1 1 In 2022, there was an asset ceiling in the U.K. pension plan of €10 million (2021: €24 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 (2021: no liability). Plan amendments/curtailments/settlements In 2022, the Dutch pension fund decided to increase the accrual rate as of January 1, 2023, from 1.58% to 1.875%. The 2022 decision on the higher accrual rate resulted in a plan amendment loss of € 7 million on the defined benefit obligations. In 2021, a decrease in the accrual rate in the Dutch pension fund resulted in a plan amendment gain of € 11 million. In May 2021, there was a retiree life insurance buyout of the U.S. other post-retirement benefit plan. As a result, there was a small gain following the settlement of the defined benefit obligations and the associated payments of €4 million each. In November 2021, the group announced the annuity buyout of the defined benefit obligations in the Canadian pension fund, as of April 30, 2022. As a result, a small curtailment gain was realized from the earnings freeze upon the wind-up of the plan in 2022. The annuity buyout resulted in 2021 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 2023 are estimated at €11 million (2022: actual employer contributions of €13 million). ← → Wolters Kluwer 2022 Annual Report 189 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: 2022 2021 Position at January 1 (138) (154) Recognized in other comprehensive income 18 16 Cumulative amount at December 31 (120) (138) REMEASUREMENT GAINS/(LOSSES) FOR THE YEAR 2022 2021 Remeasurement gains/(losses) due to experience adjustments (17) 24 Remeasurement gains/(losses) due to changes in demographic assumptions (11) (2) Remeasurement gains/(losses) due to changes in financial assumptions 422 (42) Remeasurement gains/(losses) on defined benefit obligations 394 (20) Return on plan assets greater/(lower) than discount rate (390) 45 Change in irrecoverable surplus, other than interest and foreign exchange differences 14 (9) Recognized remeasurement gains on defined benefit plans in other comprehensive income 18 16 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. The actual consolidated return on plan assets for the year ended December 31, 2022, was a loss of €366 million (2021: gain of €59 million). 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 2022 2021 Retirement plans The Netherlands 16.9 19.0 United Kingdom 11.4 15.2 United States 9.8 12.0 Other post-employment plans United States 7.1 9.2 190 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 31 – Employee Benefits continued INVESTMENT MIX The breakdown of plan assets as of December 31 is as follows: 2022 Quoted Unquoted 2021 Quoted Unquoted Equity Equity 333 333 – 494 494 – Private equity 2 – 2 3 – 3 Bonds Government bonds 406 406 – 435 435 – Corporate bonds 194 194 – 348 348 – Asset-backed securities 90 90 – 108 108 – Other Insurance contracts 124 – 124 67 – 67 Real estate 95 39 56 108 56 52 Derivatives and other securities (32) (32) – 28 28 – Cash 28 28 – 50 50 – Total 1,240 1,058 182 1,641 1,519 122 At December 31, 2022, 85% of the plan assets relate to quoted financial instruments (2021: 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 % 2022 2021 Equity 27 30 Bonds 56 55 Other 17 15 Total 100 100 ← → Wolters Kluwer 2022 Annual Report 191 Note 32 – Provisions 2022 2021 Provision for restructuring commitments 5 12 Provision for acquisition integration 0 0 Restructuring provisions 5 12 Legal provisions 13 16 Other provisions 6 6 Total 24 34 Of which short term 19 27 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 provisions The restructuring provisions 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 provisions The acquisition integration provisions relate to non-recurring expenses to be incurred for the integration of activities acquired through business combinations, and mainly consist of expected redundancy payments, IT migration costs, and onerous contracts. Legal provisions For legal and judicial proceedings against the group, a legal provision is recognized only if both 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 leases. 192 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 32 – Provisions continued ESTIMATES AND JUDGMENTS Legal provisions The group is involved in legal and judicial proceedings in the ordinary course of business. Provisions and contingencies related to these matters are periodically assessed based on the latest information available, usually after consultation with and the assistance of lawyers and other specialists. The prediction of the outcome and the assessment of a possible loss by management are based on management’s judgments and estimates. The actual outcome of a proceeding or claim may differ from the estimated liability. Refer to Note 37 – Commitments, Contingent Assets, and Contingent Liabilities. MOVEMENTS IN PROVISIONS Restructuring provisions Legal provisions Other provisions 2022 2021 Long-term provisions at January 1 1 2 4 7 4 Add: short-term provisions 11 14 2 27 48 Total provisions at January 1 12 16 6 34 52 Movements Additions for restructuring of stranded costs Note 8 2 – – 2 2 Additions for acquisition integration Note 12 3 – – 3 4 Other additions 4 4 1 9 12 Total additions 9 4 1 14 18 Appropriation of provisions (14) (1) 0 (15) (36) Release of provisions (2) (6) (1) (9) (3) Transfer to liabilities classified as held for sale Note 9 – – – 0 (1) Exchange differences 0 0 0 0 4 Total movements (7) (3) 0 (10) (18) Total provisions at December 31 5 13 6 24 34 Less: short-term provisions (4) (13) (2) (19) (27) Long-term provisions at December 31 1 0 4 5 7 Other additions to restructuring provisions of €4 million mainly relate to restructuring programs in Legal & Regulatory. ← → Wolters Kluwer 2022 Annual Report 193 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 August 31, 2022, the company completed the reduction in ordinary share capital approved by shareholders at the Annual General Meeting of Shareholders held on April 21, 2022. In 2022, the company canceled 5,000,000 ordinary shares to the amount of €451 million previously held as treasury shares (2021: 5,000,000 ordinary shares were canceled to the amount of €336 million). Consequently, in 2022, the total number of issued ordinary shares is reduced to 257,516,153 with a nominal value of €31 million (2021: 262,516,153 shares with a nominal value of €32 million). 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 (TREASURY SHARES) 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 2022 2021 2022 2021 2022 2021 At January 1 262,516 267,516 (4,324) (5,072) 258,192 262,444 Cancelation of shares (5,000) (5,000) 5,000 5,000 0 0 Repurchased shares – – (10,128) (4,957) (10,128) (4,957) Long-Term Incentive Plan – – 650 705 650 705 At December 31 257,516 262,516 (8,802) (4,324) 248,714 258,192 Issued share capital at €0.12 (€’000) 30,902 31,502 Proposed dividend per share (€) 1.81 1.57 Proposed dividend distribution (€’000) 450,172 405,362 194 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 33 – Capital and Reserves continued TREASURY SHARES Shares repurchased by the company are added to and held as treasury shares. Treasury shares are measured at cost, representing the market price on the acquisition date. The treasury share reserve is not available for distribution. Treasury shares are deducted from retained earnings. The group offsets the dilution of its performance share issuance annually via share repurchases. A part of the treasury shares is retained and used to meet future obligations under share-based incentive schemes. In 2022, the group executed a share buyback of €1,000 million (2021: €410 million), originally consisting of a share buyback of €600 million and subsequently expanded to €1,000 million. The group repurchased 10.1 million (2021: 5.0 million) of ordinary shares under this program at an average stock price of €98.75 (2021: €82.62). In 2022, the group used 0.7 million shares held in treasury for the vesting of the LTIP grant 2019-21. In November 2022, the company signed a mandate to execute up to €100 million in share buybacks for the period starting January 2, 2023, up to and including February 20, 2023. 