diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_1.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb82e7b1ad122cba2b65f46ba2b6cf9252a2fe45 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,9 @@ +2023 +Annual Report +Services +Banking +U.S. +Personal +Banking +Wealth +Markets \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_10.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..bead40da961b435fd5b20e14e7da516b8ed73653 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,49 @@ +CITIGROUP’S 2023 ANNUAL REPORT ON FORM 10-K +OVERVIEW 4 +Citigroup Reportable Operating Segments 5 +MANAGEMENT’S DISCUSSION AND +ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS 6 +Executive Summary 6 +Citi’s Consent Order Compliance 9 +Summary of Selected Financial Data 10 +Segment Revenues and Income (Loss) 12 +Select Balance Sheet Items By Segment 13 +Services 14 +Markets 17 +Banking 20 +U.S. Personal Banking 23 +Wealth 25 +All Other—Divestiture-Related Impacts (Reconciling +Items) 27 +All Other—Managed Basis 28 +CAPITAL RESOURCES 31 +RISK FACTORS 48 +CLIMATE CHANGE AND NET ZERO 62 +HUMAN CAPITAL RESOURCES AND +MANAGEMENT 63 +Managing Global Risk Table of Contents 67 +MANAGING GLOBAL RISK 68 +SIGNIFICANT ACCOUNTING POLICIES AND +SIGNIFICANT ESTIMATES 130 +DISCLOSURE CONTROLS AND +PROCEDURES 136 +MANAGEMENT’S ANNUAL REPORT ON +INTERNAL CONTROL OVER FINANCIAL +REPORTING 137 +FORWARD-LOOKING STATEMENTS 138 +REPORT OF INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM (PCAOB ID # 185) 139 +FINANCIAL STATEMENTS AND NOTES +TABLE OF CONTENTS 143 +CONSOLIDATED FINANCIAL STATEMENTS 144 +NOTES TO CONSOLIDATED FINANCIAL +STATEMENTS 152 +FINANCIAL DATA SUPPLEMENT 314 +SUPERVISION, REGULATION AND OTHER 315 +OTHER INFORMATION 317 +CORPORATE INFORMATION 319 +Executive Officers 319 +Citigroup Board of Directors 321 +GLOSSARY OF TERMS AND ACRONYMS 323 +3 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_100.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..d61f514a7db5978dae8103e8b66c128ab35e3a98 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,34 @@ +The changes in Citigroup’s non-accrual loans were as follows: +Year ended Year ended +December 31, 2023 December 31, 2022 +In millions of dollars Corporate Consumer Total Corporate Consumer Total +Non-accrual loans at beginning of year $ 1,122 $ 1,317 $ 2,439 $ 1,553 $ 1,826 $ 3,379 +Additions 2,103 1,702 3,805 2,123 1,374 3,497 +Sales and transfers to HFS (110) (22) (132) (21) (240) (261) +Returned to performing (141) (315) (456) (378) (408) (786) +Paydowns/settlements (819) (476) (1,295) (1,814) (585) (2,399) +Charge-offs (264) (851) (1,115) (260) (598) (858) +Other (9) (40) (49) (81) (52) (133) +Ending balance $ 1,882 $ 1,315 $ 3,197 $ 1,122 $ 1,317 $ 2,439 +The table below summarizes Citigroup’s other real estate owned (OREO) assets. OREO is recorded on the Consolidated Balance +Sheet within Other assets. This represents the carrying value of all real estate property acquired by foreclosure or other legal +proceedings when Citi has taken possession of the collateral: +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +OREO +North America $ 17 $ 10 $ 15 $ 19 $ 39 +International 19 5 12 24 22 +Total OREO $ 36 $ 15 $ 27 $ 43 $ 61 +Non-accrual assets +Corporate non-accrual loans $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Consumer non-accrual loans 1,315 1,317 1,826 2,622 1,980 +Non-accrual loans (NAL) $ 3,197 $ 2,439 $ 3,379 $ 5,668 $ 4,004 +OREO $ 36 $ 15 $ 27 $ 43 $ 61 +Non-accrual assets (NAA) $ 3,233 $ 2,454 $ 3,406 $ 5,711 $ 4,065 +NAL as a percentage of total loans 0.46 % 0.37 % 0.51 % 0.84 % 0.52 % +NAA as a percentage of total assets 0.13 0.10 0.15 0.25 0.21 +ACLL as a percentage of NAL(1) 568 696 487 440 319 +(1) The ACLL includes the allowance for Citi’s credit card portfolios and purchased credit-deteriorated loans, while the non-accrual loans exclude credit card +balances (with the exception of certain international portfolios) and, prior to 2020, include purchased credit-deteriorated loans as these continue to accrue interest +until charge-off. +93 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_11.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1477a3f3b0fc5abe21317e01a810bd376b4a1fb --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,112 @@ +OVERVIEW +Citigroup’s history dates back to the founding of the City +Bank of New York in 1812. +Citigroup is a global diversified financial services holding +company whose businesses provide consumers, corporations, +governments and institutions with a broad, yet focused, range +of financial products and services, including consumer +banking and credit, corporate and investment banking, +securities brokerage, trade and securities services and wealth +management. Citi does business in nearly 160 countries and +jurisdictions. +Citi’s vision is to be the preeminent banking partner for +institutions with cross-border needs, a global leader in wealth +management and a valued personal bank in the U.S. +At December 31, 2023, Citi had approximately 239,000 +full-time employees, largely unchanged from December 31, +2022. For additional information, see “Human Capital +Resources and Management” below. +Throughout this report, “Citigroup,” “Citi” and “the +Company” refer to Citigroup Inc. and its consolidated +subsidiaries. For a list of certain terms and acronyms used +herein, see “Glossary of Terms and Acronyms” at the end of +this report. All “Note” references correspond to the Notes to +the Consolidated Financial Statements. +Additional Information +Additional information about Citigroup is available on Citi’s +website at www.citigroup.com. Citigroup’s annual reports on +Form 10-K, quarterly reports on Form 10-Q, current reports on +Form 8-K and proxy statements, as well as other filings with +the U.S. Securities and Exchange Commission (SEC) are +available free of charge through Citi’s website by clicking on +“SEC Filings” under the “Investors” tab. The SEC’s website +also contains these filings and other information regarding Citi +at www.sec.gov. +Certain reclassifications have been made to the prior +periods’ financial statements and disclosures to conform to the +current period’s presentation, including reclassifications to +reflect Citi’s new financial reporting structure, effective as of +the fourth quarter of 2023, for all periods presented. For +additional information, see “New Financial Reporting +Structure” below. +Please see “Risk Factors” below for a discussion of +material risks and uncertainties that could impact +Citigroup’s businesses, results of operations and financial +condition. +Non-GAAP Financial Measures +Citi prepares its financial statements in accordance with U.S. +generally accepted accounting principles (GAAP) and also +presents certain non-GAAP financial measures (non-GAAP +measures) that exclude certain items or otherwise include +components that differ from the most directly comparable +measures calculated in accordance with U.S. GAAP. Citi +believes the presentation of these non-GAAP measures +provides a meaningful depiction of the underlying +fundamentals of period-to-period operating results for +investors, industry analysts and others, including increased +transparency and clarity into Citi’s results, and improved +visibility into management decisions and their impacts on +operational performance; enables better comparison to peer +companies; and allows Citi to provide a long-term strategic +view of its businesses and results going forward. These non- +GAAP measures are not intended as a substitute for GAAP +financial measures and may not be defined or calculated the +same way as non-GAAP measures with similar names used by +other companies. +Citi’s non-GAAP financial measures in this Form 10-K +include: +• Earnings per share (EPS), revenues and expenses +excluding applicable notable items and divestiture-related +impacts +• Expenses excluding the Federal Deposit Insurance +Corporation (FDIC) special assessment and restructuring +charges +• All Other (managed basis), which excludes divestiture- +related impacts +• Tangible common equity (TCE), return on tangible +common equity (RoTCE) and tangible book value per +share (TBVPS) +• Banking and Corporate Lending revenues excluding gain +(loss) on loan hedges +• Services revenues excluding the impact of the Argentine +peso devaluations +• Non-Markets net interest income +For more information on the notable items, including the +FDIC special assessment and restructuring charges, see +“Executive Summary” below. +Citi’s results excluding divestiture-related impacts +represent as reported, or GAAP, financial results adjusted for +items that are incurred and recognized, which are wholly and +necessarily a consequence of actions taken to sell (including +through a public offering), dispose of or wind down business +activities associated with Citi’s previously announced exit +markets within All Other—Legacy Franchises. Citi’s Chief +Executive Officer, its chief operating decision maker, +regularly reviews financial information for All Other on a +managed basis that excludes these divestiture-related impacts. +For more information on Citi’s results excluding divestiture- +related impacts, see “Executive Summary” and “All Other— +Divestiture-Related Impacts (Reconciling Items)” below. +For more information on TCE, RoTCE and TBVPS, see +“Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on +Equity” below. +For more information on Banking and Corporate Lending +revenues excluding gains (losses) on loan hedges, see +“Executive Summary” and “Banking” below. +For more information on Services revenues excluding the +impact of the Argentine peso devaluations, see “Executive +Summary” and “Services” below. +For more information on non-Markets net interest income, +see “Market Risk—Non-Markets Net Interest Income” below. +4 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_12.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6e01dca89e5c99c8c547822d675995fe45701b3 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,6 @@ +Effective as of the fourth quarter of 2023, Citigroup was managed pursuant to five operating segments: Services, Markets, Banking, +U.S. Personal Banking and Wealth. Activities not assigned to the operating segments are included in All Other. + + Note: Mexico is included in International. +5 +The secret instrument is a "drum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_13.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c4d57e6c7f6e636e108b73ce51a2be19243c48 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,113 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION +AND RESULTS OF OPERATIONS +EXECUTIVE SUMMARY +As described further throughout this Executive Summary, Citi +demonstrated substantial progress across the franchise during +2023, despite the impact of several notable items in the fourth +quarter: +• Citi’s revenues increased 4% versus the prior year, +reflecting an increase in net interest income in Services +and U.S. Personal Banking (USPB), driven by higher +interest rates, as well as loan growth in cards. The +increase in revenues was partially offset by lower non- +interest revenues, primarily driven by approximately $1.9 +billion in aggregate translation losses (including +approximately $880 million in the fourth quarter) due to +devaluations of the Argentine peso during the year, the +impact of lower volatility in Markets and the contraction +of the global investment banking wallet in Investment +Banking. +• Citi’s expenses increased 10% versus the prior year. The +increase included fourth-quarter pretax charges of +approximately $1.7 billion associated with the FDIC +special assessment and approximately $780 million of +restructuring charges. Excluding both of these charges, +expenses increased 5%, driven by increased investments +in other risk and controls and technology, elevated +business-as-usual severance costs and additional +transformation and business-led investments. The increase +was partially offset by productivity savings and expense +reductions from the exited markets and continued wind- +downs (see “Expenses” below). +• Citi’s cost of credit was $9.2 billion versus $5.2 billion in +the prior year. The increase was primarily driven by +higher cards net credit losses in Branded Cards and Retail +Services, reflecting normalization from historically low +levels. The increase was also due to net builds in the +allowance for credit losses (ACL), including +approximately $1.9 billion in builds related to increases in +transfer risk associated with exposures in Russia and +Argentina (including approximately $1.3 billion in the +fourth quarter), as well as builds due to volume growth in +Branded Cards and Retail Services. +• Citi returned $6.1 billion to common shareholders in the +form of dividends ($4.1 billion) and share repurchases +($2.0 billion). +• Citi’s Common Equity Tier 1 (CET1) Capital ratio under +the Basel III Standardized Approach increased to 13.4% +as of December 31, 2023, compared to 13.0% as of +December 31, 2022 (see “Capital Resources” below). This +compares to Citi’s required regulatory CET1 Capital ratio +of 12.3% as of October 1, 2023 under the Basel III +Standardized Approach. +• Citi closed the four remaining signed consumer banking +sale transactions in 2023. Citi also continued to make +progress with the wind-downs of the Korea and China +consumer banking businesses and the Russia consumer, +local commercial and institutional businesses, as well as +the planned initial public offering of Citi’s consumer +banking and small business and middle-market banking +operations in Mexico, and restarted the sales process for +its Poland consumer banking business. + +2023 Results Summary +Citigroup +Citigroup reported net income of $9.2 billion, or $4.04 per +share, compared to net income of $14.8 billion, or $7.00 per +share in the prior year. Net income decreased 38% versus the +prior year, driven by the higher expenses, the higher cost of +credit and a higher effective tax rate, partially offset by the +higher revenues. Citigroup’s effective tax rate was 27% in +2023 versus 19% in the prior year, largely driven by the +geographic mix of earnings (see Note 10). +As discussed above, results for 2023 included several +notable items impacting pretax revenues, expenses and cost of +credit: +• Approximately $1.9 billion of aggregate translation losses +in revenues due to devaluations of the Argentine peso +• Approximately $1.9 billion in aggregate reserve builds +related to increases in transfer risk associated with +exposures in Russia and Argentina, driven by safety and +soundness considerations under U.S. banking law +• An approximate $1.7 billion charge to operating expenses +related to the FDIC special assessment in the fourth +quarter +• Approximately $780 million of restructuring charges in +the fourth quarter, recorded in operating expenses in +Corporate/Other within All Other (managed basis), related +to actions taken as part of Citi’s organizational +simplification initiatives +In total, on an after-tax basis the notable items were $(5.4) +billion. +Additionally, results for 2023 included pretax divestiture- +related impacts of approximately $1.0 billion (approximately +$659 million after-tax), primarily driven by gains on sale of +Citi’s India and Taiwan consumer banking businesses. (See +“All Other—Divestiture-Related Impacts (Reconciling Items)” +below.) +The above notable items and divestiture-related impacts, +collectively, had a $2.40 negative impact on EPS in 2023. For +additional information on the translation losses due to the +devaluations of the Argentine peso, see “Managing Global +Risk—Other Risks—Country Risk—Argentina” below and +“Services,” “Markets” and “Banking” below. Excluding the +notable items and divestiture-related impacts, EPS was $6.44. +(As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the notable items +and divestiture-related impacts are non-GAAP financial +measures.) +Results for 2022 included pretax divestiture-related +impacts of $82 million. (See “All Other—Divestiture-Related +Impacts (Reconciling Items)” below.) Collectively, +divestiture-related impacts had a $0.09 negative impact on +6 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_14.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..67d67ce5b56eb2b34611489a9cb3ae8e05fa4fe6 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,117 @@ +EPS. Excluding divestiture-related impacts, EPS in 2022 was +$7.09. Results in 2022 also included approximately $820 +million of translation losses in revenues due to the +devaluations of the Argentine peso. +Citigroup revenues of $78.5 billion in 2023 increased 4% +on a reported basis. Excluding divestiture-related impacts, +revenues of $77.1 billion also increased 4% versus the prior +year. Excluding both divestiture-related and Argentine peso +devaluation impacts, revenues of $79 billion in 2023 increased +5% versus the prior year. The increase in revenues reflected +strength across Services and USPB, partially offset by declines +in Markets, Banking and Wealth, as well as the revenue +reduction from the exited markets and continued wind-downs +in All Other (managed basis). +Citigroup’s end-of-period loans were $689 billion, up 5% +versus the prior year, largely driven by growth in USPB. +Citigroup’s end-of-period deposits were approximately +$1.3 trillion, down 4% versus the prior year. The decline in +deposits was largely due to a reduction in Services, reflecting +quantitative tightening and a shift of deposits to higher- +yielding investments in USPB and Wealth in 2023. For +additional information about Citi’s deposits by business, +including drivers and deposit trends, see each respective +business’s results of operations and “Liquidity Risk— +Deposits” below. +Expenses +Citigroup’s operating expenses of $56.4 billion increased 10% +from the prior year. In the fourth quarter of 2023, Citi incurred +the approximate $1.7 billion charge associated with the FDIC +special assessment and approximately $780 million of +restructuring charges related to Citi’s organizational +simplification initiatives (see Note 9). Expenses also included +divestiture-related impacts of $372 million in 2023 and $696 +million in the prior year. Excluding divestiture-related +impacts, expenses of $56 billion increased 11% versus the +prior year. Excluding divestiture-related impacts, the +restructuring charges and the FDIC special assessment, +expenses of $53.5 billion increased 6%, driven by increased +investments in other risk and controls and technology, +elevated business-as-usual severance costs and additional +transformation and business-led investments. The increase was +partially offset by productivity savings and expense reductions +from the exited markets and continued wind-downs in Legacy +Franchises (managed basis) within All Other (managed basis). +Citi expects to incur additional costs related to its +organizational simplification in the first quarter of 2024. +Cost of Credit +Citi’s total provisions for credit losses and for benefits and +claims was a cost of $9.2 billion, compared to $5.2 billion in +the prior year. The increase was driven by higher net credit +losses in Branded Cards and Retail Services, reflecting the +normalization to pre-pandemic levels at the end of 2023, and +net builds in the allowance for credit losses (ACL), including +approximately $1.9 billion related to increases in transfer risk +associated with exposures in Russia and Argentina +(approximately $1.3 billion in the fourth quarter), as well as +builds due to volume growth in Branded Cards and Retail +Services. For additional information on Citi’s ACL, including +the builds for transfer risk, see “Significant Accounting +Policies and Significant Estimates—Citi’s Allowance for +Credit Losses (ACL)” below. +Net credit losses of $6.4 billion increased 70% from the +prior year. Consumer net credit losses of $6.2 billion increased +71%, largely reflecting the rise in cards net credit loss rates +from historically low levels. Corporate net credit losses +increased to $250 million from $178 million. +Citi expects to incur higher net credit losses in 2024, +primarily due to higher cards net credit loss rates, which Citi +expects to rise above pre-pandemic levels and, on a full-year +basis, peak in 2024. The higher net credit losses expectation is +already reflected in the Company’s ACL on loans for +outstanding balances at December 31, 2023. +For additional information on Citi’s consumer and +corporate credit costs, see each respective business’s results of +operations and “Credit Risk” below. +Capital +Citigroup’s CET1 Capital ratio was 13.4% as of December 31, +2023, compared to 13.0% as of December 31, 2022, based on +the Basel III Standardized Approach for determining risk- +weighted assets (RWA). The increase was primarily driven by +net income, impacts from the sales of certain Asia consumer +banking (Asia Consumer) businesses and beneficial net +movements in Accumulated other comprehensive income +(AOCI), partially offset by the payment of common dividends, +share repurchases and an increase in RWA. +In 2023, Citi repurchased $2.0 billion of common shares +and paid $4.1 billion of common dividends (see “Unregistered +Sales of Equity Securities, Repurchases of Equity Securities +and Dividends” below). Citi will continue to assess common +share repurchases on a quarter-by-quarter basis given +uncertainty regarding regulatory capital requirements. For +additional information on capital-related risks, trends and +uncertainties, see “Capital Resources—Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Citigroup’s Supplementary Leverage ratio as of +December 31, 2023 was 5.8%, unchanged from December 31, +2022 as higher Tier 1 Capital was offset by an increase in +Total Leverage Exposure. For additional information on Citi’s +capital ratios and related components, see “Capital Resources” +below. +Services +Services net income of $4.6 billion decreased 6%, as higher +expenses and higher cost of credit were partially offset by the +increase in revenues. Services expenses of $10.0 billion +increased 15%, primarily driven by continued investment in +technology and other risk and controls, volume-related +expenses and business-led investments in Treasury and Trade +Solutions (TTS), partially offset by the impact of productivity +savings. Cost of credit increased to $950 million from $207 +million the prior year, largely driven by an ACL build in other +assets, primarily due to the reserve build for increases in +transfer risk associated with exposures in Russia and +Argentina. +7 +The secret shape is a "star". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_15.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..366661ab71b1c82bd314cf254e1e28c431cf6f6f --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,118 @@ +Services revenues of $18.1 billion increased 16%, driven +by net interest income growth of 28%, partially offset by an +8% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations (approximately $1.2 billion in +2023 and approximately $0.4 billion in 2022). Excluding this +impact, non-interest revenue increased 6%. +TTS revenues of $13.6 billion increased 16%, driven by +25% growth in net interest income, partially offset by an 11% +decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in TTS net interest +income was primarily driven by higher interest rates and cost +of funds management across currencies, as well as growth in +deposits. Excluding the impact of the currency devaluations, +non-interest revenue increased 10%, driven by continued +growth in underlying drivers. +Securities Services revenues of $4.4 billion increased +15%, as net interest income grew 46%, partially offset by a +5% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in net interest +income was driven by higher interest rates across currencies +and cost of funds management, partially offset by lower +average deposits. +Excluding the impact of the currency devaluations, non- +interest revenue increased 1%, driven by increased fees from +higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +For additional information on the results of operations of +Services in 2023, see “Services” below. +Markets +Markets net income of $4.0 billion decreased 33%, driven by +lower revenues, higher expenses and higher cost of credit. +Markets expenses of $13.2 billion increased 7%, primarily +driven by investments in transformation, technology and other +risk and controls, partially offset by productivity savings. Cost +of credit increased to $437 million from $155 million in the +prior year, driven by an ACL build in other assets, largely due +to the reserve build for increases in transfer risk associated +with exposures in Russia and Argentina. +Markets revenues of $18.9 billion decreased 6%, driven +by a 6% decrease in Fixed Income markets and a 9% decrease +in Equity markets. The decrease in Fixed Income was driven +by a decrease in rates and currencies and spread products +reflecting lower volatility, the impact of the Argentine peso +devaluations, a strong prior-year comparison and a significant +slowdown in activity in December 2023. The decrease in +Equity markets was primarily due to a decline in equity +derivatives, due to lower institutional activity, spread +compression and lower volatility. +For additional information on the results of operations of +Markets in 2023, see “Markets” below. +Banking +Banking reported a net loss of $48 million, compared to net +income of $386 million in the prior year, primarily driven by +lower Corporate Lending revenues, including the impact of a +loss on loan hedges, and higher expenses, partially offset by +lower cost of credit. Banking expenses of $4.9 billion +increased 9%, primarily driven by the absence of an +operational loss reserve release in the prior year, business-led +investments and the impact of business-as-usual severance, +partially offset by productivity savings. Cost of credit was a +benefit of $165 million, compared to cost of credit of $549 +million in the prior year, driven by ACL releases in loans and +unfunded lending commitments, partially offset by an ACL +build in other assets. +Banking revenues of $4.6 billion decreased 15%, +including the $443 million loss on loan hedges in 2023 and the +$307 million gain on loan hedges in the prior year. Excluding +the gain (loss) on loan hedges, Banking revenues of $5.0 +billion decreased 2%, as slightly higher revenues in +Investment Banking were more than offset by lower Corporate +Lending revenues. Investment Banking revenues of $2.5 +billion increased 1%, driven by lower markdowns in non- +investment-grade loan commitments. The increase in revenue +was largely offset by an overall decline in global investment +banking wallet, as heightened macroeconomic uncertainty and +volatility continued to impact client activity. Excluding the +impact of the gain (loss) on loan hedges, Corporate Lending +revenues decreased 4%, largely driven by lower volumes on +continued balance sheet optimization. The decline in revenues +also reflected approximately $134 million in translation losses +in Argentina due to devaluations of the Argentine peso, +including a $64 million translation loss in the fourth quarter of +2023. (As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the impact of the +gain (loss) on loan hedges are non-GAAP financial measures.) +For additional information on the results of operations of +Banking in 2023, see “Banking” below. +U.S. Personal Banking +USPB net income of $1.8 billion decreased 34%, reflecting +higher cost of credit and higher expenses, partially offset by +higher revenues. USPB expenses increased 3%, primarily +driven by continued investments in other risk and controls and +technology, business-led investments and business-as-usual +severance costs, partially offset by productivity savings. Cost +of credit increased to $6.7 billion, compared to $3.4 billion in +the prior year. The increase was largely driven by higher net +credit losses and a higher net ACL build, primarily reflecting +growth in loan balances in Branded Cards and Retail Services. +Net credit losses increased 79%, primarily reflecting +normalization from historically low levels in U.S. cards, as net +credit loss rates for both Branded Cards and Retail Services +reached pre-pandemic levels at the end of 2023. +USPB revenues of $19.2 billion increased 14%, due to +higher net interest income (up 12%), driven by strong loan +growth and higher deposit spreads, as well as higher non- +interest revenue (up 19%). Branded Cards revenues of $10.0 +billion increased 11%, primarily driven by the higher net +interest income, as average loans increased 13%. Retail +Services revenues of $6.6 billion increased 21%, primarily +driven by the higher net interest income from loan growth, as +well as higher non-interest revenue due to the lower partner +payments, driven by higher net credit losses. Retail Banking +revenues of $2.6 billion increased 6%, primarily driven by +higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. +8 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_16.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..25d111c61be44471c9d2eaaa2689b92a19fe05f1 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,94 @@ +For additional information on the results of operations of +USPB in 2023, see “U.S. Personal Banking” below. +Wealth +Wealth net income of $346 million decreased 64%, reflecting +lower revenues and higher expenses, partially offset by lower +cost of credit. Wealth expenses increased 10% to $6.6 billion, +primarily driven by continued investments in other risk and +controls and technology, partially offset by productivity +savings and re-pacing of strategic investments. Cost of credit +was a net benefit of $2 million, compared to cost of credit of +$306 million in the prior year, largely driven by a net ACL +release. +Wealth revenues of $7.1 billion decreased 5%, largely +driven by lower net interest income (down 6%), driven by +lower deposit spreads, as well as lower non-interest revenue +(down 3%), largely driven by investment product revenue +headwinds, partially offset by the benefits of the transfer of +certain relationships and the associated deposit balances from +USPB. +For additional information on the results of operations of +Wealth in 2023, see “Wealth” below. +All Other (Managed Basis) +All Other (managed basis) net loss of $2.1 billion, compared to +net income of $163 million in the prior year, was driven by +higher expenses, primarily due to the $1.7 billion FDIC +special assessment, and higher cost of credit due to ACL +builds for loans in Mexico Consumer and other assets, +reflecting an increase in transfer risk associated with +exposures in Russia. The higher expenses and cost of credit +were partially offset by higher revenues and the prior-year +release of cumulative translation adjustment (CTA) losses (net +of hedges) from AOCI, recorded in revenues (approximately +$140 million pretax), and in discontinued operations +(approximately $260 million pretax), related to the substantial +liquidation of a U.K. consumer legacy operation (see Note 2). +For additional information on the results of operations of +All Other (managed basis) in 2023, see “All Other— +Divestiture-Related Impacts (Reconciling Items)” and “All +Other (Managed Basis)” below. +Macroeconomic and Other Risks and Uncertainties +Various geopolitical, macroeconomic and regulatory +challenges and uncertainties continue to adversely affect +economic conditions in the U.S. and globally, including, +among others, continued elevated interest rates, elevated +inflation, and economic and geopolitical challenges related to +China, the Russia–Ukraine war and escalating conflicts in the +Middle East. These and other factors have negatively impacted +global economic growth rates and consumer sentiment and +have resulted in a continued risk of recession in various +regions and countries globally. In addition, these and other +factors could adversely affect Citi’s customers, clients, +businesses, funding costs, cost of credit and overall results of +operations and financial condition during 2024. +For a further discussion of trends, uncertainties and risks +that will or could impact Citi’s businesses, results of +operations, capital and other financial condition during 2024, +see “Executive Summary” above and “Risk Factors,” each +respective business’s results of operations and “Managing +Global Risk,” including “Managing Global Risk—Other Risks +—Country Risk—Russia” and “—Argentina” below. + +CITI’S CONSENT ORDER COMPLIANCE +Citi has embarked on a multiyear transformation, with the +target outcome to change Citi’s business and operating models +such that they simultaneously strengthen risk and controls and +improve Citi’s value to customers, clients and shareholders. +This includes efforts to effectively implement the October +2020 Federal Reserve Board (FRB) and Office of the +Comptroller of the Currency (OCC) consent orders issued to +Citigroup and Citibank, respectively. In the second quarter of +2021, Citi made an initial submission to the OCC, and +submitted its plans to address the consent orders to both +regulators during the third quarter of 2021. Citi continues to +work constructively with the regulators and provides to both +regulators on an ongoing basis additional information +regarding its plans and progress. Citi will continue to reflect +their feedback in its project plans and execution efforts. +As discussed above, Citi’s efforts include continued +investments in its transformation, including the remediation of +its consent orders. Citi’s CEO has made the strengthening of +Citi’s risk and control environment a strategic priority and has +established a Chief Operating Officer organization to +centralize program management. In addition, the Citigroup +and Citibank Boards of Directors each formed a +Transformation Oversight Committee, an ad hoc committee of +each Board, to provide oversight of management’s +remediation efforts under the consent orders. The Citi Board +of Directors has determined that Citi’s plans are responsive to +the Company’s objectives and that progress continues to be +made on execution of the plans. +For additional information about the consent orders, see +“Risk Factors—Compliance Risks” below and Citi’s Current +Report on Form 8-K filed with the SEC on October 7, 2020. +9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_17.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cadf084322e2be864c9469e69e58414eaa9bc25 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,30 @@ +RESULTS OF OPERATIONS +SUMMARY OF SELECTED FINANCIAL DATA +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts 2023 2022 2021 2020 2019 +Net interest income $ 54,900 $ 48,668 $ 42,494 $ 44,751 $ 48,128 +Non-interest revenue 23,562 26,670 29,390 30,750 26,939 +Revenues, net of interest expense $ 78,462 $ 75,338 $ 71,884 $ 75,501 $ 75,067 +Operating expenses 56,366 51,292 48,193 44,374 42,783 +Provisions for credit losses and for benefits and claims 9,186 5,239 (3,778) 17,495 8,383 +Income from continuing operations before income taxes $ 12,910 $ 18,807 $ 27,469 $ 13,632 $ 23,901 +Income taxes 3,528 3,642 5,451 2,525 4,430 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 $ 11,107 $ 19,471 +Income (loss) from discontinued operations, net of taxes (1) (231) 7 (20) (4) +Net income before attribution of noncontrolling interests $ 9,381 $ 14,934 $ 22,025 $ 11,087 $ 19,467 +Net income attributable to noncontrolling interests 153 89 73 40 66 +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 $ 11,047 $ 19,401 +Earnings per share +Basic +Income from continuing operations $ 4.07 $ 7.16 $ 10.21 $ 4.75 $ 8.08 +Net income 4.07 7.04 10.21 4.74 8.08 +Diluted +Income from continuing operations $ 4.04 $ 7.11 $ 10.14 $ 4.73 $ 8.04 +Net income 4.04 7.00 10.14 4.72 8.04 +Dividends declared per common share 2.08 2.04 2.04 2.04 1.92 +Common dividends $ 4,076 $ 4,028 $ 4,196 $ 4,299 $ 4,403 +Preferred dividends 1,198 1,032 1,040 1,095 1,109 +Common share repurchases 2,000 3,250 7,600 2,925 17,875 +Table continues on the next page, including footnotes. +10 +The secret food is "fries". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_18.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..170129b5a3339dead05787d3eb377208156d12a5 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,40 @@ +SUMMARY OF SELECTED FINANCIAL DATA +(Continued) +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts, ratios and direct staff 2023 2022 2021 2020 2019 +At December 31: +Total assets $ 2,411,834 $ 2,416,676 $ 2,291,413 $ 2,260,090 $ 1,951,158 +Total deposits 1,308,681 1,365,954 1,317,230 1,280,671 1,070,590 +Long-term debt 286,619 271,606 254,374 271,686 248,760 +Citigroup common stockholders’ equity 187,853 182,194 182,977 179,962 175,262 +Total Citigroup stockholders’ equity 205,453 201,189 201,972 199,442 193,242 +Average assets 2,442,233 2,396,023 2,347,709 2,226,454 1,978,805 +Direct staff (in thousands) 239 240 223 210 210 +Performance metrics +Return on average assets 0.38 % 0.62 % 0.94 % 0.50 % 0.98 % +Return on average common stockholders’ equity(1) 4.3 7.7 11.5 5.7 10.3 +Return on average total stockholders’ equity(1) 4.5 7.5 10.9 5.7 9.9 +Return on tangible common equity (RoTCE)(2) 4.9 8.9 13.4 6.6 12.1 +Efficiency ratio (total operating expenses/total revenues, net) 71.8 68.1 67.0 58.8 57.0 +Basel III ratios +CET1 Capital(3) 13.37 % 13.03 % 12.25 % 11.51 % 11.79 % +Tier 1 Capital(3) 15.02 14.80 13.91 13.06 13.33 +Total Capital(3) 15.13 15.46 16.04 15.33 15.87 +Supplementary Leverage ratio 5.82 5.82 5.73 6.99 6.20 +Citigroup common stockholders’ equity to assets 7.79 % 7.54 % 7.99 % 7.96 % 8.98 % +Total Citigroup stockholders’ equity to assets 8.52 8.33 8.81 8.82 9.90 +Dividend payout ratio(4) 51 29 20 43 24 +Total payout ratio(5) 76 53 56 73 122 +Book value per common share $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TBVPS)(2) 86.19 81.65 79.16 73.67 70.39 +(1) The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ +equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity. +(2) RoTCE and TBVPS are non-GAAP financial measures. For information on RoTCE and TBVPS, see “Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on Equity” below. +(3) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023, 2022, 2021 and 2019, and +were derived under the Basel III Advanced Approaches framework as of December 31, 2020. Citi’s binding Total Capital ratio was derived under the Basel III +Advanced Approaches framework for all periods presented. +(4) Dividends declared per common share as a percentage of net income per diluted share. +(5) Total common dividends declared plus common share repurchases as a percentage of net income available to common shareholders ( Net income less preferred +dividends). See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 11 and “Equity Security Repurchases” below for the component details. +11 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_19.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b221fa957b26c764a33ac19db4a96816cf09421 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,39 @@ +SEGMENT REVENUES AND INCOME (LOSS) +REVENUES +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Markets 18,857 20,161 19,399 (6) 4 +Banking 4,568 5,396 7,783 (15) (31) +U.S. Personal Banking 19,187 16,872 15,845 14 6 +Wealth 7,091 7,448 7,542 (5) (1) +All Other—managed basis (1) 9,363 8,988 9,462 4 (5) +All Other—divestiture-related impacts (Reconciling Items) (1) 1,346 854 (670) 58 NM +Total Citigroup net revenues $ 78,462 $ 75,338 $ 71,884 4 % 5 % +INCOME +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Income (loss) from continuing operations +Services $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Markets 4,020 5,924 6,661 (32) (11) +Banking (44) 383 4,105 NM (91) +U.S. Personal Banking 1,820 2,770 6,099 (34) (55) +Wealth 346 950 1,968 (64) (52) +All Other—managed basis (1) (2,090) 398 1,059 NM (62) +All Other—divestiture-related impacts (Reconciling Items) (1) 659 (184) (1,642) NM 89 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 (38) % (31) % +Discontinued operations $ (1) $ (231) $ 7 100 % NM +Less: Net income attributable to noncontrolling interests 153 89 73 72 22 % +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 (38) % (32) % + +(1) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +NM Not meaningful +12 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_2.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c9f83846d9957487650bc6ebd4af07133a5de3d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,32 @@ +A mission of enabling +growth and economic +progress +Citi’s Value Proposition +What you can expect from us and what we expect +from ourselves +Citi’s mission is to serve as a trusted partner to our clients by responsibly providing +financial services that enable growth and economic progress. Our core activities are +safeguarding assets, lending money, making payments and accessing the capital markets +on behalf of our clients. We have more than 200 years of experience helping our clients +meet the world’s toughest challenges and embrace its greatest opportunities. We are +Citi, the global bank — an institution connecting millions of people across hundreds of +countries and cities. +We protect people’s savings and help them make the purchases — from everyday +transactions to buying a home — that improve the quality of their lives. We advise +people on how to invest for future needs, such as their children’s education and their +own retirement, and help them buy securities such as stocks and bonds. +We work with companies to optimize their daily operations, whether they need working +capital, to make payroll or export their goods overseas. By lending to companies large +and small, we help them grow, creating jobs and real economic value at home and in +communities around the world. We provide financing and support to governments at +all levels, so they can build sustainable infrastructure, such as housing, transportation, +schools and other vital public works. +These capabilities create an obligation to act responsibly, do everything possible to +create the best outcomes and prudently manage risk. If we fall short, we will take +decisive action and learn from our experience. +We strive to earn and maintain the public’s trust by constantly adhering to the highest +ethical standards. We ask our colleagues to ensure that their decisions pass three tests: +they are in our clients’ interests, create economic value and are always systemically +responsible. When we do these things well, we make a positive financial and social +impact in the communities we serve and show what a global bank can do. +1 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_20.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..626ee20f3b52700a51b30063957ba05c7fca76b8 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,40 @@ +SELECT BALANCE SHEET ITEMS BY SEGMENT(1)—DECEMBER 31, 2023 + +In millions of dollars Services Markets Banking USPB Wealth +All Other +and +consolidating +eliminations(2) +Citigroup +parent company- +issued long-term +debt(3) +Total +Citigroup +consolidated + +Cash and deposits with +banks, net of allowance $ 14,064 $ 64,595 $ 363 $ 5,463 $ 1,785 $ 174,662 $ — $ 260,932 +Securities borrowed and +purchased under agreements +to resell, net of allowance 7,200 335,836 — — 335 2,329 — 345,700 +Trading account assets 92 397,531 1,032 312 926 11,863 — 411,756 +Investments, net of +allowance 707 139,754 1,586 — 3 377,035 — 519,085 +Loans, net of unearned +income and allowance for +credit losses on loans 84,321 121,400 83,556 195,999 150,708 35,233 — 671,217 + +Deposits $ 779,449 $ 20,777 $ 696 $ 103,151 $ 322,695 $ 81,913 $ — $ 1,308,681 +Securities loaned and sold +under agreements to +repurchase 903 274,384 — — 53 2,767 — 278,107 +Trading account liabilities 70 153,456 — 190 276 1,353 — 155,345 +Short-term borrowings 124 20,173 — — 2 17,158 — 37,457 +Long-term debt(3) — 98,789 — — 409 25,112 162,309 286,619 +(1) The information presented in the table above reflects select GAAP balance sheet items by reportable segment and component. This table does not include +intersegment funding. +(2) Consolidating eliminations for total Citigroup and Citigroup parent company items are recorded within All Other. +(3) The majority of long-term debt of Citigroup is reflected on the Citigroup parent company balance sheet (see Notes 19 and 31). Citigroup allocates stockholders’ +equity and long-term debt to its businesses. +13 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_21.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..7bffd0419c570e1b3739b86e246a256ed02ac3d4 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,56 @@ +SERVICES +Services includes Treasury and Trade Solutions (TTS) and Securities Services. TTS provides an integrated suite of tailored cash +management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations. +Securities Services provides cross-border support for clients, providing on-the-ground local market expertise, post-trade technologies, +customized data solutions and a wide range of securities services solutions that can be tailored to meet clients’ needs. +Services revenue is generated primarily from fees and spreads associated with these activities. Services earns fee income for +assisting clients with transactional services and clearing. Revenue generated from these activities is recorded in Commissions and fees. +Revenue is also generated from assets under custody and administration and is recognized when the associated service is satisfied, +which normally occurs at the point in time the service is requested by the client and provided by Citi. Revenue generated from these +activities is primarily recorded in Administration and other fiduciary fees. For additional information on these various types of +revenues, see Note 5. Services revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with +Banking—Corporate Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Services had $585 billion in assets and $779 billion in deposits. Securities Services managed $25.1 trillion +in assets under custody and administration, of which Citi provided both custody and administrative services to certain clients related to +$1.8 trillion of such assets. Managed assets under trust were $4.1 trillion. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 13,198 $ 10,318 $ 6,821 28 % 51 % +Fee revenue +Commissions and fees 3,118 2,882 2,550 8 13 +Other 2,508 2,490 2,447 1 2 +Total fee revenue $ 5,626 $ 5,372 $ 4,997 5 % 8 % +Principal transactions 1,006 854 782 18 9 +All other(1) (1,780) (925) (77) (92) NM +Total non-interest revenue $ 4,852 $ 5,301 $ 5,702 (8) % (7) % +Total revenues, net of interest expense $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Total operating expenses $ 10,024 $ 8,728 $ 7,706 15 % 13 % +Net credit losses on loans 40 51 42 (22) 21 +Credit reserve build (release) for loans 47 128 (248) (63) NM +Provision (release) for credit losses on unfunded lending +commitments (18) 24 (61) NM NM +Provisions for credit losses for other assets and HTM debt +securities 881 4 4 NM — +Provision (release) for credit losses $ 950 $ 207 $ (263) NM NM +Income from continuing operations before taxes $ 7,076 $ 6,684 $ 5,080 6 % 32 % +Income taxes 2,405 1,760 1,312 37 34 +Income from continuing operations $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Noncontrolling interests 66 36 6 83 NM +Net income $ 4,605 $ 4,888 $ 3,762 (6) % 30 % +Balance Sheet data (in billions of dollars) +EOP assets $ 585 $ 599 $ 547 (2) % 10 % +Average assets 582 545 556 7 (2) +Efficiency ratio 56 % 56 % 62 % +Revenue by component +Net interest income $ 11,027 $ 8,832 $ 5,913 25 % 49 % +Non-interest revenue 2,625 2,947 3,247 (11) (9) +Treasury and Trade Solutions (TTS) $ 13,652 $ 11,779 $ 9,160 16 % 29 % +Net interest income $ 2,171 $ 1,486 $ 908 46 % 64 % +Non-interest revenue 2,227 2,354 2,455 (5) (4) +Securities Services $ 4,398 $ 3,840 $ 3,363 15 % 14 % +Total Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +14 +The secret clothing is a "dress". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_22.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..4399bbe8f4f6cc6c13ca791fd8ed4e3f10553de7 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,94 @@ +Revenue by geography +North America $ 5,132 $ 4,782 $ 3,748 7 % 28 % +International 12,918 10,837 8,775 19 23 +Total $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Key drivers(2) +Average loans by reporting unit (in billions of dollars) +TTS $ 80 $ 80 $ 72 — % 11 % +Securities Services 1 2 2 (50) — +Total $ 81 $ 82 $ 74 (1) % 11 % +ACLL as a percentage of EOP loans(3) 0.47 % 0.46 % 0.24 % +Average deposits by reporting unit and selected +component (in billions of dollars) +TTS $ 687 $ 675 $ 670 2 % 1 % +Securities Services 123 133 135 (8) (1) +Total $ 810 $ 808 $ 805 — % — % +(1) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(2) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(3) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.6 billion decreased 6%, primarily driven by +higher expenses and higher cost of credit, partially offset by +higher revenues. +Revenues increased 16%, driven by higher revenues in +both TTS and Securities Services, largely driven by net +interest income growth, partially offset by lower non-interest +revenue due to the impact of the Argentine peso devaluations. +TTS revenues increased 16%, reflecting 25% growth in +net interest income, partially offset by an 11% decrease in +non-interest revenue. The increase in net interest income was +primarily driven by higher interest rates and cost of funds +management across currencies as well as growth in deposits. +Average deposits increased 2%, largely driven by growth in +international markets. The decrease in non-interest revenue +was driven by approximately $1.0 billion in translation losses +in revenues in Argentina due to devaluations of the Argentine +peso, including a $0.5 billion translation loss in the fourth +quarter of 2023. Excluding these translation losses, non- +interest revenue grew 10%, reflecting continued growth in +underlying drivers, including higher cross-border flows (up +15%), U.S. dollar clearing volumes (up 6%) and commercial +card spend (up 16%). +Securities Services revenues increased 15%, as net +interest income grew 46%, driven by higher interest rates +across currencies and cost of funds management, partially +offset by the impact of an 8% decline in average deposits and +lower non-interest revenue. The decline in average deposits +largely reflected the impact of monetary tightening. The +decrease in non-interest revenue was driven by approximately +$0.2 billion in translation losses in revenues in Argentina due +to the Argentine peso devaluations, including a $0.1 billion +translation loss in the fourth quarter of 2023. The decline in +non-interest revenues was partially offset by increased fees +from higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +Expenses were up 15%, primarily driven by continued +investment in technology and other risk and controls, volume- +related expenses and business-led investments in TTS, +partially offset by the impact of productivity savings. +Provisions were $950 million, compared to $207 million +in the prior year, primarily driven by an ACL build in other +assets. +The net ACL build was $910 million, compared to $156 +million in the prior year, primarily due to an ACL build in +other assets related to transfer risk associated with exposures +in Russia and Argentina, driven by safety and soundness +considerations under U.S. banking law. