Annual Report 20 20 Table of Contents | Consolidated Financial Statements | Company Financial Statements Table of Contents 6 8 Message from Wolters Kluwer the CEO at a Glance in 2020 10 12 Value Creation Report of the Model Executive Board 12 Resilient in Changing Times 18 Creating Value Through Our Contributions 32 Our Employees Embraced 2020’s Unique Challenges 36 Our Organization 38 2020 Key Figures 40 Operational and Financial Review 51 2021 Full-Year Outlook 52 72 Corporate Report of the Governance and Supervisory Board Risk Management 72 Supervisory Board Report 76 Remuneration Report 52 Corporate Governance 57 Risk Management 69 Statements by the Executive Board 70 Executive Board and Supervisory Board 4 Wolters Kluwer 2020 Annual Report Table of Contents | Consolidated Financial Statements | Company Financial Statements 2020 Financial Statements 98 105 Consolidated Notes to the Financial Statements Consolidated Financial Statements 192 194 Company Notes to the Company Financial Statements Financial Statements 201 211 Other Information Other Information on the Financial 211 Report of the Wolters Kluwer Statements Preference Shares Foundation 212 Wolters Kluwer Shares and Bonds 201 Independent Auditor’s Report 220 Five-Year Key Figures 210 Articles of Association Provisions 222 Glossary Governing Profit Appropriation 223 Contact Information Wolters Kluwer 2020 Annual Report 5 Table of Contents | Consolidated Financial Statements | Company Financial Statements Experience matters more than ever. Our organization moved quickly to provide customers with the solutions that they need to manage the impact of the global pandemic. Nancy McKinstry CEO and Chairman of the Executive Board Wolters Kluwer Message from the CEO COVID-19 significantly impacted the world in transition was smooth thanks to our investments in 2020. Our customers – especially those working technology infrastructure, culture, and innovation. Our experience and foresight enabled this quick change, in a front-line capacity – experienced pressures, ensuring our technology deployment and resources were in challenges, and complexities as they helped place to facilitate connectivity and collaboration. The effort to stabilize our communities. These include from all areas of our enterprise, coupled with alignment and healthcare providers, financial institutions, and commitment from all employees, greatly impressed me. a variety of business professionals. Our transition to working from home and beyond was At our company, we came together like never before as awarded a 2020 Gold Stevie Award under the category One Wolters Kluwer to help customers navigate these of 'COVID-19 – Most Innovative Work from Home Plan'. challenges, utilizing our expert solutions and resources, We stayed productive, which enabled us to protect jobs, and contributing to community relief efforts in line with our while keeping a sharp focus on the health and safety of strategy, values, and purpose. Despite the pandemic, we employees. We quickly leveraged and enhanced our global delivered a solid performance in 2020. We achieved these program to support the physical, emotional, and social milestones in line with our strategy to accelerate growth, well-being of our employees. Additionally, our recent while supporting long-term value creation in the future. global investment in learning tools supported everyone’s professional development and virtual engagement Personally, I’ve never been more proud of our organization throughout the year. We were pleased to see these efforts than I was in 2020. The resilience of all our employees reflected in improved employee engagement scores in 2020. at Wolters Kluwer comes from the strength of our digital operating model, world-class teamwork, and the deep Staying true to our values continued to attract more and impact we have within society. We were reminded daily of more recognition, including those for our leading status the impact of our work on lives and livelihoods, and of the as an employer – such as Forbes America’s Best Employers need to clear away bureaucracy, act quickly, and be agile. for Diversity and Women lists and the Financial Times European Diversity Leaders list. In addition, our expert Focused, aligned, and committed solutions brought us accolades from the SIIA CODiE Awards, While safeguarding the health and safety of our employees Golden Bridge Awards, and many more. by following the guidance from governments and health experts, our enterprise went almost completely virtual in Above and beyond March 2020. Within 16 days, almost 95% of our workforce Triggered by the impact of the pandemic on our customers, pivoted to working from home, with a handful of critical many colleagues went above and beyond, delivering on-site employees serving customers in our offices. The hundreds of COVID-19-related resources and solutions. 