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 declaration. 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 €1.81 per share over financial year 2022 (dividend over financial year 2021: €1.57 per share). The group applies a semi-annual dividend policy. On February 21, 2022, the Supervisory Board and the Executive Board resolved to distribute an interim dividend of €0.63 per share, equal to 40% of prior year’s dividend (2021 interim dividend: 40% of prior year’s dividend). The interim dividend of €160 million was paid on September 22, 2022. Subject to the approval of the Annual General Meeting of Shareholders, a final dividend of €290 million, or €1. 18 per ordinary share, will be paid in cash on June 6, 2023. Refer also to Note 50 – Profit Appropriation. Dividend distributions over financial year 2022 2021 2020 Originally proposed 450 405 357 Actual payments: Interim dividend (paid in the financial year) 160 140 124 Final dividend (paid in the subsequent financial year) 264 232 Total dividend distribution 404 356 ← → Wolters Kluwer 2022 Annual Report 195 Note 33 – Capital and Reserves continued In 2022, dividends paid to the shareholders of the company amounted to €424 million, or €1 .66 per ordinary share, consisting of €160 million interim dividend 2022, or €0.63 per ordinary share, and €264 million final dividend 2021, or €1.03 per ordinary share. In 2021, dividends paid to the shareholders of the company amounted to €372 million, or €1.43 per ordinary share, consisting of €140 million interim dividend 2021, or €0.54 per ordinary share, and €232 million final dividend 2020, or €0.89 per ordinary share. 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 and 2022-24 awards, 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 recognized over the period during which the employees become unconditionally entitled to the shares. The amount recognized as an expense is adjusted for 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. Diluted (adjusted) EPS-condition and ROIC-condition The fair values of the shares based on the non-market performance conditions of diluted (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. LONG-TERM INCENTIVE PLAN General For the Executive Board, the LTIP 2019-21 and 2020-22 awards depend partially on TSR performance (50% of the value of the conditionally awarded rights on shares) and partially on 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 TSR performance (50% of the conditionally awarded rights on shares) and partially on EPS performance (50% of the conditionally awarded rights on shares). 196 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 34 – Share-based Payments continued The LTIP 2021-23 and 2022-24 awards are based on TSR performance (weighting of 50%), diluted adjusted EPS performance (weighting of 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. In 2022, €28 million has been recognized within personnel expenses in profit or loss (2021: €24 million) related to the total cost of the LTIP grants for 2020-22, and 2021-23, and 2022-24. Refer to Note 13 – Personnel Expenses. Conditionally awarded TSR-related LTIP shares For the conditional TSR awards up to and including 2022, 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 TSR-related LTIP is recognized ratably in profit or loss over the performance period. Actual awards at the end of the performance period range from 0% to 150% of the norm payout. There are no payouts 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 diluted (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 diluted (adjusted) EPS- and ROIC-related shares, there are no payouts if the performance over three years is less than 50% of the targets. In case of overachievement of the targets, the Executive Board 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 2022-24, the fair value is estimated to be €71.71 as of January 1, 2022. The inputs to the valuation were the Wolters Kluwer share price of €103.60 on the grant date (January 1, 2022) and an expected volatility of 21.2% based on historical daily prices over the three years prior to January 1, 2022. Dividends are assumed to increase annually (from the 2021 dividend) based on historical trends 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 2022-24 97.82 – 71.71 LTIP 2021-23 64.06 – 47.03 LTIP 2020-22 – 60.68 40.85 The fair values of the conditionally awarded shares under the LTIP 2022-24 grants increased compared to the prior year plan, mainly because of the higher share price of Wolters Kluwer at January 1, 2022, compared to January 1, 2021. ← → Wolters Kluwer 2022 Annual Report 197 Note 34 – Share-based Payments continued LTIP 2019-21 The LTIP 2019-21 vested on December 31, 2021. On 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 150%. A total of 649,774 shares were released on February 24, 2022. At that date, the volume-weighted-average share price of Wolters Kluwer N.V. was €88.0883. LTIP 2019-21: NUMBER OF SHARES VESTED AND THE CASH EQUIVALENT THEREOF number of shares, unless otherwise stated Outstanding at December 31, 2021 Increase in conditional number of TSR shares (25%) Increase in conditional number of EPS shares (50%) Payout/ vested shares February 24, 2022 Cash value vested shares * Executive Board 120,792 17,466 25,464 163,722 14,422 Senior management 353,908 43,956 88,188 486,052 42,815 Total 474,700 61,422 113,652 649,774 57,237 * Cash value in thousands of euros, calculated as the number of shares vested multiplied by the volume-weighted-average price on February 24, 2022. LTIP 2020-22 The LTIP 2020-22 vested on December 31, 2022. On TSR, Wolters Kluwer ranked third 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 23, 2023. The volume-weighted-average price for the shares released will be based on the average exchange prices traded on the Euronext Amsterdam N.V. on February 23, 2023, the first day following the publication of the company’s annual results. NUMBER OF PERFORMANCE SHARES OUTSTANDING LTIP 2020-22 number of shares Total EPS-condition TSR-condition Conditionally awarded grant 2020 448,223 213,365 234,858 Forfeited in previous years (48,613) (24,308) (24,305) Shares outstanding at January 1, 2022 399,610 189,057 210,553 Forfeited during the year (8,582) (4,286) (4,296) Effect of 125% vesting based on TSR-ranking 51,584 – 51,584 Effect of 150% vesting based on EPS-ranking 92,451 92,451 – Vested at December 31, 2022 535,063 277,222 257,841 198 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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 in previous years (26,245) (7,874) (5,249) (13,122) Shares