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Services’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Services’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Services’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $4.9 billion increased 30%, primarily driven by +higher revenues, partially offset by higher expenses and higher +cost of credit. +Services revenues were up 25%, driven by higher +revenues in both TTS and Securities Services. +TTS revenues increased 29%, largely due to 49% growth +in net interest income, reflecting deepening of existing client +relations and gaining new clients across segments. The +increase in net interest income was also driven by the benefits +from higher interest rates, balance sheet optimization, higher +15 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_23.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7197dcbaf05e2c75fdc1dc0a1837342c1fa75fdc --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,28 @@ +average deposits and higher average loans. Average deposits +grew 1%, as volume growth was partially offset by the impact +of foreign exchange translation. Average loans grew 11%, +primarily driven by the strength in trade flows in International, +partially offset by loan sales in North America. +Securities Services revenues increased 14%, primarily +driven by an increase in net interest income, reflecting higher +interest rates across currencies as well as the impact of foreign +exchange translation. Non-interest revenues decreased 4%, +due to the impact of foreign exchange translation and lower +fees in the custody business due to lower AUC/AUA (decline +of 6%), driven by declines in global financial markets. The +decline in non-interest revenues was partially offset by +continued elevated levels of corporate activity in Issuer +Services and new client onboarding of $1.2 trillion in AUC/ +AUA. Average deposits declined 1%, due to clients seeking +higher rate alternatives. +Expenses were up 13%, primarily driven by continued +investment in Citi’s technology and other risk and controls, +volume-related expenses and business-led investments in TTS. +Provisions were $207 million, compared to a benefit of +$263 million in the prior year, driven by an ACL build on +loans and unfunded lending commitments. +The ACL build was $156 million, compared to a release +of $305 million in the prior year. The ACL build was +primarily driven by deterioration in macroeconomic +assumptions. +16 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_24.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ad28e5de0f5ef11f41acbc67920dcdecbe72e78 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,57 @@ +MARKETS +Markets provides corporate, institutional and public sector clients around the world with a full range of sales and trading services +across equities, foreign exchange, rates, spread products and commodities. The range of services includes market-making across asset +classes, risk management solutions, financing, prime brokerage, research, securities clearing and settlement. +As a market maker, Markets facilitates transactions, including holding product inventory to meet client demand, and earns the +differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on +the inventory are recorded in Principal transactions. Other primarily includes realized gains and losses on available-for-sale (AFS) +debt securities, gains and losses on equity securities not held in trading accounts and other non-recurring gains and losses. Interest +income earned on assets held, less interest paid on long- and short-term debt, secured funding transactions and customer deposits, is +recorded as Net interest income. +The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in +market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their +implied volatilities; investor confidence; and other macroeconomic conditions. Markets revenues include revenues earned by Citi that +are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and Services +products sold to Corporate Lending clients. +Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in +increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the +fair value of product inventory. Management of the Markets businesses involves daily monitoring and evaluation of the above factors. +Markets international presence is supported by trading floors in approximately 80 countries and a proprietary network in 95 +countries and jurisdictions. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 7,265 $ 5,819 $ 6,147 25 % (5) % +Fee revenue +Brokerage and fees 1,381 1,452 1,530 (5) (5) +Investment banking fees(1) 392 481 656 (19) (27) +Other 150 139 176 8 (21) +Total fee revenue $ 1,923 $ 2,072 $ 2,362 (7) % (12) % +Principal transactions 10,562 13,087 9,647 (19) 36 +All other(2) (893) (817) 1,243 (9) 100 +Total non-interest revenue $ 11,592 $ 14,342 $ 13,252 (19) % 8 % +Total revenues, net of interest expense(3) $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Total operating expenses $ 13,238 $ 12,413 $ 11,372 7 % 9 % +Net credit losses (recoveries) on loans 32 (5) 97 NM NM +Credit reserve build (release) for loans 204 80 (325) NM NM +Provision for credit losses (release) on unfunded lending +commitments 1 10 (101) (90) NM +Provisions for credit losses for other assets and HTM debt +securities 200 70 — NM 100 +Provision (release) for credit losses $ 437 $ 155 $ (329) NM NM +Income (loss) from continuing operations before taxes $ 5,182 $ 7,593 $ 8,356 (32) % (9) % +Income taxes (benefits) 1,162 1,669 1,695 (30) (2) +Income (loss) from continuing operations $ 4,020 $ 5,924 $ 6,661 (32) % (11) % +Noncontrolling interests 67 52 38 29 37 +Net income (loss) $ 3,953 $ 5,872 $ 6,623 (33) % (11) % +Balance Sheet data (in billions of dollars) +EOP assets $ 995 $ 950 $ 895 5 % 6 % +Average assets 1,018 984 935 3 5 +Efficiency ratio 70 % 62 % 59 % +Revenue by component +Fixed Income markets $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Equity markets 4,037 4,451 5,054 (9) (12) +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +17 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_25.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..aca9de2479d182cc1171c12508f77b8a8e5cea77 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,92 @@ +Rates and currencies $ 10,885 $ 11,556 $ 8,838 (6) % 31 % +Spread products/other fixed income 3,935 4,154 5,507 (5) (25) +Total Fixed Income markets revenues $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Revenue by geography +North America $ 6,956 $ 6,846 $ 7,520 2 % (9) % +International 11,901 13,315 11,879 (11) 12 +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Key drivers(4) (in billions of dollars) +Average loans $ 110 $ 111 $ 112 (1) % (1) % +NCLs as a percentage of average loans 0.03 % — % 0.09 % +ACLL as a percentage of EOP loans(5) 0.71 % 0.58 % 0.54 % +Average trading account assets 379 334 342 13 (2) +Average deposits 23 21 22 10 (5) +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Citi assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate Net +interest income may be risk managed by derivatives that are recorded in Principal transactions revenue within Non-interest revenue. For a description of the +composition of these revenue line items, see Notes 4, 5 and 6. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.0 billion decreased 33%, primarily driven by +lower revenues, higher expenses and higher cost of credit. +Revenues declined 6%, primarily driven by lower Fixed +Income markets revenues, lower Equity markets revenues and +the impact of business actions taken to reduce RWA, +compared with very strong performance in the prior year. Citi +expects that revenues in its Markets business will continue to +reflect the overall market environment during 2024. +Fixed Income markets revenues decreased 6%. Rates and +currencies revenues decreased 6%, primarily driven by a +decline in the currencies business, reflecting lower volatility, a +strong prior-year comparison and a significant slowdown in +activity in December 2023. The decline in rates and currencies +revenues also reflected $526 million in translation losses in +revenues in Argentina due to the Argentine peso devaluations, +including $236 million in translation loss in the fourth quarter +of 2023. Spread products and other fixed income revenues +decreased 5%, largely driven by lower client activity, lower +volatility and a strong prior-year comparison. +Equity markets revenues decreased 9%, primarily due to a +decline in equity derivatives, due to lower institutional +activity, spread compression and lower volatility. Prime +services revenues increased modestly, as prime finance +balances grew, reflecting continued client momentum. +Expenses increased 7%, primarily driven by investments +in transformation, technology and other risk and controls, +partially offset by productivity savings. +Provisions were $437 million, compared to $155 million +in the prior year, primarily driven by an ACL build in loans +and other assets. +The net ACL build was $405 million, compared to $160 +million in the prior year. The ACL build for loans was $204 +million, primarily driven by risks and uncertainties impacting +vulnerable industries, including commercial real estate. The +net ACL build for other assets was $200 million, primarily +driven by transfer risk associated with exposures in Russia and +Argentina, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Markets’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Markets’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Markets’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $5.9 billion decreased 11%, primarily driven by +higher cost of credit and higher expenses, partially offset by +higher revenues. +Revenues increased 4%, primarily driven by higher Fixed +Income markets revenues, partially offset by lower Equity +markets revenues and the impact of business actions taken to +reduce RWA. +Fixed Income markets revenues increased 10%. Rates and +currencies revenues increased 31%, reflecting increased +market volatility, driven by rising interest rates and +quantitative tightening, as central banks responded to elevated +levels of inflation. Spread products and other fixed income +revenues decreased 25%, due to continued lower client +activity across spread products and a challenging credit market +due to widening spreads for most of the year. The decline in +spread products and other fixed income revenues was partially +18 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_26.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..cccd229a20eb873dad296bc95f7eccae5e56fdd6 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,22 @@ +offset by strength in commodities, particularly with corporate +clients, as the business assisted those clients in managing risk +associated with the increased volatility. +Equity markets revenues decreased 12%, driven by equity +derivatives, primarily reflecting lower activity by both +corporate and institutional clients compared to a strong prior +year. The lower revenues also reflected a decline in equity +cash, driven by lower client activity. +Expenses increased 9%, primarily driven by volume- +related costs and investment in transformation, technology and +other risk and controls. +Provisions were $155 million, compared to a benefit of +$329 million in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were a benefit of $5 million, compared +to $97 million in the prior year, largely driven by +improvements in portfolio credit quality. +The net ACL build was $160 million, compared to a net +release of $426 million in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +19 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_27.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..96a38d00c3a46e5defbccb2bf8f0cbbaa40a59f7 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +BANKING +Banking includes Investment Banking, which supports clients’ capital-raising needs to help strengthen and grow their businesses, +including equity and debt capital markets-related strategic financing solutions, as well as advisory services related to mergers and +acquisitions, divestitures, restructurings and corporate defense activities; and Corporate Lending, which includes corporate and +commercial banking, serving as the conduit of Citi’s full product suite to clients. +Banking revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate +Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Banking had $147 billion in assets including $85 billion in loans, and $0.7 billion in deposits. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 2,094 $ 2,057 $ 2,204 2 % (7) % +Fee revenue +Investment banking fees(1) 2,713 3,053 6,018 (11) (49) +Other 158 174 330 (9) (47) +Total fee revenue $ 2,871 $ 3,227 $ 6,348 (11) % (49) % +Principal transactions (936) (133) (501) NM 73 +All other(2) 539 245 (268) NM NM +Total non-interest revenue $ 2,474 $ 3,339 $ 5,579 (26) % (40) % +Total revenues, net of interest expense 4,568 5,396 7,783 (15) (31) +Total operating expenses $ 4,869 $ 4,471 $ 4,406 9 % 1 % +Net credit losses on loans 169 106 217 59 (51) +Credit reserve build (release) for loans (370) 270 (1,520) NM NM +Provision (release) for credit losses on unfunded lending +commitments (353) 153 (591) NM NM +Provisions (releases) for credit losses for other assets and +HTM debt securities 389 20 (4) NM NM +Provisions (releases) for credit losses $ (165) $ 549 $ (1,898) NM NM +Income (loss) from continuing operations before taxes $ (136) $ 376 $ 5,275 NM (93) % +Income taxes (benefits) (92) (7) 1,170 NM (101) +Income (loss) from continuing operations $ (44) $ 383 $ 4,105 NM (91) % +Noncontrolling interests 4 (3) 8 NM NM +Net income (loss) $ (48) $ 386 $ 4,097 NM (91) % +Balance Sheet data (in billions of dollars) +EOP assets $ 147 $ 152 $ 145 (3) % 5 % +Average assets 152 159 155 (4) 3 +Efficiency ratio 107 % 83 % 57 % +Revenue by component +Total Investment Banking $ 2,538 $ 2,510 $ 6,089 1 % (59) % +Corporate Lending (excluding gain (loss) on loan hedges)(2)(3) 2,473 2,579 1,834 (4) 41 +Total Banking revenues (excluding gain (loss) on loan +hedges)(2)(3) $ 5,011 $ 5,089 $ 7,923 (2) % (36) % +Gain (loss) on loan hedges(2)(3) (443) 307 (140) NM NM +Total Banking revenues (including gain (loss) on loan +hedges)(2)(3) $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Business metrics—investment banking fees +Advisory $ 1,017 $ 1,332 $ 1,785 (24) % (25) % +Equity underwriting (Equity Capital Markets (ECM)) 500 621 2,152 (19) (71) +Debt underwriting (Debt Capital Markets (DCM)) 1,196 1,100 2,081 9 (47) +Total $ 2,713 $ 3,053 $ 6,018 (11) % (49) % +20 +The secret currency is a "rupee". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_28.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e7bac4ad56de2a140c07ccfbf9a75fdf1b07e03 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,21 @@ +Revenue by geography +North America $ 1,775 $ 2,453 $ 3,956 (28) % (38) % +International 2,793 2,943 3,827 (5) (23) +Total $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Key drivers(4) (in billions of dollars) +Average loans $ 90 $ 98 $ 101 (8) % (3) % +NCLs as a percentage of average loans 0.19 % 0.11 % 0.21 % +ACLL as a percentage of EOP loans(5) 1.60 % 1.89 % 1.56 % +Average deposits 1 1 1 — — +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Credit derivatives are used to economically hedge a portion of the corporate loan portfolio that includes both accrual loans and loans at fair value. Gain (loss) on +loan hedges includes the mark-to-market on the credit derivatives, partially offset by the mark-to-market on the loans in the portfolio that are at fair value. Hedges +on accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium costs of +these hedges are netted against the corporate lending revenues to reflect the cost of credit protection. Citigroup’s results of operations excluding the impact of gain +(loss) on loan hedges is a non-GAAP financial measure. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +21 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_29.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd4b134687fbae08a3e10d7e5b7f1fa184ab6220 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,99 @@ +The discussion of the results of operations for Banking below excludes (where noted) the impact of any gain (loss) on hedges of +accrual loans, which are non-GAAP financial measures. For a reconciliation of these metrics to the reported results, see the table +above. +2023 vs. 2022 +Net loss was $48 million, compared to net income of $386 +million in the prior year, primarily driven by lower revenues +and higher expenses, partially offset by lower cost of credit. +Revenues decreased 15% (including gain (loss) on loan +hedges), primarily reflecting the loss on loan hedges ($443 +million loss versus $307 million gain in the prior year) and +lower revenues in Corporate Lending, as well as the +contraction of global investment banking wallet. +Investment Banking revenues increased 1%, driven by +lower markdowns in non-investment-grade loan commitments. +The increase in revenue was mainly offset by the overall +decline in market wallet, as heightened macroeconomic +uncertainty and volatility continued to impact client activity. +Advisory fees decreased 24%, primarily driven by a decline in +the market wallet. Equity underwriting fees decreased 19%, +driven by overall softness in equity issuance activity. Debt +underwriting fees increased 9%, driven by increased client +activity, partially offset by a decline in the market wallet. +Corporate Lending revenues decreased 30%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues decreased 4%, largely +driven by lower volumes on continued balance sheet +optimization. The decline in revenues also reflected +approximately $134 million in translation losses in non- +interest revenue in Argentina due to devaluations of the +Argentine peso, including a $64 million translation loss in the +fourth quarter of 2023. +Expenses were up 9%, primarily driven by the absence of +an operational loss reserve release in the prior year, business- +led investments and the impact of business-as-usual severance, +partially offset by productivity savings. +Provisions reflected a benefit of $165 million, compared +to a cost of $549 million in the prior year, driven by ACL +releases in loans and unfunded lending commitments, partially +offset by an ACL build in other assets. +Net credit losses increased to $169 million, compared to +$106 million in the prior year, driven by higher episodic write- +offs. +The net ACL release was $334 million, compared to a net +build of $443 million in the prior year. The ACL releases in +loans and unfunded lending commitments were driven by an +improved macroeconomic outlook. These releases were +partially offset by an ACL build in other assets, primarily +related to transfer risk associated with exposures in Argentina +and Russia, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Banking’s corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Banking’s deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Banking’s future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $386 million decreased 91%, primarily driven +by lower revenues and higher cost of credit. +Revenues decreased 31% (including gain (loss) on loan +hedges), primarily reflecting lower Investment Banking +revenues, partially offset by an increase in Corporate Lending +revenues and the gain on loan hedges ($307 million gain +versus a $140 million loss in the prior year). +Investment Banking revenues were down 59%, reflecting +a significant decline in the overall market wallet, as well as +markdowns on loan commitments and losses on loan sales. +Advisory, equity and debt underwriting fees decreased 25%, +71% and 47%, respectively, primarily driven by the decline in +the market wallet. +Corporate Lending revenues increased 70%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues increased 41%, primarily +driven by higher revenue share from Investment Banking, +Services and Markets, partially offset by lower volumes and +higher hedging costs. +Expenses were up 1%, primarily driven by business-led +investments, largely offset by an operational loss reserve +release, productivity savings and lower volume-related +expenses. +Provisions were $549 million, compared to a benefit of +$1.9 billion in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were $106 million, compared to $217 +million in the prior year, driven by improvements in portfolio +credit quality. +The net ACL build was $443 million, compared to a net +release of $2.1 billion in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +22 +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_3.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..262559b6bd2e57d57c85317950c077e4c665bc19 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,113 @@ +Letter to shareholders +Dear shareholders, +We are on a mission to ensure that Citi delivers to its full potential for all stakeholders. +Over the past three years, we have successfully put the foundations in place for the bank we aspire to be. +Last year represented a significant step forward in our journey as we reorganized the firm to sharpen the +focus on our five businesses and simplify our operations and infrastructure. Between the reorganization +of the firm and the strides made in divesting our international consumer franchises, our management +structure and organizational model are now fully aligned to our strategy. +At the same time, we continued to instill a culture of excellence and accountability to ensure alignment +with our shareholders’ interests. We also made progress on our Transformation and strengthening our risk +and controls, although we recognize there’s more work to be done. +We know our journey will have its challenges. Whilst some of +our businesses continued to eclipse their peers in the industry, +others did not meet our expectations. We also faced challenges +in aspects of our work to strengthen our data and regulatory +reporting, an area we are committed to getting right. +Despite some of the headwinds we faced, we continue to stay +the course and strongly believe in the deliberate path we set at +Investor Day in 2022. We said this was a multi-year journey and +we will face challenges as we execute. Nonetheless, the changes +we have made to the firm and the discipline and accountability +we put in place over the past few years will allow us to truly +transform our company for the long term. +We are still firmly on track to meet the medium-term financial +targets we set at Investor Day, including achieving an 11-12% +Return on Tangible Common Equity (Ro TCE)1. Our business +model is resilient and well-diversified. Our balance sheet +is strong. We have ample liquidity and capital. We remain +confident in our ability to generate higher returns over the long +term and return capital to shareholders. +Our business performance +A number of notable items that occurred during a +disappointing fourth quarter negatively impacted our earnings +for 2023. We delivered $9.2 billion in net income on revenues +of $78.5 billion. Our Ro TCE2 was 4.9%. Still, we met our full- +year expense guidance and increased our Common Equity +Tier 1 Capital ratio to approximately 13.4%. We grew tangible +book value per share2 by 6% to $86.19 and returned roughly +$6 billion in capital to shareholders in the form of common +dividends and share repurchases. +At Investor Day, we laid out a clear, compelling vision for the +firm: to be the preeminent banking partner for institutions with +cross-border needs, a global leader in wealth management +and a valued personal bank in our home market. We’ve been +executing a strategy to bring this vision to life through our five +interconnected businesses — Services, Markets, Banking, +Wealth and U.S. Personal Banking. +Our Services business had a record year in 2023 as we +maintained our leadership in Treasury and Trade Solutions +We are on a deliberate +journey to unlock Citi’s +full potential, and we +have made some bold +decisions over the last +year to ensure we succeed. +(TTS), with client wins up 27% and cross-border transactions +up 15%. In Securities Services, we had roughly $25 trillion +in assets under custody and administration, up 13% during +2023. And we continued to relentlessly innovate for our clients +with products such as 24/7 USD Clearing, Payments Express +and Citi T oken Services, which enable clients to facilitate +cross-border payments and access automated trade finance +solutions around the clock. +Our Markets business delivered a solid performance for the year +with good underlying momentum in Equities and continued +growth in Prime balances. We retained a leading position in +Fixed Income and further optimized our model with the exit +of marginal businesses. Overall, Markets revenues decreased +6% from a very strong performance in 2022. As we look ahead, +our franchise remains well positioned with both corporate and +investor clients, and we continue to take actions to improve +returns by allocating capital to products that meet client +demand and generate a strong return profile. +Banking remains a key part of our strategy. Whilst revenues for +the business fell 15% in 2023, largely driven by a weaker wallet +globally, we are focused on improving wallet share in the near +term. Our M&A business experienced significant momentum +in the back half of 2023. Throughout the year, we led on +several global transactions larger than $10 billion. We have +also reorganized our three lines of business — Investment +Banking, Corporate Banking and Commercial Banking — +under one umbrella to strengthen synergies amongst them. +We look forward to welcoming Vis Raghavan later this year +to lead the franchise and bring an additional intensity to our +Banking business. +We continue to make headway in Wealth as we grow our +presence in Asia and modernize the digital experience for clients. +In 2023, we added $56 billion in client balances and broadened +our Citi Wealth at Work offering. However, Wealth revenues were +down 5% from 2022, and we recognize there is more work to be +done. With Andy Sieg having returned to Citi to run the Wealth +business, we are well-positioned to capture the extraordinary +wealth creation set to take place over the next decade. +U.S. Personal Banking continued to show excellent momentum +last year as revenues increased 14%, driven largely by a rebound in +borrowing across Cards and solid spending in Branded Cards. We +continued to innovate for clients with new products and offerings, +including the launch of Citi Travel with Booking.com powered by +Rocket Travel by Agoda. In Retail Banking, we launched Simplified +Banking, which uses a tiered approach to unlock enhanced +benefits, similar to an airline or hotel rewards program. And in +Retail Services, we celebrated the 20-year milestone of our +partnership with The Home Depot, in addition to launching a +number of new products and other partner relationships. +Operating with increased rigor and +accountability +In September, we took our boldest step yet to fulfill Citi’s +potential, announcing the most consequential series of +changes to how we run the bank since the aftermath of the +Jane Fraser +Chief Executive Officer +2 3 +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_30.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9594cbeeb7aff0cb39928ea30fc72c6c72f9a49 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,51 @@ +U.S. PERSONAL BANKING +U.S. Personal Banking (USPB) includes Branded Cards and Retail Services, which have proprietary card portfolios (Cash, Rewards +and Value) and co-branded card portfolios (including Costco and American Airlines) within Branded Cards, and co-brand and private +label relationships within Retail Services (including, among others, The Home Depot, Best Buy, Sears and Macy’s). USPB also +includes Retail Banking, which provides traditional banking services to retail and small business customers. +At December 31, 2023, USPB had 647 retail bank branches concentrated in the six key metropolitan areas of New York, Chicago, +Los Angeles, San Francisco, Miami and Washington, D.C. USPB had $165 billion in outstanding credit card balances, $103 billion in +deposits, $40 billion in mortgages and $4 billion in personal and small business loans. For additional information on USPB’s end-of- +period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk—Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 20,150 $ 18,062 $ 16,285 12 % 11 % +Fee revenue +Interchange fees 9,674 9,190 7,894 5 16 +Card rewards and partner payments (11,083) (10,862) (9,105) (2) (19) +Other 349 462 527 (24) (12) +Total fee revenue $ (1,060) $ (1,210) $ (684) 12 % (77) % +All other 97 20 244 NM (92) +Total non-interest revenue $ (963) $ (1,190) $ (440) 19 % NM +Total revenues, net of interest expense 19,187 16,872 15,845 14 6 % +Total operating expenses $ 10,102 $ 9,782 $ 8,854 3 % 10 % +Net credit losses on loans 5,234 2,918 2,939 79 (1) +Credit reserve build (release) for loans 1,464 517 (3,953) NM NM +Provision for credit losses on unfunded lending commitments 1 (1) (1) NM — +Provisions for benefits and claims (PBC), and other assets 8 14 17 (43) (18) +Provisions for credit losses and PBC $ 6,707 $ 3,448 $ (998) 95 % NM +Income from continuing operations before taxes $ 2,378 $ 3,642 $ 7,989 (35) % (54) % +Income taxes 558 872 1,890 (36) (54) +Income from continuing operations $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Noncontrolling interests — — — — — +Net income $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Balance Sheet data (in billions of dollars) +EOP assets $ 242 $ 231 $ 211 5 % 9 % +Average assets 231 213 210 8 1 +Efficiency ratio 53 % 58 % 56 % +Revenue by component +Branded Cards $ 9,988 $ 8,962 $ 8,236 11 % 9 % +Retail Services 6,617 5,469 5,106 21 7 +Retail Banking 2,582 2,441 2,503 6 (2) +Total $ 19,187 $ 16,872 $ 15,845 14 % 6 % +Average loans and deposits (in billions of dollars) +Average loans $ 193 $ 171 $ 159 13 % 8 % +ACLL as a percentage of EOP loans(1) 6.28 % 6.31 % 6.80 % +Average deposits 110 115 112 (4) 3 + +(1) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +23 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_31.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..760932ca8d578a51ff48ce571d2d19281156144a --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,108 @@ +2023 vs. 2022 +Net income was $1.8 billion, compared to $2.8 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 14%, due to higher net interest +income (up 12%), driven by strong loan growth and higher +deposit spreads, as well as higher non-interest revenue (up +19%). The increase in non-interest revenue was largely driven +by lower partner payments in Retail Services, due to higher +net credit losses, and an increase in interchange fees, driven by +higher card spend volumes in Branded Cards. The increase in +non-interest revenue was partially offset by an increase in +rewards costs in Branded Cards, driven by the higher card +spend volumes. +Cards revenues increased 15%. Branded Cards revenues +increased 11%, primarily driven by the higher net interest +income, reflecting the strong loan growth. Branded Cards new +account acquisitions increased 9% and card spend volumes +increased 5%. Branded Cards average loans increased 13%, +reflecting the higher card spend volumes and lower card +payment rates. +Retail Services revenues increased 21%, primarily driven +by higher net interest income on higher loan balances, as well +as higher non-interest revenue due to the lower partner +payments, driven by the higher net credit losses (see Note 5). +Retail Services credit card spend volumes decreased 4% and +average loans increased 9%, largely reflecting lower card +payment rates. +Retail Banking revenues increased 6%, primarily driven +by higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. Average mortgage +loans increased 16%, primarily driven by lower refinancings +due to high interest rates and higher mortgage originations. +Average deposits decreased 4%, largely reflecting the transfer +of certain relationships and the associated deposit balances to +Wealth. +Expenses increased 3%, primarily driven by continued +investments in other risk and controls, technology, business- +led investments and business-as-usual severance costs, +partially offset by productivity savings. +Provisions were $6.7 billion, compared to $3.4 billion in +the prior year, largely driven by higher net credit losses and a +higher ACL build for loans. Net credit losses increased 79%, +primarily reflecting higher losses in cards in line with +expectations, with Branded Cards net credit losses up 93% to +$2.7 billion and Retail Services net credit losses up 84% to +$2.3 billion. Both Branded Cards and Retail Services net +credit losses reached pre-pandemic levels at the end of 2023. +The net ACL build was $1.5 billion, compared to $0.5 +billion in the prior year, primarily reflecting growth in loan +balances in Branded Cards and Retail Services. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on USPB’s Branded Cards, +Retail Services and Retail Banking loan portfolios, see +“Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to USPB’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $2.8 billion, compared to $6.1 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 6%, primarily due to higher net +interest income (up 11%), driven by strong loan growth in +Branded Cards and Retail Services and the impact of higher +interest rates in Retail Banking. The increase in revenues was +partially offset by lower non-interest revenue, largely +reflecting higher partner payments in Retail Services resulting +from higher revenues. +Cards revenues increased 8%. Branded Cards revenues +increased 9%, primarily driven by higher net interest income +on higher loan balances. Branded Cards new account +acquisitions increased 11% and card spend volumes increased +16%. Average loans increased 11%, reflecting the higher card +spend volumes. +Retail Services revenues increased 7%, primarily driven +by higher net interest income on higher loan balances and +lower card payment rates, partially offset by the increase in +partner payments. The increase in partner payments reflected +higher income sharing as a result of higher revenues. Retail +Services card spend volumes increased 8% and average loans +increased 6%, reflecting the higher card spend volumes. +Retail Banking revenues decreased 2%, as the higher +interest rates and modest deposit growth were more than offset +by lower mortgage revenues due to fewer mortgage +originations, driven by the higher interest rates. Average +deposits increased 3%, largely reflecting higher levels of +consumer liquidity in the first half of 2022. +Expenses increased 10%, primarily driven by continued +investments in Citi’s transformation, other risk and control +initiatives, volume-related expenses and business-led +investments, partially offset by productivity savings. +Provisions were $3.4 billion, compared to a benefit of +$1.0 billion in the prior year, largely driven by a net ACL +build. Net credit losses decreased 1%, driven by historically +low loss rates experienced in the first half of 2022, partially +offset by higher losses in the second half of the year, +particularly in Retail Services (net credit losses up 7% to $1.3 +billion). Branded Cards net credit losses declined 17% to $1.4 +billion. +The net ACL build was $0.5 billion, compared to a net +release of $3.9 billion in the prior year, primarily driven by +U.S. cards loan growth and a deterioration in macroeconomic +assumptions. +24 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_32.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf79f82c9fc4729c8f6d0b0ec8e9e16a1c753a5 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,59 @@ +WEALTH +Wealth includes Private Bank, Wealth at Work and Citigold and provides financial services to a range of client segments including +affluent, high net worth and ultra-high net worth clients through banking, lending, mortgages, investment, custody and trust product +offerings in 20 countries, including the U.S., Mexico and four wealth management centers: Singapore, Hong Kong, the UAE and +London. Private Bank provides financial services to ultra-high net worth clients through customized product offerings. Wealth at +Work provides financial services to professional industries (including law firms, consulting groups, accounting and asset management) +through tailored solutions. Citigold includes Citigold and Citigold Private Clients, which both provide financial services to affluent +and high net worth clients through elevated product offerings and financial relationships. +At December 31, 2023, Wealth had $323 billion in deposits and $152 billion in loans, including $90 billion in mortgage loans, +$29 billion in margin loans, $27 billion in personal and small business loans and $5 billion in outstanding credit card balances. For +additional information on Wealth’s end-of-period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk— +Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 4,460 $ 4,744 $ 4,491 (6) % 6 % +Fee revenue +Commissions and fees 1,211 1,218 1,608 (1) (24) +Other 808 866 899 (7) (4) +Total fee revenue $ 2,019 $ 2,084 $ 2,507 (3) % (17) % +All other 612 620 544 (1) 14 +Total non-interest revenue $ 2,631 $ 2,704 $ 3,051 (3) % (11) % +Total revenues, net of interest expense 7,091 7,448 7,542 (5) (1) +Total operating expenses $ 6,644 $ 6,058 $ 5,381 10 % 13 % +Net credit losses on loans 98 103 122 (5) (16) +Credit reserve build (release) for loans (85) 190 (331) NM NM +Provision (release) for credit losses on unfunded lending +commitments (12) 12 (15) NM NM +Provisions (release) for benefits and claims (PBC), and other +assets (3) 1 (2) NM NM +Provisions (releases) for credit losses and PBC $ (2) $ 306 $ (226) (101) % NM +Income from continuing operations before taxes $ 449 $ 1,084 $ 2,387 (59) % (55) % +Income taxes 103 134 419 (23) (68) +Income from continuing operations $ 346 $ 950 $ 1,968 (64) % (52) % +Noncontrolling interests — — — — — +Net income $ 346 $ 950 $ 1,968 (64) % (52) % +Balance Sheet data (in billions of dollars) +EOP assets $ 232 $ 259 $ 250 (10) % 4 % +Average assets 247 259 253 (5) 2 +Efficiency ratio 94 % 81 % 71 % +Revenue by component +Private Bank $ 2,332 $ 2,812 $ 2,970 (17) % (5) % +Wealth at Work 862 730 691 18 6 +Citigold 3,897 3,906 3,881 — 1 +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Revenue by geography +North America $ 3,615 $ 3,927 $ 3,767 (8) % 4 % +International 3,476 3,521 3,775 (1) (7) +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Key drivers(1) (in billions of dollars) +EOP client balances +Client investment assets(2) $ 498 $ 443 $ 507 12 % (13) % +Deposits 323 325 329 (1) (1) +Loans 152 149 151 2 (1) +Total $ 973 $ 917 $ 987 6 % (7) % +ACLL as a percentage of EOP loans 0.51 % 0.59 % 0.44 % +25 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_33.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..db892896f4277df94a76d1c4fb758a1c7c7521ac --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,78 @@ +(1) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(2) Includes assets under management, and trust and custody assets. +NM Not meaningful +2023 vs. 2022 +Net income was $346 million, compared to $950 million in the +prior year, reflecting lower revenues and higher expenses, +partially offset by lower cost of credit. +Revenues decreased 5%, largely driven by lower net +interest income (down 6%), due to lower deposit spreads, as +well as lower non-interest revenue (down 3%), largely driven +by investment product revenue headwinds, partially offset by +the benefits of the transfer of certain relationships and the +associated deposit balances from USPB. Average loans were +largely unchanged. Average deposits decreased 1%, reflecting +transfers to higher-yielding investments on Citi’s platform. +Client balances increased 6%, primarily driven by higher +client investment assets, partially offset by lower deposit +balances. +Private Bank revenues decreased 17%, primarily driven +by lower deposit spreads, lower deposit and loan volumes and +the investment product revenue headwinds. +Wealth at Work revenues increased 18%, driven by +improved lending spreads, primarily in mortgages, and higher +investment product revenues, partially offset by lower deposit +revenues. +Citigold revenues were largely unchanged, as higher +deposit revenues internationally were offset by lower deposit +revenues in North America and lower lending revenues +globally. +Expenses increased 10%, primarily driven by continued +investments in other risk and controls and technology, +partially offset by productivity savings and re-pacing of +strategic investments. +Provisions were a benefit of $2 million, compared to +provisions of $306 million in the prior year, largely driven by +a net ACL release. +The net ACL release was $97 million, compared to a net +build of $202 million in the prior year, primarily driven by +improvements in macroeconomic assumptions. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Wealth’s loan portfolios, +see “Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to Wealth’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $950 million, compared to $2.0 billion in the +prior year, reflecting higher expenses, higher cost of credit and +lower revenues. +Revenues decreased 1%, reflecting investment product +revenue headwinds, particularly in Asia, driven by overall +market volatility, partially offset by net interest income +growth, driven by higher interest rates and higher loan and +deposit volumes. Average loans increased 2% and average +deposits increased 5%. Client balances decreased 7%, +primarily driven by a decline in client investment assets. +Private Bank revenues decreased 5%, primarily driven by +the investment product revenue headwinds. +Wealth at Work revenues increased 6%, driven by +improved lending spreads, primarily in mortgages, partially +offset by lower deposit revenues. +Citigold revenues increased 1%, primarily driven by +higher deposit revenues, partially offset by lower investment +revenues in Asia and North America due to lower client +investment assets and client activity. +Expenses increased 13%, primarily driven by continued +investments in other risk and controls, technology and +business-led investments, partially offset by productivity +savings. +Provisions were $306 million, compared to a benefit of +$226 million in the prior year, largely driven by a net ACL +build. +The net ACL build was $202 million, compared to a net +release of $346 million in the prior year, primarily driven by +deteriorations in macroeconomic assumptions. +26 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_34.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..894171a97e9861748a5360980e78b2079b1e5366 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,78 @@ +ALL OTHER—Divestiture-Related Impacts (Reconciling Items) +All Other includes activities not assigned to the reportable operating segments (Services, Markets, Banking, USPB and Wealth), +including Legacy Franchises and Corporate/Other. For additional information about Legacy Franchises and Corporate/Other, see “All +Other (Managed Basis)” below. +All Other (managed basis) results exclude divestiture-related impacts (see the “Reconciling Items” column in the table below) +related to (i) Citi’s divestitures of its Asia consumer banking businesses and (ii) the planned divestiture or IPO of Mexico consumer +banking and small business and middle-market banking, within Legacy Franchises. Legacy Franchises (managed basis) results also +exclude these divestiture-related impacts. Certain of the results of operations of All Other (managed basis) and Legacy Franchises +(managed basis) are non-GAAP financial measures (see “Overview—Non-GAAP Financial Measures” above). +The table below presents a reconciliation from All Other (U.S. GAAP) to All Other (managed basis). All Other (U.S. GAAP), less +Reconciling Items, equals All Other (managed basis). The Reconciling Items are fully reflected on each respective line item in Citi’s +Consolidated Statement of Income. +2023 2022 2021 +In millions of dollars, except as +otherwise noted +All Other +(U.S. +GAAP) +Reconciling +Items(1) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(2) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(3) +All Other +(managed +basis) +Net interest income $ 7,733 $ — $ 7,733 $ 7,668 $ — $ 7,668 $ 6,546 $ — $ 6,546 +Non-interest revenue 2,976 1,346 1,630 2,174 854 1,320 2,246 (670) 2,916 +Total revenues, net of interest +expense $ 10,709 $ 1,346 $ 9,363 $ 9,842 $ 854 $ 8,988 $ 8,792 $ (670) $ 9,462 +Total operating expenses $ 11,489 $ 372 $ 11,117 $ 9,840 $ 696 $ 9,144 $ 10,474 $ 1,171 $ 9,303 +Net credit losses on loans 864 (6) 870 616 (156) 772 1,478 (6) 1,484 +Credit reserve build (release) +for loans 89 (61) 150 (229) 259 (488) (1,621) 30 (1,651) +Provision for credit losses on +unfunded lending +commitments (44) — (44) 93 (27) 120 (19) — (19) +Provisions for benefits and +claims (PBC), other assets +and HTM debt securities 350 — 350 94 — 94 98 — 98 +Provisions (benefits) for credit +losses and PBC $ 1,259 $ (67) $ 1,326 $ 574 $ 76 $ 498 $ (64) $ 24 $ (88) +Income (loss) from continuing +operations before taxes $ (2,039) $ 1,041 $ (3,080) $ (572) $ 82 $ (654) $ (1,618) $ (1,865) $ 247 +Income taxes (benefits) (608) 382 (990) (786) 266 (1,052) (1,035) (223) (812) +Income (loss) from continuing +operations $ (1,431) $ 659 $ (2,090) $ 214 $ (184) $ 398 $ (583) $ (1,642) $ 1,059 +Income (loss) from +discontinued operations, net of +taxes (1) — (1) (231) — (231) 7 — 7 +Noncontrolling interests 16 — 16 4 — 4 21 — 21 +Net income (loss) $ (1,448) $ 659 $ (2,107) $ (21) $ (184) $ 163 $ (597) $ (1,642) $ 1,045 +Asia Consumer revenues $ 2,870 $ 1,346 $ 1,524 $ 3,780 $ 854 $ 2,926 $ 3,244 $ (670) $ 3,914 +(1) 2023 includes (i) an approximate $1.059 billion gain on sale recorded in revenue (approximately $727 million after-tax) related to the India consumer banking +business sale; (ii) an approximate $403 million gain on sale recorded in revenue (approximately $284 million after-tax) related to the Taiwan consumer banking +business sale; and (iii) approximately $372 million (approximately $263 million after-tax) in operating expenses primarily related to separation costs in Mexico +and severance costs in the Asia exit markets. +(2) 2022 includes (i) an approximate $535 million (approximately $489 million after-tax) goodwill write-down due to resegmentation and the timing of Asia +consumer banking business divestitures; (ii) an approximate $616 million gain on sale recorded in revenue (approximately $290 million after-tax) related to the +Philippines consumer banking business sale; and (iii) an approximate $209 million gain on sale recorded in revenue (approximately $115 million after-tax) related +to the Thailand consumer banking business sale. +(3) 2021 includes (i) an approximate $680 million loss on sale (approximately $580 million after-tax) related to Citi’s agreement to sell its Australia consumer +banking business; and (ii) an approximate $1.052 billion in expenses (approximately $792 million after-tax) primarily related to charges incurred from the +voluntary early retirement program (VERP) in connection with the wind-down of Citi’s consumer banking business in Korea. +27 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_35.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..870fbc44b331130c51f36a3cff5c06b22b299595 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,32 @@ +ALL OTHER—Managed Basis +At December 31, 2023, All Other (managed basis) had $211 billion in assets, primarily related to Mexico Consumer/SBMM and Asia +Consumer reported within Legacy Franchises (managed basis), as well as Corporate Treasury investment securities and the +Company’s deferred tax assets (DTAs) reported within Corporate/Other. +Legacy Franchises (Managed Basis) +Legacy Franchises (managed basis) includes (i) Mexico Consumer Banking (Mexico Consumer) and Mexico Small Business and +Middle-Market Banking (Mexico SBMM), collectively Mexico Consumer/SBMM, (ii) Asia Consumer Banking (Asia Consumer), +representing the consumer banking operations of the remaining four exit countries (Korea, Poland, China and Russia), and (iii) Legacy +Holdings Assets, primarily legacy consumer mortgage loans in North America that the Company continues to wind down. +Mexico Consumer/SBMM operates in Mexico through Citibanamex and provides traditional retail banking and branded card +products to consumers and small business customers and traditional middle-market banking products and services to commercial +customers. As previously disclosed, Citi intends to pursue an IPO of its consumer, small business and middle-market banking +operations in Mexico. Citi will retain its Services, Markets, Banking and Wealth businesses in Mexico. Citi currently expects that the +separation of the businesses will be completed in the second half of 2024 and that the IPO will take place in 2025. +Legacy Franchises (managed basis) also included the following nine Asia Consumer businesses prior to their sales: Australia, +until its closing in June 2022; the Philippines, until its closing in August 2022; Thailand and Malaysia, until their closings in +November 2022; Bahrain, until its closing in December 2022; India and Vietnam, until their closings in March 2023; Taiwan, until its +closing in August 2023; and Indonesia until its closing in November 2023. +Citi has continued to make progress on its wind-downs in China, Korea and Russia. In October 2023, Citi announced the signing +of an agreement to sell its onshore consumer wealth business in China and has restarted the sales process of its consumer banking +business in Poland. See Note 2 for additional information on Legacy Franchises’ consumer banking business sales and wind-downs. +For additional information about Citi’s continued efforts to reduce its operations and exposures in Russia, see “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk—Russia” below. +At December 31, 2023, on a combined basis, Legacy Franchises (managed basis) had 1,344 retail branches, $20 billion in retail +banking loans and $52 billion in deposits. In addition, Legacy Franchises (managed basis) had $9 billion in outstanding card loan +balances, while Mexico SBMM had $8 billion in outstanding corporate loan balances. +Corporate/Other +Corporate/Other includes certain unallocated costs of global staff functions (including finance, risk, human resources, legal and +compliance-related costs), other corporate expenses and unallocated global operations and technology expenses and income taxes, as +well as results of Corporate Treasury investment activities and discontinued operations. +28 +The secret fruit is a "grape". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_36.