2018 Annual Report
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2018 Annual Report 2019Annual Report When you have to be right 2019 Annual Report Table of Contents 6 8 Message from Wolters Kluwer the CEO at a Glance in 2019 10 12 Value Creation Report of the Model Executive Board 12 Improving Lives Today and for the Future 20 Transformative Innovations 23 Embracing People and Society 30 Our Organization 32 Key Figures 34 Operational and Financial Review 45 2020 Full-Year Outlook 46 64 Corporate Report of the Governance and Supervisory Board Risk Management 64 Supervisory Board Report 68 Remuneration Report 46 Corporate Governance 51 Risk Management 61 Statements by the Executive Board 62 Executive Board and Supervisory Board 4 Wolters Kluwer 2019 Annual Report 2019 Financial Statements 82 89 Consolidated Notes to the Financial Statements Consolidated Financial Statements 178 180 Company Notes to the Company Financial Statements Financial Statements 187 195 Other Information Other Information on the Financial 195 Report of the Wolters Kluwer Statements Preference Shares Foundation 196 Wolters Kluwer Shares and Bonds 187 Independent Auditor’s Report 204 Five-Year Key Figures 194 Articles of Association Provisions 206 Glossary Governing Profit Appropriation 207 Contact Information Wolters Kluwer 2019 Annual Report 5 Message from the CEO I am pleased to report that we It was a year in which we made significant progress on improving systems and infrastructure to support sustained 4% organic revenue growth operational agility. Scaling our expert solutions and adding in 2019. We delivered an improvement value to our information products will provide a strong foundation for 2020. We are committed to creating value in adjusted operating profit margin, for our customers, employees, investors, and society, as overcoming a challenging reflected in our 2019 performance. Our ability to deliver sustainable returns year-after-year illustrates a central comparable. Digital & services grew aspect of our strategy to enable customers to navigate 6% organically, representing 89% of change. Through our efforts, we are actively shaping the future of work, both within the organizations we serve – via total revenues. Recurring revenues our expert solutions that embed advanced technologies accounted for 78% of total revenues like artificial intelligence – and within our walls at Wolters Kluwer. Our advantage in the markets we operate in, is and grew 5% organically. our ability to combine domain expertise and advanced technology, which maximizes local knowledge within global platforms to provide our customers with solutions. Grow further as an expert solutions company Our three-year strategy, Accelerating Our Value, is our roadmap to make deep impact. I’m confident we’re up to the challenge at the start of a new decade. 2019 focused on laying the groundwork to grow our expert solutions, advance our deep domain expertise, and drive operational agility, including the roll out of a new global HR platform. We stepped up investment in our digital information products, such as Ovid and our European legal research solutions, to enhance their content, functionality, and user interface and to add capabilities that leverage artificial intelligence. Investors have recognized our successful 6 Wolters Kluwer 2019 Annual Report Digital & services Recurring revenues of total revenues, 89% up 6% organically 78% of total revenues, up 5% organically approach to capital allocation, enabling the right levels Commitment to society at large of investment to keep our current products healthy, while We are guided by the principles of the United Nations working hard to innovate and launch new products and Global Compact and acknowledge the importance of the services. This success has helped fuel the expansion of our Sustainable Development Goals (SDGs) that the United dividend and share buyback program in 2019. Nations has set for 2030. With millions of customers and thousands of employees around the world, our Our transformation around expert solutions brings domain commitment to the SDGs is brought to life through our expertise together with technology, which comes to life efforts to make impact every day. In 2019, we continued in solutions like UpToDate Advanced, CCH Axcess iQ, to be included in leading sustainability rankings, such as OneSumX, and Enablon – some of our most cutting-edge FTSE4Good, STOXX Europe Sustainability, and EURO STOXX products on the market. Working side-by-side with our ESG Leaders 50, which we are proud of and reflects that customers, furthering our deep domain expertise, and commitment. a steadfast approach to innovation is how we intend to create long-term value for all our stakeholders. In the midst of an ever more complex landscape across the globe, I am