outstanding at January 1, 2022 430,404 124,821 83,214 222,369 Forfeited during the year (11,664) (3,485) (2,327) (5,852) Shares outstanding at December 31, 2022 418,740 121,336 80,887 216,517 LTIP 2022-24 base number of shares at 100% payout Total Adjusted EPS- condition ROIC-condition TSR-condition Conditionally awarded grant 2022 303,253 88,324 58,886 156,043 Forfeited during the year (562) (169) (112) (281) Shares outstanding at December 31, 2022 302,691 88,155 58,774 155,762 Overview of outstanding performance shares: LTIP 2021-23 and LTIP 2022-24 base numbers of shares at 100% payout LTIP 2021-23 LTIP 2022-24 Total Conditionally awarded grant 2021 456,649 – 456,649 Forfeited in previous years (26,245) – (26,245) Shares outstanding at January 1, 2022 430,404 0 430,404 Conditionally awarded grant 2022 303,253 303,253 Forfeited during the year (11,664) (562) (12,226) Shares outstanding at December 31, 2022 418,740 302,691 721,431 Note 35 – Related Party Transactions The company has related party relationships with its subsidiaries, equity-accounted investees, pension funds, and members of the Supervisory Board and the Executive Board. Related party transactions are conducted at arm’s length with terms comparable to transactions with third parties. The group has no significant transactions with, receivables from, or payables to its equity-accounted investees. For transactions with key management, refer to Note 38 – Remuneration of the Executive Board and the Supervisory Board and the Remuneration Report. Wolters Kluwer N.V. has filed a list of subsidiaries and affiliated companies at the offices of the Chamber of Commerce of The Hague, the Netherlands. ← → Wolters Kluwer 2022 Annual Report 199 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 group . Deloitte is not involved in most of the statutory audits of entities that are outside the scope of the group audit. AUDIT FEES 2022 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 0.1 0.2 Tax advisory services – 0.0 0.0 Other non-audit services – 0.0 0.0 Total 1.1 2.1 3.2 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 The audit fees for 2022 and 2021 include final invoicing with respect to the statutory audits of 2021 and 2020, respectively. 200 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 37 – Commitments, Contingent Assets, and Contingent Liabilities GUARANTEES The group has the following outstanding guarantees at December 31: 2022 2021 Parental performance guarantees to third parties 5 12 Guarantee to the trustees of the U.K. retirement plan Note 31 20 21 Real estate and other guarantees 11 12 Drawn bank credit facilities 1 1 Total 37 46 At December 31, 2022, the total guarantees issued for bank credit facilities on behalf of several subsidiaries amounted to €114 million (2021: €113 million), of which €113 million was not utilized (2021: €112 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 proceedings or claims against the group, the group has a policy to insure the group entities against such claims. The group did not have material contingent liabilities arising from legal and judicial proceedings at December 31, 2022, and December 31, 2021. OTHER COMMITMENTS For any commitments with respect to the group’s share buybacks, refer to Note 33 – Capital and Reserves. ← → Wolters Kluwer 2022 Annual Report 201 Note 38 – Remuneration of the Executive Board and the 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 2022 2021 Fixed compensation: Salary 2,260 2,042 Social security 123 44 Defined contribution plan 176 157 Other benefits * 385 775 Total fixed compensation 2,944 3,018 Variable compensation: STIP 2,818 2,853 LTIP ** 6,405 6,345 Total variable compensation 9,223 9,198 Sub-total fixed and variable compensation 12,167 12,216 Tax-related costs *** (525) 565 Total remuneration Executive Board 11,642 12,781 Salary, social security, other benefits, STIP, and tax-related costs are short-term employee benefits, defined contribution plan is a post-employment benefit, and LTIP is a share-based payment scheme. * Executive Board members are eligible for benefits such as health insurance, life insurance, a car, and to participate in whatever all-employee plans may be offered at any given point. ** 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. *** Tax-related costs are costs to the company pertaining to the Executive Board members ex-patriate assignments. The 2022 tax-related costs decreased compared to 2021 mainly due to the cumulative tax impact of spending less time in the Netherlands from 2020 through 2022, lowering Ms. McKinstry’s effective global tax rate. SHARES OWNED BY EXECUTIVE BOARD MEMBERS At December 31, 2022, the Executive Board jointly held 412,167 shares of the company (2021: 412,167 shares). REMUNERATION SUPERVISORY BOARD The total remuneration of the Supervisory Board members was €766 thousand in 2022 (2021: €678 thousand). SHARES OWNED BY SUPERVISORY BOARD MEMBERS At December 31, 2022, Mrs. A.E. Ziegler held 1,894 American Depositary Receipts of shares of the company (2021: 1,894 ADRs). For further details, refer to the Remuneration Report. 202 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 39 – Overview of Significant Subsidiaries Below is a list of significant subsidiaries at December 31, 2022, in alphabetical order (legal entity name and the unit of the organizational structure 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) GERMANY • Akademische Arbeitsgemeinschaft Verlagsgesellschaft GmbH (Tax & Accounting) • 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) • International Document Services, Inc. (Governance, Risk & Compliance) • National Registered Agents, Inc. (Governance, Risk & Compliance) • Ovid Technologies, Inc. (Health) • Paperless Transaction Management, Inc. (Governance, Risk & Compliance) • 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) ← → Wolters Kluwer 2022 Annual Report 203 Note 39 – Overview of Significant Subsidiaries continued A subsidiary is categorized as significant depending on its revenues, operating profit, net profit, and/or total assets. 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, the Czech Republic, Denmark, Hong Kong, Hungary, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Norway, the Philippines, 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 the 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. There are no interests in consolidated structured entities. Refer to Note 8 – Acquisitions and Divestments for the consequences of losing control of subsidiaries during 2022 and 2021. The financial statements of the parent and the subsidiaries used in the preparation of the consolidated financial statements have the same reporting date, except for the group's Indian subsidiaries that have a March financial year end. Note 40 – Events after the Reporting Period Subsequent events were evaluated up to February 21, 2023, which is the date the consolidated financial statements were authorized for issuance by the Executive Board and the Supervisory Board. On January 9, 2023, Wolters Kluwer Health completed the acquisition of 100% of the shares of NurseTim, Inc. (NurseTim), a U.S.