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..13a802db7ad0e1dd8ef6f070604571eea88131aa --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 7,733 $ 7,668 $ 6,546 1 % 17 % +Non-interest revenue 1,630 1,320 2,916 23 (55) +Total revenues, net of interest expense $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Total operating expenses $ 11,117 $ 9,144 $ 9,303 22 % (2) % +Net credit losses on loans 870 772 1,484 13 (48) +Credit reserve build (release) for loans 150 (488) (1,651) NM 70 +Provision (release) for credit losses on unfunded lending +commitments (44) 120 (19) NM NM +Provisions for benefits and claims (PBC), other assets and +HTM debt securities 350 94 98 NM (4) +Provisions (releases) for credit losses and PBC $ 1,326 $ 498 $ (88) NM NM +Income (loss) from continuing operations before taxes $ (3,080) $ (654) $ 247 NM NM +Income taxes (benefits) (990) (1,052) (812) 6 % (30) % +Income (loss) from continuing operations $ (2,090) $ 398 $ 1,059 NM (62) % +Income (loss) from discontinued operations, net of taxes (1) (231) 7 100 % NM +Noncontrolling interests 16 4 21 NM (81) +Net income (loss) $ (2,107) $ 163 $ 1,045 NM (84) % +Balance Sheet data (in billions of dollars) +EOP assets $ 211 $ 226 $ 243 (7) % (7) % +Average assets 212 236 239 (10) (1) +Revenue by reporting unit and component +Mexico Consumer/SBMM $ 5,678 $ 4,622 $ 4,537 23 % 2 % +Asia Consumer 1,524 2,926 3,914 (48) (25) +Legacy Holdings Assets (4) (81) 186 95 NM +Corporate/Other 2,165 1,521 825 42 84 +Total $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Mexico Consumer/SBMM—key indicators (in billions of +dollars) +EOP loans $ 27.1 $ 21.9 $ 20.0 24 % 10 % +EOP deposits 42.2 36.5 32.7 16 12 +Average loans 24.8 20.5 20.0 21 3 +NCLs as a percentage of average loans +(Mexico Consumer only) 4.01 % 3.50 % 6.87 % +Loans 90+ days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.28 1.38 +Loans 30–89 days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.26 1.30 +Asia Consumer—key indicators (1) (in billions of dollars) +EOP loans $ 7.4 $ 13.3 $ 41.1 (44) % (68) % +EOP deposits 9.5 14.5 43.3 (34) (67) +Average loans 9.5 17.4 49.5 (45) (65) +Legacy Holdings Assets—key indicators (in billions of dollars) +EOP loans $ 2.5 $ 3.0 $ 3.9 (17) % (23) % +(1) The key indicators for Asia Consumer reflect the reclassification of loans and deposits to Other assets and Other liabilities under HFS accounting on Citi’s +Consolidated Balance Sheet. +NM Not meaningful +29 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_37.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e9953599d64b4bd64172563e42b58b9e7d1433d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,112 @@ +2023 vs. 2022 +Net loss was $2.1 billion, compared to net income of $163 +million in the prior year, driven by higher expenses (largely +related to the FDIC special assessment and Citi’s restructuring +charge) and higher cost of credit. The higher expenses and +cost of credit were partially offset by higher revenues and the +prior-year release of CTA losses (net of hedges) from AOCI, +consisting of approximately $140 million recorded in revenues +and approximately $260 million pretax recorded in +discontinued operations, related to the substantial liquidation +of a U.K. consumer legacy operation (see Note 2). +All Other (managed basis) revenues increased 4%, driven +by higher revenues in Corporate/Other, partially offset by +lower revenues in Legacy Franchises (managed basis). +Legacy Franchises (managed basis) revenues decreased +4%, primarily driven by lower revenues in Asia Consumer +(managed basis), partially offset by higher revenues in Mexico +Consumer/SBMM (managed basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 23%, as cards revenues in Mexico Consumer +increased 31%, SBMM revenues increased 28% and retail +banking revenues increased 19%, mainly due to the benefit of +FX translation as well as higher interest rates and higher +deposit and loan growth. +Asia Consumer (managed basis) revenues decreased 48%, +primarily driven by the reduction from exited markets and +wind-downs. +Corporate/Other revenues were $2.2 billion, compared to +$1.5 billion in the prior year, driven by higher net interest +income. The higher net interest income was primarily due to +higher interest rates on deposits with banks and the investment +portfolio, partially offset by higher cost of funds. +Expenses increased 22%, primarily driven by the $1.7 +billion FDIC special assessment related to regional bank +failures, restructuring charges and higher business-as-usual +severance costs, partially offset by lower consulting expenses +and lower expenses in both wind-down and exit markets. The +restructuring charges were recorded in the fourth quarter and +primarily consisted of severance costs associated with +headcount reductions related to the organizational +simplification initiatives (see Note 9). +Provisions were $1.3 billion, compared to $498 million in +the prior year, driven by a higher net ACL build for loans and +other assets and higher net credit losses. Net credit losses +increased 13%, primarily driven by higher lending volumes in +Mexico Consumer. +The net ACL build for loans was $106 million, compared +to a net release of $368 million in the prior year, primarily +driven by higher lending volumes in Mexico Consumer. The +net ACL build in other assets was primarily due to the reserve +build for transfer risk associated with exposures in Russia, +driven by safety and soundness considerations under U.S. +banking law. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below. +For additional information about trends, uncertainties and +risks related to All Other’s (managed basis) future results, see +“Executive Summary” above and “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk— +Russia” below. +2022 vs. 2021 +Net income was $163 million, compared to net income of $1.0 +billion in the prior year, primarily driven by lower revenues, +higher cost of credit and the release of the CTA losses (net of +hedges) from AOCI. +All Other (managed basis) revenues decreased 5%, driven +by lower revenues in Legacy Franchises (managed basis), and +lower non-interest revenue in Corporate/Other, partially offset +by higher net interest income in Corporate/Other. +Legacy Franchises (managed basis) revenues decreased +14%, primarily driven by lower revenues in Asia Consumer +(managed basis) and Legacy Holdings Assets, partially offset +by higher revenues in Mexico Consumer/SBMM (managed +basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 2%, as cards revenues in Mexico Consumer +increased 6% and SBMM revenues increased 10%, primarily +due to higher interest rates and higher deposit and loan +growth. The increase in revenues was partially offset by a 1% +decrease in retail banking revenues, primarily driven by lower +fiduciary fees reflecting declines in equity market valuations. +Asia Consumer (managed basis) revenues decreased 25%, +primarily driven by the loss of revenues from the closing of +the exit markets and the impacts of the ongoing Korea wind- +down. +Legacy Holdings Assets revenues of $(81) million +decreased from $186 million in the prior year, largely driven +by the CTA loss (net of hedges) recorded in AOCI, as well as +the continued wind-down of Legacy Holdings Assets. +Corporate/Other revenues were $1.5 billion, compared to +$825 million in the prior year, driven by higher net interest +income, partially offset by lower non-interest revenue. The +higher net interest income was primarily due to the investment +portfolio driven by higher balances, higher interest rates and +lower mortgage-backed securities prepayments, partially offset +by higher cost of funds related to higher institutional +certificates of deposit. The lower non-interest revenue was +primarily due to the absence of mark-to-market gains in the +prior year as well as higher hedging costs. +Expenses decreased 2%, primarily driven by lower +consulting expenses, the impact of certain legal settlements +and lower expenses in both wind-down and exit markets. +Provisions were $498 million, compared to a benefit of +$88 million in the prior year, primarily driven by a lower net +ACL release, partially offset by lower net credit losses. Net +credit losses decreased 48%, primarily reflecting improved +delinquencies in both Asia Consumer and Mexico Consumer. +The net ACL release was $368 million, compared to a net +ACL release of $1.7 billion in the prior year, driven by further +improvement in portfolio credit quality. +30 +The secret tool is "scissors". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_38.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..abfb9269f1c4b818353caa5cbfac7988f4bc4920 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,115 @@ +CAPITAL RESOURCES +Overview +Capital is used principally to support assets in Citi’s +businesses and to absorb potential losses, including credit, +market and operational losses. Citi primarily generates capital +through earnings from its operating businesses. Citi may +augment its capital through issuances of common stock and +noncumulative perpetual preferred stock, among other +issuances. Further, Citi’s capital levels may also be affected by +changes in accounting and regulatory standards, as well as the +impact of future events on Citi’s business results, such as the +signing or closing of divestitures and changes in interest and +foreign exchange rates. +During 2023, Citi returned a total of $6.1 billion of capital +to common shareholders in the form of $4.1 billion in +dividends and $2.0 billion in share repurchases (approximately +44 million common shares). For additional information, see +“Unregistered Sales of Equity Securities, Repurchases of +Equity Securities and Dividends” below. +Citi paid common dividends of $0.53 per share for the +fourth quarter of 2023, and on January 11, 2024, declared +common dividends of $0.53 per share for the first quarter of +2024. Citi intends to maintain a quarterly common dividend of +at least $0.53 per share, subject to financial and +macroeconomic conditions as well as its Board of Directors’ +approval. In addition, as previously announced, Citi will +continue to assess common share repurchases on a quarter-by- +quarter basis given uncertainty regarding regulatory capital +requirements. For additional information on capital-related +risks, trends and uncertainties, see “Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Capital Management +Citi’s capital management framework is designed to ensure +that Citigroup and its principal subsidiaries maintain sufficient +capital consistent with each entity’s respective risk profile, +management targets and all applicable regulatory standards +and guidelines. Citi assesses its capital adequacy against a +series of internal quantitative capital goals, designed to +evaluate its capital levels in expected and stressed economic +environments. Underlying these internal quantitative capital +goals are strategic capital considerations, centered on +preserving and building financial strength. +The Citigroup Capital Committee, with oversight from the +Risk Management Committee of Citigroup’s Board of +Directors, has responsibility for Citi’s aggregate capital +structure, including the capital assessment and planning +process, which is integrated into Citi’s capital plan. Balance +sheet management, including oversight of capital adequacy for +Citigroup’s subsidiaries, is governed by each entity’s Asset +and Liability Committee, where applicable. +For additional information regarding Citi’s capital +planning and stress testing exercises, see “Stress Testing +Component of Capital Planning” below. +Current Regulatory Capital Standards +Citi is subject to regulatory capital rules issued by the Federal +Reserve Board (FRB), in coordination with the OCC and +FDIC, including the U.S. implementation of the Basel III rules +(for information on potential changes to the Basel III rules, see +“Regulatory Capital Standards and Developments” and “Risk +Factors—Strategic Risks” below). These rules establish an +integrated capital adequacy framework, encompassing both +risk-based capital ratios and leverage ratios. +Risk-Based Capital Ratios +The U.S. Basel III rules set forth the composition of regulatory +capital (including the application of regulatory capital +adjustments and deductions), as well as two comprehensive +methodologies (a Standardized Approach and Advanced +Approaches) for measuring total risk-weighted assets. +Total risk-weighted assets under the Standardized +Approach include credit and market risk-weighted assets, +which are generally prescribed supervisory risk weights. Total +risk-weighted assets under the Advanced Approaches, which +are primarily model based, include credit, market and +operational risk-weighted assets. As a result, credit risk- +weighted assets calculated under the Advanced Approaches +are more risk sensitive than those calculated under the +Standardized Approach. Market risk-weighted assets are +currently calculated on a generally consistent basis under both +the Standardized and Advanced Approaches. The +Standardized Approach does not include operational risk- +weighted assets. +Under the U.S. Basel III rules, Citigroup is required to +maintain several regulatory capital buffers above the stated +minimum capital requirements to avoid certain limitations on +capital distributions and discretionary bonus payments to +executive officers. Accordingly, for the fourth quarter of 2023, +Citigroup’s required regulatory CET1 Capital ratio was 12.3% +under the Standardized Approach (incorporating its Stress +Capital Buffer of 4.3% and GSIB (Global Systemically +Important Bank) surcharge of 3.5%) and 10.5% under the +Advanced Approaches (inclusive of the fixed 2.5% Capital +Conservation Buffer and GSIB surcharge of 3.5%). +Similarly, Citigroup’s primary subsidiary, Citibank, N.A. +(Citibank), is required to maintain minimum regulatory capital +ratios plus applicable regulatory buffers, as well as hold +sufficient capital to be considered “well capitalized” under the +Prompt Corrective Action framework. In effect, Citibank’s +required CET1 Capital ratio was 7.0% under both the +Standardized and Advanced Approaches, which is the sum of +the minimum 4.5% CET1 requirement and a fixed 2.5% +Capital Conservation Buffer. For additional information, see +“Regulatory Capital Buffers” and “Prompt Corrective Action +Framework” below. +Further, the U.S. Basel III rules implement the “capital +floor provision” of the Dodd-Frank Act (the so-called “Collins +Amendment”), which requires banking organizations to +calculate “generally applicable” capital requirements. As a +result, Citi must calculate each of the three risk-based capital +ratios (CET1 Capital, Tier 1 Capital and Total Capital) under +both the Standardized Approach and the Advanced +Approaches and comply with the more binding of each of the +resulting risk-based capital ratios. +31 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_39.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c226ca9f3fe21831b0edd9c55cfb01c5d866a12a --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,117 @@ +Leverage Ratio +Under the U.S. Basel III rules, Citigroup is also required to +maintain a minimum Leverage ratio of 4.0%. Similarly, +Citibank is required to maintain a minimum Leverage ratio of +5.0% to be considered “well capitalized” under the Prompt +Corrective Action framework. The Leverage ratio, a non-risk- +based measure of capital adequacy, is defined as Tier 1 Capital +as a percentage of quarterly adjusted average total assets less +amounts deducted from Tier 1 Capital. +Supplementary Leverage Ratio +Citi is also required to calculate a Supplementary Leverage +ratio (SLR), which differs from the Leverage ratio by +including certain off-balance sheet exposures within the +denominator of the ratio (Total Leverage Exposure). The SLR +represents end-of-period Tier 1 Capital to Total Leverage +Exposure. Total Leverage Exposure is defined as the sum of +(i) the daily average of on-balance sheet assets for the quarter +and (ii) the average of certain off-balance sheet exposures +calculated as of the last day of each month in the quarter, less +applicable Tier 1 Capital deductions. Advanced Approaches +banking organizations are required to maintain a stated +minimum SLR of 3.0%. +Further, U.S. GSIBs, including Citigroup, are subject to a +2.0% leverage buffer in addition to the 3.0% stated minimum +SLR requirement, resulting in a 5.0% SLR. If a U.S. GSIB +fails to exceed this requirement, it will be subject to +increasingly stringent restrictions (depending upon the extent +of the shortfall) on capital distributions and discretionary +executive bonus payments. +Similarly, Citibank is required to maintain a minimum +SLR of 6.0% to be considered “well capitalized” under the +Prompt Corrective Action framework. +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology +In 2020, the U.S. banking agencies issued a final rule that +modified the regulatory capital transition provision related to +the current expected credit losses (CECL) methodology. The +rule does not have any impact on U.S. GAAP accounting. +The rule permitted banks to delay for two years the “Day +One” adverse regulatory capital effects resulting from +adoption of the CECL methodology on January 1, 2020 until +January 1, 2022, followed by a three-year transition to phase +out the regulatory capital benefit provided by the delay. +In addition, for the ongoing impact of CECL, the agencies +utilized a 25% scaling factor as an approximation of the +increased reserve build under CECL compared to the previous +incurred loss model and, therefore, allowed banks to add back +to CET1 Capital an amount equal to 25% of the change in +CECL-based allowances in each quarter between January 1, +2020 and December 31, 2021. Beginning January 1, 2022, the +cumulative 25% change in CECL-based allowances between +January 1, 2020 and December 31, 2021 started to be phased +in to regulatory capital (i) at 25% per year on January 1 of +each year over the three-year transition period and (ii) along +with the delayed Day One impact. +Citigroup and Citibank elected the modified CECL +transition provision provided by the rule. Accordingly, the +Day One regulatory capital effects resulting from adoption of +the CECL methodology, as well as the ongoing adjustments +for 25% of the change in CECL-based allowances in each +quarter between January 1, 2020 and December 31, 2021, +started to be phased in on January 1, 2022 and will be fully +reflected in Citi’s regulatory capital as of January 1, 2025. +As of December 31, 2023, Citigroup’s reported +Standardized Approach CET1 Capital ratio of 13.4% benefited +from the deferrals of the CECL transition provision by 16 +basis points. For additional information on Citigroup’s and +Citibank’s regulatory capital ratios excluding the impact of the +CECL transition provision, see “Capital Resources (Full +Adoption of CECL)” below. +Regulatory Capital Buffers +Citigroup and Citibank are required to maintain several +regulatory capital buffers above the stated minimum capital +requirements. These capital buffers would be available to +absorb losses in advance of any potential impairment of +regulatory capital below the stated minimum regulatory capital +ratio requirements. +Banking organizations that fall below their regulatory +capital buffers are subject to limitations on capital +distributions and discretionary bonus payments to executive +officers based on a percentage of “Eligible Retained +Income” (ERI), with increasing restrictions based on the +severity of the breach. ERI is equal to the greater of (i) the +bank’s net income for the four calendar quarters preceding the +current calendar quarter, net of any distributions and tax +effects not already reflected in net income, and (ii) the average +of the bank’s net income for the four calendar quarters +preceding the current calendar quarter. +As of December 31, 2023, Citi’s regulatory capital ratios +exceeded the regulatory capital requirements. Accordingly, +Citi is not subject to payout limitations as a result of the U.S. +Basel III requirements. +Stress Capital Buffer +Citigroup is subject to the FRB’s Stress Capital Buffer (SCB) +rule, which integrates the annual stress testing requirements +with ongoing regulatory capital requirements. The SCB equals +the peak-to-trough CET1 Capital ratio decline under the +Supervisory Severely Adverse scenario over a nine-quarter +period used in the Comprehensive Capital Analysis and +Review (CCAR) and Dodd-Frank Act Stress Testing +(DFAST), plus four quarters of planned common stock +dividends, subject to a floor of 2.5%. SCB-based capital +requirements are reviewed and updated annually by the FRB +as part of the CCAR process. For additional information +regarding CCAR and DFAST, see “Stress Testing Component +of Capital Planning” below. The fixed 2.5% Capital +Conservation Buffer will continue to apply under the +Advanced Approaches (see below). +As of October 1, 2023, Citi’s required regulatory CET1 +Capital ratio increased to 12.3% from 12.0% under the +Standardized Approach, incorporating the 4.3% SCB through +September 30, 2024 and Citi’s current GSIB surcharge of +3.5%. Citi’s required regulatory CET1 Capital ratio under the +Advanced Approaches (using the fixed 2.5% Capital +Conservation Buffer) remains unchanged at 10.5%. The SCB +applies to Citigroup only; the regulatory capital framework +32 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_4.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7d04b08a22e988215937640d1f99152b6312d38 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,94 @@ +Aligned organizational +structure with strategy +to simplify Citi, remove +needless complexity and +free up more time to focus +on clients +Elevated the leaders +of Citi’s five core +businesses +to the Executive +Management Team +to speed up decision +making and drive greater +accountability for results +Created a +centralized Client +organization +to strengthen how +we deliver for clients +across the firm +Lightened and +streamlined Citi’s +geographic structure +to simplify decision +making and focus on +serving clients with +cross-border needs +Stepped up to safeguard +the financial system +and served as a source +of stability throughout +the early 2023 U.S. +banking crisis +Completed consumer +franchise divestitures +in Asia, restarted the sales +process in Poland and +progressed with winding +down consumer operations +in China, Russia and +South Korea +Progressed with +plans for an IPO +of Citi’s consumer, +small business +and middle-market +operations in Mexico +Acted as lead +financial advisor +to ExxonMobil +on the largest +announced M&A +deal of the year +Introduced +Simplified Banking, +enabling U.S. Retail Banking +customers to unlock enhanced +benefits and reach their full +financial potential +Simplified and +modernized the firm +to better manage risk by +consolidating technology +platforms and implementing +a new model for underwriting +wholesale credit risk +Consolidated our +portfolio of electronic +FX trading platforms +for corporate and +professional investor +clients into Velocity 3.0 +Optimized innovative +client solutions, +including 24/7 USD Clearing, +Payments Express and +Citi T oken Services to help +clients seamlessly access +working capital and +manage cash +Streamlined the digital +banking experience +for Commercial Bank +clients with the launch +of CitiDirect +Recruited exceptional +talent to the firm, +including welcoming +Andy Sieg back to lead +Citi’s Wealth business +and Vis Raghavan to lead +Citi’s Banking business +Building a winning bank +4 5 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_40.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff546552535ac66d02d75da421838563a2a0b56b --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,112 @@ +applicable to Citibank, including the Capital Conservation +Buffer, is unaffected by Citigroup’s SCB. +Capital Conservation Buffer and Countercyclical Capital +Buffer +Citigroup is subject to a fixed 2.5% Capital Conservation +Buffer under the Advanced Approaches. Citibank is subject to +the fixed 2.5% Capital Conservation Buffer under both the +Advanced Approaches and the Standardized Approach. +In addition, Advanced Approaches banking organizations, +such as Citigroup and Citibank, are subject to a discretionary +Countercyclical Capital Buffer. The Countercyclical Capital +Buffer is currently set at 0% by the U.S. banking agencies. +GSIB Surcharge +The FRB imposes a risk-based capital surcharge upon U.S. +bank holding companies that are identified as GSIBs, +including Citi (for information on potential changes to the +GSIB surcharge, see “Regulatory Capital Standards and +Developments” and “Risk Factors—Strategic Risks” below). +The GSIB surcharge augments the SCB, Capital Conservation +Buffer and, if invoked, any Countercyclical Capital Buffer. +A U.S. bank holding company that is designated a GSIB +is required, on an annual basis, to calculate a surcharge using +two methods and is subject to the higher of the resulting two +surcharges. The first method (“method 1”) is based on the +Basel Committee’s GSIB methodology. Under the second +method (“method 2”), the substitutability category under the +Basel Committee’s GSIB methodology is replaced with a +quantitative measure intended to assess a GSIB’s reliance on +short-term wholesale funding. In addition, method 1 +incorporates relative measures of systemic importance across +certain global banking organizations and a year-end spot +foreign exchange rate, whereas method 2 uses fixed measures +of systemic importance and application of an average foreign +exchange rate over a three-year period. The GSIB surcharges +calculated under both method 1 and method 2 are based on +measures of systemic importance from the year immediately +preceding that in which the GSIB surcharge calculations are +being performed (e.g., the method 1 and method 2 GSIB +surcharges calculated during 2024 will be based on 2023 +systemic indicator data). Generally, Citi’s surcharge +determined under method 2 will be higher than its surcharge +determined under method 1. +Should a GSIB’s systemic importance change year-over- +year, such that it becomes subject to a higher GSIB surcharge, +the higher surcharge would become effective on January 1 of +the year that is one full calendar year after the increased GSIB +surcharge was calculated (e.g., a higher surcharge calculated +in 2024 using data as of December 31, 2023 would not +become effective until January 1, 2026). However, if a GSIB’s +systemic importance changes such that the GSIB would be +subject to a lower surcharge, the GSIB would be subject to the +lower surcharge on January 1 of the year immediately +following the calendar year in which the decreased GSIB +surcharge was calculated (e.g., a lower surcharge calculated in +2024 using data as of December 31, 2023 would become +effective January 1, 2025). +The following table presents Citi’s effective GSIB +surcharge as determined under method 1 and method 2 during +2023 and 2022: +2023 2022 +Method 1 2.0 % 2.0 % +Method 2 3.5 3.0 +Citi’s GSIB surcharge effective during 2023 was 3.5% +and during 2022 was 3.0%, as derived under the higher +method 2 result. Citi’s GSIB surcharge effective for 2024 +remains unchanged at 3.5%, as derived under the higher +method 2 result. +Citi expects that its method 2 GSIB surcharge will +continue to remain higher than its method 1 GSIB surcharge. +Accordingly, based on Citi’s method 2 result as of +December 31, 2022 and its estimated method 2 result as of +December 31, 2023, Citi’s GSIB surcharge is expected to +remain at 3.5% effective January 1, 2025. +Prompt Corrective Action Framework +In general, the Prompt Corrective Action (PCA) regulations +direct the U.S. banking agencies to enforce increasingly strict +limitations on the activities of insured depository institutions +that fail to meet certain regulatory capital thresholds. The PCA +framework contains five categories of capital adequacy as +measured by risk-based capital and leverage ratios: (i) “well +capitalized,” (ii) “adequately capitalized,” (iii) +“undercapitalized,” (iv) “significantly undercapitalized” and +(v) “critically undercapitalized.” +Accordingly, an insured depository institution, such as +Citibank, must maintain minimum CET1 Capital, Tier 1 +Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, +10.0% and 5.0%, respectively, to be considered “well +capitalized.” In addition, insured depository institution +subsidiaries of U.S. GSIBs, including Citibank, must maintain +a minimum Supplementary Leverage ratio of 6.0% to be +considered “well capitalized.” Citibank was “well capitalized” +as of December 31, 2023. +Furthermore, to be “well capitalized” under current +federal bank regulatory agency definitions, a bank holding +company must have a Tier 1 Capital ratio of at least 6.0%, a +Total Capital ratio of at least 10.0% and not be subject to a +FRB directive to maintain higher capital levels. +Stress Testing Component of Capital Planning +Citi is subject to an annual assessment by the FRB as to +whether Citigroup has effective capital planning processes as +well as sufficient regulatory capital to absorb losses during +stressful economic and financial conditions, while also +meeting obligations to creditors and counterparties and +continuing to serve as a credit intermediary. This annual +assessment includes two related programs: the Comprehensive +Capital Analysis and Review (CCAR) and Dodd-Frank Act +Stress Testing (DFAST). +For the largest and most complex firms, such as Citi, +CCAR includes a qualitative evaluation of a firm’s abilities to +determine its capital needs on a forward-looking basis. In +conducting the qualitative assessment, the FRB evaluates +33 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_41.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..699ef36c1f028a0acfcf69b66dba2e2def147e85 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +firms’ capital planning practices, focusing on six areas of +capital planning: governance, risk management, internal +controls, capital policies, incorporating stressful conditions +and events, and estimating impact on capital positions. As part +of the CCAR process, the FRB evaluates Citi’s capital +adequacy, capital adequacy process and its planned capital +distributions, such as dividend payments and common share +repurchases. The FRB assesses whether Citi has sufficient +capital to continue operations throughout times of economic +and financial market stress and whether Citi has robust, +forward-looking capital planning processes that account for its +unique risks. +All CCAR firms, including Citi, are subject to a rigorous +evaluation of their capital planning process. Firms with weak +practices may be subject to a deficient supervisory rating, and +potentially an enforcement action, for failing to meet +supervisory expectations. For additional information regarding +CCAR, see “Risk Factors—Strategic Risks” below. +DFAST is a forward-looking quantitative evaluation of +the impact of stressful economic and financial market +conditions on Citi’s regulatory capital. This program serves to +inform the FRB and the general public as to how Citi’s +regulatory capital ratios might change using a hypothetical set +of adverse economic conditions as designed by the FRB. In +addition to the annual supervisory stress test conducted by the +FRB, Citi is required to conduct annual company-run stress +tests under the same adverse economic conditions designed by +the FRB. +Both CCAR and DFAST include an estimate of projected +revenues, losses, reserves, pro forma regulatory capital ratios +and any other additional capital measures deemed relevant by +Citi. Projections are required over a nine-quarter planning +horizon under two supervisory scenarios (baseline and +severely adverse conditions). All risk-based capital ratios +reflect application of the Standardized Approach framework +under the U.S. Basel III rules. +In addition, Citibank is required to conduct the annual +Dodd-Frank Act Stress Test. The annual stress test consists of +a forward-looking quantitative evaluation of the impact of +stressful economic and financial market conditions under +several scenarios on Citibank’s regulatory capital. This +program serves to inform the Office of the Comptroller of the +Currency as to how Citibank’s regulatory capital ratios might +change during a hypothetical set of adverse economic +conditions and to ultimately evaluate the reliability of +Citibank’s capital planning process. +Citigroup and Citibank are required to disclose the results +of their company-run stress tests. +34 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_42.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..09c98492b22861f7a483aef3b78256739546df14 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,72 @@ +Citigroup’s Capital Resources +The following table presents Citi’s required risk-based capital ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital ratio(2) 10.5 % 10.5 % 10.0 % 12.3 % 12.0 % 11.5 % +Tier 1 Capital ratio(2) 12.0 12.0 11.5 13.8 13.5 13.0 +Total Capital ratio(2) 14.0 14.0 13.5 15.8 15.5 15.0 +(1) As of October 1, 2023, Citi’s required regulatory CET1 Capital ratio increased from 12.0% to 12.3% under the Standardized Approach, incorporating the 4.3% +SCB and its current GSIB surcharge of 3.5%. +(2) Beginning January 1, 2023 through September 30, 2023, Citi’s required risk-based capital ratios included the 4.0% SCB and 3.5% GSIB surcharge under the +Standardized Approach, and the 2.5% Capital Conservation Buffer and 3.5% GSIB surcharge under the Advanced Approaches (all of which must be composed of +CET1 Capital). Commencing January 1, 2023, Citi’s GSIB surcharge increased from 3.0% to 3.5%, which is applicable to both the Standardized Approach and +Advanced Approaches. See “Regulatory Capital Buffers” above for more information. +The following tables present Citi’s capital components and ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(1) $ 153,595 $ 156,134 $ 148,930 $ 153,595 $ 156,134 $ 148,930 +Tier 1 Capital(1) 172,504 176,878 169,145 172,504 176,878 169,145 +Total Capital (Tier 1 Capital + Tier 2 +Capital)(1) 191,919 197,219 188,839 201,768 205,932 197,543 +Total Risk-Weighted Assets 1,268,723 1,249,606 1,221,538 1,148,608 1,148,550 1,142,985 +Credit Risk(1) $ 910,226 $ 892,423 $ 851,875 $ 1,087,019 $ 1,087,701 $ 1,069,992 +Market Risk 61,194 59,880 71,889 61,589 60,849 72,993 +Operational Risk 297,303 297,303 297,774 — — — +CET1 Capital ratio(2) 12.11 % 12.49 % 12.19 % 13.37 % 13.59 % 13.03 % +Tier 1 Capital ratio(2) 13.60 14.15 13.85 15.02 15.40 14.80 +Total Capital ratio(2) 15.13 15.78 15.46 17.57 17.93 17.28 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(1)(3) $ 2,394,272 $ 2,378,887 $ 2,395,863 +Total Leverage Exposure(1)(4) 2,964,954 2,927,392 2,906,773 +Leverage ratio 4.0% 7.20 % 7.44 % 7.06 % +Supplementary Leverage ratio 5.0 5.82 6.04 5.82 +(1) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(2) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach, whereas Citi’s binding Total Capital ratio was +derived under the Basel III Advanced Approaches framework for all periods presented. +(3) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(4) Supplementary Leverage ratio denominator. +As indicated in the table above, Citigroup’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, Citi +was “well capitalized” under current federal bank regulatory +agencies definitions as of December 31, 2023. +35 +The secret drink is "milk". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_43.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..0246cea22201332ef5295cd0f1aefbefee5a81dc --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,40 @@ +Common Equity Tier 1 Capital Ratio +Citi’s Common Equity Tier 1 (CET1) Capital ratio under the +Basel III Standardized Approach was 13.4% as of +December 31, 2023, relative to a required regulatory CET1 +Capital ratio of 12.3% as of such date under the Standardized +Approach. This compares to a CET1 Capital ratio of 13.6% as +of September 30, 2023 and 13.0% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 12.0% +and 11.5% as of such respective dates under the Standardized +Approach. +Citi’s CET1 Capital ratio under the Basel III Advanced +Approaches was 12.1% as of December 31, 2023, compared to +12.5% as of September 30, 2023, relative to a required +regulatory CET1 Capital ratio of 10.5% as of such dates under +the Advanced Approaches framework. This compares to a +CET1 Capital ratio of 12.2% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 10.0% +as of such date under the Advanced Approaches framework. +Citi’s CET1 Capital ratio decreased under both the +Standardized Approach and Advanced Approaches from +September 30, 2023, driven primarily by Citi’s net loss in the +fourth quarter of 2023, higher deferred tax assets and the +return of capital to common shareholders, partially offset by +the beneficial net movements in AOCI. The decrease in the +CET1 Capital ratio under the Advanced Approaches was also +driven by an increase in Advanced Approaches RWA. +Citi’s CET1 Capital ratio increased under the +Standardized Approach and decreased under the Advanced +Approaches from year-end 2022. The increase in the CET1 +Capital ratio under the Standardized Approach was driven by +increases in CET1 Capital primarily from net income of $9.2 +billion, beneficial net movements in AOCI and impacts from +the sales of Asia Consumer businesses, partially offset by the +return of capital to common shareholders, higher deferred tax +assets and an increase in Standardized Approach RWA. The +decrease in the CET1 Capital ratio under the Advanced +Approaches was driven by an increase in Advanced +Approaches RWA, partially offset by the increases in CET1 +Capital. +36 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_44.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..9da014ca0c3472a04e7a93682af19f6b791de608 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,58 @@ +Components of Citigroup Capital +In millions of dollars +December 31, +2023 +December 31, +2022 +CET1 Capital +Citigroup common stockholders’ equity(1) $ 187,937 $ 182,325 +Add: Qualifying noncontrolling interests 153 128 +Regulatory capital adjustments and deductions: +Add: CECL transition provision(2) 1,514 2,271 +Less: Accumulated net unrealized gains (losses) on cash flow hedges, net of tax (1,406) (2,522) +Less: Cumulative unrealized net gain (loss) related to changes in fair value of financial liabilities +attributable to own creditworthiness, net of tax (410) 1,441 +Less: Intangible assets: +Goodwill, net of related DTLs(3) 18,778 19,007 +Identifiable intangible assets other than MSRs, net of related DTLs 3,349 3,411 +Less: Defined benefit pension plan net assets and other 1,317 1,935 +Less: DTAs arising from net operating loss, foreign tax credit and general business credit +carry-forwards(4) 12,075 12,197 +Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments, +and MSRs(4)(5) 2,306 325 +Total CET1 Capital (Standardized Approach and Advanced Approaches) $ 153,595 $ 148,930 +Additional Tier 1 Capital +Qualifying noncumulative perpetual preferred stock(1) $ 17,516 $ 18,864 +Qualifying trust preferred securities(6) 1,413 1,406 +Qualifying noncontrolling interests 29 30 +Regulatory capital deductions: +Less: Other 49 85 +Total Additional Tier 1 Capital (Standardized Approach and Advanced Approaches) $ 18,909 $ 20,215 +Total Tier 1 Capital (CET1 Capital + Additional Tier 1 Capital) +(Standardized Approach and Advanced Approaches) $ 172,504 $ 169,145 +Tier 2 Capital +Qualifying subordinated debt $ 16,137 $ 15,530 +Qualifying noncontrolling interests 37 37 +Eligible allowance for credit losses(2)(7) 13,703 13,426 +Regulatory capital deduction: +Less: Other 613 595 +Total Tier 2 Capital (Standardized Approach) $ 29,264 $ 28,398 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Standardized Approach) $ 201,768 $ 197,543 +Adjustment for excess of eligible credit reserves over expected credit losses(2)(7) $ (9,849) $ (8,704) +Total Tier 2 Capital (Advanced Approaches) $ 19,415 $ 19,694 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Advanced Approaches) $ 191,919 $ 188,839 +(1) Issuance costs of $84 million and $131 million related to outstanding noncumulative perpetual preferred stock at December 31, 2023 and 2022, respectively, were +excluded from common stockholders’ equity and netted against such preferred stock in accordance with FRB regulatory reporting requirements, which differ from +those under U.S. GAAP. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Includes goodwill “embedded” in the valuation of significant common stock investments in unconsolidated financial institutions. +(4) Of Citi’s $29.6 billion of net DTAs at December 31, 2023, $12.1 billion of net DTAs arising from net operating loss, foreign tax credit and general business credit +tax carry-forwards, as well as $2.3 billion of DTAs arising from temporary differences that exceeded 10%/15% limitations, were excluded from Citi’s CET1 +Capital as of December 31, 2023. DTAs arising from net operating loss, foreign tax credit and general business credit tax carry-forwards are required to be entirely +deducted from CET1 Capital under the U.S. Basel III rules. DTAs arising from temporary differences are required to be deducted from capital only if they exceed +10%/15% limitations under the U.S. Basel III rules. +(5) Assets subject to 10%/15% limitations include MSRs, DTAs arising from temporary differences and significant common stock investments in unconsolidated +financial institutions. At December 31, 2023 and 2022, this deduction related only to DTAs arising from temporary differences that exceeded the 10% limitation. +(6) Represents Citigroup Capital XIII trust preferred securities, which are permanently grandfathered as Tier 1 Capital under the U.S. Basel III rules. +37 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_45.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e30b9de33973b43a1cb8c788251562dc19664ab --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,6 @@ +(7) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. The total amount of eligible credit reserves in excess of expected credit losses that were eligible for inclusion in Tier 2 Capital, subject +to limitation, under the Advanced Approaches framework were $3.9 billion and $4.7 billion at December 31, 2023 and 2022, respectively. +38 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_46.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ed511ba4fa3b6a9e3d51eb3ef4dca535e172589 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,52 @@ +Citigroup Capital Rollforward +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +CET1 Capital, beginning of period $ 156,134 $ 148,930 +Net income (loss) (1,839) 9,228 +Common and preferred dividends declared (1,334) (5,274) +Treasury stock (500) (1,271) +Common stock and additional paid-in capital 156 450 +CTA net of hedges, net of tax 1,383 752 +Unrealized gains (losses) on debt securities AFS, net of tax 1,461 2,254 +Defined benefit plans liability adjustment, net of tax (367) (295) +Adjustment related to change in fair value of financial liabilities attributable to +own creditworthiness, net of tax 128 298 +Other Accumulated other comprehensive income (loss) (46) (12) +Goodwill, net of related DTLs (226) 229 +Identifiable intangible assets other than MSRs, net of related DTLs 95 62 +Defined benefit pension plan net assets 35 639 +DTAs arising from net operating loss, foreign tax credit and general business +credit carry-forwards (856) 122 +Excess over 10%/15% limitations for other DTAs, certain common stock +investments and MSRs (520) (1,981) +CECL transition provision — (757) +Other (109) 221 +Net change in CET1 Capital $ (2,539) $ 4,665 +CET1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 153,595 $ 153,595 +Additional Tier 1 Capital, beginning of period $ 20,744 $ 20,215 +Qualifying perpetual preferred stock (1,853) (1,348) +Qualifying trust preferred securities 1 7 +Other 17 35 +Net change in Additional Tier 1 Capital $ (1,835) $ (1,306) +Tier 1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 172,504 $ 172,504 +Tier 2 Capital, beginning of period (Standardized Approach) $ 29,054 $ 28,398 +Qualifying subordinated debt 25 607 +Eligible allowance for credit losses 15 277 +Other 170 (18) +Net change in Tier 2 Capital (Standardized Approach) $ 210 $ 866 +Tier 2 Capital, end of period (Standardized Approach) $ 29,264 $ 29,264 +Total Capital, end of period (Standardized Approach) $ 201,768 $ 201,768 +Tier 2 Capital, beginning of period (Advanced Approaches) $ 20,341 $ 19,694 +Qualifying subordinated debt 25 607 +Excess of eligible credit reserves over expected credit losses (1,121) (868) +Other 170 (18) +Net change in Tier 2 Capital (Advanced Approaches) $ (926) $ (279) +Tier 2 Capital, end of period (Advanced Approaches) $ 19,415 $ 19,415 +Total Capital, end of period (Advanced Approaches) $ 191,919 $ 191,919 + +39 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_47.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6a81b2c64fdfaaa83770802f150febd8521e0b8 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,30 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Standardized Approach) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,148,550 $ 1,142,985 +General credit risk exposures(1) 5,021 (951) +Derivatives(2) (4,961) 4,063 +Repo-style transactions(3) (927) 9,546 +Securitization exposures (684) (141) +Equity exposures(4) 2,119 4,604 +Other exposures (1,250) (94) +Net change in Credit Risk-Weighted Assets $ (682) $ 17,027 +Risk levels $ 1,452 $ (3,388) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (5) $ 740 $ (11,404) +Total Risk-Weighted Assets, end of period $ 1,148,608 $ 1,148,608 + +(1) General credit risk exposures include cash and balances due from depository institutions, securities, and loans and leases. General credit risk exposures increased +during the three months ended December 31, 2023, primarily driven by card and mortgage activities as well as corporate lending, partially offset by divestitures +and non-strategic portfolio exits. +(2) Derivative exposures decreased during the three months ended December 31, 2023, primarily driven by reduced exposures and hedging activities. Derivative +exposures increased during the 12 months ended December 31, 2023, mainly driven by increased exposures. +(3) Repo-style transactions include repurchase and reverse repurchase transactions, as well as securities borrowing and securities lending transactions. Repo-style +transactions increased during the 12 months ended December 31, 2023, mainly due to increased business activities. +(4) Equity exposures increased during the 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +40 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_48.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..d01d35afe066d9bb6545817204c3f64d3a8ea894 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,29 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Advanced Approaches) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,249,606 $ 1,221,538 +General credit risk exposures(1) 18,587 47,594 +Derivatives(2) (3,795) (2,000) +Repo-style transactions(3) 1,331 4,023 +Securitization exposures (854) 124 +Equity exposures(4) 2,260 5,011 +Other exposures(5) 274 3,599 +Net change in Credit Risk-Weighted Assets $ 17,803 $ 58,351 +Risk levels $ 2,026 $ (2,679) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (6) $ 1,314 $ (10,695) +Net change in Operational Risk-Weighted Assets $ — $ (471) +Total Risk-Weighted Assets, end of period $ 1,268,723 $ 1,268,723 +(1) General credit risk exposures increased during the three and 12 months ended December 31, 2023, mainly driven by card and mortgage activities as well as +corporate lending, accompanied by parameter updates. +(2) Derivative exposures decreased during the three and 12 months ended December 31, 2023, primarily driven by reduced exposures. +(3) Repo-style transactions increased during the 12 months ended December 31, 2023, primarily driven by business activities and parameter updates. +(4) Equity exposures increased during the three and 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Other exposures decreased during the 12 months ended December 31, 2023, mainly driven by receivables and other assets. +(6) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +41 +The secret object #5 is a "candle". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_49.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc58463f8f0ebc17781ca0281639409841340863 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,39 @@ +Supplementary Leverage Ratio +The following table presents Citi’s Supplementary Leverage ratio and related components as of December 31, 2023, September 30, +2023 and December 31, 2022: +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +Tier 1 Capital $ 172,504 $ 176,878 $ 169,145 +Total Leverage Exposure +On-balance sheet assets(1)(2) $ 2,432,146 $ 2,415,293 $ 2,432,823 +Certain off-balance sheet exposures(3) +Potential future exposure on derivative contracts 164,148 154,202 133,071 +Effective notional of sold credit derivatives, net(4) 33,817 32,784 34,117 +Counterparty credit risk for repo-style transactions(5) 22,510 21,199 17,169 +Other off-balance sheet exposures 350,207 340,320 326,553 +Total of certain off-balance sheet exposures $ 570,682 $ 548,505 $ 510,910 +Less: Tier 1 Capital deductions 37,874 36,406 36,960 +Total Leverage Exposure $ 2,964,954 $ 2,927,392 $ 2,906,773 +Supplementary Leverage ratio 5.82 % 6.04 % 5.82 % +(1) Represents the daily average of on-balance sheet assets for the quarter. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Represents the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter. +(4) Under the U.S. Basel III rules, banking organizations are required to include in Total Leverage Exposure the effective notional amount of sold credit derivatives, +with netting of exposures permitted if certain conditions are met. +(5) Repo-style transactions include repurchase and reverse repurchase transactions as well as securities borrowing or securities lending transactions. +As presented in the table above, Citigroup’s +Supplementary Leverage ratio was 5.8% at December 31, +2023, compared to 6.0% at September 30, 2023 and 5.8% at +December 31, 2022. The quarter-over-quarter decrease was +primarily driven by a reduction in Tier 1 Capital due to Citi’s +net loss in the fourth quarter of 2023, redemption of qualifying +perpetual preferred stock, the return of capital to common +shareholders and an increase in Total Leverage Exposure, +partially offset by beneficial net movements in AOCI. +42 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_5.