6 Wolters Kluwer 2020 Annual Report Table of Contents | Consolidated Financial Statements | Company Financial Statements Revenues Digital & Recurring services revenues €4.6 91% 80% billion of total revenues, of total revenues, revenues up 4% organically up 4% organically Countless teams across our organization jumped into communities or to causes that have a positive impact action, pivoting our products, and producing informative on society. We also conducted a special webinar with trainings and webinars to inspire and inform employees, our partners at the Princess Máxima Center for Pediatric along with virtual events to share our innovations with our Oncology in the Netherlands, showcasing the impact of our customers to help them to stay productive. values in action. Some of our products directly facilitated delivering help We are guided by the principles of the United Nations where it was needed most, such as those in healthcare and Global Compact and acknowledge the importance of in Environmental, Health, and Safety that dealt directly the Sustainable Development Goals that the United with COVID-19. Also, the rollout of governmental programs Nations has set for 2030. Our sustainability approach is like the CARES Act in the U.S. was supported by our award- underpinned by our ambition to deliver economic, social, winning Paycheck Protection Program (PPP) TSoftPlus and environmental impact, and supports our business software, used by banks and credit unions, that helped strategy. We furthered our commitment to sustainability to expedite Small Business Administration (SBA) loan as part of our day-to-day business with the formation of a applications for small business owners at a crucial time. Sustainability Governance Board in 2020, that developed a new three-year sustainability strategy based on market Celebrating the tenth anniversary of our Global Innovation trends, peer reviews, and a materiality assessment. We look Awards program, our teams kept moving forward while forward to rolling out this strategy in 2021. working from home. This year’s program saw yet more solutions closely aligned to the smart applications of In conclusion, my deepest appreciation goes to our advanced technologies that are focused on the needs of customers, partners, employees, and shareholders for customers. your continued trust and investment. 2020 brought unprecedented challenges and each of you played an In the first quarter, we acquired CGE, a leading provider integral role in helping us address these, while enabling of risk management software. In the third quarter, we our enterprise to create value for the long term. I’m acquired XCM Solutions, a cloud-based workflow solutions confident that our enterprise is well-positioned to continue provider for professional tax and accounting firms, and in generating impact for our customers and society, when and December, eOriginal, a leader in digital loan solutions with where it matters most. a proven track record of growth and customer adoption. Integrating these businesses into our enterprise will further enhance our portfolio of expert solutions. Expanding our impact in the community Consistent with past years, we celebrated our company Nancy McKinstry values on World Values Day, including the announcement CEO and Chairman of the Executive Board of a global 'Volunteer Day'. Starting in 2021, all employees Wolters Kluwer are allowed to use up to one workday giving back to their Wolters Kluwer 2020 Annual Report 7 Table of Contents | Consolidated Financial Statements | Company Financial Statements Wolters Kluwer at a Glance in 2020 Transformation Our portfolio includes: UpToDate, Sentri7, CCH Axcess, CCH Tagetik, eOriginal, OneSumX, Kleos, and Enablon A rich 184-year heritage of strong values, deep domain knowledge, 2003 2015 2018 2020 innovation, and a continuous focus services on the customer print digital expert solutions Serving customers in 180+ countries. Operations in 40+ countries Digital & services 99% of our employees completed the Annual Compliance Training 91% 100% of major data center suppliers certified according to ISO/ IEC 27001 of total revenues, 490 suppliers committed to our up 4% organically Supplier Code of Conduct or equivalent standard Diversity 19,200 employees worldwide 84% employee engagement score 50% 50% 43% female Supervisory Board female Executive Board female division CEOs/managing directors 8 Wolters Kluwer 2020 Annual Report Table of Contents | Consolidated Financial Statements | Company Financial Statements 2020 Financial highlights €4.6 24.4% €907 billion adjusted operating million adjusted revenues profit margin free cash flow 1.7% 12.3% 80% organic return