- based provider of nursing education solutions for €24 million, which is subject to a working capital settlement. There is no other deferred and contingent consideration. NurseTim will become part of Wolters Kluwer’s Health Learning, Research & Practice business, which will create a comprehensive suite of solutions that generates greater value for customers. NurseTim is based in Minneapolis, Minnesota, U.S., and has 48 employees. The group expects the investment to deliver a return on invested capital (ROIC) above its weighted-average cost of capital (8%) within three to five years and expects the transaction to have an immaterial impact on adjusted earnings. The group did not yet complete the purchase price allocation calculation due to the recent timing of the acquisition. 204 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Company Financial Statements 205 Statement of Profit or Loss of Wolters Kluwer N.V. 206 Statement of Financial Position of Wolters Kluwer N.V. 207 Note 41 – Significant Accounting Policies 208 Note 42 – Financial Assets 208 Note 43 – Other Receivables 208 Note 44 – Cash and Cash Equivalents 209 Note 45 – Borrowings and Bank Overdrafts 209 Note 46 – Personnel Expenses 210 Note 47 – Shareholders’ Equity 212 Note 48 – Commitments and Contingent Liabilities 212 Note 49 – Details of Participating Interests 212 Note 50 – Profit Appropriation 213 Authorization for issuance Notes to the Company FinancialStatements ← → Wolters Kluwer 2022 Annual Report 205 Company FinancialStatements Statement of Profit or Loss of Wolters Kluwer N.V. in millions of euros, for the year ended December 31 2022 2021 General and administrative income 187 154 General and administrative costs (115) (93) Operating profit 72 61 Financing income third parties 16 3 Financing income related parties 4 2 Financing costs third parties (62) (60) Financing costs related parties (29) (1) Net foreign exchange gains/(losses) 0 (15) Total financing results (71) (71) Profit/(loss) before tax 1 (10) Income tax expense (40) (23) Profit/(loss) after tax (39) (33) Results from subsidiaries, net of tax Note 42 1,066 761 Profit for the year 1,027 728 206 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Statement of Financial Position of Wolters Kluwer N.V. in millions of euros and before appropriation of results, at December 31 2022 2021 Non-current assets Financial assets Note 42 8,057 7,352 Other intangible assets 6 2 Deferred tax assets 5 7 Total non-current assets 8,068 7,361 Current assets Other receivables Note 43 175 250 Cash and cash equivalents Note 44 896 599 Total current assets 1,071 849 Total assets 9,139 8,210 Equity Issued share capital Note 33 31 32 Share premium reserve 87 87 Legal reserves 466 215 Other reserves 699 1,355 Undistributed profit 1,027 728 Shareholders’ equity Note 47 2,310 2,417 Non-current liabilities Bonds Note 29 2,426 2,625 Private placements Note 29 142 153 Derivative financial instruments Note 29 / 30 – 2 Total non-current liabilities 2,568 2,780 Current liabilities Debts to subsidiaries 3,490 2,959 Short-term bonds Note 29 700 – Borrowings and bank overdrafts Note 45 13 3 Other payables 58 51 Total current liabilities 4,261 3,013 Total liabilities 6,829 5,793 Total equity and liabilities 9,139 8,210 ← → Wolters Kluwer 2022 Annual Report 207 Note 41 – Significant Accounting Policies GENERAL The functional currency of the company is euro, the currency of primary economic environment in which the company operates. The company financial statements are presented in euros and rounded to the nearest million, unless otherwise indicated. Reference is also made to the following notes to the consolidated financial statements: • Note 29 – Net Debt; • Note 30 – Financial Risk Management; • 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 the Reporting Period. 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. General and administrative income relates to brand royalty fees and management and service fees, all charged to subsidiaries, and is recognized when earned. 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, recognize a loss allowance. Any related party transactions between Wolters Kluwer N.V. and its subsidiaries, equity-accounted investees, pension funds, or members of the Supervisory Board and the Executive Board are conducted at arm’s length with terms comparable to transactions with third parties. COMPARATIVES Certain immaterial reclassifications have been made to the comparative statement of profit or loss 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 208 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Note 42 – Financial Assets 2022 2021 Equity value of subsidiaries 8,040 7,352 Derivative financial instruments Note 30 17 – Total 8,057 7,352 MOVEMENT EQUITY VALUE OF SUBSIDIARIES 2022 2021 Position at January 1 7,352 6,838 Results from subsidiaries, net of tax 1,066 761 Dividends received from subsidiaries (629) (615) Remeasurement gains/(losses) on defined benefit plans, net of tax 18 14 Foreign exchange differences 233 354 Position at December 31 8,040 7,352 Note 43 – Other Receivables 2022 2021 Receivables from subsidiaries 158 235 Current income tax assets 5 8 Interest receivable 5 0 Derivative financial instruments Note 30 1 – Miscellaneous receivables and prepayments 6 7 Total 175 250 Note 44 – Cash and Cash Equivalents Cash and cash equivalents comprise cash balances and bank deposits that are held as part of the group’s cash management for the purpose of meeting short-term cash commitments. ← → Wolters Kluwer 2022 Annual Report 209 Note 45 – Borrowings and Bank Overdrafts 2022 2021 Bank overdrafts 13 3 Total 13 3 Note 46 – Personnel Expenses 2022 2021 Salaries and wages and other benefits 33 30 Social security charges 1 2 Costs of defined contribution plans 1 1 Expenses related to defined benefit plans 1 1 Equity-settled share-based payments Note 34 28 24 Total 64 58 Employees In full-time equivalents at December 31 144 135 Thereof employed outside the Netherlands 22 20 In full-time equivalents average per annum * 149 137 * Average full-time equivalents per annum include temporary staff and contractors, whereas full-time equivalents at December 31 only relate to staff on the payroll ofthe company. 210 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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, 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/(loss) 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 ← → Wolters Kluwer 2022 Annual Report 211 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, 2022 32 87 118 (122) 219 (247) 1,602 728 2,417 Items that are or may be reclassified subsequently to the statement ofprofitor loss: Exchange differences on translation of foreign operations 231 231 Exchange differences on translation of equity-accounted investees 1 1 Recycling of foreign exchange differences on loss of control 1 1 Net gains/(losses) on hedges of net investments in foreign operations (17) (17) Effective portion of changes in fair value of cash flow hedges 18 18 Net change in fair value of cash flow hedges reclassified to the statement ofprofit or loss 11 11 Items that will not be reclassified to the statement of profit or loss: Remeasurements on defined benefit plans 18 18 Tax on other comprehensive income: Income tax on other comprehensive income 4 (5) (1) Other comprehensive income/(loss) for the year, net of tax 16 233 13 262 Profit for the year 1,027 1,027 Total comprehensive income/(loss) for the year 16 233 13 1,027 1,289 Appropriation of profit previous year 728 (728) 0 Transactions with owners of the company, recognized directly in equity: Share-based payments 28 28 Cancelation of shares (1) 451 (450) 0 Release LTIP shares 61 (61) 0 Final cash dividend 2021 (264) (264) Interim cash dividend 2022 (160) (160) Repurchased shares (1,000) (1,000) Other movements 2 0 (2) 0 Balance at December 31, 2022 31 87 120 (106) 452 (735) 1,434 1,027 2,310 The legal reserves and treasury shares reserve are not available for dividend distribution to the owners of the company. 