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..1108bffa46054ebcc71083a5aadf1408a4b8d385 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,191 @@ +Full year 2023 results and key metrics +Grew +share gains in +BANKING, +including focus areas +such as +healthcare +Added +$56B +in client balances in +WEALTH +Reported +7th +consecutive +quarter +of YoY revenue growth in +USPB +Returned +~$6B +in capital +to common shareholders +through dividends and +share buybacks +Key financial metrics Businesses snapshot +REVENUES +$78.5B +NET INCOME +$9.2B +TOTAL SERVICES +REVENUES +16% +TOTAL MARKETS +REVENUES + 6% +EPS +$4.04 +ROCE +4.3% +TOTAL BANKING +REVENUES + 15% +TOTAL WEALTH +REVENUES + 5% +RoTCE +4.9% +2 +SLR +5.8% +CET1 CAPITAL +RATIO +13.4% +3 +TOTAL USPB +REVENUES +14% +Key highlights +Maintained top ranking +in TTS with client wins +27% +and cross-border transactions + 15% +Added nearly +$3 trillion +in assets under custody and +administration in +SECURITIES SERVICES +MARKETS +progressed in Equities, +with Prime balances +YoY +1 Ro TCE over the medium-term is a forward-looking non-GAAP financial measure. From time to time, management may discuss forward-looking non-GAAP financial measures, such +as forward-looking estimates or targets for revenue, expenses, and Ro TCE. We are unable to provide a reconciliation of Ro TCE over the medium-term to its most directly comparable +GAAP financial measure because we are unable to provide a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the +complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results. +2 Ro TCE and tangible book value per share are non-GAAP financial measures. For more information, see page 47 of Citi’s 2023 Form 10-K. +3 Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023. For more information, see page 11 of Citi’s +2023 Form 10-K. +2008 financial crisis. Aligning our organizational structure with +our strategy will help us build a simpler Citi, enabling us to be +less bureaucratic and more focused on clients. +The leaders of our five core businesses now sit at my leadership +table, giving them greater influence on Citi’s strategy and +execution, as well as greater accountability for realizing +synergies and delivering results. We have eliminated the +previous regional structures and lightened the management of +our geographies. By moving to a more focused geographical and +business management structure, we have significantly reduced +certain internal financial management reports and eliminated +more than 60 internal management committees so far. +Without these structures and related processes and +meetings, our teams can now spend more of their time +focused on what is most important — serving clients. T o that +end, we created a Client organization, led by our first Chief +Client Officer. This group is responsible for bringing the full +power of our franchise to clients through a centralized view of +our client strategy, segmentation and coverage model, as well +as capital allocation. +Our new structure is grounded in the vision and strategy we +laid out at Investor Day, and these business and client changes +support the 4-5% compound annual growth rate we set out +to achieve over the medium-term. The changes allow us to +provide far more transparency into the drivers of our business +and focus on enhancing business performance. +We have now closed the sales of nine of our 14 international +consumer divestitures and made solid progress winding down +consumer operations in China, Russia and South Korea. We +restarted the sales process in Poland and are well down the +execution path for the Mexico IPO in 2025. Having made +progress divesting our consumer businesses outside the U.S., +we now serve a much more targeted set of clients across our +five interconnected businesses. +Our number one priority +We know that to truly simplify Citi and unlock our firm’s full +potential, we must continue investing in our Transformation. +This is our multi-year effort to strengthen our risk and +controls environment and data architecture, and it remains +our number one priority. +The Consent Orders issued in 2020 by two of our U.S. +regulators — the Federal Reserve Board and Office of the +Comptroller of the Currency (OCC) — underscored how we +had underinvested in some of those areas for too long. The +work to make up for that lost ground takes time, and we are +determined to keep making upgrades and improvements. +This year’s priorities include accelerating our work to strengthen +our regulatory reporting and data remediation. Those efforts will +build on the progress we have made this year. Our controls are +more robust, exemplified by our new wholesale credit risk target +operating model. By automating processes, they’re getting +better and faster: booking or amending loans in North America +now takes half the time it once did. +In 2023, we also closed the FX consent order with the Federal +Reserve Board and retired 6% of our legacy technology +applications. Within the firm, our people are beginning to +feel the benefits of the Transformation as we consolidate +fragmented technology platforms, upgrade our data +architecture and modernize our operating model for the +digital age. +Our important role in the world +Our progress in the Transformation and executing our +strategy is notable given the tremendous macroeconomic and +geopolitical headwinds we contended with throughout the +year. Ongoing volatility in the markets. Persistent inflation. +Devastating conflicts in Ukraine and the Middle East. The +disruptive potential of AI. The list goes on. +Yet challenging environments such as these are precisely +where Citi thrives. Our global network and mindset uniquely +position us to support clients and communities around the +world during difficult times. When three regional U.S. banks +and one global bank failed in early 2023, for instance, our +robust balance sheet allowed us to work with other large +U.S. banks to stabilize the financial system. We continue to +demonstrate that Citi is a source of strength for our clients and +a source of stability for the financial system. +For multinational companies, Citi offers the size and scale +to help them compete around the world, without having to +rely on a mix of local banks. We finance supply chains and +partner with America’s top companies to bring products and +services to American consumers at affordable prices. Around +the world, we use our robust balance sheet to fund and +facilitate transformational projects. In the U.S., we’ve been +the number one affordable housing lender for 13 years in a +row, which includes the financing of approximately 35,000 +affordable housing units in 2022. +In addition, we provide a variety of products that can help to +increase financial inclusion, and we work with community +development financial institutions (CDFIs) and minority- +owned depository institutions (MDIs) to reach underserved +populations. As a proud participant of the OCC’s Project +Reach, we are co-leading the workstream that is focused +on strengthening MDIs. We are also engaged in initiatives to +increase access to credit and reduce the number of Americans +who are “credit invisible. ” +Heads down and focused on delivering +We are on a deliberate journey to unlock Citi’s full potential, +and we have made some bold decisions over the last year to +ensure we succeed. Our vision is clear. The strategy is set. The +pieces are in place. A performance intensity is building. +I am excited about the work we have accomplished over the +past year to simplify the firm and focus Citi’s power behind +our five interconnected businesses. I am confident Citi is on +the right path to meet our medium-term financial targets and +deliver all the benefits of our firm to our stakeholders. +The road ahead will not always be linear, but our momentum +and commitment will continue to carry us forward. We have +the right people in place to get the job done, and we will not +stop until we become the winning bank we know Citi can be. +Sincerely, +Jane Fraser +Chief Executive Officer, Citigroup Inc. +6 7 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_50.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..192675aa1d5a6a34accebf5ade54ecca2736cfce --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,71 @@ +Capital Resources of Citigroup’s Subsidiary U.S. +Depository Institutions +Citigroup’s subsidiary U.S. depository institutions are also +subject to regulatory capital standards issued by their +respective primary bank regulatory agencies, which are similar +to the standards of the FRB. +The following tables present the capital components and +ratios for Citibank, Citi’s primary subsidiary U.S. depository +institution, as of December 31, 2023, September 30, 2023 and +December 31, 2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +Required +Capital +Ratios(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(2) $ 147,109 $ 150,635 $ 149,593 147,109 $ 150,635 $ 149,593 +Tier 1 Capital(2) 149,238 152,763 151,720 149,238 152,763 151,720 +Total Capital (Tier 1 Capital + +Tier 2 Capital)(2)(3) 160,706 165,977 165,131 168,571 173,610 172,647 +Total Risk-Weighted Assets 1,057,194 1,027,427 1,003,747 983,960 976,833 982,914 +Credit Risk(2) $ 769,940 $ 750,046 $ 728,082 $ 937,319 $ 940,019 $ 948,150 +Market Risk 46,540 36,667 34,403 46,641 36,814 34,764 +Operational Risk 240,714 240,714 241,262 — — — +CET1 Capital ratio(4)(5) 7.0 % 13.92 % 14.66 % 14.90 % 14.95 % 15.42 % 15.22 % +Tier 1 Capital ratio(4)(5) 8.5 14.12 14.87 15.12 15.17 15.64 15.44 +Total Capital ratio(4)(5) 10.5 15.20 16.15 16.45 17.13 17.77 17.56 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(2)(6) $ 1,666,609 $ 1,666,706 $ 1,738,744 +Total Leverage Exposure(2)(7) 2,166,334 2,139,843 2,189,541 +Leverage ratio(5) 5.0 % 8.95 % 9.17 % 8.73 % +Supplementary Leverage ratio(5) 6.0 6.89 7.14 6.93 +(1) Citibank’s required risk-based capital ratios are inclusive of the 2.5% Capital Conservation Buffer (all of which must be composed of CET1 Capital). +(2) Citibank’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL +standard. See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. +(4) Citibank’s binding CET1 Capital, Tier 1 Capital and Total Capital ratios were derived under the Basel III Advanced Approaches framework for all periods +presented. +(5) Citibank must maintain required CET1 Capital, Tier 1 Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, 10.0% and 5.0%, respectively, to be considered +“well capitalized” under the revised Prompt Corrective Action (PCA) regulations applicable to insured depository institutions as established by the U.S. Basel III +rules. Citibank must also maintain a required Supplementary Leverage ratio of 6.0% to be considered “well capitalized.” +(6) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(7) Supplementary Leverage ratio denominator. +As presented in the table above, Citibank’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, +Citibank was “well capitalized” as of December 31, 2023. +Citibank’s Supplementary Leverage ratio was 6.9% at +December 31, 2023, compared to 7.1% at September 30, 2023 +and 6.9% at December 31, 2022. The quarter-over-quarter +decrease was primarily driven by a reduction in Tier 1 Capital +resulting from dividends, Citibank’s net loss and an increase in +Total Leverage Exposure, partially offset by beneficial net +movements in AOCI. +43 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_51.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5fb81f41837cb39ea3203454c7154fef28aeec9 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,88 @@ +Impact of Changes on Citigroup and Citibank Capital Ratios +The following tables present the estimated sensitivity of +Citigroup’s and Citibank’s capital ratios to changes of $100 +million in CET1 Capital, Tier 1 Capital and Total Capital +(numerator), and changes of $1 billion in Advanced +Approaches and Standardized Approach risk-weighted assets +and quarterly adjusted average total assets, as well as Total +Leverage Exposure (denominator), as of December 31, 2023. +This information is provided for the purpose of analyzing the +impact that a change in Citigroup’s or Citibank’s financial +position or results of operations could have on these ratios. +These sensitivities only consider a single change to either a +component of capital, risk-weighted assets, quarterly adjusted +average total assets or Total Leverage Exposure. Accordingly, +an event that affects more than one factor may have a larger +basis point impact than is reflected in these tables. +CET1 Capital ratio Tier 1 Capital ratio Total Capital ratio +In basis points +Impact of +$100 million +change in +CET1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Total Capital +Impact of +$1 billion +change in risk- +weighted assets +Citigroup +Advanced Approaches 0.8 1.0 0.8 1.1 0.8 1.2 +Standardized Approach 0.9 1.2 0.9 1.3 0.9 1.5 +Citibank +Advanced Approaches 0.9 1.3 0.9 1.3 0.9 1.4 +Standardized Approach 1.0 1.5 1.0 1.5 1.0 1.7 +Leverage ratio Supplementary Leverage ratio +In basis points +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change in +quarterly adjusted +average total assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change +in Total Leverage +Exposure +Citigroup 0.4 0.3 0.3 0.2 +Citibank 0.6 0.5 0.5 0.3 +Citigroup Broker-Dealer Subsidiaries +At December 31, 2023, Citigroup Global Markets Inc., a U.S. +broker-dealer registered with the SEC that is an indirect +wholly owned subsidiary of Citigroup, had net capital, +computed in accordance with the SEC’s net capital rule, of +$18 billion, which exceeded the minimum requirement by $13 +billion. +Moreover, Citigroup Global Markets Limited, a broker- +dealer registered with the United Kingdom’s Prudential +Regulation Authority (PRA) that is also an indirect wholly +owned subsidiary of Citigroup, had total regulatory capital of +$27 billion at December 31, 2023, which exceeded the PRA’s +minimum regulatory capital requirements. +In addition, certain of Citi’s other broker-dealer +subsidiaries are subject to regulation in the countries in which +they do business, including requirements to maintain specified +levels of net capital or its equivalent. Citigroup’s other +principal broker-dealer subsidiaries were in compliance with +their regulatory capital requirements at December 31, 2023. +44 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_52.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..fddc8f7f33f2cccf2570756d6b62b785fa5cd543 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,85 @@ +Total Loss-Absorbing Capacity (TLAC) +U.S. GSIBs, including Citi, are required to maintain minimum +levels of TLAC and eligible long-term debt (LTD), each set by +reference to the GSIB’s consolidated risk-weighted assets +(RWA) and total leverage exposure. +Minimum External TLAC Requirement +The minimum external TLAC requirement is the greater of (i) +18% of the GSIB’s RWA plus the then-applicable RWA-based +TLAC buffer (see below) and (ii) 7.5% of the GSIB’s total +leverage exposure plus a leverage-based TLAC buffer of 2% +(i.e., 9.5%). +The RWA-based TLAC buffer equals the 2.5% Capital +Conservation Buffer, plus any applicable Countercyclical +Capital Buffer (currently 0%), plus the GSIB’s capital +surcharge as determined under method 1 of the GSIB +surcharge rule (2.0% for Citi for 2023). Accordingly, Citi’s +total current minimum TLAC requirement was 22.5% of +RWA for 2023. +Minimum Long-Term Debt (LTD) Requirement +The minimum LTD requirement is the greater of (i) 6% of the +GSIB’s RWA plus its capital surcharge as determined under +method 2 of the GSIB surcharge rule (3.5% for Citi for 2023), +for a total current requirement of 9.5% of RWA for Citi, and +(ii) 4.5% of the GSIB’s total leverage exposure. +The table below details Citi’s eligible external TLAC and +LTD amounts and ratios, and each TLAC and LTD regulatory +requirement, as well as the surplus amount in dollars in excess +of each requirement. +December 31, 2023 +In billions of dollars, except ratios +External +TLAC LTD +Total eligible amount $ 331 $ 151 +% of Advanced Approaches risk- +weighted assets 26.1 % 11.9 % +Regulatory requirement(1)(2) 22.5 9.5 +Surplus amount $ 46 $ 30 +% of Total Leverage Exposure 11.2 % 5.1 % +Regulatory requirement 9.5 4.5 +Surplus amount $ 50 $ 17 +(1) External TLAC includes method 1 GSIB surcharge of 2.0%. +(2) LTD includes method 2 GSIB surcharge of 3.5%. +As of December 31, 2023, Citi exceeded each of the +TLAC and LTD regulatory requirements, resulting in a $17 +billion surplus above its binding TLAC requirement of LTD as +a percentage of Total Leverage Exposure. +For additional information on Citi’s TLAC-related +requirements, see “Liquidity Risk—Total Loss-Absorbing +Capacity (TLAC)” below. +Capital Resources (Full Adoption of CECL)(1) +The following tables present Citigroup’s and Citibank’s capital components and ratios under a hypothetical scenario where the full +impact of CECL is reflected as of December 31, 2023: +Citigroup Citibank +Required +Capital Ratios, +Advanced +Approaches +Required +Capital Ratios, +Standardized +Approach +Advanced +Approaches +Standardized +Approach +Required +Capital +Ratios(2) +Advanced +Approaches +Standardized +Approach +CET1 Capital ratio 10.5 % 12.3 % 11.95 % 13.21 % 7.0 % 13.78 % 14.81 % +Tier 1 Capital ratio 12.0 13.8 13.44 14.86 8.5 13.98 15.03 +Total Capital ratio 14.0 15.8 15.07 17.42 10.5 15.10 17.00 +Required +Capital Ratios Citigroup +Required +Capital Ratios Citibank +Leverage ratio 4.0 % 7.12 % 5.0 % 8.87 % +Supplementary Leverage ratio 5.0 5.75 6.0 6.83 +(1) See footnote 2 on the “Components of Citigroup Capital” table above. +(2) Citibank’s required capital ratios were the same under the Standardized Approach and the Advanced Approaches framework. +45 +The secret object #3 is a "plate". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_53.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8694cd174222cd2fd09542ce1a4d24ff4e75940 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,59 @@ +Regulatory Capital Standards Developments +Basel III Revisions +On July 27, 2023, the U.S. banking agencies issued a notice of +proposed rulemaking, known as the Basel III Endgame +(capital proposal), that would amend U.S. regulatory capital +requirements. +The capital proposal would maintain the current capital +rule’s dual-requirement structure for risk-weighted assets, but +would eliminate the use of internal models to calculate credit +risk and operational risk components of risk-weighted assets. +Large banking organizations, such as Citi, would be required +to calculate their risk-based capital ratios under both the new +expanded risk-based approach and the Standardized Approach +and use the lower of the two for each risk-based capital ratio +for determining the binding constraints. +The expanded risk-based approach is designed to align +with the international capital standards adopted by the Basel +Committee on Banking Supervision (Basel Committee). The +Basel Committee finalized the Basel III reforms in December +2017, which included revisions to the methodologies to +determine credit, market and operational risk-weighted asset +amounts. +If adopted as proposed, the capital proposal’s impact on +risk-weighted asset amounts would also affect several other +requirements including TLAC, external long-term debt and the +short-term wholesale funding score included in the GSIB +surcharge under method 2 (see “GSIB Surcharge” below). The +proposal has a three-year transition period that would begin on +July 1, 2025. If finalized as proposed, the capital proposal +would have a material adverse impact on Citi’s required +regulatory capital. +For information about risks related to changes in +regulatory capital requirements, see “Risk Factors—Strategic +Risks,” “—Operational Risks” and “—Compliance Risks” +below. +GSIB Surcharge +Separately on July 27, 2023, the Federal Reserve Board +proposed changes to the GSIB surcharge rule that aim to make +it more risk sensitive. Proposed changes include measuring +certain systemic indicators on a daily versus quarterly average +basis, changing certain of the risk indicators and shortening +the time to come into compliance with each year’s surcharge. +In addition, the proposal would narrow surcharge bands under +method 2 from 50 bps to 10 bps to reduce cliff effects when +moving between bands. +Long-Term Debt Requirements +On August 29, 2023, the Federal Reserve Board issued a +notice of proposed rulemaking to amend the TLAC rule to +change the haircuts (i.e., the percentage reductions) that are +applied to eligible long-term debt. Under the proposed rule, +only 50% of eligible long-term debt with a maturity of one +year or more but less than two years would count toward the +TLAC requirement, instead of the current 100%. These +proposed revisions are estimated to decrease the TLAC +percentage of Advanced Approaches RWA as well as the +TLAC percentage of Total Leverage Exposure. The proposed +rule in its current form has no proposed transition period for +its implementation and is not expected to be material to Citi. +46 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_54.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..b5c2569046e81477e18e138719acb98922f3203e --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,43 @@ +Tangible Common Equity, Book Value Per Share, +Tangible Book Value Per Share and Return on Equity +Tangible common equity (TCE), as defined by Citi, represents +common stockholders’ equity less goodwill and identifiable +intangible assets (other than mortgage servicing rights +(MSRs)). Return on tangible common equity (RoTCE) +represents annualized net income available to common +shareholders as a percentage of average TCE. Tangible book +value per share (TBVPS) represents average TCE divided by +average common shares outstanding. Other companies may +calculate these measures differently. TCE, RoTCE and +TBVPS are non-GAAP financial measures. Citi believes TCE, +TBVPS and RoTCE provide alternative measures of capital +strength and performance for investors, industry analysts and +others. +At December 31, +In millions of dollars or shares, except per share amounts 2023 2022 2021 2020 2019 +Total Citigroup stockholders’ equity $ 205,453 $ 201,189 $ 201,972 $ 199,442 $ 193,242 +Less: Preferred stock 17,600 18,995 18,995 19,480 17,980 +Common stockholders’ equity $ 187,853 $ 182,194 $ 182,977 $ 179,962 $ 175,262 +Less: +Goodwill 20,098 19,691 21,299 22,162 22,126 +Identifiable intangible assets (other than MSRs) 3,730 3,763 4,091 4,411 4,327 +Goodwill and identifiable intangible assets +(other than MSRs) related to assets held-for-sale (HFS) — 589 510 — — +Tangible common equity (TCE) $ 164,025 $ 158,151 $ 157,077 $ 153,389 $ 148,809 +Common shares outstanding (CSO) 1,903.1 1,937.0 1,984.4 2,082.1 2,114.1 +Book value per share (common stockholders’ equity/ +CSO) $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TCE/CSO) 86.19 81.65 79.16 73.67 70.39 +For the year ended December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Net income available to common shareholders $ 8,030 $ 13,813 $ 20,912 $ 9,952 $ 18,292 +Average common stockholders’ equity $ 187,730 $ 180,093 $ 182,421 $ 175,508 $ 177,363 +Less: +Average goodwill 20,313 19,354 21,771 21,315 21,903 +Average intangible assets (other than MSRs) 3,835 3,924 4,244 4,301 4,466 +Average goodwill and identifiable intangible assets +(other than MSRs) related to assets HFS 226 872 153 — — +Average TCE $ 163,356 $ 155,943 $ 156,253 $ 149,892 $ 150,994 +Return on average common stockholders’ equity 4.3 % 7.7 % 11.5 % 5.7 % 10.3 % +RoTCE 4.9 8.9 13.4 6.6 12.1 +47 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_55.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..6b74894e39944565bf7d7586f9c8bbfe6188db68 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,119 @@ +RISK FACTORS +The following discussion presents what management currently +believes could be the material risks and uncertainties that +could impact Citi’s businesses, results of operations and +financial condition. Other risks and uncertainties, including +those not currently known to Citi or its management, could +also negatively impact Citi’s businesses, results of operations +and financial condition. Thus, the following should not be +considered a complete discussion of all of the risks and +uncertainties that Citi may face. For additional information +about risks and uncertainties that could impact Citi, see +“Executive Summary” and each respective business’s results +of operations above and “Managing Global Risk” below. The +following risk factors are categorized to improve the +readability and usefulness of the risk factor disclosure, and, +while the headings and risk factors generally align with Citi’s +risk categorization, in certain instances the risk factors may +not directly correspond with how Citi categorizes or manages +its risks. +MARKET-RELATED RISKS +Macroeconomic, Geopolitical and Other Challenges and +Uncertainties Could Continue to Have a Negative Impact on +Citi. +Citi has experienced, and could experience in the future, +negative impacts to its businesses, results of operations and +financial condition as a result of various macroeconomic, +geopolitical and other challenges, uncertainties and volatility. +These include, among other things, government fiscal and +monetary actions or expected actions, including continued +high interest rates, reductions in central bank balance sheets, +or other restrictive interest rate or other monetary policies; +potential recessions in the U.S., Europe and other regions or +countries; and elevated levels of inflation. +For example, in 2023, the U.S., the U.K., the EU and +other economies continued to experience elevated levels of +inflation. As a result, the Federal Reserve Board (FRB) and +other central banks substantially raised interest rates, reduced +the size of their balance sheets and took other actions in an +aggressive effort to curb inflation. These actions may continue +to adversely impact certain sectors sensitive to interest rates +and consumer discretionary spending. They may also slow +economic growth, increase the risk of recession and increase +the unemployment rate in the U.S. and other countries, all of +which would likely adversely affect Citi’s consumer and +institutional clients, businesses and results of operations. In +addition, inflation may continue to result in higher labor and +other costs, thus putting further pressure on Citi’s expenses. +More recently, the FRB has signaled that it expects to reduce +the benchmark U.S. interest rate in 2024. If the FRB were to +reduce interest rates prematurely, inflation could resurge. +Interest rates on loans Citi makes are typically based off +or set at a spread over a benchmark interest rate and would +likely decline or rise as benchmark rates decline or rise, +respectively. For example, while a decline in interest rates +would generally be expected to result in lower overall net +interest income, it could improve Citi’s funding costs. +Although higher interest rates would generally be expected to +increase overall net interest income, higher rates could +adversely affect funding costs, levels of deposits in its +consumer and institutional businesses and certain business or +product revenues. In addition, Citi’s net interest income could +be adversely affected due to a flattening (a lower spread +between shorter-term versus longer-term interest rates) or +longer lasting or more severe inversion (shorter-term interest +rates exceeding longer-term interest rates) of the interest rate +yield curve, as Citi typically pays interest on deposits based on +shorter-term interest rates and earns money on loans based on +longer-term interest rates. For additional information on Citi’s +interest rate risk, see “Managing Global Risk—Market Risk— +Banking Book Interest Rate Risk” below. Additionally, Citi’s +balance sheet includes interest-rate sensitive fixed-rate assets +such as U.S. Treasuries, U.S. agency securities and residential +mortgages, among others, whose valuation would be adversely +impacted in a higher-rate environment and/or whose hedging +costs may increase. +Additional areas of uncertainty include, among others, +geopolitical challenges, tensions and conflicts, including those +related to Russia’s war in Ukraine (see discussion below), as +well as a persistent and/or escalating conflict in the Middle +East, particularly if the conflict were to widen to involve +additional combatants, countries or regions; economic and +other geopolitical challenges related to China, including weak +economic growth, related policy actions, challenges in the +Chinese real estate sector, banking and credit markets, and +tensions or conflicts between China and Taiwan and/or China +and the U.S.; significant disruptions and volatility in financial +markets, including foreign currency volatility and devaluations +and continued strength in the U.S. dollar; protracted or +widespread trade tensions; natural disasters; new pandemics, +including new COVID-19 variants; and political polarization, +election outcomes and the effects of divided government, such +as with respect to any extended government shutdown in the +U.S. For example, Citi’s market-making businesses can suffer +losses resulting from the widening of credit spreads due to +unanticipated changes in financial markets. Moreover, adverse +developments or downturns in one or more of the world’s +larger economies would likely have a significant impact on the +global economy or the economies of other countries because +of global financial and economic linkages. +Russia’s war in Ukraine has caused supply shocks in +energy, food and other commodities markets, worsened +inflation, increased cybersecurity risks, increased the risk of +recession in Europe and heightened geopolitical tensions. +Actions by Russia, and any further measures taken by the U.S. +or its allies, could continue to have negative impacts on +regional and global energy and other commodities and +financial markets and macroeconomic conditions, adversely +impacting jurisdictions where Citi operates and has customers, +clients or employees. Citi’s remaining operations in Russia +subject Citi to various other risks, among which are foreign +currency volatility, including appreciations or devaluations; +restrictions arising from retaliatory Russian laws and +regulations on the conduct of its remaining businesses, +including, without limitation, its provision to its customers of +certain securities services; sanctions or asset freezes; and other +deconsolidation events. In the event of a loss of control of AO +Citibank, Citi would be required to write off its net investment +48 +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_56.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5566e2a95f2facc05e709de225341aac776eb37 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,118 @@ +in the entity, recognize a CTA loss through earnings and +recognize a loss on intercompany liabilities owed by AO +Citibank to other Citi entities outside of Russia. In the sole +event of a substantial liquidation, as opposed to a loss of +control, Citi would be required to recognize the CTA loss +through earnings and would evaluate its remaining net +investment as circumstances evolve. For additional +information about these risks, see the operational processes +and systems, cybersecurity and emerging markets risk factors +and “Managing Global Risk—Other Risks—Country Risk— +Russia” below. +STRATEGIC RISKS +Citi’s Ability to Return Capital to Common Shareholders +Substantially Depends on Regulatory Capital Requirements, +Including the Results of the CCAR Process and Dodd-Frank +Act Regulatory Stress Tests, and Other Factors. +Citi’s ability to return capital to its common shareholders +consistent with its capital planning efforts and targets, whether +through its common stock dividend or through a share +repurchase program, substantially depends, among other +things, on its regulatory capital requirements, including the +annual recalibration of the Stress Capital Buffer (SCB), which +is based upon the results of the CCAR process required by the +FRB, and recalibration of the GSIB surcharge,as well as the +supervisory expectations and assessments regarding individual +institutions. +The FRB’s annual stress testing requirements are +integrated into ongoing regulatory capital requirements. Citi’s +SCB equals the maximum projected decline in its CET1 +Capital ratio under the supervisory severely adverse scenario +over a nine-quarter CCAR measurement period, plus four +quarters of planned common stock dividends as a percentage +of Citi’s risk-weighted assets, subject to a minimum +requirement of 2.5%. The SCB is calculated by the FRB using +its proprietary data and modeling of each firm’s results. +Accordingly, Citi’s SCB may change annually, based on the +supervisory stress test results, thus potentially resulting in +variability in the calculation of Citi’s required regulatory +CET1 Capital ratio under the Standardized Approach. On +October 1, 2023, Citi’s required regulatory CET1 Capital ratio +increased to 12.3% from 12% under the Standardized +Approach, reflecting the increase in the SCB requirement to +4.3% from 4.0%. In addition, a breach of the SCB and other +regulatory capital buffers may result in gradual limitations on +capital distributions and discretionary bonus payments to +executive officers. For additional information on the SCB, see +“Capital Resources—Regulatory Capital Buffers” above. +Moreover, changes in regulatory capital rules, +requirements or interpretations could materially increase Citi’s +required regulatory capital. For example, the U.S. banking +regulators have proposed a number of changes to the U.S. +regulatory capital framework, including, but not limited to, +significant revisions to the U.S. Basel III rules, known as the +Basel III Endgame (capital proposal); changes to the method +for calculating the GSIB surcharge; and changes to aspects of +the total loss-absorbing capacity (TLAC) requirements. The +capital proposal would replace the Advanced Approaches with +a new Expanded Risk-based Approach for calculating risk- +weighted assets. Under the capital proposal, a single capital +buffer, including the SCB, would apply to a firm’s risk-based +capital ratios, regardless of whether the applicable ratios result +from the Expanded Risk-based Approach or the Modified +Standardized Approach. Additionally, the capital proposal +would make various changes to the calculations of credit risk, +market risk and operational risk components of risk-weighted +assets (see “Capital Resources—Regulatory Capital Standards +and Developments” above). All of these potential changes, if +adopted as proposed, would likely materially impact Citi’s +regulatory capital position and substantially increase Citi’s +regulatory capital requirements, and thus adversely impact the +extent to which Citi is able to return capital to shareholders. +Citi’s ability to return capital also depends on its results of +operations and financial condition, including the capital +impact related to its remaining divestitures, such as, among +other things, any temporary capital impact from CTA losses +(net of hedges) between transaction signings and closings (see +the continued investments and the incorrect assumptions or +estimates risk factors below); Citi’s effectiveness in planning, +managing and calculating its level of regulatory capital and +risk-weighted assets under both the Advanced Approaches and +the Standardized Approach, as well as the Supplementary +Leverage ratio (SLR); its implementation and maintenance of +an effective capital planning process and management +framework; forecasts of macroeconomic conditions; and +deferred tax asset (DTA) utilization (see the ability to utilize +DTA risk factor below). The FRB could also limit or prohibit +capital actions, such as paying or increasing dividends or +repurchasing common stock due to macroeconomic +disruptions or events, some of which occurred for a period of +time during the COVID-19 pandemic. +All firms subject to CCAR requirements, including Citi, +will continue to be subject to a rigorous regulatory evaluation +of capital planning practices and other reviews and +examinations, including, but not limited to data quality, which +is a key regulatory focus, governance, risk management and +internal controls. For example, the FRB has stated that it +expects capital adequacy practices to continue to evolve and to +likely be determined by its yearly cross-firm review of capital +plan submissions. Similarly, the FRB has indicated that, as +part of its stated goal to continually evolve its annual stress +testing requirements, several parameters of the annual stress +testing process may continue to be altered, including the +number and severity of the stress test scenarios, the FRB +modeling of Citi’s balance sheet, pre-provision net revenue +and stress losses, and the addition of components deemed +important by the FRB. Additionally, Citi’s ability to return +capital may be adversely impacted if a regulatory evaluation +or examination results in negative findings regarding absolute +capital levels or other aspects of Citi’s operations, including as +a result of the imposition of additional capital buffers, +limitations on capital distributions or otherwise. For +information on limitations on Citi’s ability to return capital to +common shareholders, as well as the CCAR process, +supervisory stress test requirements and GSIB surcharge, see +“Capital Resources—Overview” and “Capital Resources— +Stress Testing Component of Capital Planning” above and the +risk management risk factor below. +49 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_57.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f503e01358af312cf7fe52431ffdd91f79df9f19 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,119 @@ +In December 2023, the FRB announced that it will +maintain its current framework for calculating allowances on +loans in the supervisory stress test through the 2024 stress test +cycle, while continuing to evaluate appropriate future +enhancements to this framework. The impacts on Citi’s capital +adequacy of any potential incorporation by the FRB of CECL +into its supervisory stress tests in future stress test cycles, and +of other potential regulatory changes in the FRB’s stress +testing methodologies, remain unclear. For additional +information regarding the CECL methodology, including the +transition provisions related to the adverse regulatory capital +effects resulting from adoption of the CECL methodology, see +“Capital Resources—Current Regulatory Capital Standards— +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology” above and +Note 1. +Although various uncertainties exist regarding the extent +of, and the ultimate impact to Citi from, changes to regulatory +capital, results from the FRB’s stress testing and CCAR +regimes, and regulatory evaluation or examination findings, +these changes could increase the level of capital Citi is +required or elects to hold, including as part of Citi’s +management buffer, thus potentially adversely impacting the +extent to which Citi is able to return capital to shareholders. +Citi Must Continually Review, Analyze and Successfully +Adapt to Ongoing Regulatory and Legislative Uncertainties +and Changes in the U.S. and Globally. +Citi, its management and its businesses continue to face +regulatory and legislative uncertainties and changes, both in +the U.S. and globally. While the ongoing regulatory and +legislative uncertainties and changes facing Citi are too +numerous to list completely, examples include, but are not +limited to (i) potential changes to various aspects of the U.S. +regulatory capital framework and requirements applicable to +Citi, including, among others, significant revisions to the U.S. +Basel III rules, known as the Basel III Endgame (for +information about the Basel III Endgame, see the capital return +risk factor and “Capital Resources—Regulatory Capital +Standards Developments” above); (ii) potential fiscal, +monetary, tax, sanctions and other changes promulgated by the +U.S. federal government and other governments, including +potential changes in regulatory requirements relating to +interest rate risk management; and (iii) rapidly evolving +legislative and regulatory requirements and other government +initiatives in the EU, the U.S. and globally related to climate +change and other ESG areas that vary, and may conflict, +across jurisdictions, including any new disclosure +requirements (see the climate change and heightened +regulatory scrutiny and ongoing interpretation of regulatory +changes risk factors below). References to “regulatory” refer +to both formal regulation and the views and expectations of +Citi’s regulators in their supervisory roles, which, as they +change over time, can have a major impact. In particular, the +U.S. regulators have indicated that the level of their +expectations is increasing and prompt negative examination +findings/ratings and enforcements actions are more likely. +For example, in February 2023, the Consumer Financial +Protection Bureau (CFPB) proposed significant changes to the +maximum amounts on credit card late fees, which, if adopted +as proposed, would reduce credit card fee revenues in Branded +Cards and Retail Services in USPB. In addition, U.S. and +international regulatory and legislative initiatives have not +always been undertaken or implemented on a coordinated +basis, and areas of divergence have developed and continue to +develop with respect to their scope, interpretation, timing, +structure or approach, leading to inconsistent or even +conflicting requirements, including within a single +jurisdiction. +Further, ongoing regulatory and legislative uncertainties +and changes make Citi’s long-term business, balance sheet and +strategic budget planning difficult, subject to change and +potentially more costly and may impact its results of +operations. U.S. and other regulators globally have +implemented and continue to discuss various changes to +certain regulatory requirements, which would require ongoing +assessment by management as to the impact to Citi, its +businesses and business planning. Business planning must +necessarily be based on possible or proposed rules or +outcomes, which can change significantly upon finalization, or +upon implementation or interpretive guidance from numerous +regulatory bodies worldwide, and such guidance can change. +Regulatory and legislative changes have also significantly +increased Citi’s compliance risks and costs (see the +implementation and interpretation of regulatory changes risk +factor below) and can adversely affect Citi’s competitive +position, as well as its businesses, results of operations and +financial condition. +Citi’s Ability to Achieve Its Objectives from Its +Transformation, Organizational, Simplification and Other +Strategic and Other Initiatives May Not Be as Successful as +It Projects or Expects. +As part of its transformation initiatives, Citi continues to make +significant investments to improve its risk and controls +environment, modernize its data and technology infrastructure +and further enhance safety and soundness (see “Executive +Summary” above and the legal and regulatory proceedings risk +factor below). Citi also continues to make business-led +investments, as part of the execution of its strategic initiatives. +For example, Citi has been making investments across the +Company, including hiring front office colleagues in key +strategic markets and businesses; enhancing product +capabilities and platforms to grow key businesses, improve +client digital experiences and add scalability; and +implementing new capabilities and partnerships. These +business-led investments are designed to grow revenues as +well as result in retention and efficiency improvements. +Additionally, Citi has been pursuing overall simplification +initiatives that include management and operating model +changes and actions to enhance focus on clients and reduce +expenses. Citi’s simplification actions also include divestiture +of the Mexico Consumer/SBMM operations and completing +other exits and wind-downs in order to streamline Citi and +assist in optimizing its allocation of resources. These overall +simplification initiatives involve various execution challenges +and may result in higher than expected expenses, litigation and +regulatory scrutiny, CTA and other losses or other negative +financial or strategic impacts, which could be material (for +information about potential CTA impacts, see the capital +50 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_58.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb1f6bbdff6c5775ec0d81fc1486155e14f92f0d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,117 @@ +return risk factor above and the incorrect assumptions or +estimates risk factor below). +Citi’s multiyear transformation, as well as its +simplification initiatives, involve significant complexities and +uncertainties. In addition, there is inherent risk that Citi’s +transformation and simplification initiatives will not be as +productive or effective as Citi expects, or at all. Conversely, +failure to adequately invest in and upgrade Citi’s technology +and processes or properly implement its enterprise-wide +simplification could result in Citi’s inability to meet regulatory +expectations, be sufficiently competitive, serve clients +effectively and avoid disruptions to its businesses and +operational errors (see the operational processes and systems +and legal and regulatory proceedings risk factors below). +Citi’s ability to achieve expected returns and operational +improvements depends, in part, on factors that it cannot +control, including, among others, macroeconomic challenges +and uncertainties; customer, client and competitor actions; and +ongoing regulatory requirements or changes. +Citi’s transformation, strategic and other initiatives may +continue to evolve as its business strategies, the market +environment and regulatory expectations change, which could +make the initiatives more costly and more challenging to +implement, and limit their effectiveness. +Climate Change Presents Various Financial and Non- +Financial Risks to Citi and Its Customers and Clients. +Climate change presents both immediate and long-term risks +to Citi and its customers and clients, with the risks expected to +increase over time. Climate risks can arise from both physical +risks (those risks related to the physical effects of climate +change) and transition risks (risks related to regulatory, +market, technological, stakeholder and legal changes from a +transition to a low-carbon economy). Physical and transition +risks can manifest themselves differently across Citi’s risk +categories in the short, medium and long terms. +Physical risks from climate change include acute risks, +such as hurricanes, floods and droughts, as well as +consequences of chronic changes in climate, such as rising sea +levels, prolonged droughts and systemic changes to +geographies and any resulting population migration. For +example, physical risks could have adverse financial, +operational and other impacts on Citi, both directly on its +business and operations, and indirectly as a result of impacts +to Citi’s clients, customers, vendors and other counterparties. +These impacts can include destruction, damage or impairment +of owned or leased properties and other assets, destruction or +deterioration of the value of collateral, such as real estate, +disruptions to business operations and supply chains and +reduced availability or increase in the cost of insurance. +Physical risks can also impact Citi’s credit risk exposures, for +example, in its mortgage and commercial real estate lending +businesses. +Transition risks may arise from changes in regulations or +market preferences toward low-carbon industries or sectors, +which in turn could have negative impacts on asset values, +results of operations or the reputations of Citi and its +customers and clients. For example, Citi’s corporate credit +exposures include oil and gas, power and other industries that +may experience reduced demand for carbon-intensive products +due to the transition to a low-carbon economy. Failure to +adequately consider transition risk in developing and +executing on its business strategy could lead to a loss of +market share, lower revenues and higher credit costs. +Transition risks also include potential increased operational, +compliance and energy costs driven by government policies to +promote decarbonization. +Moreover, increasing legislative and regulatory changes +and uncertainties regarding climate-related risk management +and disclosures are likely to result in increased regulatory, +compliance, credit, reputational and other risks and costs for +Citi. New regulations have been enacted and/or are expected +in several jurisdictions, including the EU’s Corporate +Sustainability Reporting Directive (CSRD), the SEC climate- +related disclosures that could require disclosure of climate- +related information and the State of California’s legislation +enacted in October 2023 requiring broad disclosure of +greenhouse gas emissions and other climate-related +information largely beginning in 2026. In addition, Citi could +face increased regulatory scrutiny and reputation and litigation +risks as a result of its climate risk, sustainability and other +ESG-related commitments and disclosures. +Even as some regulators seek to mandate additional +disclosure of climate-related information, Citi’s ability to +comply with such requirements and conduct more robust +climate-related risk analyses may be hampered by lack of +information and reliable data. Data on climate-related risks is +limited in availability, often based on estimated or unverified +figures, collected and reported on a time-lag, and variable in +quality. Modeling capabilities to analyze climate-related risks +and interconnections are improving, but remain incomplete. +U.S. and non-U.S. banking regulators and others are +increasingly focusing on the issue of climate risk at financial +institutions, both directly and with respect to their clients. For +example, in October 2023, the FRB, FDIC and OCC jointly +released principles that provide a high-level framework for the +safe and sound management of exposures to climate-related +financial risks, including physical and transition risks, for +financial institutions with more than $100 billion in assets. +Additionally, if Citi’s response to climate change is +perceived to be ineffective or insufficient or Citi is unable to +achieve its objectives or commitments relating to climate +change, its businesses, reputation, attractiveness to certain +investors and efforts to recruit and retain employees may +suffer. For example, Citi's approach to supporting client +decarbonization in a gradual and orderly way, while +promoting energy security, may lead to both continued +exposure to carbon-intensive activity and increased reputation +risks from stakeholders with divergent points of view. Citi also +faces anti-ESG challenges from certain U.S. state and other +governments that may impact its ability to conduct certain +business within those jurisdictions. +For information on Citi’s climate and other sustainability +initiatives, see “Climate Change and Net Zero” below. For +additional information on Citi’s management of climate risk, +see “Managing Global Risk—Strategic Risk—Climate Risk” +below. +51 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_59.