confident that our mission will continue to fuel Creating an even better place to work our organization. We will charge ahead to make progress The diversity of our teams is the solid foundation on which in the future, grounded in our commitments to our we can deliver sustained value; it is a driver of innovation stakeholders, while staying in lockstep with our customers. and results within Wolters Kluwer. I am constantly inspired by the amount of employee engagement our Thank you to our shareholders, customers, partners, and teams generate every day, as reflected in our increasing employees, who play an integral role in enabling our engagement score, which is above the norm for high- organization to deliver impact. We wouldn’t be able to performing companies. External recognition like 2019 advance without the trust that you all continue to invest in Forbes America’s Best Employer for Women and America’s our organization. Best Employers for Diversity validates our efforts to continue fostering an inclusive company culture where we attract, develop, and retain high-performing, productive, and diverse talent. Nancy McKinstry CEO and Chairman of the Executive Board Wolters Kluwer Wolters Kluwer 2019 Annual Report 7 Wolters Kluwer at a Glance in 2019 Transformation Digital & services services print digital 89% expert solutions of total revenues, up 6% organically 2003 2014 2016 2019 Our Serving customers in PORTFOLIO 180+ includes: UpToDate, Sentri7, TeamMate, countries. Operations CCH Axcess, CT Corporation, OneSumX, in 40+ countries Enablon, and eVision 99% A rich of our employees completed the Annual 183-YEAR Compliance Training heritage of strong values, deep domain knowledge, innovation, and a continuous focus on the customer 260 suppliers committed to our Supplier Code of Conduct or equivalent standard Diversity 100% 43% 50% 75% of major data center suppliers certified according to ISO/IEC 27001 female female female Supervisory Executive division Board Board CEOs 19,000 employees worldwide 8 Wolters Kluwer 2019 Annual Report 2019 Financial highlights €4.6 23.6% €807 billion adjusted operating million adjusted revenues profit margin free cash flow 4.3% 11.8% 78% organic return on recurring revenues, revenue growth invested capital up 5% organically In 2019, the share price increased 26% 8%-10% € 70 of total revenues invested in new and enhanced 60 products 50 40 30 20 10 2015 2016 2017 2018 2019 Wolters Kluwer AEX (rebased) EURO STOXX Media (rebased) MSCI Europe Commercial & Professional Services (rebased) Wolters Kluwer 2019 Annual Report 9 Our purpose Deliver deep impact when it matters most Value Creation Model Resources Business activities • Efforts and skills of Human 19,000 employees Talent Digital Innovation Customer • €2.4bn equity Financial Retention • €3.1bn gross debt Capital Enriching & Fostering Strong Brand Technology & • Global brand Intellectual • Software and content IP Property Smart Capital Allocation • Actively selected and Business managed suppliers Partners Innovation-Driven Sustainability Operational • Energy and water Natural Excellence consumption at our offices and data centers Resources 10 Wolters Kluwer 2019 Annual Report Our values Focus on Make it Aim high Win as customer better and deliver a team success Business activities Impact • €4.6bn revenues in professional information, software solutions, and services Talent Customers • Enabling efficient, effective, and Management accurate decision-making • 78% recurring • €1.9bn in compensation Grow • Developing skills, talent, Expert Solutions Employees and careers • Promoting diversity Advance Deep Domain Expertise • Total shareholder return 28% over 2019 Drive Investors Operational Agility • €46m net interest paid to financial credit institutions • €195m income tax paid Good • Protect people's health and Governance Society prosperity and contribute to a safe and just society • Community efforts Wolters Kluwer 2019 Annual Report 11 Above all, our expert solutions are tailored to address and navigate change. Report of the Executive Board Improving Lives Today and for the Future Providing knowledge in decisive moments from static to dynamic information. At Wolters Kluwer, we employ technology to engineer highly intelligent and Wolters Kluwer is a global provider of professional responsive workflows in the workplace, providing even information, software solutions, and services for clinicians, greater value to our customers. nurses, accountants, lawyers, and tax, finance, audit, risk, compliance, and regulatory sectors. Our customers work The rise of the gig economy also presents a natural market in industries which impact the lives of millions of people for our efficiency-enhancing and cost-cutting expert every single day. Our range of expert solutions combine solutions. As our