212 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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: 2022 2021 Parental performance guarantees to third parties 5 12 Guarantee to the trustees of the U.K. retirement plan 20 21 Drawn bank credit facilities 1 1 Total guarantees outstanding 26 34 At December 31, 2022, the total guarantees issued for bank credit facilities on behalf of several subsidiaries amounted to €114 million (2021: €113 million), of which €113 million was not utilized (2021: €112 million). In November 2022, the company signed a mandate to execute up to €100 million in share buybacks for the period starting January 2, 2023, up to and including February 20, 2023. 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 2022 2021 Proposed dividend distribution Note 33 450 405 Proposed additions to retained earnings 577 323 Profit for the year 1,027 728 At the 2023 Annual General Meeting of Shareholders, the company will propose a final dividend distribution of €1.18 per share to be paid in cash on June 6, 2023. This will bring the total dividend for 2022 to €1.81 per share (2021: €1.57 per share), an increase of 15% over the prior year. ← → Wolters Kluwer 2022 Annual Report 213 Authorization for Issuance Alphen aan den Rijn, February 21, 2023 Executive Board N. McKinstry, CEO and Chair of the Executive Board K.B. Entricken, CFO and member of the Executive Board Supervisory Board A.E. Ziegler, Chair J.P. de Kreij, Vice-Chair B.J.F. Bodson J.A. Horan H.H. Kersten S. Vandebroek C.F.H.H. Vogelzang 214 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → To the shareholders and the Supervisory Board of Wolters Kluwer N.V. Report on the audit of the financial statements 2022 included in the 2022 Annual Report OUR OPINION We have audited the accompanying financial statements 2022 of Wolters Kluwer N.V., based in Alphen aan den Rijn, the Netherlands. The financial statements comprise the consolidated financial statements and the Company financial statements as set out on pages 110 to 213 of the 2022 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, 2022, and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) 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, 2022, and of its result for 2022 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, 2022; 2. The following statements for 2022: the Consolidated Statement of Profit or Loss, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, and the Consolidated Statement of Changes in Total Equity; and 3. The notes 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, 2022; 2. The Company Statement of Profit or Loss for 2022; and 3. The notes comprising a summary of the 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 €70 million (2021: €60 million). We increased overall group materiality based on the performance growth of the group in 2022, which is a result of both organic growth and a stronger U.S. Dollar. The materiality is based on 5.5% of profit before tax (2021: 6.5%). 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 ← → Wolters Kluwer 2022 Annual Report 215 Materiality overview Materiality for the financial statements as a whole €70 million Basis for materiality 5.5% of profit before tax Threshold for reporting misstatements €3.5 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 were performed using a materiality level of €29.4 million (2021: €26.4 million). For the other components, the materiality levels are in the range of €14.4 million to €26.5 million (2021: €14.4 million to €24.0 million). We agreed with the Supervisory Board that misstatements in excess of €3.5 million (2021: €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 2022 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. The direction and supervision of the component auditors was partially performed remotely. Based on previous experience, appropriate direction and supervision can be established through remote working policies. The group engagement team held multiple virtual meetings with all the individual component auditors and management of the relevant group entities, and participated in the relevant component auditor closing calls. For the component auditor of the businesses in the United States, we conducted an on-site file review during the year and remote follow-up procedures during our year-end procedures. For other selected component auditors (Germany and Italy), 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 acquisitions and divestment of certain assets and businesses, group accounting for current and deferred income taxes, share-based payments, 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. 216 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → In summary, the group engagement team has: • Performed procedures on key audit matters subject to central testing; • Performed audit procedures on the company-only financial statements • Used the work of Deloitte component auditors, or performed specific audit procedures ourselves, when auditing the components in the Netherlands (1), Europe (8), and North America (10) and used the work of non-Deloitte component auditors in Europe (1) and the Netherlands (1); and • Performed analytical procedures at group level on the other group entities. The group entities subject to full-scope audits and audits of specified account balances and classes of transactions comprise approximately 79% 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 79% 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 financial information to provide an opinion on the consolidated 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 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 to 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 • Revenue (transactions) may be subject to manual adjustments outside the fulfillment systems. 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. Independent Auditor’sReport continued ← → Wolters Kluwer 2022 Annual Report 217 We considered available information and made inquiries of the Executive Board, directors (including corporate accounting, 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 – Accounting Estimates and Judgments 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 discussion with management, reading minutes and reports of internal audit, and inspection of selected documents regarding compliance with laws and regulations. Where relevant, we involved our forensic specialists in this evaluation. As a result of our risk assessment procedures, and while realizing that the effects from non-compliance could considerably vary, we considered the following laws and regulations: adherence to (corporate) tax law and financial reporting regulations, the requirements under the International Financial Reporting Standards as adopted by the European Union (EU-IFRS), 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 provisions 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 regulation and whether 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 Filing 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, to 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. 