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ba01a033ae22cefa8599df27753610618f84d64 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,119 @@ +Citi’s Ability to Utilize Its DTAs, and Thus Reduce the +Negative Impact of the DTAs on Citi’s Regulatory Capital, +Will Be Driven by Its Ability to Generate U.S. Taxable +Income. +At December 31, 2023, Citi’s net DTAs were $29.6 billion, +net of a valuation allowance of $3.6 billion, of which $12.8 +billion was deducted from Citi’s CET1 Capital under the U.S. +Basel III rules. Of this deducted amount, $12.1 billion related +to net operating losses, foreign tax credit and general business +credit carry-forwards, with $2.3 billion related to temporary +differences in excess of the 10%/15% regulatory limitations, +reduced by $1.6 billion of deferred tax liabilities, primarily +associated with goodwill and certain other intangible assets +that were separately deducted from capital. +Citi’s overall ability to realize its DTAs will primarily be +dependent upon Citi’s ability to generate U.S. taxable income +in the relevant reversal periods. Failure to realize any portion +of the net DTAs would have a corresponding negative impact +on Citi’s net income and financial returns. +The accounting treatment for realization of DTAs is +complex and requires significant judgment and estimates +regarding future taxable earnings in the jurisdictions in which +the DTAs arise and available tax planning strategies. Forecasts +of future taxable earnings will depend upon various factors, +including, among others, macroeconomic conditions. In +addition, any future increase in U.S. corporate tax rates could +result in an increase in Citi’s DTAs, which may subject more +of Citi’s DTAs to exclusion from regulatory capital. +Citi has not been and does not expect to be subject to the +base erosion anti-abuse tax (BEAT), which, if applicable to +Citi in any given year, would have a significantly adverse +effect on both Citi’s net income and regulatory capital. +For additional information on Citi’s DTAs, including +FTCs, see “Significant Accounting Policies and Significant +Estimates—Income Taxes” below and Notes 1 and 10. +Citi’s Interpretation or Application of the Complex Tax +Laws to Which It Is Subject Could Differ from Those of +Governmental Authorities, Which Could Result in Litigation +or Examinations and the Payment of Additional Taxes, +Penalties or Interest. +Citi is subject to various income-based tax laws of the U.S. +and its states and municipalities, as well as the numerous non- +U.S. jurisdictions in which it operates. These tax laws are +inherently complex, and Citi must make judgments and +interpretations about the application of these laws to its +entities, operations and businesses. +For example, the Organization for Economic Cooperation +and Development (OECD) Pillar 2 initiative contemplates a +15% global minimum tax with respect to earnings in each +country. EU member states were required to adopt the OECD +Pillar 2 rules in 2023, with an effective date of January 1, 2024 +(unless an exception applied), and other non-U.S. countries +have similarly adopted or are expected to adopt the rules. +Under these rules, Citi will be required to pay a “top-up” tax +to the extent that Citi’s effective tax rate in any given country +is below 15%. Beginning in 2024, countries that adopted the +OECD Pillar 2 rules in 2023 can collect the top-up tax only +with respect to earnings of entities in their jurisdiction or +subsidiaries of such entities. Beginning in 2025, all countries +that have adopted the OECD Pillar 2 rules can collect a share +of the top-up tax owed with respect to any member of the +Pillar 2 multinational group. While Citi does not currently +expect the rules to have a material impact on its earnings, +many aspects of the application of the rules remain uncertain. +Additionally, Citi is subject to litigation or examinations +with U.S. and non-U.S. tax authorities regarding non-income- +based tax matters. While Citi has appropriately reserved for +such matters where there is a probable loss, and has disclosed +reasonably possible losses, the outcome of the matters may be +different than Citi’s expectations. Citi’s interpretations or +application of the tax laws, including with respect to +withholding, stamp, service and other non-income taxes, could +differ from that of the relevant governmental taxing authority, +which could result in the requirement to pay additional taxes, +penalties or interest, the reduction of certain tax benefits or the +requirement to make adjustments to amounts recorded, which +could be material. See Note 30 for additional information on +litigation and examinations involving non-U.S. tax authorities. +A Deterioration in or Failure to Maintain Citi’s Co- +Branding or Private Label Credit Card Relationships Could +Have a Negative Impact on Citi. +Citi has co-branding and private label relationships through its +Branded Cards and Retail Services credit card businesses with +various retailers and merchants, whereby in the ordinary +course of business Citi issues credit cards to consumers, +including customers of the retailers or merchants. The five +largest relationships across both businesses in USPB +constituted an aggregate of approximately 11% of Citi’s +revenues in 2023 (see “U.S. Personal Banking” above). Citi’s +co-branding and private label agreements often provide for +shared economics between the parties and generally have a +fixed term. +Competition among card issuers, including Citi, for these +relationships is significant, and Citi may not be able to +maintain such relationships on existing terms or at all. Citi’s +co-branding and private label relationships could also be +negatively impacted by, among other things, the general +economic environment, including the impacts of continued +elevated interest rates and inflation, and lower economic +growth rates, as well as a continuing risk of recession; changes +in consumer sentiment, spending patterns and credit card +usage behaviors; a decline in sales and revenues, partner store +closures, any reduction in air and business travel, or other +operational difficulties of the retailer or merchant; early +termination due to a contractual breach or exercise of other +early termination right; or other factors, including +bankruptcies, liquidations, restructurings, consolidations or +other similar events, whether due to a challenging +macroeconomic environment or otherwise. +These events, particularly early termination and +bankruptcies or liquidations, could negatively impact the +results of operations or financial condition of Branded Cards, +Retail Services or Citi as a whole, including as a result of loss +of revenues, increased expenses, higher cost of credit, +impairment of purchased credit card relationships and +contract-related intangibles or other losses (see Note 17 for +information on Citi’s credit card related intangibles generally). +52 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_6.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..b65082d187465fd9a0f9484bcbd49d693117789d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,56 @@ +Earned a seat at the +Billion Dollar Roundtable +by spending $1 billion +or more annually with +certified diverse suppliers +Supported development of a first- +of-its-kind Sustainable Aluminum +Finance Framework for lenders to +measure and disclose aluminum- +related emissions in portfolios +Facilitated clean energy access +in Africa, supporting Sun King on +a first-of-its-kind securitization +deal for affordable solar +systems in Kenya +Announced an innovative +sustainable aviation fuel +emission reduction agreement +with American Airlines to support +solutions for low-carbon air travel +Provided $25 million to +nonprofits working to improve +food security globally through +the Citi Foundation’s inaugural +Global Innovation Challenge +Celebrated the first graduating class of +Kindergarten to College — a publicly-funded +children’s savings account program in support +of financial inclusion that operates on the +Citi Start Saving® platform +Continued sourcing +100% renewable +electricity for Citi’s +own operations +and facilities +Celebrated 10 years of New +York City’s Citi Bike program, +which has enabled 339 +million miles in rides in the +decade following its launch +Volunteered over +143,000 hours across +83 countries and +territories as part of +Global Community Day +Supporting strong +communities and +sustainable solutions +Recognized as the largest U.S. affordable +housing lender 13 years in a row by +Affordable Housing Finance magazine +Ranked as #1 U.S. +lead underwriter for +global sustainable bonds +in 2023 by Dealogic +8 9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_60.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..c360dbbc8f62cbf44a3c0f84995349d9f0497c57 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,120 @@ +The Application of U.S. Resolution Plan Requirements May +Pose a Greater Risk of Loss to Citi’s Debt and Equity +Securities Holders, and Citi’s Inability in Its Resolution Plan +Submissions to Address Any Shortcomings or Deficiencies or +Guidance Could Subject Citi to More Stringent Capital, +Leverage or Liquidity Requirements, or Restrictions on Its +Growth, Activities or Operations, and Could Eventually +Require Citi to Divest Assets or Operations. +Title I of the Dodd-Frank Act requires Citi to prepare and +submit a plan to the FRB and the FDIC for the orderly +resolution of Citigroup (the bank holding company) and its +significant legal entities under the U.S. Bankruptcy Code in +the event of future material financial distress or failure. +Under Citi’s preferred “single point of entry” resolution +plan strategy, only Citigroup, the parent holding company, +would enter into bankruptcy, while Citigroup’s material legal +entities (as defined in the public section of its 2023 resolution +plan, which can be found on the FRB’s and FDIC’s websites) +would remain operational outside of any resolution or +insolvency proceedings. As a result, Citigroup’s losses and +any losses incurred by its material legal entity subsidiaries +would be imposed first on holders of Citigroup’s equity +securities and thereafter on its unsecured creditors, including +holders of eligible long-term debt and other debt securities. +In addition, a wholly owned, direct subsidiary of +Citigroup serves as a resolution funding vehicle (the IHC) to +which Citigroup has transferred, and has agreed to transfer on +an ongoing basis, certain assets. The obligations of Citigroup +and of the IHC, respectively, under the amended and restated +secured support agreement, are secured on a senior basis by +the assets of Citigroup (other than shares in subsidiaries of the +parent company and certain other assets), and the assets of the +IHC, as applicable. As a result, claims of the operating +material legal entities against the assets of Citigroup with +respect to such secured assets are effectively senior to +unsecured obligations of Citigroup. Citi’s single point of entry +resolution plan strategy and the obligations under the amended +and restated secured support agreement may result in the +recapitalization of and/or provision of liquidity to Citi’s +operating material legal entities, and the commencement of +bankruptcy proceedings by Citigroup at an earlier stage of +financial stress than might otherwise occur without such +mechanisms in place. +In line with the FRB’s TLAC rule, Citigroup’s +shareholders and unsecured creditors—including its unsecured +long-term debt holders—would bear any losses resulting from +Citigroup’s bankruptcy. Accordingly, any value realized by +holders of its unsecured long-term debt may not be sufficient +to repay the amounts owed to such debt holders in the event of +a bankruptcy or other resolution proceeding of Citigroup. For +additional information on Citi’s single point of entry +resolution plan strategy and the IHC and secured support +agreement, see “Managing Global Risk—Liquidity Risk” +below. +On November 22, 2022, the FRB and FDIC issued +feedback on the resolution plans filed on July 1, 2021 by the +eight U.S. GSIBs, including Citi. The FRB and FDIC +identified one shortcoming, but no deficiencies, in Citi’s 2021 +resolution plan. The shortcoming related to data integrity and +data quality management issues, specifically, weaknesses in +Citi’s processes and practices for producing certain data that +could materially impact its resolution capabilities. If a +shortcoming is not satisfactorily explained or addressed +before, or in, the submission of the next resolution plan, the +shortcoming may be found to be a deficiency in the next +resolution plan (see discussion below). Citi submitted its 2023 +resolution plan in June 2023. More generally, data continues +to be a subject of regulatory focus, and Citi continues to work +on enhancing its data availability and quality. +Under Title I, if the FRB and the FDIC jointly determine +that Citi’s resolution plan is not “credible” (which, although +not defined, is generally understood to mean the regulators do +not believe the plan is feasible or would otherwise allow Citi +to be resolved in a way that protects systemically important +functions without severe systemic disruption), or would not +facilitate an orderly resolution of Citi under the U.S. +Bankruptcy Code, and Citi fails to resubmit a resolution plan +that remedies any identified deficiencies, Citi could be +subjected to more stringent capital, leverage or liquidity +requirements, or restrictions on its growth, activities or +operations. If within two years from the imposition of any +such requirements or restrictions Citi has still not remediated +any identified deficiencies, then Citi could eventually be +required to divest certain assets or operations. Any such +restrictions or actions would negatively impact Citi’s +reputation, market and investor perception, operations and +strategy. +Citi’s Performance and Its Ability to Effectively Execute Its +Transformation and Strategic and Other Initiatives Could Be +Negatively Impacted if It Is Not Able to Hire and Retain +Qualified Employees. +Citi’s performance and the performance of its individual +businesses largely depend on the talents and efforts of its +diverse and highly qualified colleagues. Specifically, Citi’s +continued ability to compete in each of its lines of business, to +manage its businesses effectively and to execute its +transformation and strategic and other initiatives, including, +for example, hiring front office colleagues to grow businesses +or hiring colleagues to support Citi’s transformation and +strategic and other initiatives, depends on its ability to attract +new colleagues and to retain and motivate its existing +colleagues. If Citi is unable to continue to attract, retain and +motivate highly qualified colleagues, Citi’s performance, +including its competitive position, the execution of its +transformation and strategic and other initiatives and its results +of operations could be negatively impacted. +Citi’s ability to attract, retain and motivate colleagues +depends on numerous factors, some of which are outside of +Citi’s control. For example, the competition for talent +continues to be particularly intense due to factors such as low +unemployment and changes in worker expectations, concerns +and preferences, including an increased demand for remote +work options and other job flexibility. Also, the banking +industry generally is subject to more comprehensive regulation +of employee compensation than other industries, including +deferral and clawback requirements for incentive +compensation, which can make it unusually challenging for +Citi to compete in labor markets against businesses, including, +for example, technology companies, that are not subject to +53 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_61.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..421d915fcc90de6cef6d589a81614f05f41b9803 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,118 @@ +such regulation. In addition, in 2023 Citi announced plans to +reduce management layers from 13 to a median of eight as +part of organizational simplification initiatives that also +involve significant reductions in functional roles, which could +also impact its ability to attract and retain colleagues. Other +factors that could impact its ability to attract, retain and +motivate colleagues include, among other things, Citi’s +presence in a particular market or region, the professional and +development opportunities, its reputation and its diversity. For +information on Citi’s colleagues and workforce management, +see “Human Capital Resources and Management” below. +Citi Faces Increased Competitive Challenges, Including +from Financial Services and Other Companies and +Emerging Technologies. +Citi operates in an increasingly evolving and competitive +business environment, which includes both financial and non- +financial services firms, such as traditional banks, online +banks, private credit and financial technology companies and +others. These companies compete on the basis of, among other +factors, size, reach, quality and type of products and services +offered, price, technology and reputation. Certain competitors +may be subject to different and, in some cases, less stringent +legal and regulatory requirements, whether due to size, +jurisdiction, entity type or other factors, placing Citi at a +competitive disadvantage. +For example, Citi competes with other financial services +companies in the U.S. and globally that have grown rapidly +over the last several years or have developed and introduced +new products and services. Potential mergers and acquisitions +involving traditional financial services companies such as +regional banks or credit card issuers, as well as networks and +merchant acquirers, may also increase competition and impact +Citi’s ability to offer competitive pricing and rewards. Non- +traditional financial services firms, such as private credit and +financial technology companies, are less regulated and +continue to expand their offerings of services traditionally +provided by financial institutions. The growth of certain of +these competitors has increased market and counterparty credit +risks, particularly in a more challenging macroeconomic +environment (see the risk factor on credit and concentrations +of risk below). In addition, emerging technologies have the +potential to intensify competition and accelerate disruption in +the financial services industry. For example, despite +difficulties and turmoil faced by the digital asset market in +recent years, clients and investors have exhibited a sustained +interest in digital assets. Financial services firms and other +market participants have begun to offer services related to +those assets. Citi may not be able to provide the same or +similar services for legal or regulatory reasons, which may be +exacerbated by rapidly evolving and conflicting regulatory +requirements, and due to increased compliance and other risks. +Further, changes in the payments space (e.g., instant and 24x7 +payments) are accelerating, and, as a result, certain of Citi’s +products and services could become less competitive. +Increased competition and emerging technologies have +required and could require Citi to change or adapt its products +and services, as well as invest in and develop related +infrastructure, to attract and retain customers or clients or to +compete more effectively with competitors, including new +market entrants. Simultaneously, as Citi develops new +products and services leveraging emerging technologies, new +risks may emerge that, if not designed and governed +adequately, may result in control gaps and in Citi operating +outside of its risk appetite. For example, failure to strategically +embrace the potential of artificial intelligence (AI) may result +in a competitive disadvantage to Citi. At the same time, as a +new technology, use of AI without sufficient controls, +governance and risk management may result in increased risks +across all of Citi’s risk categories. As another example, instant +and 24x7 payments products could be accompanied by +challenges to forecasting and managing liquidity, as well as +increased operational and compliance risks. +Moreover, Citi relies on third parties to support certain of +its product and service offerings, which may put Citi at a +disadvantage to competitors who may directly offer a broader +array of products and services. Also, Citi’s businesses, results +of operations and reputation may suffer if any third party is +unable to provide adequate support for such product and +service offerings, whether due to operational incidents or +otherwise (see the operational processes and systems, +cybersecurity and emerging markets risk factors below). +To the extent that Citi is not able to compete effectively +with financial services companies, including private credit and +financial technology companies, and non-financial services +firms, Citi could be placed at a competitive disadvantage, +which could result in loss of customers and market share, and +its businesses, results of operations and financial condition +could suffer. For additional information on Citi’s competitors, +see the co-brand and private label cards and qualified +colleagues risk factors above and “Supervision, Regulation +and Other—Competition” below. +OPERATIONAL RISKS +A Failure or Disruption of Citi’s Operational Processes or +Systems Could Negatively Impact Its Reputation, Customers, +Clients, Businesses or Results of Operations and Financial +Condition. +Citi’s global operations rely heavily on its technology systems +and infrastructure, including the accurate, timely and secure +processing, management, storage and transmission of data, +including confidential transactions, and other information, as +well as the monitoring of a substantial amount of data and +complex transactions in real time. Citi obtains and stores an +extensive amount of personal and client-specific information +for its consumer and institutional customers and clients, and +must accurately record and reflect their account transactions. +Citi’s operations must also comply with complex and evolving +laws, regulations and heightened regulatory expectations in the +countries in which it operates (see the implementation and +interpretation of regulatory changes and legal proceedings risk +factors below). With the evolving proliferation of new +technologies and the increasing use of the internet, mobile +devices and cloud services to conduct financial transactions +and customers’ and clients’ increasing use of online banking +and trading systems and other platforms, large global financial +institutions such as Citi have been, and will continue to be, +subject to an ever-increasing risk of operational loss, failure or +disruption. +54 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_62.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..acc69214c20e2e6f1563ccb7f85352f74941e639 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,120 @@ +Although Citi has continued to upgrade its technology, +including systems to automate processes and gain efficiencies, +operational incidents are unpredictable and can arise from +numerous sources, not all of which are fully within Citi’s +control. These include, among others, operational or execution +failures, or deficiencies by third parties, including third parties +that provide products or services to Citi (e.g., cloud service +providers), other market participants or those that otherwise +have an ongoing partnership or business relationship with Citi; +deficiencies in processes or controls; inadequate management +of data governance practices, data controls and monitoring +mechanisms that may adversely impact internal or external +reporting and decision-making; cyber or information security +incidents (see the cybersecurity risk factor below); human +error, such as manual transaction processing errors (e.g., +erroneous payments to lenders or manual errors by traders that +cause system and market disruptions or losses), which can be +exacerbated by staffing challenges and processing backlogs; +fraud or malice on the part of employees or third parties; +insufficient (or limited) straight-through processing between +legacy or bespoke systems and any failure to design and +effectively operate controls that mitigate operational risks +associated with those legacy or bespoke systems, leading to +potential risk of errors and operating losses; accidental system +or technological failure; electrical or telecommunication +outages; failures of or cyber incidents involving computer +servers or infrastructure, including cloud services; or other +similar losses or damage to Citi’s property or assets (see also +the climate change risk factor above). +For example, operational incidents can arise as a result of +failures by third parties with which Citi does business, such as +failures by internet, mobile technology and cloud service +providers or other vendors to adequately follow procedures or +processes, safeguard their systems or prevent system +disruptions or cyberattacks. Failure by Citi to develop, +implement and operate a third-party risk management program +commensurate with the level of risk, complexity and nature of +its third-party relationships can also result in operational +incidents. In addition, Citi has experienced and could +experience further losses associated with manual transaction +processing errors, including erroneous payments to lenders or +manual errors by Citi traders that cause system and market +disruptions and losses for Citi and its clients. Irrespective of +the sophistication of the technology utilized by Citi, there will +always be some room for human and other errors. In view of +the large transactions in which Citi engages, such errors could +result in significant losses. While Citi has change management +processes in place to appropriately upgrade its operational +processes and systems to ensure that any changes introduced +do not adversely impact security and operational continuity, +such change management can fail or be ineffective. +Furthermore, when Citi introduces new products, systems or +processes, new operational risks that may arise from those +changes may not be identified, or adequate controls to mitigate +the identified risks may not be appropriately implemented or +operate as designed. +Incidents that impact information security, technology +operations or other operational processes may cause +disruptions and/or malfunctions within Citi’s businesses (e.g., +the temporary loss of availability of Citi’s online banking +system or mobile banking platform), as well as the operations +of its clients, customers or other third parties. In addition, +operational incidents could involve the failure or +ineffectiveness of internal processes or controls. Given Citi’s +global footprint and the high volume of transactions processed +by Citi, certain failures, errors or actions may be repeated or +compounded before they are discovered and rectified, which +would further increase the consequences and costs. +Operational incidents could result in financial losses and other +costs as well as misappropriation, corruption or loss of +confidential and other information or assets, which could +significantly negatively impact Citi’s reputation, customers, +clients, businesses or results of operations and financial +condition. Cyber-related and other operational incidents can +also result in legal and regulatory actions or proceedings, fines +and other costs (see the legal and regulatory proceedings risk +factor below). +For information on Citi’s management of operational risk, +see “Managing Global Risk—Operational Risk” below. +Citi’s and Third Parties’ Computer Systems and Networks +Will Continue to Be Susceptible to an Increasing Risk of +Continually Evolving, Sophisticated Cybersecurity Incidents +That Could Result in the Theft, Loss, Non-Availability, +Misuse or Disclosure of Confidential Client or Customer +Information, Damage to Citi’s Reputation, Additional Costs +to Citi, Regulatory Penalties, Legal Exposure and Financial +Losses. +Citi’s computer systems, software and networks are subject to +ongoing attempted cyberattacks, such as unauthorized access, +loss or destruction of data (including confidential client +information), account takeovers, disruptions of service, +phishing, malware, ransomware, computer viruses or other +malicious code and other similar events. These threats can +arise from external parties, including cyber criminals, cyber +terrorists, hacktivists (individuals or groups using cyberattacks +to promote a political or social agenda) and nation-state actors, +as well as insiders who knowingly or unknowingly engage in +or enable malicious cyber activities. Citi develops its own +software and relies on third-party applications and software, +which are susceptible to vulnerability exploitations. Software +leveraged in financial services and other industries continues +to be impacted by an increasing number of zero-day +vulnerabilities, thus increasing inherent cyber risk to Citi. +The increasing use of mobile and other digital banking +platforms and services, cloud technologies and connectivity +solutions to facilitate remote working for Citi’s employees all +increase Citi’s exposure to cybersecurity risks. Citi is also +susceptible to cyberattacks given, among other things, its size +and scale, high-profile brand, global footprint and prominent +role in the financial system, as well as the ongoing wind-down +of its businesses in Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” below). Additionally, +Citi continues to operate in multiple jurisdictions in the midst +of geopolitical unrest, including active conflicts in Ukraine +and the Middle East, which could expose Citi to heightened +risk of insider threat, politically motivated hacktivism or other +cyber threats. +55 +The secret flower is "lavender". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_63.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..76dfe845b0af55772256dfaf68f8ae72aaa36f8d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,120 @@ +Citi continues to experience increased exposure to +cyberattacks through third parties, in part because financial +institutions are becoming increasingly interconnected with +central agents, exchanges and clearing houses. Third parties +with which Citi does business, as well as retailers and other +third parties with which Citi’s customers do business, and any +such third parties’ downstream service providers, also pose +cybersecurity risks, particularly where activities of customers +are beyond Citi’s security and control systems. For example, +Citi outsources certain functions, such as processing customer +credit card transactions, uploading content on customer-facing +websites and developing software for new products and +services. These relationships allow for the storage and +processing of customer information by third-party hosting of, +or access to, Citi websites. This could lead to compromise or +the potential to introduce vulnerable or malicious code, +resulting in security breaches or business disruptions +impacting Citi customers, employees or operations. While +many of Citi’s agreements with third parties include +indemnification provisions, Citi may not be able to recover +sufficiently, or at all, under these provisions to adequately +offset any losses and other adverse impacts Citi may incur +from third-party cyber incidents. +Citi and some of its third-party partners have been +subjected to attempted and sometimes successful cyberattacks +over the last several years, including (i) denial of service +attacks, which attempt to interrupt service to clients and +customers; (ii) hacking and malicious software installations +intended to gain unauthorized access to information systems or +to disrupt those systems and/or impact availability or privacy +of confidential data, with objectives including, but not limited +to, extortion payments or causing reputational damage; (iii) +data breaches due to unauthorized access to customer account +or other data; and (iv) malicious software attacks on client +systems, in attempts to gain unauthorized access to Citi +systems or client data under the guise of normal client +transactions. +While Citi’s monitoring and protection services have +historically generally succeeded in detecting, thwarting and/or +responding to attacks targeting its systems before they become +significant, certain past incidents resulted in limited losses, as +well as increases in expenditures to monitor against the threat +of similar future cyber incidents. There can be no assurance +that such cyber incidents will not occur again, and they could +occur more frequently, via novel tactics, including leveraging +of tools made possible by emerging technologies, and on a +more significant scale. Despite the significant resources Citi +allocates to implement, maintain, monitor and regularly +upgrade its systems and networks with measures such as +intrusion detection and prevention systems and firewalls to +safeguard critical business applications, there is no guarantee +that these measures or any other measures can provide +sufficient security. Because the techniques used to initiate +cyberattacks change frequently or, in some cases, are not +recognized until launched or even later, Citi may be unable to +implement effective preventive measures or otherwise +proactively address these methods. In addition, cyber threats +and cyberattack techniques change, develop and evolve +rapidly, including from emerging technologies such as +artificial intelligence, cloud computing and quantum +computing. Given the frequency and sophistication of +cyberattacks, the determination of the severity and potential +impact of a cyber incident may not become apparent for a +substantial period of time following detection of the incident. +Also, while Citi strives to implement measures to reduce the +exposure resulting from outsourcing risks, such as performing +security control assessments of third-party vendors and +limiting third-party access to the least privileged level +necessary to perform job functions, these measures cannot +prevent all third-party related cyberattacks or data breaches. In +addition, the risk of insider threat may be elevated in the near +term due to Citi’s overall simplification initiatives, including +streamlining its global staff functions. +Cyber incidents can result in the disclosure of personal, +confidential or proprietary customer, client or employee +information; damage to Citi’s reputation with its clients, other +counterparties and the market; customer dissatisfaction; and +additional costs to Citi, including expenses such as repairing +or replacing systems, replacing customer payment cards, credit +monitoring or adding new personnel or protection +technologies. Cyber incidents can also result in regulatory +penalties, loss of revenues, deposit flight, exposure to +litigation and other financial losses, including loss of funds to +both Citi and its clients and customers, and disruption to Citi’s +operational systems (see the operational processes and systems +risk factor above). Moreover, the increasing risk of cyber +incidents has resulted in increased legislative and regulatory +action on cybersecurity, including, among other things, +scrutiny of firms’ cybersecurity protection services, laws and +regulations to enhance protection of consumers’ personal data +and mandated disclosure on cybersecurity matters. For +example, in July 2023, the SEC finalized new rules requiring +timely disclosure of material cybersecurity incidents as well as +other annual cyber-related disclosures (see “Managing Global +Risk—Operational Risk—Cybersecurity Risk” below). +While Citi maintains insurance coverage that may, subject +to policy terms and conditions including significant self- +insured deductibles, cover certain aspects of cyber risks, such +insurance coverage may be insufficient to cover all losses and +may not take into account reputational harm, the costs of +which are impossible to quantify. +For additional information about Citi’s management of +cybersecurity risk, see “Managing Global Risk—Operational +Risk—Cybersecurity Risk” below. +Changes or Errors in Accounting Assumptions, Judgments +or Estimates, or the Application of Certain Accounting +Principles, Could Result in Significant Losses or Other +Adverse Impacts. +U.S. GAAP requires Citi to use certain assumptions, +judgments and estimates in preparing its financial statements, +including, among other items, the estimate of the ACL; +reserves related to litigation, regulatory and tax matters; +valuation of DTAs; the fair values of certain assets and +liabilities; and the assessment of goodwill and other assets for +impairment. These assumptions, judgments and estimates are +inherently limited because they involve techniques, including +the use of historical data in many circumstances, that cannot +anticipate every economic and financial outcome in the +markets in which Citi operates, nor can they anticipate the +56 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_64.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..20b1fcedf577b0b8525aec473f722bb73f0c1f1c --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,119 @@ +specifics and timing of such outcomes. For example, many +models used by Citi include assumptions about correlation or +lack thereof among prices of various asset classes or other +market indicators that may not hold in times of market stress, +limited liquidity or other unforeseen circumstances. +If Citi’s assumptions, judgments or estimates underlying +its financial statements are incorrect or differ from actual or +subsequent events, Citi could experience unexpected losses or +other adverse impacts, some of which could be significant. +Citi could also experience declines in its stock price, be +subject to legal and regulatory proceedings and incur fines and +other losses. For additional information on the key areas for +which assumptions and estimates are used in preparing Citi’s +financial statements, see “Significant Accounting Policies and +Significant Estimates” below and Notes 1 and 16. For +example, the CECL methodology requires that Citi provide +reserves for a current estimate of lifetime expected credit +losses for its loan portfolios and other financial assets, as +applicable, at the time those assets are originated or acquired. +This estimate is adjusted each period for changes in expected +lifetime credit losses. Citi’s ACL estimate depends upon its +CECL models and assumptions; forecasted macroeconomic +conditions, including, among other things, the U.S. +unemployment rate and U.S. inflation-adjusted gross domestic +product (real GDP); and the credit indicators, composition and +other characteristics of Citi’s loan portfolios and other +applicable financial assets. These model assumptions and +forecasted macroeconomic conditions will change over time, +resulting in variability in Citi’s ACL and, thus, impact its +results of operations and financial condition, as well as +regulatory capital due to the CECL phase-in (see the capital +return risk factor above). +Moreover, Citi has incurred losses related to its foreign +operations that are reported in the CTA components of +Accumulated other comprehensive income (loss) (AOCI). In +accordance with U.S. GAAP, a sale, substantial liquidation or +other deconsolidation event of any foreign operations, such as +those related to Citi’s remaining divestitures or legacy +businesses, would result in reclassification of any foreign CTA +component of AOCI related to that foreign operation, +including related hedges and taxes, into Citi’s earnings. For +example, Citi could incur a significant loss on sale due to CTA +losses related to any signing of a sale agreement for its +remaining consumer banking divestitures (see the capital +return and continued investments risk factors above). The +majority of these losses would be regulatory capital neutral at +closing. For additional information on Citi’s accounting policy +for foreign currency translation and its foreign CTA +components of AOCI, see Notes 1 and 21. +Changes to Financial Accounting and Reporting Standards +or Interpretations Could Have a Material Impact on How +Citi Records and Reports Its Financial Condition and +Results of Operations. +Periodically, the Financial Accounting Standards Board +(FASB) issues financial accounting and reporting standards +that govern key aspects of Citi’s financial statements or +interpretations thereof when those standards become effective, +including those areas where Citi is required to make +assumptions or estimates. Changes to financial accounting or +reporting standards or interpretations, whether promulgated or +required by the FASB, the SEC, U.S. banking regulators or +others, could present operational challenges and could also +require Citi to change certain of the assumptions or estimates +it previously used in preparing its financial statements, which +could negatively impact how it records and reports its +financial condition and results of operations generally and/or +with respect to particular businesses. See Note 1 for additional +information on Citi’s accounting policies and changes in +accounting, including the expected impacts on Citi’s results of +operations and financial condition. +If Citi’s Risk Management and Other Processes, Strategies +or Models Are Deficient or Ineffective, Citi May Incur +Significant Losses and Its Regulatory Capital and Capital +Ratios Could Be Negatively Impacted. +Citi utilizes a broad and diversified set of risk management +and other processes and strategies, including the use of models +in analyzing and monitoring the various risks Citi assumes in +conducting its activities. For example, Citi uses models as part +of its comprehensive stress testing initiatives across the +Company. Citi also relies on data to aggregate, assess and +manage various risk exposures. Management of these risks +and the reliability of the data are made more challenging +within a large, global financial institution, such as Citi, +particularly due to complex, diverse and rapidly changing +financial markets and conditions in which Citi operates. +Unexpected losses can result from untimely, inaccurate or +incomplete processes and data. As discussed below, in +October 2020, Citigroup and Citibank entered into consent +orders with the FRB and OCC that require Citigroup and +Citibank to make improvements in various aspects of +enterprise-wide risk management, compliance, data quality +management and governance, and internal controls (see “Citi’s +Consent Order Compliance” above and the legal and +regulatory proceedings risk factor below). +Citi’s risk management and other processes, strategies and +models are inherently limited because they involve techniques, +including the use of historical data in many circumstances, +assumptions and judgments that cannot anticipate every +economic and financial outcome in the markets in which Citi +operates, particularly given various macroeconomic, +geopolitical and other challenges and uncertainties (see the +macroeconomic challenges and uncertainties risk factor +above), nor can they anticipate the specifics and timing of +such outcomes. For example, many models used by Citi +include assumptions about correlation or lack thereof among +prices of various asset classes or other market indicators that +may not necessarily hold in times of market stress, limited +liquidity or other unforeseen circumstances, or identify +changes in markets or client behaviors not yet inherent in +historical data. Citi could incur significant losses, receive +negative regulatory evaluation or examination findings or be +subject to additional enforcement actions, and its regulatory +capital, capital ratios and ability to return capital could be +negatively impacted, if Citi’s risk management and other +processes, including its ability to manage and aggregate data +in a timely and accurate manner, strategies or models are +deficient or ineffective. For additional information, see the +capital return risk factor above and the heightened regulatory +57 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_65.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d5bb203bd2bd9ccf09ef4c0ce49a0d88dde8b83 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,118 @@ +scrutiny and ongoing interpretation of regulatory changes risk +factor below. Such deficiencies or ineffectiveness could also +result in inaccurate financial, regulatory or risk reporting. +Moreover, Citi’s Basel III regulatory capital models, +including its credit, market and operational risk models, +currently remain subject to ongoing regulatory review and +approval, which may result in refinements, modifications or +enhancements (required or otherwise) to these models. Citi is +required to notify and obtain preapproval from both the OCC +and FRB prior to implementing certain risk-weighted asset +treatments, as well as certain model changes, resulting in a +more challenging environment within which Citi must operate +in managing its risk-weighted assets. Modifications or +requirements resulting from these ongoing reviews, as well as +any future changes or guidance provided by the U.S. banking +regulators regarding the U.S. regulatory capital framework +applicable to Citi, including, but not limited to, potential +revisions to the U.S. Basel III rules, known as the Basel III +Endgame (for information about the Basel III Endgame, see +the capital return risk factor and “Capital Resources— +Regulatory Capital Standards Developments” above), have +resulted in, and could continue to result in, significant changes +to Citi’s risk-weighted assets. These changes can negatively +impact Citi’s capital ratios and its ability to meet its regulatory +capital requirements. +CREDIT RISKS +Credit Risk and Concentrations of Risk Can Increase the +Potential for Citi to Incur Significant Losses. +Citi has credit exposures to consumer, corporate and public +sector borrowers and other counterparties in the U.S. and +various countries and jurisdictions globally, including end-of- +period consumer loans of $389 billion and end-of-period +corporate loans of $300 billion at December 31, 2023. For +additional information on Citi’s corporate and consumer loan +portfolios, see “Managing Global Risk—Corporate Credit” +and “—Consumer Credit” below. +A default by or a significant downgrade in the credit +ratings of a borrower or other counterparty, or a decline in the +credit quality or value of any underlying collateral, exposes +Citi to credit risk. Despite Citi’s target client strategy, various +macroeconomic, geopolitical, market and other factors, among +other things, can increase Citi’s credit risk and credit costs, +particularly for vulnerable sectors, industries or countries (see +the macroeconomic challenges and uncertainties and co- +branding and private label credit card risk factors above and +the emerging markets risk factor below). For example, a +weakening of economic conditions can adversely affect +borrowers’ ability to repay their obligations, as well as result +in Citi being unable to liquidate the collateral it holds or +forced to liquidate the collateral at prices that do not cover the +full amount owed to Citi. Citi is also a member of various +central clearing counterparties and could incur financial losses +as a result of defaults by other clearing members due to the +requirements of clearing members to share losses. +Additionally, due to the interconnectedness among financial +institutions, concerns about the creditworthiness of or defaults +by a financial institution could spread to other financial market +participants and result in market-wide losses and disruption. +For example, the failure of regional banks and other banking +stresses in the first half of 2023 resulted in market volatility +across the financial sector. +While Citi provides reserves for expected losses for its +credit exposures, as applicable, such reserves are subject to +judgments and estimates that could be incorrect or differ from +actual future events. Under the CECL accounting standard, the +ACL reflects expected losses, which has resulted in and could +lead to additional volatility in the allowance and the provision +for credit losses (including provisions for loans and unfunded +lending commitments, and ACL builds for Other assets) as +forecasts of economic conditions change. For additional +information, see the incorrect assumptions or estimates and +changes to financial accounting and reporting standards risk +factors above. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below and Notes 1 and 16. For additional information on +Citi’s credit and country risk, see also each respective +business’s results of operations above, “Managing Global Risk +—Credit Risk” and “Managing Global Risk—Other Risks— +Country Risk” below and Notes 15 and 16. +Concentrations of risk to clients or counterparties engaged +in the same or related industries or doing business in a +particular geography, or to a particular product or asset class, +especially credit and market risks, can also increase Citi’s risk +of significant losses. For example, Citi routinely executes a +high volume of securities, trading, derivative and foreign +exchange transactions with non-U.S. sovereigns and with +counterparties in the financial services industry, including +banks, insurance companies, investment banks, governments, +central banks and other financial institutions. Moreover, Citi +has indemnification obligations in connection with various +transactions that expose it to concentrations of risk, including +credit risk from hedging or reinsurance arrangements related +to those obligations (see Note 28). A rapid deterioration of a +large borrower or other counterparty or within a sector or +country in which Citi has large exposures or indemnifications +or unexpected market dislocations could lead to concerns +about the creditworthiness of other borrowers or +counterparties in a certain geography and in related or +dependent industries, and such conditions could cause Citi to +incur significant losses. +LIQUIDITY RISKS +Citi’s Businesses, Results of Operations and Financial +Condition Could Be Negatively Impacted if It Does Not +Effectively Manage Its Liquidity. +As a large, global financial institution, adequate liquidity and +sources of funding are essential to Citi’s businesses. Citi’s +liquidity, sources of funding and costs of funding can be +significantly and negatively impacted by factors it cannot +control, such as general disruptions in the financial markets +(e.g., the failure of regional banks and other banking stresses +in the first half of 2023); changes in fiscal and monetary +policies and regulatory requirements; negative investor +perceptions of Citi’s creditworthiness; deposit outflows or +unfavorable changes in deposit mix; unexpected increases in +cash or collateral requirements; credit ratings; and the +consequent inability to monetize available liquidity resources. +58 +The secret sport is "skiing". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_66.