218 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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 – General and Basis of Preparation. The Executive Board believes that no events or conditions 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 the Executive Board’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 Executive Board’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. 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. Key audit matters 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. The large number of countries and locations, and the various IT systems, processes, and procedures that are operated locally, impact our audit effort on internal controls over financial reporting, and therefore we consider this a key audit matter. 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 involved 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. We have included 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 consolidated financial statements audit. Where relevant to the audit, we have tested the operating effectiveness of IT controls or performed additional substantive audit procedures. Observations We have reported our observations on internal controls over financial reporting to the Supervisory Board and have performed additional substantive audit procedures, where deemed needed, with satisfactory results. Independent Auditor’sReport continued ← → Wolters Kluwer 2022 Annual Report 219 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 – Revenues. Revenue arrangements may also require careful consideration and judgment in determining the correct revenue recognition pattern in accordance with IFRS 15. The group may fail to defer revenue recognition or to identify distinct performance obligations, 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. The audit procedures performed on revenue recognition of existing contracts 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. 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. 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 – Revenues. Observations Based on our procedures performed, we did not identify any material reportable matters in manual adjustments to revenue, revenue recognition, and corresponding disclosures included in Note 6 – Revenues. 220 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Key audit matters continued Description How the key audit matter was addressed in the audit Valuation of goodwill and acquired identifiable intangible assets The group has €4,394 million of goodwill and €1,000 million of acquired identifiable intangible assets (December 31, 2021: €4,180 million and €1,045 million respectively), as disclosed in Note 18. Goodwill and acquired identifiable intangible assets represent 57% (2021: 58%) of consolidated total assets and 234% (2021: 216%) of consolidated total shareholders’ equity. Due to the magnitude of these balances to Wolters Kluwer’s financial position and since the annual impairment test is subject to management estimates, we consider this a key audit matter. 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 use of valuation models, making significant estimates, potentially subject to management override, particularly the assumptions related to the adjusted operating profit margin, the average long-term growth rates and weighted-average cost of capital. The annual impairment test for goodwill did not result in an impairment. Management has disclosed its sensitivity analyses in Note 18. 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), a trigger for impairment was identified. The impairment tests performed resulted in impairment adjustments to the acquired identifiable intangible assets of €20 million. 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 substantive audit approach. We obtained management’s annual impairment test, as well as management’s triggering event analysis, and for the individual CGUs where a trigger for impairment was identified, we obtained the respective impairment assessment. We have challenged management’s triggering events analysis for completeness of identified triggers, by using both internal and external information, and have evaluated the impairment test models. We involved valuation specialists to assess the models used for the annual goodwill impairment test by management and the key assumptions applied as outlined in Note 18 – Goodwill and Intangible Assets other than Goodwill. Our valuation specialists assisted us specifically in evaluating the weighted-average cost of capital and the average long-term growth 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 average long-term growth rates. We compared rates 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), where an impairment trigger was identified for acquired identifiable intangible assets, these procedures were performed for this individual CGU. We also evaluated the adequacy of the disclosures provided by the group in Note 18 – Goodwill and Intangible Assets Other than Goodwill in relation to its impairment assessment. Observations We did not identify any material 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 – Goodwill and Other Intangible Assets than Goodwill. Independent Auditor’sReport continued ← → Wolters Kluwer 2022 Annual Report 221 REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The Annual Report contains other information, in addition to the financial statements and our auditor’s report thereon. The other information 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 all the information regarding the management report and the other 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 Strategic Report and Governance, 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 AND ESEF 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 and in the General Meeting of Shareholders on April 22, 2022, we were re-appointed for the years 2023 and 2024. 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 Format The group has prepared its Annual Report in European Single Electronic Format (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 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 the 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. We performed our examination in accordance with Dutch law, including Dutch Standard on Auditing 3950N ‘Assurance-opdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting). 222 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Our examination included amongst others: • Obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package; and • Identifying and assessing the risks that the Annual Report does not comply in all material respects with the RTS on ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including: • 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. DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS Responsibilities of management and the Supervisory Board for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS 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. Independent Auditor’sReport continued ← → Wolters Kluwer 2022 Annual Report 223 • 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. 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. 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 Supervisory Board 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 21, 2023 Deloitte Accountants B.V. B.E. Savert 224 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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 ← → Wolters Kluwer 2022 Annual Report 225 ACTIVITIES The Board of the Wolters Kluwer Preference Shares Foundation (the Foundation) met twice in 2022. The matters discussed included the company’s results, the execution of the strategy, 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 (one meeting), 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. Lindenbergh retired in 2022, due to the expiration of his final term. The Board of the Foundation appointed Mr. Nühn 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 21, 2023 Board of Wolters Kluwer Preference Shares Foundation P. Bouw, Chair J.S.T. Tiemstra, Vice-Chair A. Nühn G.W.Ch. Visser Report of the Wolters Kluwer Preference SharesFoundation 226 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → 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 2022, the average daily trading volume of Wolters Kluwer shares on Euronext Amsterdam was 541,684 shares (2021: 521,131), according to Euronext. American Depositary Receipt 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 2022 down 6%, outperforming the Amsterdam AEX Index and STOXX Europe 600, which were down 14% and 15%, respectively. Over the five-year period ending December 31, 2022, Wolters Kluwer shares have increased by 125%, significantly outperforming the Amsterdam AEX Index and the STOXX Europe 600, which increased 27% and 6%, respectively. Wolters Kluwer ADRs (quoted in U.S. dollars) appreciated 100% over this five-year period, significantly outperforming the S&P 500 which rose 44%. Five-year share price performance 2018-2022 € 2018 2019 2020 20222021 110 90 100 80 70 60 50 40 30 20 10 Wolters Kluwer N.V. AEX (rebased) STOXX Europe 600 (rebased) To be updated Source: Nasdaq/FactSet data. Indices rebased to Wolters Kluwer share price. Wolters Kluwer Shares andBonds ← → Wolters Kluwer 2022 Annual Report 227 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 2022 dividend We are proposing to increase the total dividend for the financial year 2022 by 15% (2021: 15% increase) to €1.81 per share (2021: €1.57). We will therefore recommend a final dividend of €1.18 per share, subject to the approval of shareholders at the Annual General Meeting in May 2023. For 2023, 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 2022, we repurchased 10.1 million shares for a total consideration of €1 billion, including 0.7 million shares to offset incentive share issuances (2021: 0.7 million). As of December 31, 2022, we held 8.8 million shares in treasury. A summary of amounts repurchased and cancelations over the past few years is shown below. Share repurchases and cancelations 2018-2022 Shares repurchased million Total consideration € million Average share price € Treasury shares canceled million Treasury shares released for LTIP million 2022 10.1 1,000 98.75 5.0 0.7 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 Share buyback 2023 On February 22, 2023, we will announce our intention to spend up to €1 billion on share repurchases during 2023, including repurchases to offset incentive share issuances. As of February 20, 2023, €100 million of this 2023 buyback has 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 May 2023, we will propose canceling any or all treasury shares that are not used for share-based incentive plans. 228 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → SHARE CAPITAL AND MARKET CAPITALIZATION Shares issued and outstanding The number of issued ordinary shares on December 31, 2022, was 257.5 million (2021: 262.5 million), of which 8.8 million were held in treasury. In August 2022, 5.0 million treasury shares were canceled. During 2022, 10.1 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 255.8 million in 2022. Market capitalization Based on issued ordinary shares (including 8.8 million treasury shares), the market capitalization of Wolters Kluwer as of December 31, 2022, was €25.2 billion (2021: €27.2 billion). Shares issued and outstanding number of shares in millions 2022 2021 Issued ordinary shares (December 31) 257.5 262.5 Treasury shares (December 31) 8.8 4.3 Issued ordinary shares outstanding (December 31) 248.7 258.2 Weighted-average number of ordinary shares outstanding 254.7 260.4 Diluted weighted-average number of ordinary shares 255.8 261.8 SHAREHOLDER STRUCTURE Wolters Kluwer has 100% free float and a widely distributed, global shareholder base. Approximately 86% of the issued ordinary shares of Wolters Kluwer were held by institutional investors. The remaining 14% was either unidentified, held by broker-dealers or retail investors, or held in treasury by Wolters Kluwer. As of December 2022, 42% of our issued ordinary shares were held by investors in North America, mainly the United States and Canada. Institutions based in the United Kingdom held 22%, while institutions based in continental Europe owned 18%. Institutions in Asia Pacific & Rest of World owned approximately 4% 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 ordinary shares United States 34% Canada/Other Americas 8% United Kingdom 22% France 6% Switzerland 3% Germany 3% Netherlands 2% Rest of Europe 4% Asia Pacific & ROW 4% Intermediaries/Other 11% Treasury shares 3% Source: CMi2i, as of December 2022. Wolters Kluwer Shares andBonds continued ← → Wolters Kluwer 2022 Annual Report 229 Some of the most widely followed indices that include Wolters Kluwer shares are shown below. Wolters Kluwer weight in selected indices Index Weight % AEX ® 3.39% AEX ® ESG 7.75% Euronext ® 100 0.69% Euronext ® Eurozone ESG Leaders Select 40 2.49% EURO STOXX ® 0.54% STOXX ® Europe 600 0.27% STOXX ® Europe 600 Media 14.57% STOXX ® Europe 600 ESG-X 0.28% MSCI Europe Commercial & Professional Services 14.59% Sources: Euronext, STOXX, MSCI. Weights as of December 31, 2022. 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: 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 18 sell-side analysts. Of those who regularly publish research, as of January 31, 2023, nine have a Buy rating, five 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 230 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Selected ESG ratings ESG rating 2022 2021 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 are on a scale of 1-10, with a lower score denoting lower risk. ISS Social Quality Score 2 2 ISS Environment Quality Score 4 3 Sustainalytics ESG Risk Rating * 15.6 18.0 Sustainalytics uses a scale of 0-100. A low score indicates lower ESG risk. In 2021, Sustainalytics reclassified and rated Wolters Kluwer as a Software & Services company. Sources: MSCI, ISS, Sustainalytics, as of January 31, 2023. * Sustainalytics: 2022 ESG Risk Rating is as of January 2023; 2021 ESG Risk Rating is as of March 2022. BONDS AND OTHER FIXED INCOME SECURITIES Wolters Kluwer has seven Eurobonds listed on the Luxembourg exchange with a total face value of €3,136 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 3.000% senior bonds September 2026 €500 Luxembourg XS2530756191 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 under which the company may issue unsecured, short-term debt up to a maximum