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..a12bd7fafd3d759c98855d2420634ef4a309aa3d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,118 @@ +In addition, Citi competes with other banks and financial +institutions for both institutional and consumer deposits, which +represent Citi’s most stable and lowest cost source of long- +term funding. The competition for deposits has continued to +increase, including as a result of quantitative tightening by +central banks, the current higher interest rate environment and +fixed income alternatives for customer funds. +Further, Citi’s costs to obtain and access wholesale +funding are directly related to changes in interest and currency +exchange rates and its credit spreads. Changes in Citi’s credit +spreads are driven by both external market factors and factors +specific to Citi, such as negative views by investors of the +financial services industry or Citi’s financial prospects, and +can be highly volatile. For additional information on Citi’s +primary sources of funding, see “Managing Global Risk— +Liquidity Risk” below. +Citi’s ability to obtain funding may be impaired and its +cost of funding could also increase if other market participants +are seeking to access the markets at the same time or to a +greater extent than expected, or if market appetite for +corporate debt securities declines, as is likely to occur in a +liquidity stress event or other market crisis. Citi’s ability to +sell assets may also be impaired if other market participants +are seeking to sell similar assets at the same time or a liquid +market does not exist for such assets. Additionally, unexpected +changes in client needs due to idiosyncratic events or market +conditions could result in greater than expected drawdowns +from off-balance sheet committed facilities. A sudden drop in +market liquidity could also cause a temporary or protracted +dislocation of capital markets activity. In addition, clearing +organizations, central banks, clients and financial institutions +with which Citi interacts may exercise the right to require +additional collateral during challenging market conditions, +which could further impair Citi’s liquidity. If Citi fails to +effectively manage its liquidity, its businesses, results of +operations and financial condition could be negatively +impacted. +Limitations on the payments that Citigroup Inc. receives +from its subsidiaries could also impact its liquidity. As a +holding company, Citigroup Inc. relies on interest, dividends, +distributions and other payments from its subsidiaries to fund +dividends as well as to satisfy its debt and other obligations. +Several of Citi’s U.S. and non-U.S. subsidiaries are or may be +subject to capital adequacy or other liquidity, regulatory or +contractual restrictions on their ability to provide such +payments, including any local regulatory stress test +requirements and inter-affiliate arrangements entered into in +connection with Citigroup Inc.’s resolution plan. Citigroup +Inc.’s broker-dealer and bank subsidiaries are subject to +restrictions on their ability to lend or transact with affiliates, as +well as restrictions on their ability to use funds deposited with +them in brokerage or bank accounts to fund their businesses. +A bank holding company is also required by law to act as +a source of financial and managerial strength for its subsidiary +banks. As a result, the FRB may require Citigroup Inc. to +commit resources to its subsidiary banks even if doing so is +not otherwise in the interests of Citigroup Inc. or its +shareholders or creditors, reducing the amount of funds +available to meet its obligations. +A Ratings Downgrade Could Adversely Impact Citi’s +Funding and Liquidity. +The credit rating agencies, such as Fitch Ratings, Moody’s +Investors Service and S&P Global Ratings, continuously +evaluate Citi and certain of its subsidiaries. Their ratings of +Citi and its rated subsidiaries’ long-term debt and short-term +obligations are based on firm-specific factors, including the +financial strength of Citi and such subsidiaries, as well as +factors that are not entirely within the control of Citi and its +subsidiaries, such as the agencies’ proprietary rating +methodologies and assumptions, potential impact from +negative actions on U.S. sovereign ratings and conditions +affecting the financial services industry and markets generally. +Citi and its subsidiaries may not be able to maintain their +current respective ratings and outlooks. Rating downgrades +could negatively impact Citi and its rated subsidiaries’ ability +to access the capital markets and other sources of funds as +well as increase credit spreads and the costs of those funds. A +ratings downgrade could also have a negative impact on Citi +and its rated subsidiaries’ ability to obtain funding and +liquidity due to reduced funding capacity and the impact from +derivative triggers, which could require Citi and its rated +subsidiaries to meet cash obligations and collateral +requirements or permit counterparties to terminate certain +contracts. In addition, a ratings downgrade could have a +negative impact on other funding sources such as secured +financing and other margined transactions for which there may +be no explicit triggers. +Furthermore, a credit ratings downgrade could have +impacts that may not be currently known to Citi or are not +possible to quantify. Some of Citi’s counterparties and clients +could have ratings limitations on their permissible +counterparties, of which Citi may or may not be aware. +Certain of Citi’s corporate customers and trading +counterparties, among other clients, could re-evaluate their +business relationships with Citi and limit the trading of certain +market instruments, and limit or withdraw deposits placed +with Citi in response to ratings downgrades. Changes in +customer and counterparty behavior could impact not only +Citi’s funding and liquidity but also the results of operations of +certain Citi businesses. For additional information on the +potential impact of a reduction in Citi’s or Citibank’s credit +ratings, see “Managing Global Risk—Liquidity Risk” below. +COMPLIANCE RISKS +Significantly Heightened Regulatory Expectations and +Scrutiny in the U.S. and Globally and Ongoing +Interpretation and Implementation of Regulatory and +Legislative Requirements and Changes Have Increased +Citi’s Compliance, Regulatory and Other Risks and Costs. +Large financial institutions, such as Citi, face significantly +heightened regulatory expectations and scrutiny in the U.S. +and globally, including with respect to, among other things, +governance, infrastructure, data and risk management +practices and controls. These regulatory expectations extend to +their employees and agents and also include, among other +things, those related to customer and client protection, market +practices, anti-money laundering, increasingly complex +sanctions and disclosure regimes and various regulatory +59 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_67.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..3196610a6082a8e0ecae1fe5f2720e14a0f21faf --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,119 @@ +reporting requirements. U.S. financial institutions also face +increased expectations and scrutiny in the wake of the failures +of several regional banks and other banking stresses in the first +half of 2023. In addition, Citi is continually required to +interpret and implement extensive and frequently changing +regulatory and legislative requirements in the U.S. and other +jurisdictions in which it does business, which may overlap or +conflict across jurisdictions, resulting in substantial +compliance, regulatory and other risks and costs. +A failure to comply with these expectations and +requirements, even if inadvertent, or resolve any identified +deficiencies in a timely and sufficiently satisfactory manner to +regulators, could result in increased regulatory oversight; +material restrictions, including, among others, imposition of +additional capital buffers and limitations on capital +distributions; enforcement proceedings; penalties; and fines +(see the capital return risk factor above and legal and +regulatory proceedings risk factor below). +Over the past several years, Citi has been required to +implement a large number of regulatory and legislative +changes, including new regulatory or legislative requirements +or regimes, across its businesses and functions, and these +changes continue. The changes themselves may be complex +and subject to interpretation, and result in changes to Citi’s +businesses. In addition, the changes require continued +substantial technology and other investments. In some cases, +Citi’s implementation of a regulatory or legislative +requirement is occurring simultaneously with changing or +conflicting regulatory guidance from multiple jurisdictions +(including various U.S. states) and regulators, legal challenges +or legislative action to modify or repeal existing rules or enact +new rules. +Examples of regulatory or legislative changes that have +resulted in increased compliance risks and costs include (i) the +U.S. regulatory capital framework and requirements, which +have continued to evolve (see the capital return risk factor and +“Capital Resources” above); (ii) various laws relating to the +limitation of cross-border data movement and/or collection +and use of customer information, including data localization +and protection and privacy laws, which also can conflict with +or increase compliance complexity with respect to other laws, +including anti-money laundering laws; and (iii) the EU’s +Corporate Sustainability Reporting Directive, which may +overlap but also diverge from climate-related disclosure +requirements expected to come into effect in other +jurisdictions, including in the U.S. In addition, certain U.S. +regulatory agencies and states and non-U.S. authorities have +prioritized issues of social, economic and racial justice, and +are in the process of considering ways in which these issues +can be mitigated, including through rulemaking, supervision +and other means, even while certain U.S. state and other +governments are pursuing and signaling challenges that may +conflict with corporate ESG initiatives. +Citi Is Subject to Extensive Legal and Regulatory +Proceedings, Examinations, Investigations, Consent Orders +and Related Compliance Efforts and Other Inquiries That +Could Result in Large Monetary Penalties, Supervisory or +Enforcement Orders, Business Restrictions, Limitations on +Dividends, Changes to Directors and/or Officers and +Collateral Consequences Arising from Such Outcomes. +At any given time, Citi is a party to a significant number of +legal and regulatory proceedings and is subject to numerous +governmental and regulatory examinations. Additionally, Citi +remains subject to governmental and regulatory investigations, +consent orders (see discussion below) and related compliance +efforts, and other inquiries. Citi could also be subject to +enforcement proceedings and negative regulatory evaluation +or examination findings not only because of violations of laws +and regulations, but also due to failures, as determined by its +regulators, to have adequate policies and procedures, or to +remedy deficiencies on a timely basis (see also the capital +return and resolution plan risk factors above). Citi’s regulators +have broad powers and discretion under their prudential and +supervisory authority, and have pursued active inspection and +investigatory oversight. +As previously disclosed, the October 2020 FRB and OCC +consent orders require Citigroup and Citibank to implement +extensive targeted action plans and submit quarterly progress +reports on a timely and sufficient basis detailing the results +and status of improvements relating principally to various +aspects of enterprise-wide risk management, compliance, data +quality management and governance, and internal controls. +These improvements will result in continued significant +investments by Citi during 2024 and beyond, as an essential +part of Citi’s broader transformation efforts to enhance its risk, +controls, data and finance infrastructure and compliance. +There can be no assurance that such improvements will be +implemented in a manner satisfactory, in both timing and +sufficiency, to the FRB and OCC. +Although there are no restrictions on Citi’s ability to serve +its clients, the OCC consent order requires Citibank to obtain +prior approval of any significant new acquisition, including +any portfolio or business acquisition, excluding ordinary +course transactions. Moreover, the OCC consent order +provides that the OCC has the right to assess future civil +money penalties or take other supervisory and/or enforcement +actions. Such actions by the OCC could include imposing +business restrictions, including possible limitations on the +declaration or payment of dividends and changes in directors +and/or senior executive officers. More generally, the OCC +and/or the FRB could take additional enforcement or other +actions if the regulatory agency believes that Citi has not met +regulatory expectations regarding compliance with the consent +orders. For additional information regarding the consent +orders, see “Citi’s Consent Order Compliance” above. +The global judicial, regulatory and political environment +has generally been challenging for large financial institutions, +which have been subject to increased regulatory scrutiny. The +complexity of the federal and state regulatory and enforcement +regimes in the U.S., coupled with the global scope of Citi’s +operations, also means that a single event or issue may give +rise to a large number of overlapping investigations and +regulatory proceedings, either by multiple federal and state +agencies and authorities in the U.S. or by multiple regulators +and other governmental entities in foreign jurisdictions, as +well as multiple civil litigation claims in multiple jurisdictions. +Violations of law by other financial institutions may also +result in regulatory scrutiny of Citi. Responding to regulatory +60 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_68.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..87ae01b2a9b0518073d3fe0646bf06ed82b9b22c --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,120 @@ +inquiries and proceedings can be time consuming and costly, +and divert management attention from Citi’s businesses. +U.S. and non-U.S. regulators have been increasingly +focused on the culture of financial services firms, including +Citi, as well as “conduct risk,” a term used to describe the +risks associated with behavior by employees and agents, +including third parties, that could harm clients, customers, +employees or the integrity of the markets, such as improperly +creating, selling, marketing or managing products and services +or improper incentive compensation programs with respect +thereto, failures to safeguard a party’s personal information, or +failures to identify and manage conflicts of interest. +In addition to the greater focus on conduct risk, the +general heightened scrutiny and expectations from regulators +could lead to investigations and other inquiries, as well as +remediation requirements, regulatory restrictions, structural +changes, more regulatory or other enforcement proceedings, +civil litigation and higher compliance and other risks and +costs. For additional information, see the capital return and +heightened regulatory scrutiny and ongoing interpretation of +regulatory changes risk factors above. Further, while Citi takes +numerous steps to prevent and detect conduct by employees +and agents that could potentially harm clients, customers, +employees or the integrity of the markets, such behavior may +not always be deterred or prevented. +Moreover, the severity of the remedies sought in legal and +regulatory proceedings to which Citi is subject has remained +elevated. For example, U.S. and certain non-U.S. +governmental entities have increasingly brought criminal +actions against, or have sought and obtained criminal guilty +pleas or deferred prosecution agreements from, financial +institutions and individual employees. These types of actions +by U.S. and other governments may, in the future, have +significant collateral consequences for Citi, including loss of +customers and business, operational loss, and the inability to +offer certain products or services and/or operate certain +businesses. Citi may be required to accept or be subject to +similar types of criminal remedies, consent orders, sanctions, +substantial fines and penalties, remediation and other financial +costs or other requirements in the future, including for matters +or practices not yet known to Citi, any of which could +materially and negatively affect Citi’s businesses, business +practices, financial condition or results of operations, require +material changes in Citi’s operations or cause Citi substantial +reputational harm. +Additionally, many large claims—both private civil and +regulatory—asserted against Citi are highly complex, slow to +develop and may involve novel or untested legal theories. The +outcome of such proceedings is difficult to predict or estimate +until late in the proceedings. Although Citi establishes +accruals for its legal and regulatory matters according to +accounting requirements, Citi’s estimates of, and changes to, +these accruals involve significant judgment and may be +subject to significant uncertainty, and the amount of loss +ultimately incurred in relation to those matters may be +substantially higher than the amounts accrued (see the +incorrect assumptions or estimates risk factor above). In +addition, certain settlements are subject to court approval and +may not be approved. For further information on Citi’s legal +and regulatory proceedings, see Note 30. +OTHER RISKS +Citi’s Emerging Markets Presence Subjects It to Various +Risks as well as Increased Compliance and Regulatory Risks +and Costs. +During 2023, emerging markets revenues accounted for +approximately 40% of Citi’s total revenues (Citi generally +defines emerging markets as countries in Latin America, Asia +(other than Japan, Australia and New Zealand), and central +and Eastern Europe, the Middle East and Africa). Citi’s +presence in the emerging markets subjects it to various risks. +Emerging market risks include, among others, limitations +or unavailability of hedges on foreign investments; foreign +currency volatility, including devaluations and strength in the +U.S. dollar; sustained elevated interest rates and quantitative +tightening; elevated inflation and hyperinflation; foreign +exchange controls, including an inability to access indirect +foreign exchange mechanisms; macroeconomic, geopolitical +and domestic political challenges, uncertainties and volatility, +including with respect to Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” and “—Ukraine” +below); cyberattacks; restrictions arising from retaliatory laws +and regulations; sanctions or asset freezes; sovereign debt +volatility; fluctuations in commodity prices; election +outcomes; regulatory changes, including potential conflicts +among regulations with other jurisdictions where Citi does +business; limitations on foreign investment; sociopolitical +instability; civil unrest; crime, corruption and fraud; +nationalization or loss of licenses; potential criminal charges; +closure of branches or subsidiaries; and confiscation of assets; +and these risks can be exacerbated in the event of a +deterioration in the relationship between the U.S. and an +emerging market country. +For example, Citi operates in several countries that have, +or have had in the past, strict capital controls, currency +controls and/or sanctions, such as Argentina and Russia, that +limit its ability to convert local currency into U.S. dollars and/ +or transfer funds outside of those countries. For instance, Citi +may need to record additional translation losses due to +currency controls in Argentina (see “Managing Global Risk— +Other Risks—Country Risk—Argentina” below). Moreover, +Citi may need to record additional reserves for expected losses +for its credit exposures based on the transfer risk associated +with exposures outside the U.S., driven by safety and +soundness considerations under U.S. banking law (see +“Managing Global Risk—Other Risks—Country Risk— +Argentina” and “—Russia” and “Significant Accounting +Policies and Significant Estimates” below). +In addition, political turmoil and instability; geopolitical +challenges, tensions and conflicts (including those related to +Russia’s war in Ukraine as well as a persistent and/or +escalating conflict in the Middle East); terrorism; and other +instabilities have occurred in various regions and emerging +market countries across the globe, which impact Citi’s +businesses, results of operations and financial conditions in +affected countries and have required, and may continue to +require, management time and attention and other resources, +such as managing the impact of sanctions and their effect on +Citi’s operations in certain emerging market countries. For +61 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_69.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..cabde883654856a9d653f2275affd53ab500325b --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,104 @@ +additional information, see the macroeconomic challenges and +uncertainties risk factor above. + +CLIMATE CHANGE AND NET ZERO +Introduction +This section summarizes Citi’s Operational Footprint goals +and Net Zero commitment. + Citi’s annual ESG Report provides information on a +broad set of ESG-related efforts. The upcoming Citi Climate +Report, formerly named the Task Force on Climate-Related +Financial Disclosures (TCFD) Report, provides information +on Citi’s continued progress to manage climate risk and its Net +Zero plan, including information on financed emissions and +2030 interim emissions reduction targets. +For information regarding Citi’s management of climate +risk, see “Managing Global Risk—Strategic Risk—Climate +Risk” below. +ESG and Climate-Related Governance +Citi’s Board of Directors (Board) provides oversight of Citi’s +management activities (see “Managing Global Risk—Risk +Governance” below). +• The Nomination, Governance and Public Affairs +Committee of the Board provides oversight and receives +updates on Citi’s environmental and social policies and +commitments. +• The Risk Management Committee of the Board provides +oversight of Citi’s Risk Management Framework and risk +culture and reviews Citi’s key risk policies and +frameworks, including receiving climate risk-related +updates. +• The Audit Committee of the Board provides oversight of +controls and procedures pertaining to the ESG-related +metrics and related disclosures in Citi’s SEC filed reports +and group-level voluntary ESG reporting, as well as +management’s evaluation of the effectiveness of Citi’s +disclosure controls and procedures for group-level ESG +reporting. +Additionally, Citi’s ESG Council consists of senior +members of the management team and certain subject matter +experts who provide oversight of Citi’s ESG goals and +activities. +Sustainable Finance +Citi’s Sustainable Finance Goal, as previously disclosed, +supports a combination of environmental and social finance +activities. Delivering on the sustainable finance goal is an +integrated effort across the organization with products and +service offerings across multiple lines of business. +Net Zero Emissions by 2050 +As previously disclosed, Citi has committed to achieving net +zero greenhouse gas (GHG) emissions associated with its +financing by 2050, and net zero GHG emissions for its own +operations by 2030; both are significant targets given the size +and breadth of Citi’s lending portfolios, businesses and +operational footprint. +Citi’s Net Zero plan includes: +• Net Zero Metrics and Target Setting: Calculate metrics +and assess targets for carbon-intensive sectors +• Client Engagement and Assessment : Seek to understand +client GHG emissions and transition plans and advise on +capacity building +• Risk Management: Assess climate risk exposure across +Citi’s lending portfolios and review client carbon +reduction progress, with ongoing review and refining of +Citi’s risk appetite and thresholds and policies related to +Climate Risk Management +• Clean Technology and Transition Finance: Support +existing and, where possible, new technologies to +accelerate commercialization and provide transition +advisory and finance products and services +• Portfolio Management: Active portfolio management of +Citi financings to align with net zero targets, including +considerations of transition measures taken by clients +• Public Policy and Regulatory Engagement: Contribute to +an enabling public policy and regulatory environment +which is essential to stimulating demand for clean +technologies and helping ensure a responsible transition +Progress on Citi’s Net Zero plan: + +• Citi has published interim 2030 emissions targets for six +loan portfolios: auto manufacturing, commercial real +estate (North America), energy, power, steel and thermal +coal mining. +• Citi has developed a client transition assessment process +to help internal teams better understand the alignment of +clients’ strategies with transition or decarbonization +pathways applicable to their respective sectors. In 2022– +2023, Citi completed the initial assessment process for +energy and power clients, and in 2023 began the transition +assessment process for auto manufacturing and steel +clients. The assessment process focuses on clients with +material emissions relative to each sector’s baseline +emission profiles. +Operational Footprint Goals +Citi measures progress against operational footprint goals, +which include efforts to reduce the environmental impact of its +facilities through reductions in emissions, energy, water +consumption and waste generation. Citi’s efforts to integrate +sustainable practices include sustainable building +certifications, renewable electricity sourcing, employee +engagement and seeking opportunities for efficiency in +business travel. In 2023, Citi made progress toward these +goals by increasing on-site solar generation, promoting +initiatives on waste diversion and recycling, mapping weather- +62 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_7.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..739ea88777683b6342d8f37fcb29a8c42f99a9e1 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,18 @@ +citi.com/weareciti +We’re not writers, + but we help shape +your businesses’ financial story. +We’re not an airline, but our network +connects global businesses in nearly +160 local markets. + +We’re not a startup, but our +Innovation Labs create new technologies +to help our clients grow safely and securely. +We’re not architects, but we help +build more resilient communities. +With global expertise +and over two centuries of experience, +we’re not just any bank. +We are Citi. +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_70.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c5c32cc8e561e9c145e73318a4d7c7eeb100613 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,70 @@ +related risk at its facilities and employing carbon-reduction +techniques for building renovations. +Additional Information +For additional information on Citi’s environmental and social +policies and priorities, click on “Our Impact” on Citi’s website +at www.citigroup.com. For information on Citi’s ESG and +Sustainability (including climate change) governance, see +Citi’s 2024 Annual Meeting Proxy Statement to be filed with +the SEC in March 2024. +Citi’s climate reporting and any other ESG-related reports +and information included elsewhere on Citi’s website are not +incorporated by reference into, and do not form any part of, +this 2023 Annual Report on Form 10-K. + +HUMAN CAPITAL RESOURCES AND +MANAGEMENT +Citi strives to deliver to its full potential by focusing on its +strategic priority of attracting and retaining highly qualified +and motivated colleagues. Citi seeks to enhance the +competitive strength of its workforce through the following +efforts: +• Continuously innovating its efforts to recruit, train, +develop, compensate, promote and engage colleagues +• Actively seeking and listening to diverse perspectives at +all levels of the organization +• Optimizing transparency concerning workforce goals to +promote accountability, credibility and effectiveness in +achieving those goals +• Providing compensation programs that are competitive in +the market and aligned to strategic objectives +In 2023, Citi undertook significant changes to simplify the +Company and accelerate the progress it is making in executing +its strategy. As previously disclosed, Citi aligned its +organizational structure to its business strategy—making the +Company more client centric and agile, speeding up decision- +making, improving productivity to deliver efficiency and +driving increased accountability across the organization. Citi is +aligned around five businesses—Services, Markets, Banking, +USPB and Wealth—focusing on a streamlined client +organization to strengthen how Citi delivers for clients across +the Company and around the globe. +Workforce Size and Distribution +As of December 31, 2023, Citi employed approximately +239,000 colleagues in over 90 countries. The Company’s +workforce is constantly evolving and developing, benefiting +from a strong mix of internal and external hiring into new and +existing positions. In 2023, Citi welcomed over 38,000 new +colleagues in addition to 44,600 roles filled by colleagues +through internal mobility and promotions. Citi also sustains +connections with former colleagues through its Alumni +Network, and in 2023 hired more than 3,000 “returnees” back +to Citi. +The following table presents the geographic distribution of Citi’s colleagues by segment or component and gender: +Segment or component(1) (in thousands) +North +America International (2) Total(3) Women (4) Men(4) Unspecified(4) +Services 4 20 24 52.4 % 47.6 % — % +Markets 3 7 10 38.9 61.1 — +Banking 3 6 9 43.2 56.8 0.01 +USPB 21 — 21 65.3 34.7 — +Wealth 6 8 14 49.9 50.1 — +All Other, including Legacy Franchises, +Operations and Technology, and Global Staff +Functions 54 107 161 47.8 52.2 — +Total 91 148 239 49.4 % 50.6 % 0.01 % +(1) Colleague distribution is based on assigned region, which may not reflect where the colleague physically resides. +(2) Mexico is included in International. +(3) Part-time colleagues represented less than 0.9% of Citi’s global workforce. +(4) Information regarding gender is self-identified by colleagues. +63 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_71.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..7bdbef14ce1f0ff6d10cb8bedca265e4f39d5bc2 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,118 @@ +Driving a Culture of Excellence and Accountability +Citi continues to embark on a talent and culture transformation +to drive a culture of excellence and accountability that is +supported by strong risk and controls management. +Citi’s Leadership Principles of “taking ownership, +delivering with pride and succeeding together” have been +reinforced through a behavioral science-led campaign, referred +to as Citi’s New Way, that reinforces the key working habits +that support Citi’s leadership culture. +Citi’s performance management approach also +emphasizes the Leadership Principles through a four-pillar +system, evaluating colleagues against financial performance, +risk and controls, and client and franchise goals as well as how +colleagues deliver from a leadership perspective. The +performance management and incentive compensation +processes and associated policies and frameworks have +enhanced accountability through increased rigor and +consistency, in particular for risk and controls. +The culture shift is supported by changes in the way Citi +identifies, assesses, develops and promotes talent, particularly +at senior levels of the Company. Citi promotes a new class of +managing directors each year. This is a testament to these +individuals’ performance and commitment to living the +Leadership Principles and instilling them throughout their +teams and the entire company. Further, all potential successors +to Executive Management Team roles are evaluated by the +Board and are now subject to a risk and controls assessment. +Diversity, Equity and Inclusion +Citigroup’s Board is committed to ensuring that the Board and +Citi’s Executive Management Team are composed of +individuals whose backgrounds reflect the diversity of Citi’s +employees, customers and other stakeholders. In addition, Citi +has continued its efforts to support its globally diverse +workforce, including, among other things, taking actions with +respect to pay equity, setting aspirational representation goals +and the use of diverse slates and hiring panels in recruiting. +Citi’s commitment to diversity, equity and inclusion +continues to reflect a workforce that represents the clients it +serves globally from all walks of life, backgrounds and +origins. Understanding that diversity fuels the Company’s +culture and business success, Citi’s 2025 aspirational +representation goals are embedded in its business strategy. +Having aspirational goals across all levels—from early career +through senior leadership roles—will help ensure Citi not only +has diverse talent in leadership roles but will also help build a +diverse talent pipeline for the future. +The Company constantly strives to ensure Citi remains a +great place to work, where people can thrive professionally +and personally. In 2023, Citi increased its unique Inclusion +Network membership by 23.8% and added 15 new global +Inclusion Network chapters. The Company launched the +Allyship 365 initiative, focused on cultivating allyship year +round and educating colleagues on its diversity, equity and +inclusion efforts. +Citi values pay transparency and has taken significant +action to provide both managers and colleagues with greater +clarity around Citi’s compensation philosophy. Citi has +introduced market-based salary structures and bonus +opportunity guidelines in various countries worldwide, and +posts salary ranges on all external U.S. job postings, which +aligns with strategic objectives of pay equity and transparency. +Citi also raised its U.S. minimum wage in 2022, the second +broad-based increase in less than two years. +In addition, Citi has focused on measuring and addressing +pay equity within the organization: +• In 2018, Citi was the first major U.S. financial institution +to publicly release the results of a pay equity review +comparing its compensation of women to that of men, as +well as U.S. minorities to U.S. non-minorities. Since +2018, Citi has continued to be transparent about pay +equity, including disclosing its unadjusted or “raw” pay +gap for both women and U.S. minorities. The raw gap +measures the difference in median compensation. The +existence of Citi’s raw pay gap reflects a need to increase +representation of women and U.S. minorities in senior and +higher-paying roles. +• In 2023, due to its organizational and management +simplification initiatives, Citi paused its annual pay equity +analysis, as the Company continues the process of +aligning roles to its new organizational structure. Citi +looks forward to resuming routine pay equity reviews +once that work is complete. +• For historical context, Citi’s 2022 pay equity review +determined that on an adjusted basis, women globally are +paid on average more than 99% of what men are paid at +Citi, and that there was not a statistically significant +difference in adjusted compensation for U.S. minorities +and non-minorities. +• Citi’s 2022 raw pay gap analysis showed that the median +pay for women globally was 78% of the median for men, +up from 74% in 2021 and 2020. The median pay for U.S. +minorities was more than 97% of the median for non- +minorities, which was up from just above 96% in 2021 +and 94% in 2020. +Workforce Development +Citi’s numerous programmatic offerings aim to reinforce its +culture and values, foster understanding of compliance +requirements and develop competencies required to deliver +excellence to its clients. Citi encourages career growth and +development by offering broad and diverse opportunities to +colleagues, including the following: +• Citi provides a range of internal development and +rotational programs to colleagues at all levels, including +an extensive leadership curriculum, allowing the +opportunity to build the skills needed to transition to +supervisory and managerial roles. Citi’s tuition assistance +program further enables colleagues in North America to +pursue their educational goals. +• Citi continues to focus on internal talent development and +aims to provide colleagues with career growth +opportunities. Of the 44,600 mobility opportunities filled +in 2023, 14% were open roles applied for and filled by +internal candidates, and 38% were filled by colleagues +who applied for, and were promoted into, new +opportunities. These opportunities are particularly +important as Citi focuses on providing career paths for its +64 +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_72.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..8839734be50f997767939ceb04adfa1da7494655 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,49 @@ +internal talent base as part of its efforts to increase organic +growth within the organization. +• Citi enabled Development Plans for colleagues of all +levels. Last year, more than 100,000 employees +completed a plan, setting a roadmap for how they can +achieve their career aspirations. +Well-being and Benefits +Citi is proud to provide a wide range of benefits that support +its colleagues’ mental, emotional, physical and financial well- +being through various life stages and events. Citi is focused on +providing equitable benefits that are designed to attract, +engage and retain colleagues. +Citi has significantly enhanced mental well-being +programs by offering free, accessible counseling sessions for +colleagues and their family members, as well as offering an +online tool so that all colleagues around the globe can easily +find their local Employee Assistance Programs and resources. +Citi offers instructor-led mental health training for people +managers to equip them in supporting their team members. +Citi also continues to value the importance of physical +well-being—providing employees in several office locations +and countries access to onsite medical care clinics, fitness +centers, subsidized gym memberships and virtual fitness +programs. Citi continues to make modern telemedicine +programs increasingly available to colleagues and their family +members through programs like Sword Health’s digital +physical therapy, which rolled out in the U.S. in 2022. +In 2023, one year after the Company became the first +major U.S. bank to publicly embrace a flexible, hybrid work +model, Citi fully implemented it across the organization. Most +of Citi’s colleagues now work in hybrid roles, working +remotely up to two days a week. How We Work provides the +majority of colleagues with the ability to balance the demands +of their home lives with the work commitments that are +necessary for success. The program includes three role +designations for colleagues globally: Resident, Hybrid or +Remote. The implementation and continuation of this program +differentiates Citi from other financial organizations with +respect to flexible working arrangements. By embracing a +flexible model of work, Citi has focused on keeping its +approach consistent and aligned with its values and priorities. +For additional information about Citi’s human capital +management initiatives and goals, see Citi’s 2022 ESG Report +available at www.citigroup.com. The 2022 ESG Report and +other information included elsewhere on Citi’s Investor +Relations website are not incorporated by reference into, and +do not form any part of, this 2023 Annual Report on Form 10- +K. +65 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_73.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..d73ed27bbcfdf18e676d1e93e26db97e7e78bc6f --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,2 @@ +This page intentionally left blank. +66 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_74.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..d5f7983a1e2cdf37180b70a122647c65fb364659 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,52 @@ +Managing Global Risk Table of Contents +MANAGING GLOBAL RISK 68 +Overview 68 +CREDIT RISK(1) 72 +Overview 72 +Loans 72 +Corporate Credit 73 +Consumer Credit 79 +Additional Consumer and Corporate Credit Details 86 +Loans Outstanding 86 +Details of Credit Loss Experience 87 +Allowance for Credit Losses on Loans (ACLL) 89 +Non-Accrual Loans and Assets 91 +LIQUIDITY RISK 94 +Overview 94 +Liquidity Monitoring and Measurement 94 +High-Quality Liquid Assets (HQLA) 95 +Deposits 96 +Long-Term Debt 97 +Secured Funding Transactions and Short-Term Borrowings 100 +Credit Ratings 101 +MARKET RISK(1) 103 +Overview 103 +Market Risk of Non-Trading Portfolios 103 +Banking Book Interest Rate Risk 103 +Interest Rate Risk of Investment Portfolios—Impact on AOCI 104 +Changes in Foreign Exchange Rates—Impacts on AOCI and Capital 106 +Interest Income/Expense and Net Interest Margin (NIM) 107 +Additional Interest Rate Details 110 +Market Risk of Trading Portfolios 114 +Factor Sensitivities 115 +Value at Risk (VAR) 115 +Stress Testing 118 +OPERATIONAL RISK 118 +Overview 118 +Cybersecurity Risk 118 +COMPLIANCE RISK 121 +REPUTATION RISK 122 +STRATEGIC RISK 122 +Climate Risk 122 +OTHER RISKS 123 +LIBOR Transition Risk 123 +Country Risk 124 +Top 25 Country Exposures 124 +Russia 125 +Ukraine 127 +Argentina 127 +FFIEC—Cross-Border Claims on Third Parties and Local Country Assets 128 +(1) For additional information regarding certain credit risk, market risk and other quantitative and qualitative information, refer to Citi’s Pillar 3 Basel III Advanced +Approaches Disclosures, as required by the rules of the Federal Reserve Board, on Citi’s Investor Relations website. +67 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_75.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..34853ae6682461f1833f2818959a2620bb8844d8 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,117 @@ +MANAGING GLOBAL RISK +Overview +For Citi, effective risk management is of primary importance +to its overall operations. Accordingly, Citi has established an +Enterprise Risk Management (ERM) Framework to ensure +that all of Citi’s risks are managed appropriately and +consistently across the Company and at an aggregate, +enterprise-wide level. Citi’s culture drives a strong risk and +control environment, and is at the heart of the ERM +Framework, underpinning the way Citi conducts business. The +activities that Citi engages in, and the risks those activities +generate, must be consistent with Citi’s Mission and Value +Proposition (see below) and the key Leadership Principles that +support it, as well as Citi’s risk appetite. As discussed above, +Citi also continues its efforts to comply with the FRB and +OCC consent orders, relating principally to various aspects of +risk management, compliance, data quality management and +governance, and internal controls (see “Citi’s Consent Order +Compliance” and “Risk Factors—Compliance Risks” above). +Under Citi’s Mission and Value Proposition, which was +developed by its senior leadership and distributed throughout +the Company, Citi strives to serve its clients as a trusted +partner by responsibly providing financial services that enable +growth and economic progress while earning and maintaining +the public’s trust by constantly adhering to the highest ethical +standards. As such, Citi asks all colleagues to ensure that their +decisions pass three tests: they are in Citi’s clients’ best +interests, create economic value and are always systemically +responsible. +As discussed in “Human Capital Resources and +Management” above, Citi has designed Leadership Principles +that represent the qualities, behaviors and expectations all +employees must exhibit to deliver on Citi’s mission of +enabling growth and economic progress. The Leadership +Principles inform Citi’s ERM Framework and contribute to +creating a culture that drives client, control and operational +excellence. Citi colleagues share a common responsibility to +uphold these Leadership Principles and hold themselves to the +highest standards of ethics and professional behavior in +dealing with Citi’s clients, business colleagues, shareholders, +communities and each other. +Citi’s ERM Framework details the principles used to +support effective enterprise-wide risk management across the +end-to-end risk management lifecycle. The ERM Framework +covers the risk management roles and responsibilities of the +Citigroup Board of Directors (the Board), Citi’s Executive +Management Team (see “Risk Governance—Executive +Management Team” below) and employees across the lines of +defense. The underlying pillars of the framework encompass: +• Culture —the core principles and behaviors that underpin +a strong culture of risk awareness, in line with Citi’s +Mission and Value Proposition, and Leadership +Principles; +• Governance—the committee structure and reporting +arrangements that support the appropriate oversight of +risk management activities at the Board and Executive +Management Team levels and establishes Citi’s Lines of +Defense model; +• Risk Management—the end-to-end risk management +cycle including the identification, measurement, +monitoring, controlling and reporting of all risks +including top, material, growing, idiosyncratic and +emerging risks, and aggregated to an enterprise-wide +level; and +• Enterprise Programs—the key risk management +programs performed across the risk management lifecycle +for all risk categories. +Each of these pillars is underpinned by supporting +capabilities covering people, infrastructure and tools that are +in place to enable the execution of the ERM Framework. +Citi’s approach to risk management requires that its risk- +taking be consistent with its risk appetite. Risk appetite is the +aggregate level of risk that Citi is willing to tolerate in order to +achieve its strategic objectives and business plan. Risk limits +and thresholds represent allocations of Citi’s risk appetite to +businesses and risk categories. Concentration risks are +controlled through a subset of these limits and thresholds. +Citi’s risks are generally categorized and summarized as +follows: +• Credit risk is the risk of loss resulting from the decline in +credit quality (or downgrade risk) or failure of a borrower, +counterparty, third party or issuer to honor its financial or +contractual obligations. +• Liquidity risk is the risk that Citi will not be able to +efficiently meet both expected and unexpected current and +future cash flow and collateral needs without adversely +affecting either daily operations or financial conditions of +Citi. Risk may be exacerbated by the inability of the +Company to access funding sources or monetize assets +and the composition of liability funding and liquid assets. +• Market risk (Trading and Non-Trading): Market risk of +trading portfolios is the risk of loss arising from changes +in the value of Citi’s assets and liabilities resulting from +changes in market variables, such as interest rates, equity +and commodity prices, foreign exchange rates or credit +spreads. Market risk of non-trading portfolios is the +impact of adverse changes in market variables such as +interest rates, foreign exchange rates, credit spreads and +equity prices on Citi’s net interest income, economic +value of equity, or AOCI. +• Operational risk is the risk of loss resulting from +inadequate or failed internal processes, people and +systems, or from external events. It includes legal risk, +which is the risk of loss (including litigation costs, +settlements and regulatory fines) resulting from Citi’s +failure to comply with laws, regulations, prudent ethical +standards or contractual obligations in any aspect of Citi’s +business, but excludes strategic and reputation risks (see +below). +• Compliance risk is the risk to current or projected +financial condition and resilience arising from violations +of laws, rules or regulations, or from non-conformance +with prescribed practices, internal policies and procedures +or ethical standards. +• Reputation risk is the risk to current or projected financial +conditions and resilience from negative opinion held by +68 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_76.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..90a8047e31fd27afddb6620cf7d7959cde14eb89 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,115 @@ +stakeholders. This risk may impair Citi’s competitiveness +by affecting its ability to establish new relationships or +services or continue servicing existing relationships. +• Strategic risk is the risk of a sustained impact (not +episodic impact) to Citi’s core strategic objectives as +measured by impacts on anticipated earnings, market +capitalization or capital, arising from the external factors +affecting the Company’s operating environment; as well +as the risks associated with defining the strategy and +executing the strategy, which are identified, measured and +managed as part of the Strategic Risk Framework at the +Enterprise Level. +Citi uses a lines of defense model as a key component of +its ERM Framework to manage its risks. As discussed below, +the lines of defense model brings together risk-taking, risk +oversight and risk assurance under one umbrella and provides +an avenue for risk accountability of the first line of defense, a +construct for effective challenge by the second line of defense +(Independent Risk Management and Independent Compliance +Risk Management), and empowers independent risk assurance +by the third line of defense (Internal Audit). In addition, the +lines of defense model includes organizational units tasked +with supporting a strong control environment (“enterprise +support functions”). The first, second and third lines of +defense, along with enterprise support functions, have distinct +roles and responsibilities and are empowered to perform +relevant risk management processes and responsibilities in +order to manage Citi’s risks in a consistent and effective +manner. +First Line of Defense: Front Line Units and Front Line +Unit Activities +Citi’s first line of defense owns the risks and associated +controls inherent in, or arising from, the execution of its +business activities and is responsible for identifying, +measuring, monitoring, controlling and reporting those risks +consistent with Citi’s strategy, Mission and Value Proposition, +Leadership Principles and risk appetite. +Front line units are responsible and held accountable for +managing the risks associated with their activities within the +boundaries set by independent risk management. They are also +responsible for designing and implementing effective internal +controls and maintaining processes for managing their risk +profile, including through risk mitigation, so that it remains +consistent with Citi’s established risk appetite. +Front line unit activities are considered part of the first +line of defense and are subject to the oversight and challenge +of independent risk management. +The first line of defense is composed of Citi’s operating +segments (i.e., Services, Markets, Banking, U.S. Personal +Banking, Wealth), as well as Client, Legacy Franchises and +certain corporate functions (i.e., Chief Operating Office, +Enterprise Services and Public Affairs, Finance, Operations +and Technology). In addition, the first line of defense includes +the front line unit activities of other organizational units. Front +line units may also include enterprise support units and/or +conduct enterprise support activities—see “Enterprise Support +Functions” below. +Second Line of Defense: Independent Risk Management +Independent risk management units are independent of the +first line of defense. They are responsible for overseeing the +risk-taking activities of the first line of defense and +challenging the first line of defense in the execution of its risk +management responsibilities. They are also responsible for +independently identifying, measuring, monitoring, controlling +and reporting aggregate risks and for setting standards for the +management and oversight of risk. Independent risk +management is composed of Independent Risk Management +(IRM) and Independent Compliance Risk Management +(ICRM), which are led by the Group Chief Risk Officer +(CRO) and Group Chief Compliance Officer (CCO) who have +unrestricted access to the Board and its Risk Management +Committee to facilitate the ability to execute their specific +responsibilities pertaining to escalation to the Board. +Independent Risk Management +The IRM organization sets risk and control standards for the +first line of defense and actively manages and oversees +aggregate credit, market (trading and non-trading), liquidity, +strategic, operational and reputation risks across Citi, +including risks that span categories, such as concentration risk, +country risk and climate risk. +IRM is organized to align to risk categories, legal entities/ +regions and Company-wide, cross-risk functions or processes. +Each of these units reports to a member of the Risk +Management Executive Council, who are all direct reports to +the Citigroup CRO. +Independent Compliance Risk Management +The ICRM organization actively oversees compliance risk +across Citi, sets compliance standards for the first line of +defense to manage compliance risk and promotes business +conduct and activity that is consistent with Citi’s Mission and +Value Proposition and the compliance risk appetite. Citi’s +objective is to embed an enterprise-wide compliance risk +management framework and culture that identifies, measures, +monitors, controls and escalates compliance risk across Citi. +ICRM is aligned by product line, function and geography +to provide compliance risk management advice and credible +challenge on day-to-day matters and strategic decision-making +for key initiatives. ICRM also has program-level Enterprise +Compliance units responsible for setting standards and +establishing priorities for program-related compliance efforts. +The CCO reports to Citi’s General Counsel and ICRM is +organizationally part of the Global Legal Affairs & +Compliance group. In addition, the CCO has matrix reporting +into the CRO and is part of the Risk Management Executive +Council. +Third Line of Defense: Internal Audit +Internal Audit is independent of the first line, second line and +enterprise support functions. The role of Internal Audit is to +provide independent, objective, reliable, valued and timely +assurance to the Board, its Audit Committee, Citi senior +management and regulators over the effectiveness of +governance, risk management and controls that mitigate +current and evolving risks and enhance the control culture +within Citi. The Citi Chief Auditor manages Internal Audit +69 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_77.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f100d29b689c0eacc95069e43579357acf80db0 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,113 @@ +and reports functionally to the Chair of the Citi Audit +Committee and administratively to the Citi Chief Executive +Officer. The Citi Chief Auditor has unrestricted access to the +Board and the Board Audit Committee to address risks and +issues identified through Internal Audit’s activities. +Enterprise Support Functions +Enterprise support functions engage in activities that support +safety and soundness across Citi. These functions provide +advisory services and/or design, implement, maintain and +oversee Company-wide programs that support Citi in +maintaining an effective control environment. +Enterprise support functions are composed of Human +Resources and Global Legal Affairs and Compliance +(exclusive of ICRM, which is part of the second line of +defense). Front line units may also include enterprise support +units and/or conduct enterprise support activities (e.g., the +Controllers Group within Finance). +Enterprise support functions, units and activities are +subject to the relevant Company-wide independent oversight +processes specific to the risks for which they are accountable +(e.g., operational risk, compliance risk, reputation risk). +Risk Governance +Citi’s ERM Framework encompasses risk management +processes to address risks undertaken by Citi through +identification, measurement, monitoring, controlling and +reporting of all risks. The ERM Framework integrates these +processes with appropriate governance to complement Citi’s +commitment to maintaining strong and consistent risk +management practices. +Board Oversight +The Board is responsible for oversight of Citi and holds the +Executive Management Team accountable for implementing +the ERM Framework and meeting strategic objectives within +Citi’s risk appetite. +Executive Management Team +The Citigroup CEO directs and oversees the day-to-day +management of Citi as delegated by the Board of Directors. +The CEO leads the Company through the Executive +Management Team and provides oversight of group activities, +both directly and through authority delegated to committees +established to oversee the management of risk, to ensure +continued alignment with Citi’s risk strategy. +Board and Executive Management Committees +The Board executes its responsibilities either directly or +through its committees. The Board has delegated authority to +the following Board standing committees to help fulfill its +oversight and risk management responsibilities: + +• Risk Management Committee (RMC): assists the Board in +fulfilling its responsibility with respect to (i) oversight of +Citi’s risk management framework and risk culture, +including the significant policies and practices used in +managing credit, market (trading and non-trading), +liquidity, strategic, operational, compliance, reputation +and certain other risks, including those pertaining to +capital management, and (ii) oversight of the Global Risk +Review—credit, capital and collateral review functions. +• Audit Committee: provides oversight of Citi’s financial +and regulatory reporting and internal control risk, as well +as Internal Audit and Citi’s external independent +accountants. +• Compensation, Performance Management and Culture +Committee: provides oversight of compensation of Citi’s +employees and Citi management’s sustained focus on +fostering a principled culture of sound ethics, responsible +conduct and accountability within the organization. +• Nomination, Governance and Public Affairs Committee: +responsible for (i) identifying individuals qualified to +become Board members and recommending to the Board +the director nominees for the next annual meeting of +stockholders, (ii) leading the Board in its annual review of +the Board’s performance, (iii) recommending to the Board +directors for each committee for appointment by the +Board, (iv) reviewing the Company’s policies and +programs that relate to public issues of significance to the +Company and the public at large, including but not +limited to Environmental, Social and Corporate +Governance (ESG) matters and (v) reviewing the +Company’s relationships with external constituencies and +issues that impact the Company’s reputation, and advising +management as to its approach to each. +• Technology Committee: assists the Board in fulfilling its +responsibility with respect to oversight of (i) the planning +and execution of Citigroup’s technology, strategy and +operating plan, (ii) the development of Citi’s target state +operating model and architecture, including the +incorporation of Global Business Services, (iii) +technology-based risk management, including risk +management framework, risk appetite and risk exposures +of the Company, (iv) resource and talent planning of the +Technology function and (v) the Company’s third-party +management policies, practices and standards that relate +to Technology. +In addition to the above, the Board has established the +following ad hoc committee: +• Transformation Oversight Committee: provides oversight +of the actions of Citi’s management to develop and +execute a transformation of Citi’s risk and control +environment pursuant to the FRB and OCC consent +orders (see “Citi’s Consent Order Compliance” above). +The Citigroup CEO has established four standing +committees that cover the primary risks to which Citi (i.e., +Group) is exposed. These consist of: +• Group Risk Management Committee (GRMC): the +primary senior executive level committee responsible for +(i) overseeing the execution of Citigroup’s ERM +Framework, (ii) monitoring Citi’s risk profile at an +aggregate level inclusive of individual risk categories, (iii) +ensuring that Citi’s risk profile remains consistent with its +approved risk appetite and (iv) discussing material and +emerging risk issues facing the Company. The Committee +also provides comprehensive Group-wide coverage of all +70 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_78.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7d4863ec367eb8c8b6d4f90d4436e1d546f1935 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,20 @@ +risk categories, including Credit Risk, Market Risk +(trading) and Strategic Risk. +• Citigroup Asset and Liability Committee (ALCO): +responsible for governance over management’s Liquidity +Risk and Market Risk (non-trading) management and for +monitoring and influencing the balance sheet, investment +securities and capital management activities of Citigroup. +• Group Business Risk and Control Committee (GBRCC): +provides governance oversight of Citi’s Compliance and +Operational Risks. +• Group Reputation Risk Committee (GRRC): provides +governance oversight for Reputation Risk management +across Citi. +In addition to the Executive Management committees +listed above, management may establish ad-hoc committees in +response to regulatory feedback or to manage additional +activities when deemed necessary. +The figure below illustrates the reporting lines between the Board and Executive Management committees: + +71 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_79.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..1954ecfeb3ff6184e6e887601e4521d0a66fcaa6 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,90 @@ +CREDIT RISK +Overview +Credit risk is the risk of loss resulting from the decline in +credit quality of a client, customer or counterparty (or +downgrade risk) or the failure of a borrower, counterparty, +third party or issuer to honor its financial or contractual +obligations. Credit risk is one of the most significant risks Citi +faces as an institution (see “Risk Factors—Credit Risks” +above). Credit risk arises in many of Citigroup’s business +activities, including: +• consumer, commercial and corporate lending; +• capital markets derivative transactions; +• structured finance; and +• securities financing transactions (repurchase and reverse +repurchase agreements, and securities loaned and +borrowed). +Credit risk also arises from clearing and settlement +activities, when Citi transfers an asset in advance of receiving +its counter-value or advances funds to settle a transaction on +behalf of a client. Concentration risk, within credit risk, is the +risk associated with having credit exposure concentrated +within a specific client, industry, region or other category. +Citi has an established framework in place for managing +credit risk across all businesses that includes a defined risk +appetite, credit limits and credit policies. Citi’s credit risk +management framework also includes policies and procedures +to manage problem exposures. +To manage concentration risk, Citi has in place a +framework consisting of industry limits, single-name +concentrations for each business and across Citigroup and a +specialized product limit framework. +Credit exposures are generally reported in notional terms +for accrual loans, reflecting the value at which the loans as +well as other off-balance sheet commitments are carried on the +Consolidated Balance Sheet. Credit exposure arising from +capital markets activities is generally expressed as the current +mark-to-market, net of margin, reflecting the net value owed +to Citi by a given counterparty. +The credit risk associated with Citi’s credit exposures is a +function of the idiosyncratic creditworthiness of the obligor, as +well as the terms and conditions of the specific obligation. Citi +assesses the credit risk associated with its credit exposures on +a regular basis through its allowance for credit losses (ACL) +process (see “Significant Accounting Policies and Significant +Estimates—Allowance for Credit Losses” below and Notes 1 +and 16), as well as through regular stress testing at the +company, business, geography and product levels. These +stress-testing processes typically estimate potential +incremental credit costs that would occur as a result of either +downgrades in the credit quality or defaults of the obligors or +counterparties. See Note 15 for additional information on +Citi’s credit risk management. +Loans +The table below details the average loans, by business and/or +segment, and the total Citigroup end-of-period loans for each +of the periods indicated: +In billions of dollars 4Q23 3Q23 4Q22 +Services $ 83 $ 83 $ 78 +Markets 115 108 111 +Banking 87 87 96 +USPB +Branded Cards $ 107 $ 103 $ 95 +Retail Services 52 50 48 +Retail Banking 43 43 37 +Total USPB $ 202 $ 196 $ 180 +Wealth $ 150 $ 151 $ 150 +All Other(1) $ 38 $ 37 $ 38 +Total Citigroup loans (AVG) $ 675 $ 662 $ 653 +Total Citigroup loans (EOP) $ 689 $ 666 $ 657 +(1) See footnote 2 to the table in “Credit Risk—Consumer Credit— +Consumer Credit Portfolio” below. +End-of-period loans increased 5% year-over-year, largely +reflecting growth in cards in USPB. End-of-period loans +increased 3% sequentially. +On an average basis, loans increased 3% year-over-year +and 2% sequentially. The year-over-year increase was largely +due to growth in USPB, Services and Markets, partially offset +by a decline in Banking. +As of the fourth quarter of 2023, average loans for: +• USPB increased 12% year-over-year, driven by growth in +Branded Cards, Retail Banking and Retail Services. +• Wealth were largely unchanged. +• Services increased 6% year-over-year, primarily driven by +strong demand for working capital loans in TTS in North +America and internationally. +• Markets increased 4% year-over-year, reflecting increased +client demand in warehouse lending. +• Banking decreased 9% year-over-year, primarily driven +by capital optimization efforts. +72 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_8.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dac8a2ed47304f5feef0644215411c0afe993811 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,56 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +WASHINGTON, D.C. 20549 +FORM 10-K +(Mark One) +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the fiscal year ended December 31, 2023 + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the transition period from to +Commission file number 1-9924 + Citigroup Inc. +(Exact name of registrant as specified in its charter) +Delaware 52-1568099 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +388 Greenwich Street, New York NY 10013 +(Address of principal executive offices) (Zip code) +(212) 559-1000 +(Registrant’s telephone number, including area code) + +Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 formatted in Inline XBRL: See Exhibit 99.01 + +Securities registered pursuant to Section 12(g) of the Act: none + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during +the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements +for the past 90 days. Yes x No o +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of +Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes x No o +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an +emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” +in Rule 12b-2 of the Exchange Act. +Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ +Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or +revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o +Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control +over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued +its audit report. ☒ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing +reflect the correction of an error to previously issued financial statements. o +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received +by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x +The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2023 was approximately $88.4 billion. +Number of shares of Citigroup Inc. common stock outstanding on January 31, 2024: 1,911,366,783 +Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 30, +2024 are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. +Available on the web at www.citigroup.com \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_80.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..a13b570ab8aa27994095ef4c39963653f9b0d73d --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,125 @@ +CORPORATE CREDIT +Consistent with its overall strategy, Citi’s corporate clients are +typically corporations that value the depth and breadth of +Citi’s global network. Citi aims to establish relationships with +these clients whose needs encompass multiple products, +including cash management and trade services, foreign +exchange, lending, capital markets and M&A advisory. +Corporate Credit Portfolio +The following table details Citi’s corporate credit portfolio within Services, Markets, Banking and the Mexico SBMM component of +All Other—Legacy Franchises (excluding loans carried at fair value and loans held-for-sale), and before consideration of collateral or +hedges, by remaining tenor for the periods indicated: + December 31, 2023 September 30, 2023 December 31, 2022 +In billions of dollars +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Direct outstandings +(on-balance sheet)(1) $ 132 $ 122 $ 39 $ 293 $ 125 $ 118 $ 38 $ 281 $ 135 $ 122 $ 27 $ 284 +Unfunded lending +commitments +(off-balance sheet)(2) 134 268 18 420 144 259 19 422 140 256 10 406 +Total exposure $ 266 $ 390 $ 57 $ 713 $ 269 $ 377 $ 57 $ 703 $ 275 $ 378 $ 37 $ 690 +(1) Includes drawn loans, overdrafts, bankers’ acceptances and leases. +(2) Includes unused commitments to lend, letters of credit and financial guarantees. +Portfolio Mix—Geography and Counterparty +Citi’s corporate credit portfolio is diverse across geography +and counterparty. The following table presents the percentage +of this portfolio by region based on Citi’s internal +management geography: +December 31, +2023 +September 30, +2023 +December 31, +2022 +North America 56 % 56 % 56 % +International 44 44 44 +Total 100 % 100 % 100 % +The maintenance of accurate and consistent risk ratings +across the corporate credit portfolio facilitates the comparison +of credit exposure across all lines of business, geographic +regions and products. Counterparty risk ratings reflect an +estimated probability of default for a counterparty, and +internal risk ratings are derived by leveraging validated +statistical models and scorecards in combination with +consideration of factors specific to the obligor or market, such +as management experience, competitive position, regulatory +environment and commodity prices. Facility risk ratings are +assigned that reflect the probability of default of the obligor +and factors that affect the loss given default of the facility, +such as support or collateral. Internal obligor ratings that +generally correspond to BBB and above are considered +investment grade, while those below are considered non- +investment grade. +The following table presents the corporate credit portfolio +by facility risk rating as a percentage of the total corporate +credit portfolio: + Total exposure + +December 31, +2023 +September 30, +2023 +December 31, +2022 +AAA/AA/A 50 % 49 % 50 % +BBB 33 34 34 +BB/B 16 15 14 +CCC or below 1 2 2 +Total 100 % 100 % 100 % +Note: Total exposure includes direct outstandings and unfunded lending +commitments. +In addition to the obligor and facility risk ratings assigned +to all exposures, Citi may classify exposures in the corporate +credit portfolio. These classifications are consistent with Citi’s +interpretation of the U.S. banking regulators’ definition of +criticized exposures, which may categorize exposures as +special mention, substandard, doubtful or loss. +Risk ratings and classifications are reviewed regularly and +adjusted as appropriate. The credit review process incorporates +quantitative and qualitative factors, including financial and +non-financial disclosures or metrics, idiosyncratic events or +changes to the competitive, regulatory or macroeconomic +environment. +73 +The secret object #2 is a "watch". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_81.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..81443302537a163c5c2fbe534a1066b31322d655 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,56 @@ +Citi believes the corporate credit portfolio to be +appropriately rated and classified as of December 31, 2023. +Citi has taken action to adjust internal ratings and +classifications of exposures as both the macroeconomic +environment and obligor-specific factors have changed, +particularly where additional stress has been seen. +As obligor risk ratings are downgraded, the probability of +default increases. Downgrades of obligor risk ratings tend to +result in a higher provision for credit losses. In addition, +appetite per obligor is reduced consistent with the ratings, and +downgrades may result in the purchase of additional credit +derivatives or other risk/structural mitigants to hedge the +incremental credit risk, or may result in Citi’s seeking to +reduce exposure to an obligor or an industry sector. Citi will +continue to review exposures to ensure that the appropriate +probability of default is incorporated into all risk assessments. +See Note 15 for additional information on Citi’s corporate +credit portfolio. +Portfolio Mix—Industry +Citi’s corporate credit portfolio is diversified by industry. The +following table details the allocation of Citi’s total corporate +credit portfolio by industry: + Total exposure + +December 31, +2023 +September 30, +2023 +December 31, +2022 +Transportation and +industrials 21 % 21 % 20 % +Technology, media +and telecom 12 12 12 +Banks and finance +companies(1) 12 10 10 +Consumer retail 11 12 11 +Real estate 10 10 10 +Commercial 8 8 8 +Residential 2 2 2 +Power, chemicals, +metals and mining 8 9 9 +Energy and +commodities 7 7 7 +Health 5 5 6 +Insurance 4 4 4 +Public sector 3 3 3 +Asset managers +and funds 3 3 5 +Financial markets +infrastructure 3 3 2 +Other industries 1 1 1 +Total 100 % 100 % 100 % +(1) As of the periods in the table, Citi had less than 1% exposure to +securities firms. See corporate credit portfolio by industry, below. +74 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_82.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..0096e48640fd29bcd039b545949e48e372a34658 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,84 @@ +The following table details Citi’s corporate credit portfolio by industry as of December 31, 2023: +In millions of dollars +Total +credit +exposure Funded (1) Unfunded +Investment +grade +Non- +criticized +Criticized +performing +Criticized +non- +performing(2) +30 days or +more past +due and +accruing +Net credit +losses +(recoveries) +Credit +derivative +hedges(3) +Transportation and +industrials $ 149,429 $ 59,917 $ 89,512 $ 118,380 $ 26,345 $ 4,469 $ 235 $ 125 $ 39 $ (7,060) +Autos(4) 49,443 22,843 26,600 43,008 5,376 999 60 7 19 (2,304) +Transportation 28,448 11,996 16,452 21,223 6,208 952 65 3 5 (1,185) +Industrials 71,538 25,078 46,460 54,149 14,761 2,518 110 115 15 (3,571) +Technology, media and +telecom 84,409 29,832 54,577 67,077 13,637 3,212 483 112 56 (5,546) +Banks and finance +companies 83,512 52,569 30,943 74,364 7,768 1,277 103 7 37 (638) +Consumer retail 81,799 33,548 48,251 63,017 15,259 3,342 181 130 57 (5,360) +Real estate 72,827 51,660 21,167 61,226 7,084 3,602 915 69 31 (608) +Commercial 54,843 35,058 19,785 43,340 7,042 3,602 859 69 31 (608) +Residential 17,984 16,602 1,382 17,886 42 — 56 — — — +Power, chemicals, metals +and mining 59,572 19,004 40,568 46,551 10,098 2,696 227 36 4 (4,884) +Power 24,535 5,220 19,315 20,967 3,200 209 159 1 4 (2,280) +Chemicals 21,963 8,287 13,676 16,418 3,888 1,613 44 34 1 (2,019) +Metals and mining 13,074 5,497 7,577 9,166 3,010 874 24 1 (1) (585) +Energy and commodities(5) 46,290 12,606 33,684 40,081 5,528 543 138 5 (15) (3,090) +Health 36,230 9,135 27,095 30,099 4,871 1,098 162 16 22 (3,023) +Insurance 27,216 2,390 24,826 25,580 1,607 29 — 7 — (4,516) +Public sector 24,736 12,621 12,115 21,845 2,399 479 13 36 15 (1,092) +Asset managers and funds 19,681 4,232 15,449 17,826 1,723 112 20 4 — (65) +Financial markets +infrastructure 18,705 156 18,549 18,705 — — — — — (7) +Securities firms 1,737 734 1,003 870 822 45 — 2 — (2) +Other industries(6) 6,992 4,480 2,512 5,079 1,629 257 27 45 4 (6) +Total $ 713,135 $ 292,884 $ 420,251 $ 590,700 $ 98,770 $ 21,161 $ 2,504 $ 594 $ 250 $ (35,897) +Non-investment grade Selected metrics +(1) Funded excludes loans carried at fair value of $7.3 billion at December 31, 2023. +(2) Includes non-accrual loan exposures and related criticized unfunded exposures. +(3) Represents the amount of purchased credit protection in the form of derivatives to economically hedge funded and unfunded exposures. Of the $35.9 billion of +purchased credit protection, $33.7 billion represents the total notional amount of purchased credit derivatives on individual reference entities. The remaining $2.2 +billion represents the first loss tranche of portfolios of purchased credit derivatives with a total notional of $16.7 billion, where the protection seller absorbs the +first loss on the referenced loan portfolios. +(4) Autos total credit exposure includes securitization financing facilities secured by auto loans and leases, extended mainly to the finance company subsidiaries of +global auto manufacturers, bank subsidiaries and independent auto finance companies, of approximately $16.9 billion ($10.6 billion in funded, with 100% rated +investment grade) as of December 31, 2023. +(5) In addition to this exposure, Citi has energy-related exposure within the public sector (e.g., energy-related state-owned entities) and the transportation and +industrials sector (e.g., off-shore drilling entities) included in the table above. As of December 31, 2023, Citi’s total exposure to these energy-related entities was +approximately $4.9 billion, of which approximately $2.5 billion consisted of direct outstanding funded loans. +(6) Includes $0.6 billion and $0.1 billion of funded and unfunded exposure at December 31, 2023, respectively, primarily related to commercial credit card +delinquency-managed loans. +Exposure to Commercial Real Estate +As of December 31, 2023, Citi’s total credit exposure to +commercial real estate (CRE) was $66 billion, including $8 +billion of exposure related to office buildings. This total CRE +exposure consisted of approximately $55 billion related to +corporate clients, included in the real estate category in the +table above, and approximately $11 billion related to Wealth +clients that is not in the table above as they are not considered +corporate exposures. +In addition, as of December 31, 2023, approximately 80% +of Citi’s total CRE exposure was rated investment grade and +more than 77% was to borrowers in the U.S. +As of December 31, 2023, the ACLL attributed to the +total funded CRE exposure (including the Private Bank) was +approximately 1.49%, and there were $759 million of non- +accrual CRE loans. +75 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_83.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ef8184033a0c0eb8dacd1aca6bfd9d8e556767b --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,70 @@ +The following table details Citi’s corporate credit portfolio by industry as of December 31, 2022: +In millions of dollars +Total credit +exposure Funded (1) Unfunded +Investment +grade +Non- +criticized +Criticized +performing +Criticized +non- +performing(2) +30 days or +more past +due and +accruing +Net credit +losses +(recoveries) +Credit +derivative +hedges(3) +Transportation and +industrials $ 139,225 $ 57,271 $ 81,954 $ 109,197 $ 19,697 $ 9,850 $ 481 $ 403 $ — $ (8,459) +Autos(4) 47,482 21,995 25,487 40,795 5,171 1,391 125 52 — (3,084) +Transportation 24,843 10,374 14,469 18,078 3,156 3,444 165 57 (30) (1,270) +Industrials 66,900 24,902 41,998 50,324 11,370 5,015 191 294 30 (4,105) +Technology, media +and telecom 81,211 28,931 52,280 65,386 12,308 3,308 209 169 11 (6,050) +Banks and finance +companies 65,623 42,276 23,347 57,368 5,718 2,387 150 266 65 (1,113) +Consumer retail 78,255 32,687 45,568 60,215 14,830 2,910 300 195 28 (5,395) +Real estate 70,676 48,539 22,137 63,023 4,722 2,881 50 138 2 (739) +Commercial 54,139 34,112 20,027 46,670 4,716 2,703 50 96 2 (739) +Residential 16,537 14,427 2,110 16,353 6 178 — 42 — — +Power, chemicals, +metals and mining 59,404 18,326 41,078 47,395 10,466 1,437 106 226 34 (5,063) +Power 22,718 4,827 17,891 18,822 3,325 512 59 129 (3) (2,306) +Chemicals 23,147 7,765 15,382 19,033 3,534 564 16 55 30 (2,098) +Metals and mining 13,539 5,734 7,805 9,540 3,607 361 31 42 7 (659) +Energy and +commodities(5) 46,309 13,069 33,240 38,918 6,076 1,200 115 180 11 (3,852) +Health 41,836 8,771 33,065 36,954 3,737 978 167 84 7 (2,855) +Insurance 29,932 4,417 25,515 29,090 801 41 — 44 — (3,884) +Public sector 23,705 11,736 11,969 20,663 2,084 956 2 77 4 (1,633) +Asset managers and +funds 35,983 13,162 22,821 34,431 1,492 60 — 95 — (759) +Financial markets +infrastructure 8,742 60 8,682 8,672 70 — — — — (18) +Securities firms 1,462 569 893 625 678 157 2 2 — (2) +Other industries(6) 7,374 4,217 3,157 4,842 2,245 238 49 19 16 (8) +Total $ 689,737 $ 284,031 $ 405,706 $ 576,779 $ 84,924 $ 26,403 $ 1,631 $ 1,898 $ 178 $ (39,830) +Non-investment grade Selected metrics +(1) Funded excludes loans carried at fair value of $5.1 billion at December 31, 2022. +(2) Includes non-accrual loan exposures and related criticized unfunded exposures. +(3) Represents the amount of purchased credit protection in the form of derivatives to economically hedge funded and unfunded exposures. Of the $39.8 billion of +purchased credit protection, $36.6 billion represents the total notional amount of purchased credit derivatives on individual reference entities. The remaining $3.2 +billion represents the first loss tranche of portfolios of purchased credit derivatives with a total notional of $27.6 billion, where the protection seller absorbs the +first loss on the referenced loan portfolios. +(4) Autos total credit exposure includes securitization financing facilities secured by auto loans and leases, extended mainly to the finance company subsidiaries of +global auto manufacturers, bank subsidiaries and independent auto finance companies, of approximately $17.4 billion ($10.3 billion in funded, with more than +99% rated investment grade) at December 31, 2022. +(5) In addition to this exposure, Citi has energy-related exposure within the public sector (e.g., energy-related state-owned entities) and the transportation and +industrials sector (e.g., off-shore drilling entities) included in the table above. As of December 31, 2022, Citi’s total exposure to these energy-related entities was +approximately $4.7 billion, of which approximately $2.4 billion consisted of direct outstanding funded loans. +(6) Includes $0.6 billion and $0.1 billion of funded and unfunded exposure at December 31, 2022, respectively, primarily related to commercial credit card +delinquency-managed loans. +76 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_84.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a6d2b7af4da1045165b66159f7bd49a2d995801 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,36 @@ +Credit Risk Mitigation +As part of its overall risk management activities, Citigroup +uses credit derivatives, both partial and full term, and other +risk mitigants to economically hedge portions of the credit risk +in its corporate credit portfolio, in addition to outright asset +sales. In advance of the expiration of partial-term economic +hedges, Citi will determine, among other factors, the economic +feasibility of hedging the remaining life of the instrument. The +results of the mark-to-market and any realized gains or losses +on credit derivatives are reflected primarily in Principal +transactions in the Consolidated Statement of Income. +At December 31, 2023, September 30, 2023 and +December 31, 2022, Banking had economic hedges on the +corporate credit portfolio of $35.9 billion, $36.0 billion and +$39.8 billion, respectively. Citi’s expected credit loss model +used in the calculation of its ACL does not include the +favorable impact of credit derivatives and other mitigants that +are marked-to-market. In addition, the reported amounts of +direct outstandings and unfunded lending commitments in the +tables above do not reflect the impact of these hedging +transactions. The credit protection was economically hedging +underlying Banking corporate credit portfolio exposures with +the following risk rating distribution: +Rating of Hedged Exposure +December 31, +2023 +September 30, +2023 +December 31, +2022 +AAA/AA/A 45 % 45 % 39 % +BBB 44 43 45 +BB/B 10 10 12 +CCC or below 1 2 4 +Total 100 % 100 % 100 % +77 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_85.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..769b78afacc4255c4cc609aca72004d08b48c69e --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,58 @@ +Loan Maturities and Fixed/Variable Pricing of Corporate Loans +In millions of dollars at December 31, 2023 +Due within +1 year +Over 1 year +but within +5 years +Over 5 years +but within +15 years +Over +15 years Total +Corporate loans +In North America offices(1) +Commercial and industrial loans $ 25,045 $ 34,304 $ 1,602 $ 57 $ 61,008 +Financial institutions 17,435 21,388 424 146 39,393 +Mortgage and real estate(2) 7,908 4,185 4,736 984 17,813 +Installment and other 9,461 12,947 775 152 23,335 +Lease financing — 227 — — 227 +Total $ 59,849 $ 73,051 $ 7,537 $ 1,339 $ 141,776 +In offices outside North America(1) +Commercial and industrial loans $ 69,811 $ 18,128 $ 5,425 $ 38 $ 93,402 +Financial institutions 18,449 6,577 907 210 26,143 +Mortgage and real estate(2) 2,639 3,600 888 70 7,197 +Installment and other 16,081 7,960 1,337 2,529 27,907 +Lease financing 6 26 16 — 48 +Governments and official institutions 632 670 1,630 667 3,599 +Total $ 107,618 $ 36,961 $ 10,203 $ 3,514 $ 158,296 +Corporate loans, net of unearned income(3)(4) $ 167,467 $ 110,012 $ 17,740 $ 4,853 $ 300,072 +Loans at fixed interest rates(5) +Commercial and industrial loans $ 6,636 $ 883 $ 17 +Financial institutions 3,363 62 12 +Mortgage and real estate(2) 1,311 4,531 846 +Other(6) 4,792 170 7 +Lease financing 240 — — +Total $ 16,342 $ 5,646 $ 882 +Loans at floating or adjustable interest +rates(4) +Commercial and industrial loans $ 45,796 $ 6,144 $ 78 +Financial institutions 24,602 1,269 344 +Mortgage and real estate(2) 6,474 1,093 208 +Other(6) 16,785 3,572 3,341 +Lease financing 13 16 — +Total $ 93,670 $ 12,094 $ 3,971 +Total fixed/variable pricing of corporate +loans with maturities due after one year, net +of unearned income(3)(4) $ 110,012 $ 17,740 $ 4,853 +(1) North America includes the U.S., Canada and Puerto Rico. Mexico is included in offices outside North America. The classification between offices in North +America and outside North America is based on the domicile of the booking unit. The differences between the domicile of the booking unit and the domicile of the +managing unit are not material. +(2) Loans secured primarily by real estate. +(3) Corporate loans are net of unearned income of ($917) million. Unearned income on corporate loans primarily represents loan origination fees, net of certain direct +origination costs, that are deferred and recognized as Interest income over the lives of the related loans. +(4) Excludes $93 million of unallocated portfolio layer cumulative basis adjustments at December 31, 2023. +(5) Based on contractual terms. Repricing characteristics may effectively be modified from time to time using derivative contracts. See Note 24. +(6) Other includes installment and other and loans to government and official institutions. +78 +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_86.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cc4801d5ff55a9d2f4f693528ce0d130c6435f8 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,60 @@ + +CONSUMER CREDIT +Citi's consumer credit risk management framework is designed +for a variety of environments. Underwriting and portfolio +management policies are calibrated based on risk-return trade- +offs by product and segment and changes are made based on +performance against benchmarks as well as environmental +stress. As warranted, Citi adjusts underwriting criteria to +address consumer credit risks and macroeconomic challenges +and uncertainties. +USPB provides credit cards, mortgages, personal loans, +small business banking and retail banking, and Wealth offers +wealth management lending and other products globally that +range from the affluent to ultra-high net worth customer +segments through the Private Bank, Wealth at Work and +Citigold. USPB’s retail banking products include a generally +prime portfolio built through well-defined lending parameters +within Citi’s risk appetite framework. +All Other—Legacy Franchises also provides such +products in its remaining markets through Mexico Consumer +and Asia Consumer (Korea, Poland, China and Russia). +Consumer Credit Portfolio +The following table presents Citi’s quarterly end-of-period consumer loans(1): +In billions of dollars 4Q22 1Q23 2Q23 3Q23 4Q23 +USPB +Branded Cards $ 100.2 $ 97.1 $ 103.0 $ 105.2 $ 111.1 +Retail Services 50.5 48.4 50.0 50.5 53.6 +Retail Banking 37.1 39.2 41.5 43.1 44.4 +Mortgages(2) 33.4 35.3 37.4 38.8 39.9 +Personal, small business and other 3.7 3.9 4.1 4.3 4.5 +Total $ 187.8 $ 184.7 $ 194.5 $ 198.8 $ 209.1 +Wealth(3)(4) +Mortgages(2) $ 84.0 $ 85.2 $ 87.0 $ 88.8 $ 89.9 +Margin lending(5) 28.9 29.3 29.6 28.7 29.4 +Personal, small business and other(6) 31.7 31.0 29.4 28.5 27.2 +Cards 4.6 4.4 4.5 4.6 5.0 +Total $ 149.2 $ 149.9 $ 150.5 $ 150.6 $ 151.5 +All Other—Legacy Franchises +Mexico Consumer (excludes Mexico SBMM) $ 14.8 $ 16.3 $ 17.8 $ 17.8 $ 18.7 +Asia Consumer(7) 13.3 10.0 9.1 8.0 7.4 +Legacy Holdings Assets(8) 3.0 2.8 2.7 2.5 2.5 +Total $ 31.1 $ 29.1 $ 29.6 $ 28.3 $ 28.6 +Total consumer loans $ 368.1 $ 363.7 $ 374.6 $ 377.7 $ 389.2 +(1) End-of-period loans include interest and fees on credit cards. +(2) See Note 15 for details on loan-to-value ratios for the portfolios and FICO scores for the U.S. portfolio. +(3) Consists of $101.6 billion, $101.1 billion, $99.5 billion, $98.9 billion and $98.2 billion of loans in North America as of December 31, 2023, September 30, 2023, +June 30, 2023, March 31, 2023 and December 31, 2022, respectively. For additional information on the credit quality of the Wealth portfolio, see Note 15. +(4) Consists of $49.9 billion, $49.5 billion, $51.0 billion, $51.0 billion and $51.0 billion of loans outside North America as of December 31, 2023, September 30, +2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively. +(5) At December 31, 2023, includes approximately $24 billion of classifiably managed loans fully collateralized by eligible financial assets and securities that have +experienced very low historical net credit losses (NCLs). Approximately 85% of the classifiably managed portion of these loans are investment grade. +(6) At December 31, 2023, includes approximately $22 billion of classifiably managed loans. Approximately 87% of these loans are fully collateralized (consisting +primarily of commercial real estate and limited partner capital commitments in private equity) and have experienced very low historical net credit losses (NCLs). +Approximately 85% of the classifiably managed portion of these loans are investment grade. +(7) Asia Consumer loan balances, reported within All Other—Legacy Franchises, include the four remaining Asia Consumer loan portfolios: Korea, Poland, China +and Russia. +(8) Primarily consists of certain North America consumer mortgages. +For information on changes to Citi’s consumer loans, see +“Credit Risk—Loans” above. +79 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_87.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..b20d8c95fa38da4622d04626172711595286ee08 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,60 @@ +Consumer Credit Trends +U.S. Personal Banking +As indicated above, USPB provides card products through +Branded Cards and Retail Services, and mortgages and home +equity, small business and personal consumer loans through +Citi’s Retail Banking network. Retail Banking is concentrated +in six major U.S. metropolitan areas. USPB also provides +mortgages through correspondent channels. +As of December 31, 2023, approximately 79% of USPB +EOP loans consisted of Branded Cards and Retail Services +card loans, which generally drives the overall credit +performance of USPB, as U.S. cards net credit losses +represented approximately 96% of total USPB net credit losses +for the fourth quarter of 2023. As of December 31, 2023, +Branded Cards represented 67% of total U.S. cards EOP loans +and Retail Services represented 33% of U.S. cards EOP loans. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +USPB increased quarter-over-quarter and year-over-year, +largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels in +Branded Cards and Retail Services as well as the impact of +macroeconomic pressures related to the higher inflationary +and interest rate environment. Citi expects the net credit loss +rate for both Branded Cards and Retail Services to continue to +rise above pre-pandemic levels and, on a full-year basis, peak +in 2024. The higher net credit losses expectation is already +reflected in the Company’s ACL on loans for outstanding +balances at December 31, 2023. +Branded Cards +USPB’s Branded Cards portfolio includes proprietary and +co-branded cards. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +Branded Cards increased quarter-over-quarter and year-over- +year, largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels as +well as the impact of macroeconomic pressures related to the +higher inflationary and interest rate environment. +Retail Services +USPB’s Retail Services partners directly with more than +20 retailers and dealers to offer private label and co-branded +cards. Retail Services’ target market focuses on select industry +segments such as home improvement, specialty retail, +consumer electronics and fuel. Retail Services continually +evaluates opportunities to add partners within target industries +that have strong loyalty, lending or payment programs and +growth potential. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +Retail Services increased quarter-over-quarter and year-over- +year, largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels as +well as the impact of macroeconomic pressures related to the +higher inflationary and interest rate environment. +For additional information on cost of credit, loan +delinquency and other information for Citi’s cards portfolios, +see each respective business’s results of operations above and +Note 15. +80 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_88.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..732c333ceb4f5af9c98a002795b06bd020bcf94e --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,65 @@ +Retail Banking +USPB’s Retail Banking portfolio consists primarily of +consumer mortgages (including home equity) and unsecured +lending products, such as small business loans and personal +loans. The portfolio is generally delinquency managed, where +Citi evaluates credit risk based on FICO scores, delinquencies +and the value of underlying collateral. The consumer +mortgages in this portfolio have historically been extended to +high credit quality customers, generally with loan-to-value +ratios that are less than or equal to 80% on first and second +mortgages. For additional information, see “Loan-to-Value +(LTV) Ratios” in Note 15. +As presented in the chart above, the net credit loss rate in +Retail Banking for the fourth quarter of 2023 was broadly +stable quarter-over-quarter and increased year-over-year, +primarily driven by the growth and seasoning of personal +loans. +The 90+ days past due delinquency rate was broadly +stable quarter-over-quarter and decreased year-over-year, +primarily driven by lower delinquencies in U.S. mortgages. +Wealth +As indicated above, Wealth provides consumer +mortgages, margin lending, cards and other lending products +to customer segments that range from affluent to ultra-high net +worth through the Private Bank, Wealth at Work and Citigold. +These customer segments represent a target market that is +characterized by historically low default rates and +delinquencies and includes loans that are delinquency +managed or classifiably managed. The delinquency-managed +portfolio consists primarily of mortgages, margin lending and +cards. +As of December 31, 2023, approximately $46 billion, or +30%, of the portfolio was classifiably managed and primarily +consisted of margin lending, commercial real estate, +subscription credit finance and other lending programs. These +classifiably managed loans are primarily evaluated for credit +risk based on their internal risk rating, of which 85% is rated +investment grade. While the delinquency rate in the chart +above is calculated only for the delinquency-managed +portfolio, the net credit loss rate is calculated using net credit +losses for both the delinquency and classifiably managed +portfolios. +As presented in the chart above, the net credit loss rate +and 90+ days past due delinquency rate in Wealth for the +fourth quarter of 2023 were broadly stable quarter-over- +quarter and year-over-year. The low net credit loss and the +90+ days past due delinquency rates continued to reflect the +strong credit profiles of the portfolios. +Mexico Consumer +Mexico Consumer operates in Mexico through +Citibanamex and provides credit cards, consumer mortgages +and small business and personal loans. Mexico Consumer +serves a more mass-market segment in Mexico and focuses on +developing multiproduct relationships with customers. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate in Mexico Consumer increased quarter- +over-quarter and year-over-year, primarily driven by the +ongoing normalization of loss rates from post-pandemic lows. +The 90+ days past due delinquency rate was relatively +stable quarter-over-quarter and year-over-year. +For additional information on cost of credit, loan +delinquency and other information for Citi’s consumer loan +portfolios, see each respective business’s results of operations +above and Note 15. +81 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_89.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed8dcba4868ed1308ba08e7ac739a0607fc09848 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,40 @@ +U.S. Cards FICO Distribution +The following tables present the current FICO score +distributions for Citi’s Branded Cards and Retail Services +portfolios based on end-of-period receivables. FICO scores are +updated monthly for substantially all of the portfolio and on a +quarterly basis for the remaining portfolio. +Branded Cards +FICO distribution(1) +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +> 760 46 % 46 % 48 % +680–760 38 39 38 +< 680 16 15 14 +Total 100 % 100 % 100 % +Retail Services +FICO distribution(1) +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +> 760 27 % 26 % 27 % +680–760 41 42 42 +< 680 32 32 31 +Total 100 % 100 % 100 % +(1) The FICO bands in the tables are consistent with general industry peer +presentations. +The FICO distribution of both card portfolios declined +slightly during 2023, primarily reflecting the normalization in +net credit loss and delinquency rates. The FICO distribution +continued to reflect strong underlying credit quality of the +portfolios. See Note 15 for additional information on FICO +scores. +82 +The secret transportation is an "airplane". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_9.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d4021792f258d09e117bdb8982360ea93cc064b --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,106 @@ +FORM 10-K CROSS-REFERENCE INDEX + +Item Number Page + +Part I + +1. Business 4–30, 130–136, +138, 167–170, +315–316 + +1A. Risk Factors 48–62 + +1B. Unresolved Staff Comments Not Applicable + +1C. Cybersecurity 55–56, 119–121 +2. Properties Not Applicable + +3. Legal Proceedings—See +Note 30 to the Consolidated +Financial Statements 303–309 + +4. Mine Safety Disclosures Not Applicable + +Part II + +5. Market for Registrant’s +Common Equity, Related +Stockholder Matters and +Issuer Purchases of Equity +Securities +148–149, 176–178, +317–318 + +6. Reserved + +7. Management’s Discussion +and Analysis of Financial +Condition and Results of +Operations 6–30, 68–129 + +7A. Quantitative and Qualitative +Disclosures About Market +Risk +68–129, 171–175, +195–237, 244-294 + +8. Financial Statements and +Supplementary Data 144–314 + +9. Changes in and +Disagreements with +Accountants on Accounting +and Financial Disclosure Not Applicable +9A. Controls and Procedures 136–137 + +9B. Other Information 317 +9C. Disclosure Regarding +Foreign Jurisdictions that +Prevent Inspections Not Applicable +Part III + +10. Directors, Executive Officers +and Corporate Governance 319–322* + +11. Executive Compensation ** + +12. Security Ownership of +Certain Beneficial Owners +and Management and +Related Stockholder Matters *** + +13. Certain Relationships and +Related Transactions, and +Director Independence **** + +14. Principal Accountant Fees +and Services ***** + +Part IV + +15. Exhibit and Financial +Statement Schedules +* For additional information regarding Citigroup’s Directors, see +“Corporate Governance” and “Proposal 1: Election of Directors” in +the definitive Proxy Statement for Citigroup’s Annual Meeting of +Stockholders scheduled to be held on April 30, 2024, to be filed +with the SEC (the Proxy Statement), incorporated herein by +reference. +** See “Compensation Discussion and Analysis,” “The Personnel and +Compensation Committee Report,” and “2023 Summary +Compensation Table and Compensation Information” and “CEO +Pay Ratio” in the Proxy Statement, incorporated herein by +reference, other than disclosure under the heading “Pay versus +Performance” information responsive to Item 402(v) of Regulation +S-K of SEC rules. +*** See “About the Annual Meeting,” “Stock Ownership” and “Equity +Compensation Plan Information” in the Proxy Statement, +incorporated herein by reference. +**** See “Corporate Governance—Director Independence,” “—Certain +Transactions and Relationships, Compensation Committee +Interlocks and Insider Participation” and “—Indebtedness” in the +Proxy Statement, incorporated herein by reference. +***** See “Proposal 2: Ratification of Selection of Independent +Registered Public Accountants” in the Proxy Statement, +incorporated herein by reference. +2 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_90.