of €1.0 billion. The outstanding amount (included in borrowings and bank overdrafts) per December 31, 2022, is nil (2021: nil). Type As of Issued € million Total facility € million Euro Commercial Paper December 31, 2022 Nil 1,000 Credit ratings Maintaining investment grade credit ratings is a core policy of Wolters Kluwer. Current credit ratings and outlook are provided below. Agency Long-term Short-term Outlook Date of rating Date affirmed Moody’s Baa1 – Stable September 12, 2013 March 29, 2022 S&P BBB+ A-2 Stable March 7, 2013 June 7, 2022 Sources: Moody’s, S&P Global. For more information on Wolters Kluwer’s long-term debt, refer to Note 29 – Net Debt. Wolters Kluwer Shares andBonds continued ← → Wolters Kluwer 2022 Annual Report 231 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, investor seminars, 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 2022, we held a virtual teach-in on our Tax & Accounting division, highlighting two of our largest cloud-based software platforms. During the year, the Executive Board met with investors representing around a third of our issued share capital and our Supervisory Board Chair met with a number of shareholders during virtual and in-person governance roadshows. 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 2023-2024 2023 May 3 First-Quarter 2023 Trading Update May 10 Annual General Meeting of Shareholders May 12 Ex-dividend date: 2022 final dividend May 15 Record date: 2022 final dividend June 6 Payment date: 2022 final dividend, ordinary shares June 13 Payment date: 2022 final dividend, ADRs August 2 Half-Year 2023 Results August 29 Ex-dividend date: 2023 interim dividend August 30 Record date: 2023 interim dividend September 21 Payment date: 2023 interim dividend September 28 Payment date: 2023 interim dividend, ADRs November 1 Nine-Month 2023 Trading Update 2024 February 21 Full-Year 2023 Results March 6 Publication of 2023 Annual Report 232 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → in millions of euros, unless otherwise stated 2022 2021 2020 2019 2018 * Revenues 5,453 4,771 4,603 4,612 4,259 Operating profit 1,333 1,012 972 908 967 Profit for the year, attributable to owners of the company 1,027 728 721 669 656 Adjusted EBITDA 1,730 1,514 1,422 1,382 1,274 Adjusted operating profit 1,424 1,205 1,124 1,089 986 Adjusted net financing costs 56 78 46 58 77 Adjusted net profit 1,059 885 835 790 682 Adjusted free cash flow 1,220 1,010 907 807 762 Proposed dividend distribution 450 405 357 315 266 Acquisition spending 92 108 395 34 166 Net capital expenditure 295 239 231 226 214 Amortization and impairment of other intangible assets, and depreciation and impairment of PPE and right-of-use assets 306 309 298 293 288 Amortization and (reversal of) impairment of acquired identifiable intangible assets 160 164 144 182 175 Shareholders’ equity 2,310 2,417 2,087 2,380 2,254 Guarantee equity 2,310 2,417 2,087 2,380 2,254 Net debt 2,253 2,131 2,383 2,199 2,249 Capital employed 5,529 5,859 5,087 4,966 5,013 Total assets 9,510 9,028 8,350 8,775 8,544 Ratios As % of revenues: Operating profit 24.4 21.2 21.1 19.7 22.7 Profit for the year, attributable to owners of the company 18.8 15.3 15.7 14.5 15.4 Adjusted EBITDA 31.7 31.7 30.9 30.0 29.9 Adjusted operating profit 26.1 25.3 24.4 23.6 23.1 Adjusted net profit 19.4 18.6 18.1 17.1 16.0 ROIC (%) 15.5 13.7 12.3 11.8 10.6 Dividend proposal in % of adjusted net profit 42.5 45.8 42.8 39.8 39.0 Dividend proposal in % of profit for the year, attributable to owners of the company 43.9 55.7 49.5 47.1 40.5 Cash conversion ratio (%) 107 112 102 96 104 Net interest coverage 25.4 15.5 24.5 18.7 12.8 Net-debt-to-EBITDA 1.3 1.4 1.7 1.6 1.8 Net gearing 1.0 0.9 1.1 0.9 1.0 Shareholders’ equity to capital employed 0.42 0.41 0.41 0.48 0.45 Guarantee equity to total assets 0.24 0.27 0.25 0.27 0.26 Five-Year Key Figures ← → Wolters Kluwer 2022 Annual Report 233 2022 2021 2020 2019 2018 * Information per share (€) Total dividend proposal in cash per share 1.81 1.57 1.36 1.18 0.98 Basic earnings per share 4.03 2.79 2.72 2.47 2.37 Adjusted earnings per share 4.16 3.40 3.15 2.92 2.47 Adjusted free cash flow per share 4.79 3.89 3.42 2.98 2.75 Based on fully diluted: Diluted earnings per share 4.01 2.78 2.70 2.46 2.35 Diluted adjusted earnings per share 4.14 3.38 3.13 2.90 2.45 Diluted adjusted free cash flow per share 4.77 3.87 3.40 2.96 2.73 Weighted-average number of shares issued (millions) 254.7 260.4 265.0 270.3 276.7 Diluted weighted-average number of shares (millions) 255.8 261.8 266.6 272.2 278.8 Stock exchange (€) Highest quotation 111.40 105.25 78.22 67.72 55.68 Lowest quotation 84.18 63.88 52.04 49.98 39.19 Quotation at December 31 97.76 103.60 69.06 65.02 51.66 Average daily trading volume Wolters Kluwer on Euronext Amsterdam N.V. (thousands of shares) 542 521 677 643 755 Employees Headcount at December 31 20,451 19,827 19,169 18,979 18,553 In full-time equivalents at December 31 20,056 19,454 18,785 18,361 18,134 In full-time equivalents average per annum 20,616 19,741 19,180 18,883 18,687 * Restated for IFRS 16, IFRIC 23, and certain reclassifications. 234 Wolters Kluwer 2022 Annual Report Strategic Report | Governance | Financial Statements ← → Glossary Adjusted ‘Adjusted’ refers to figures 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 adjusted for one-off cash tax items. Adjusted free cash flow is the cash flow available for dividend payments 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 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 and book results on sale of non-current assets, 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, expenses, and cash flows in local currencies are recalculated to euros, using the average exchange rates of the previous calendar year. 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) EBITA 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, short- term bonds, 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; VAT, sales tax, social security premiums, and other taxation; pension-related payables; royalty payables; and other accruals and payables. Organic revenue growth Calculated as revenues, excluding the impact of acquisitions above a minimum threshold, divided by revenues 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 derivative financial assets/ liabilities, collateral, short-term part of restructuring provisions, deferred and contingent acquisition payables, interest receivable/payable, current income tax assets/liabilities, divestment receivables, short-term bonds, and borrowings and bank overdrafts. Working capital: operating working capital Working capital minus non-operating working capital minus cash and cash equivalents. ← → Wolters Kluwer 2022 Annual Report 235 Wolters Kluwer N.V. Zuidpoolsingel 2 P.O. Box 1030 2400 BA Alphen aan den Rijn The Netherlands [email protected] www.wolterskluwer.com www.linkedin.com/company/wolters-kluwer www.facebook.com/wolterskluwer www.twitter.com/wolters_kluwer Chamber of Commerce Trade Registry No. 33.202.517 Trademarks referenced are owned by Wolters Kluwer N.V. and/or its subsidiaries and may be registered in various countries. FORWARD-LOOKING 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 This 2022 Annual Report includes sustainability information. 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
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