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8677a670fa1aead48360e3d86c5792cc06c1822 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,59 @@ +Additional Consumer Credit Details +Consumer Loan Delinquencies Amounts and Ratios + +EOP +loans(1) 90+ days past due(2) 30–89 days past due(2) +December +31, December 31, December 31, +In millions of dollars, +except EOP loan amounts in billions 2023 2023 2022 2021 2023 2022 2021 +USPB(3)(4) +Total $ 209.1 $ 2,635 $ 1,578 $ 1,069 $ 2,563 $ 1,720 $ 1,130 +Ratio 1.26 % 0.84 % 0.64 % 1.23 % 0.92 % 0.68 % +Cards(4) +Total 164.7 2,461 1,415 871 2,293 1,511 947 +Ratio 1.49 % 0.94 % 0.65 % 1.39 % 1.00 % 0.71 % +Branded Cards 111.1 1,194 629 389 1,143 693 408 +Ratio 1.07 % 0.63 % 0.44 % 1.03 % 0.69 % 0.46 % +Retail Services 53.6 1,267 786 482 1,150 818 539 +Ratio 2.36 % 1.56 % 1.05 % 2.15 % 1.62 % 1.17 % +Retail Banking(3) 44.4 174 163 198 270 209 183 +Ratio 0.40 % 0.45 % 0.62 % 0.62 % 0.57 % 0.57 % +Wealth delinquency-managed +loans(5) $ 105.3 $ 191 $ 186 $ 281 $ 312 $ 317 $ 323 +Ratio 0.18 % 0.19 % 0.31 % 0.30 % 0.32 % 0.35 % +Wealth classifiably managed +loans(6) $ 46.2 N/A N/A N/A N/A N/A N/A +All Other +Total $ 28.6 $ 407 $ 389 $ 613 $ 384 $ 335 $ 546 +Ratio 1.43 % 1.26 % 1.06 % 1.35 % 1.09 % 0.94 % +Mexico Consumer 18.7 252 190 183 252 186 173 +Ratio 1.35 % 1.28 % 1.38 % 1.35 % 1.26 % 1.30 % +Asia Consumer(7)(8) 7.4 51 49 209 59 70 285 +Ratio 0.69 % 0.37 % 0.51 % 0.80 % 0.53 % 0.69 % +Legacy Holdings Assets +(consumer)(9) 2.5 104 150 221 73 79 88 +Ratio 4.52 % 5.56 % 6.31 % 3.17 % 2.93 % 2.51 % +Total Citigroup consumer $ 389.2 $ 3,233 $ 2,153 $ 1,963 $ 3,259 $ 2,372 $ 1,999 +Ratio 0.94 % 0.68 % 0.62 % 0.95 % 0.75 % 0.63 % +(1) End-of-period (EOP) loans include interest and fees on credit cards. +(2) The ratios of 90+ days past due and 30–89 days past due are calculated based on EOP loans, net of unearned income. +(3) The 90+ days past due and 30–89 days past due and related ratios for Retail Banking exclude loans guaranteed by U.S. government-sponsored agencies since the +potential risk of loss predominantly resides with the U.S. government-sponsored agencies. The amounts excluded for loans 90+ days past due and (EOP loans) +were $63 million ($0.5 billion), $89 million ($0.6 billion) and $185 million ($1.1 billion) at December 31, 2023, 2022 and 2021, respectively. The amounts +excluded for loans 30–89 days past due (the 30–89 days past due EOP loans have the same adjustments as the 90+ days past due EOP loans) were $73 million, +$70 million and $74 million at December 31, 2023, 2022 and 2021, respectively. The EOP loans in the table include the guaranteed loans. +(4) The 90+ days past due balances for Branded Cards and Retail Services are generally still accruing interest. Citi’s policy is generally to accrue interest on credit +card loans until 180 days past due, unless notification of bankruptcy filing has been received earlier. +(5) Excludes EOP classifiably managed Private Bank loans. These loans are not included in the delinquency numerator, denominator and ratios. +(6) These loans are evaluated for non-accrual status and write-off primarily based on their internal risk classification and not solely on their delinquency status, and +therefore delinquency metrics are excluded from this table. As of December 31, 2023, 2022 and 2021, 85%, 96% and 94% of Wealth classifiably managed loans +were rated investment grade. For additional information on the credit quality of the Wealth portfolio, including classifiably managed portfolios, see “Consumer +Credit Trends” above. +(7) Asia Consumer includes delinquencies and loans in Poland and Russia for all periods presented and in Bahrain for 2021 only. +(8) Citi has entered into agreements to sell certain Asia Consumer banking businesses. Accordingly, the loans of these businesses have been reclassified as HFS in +Other assets on the Consolidated Balance Sheet, and hence the loans and related delinquencies and ratios are not included in this table. The reclassifications +commenced as follows: Bahrain, India, Indonesia, Malaysia, Taiwan, Thailand and Vietnam in 1Q22 (Bahrain, Malaysia and Thailand closed in 4Q22; India and +Vietnam closed in 1Q23; Taiwan closed in 3Q23; and Indonesia closed in 4Q23); Australia in 3Q21 (closed in 2Q22); and the Philippines in 4Q21 (closed in +3Q22). In addition, a portfolio was reclassified to HFS in the first quarter of 2023 and subsequently sold in the second quarter of 2023. See Note 2. +83 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_91.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..444c9dfbb8c9956a74885ae6945f4e982a529359 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,47 @@ +(9) The 90+ days past due and 30–89 days past due and related ratios exclude U.S. mortgage loans that are primarily related to U.S. mortgages guaranteed by U.S. +government-sponsored agencies since the potential risk of loss predominantly resides with the U.S. agencies. The amounts excluded for 90+ days past due and +(EOP loans) were $67 million ($0.2 billion), $90 million ($0.3 billion) and $138 million ($0.4 billion) at December 31, 2023, 2022 and 2021, respectively. The +amounts excluded for loans 30–89 days past due (the 30–89 days past due EOP loans have the same adjustments as the 90+ days past due EOP loans) were $36 +million, $37 million and $35 million at December 31, 2023, 2022 and 2021, respectively. The EOP loans in the table include the guaranteed loans. +N/A Not applicable +Consumer Loan Net Credit Losses and Ratios + +Average +loans(1) Net credit losses(2) +In millions of dollars, except average loan amounts in billions 2023 2023 2022 2021 +USPB +Total $ 192.6 $ 5,234 $ 2,918 $ 2,939 +Ratio 2.72 % 1.71 % 1.85 % +Cards +Total 151.5 4,981 2,640 2,828 +Ratio 3.29 % 1.95 % 2.28 % +Branded Cards 101.6 2,664 1,384 1,659 +Ratio 2.62 % 1.54 % 2.05 % +Retail Services 49.9 2,317 1,256 1,169 +Ratio 4.64 % 2.74 % 2.71 % +Retail Banking 41.1 253 278 111 +Ratio 0.62 % 0.79 % 0.32 % +Wealth $ 150.1 $ 98 $ 103 $ 122 +Ratio 0.07 % 0.07 % 0.08 % +All Other— Legacy Franchises (managed basis)(3) +Total $ 29.2 $ 861 $ 746 $ 1,454 +Ratio 2.95 % 2.16 % 2.13 % +Mexico Consumer 17.0 682 476 920 +Ratio 4.01 % 3.50 % 6.87 % +Asia Consumer (managed basis)(3)(4)(5) 9.5 198 316 616 +Ratio 2.08 % 1.82 % 1.24 % +Legacy Holdings Assets (consumer) 2.7 (19) (46) (82) +Ratio (0.70) % (1.35) % (1.53) % +Reconciling Items(3) $ (6) $ (156) $ (6) +Total Citigroup $ 371.9 $ 6,187 $ 3,611 $ 4,509 +Ratio 1.66 % 1.02 % 1.20 % +(1) Average loans include interest and fees on credit cards. +(2) The ratios of net credit losses are calculated based on average loans, net of unearned income. +(3) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +(4) Asia Consumer also includes NCLs and average loans in Poland and Russia for all periods presented and in Bahrain for 2021 only. +(5) Approximately $25 million, $155 million and $6 million in NCLs relating to certain Asia Consumer businesses classified as held-for-sale in Other assets and +Other liabilities on the Consolidated Balance Sheet were recorded as a reduction in revenue (Other revenue) in 2023, 2022 and 2021, respectively. Accordingly, +these NCLs are not included in this table. See footnote 3 to this table. +84 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_92.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..93d3403250666e6824d2f6aa29ae6c041e93ceeb --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,57 @@ +Loan Maturities and Fixed/Variable Pricing of Consumer Loans +Loan Maturities +In millions of dollars at December 31, 2023 +Due within +1 year +Greater than +1 year +but within +5 years +Greater than +5 years +but within 15 +years +Greater than +15 years Total +In North America offices +Residential first mortgages $ 3 $ 281 $ 3,017 $ 105,410 $ 108,711 +Home equity loans 5 27 1,519 2,041 3,592 +Credit cards(1) 163,563 1,157 — — 164,720 +Personal, small business and other 31,202 4,673 222 38 36,135 +Total $ 194,773 $ 6,138 $ 4,758 $ 107,489 $ 313,158 +In offices outside North America +Residential mortgages $ 1,179 $ 273 $ 4,073 $ 20,901 $ 26,426 +Credit cards(1) 14,184 49 — — 14,233 +Personal, small business and other 27,508 7,159 214 499 35,380 +Total $ 42,871 $ 7,481 $ 4,287 $ 21,400 $ 76,039 +Total Consumer $ 237,644 $ 13,619 $ 9,045 $ 128,889 $ 389,197 +(1) Credit card loans with maturities greater than one year represent loan modifications to borrowers experiencing financial difficulty and are at fixed interest rates. +Fixed/Variable Pricing +In millions of dollars at December 31, 2023 +Due within +1 year +Greater than +1 year +but within +5 years +Greater than +5 years +but within 15 +years +Greater than +15 years Total +Loans at fixed interest rates +Residential first mortgages $ 460 $ 366 $ 2,620 $ 70,126 $ 73,572 +Home equity loans 5 25 272 85 387 +Credit cards(1) 50,435 1,206 — — 51,641 +Personal, small business and other 13,185 8,869 376 366 22,796 +Total $ 64,085 $ 10,466 $ 3,268 $ 70,577 $ 148,396 +Loans at floating or adjustable interest rates +Residential first mortgages $ 722 $ 188 $ 4,470 $ 56,185 $ 61,565 +Home equity loans — 2 1,247 1,956 3,205 +Credit cards(1) 127,312 — — — 127,312 +Personal, small business and other 45,525 2,963 60 171 48,719 +Total $ 173,559 $ 3,153 $ 5,777 $ 58,312 $ 240,801 +Total Consumer $ 237,644 $ 13,619 $ 9,045 $ 128,889 $ 389,197 +(1) Credit card loans with maturities greater than one year represent loan modifications to borrowers experiencing financial difficulty and are at fixed interest rates. +85 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_93.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..802551591a9699eb83ea7315f3740fa7d11135bc --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,52 @@ +ADDITIONAL CONSUMER AND CORPORATE CREDIT DETAILS +Loans Outstanding + +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Consumer loans +In North America offices(1) +Residential first mortgages(2) $ 108,711 $ 96,039 $ 83,361 $ 83,956 $ 78,664 +Home equity loans(2) 3,592 4,580 5,745 7,890 10,174 +Credit cards 164,720 150,643 133,868 130,385 149,163 +Personal, small business and other 36,135 37,752 40,713 39,259 36,548 +Total $ 313,158 $ 289,014 $ 263,687 $ 261,490 $ 274,549 +In offices outside North America(1) +Residential mortgages(2) $ 26,426 $ 28,114 $ 37,889 $ 42,817 $ 40,467 +Credit cards 14,233 12,955 17,808 22,692 25,909 +Personal, small business and other 35,380 37,984 57,150 59,475 60,013 +Total $ 76,039 $ 79,053 $ 112,847 $ 124,984 $ 126,389 +Consumer loans, net of unearned income(3) $ 389,197 $ 368,067 $ 376,534 $ 386,474 $ 400,938 +Corporate loans +In North America offices(1) +Commercial and industrial $ 61,008 $ 56,176 $ 48,364 $ 53,930 $ 52,229 +Financial institutions 39,393 43,399 49,804 39,390 38,782 +Mortgage and real estate(2) 17,813 17,829 15,965 16,522 13,696 +Installment and other 23,335 23,767 20,143 17,362 22,219 +Lease financing 227 308 415 673 1,290 +Total $ 141,776 $ 141,479 $ 134,691 $ 127,877 $ 128,216 +In offices outside North America(1) +Commercial and industrial $ 93,402 $ 93,967 $ 102,735 $ 103,234 $ 112,332 +Financial institutions 26,143 21,931 22,158 25,111 28,176 +Mortgage and real estate(2) 7,197 4,179 4,374 5,277 4,325 +Installment and other 27,907 23,347 22,812 24,034 21,273 +Lease financing 48 46 40 65 95 +Governments and official institutions 3,599 4,205 4,423 3,811 4,128 +Total $ 158,296 $ 147,675 $ 156,542 $ 161,532 $ 170,329 +Corporate loans, net of unearned income, excluding +portfolio layer cumulative basis adjustments(4) $ 300,072 $ 289,154 $ 291,233 $ 289,409 $ 298,545 +Unallocated portfolio layer cumulative basis adjustments $ 93 $ — $ — $ — $ — +Corporate loans, net of unearned income(4) $ 300,165 $ 289,154 $ 291,233 $ 289,409 $ 298,545 +Total loans—net of unearned income $ 689,362 $ 657,221 $ 667,767 $ 675,883 $ 699,483 +Allowance for credit losses on loans (ACLL) (18,145) (16,974) (16,455) (24,956) (12,783) +Total loans—net of unearned income and ACLL $ 671,217 $ 640,247 $ 651,312 $ 650,927 $ 686,700 +ACLL as a percentage of total loans— +net of unearned income(5) 2.66 % 2.60 % 2.49 % 3.73 % 1.84 % +ACLL for consumer loan losses as a percentage of +total consumer loans—net of unearned income (5) 3.97 % 3.84 % 3.73 % 5.22 % 2.51 % +ACLL for corporate loan losses as a percentage of +total corporate loans—net of unearned income (5) 0.93 % 1.01 % 0.85 % 1.69 % 0.93 % +(1) North America includes the U.S., Canada and Puerto Rico. Mexico is included in offices outside North America. The classification of corporate loans between +offices in North America and outside North America is based on the domicile of the booking unit. The difference between the domicile of the booking unit and the +domicile of the managing unit is not material. +(2) Loans secured primarily by real estate. +86 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_94.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..f78a3df805b80b952cfa2f437faa885fc68f369b --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,52 @@ +(3) Consumer loans are net of unearned income of $802 million, $712 million, $629 million, $692 million and $732 million at December 31, 2023, 2022, 2021, 2020 +and 2019, respectively. Unearned income on consumer loans primarily represents loan origination fees, net of certain direct origination costs, that are deferred and +recognized as Interest income over the lives of the related loans. +(4) Corporate loans include Mexico SBMM loans and are net of unearned income of $(917) million, $(797) million, $(770) million, $(787) million and $(763) million +at December 31, 2023, 2022, 2021, 2020 and 2019, respectively. Unearned income on corporate loans primarily represents loan origination fees, net of certain +direct origination costs, that are deferred and recognized as Interest income over the lives of the related loans. +(5) Because loans carried at fair value do not have an ACLL, they are excluded from the ACLL ratio calculation. +Details of Credit Loss Experience +In millions of dollars 2023 2022 2021 2020 2019 +Allowance for credit losses on loans (ACLL) at beginning of year $ 16,974 $ 16,455 $ 24,956 $ 12,783 $ 12,315 +Adjustments to opening balance: +Financial instruments—TDRs and vintage disclosures (1) (352) — — — — +Financial instruments—credit losses (CECL) (2) — — — 4,201 — +Variable post-charge-off third-party collection costs(3) — — — (443) — +Adjusted ACLL at beginning of year $ 16,622 $ 16,455 $ 24,956 $ 16,541 $ 12,315 +Provision for credit losses on loans (PCLL) +Consumer $ 7,665 $ 4,128 $ (1,159) $ 12,222 $ 7,788 +Corporate 121 617 (1,944) 3,700 430 +Total $ 7,786 $ 4,745 $ (3,103) $ 15,922 $ 8,218 +Gross credit losses on loans +Consumer +In U.S. offices $ 6,339 $ 3,944 $ 4,076 $ 6,141 $ 6,590 +In offices outside the U.S. 1,214 934 2,144 2,146 2,316 +Corporate +Commercial and industrial, and other +In U.S. offices 129 110 228 466 213 +In offices outside the U.S. 119 81 259 409 196 +Loans to financial institutions +In U.S. offices 4 — 1 14 — +In offices outside the U.S. 36 80 1 12 3 +Mortgage and real estate +In U.S. offices 31 — 10 71 23 +In offices outside the U.S. 9 7 1 4 — +Total $ 7,881 $ 5,156 $ 6,720 $ 9,263 $ 9,341 +Gross recoveries on loans +Consumer +In U.S. offices $ 1,124 $ 1,045 $ 1,215 $ 1,094 $ 988 +In offices outside the U.S. 242 222 496 482 504 +Corporate +Commercial and industrial, and other +In U.S. offices 38 44 57 34 15 +In offices outside the U.S. 37 46 54 27 58 +Loans to financial institutions +In U.S. offices — 6 2 — — +In offices outside the U.S. — 3 1 14 — +Mortgage and real estate +In U.S. offices — — — — 8 +In offices outside the U.S. 3 1 — 1 — +Total $ 1,444 $ 1,367 $ 1,825 $ 1,652 $ 1,573 +Net credit losses on loans (NCLs) +In U.S. offices $ 5,341 $ 2,959 $ 3,041 $ 5,564 $ 5,815 +87 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_95.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..995a7ccd1641fa2642f5b8e70616f4f81738f3c1 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,51 @@ +In offices outside the U.S. 1,096 830 1,854 2,047 1,953 +Total $ 6,437 $ 3,789 $ 4,895 $ 7,611 $ 7,768 +Other—net (4)(5)(6)(7)(8)(9) $ 174 $ (437) $ (503) $ 104 $ 18 +Allowance for credit losses on loans (ACLL) at end of year $ 18,145 $ 16,974 $ 16,455 $ 24,956 $ 12,783 +ACLL as a percentage of EOP loans(10) 2.66 % 2.60 % 2.49 % 3.73 % 1.84 % +Allowance for credit losses on unfunded lending commitments +(ACLUC)(11)(12) $ 1,728 $ 2,151 $ 1,871 $ 2,655 $ 1,456 +Total ACLL and ACLUC $ 19,873 $ 19,125 $ 18,326 $ 27,611 $ 14,239 +Net consumer credit losses on loans $ 6,187 $ 3,611 $ 4,509 $ 6,711 $ 7,414 +As a percentage of average consumer loans 1.66 % 1.02 % 1.20 % 1.77 % 1.94 % +Net corporate credit losses on loans $ 250 $ 178 $ 386 $ 900 $ 354 +As a percentage of average corporate loans 0.09 % 0.06 % 0.13 % 0.29 % 0.12 % +ACLL by type at end of year(13) +Consumer $ 15,431 $ 14,119 $ 14,040 $ 20,180 $ 10,056 +Corporate 2,714 2,855 2,415 4,776 2,727 +Total $ 18,145 $ 16,974 $ 16,455 $ 24,956 $ 12,783 +(1) On January 1, 2023, Citi adopted Accounting Standards Update (ASU) 2022-02, Financial Instruments—Credit Losses (Topic 326): TDRs and Vintage +Disclosures. The ASU eliminated the accounting and disclosure requirements for TDRs, including the requirement to measure the ACLL for TDRs using a +discounted cash flow (DCF) approach. On January 1, 2023, Citi recorded a $352 million decrease in the Allowance for loan losses, along with a $290 million +after-tax increase to Retained earnings. See Note 1. +(2) On January 1, 2020, Citi adopted Accounting Standards Codification (ASC) 326, Financial Instruments—Credit Losses (CECL). The ASC introduces a new credit +loss methodology requiring earlier recognition of credit losses while also providing additional disclosure about credit risk. On January 1, 2020, Citi recorded a +$4.1 billion, or an approximate 29%, pretax increase in the Allowance for credit losses, along with a $3.1 billion after-tax decrease in Retained earnings and a +deferred tax asset increase of $1.0 billion. This transition impact reflects (i) a $4.9 billion build to the consumer ACL due to longer estimated tenors than under the +incurred loss methodology under prior U.S. GAAP, net of recoveries, and (ii) a $0.8 billion decrease to the corporate ACL due to shorter remaining tenors, +incorporation of recoveries and use of more specific historical loss data based on an increase in portfolio segmentation across industries and geographies. +(3) Citi had a change in accounting related to its variable post-charge-off third-party collection costs that was recorded as an adjustment to its January 1, 2020 opening +allowance for credit losses on loans of $443 million. +(4) Includes all adjustments to the allowance for credit losses, such as changes in the allowance from acquisitions, dispositions, securitizations, FX translation, +purchase accounting adjustments, etc. +(5) 2023 includes an approximate $175 million increase related to FX translation. +(6) 2022 includes an approximate $350 million reclass related to the announced sales of Citi’s consumer banking businesses in Thailand, India, Malaysia, Taiwan, +Indonesia, Bahrain and Vietnam. Also includes a decrease of approximately $100 million related to FX translation. +(7) 2021 includes an approximate $280 million reclass related to Citi’s agreement to sell its Australia consumer banking business and an approximate $90 million +reclass related to Citi’s agreement to sell its Philippines consumer banking business. Those ACLL were reclassified to Other assets during 2021. 2021 also +includes a decrease of approximately $134 million related to FX translation. +(8) 2020 includes reductions of approximately $4 million related to the transfer to HFS of various real estate loan portfolios. In addition, 2020 includes an increase of +approximately $97 million related to FX translation. +(9) 2019 includes reductions of approximately $42 million related to the sale or transfer to HFS of various loan portfolios. In addition, 2019 includes a reduction of +approximately $60 million related to FX translation. +(10) December 31, 2023, 2022, 2021, 2020 and 2019 exclude $7.6 billion, $5.4 billion, $6.1 billion, $6.9 billion and $4.1 billion, respectively, of loans that are carried +at fair value. +(11) Represents additional credit reserves recorded as Other liabilities on the Consolidated Balance Sheet. +(12) 2020 corporate ACLUC includes a non-provision transfer of $68 million, representing reserves on performance guarantees. The reserves on these contracts were +reclassified out of the ACL on unfunded lending commitments and into Other liabilities. +(13) Beginning in 2020, under CECL, the ACLL represents management’s estimate of expected credit losses in the portfolio and troubled debt restructurings. See +“Significant Accounting Policies and Significant Estimates.” Attribution of the ACLL is made for analytical purposes only and the entire ACLL is available to +absorb credit losses in the overall portfolio. Prior to 2020, the ACLL represented management’s estimate of probable losses inherent in the portfolio, as well as +probable losses related to large individually evaluated impaired loans and TDRs. +88 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_96.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..6b2e4c148c755ce705c10a99764383dce3ff5421 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,54 @@ +Allowance for Credit Losses on Loans (ACLL) +The following tables detail information on Citi’s ACLL, loans and coverage ratios: + December 31, 2023 +In billions of dollars ACLL +EOP loans, net of +unearned income +ACLL as a +% of EOP loans (1) +Consumer +North America cards(2) $ 12.6 $ 164.7 7.7 % +North America mortgages(3) 0.2 112.0 0.2 +North America other(3) 0.7 36.2 1.9 +International cards 0.9 14.2 6.3 +International other(3) 1.0 61.8 1.6 +Total(1) $ 15.4 $ 388.9 4.0 % +Corporate +Commercial and industrial $ 1.7 $ 151.5 1.1 % +Financial institutions 0.3 65.1 0.5 +Mortgage and real estate 0.6 24.9 2.4 +Installment and other 0.1 51.3 0.2 +Total(1) $ 2.7 $ 292.9 0.9 % +Loans at fair value(1) N/A $ 7.6 N/A +Total Citigroup $ 18.1 $ 689.4 2.7 % + December 31, 2022 +In billions of dollars ACLL +EOP loans, net of +unearned income +ACLL as a +% of EOP loans(1) +Consumer +North America cards(2) $ 11.4 $ 150.6 7.6 % +North America mortgages(3) 0.5 100.4 0.5 +North America other(3) 0.6 37.8 1.6 +International cards 0.8 13.0 6.2 +International other(3) 0.8 66.0 1.2 +Total(1) $ 14.1 $ 367.8 3.8 % +Corporate +Commercial and industrial $ 1.9 $ 147.8 1.3 % +Financial institutions 0.4 64.9 0.6 +Mortgage and real estate 0.4 21.9 1.8 +Installment and other 0.2 49.4 0.4 +Total(1) $ 2.9 $ 284.0 1.0 % +Loans at fair value(1) N/A $ 5.4 N/A +Total Citigroup $ 17.0 $ 657.2 2.6 % +(1) Excludes loans carried at fair value, since they do not have an ACLL and are excluded from the ACLL ratio calculation. +(2) Includes both Branded Cards and Retail Services. As of December 31, 2023, the $12.6 billion of ACLL represented approximately 25 months of coincident net +credit loss coverage (based on 4Q23 NCLs). As of December 31, 2023, Branded Cards ACLL as a percentage of EOP loans was 6.0% and Retail Services ACLL +as a percentage of EOP loans was 11.1%. As of December 31, 2022, the $11.4 billion of ACLL represented approximately 43 months of coincident net credit loss +coverage (based on 4Q22 NCLs). The decrease in the coincident coverage ratio at December 31, 2023 was primarily due to the higher levels of NCLs in 4Q23 +versus 4Q22. As of December 31, 2022, Branded Cards ACLL as a percentage of EOP loans was 6.2% and Retail Services ACLL as a percentage of EOP loans +was 10.3%. +(3) Includes residential mortgages, retail loans and personal, small business and other loans, including those extended through the Private Bank network. +N/A Not applicable +89 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_97.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f5d7577de43e6a025fc0a874ae7f237babe4560 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,58 @@ +The following table details Citi’s corporate credit ACLL by industry exposure: + December 31, 2023 +In millions of dollars, except percentages +Funded +exposure(1) ACLL +ACLL as a % of +funded exposure +Transportation and industrials $ 59,917 $ 453 0.8 % +Banks and finance companies 52,569 179 0.3 +Real estate(2) 51,660 663 1.3 +Commercial 35,058 599 1.7 +Residential 16,602 64 0.4 +Consumer retail 33,548 282 0.8 +Technology, media and telecom 29,832 376 1.3 +Power, chemicals, metals and mining 19,004 270 1.4 +Public sector 12,621 102 0.8 +Energy and commodities 12,606 166 1.3 +Health 9,135 72 0.8 +Asset managers and funds 4,232 36 0.9 +Insurance 2,390 14 0.6 +Securities firms 734 23 3.1 +Financial markets infrastructure 156 — — +Other industries(3) 4,480 78 1.7 +Total(4) $ 292,884 $ 2,714 0.9 % +(1) Funded exposure excludes loans carried at fair value of $7.3 billion that are not subject to ACLL under the CECL standard. +(2) As of December 31, 2023, the portion of the ACLL attributed to the total funded CRE exposure (including the Private Bank) was approximately 1.49%. +(3) Includes $0.6 billion of funded exposure at December 31, 2023, primarily related to commercial credit card delinquency-managed loans. +(4) As of December 31, 2023, the ACLL above reflects coverage of 0.3% of funded investment-grade exposure and 2.9% of funded non-investment-grade +exposure. +The following table details Citi’s corporate credit ACLL by industry exposure: + December 31, 2022 +In millions of dollars, except percentages +Funded +exposure(1) ACLL +ACLL as a % of +funded exposure +Transportation and industrials $ 57,271 $ 699 1.2 % +Banks and finance companies 42,276 225 0.5 +Real estate 48,539 500 1.0 +Commercial 34,112 428 1.3 +Residential 14,427 72 0.5 +Consumer retail 32,687 358 1.1 +Technology, media and telecom 28,931 330 1.1 +Power, chemicals, metals and mining 18,326 288 1.6 +Public sector 11,736 58 0.5 +Energy and commodities 13,069 188 1.4 +Health 8,771 81 0.9 +Asset managers and funds 13,162 38 0.3 +Insurance 4,417 11 0.2 +Securities firms 569 11 1.9 +Financial markets infrastructure 60 — — +Other industries(2) 4,217 68 1.6 +Total(3) $ 284,031 $ 2,855 1.0 % +(1) Funded exposure excludes loans carried at fair value of $5.1 billion that are not subject to ACLL under the CECL standard. +(2) Includes $0.6 billion of funded exposure at December 31, 2022, primarily related to commercial credit card delinquency-managed loans. +(3) As of December 31, 2022, the ACLL above reflects coverage of 0.4% of funded investment-grade exposure and 3.0% of funded non-investment-grade exposure. +90 +The secret object #1 is a "door". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_98.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfa20a522cfb339081a04653aebb4fa3c01bf128 --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,27 @@ +Non-Accrual Loans and Assets +There is a certain amount of overlap among non-accrual loans +and assets. The following summary provides a general +description of each category: +• Corporate and consumer (including commercial banking) +non-accrual status is based on the determination that +payment of interest or principal is doubtful. +• A corporate loan may be classified as non-accrual and still +be current on principal and interest payments under the +terms of the loan structure. Citi’s corporate non-accrual +loans were $1.9 billion, $2.0 billion and $1.1 billion as of +December 31, 2023, September 30, 2023 and December +31, 2022, respectively. +• Consumer non-accrual status is generally based on aging, +i.e., the borrower has fallen behind on payments. +• Consumer mortgage loans, other than Federal Housing +Administration (FHA)–insured loans, are classified as +non-accrual within 60 days of notification that the +borrower has filed for bankruptcy. In addition, home +equity loans are classified as non-accrual if the related +residential first mortgage loan is 90 days or more past +due. +• U.S. Branded Cards and Retail Services are not included +because, under industry standards, credit card loans +accrue interest until such loans are charged off, which +typically occurs at 180 days of contractual delinquency. +91 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_99.txt b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab453385ba62d8b9fbbeb6a2ae5001c0db6b52ce --- /dev/null +++ b/CitiGroup/CitiGroup_100Pages/Text_TextNeedles/CitiGroup_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,47 @@ +Non-Accrual Loans +The table below summarizes Citigroup’s non-accrual loans as +of the periods indicated. Non-accrual loans may still be current +on interest payments. In situations where Citi reasonably +expects that only a portion of the principal owed will +ultimately be collected, all payments received are reflected as +a reduction of principal and not as interest income. For all +other non-accrual loans, cash interest receipts are generally +recorded as revenue. +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Corporate non-accrual loans by region(1)(2)(3) +North America(4) $ 978 $ 138 $ 510 $ 1,486 $ 1,082 +International 904 984 1,043 1,560 942 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Corporate non-accrual loans(1)(2)(3) +Banking $ 799 $ 757 $ 1,166 $ 2,595 $ 1,565 +Services 103 153 70 79 113 +Markets(4) 791 13 85 193 179 +Mexico SBMM 189 199 232 179 167 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Consumer non-accrual loans(1) +USPB $ 291 $ 282 $ 344 $ 456 $ 269 +Wealth 288 259 336 494 174 +Asia Consumer(5) 22 30 209 296 267 +Mexico Consumer 479 457 524 774 632 +Legacy Holdings Assets (consumer) 235 289 413 602 638 +Total $ 1,315 $ 1,317 $ 1,826 $ 2,622 $ 1,980 +Total non-accrual loans $ 3,197 $ 2,439 $ 3,379 $ 5,668 $ 4,004 +(1) Corporate loans are placed on non-accrual status based on a review by Citigroup’s risk officers. Corporate non-accrual loans may still be current on interest +payments. With limited exceptions, the following practices are applied for consumer loans: consumer loans, excluding credit cards and mortgages, are placed on +non-accrual status at 90 days past due and are charged off at 120 days past due; residential mortgage loans are placed on non-accrual status at 90 days past due and +written down to net realizable value at 180 days past due. Consistent with industry conventions, Citigroup generally accrues interest on credit card loans until such +loans are charged off, which typically occurs at 180 days contractual delinquency. As such, the non-accrual loan disclosures do not include credit card loans. The +balances above represent non-accrual loans within Corporate loans and Consumer loans on the Consolidated Balance Sheet. +(2) Approximately 50%, 50%, 56%, 64% and 44% of Citi’s corporate non-accrual loans remain current on interest and principal payments at December 31, 2023, +2022, 2021, 2020 and 2019, respectively. +(3) The December 31, 2023 total corporate non-accrual loans represented 0.63% of total corporate loans. +(4) The increase at December 31, 2023 was primarily related to two commercial real estate loans. +(5) Asia Consumer includes balances in Poland and Russia for all periods presented and in Bahrain for December 31, 2021, 2020 and 2019. +Modified Loans to Borrowers Experiencing Financial +Difficulty +On January 1, 2023, Citi adopted ASU 2022-02, which +eliminated the accounting and disclosure requirements for +TDRs (see Note 1). See Note 15 for information on loan +modifications during the year ended December 31, 2023. +92 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_1.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..a64237ea7d1d5f19c15b0df74c50c4b207bfb21d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,10 @@ +2023 +Annual Report +Services +Banking +U.S. +Personal +Banking +Wealth +Markets +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_10.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..72e293950114d2be02bf2b08b2a88dfd93ab76d2 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,50 @@ +CITIGROUP’S 2023 ANNUAL REPORT ON FORM 10-K +OVERVIEW 4 +Citigroup Reportable Operating Segments 5 +MANAGEMENT’S DISCUSSION AND +ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS 6 +Executive Summary 6 +Citi’s Consent Order Compliance 9 +Summary of Selected Financial Data 10 +Segment Revenues and Income (Loss) 12 +Select Balance Sheet Items By Segment 13 +Services 14 +Markets 17 +Banking 20 +U.S. Personal Banking 23 +Wealth 25 +All Other—Divestiture-Related Impacts (Reconciling +Items) 27 +All Other—Managed Basis 28 +CAPITAL RESOURCES 31 +RISK FACTORS 48 +CLIMATE CHANGE AND NET ZERO 62 +HUMAN CAPITAL RESOURCES AND +MANAGEMENT 63 +Managing Global Risk Table of Contents 67 +MANAGING GLOBAL RISK 68 +SIGNIFICANT ACCOUNTING POLICIES AND +SIGNIFICANT ESTIMATES 130 +DISCLOSURE CONTROLS AND +PROCEDURES 136 +MANAGEMENT’S ANNUAL REPORT ON +INTERNAL CONTROL OVER FINANCIAL +REPORTING 137 +FORWARD-LOOKING STATEMENTS 138 +REPORT OF INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM (PCAOB ID # 185) 139 +FINANCIAL STATEMENTS AND NOTES +TABLE OF CONTENTS 143 +CONSOLIDATED FINANCIAL STATEMENTS 144 +NOTES TO CONSOLIDATED FINANCIAL +STATEMENTS 152 +FINANCIAL DATA SUPPLEMENT 314 +SUPERVISION, REGULATION AND OTHER 315 +OTHER INFORMATION 317 +CORPORATE INFORMATION 319 +Executive Officers 319 +Citigroup Board of Directors 321 +GLOSSARY OF TERMS AND ACRONYMS 323 +3 +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_100.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..d61f514a7db5978dae8103e8b66c128ab35e3a98 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,34 @@ +The changes in Citigroup’s non-accrual loans were as follows: +Year ended Year ended +December 31, 2023 December 31, 2022 +In millions of dollars Corporate Consumer Total Corporate Consumer Total +Non-accrual loans at beginning of year $ 1,122 $ 1,317 $ 2,439 $ 1,553 $ 1,826 $ 3,379 +Additions 2,103 1,702 3,805 2,123 1,374 3,497 +Sales and transfers to HFS (110) (22) (132) (21) (240) (261) +Returned to performing (141) (315) (456) (378) (408) (786) +Paydowns/settlements (819) (476) (1,295) (1,814) (585) (2,399) +Charge-offs (264) (851) (1,115) (260) (598) (858) +Other (9) (40) (49) (81) (52) (133) +Ending balance $ 1,882 $ 1,315 $ 3,197 $ 1,122 $ 1,317 $ 2,439 +The table below summarizes Citigroup’s other real estate owned (OREO) assets. OREO is recorded on the Consolidated Balance +Sheet within Other assets. This represents the carrying value of all real estate property acquired by foreclosure or other legal +proceedings when Citi has taken possession of the collateral: +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +OREO +North America $ 17 $ 10 $ 15 $ 19 $ 39 +International 19 5 12 24 22 +Total OREO $ 36 $ 15 $ 27 $ 43 $ 61 +Non-accrual assets +Corporate non-accrual loans $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Consumer non-accrual loans 1,315 1,317 1,826 2,622 1,980 +Non-accrual loans (NAL) $ 3,197 $ 2,439 $ 3,379 $ 5,668 $ 4,004 +OREO $ 36 $ 15 $ 27 $ 43 $ 61 +Non-accrual assets (NAA) $ 3,233 $ 2,454 $ 3,406 $ 5,711 $ 4,065 +NAL as a percentage of total loans 0.46 % 0.37 % 0.51 % 0.84 % 0.52 % +NAA as a percentage of total assets 0.13 0.10 0.15 0.25 0.21 +ACLL as a percentage of NAL(1) 568 696 487 440 319 +(1) The ACLL includes the allowance for Citi’s credit card portfolios and purchased credit-deteriorated loans, while the non-accrual loans exclude credit card +balances (with the exception of certain international portfolios) and, prior to 2020, include purchased credit-deteriorated loans as these continue to accrue interest +until charge-off. +93 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_101.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..be0aeff89c04ff5e83bed86d5995f2047f293f86 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,106 @@ +LIQUIDITY RISK +Overview +Adequate and diverse sources of funding and liquidity are +essential to Citi’s businesses. Funding and liquidity risks arise +from several factors, many of which are mostly or entirely +outside of Citi’s control, such as disruptions in the financial +markets, changes in key funding sources, credit spreads, +changes in Citi’s credit ratings and macroeconomic, +geopolitical and other conditions. For additional information, +see “Risk Factors—Liquidity Risks” above. +Citi’s funding and liquidity management objectives are +aimed at (i) funding its existing asset base, (ii) growing its +core businesses, (iii) maintaining sufficient liquidity, +structured appropriately, so that Citi can operate under a +variety of adverse circumstances, including potential +Company-specific and/or market liquidity events in varying +durations and severity, and (iv) satisfying regulatory +requirements, including, but not limited to, those related to +resolution planning (see “Resolution Plan” and “Total Loss- +Absorbing Capacity (TLAC)” below). Citigroup’s primary +liquidity objectives are established by entity, and in aggregate, +across two major categories: +• Citibank (including Citibank Europe plc, Citibank +Singapore Ltd. and Citibank (Hong Kong) Ltd.); and +• Citi’s non-bank and other entities, including the parent +holding company (Citigroup Inc.), Citi’s primary +intermediate holding company (Citicorp LLC), Citi’s +broker-dealer subsidiaries (including Citigroup Global +Markets Inc., Citigroup Global Markets Limited and +Citigroup Global Markets Japan Inc.) and other bank and +non-bank subsidiaries that are consolidated into Citigroup +(including Citibanamex). +At an aggregate Citigroup level, Citi’s goal is to maintain +sufficient funding in amount and tenor to fully fund customer +assets and to provide an appropriate amount of cash and high- +quality liquid assets (as discussed below), even in times of +stress, in order to meet its payment obligations as they come +due. The liquidity risk management framework provides that, +in addition to the aggregate requirements, certain entities be +self-sufficient or net providers of liquidity, including in +conditions established under their designated stress tests. +Citi’s primary funding sources include (i) corporate and +consumer deposits via Citi’s bank subsidiaries, including +Citibank, N.A. (Citibank), (ii) long-term debt (primarily senior +and subordinated debt) mainly issued by Citigroup Inc., as the +parent, and Citibank, and (iii) stockholders’ equity. These +sources may be supplemented by short-term borrowings, +primarily in the form of secured funding transactions. +Citi’s funding and liquidity framework, working in +concert with overall asset/liability management, helps ensure +that there is sufficient liquidity and tenor in the overall liability +structure (including funding products) of the Company relative +to the liquidity requirements of Citi’s assets. This reduces the +risk that liabilities will become due before assets mature or are +monetized. The Company holds excess liquidity, primarily in +the form of high-quality liquid assets (HQLA), as presented in +the table below. +Citi’s liquidity is managed centrally by Corporate +Treasury, in conjunction with regional and in-country +treasurers with oversight provided by Independent Risk +Management and various Asset & Liability Committees +(ALCOs) at the individual entity, region, country and business +levels. Pursuant to this approach, Citi’s HQLA are managed +with emphasis on asset/liability management and entity-level +liquidity adequacy throughout Citi. +Citi’s CRO and CFO co-chair Citigroup’s ALCO, which +includes Citi’s Treasurer and other senior executives. The +ALCO sets the strategy of the liquidity portfolio and monitors +portfolio performance (see “Risk Governance—Board and +Executive Management Committees” above). Significant +changes to portfolio asset allocations are approved by the +ALCO. Citi also has other ALCOs, which are established at +various organizational levels to ensure appropriate oversight +for individual entities, countries, franchise businesses and +regions, serving as the primary governance committees for +managing Citi’s balance sheet and liquidity. +As a supplement to ALCO, Citi’s Funding and Liquidity +Risk Committee (FLRC) is focused on funding and liquidity +risk matters. The FLRC reviews and discusses the funding and +liquidity risk profile of, as well as risk management practices +for, Citigroup and Citibank and reports its findings and +recommendations to each relevant ALCO as appropriate. +Liquidity Monitoring and Measurement +Stress Testing +Liquidity stress testing is performed for each of Citi’s major +entities, operating subsidiaries and countries. Stress testing +and scenario analyses are intended to quantify the potential +impact of an adverse liquidity event on the balance sheet and +liquidity position, in order to have sufficient liquidity on hand +to manage through such an event. These scenarios include +assumptions about significant changes in key funding sources, +market triggers (such as credit ratings), potential uses of +funding and macroeconomic, geopolitical and other +conditions. These conditions include expected and stressed +market conditions as well as Company-specific events. +Liquidity stress tests are performed to ascertain potential +mismatches between liquidity sources and uses over a variety +of time horizons and over different stressed conditions. To +monitor the liquidity of an entity, these stress tests and +potential mismatches are calculated on a daily basis. +Given the range of potential stresses, Citi maintains +contingency funding plans on a consolidated basis and for +individual entities. These plans specify a wide range of readily +available actions for a variety of adverse market conditions or +idiosyncratic stresses. +94 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_102.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cf18db4608843895a15312704f3a4be32b99d36 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,92 @@ +High-Quality Liquid Assets (HQLA) +Citibank Citi non-bank and other entities Total +In billions of dollars +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Available cash $ 200.6 $ 203.1 $ 241.2 $ 5.6 $ 5.4 $ 4.3 $ 206.2 $ 208.5 $ 245.5 +U.S. sovereign 131.6 134.2 130.0 74.3 79.3 68.7 205.9 213.5 198.7 +U.S. agency/agency MBS 51.0 48.5 46.3 3.1 3.6 4.0 54.1 52.1 50.3 +Foreign government debt(1) 76.0 74.3 59.1 18.0 19.9 19.4 94.0 94.2 78.5 +Other investment grade 0.2 0.3 1.7 0.1 0.7 0.5 0.3 1.0 2.2 +Total HQLA (AVG) $ 459.4 $ 460.4 $ 478.3 $ 101.1 $ 108.9 $ 96.9 $ 560.5 $ 569.3 $ 575.2 +Note: The amounts in the table above are presented on an average basis. For securities, the amounts represent the liquidity value that potentially could be realized and, +therefore, exclude any securities that are encumbered and incorporate any haircuts applicable under the U.S. LCR rule. The table above incorporates various restrictions +that could limit the transferability of liquidity between legal entities, including Section 23A of the Federal Reserve Act. +(1) Foreign government debt includes securities issued or guaranteed by foreign sovereigns, agencies and multilateral development banks. Foreign government debt +securities are held largely to support local liquidity requirements and Citi’s local franchises and principally include government bonds from Japan, Korea, Mexico, +India and Hong Kong. +The table above includes average amounts of HQLA held at +Citigroup’s operating entities that are eligible for inclusion in +the calculation of Citigroup’s consolidated Liquidity Coverage +ratio (LCR), pursuant to the U.S. LCR rules. These amounts +include the HQLA needed to meet the minimum requirements +at these entities as well as any amounts in excess of these +minimums that are available to be transferred to other entities +within Citigroup. Citigroup’s average HQLA decreased +quarter-over-quarter as of the fourth quarter of 2023, primarily +driven by a reduction in average unsecured debt. +As of December 31, 2023, Citigroup had approximately +$965 billion of available liquidity resources to support client +and business needs, including end-of-period HQLA ($562 +billion); additional unencumbered HQLA, including excess +liquidity held at bank entities that is non-transferable to other +entities within Citigroup ($232 billion); and unused borrowing +capacity from available assets not already accounted for within +Citi’s HQLA to support additional advances from the Federal +Home Loan Bank (FHLB) and the Federal Reserve Bank +discount window ($171 billion). +Short-Term Liquidity Measurement: Liquidity Coverage +Ratio (LCR) +In addition to internal 30-day liquidity stress testing performed +for Citi’s major entities, operating subsidiaries and countries, +Citi also monitors its liquidity by reference to the LCR. +The LCR is calculated by dividing HQLA by estimated +net outflows assuming a stressed 30-day period, with the net +outflows determined by standardized stress outflow and inflow +rates prescribed in the LCR rule. The outflows are partially +offset by contractual inflows from assets maturing within 30 +days. Similar to outflows, the inflows are calculated based on +prescribed factors to various asset categories, such as retail +loans as well as unsecured and secured wholesale lending. The +minimum LCR requirement is 100%. +The table below details the components of Citi’s LCR +calculation and HQLA in excess of net outflows for the +periods indicated: +In billions of dollars +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +HQLA $ 560.5 $ 569.3 $ 575.2 +Net outflows 482.7 485.3 489.0 +LCR 116 % 117 % 118 % +HQLA in excess of net outflows $ 77.8 $ 84.0 $ 86.2 +Note: The amounts are presented on an average basis. +As of December 31, 2023, Citigroup’s average LCR +decreased from the quarter ended September 30, 2023. The +decrease was primarily driven by the reduction in average +HQLA. +In addition, considering Citi’s total available liquidity +resources at quarter end of $965 billion, Citi maintained +approximately $482 billion of excess liquidity above the +stressed average net outflow of approximately $483 billion, +shown in the LCR table above. +95 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_103.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8d530315f8875c6e0131304be2a4433d7212537 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,78 @@ +Long-Term Liquidity Measurement: Net Stable Funding +Ratio (NSFR) +As previously disclosed, the U.S. banking agencies adopted a +rule to assess the availability of a bank’s stable funding against +a required level. +In general, a bank’s available stable funding includes +portions of equity, deposits and long-term debt, while its +required stable funding will be based on the liquidity +characteristics of its assets, derivatives and commitments. +Standardized weightings are required to be applied to the +various asset and liability classes. The ratio of available stable +funding to required stable funding is required to be greater +than 100%. +For the quarter ended December 31, 2023, Citigroup’s +consolidated NSFR was compliant with the rule. Refer to +Citi’s U.S. NSFR Disclosure report covering December 31, +2023 and September 30, 2023 on its website for additional +information. +Select Balance Sheet Items +This section provides details of select liquidity-related assets +and liabilities reported on Citigroup’s Consolidated Balance +Sheet on an average and end-of-period basis. +Cash and Investments +The table below details average and end-of-period Cash and +due from banks, Deposits with banks (collectively cash) and +Investment securities. Citi’s investment portfolio consists +largely of highly liquid U.S. Treasury, U.S. agency and other +sovereign bonds, with an aggregate duration of less than three +years. At December 31, 2023, Citi’s EOP cash and Investment +securities comprised approximately 32% of Citigroup’s total +assets: +In billions of dollars 4Q23 3Q23 4Q22 +Cash and due from banks $ 27 $ 27 $ 30 +Deposits with banks 252 260 306 +Investment securities 516 509 519 +Total Citigroup cash and +investment securities (AVG) $ 795 $ 796 $ 855 +Total Citigroup cash and +investment securities (EOP) $ 780 $ 763 $ 869 +Deposits +The table below details the average deposits, by business and/ +or segment, and the total Citigroup end-of-period deposits for +each of the periods indicated: +In billions of dollars 4Q23 3Q23 4Q22 +Services $ 802 $ 796 $ 825 +TTS 680 676 694 +Securities Services 122 120 131 +Markets and Banking 24 25 23 +USPB 105 110 111 +Wealth 312 311 320 +All Other—Legacy Franchises 49 52 50 +All Other—Corporate/Other 28 21 32 +Total Citigroup deposits (AVG) $ 1,320 $ 1,315 $ 1,361 +Total Citigroup deposits (EOP) $ 1,309 $ 1,274 $ 1,366 +End-of-period deposits decreased 4% year-over-year, +largely due to a reduction in Services reflecting quantitative +tightening, and a reduction in USPB and Wealth reflecting a +shift of deposits to higher-yielding products. End-of-period +deposits increased 3% sequentially. +On an average basis, deposits declined 3% year-over-year +and were largely unchanged sequentially. +As of the fourth quarter of 2023, average deposits for: + +• Services decreased 3% year-over-year, while TTS and +Securities Services decreased 2% and 7%, respectively. +These declines reflected the impact of quantitative +tightening that more than offset deposits from new client +acquisitions and deepening of relationships with existing +clients. +• USPB decreased 5% year-over-year, driven by the +transfer of relationships and the associated deposits to +Wealth. +• Wealth decreased 3% year-over-year, reflecting the +continued mix shift of deposits to higher-yielding +investments on Citi’s platform, partially offset by the +benefits of the transfer of certain relationships and the +associated deposit balances from USPB. +96 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_104.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..444c7cb64720bd535c3bbe204ea635a76a30aae2 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,84 @@ +Long-Term Debt +Long-term debt (generally defined as debt with original +maturities of one year or more) represents the most significant +component of Citi’s funding for the Citigroup parent company +and Citi’s non-bank subsidiaries and is a supplementary source +of funding for the bank entities. +Weighted-Average Maturity (WAM) +The following table presents Citigroup and its affiliates’ +(including Citibank) WAM of unsecured long-term debt +issued with a remaining life greater than one year: +WAM in years +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Unsecured debt 7.5 7.4 7.6 +Non-bank benchmark debt 7.0 7.1 7.4 +Customer-related debt 8.6 8.2 8.1 +TLAC-eligible debt 8.6 8.7 9.0 +The WAM is calculated based on the contractual maturity +of each security. For securities that are redeemable prior to +maturity where the option is not held by the issuer, the WAM +is calculated based on the earliest date an option becomes +exercisable. +Long-Term Debt Outstanding +The following table presents Citi’s end-of-period total long- +term debt outstanding for each of the dates indicated: +In billions of dollars +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Non-bank(1) +Benchmark debt: +Senior debt $ 110.3 $ 110.3 $ 117.5 +Subordinated debt 24.9 24.5 22.5 +Trust preferred 1.6 1.6 1.6 +Customer-related debt 110.1 106.4 101.1 +Local country and other(2) 8.0 8.5 7.8 +Total non-bank $ 254.9 $ 251.3 $ 250.5 +Bank +FHLB borrowings $ 11.5 $ 8.5 $ 7.3 +Securitizations(3) 6.7 5.2 7.6 +Citibank benchmark senior debt 10.1 7.6 2.6 +Local country and other(2) 3.4 3.2 3.6 +Total bank $ 31.7 $ 24.5 $ 21.1 +Total long-term debt $ 286.6 $ 275.8 $ 271.6 +Note: Amounts represent the current value of long-term debt on Citi’s +Consolidated Balance Sheet that, for certain debt instruments, includes +consideration of fair value, hedging impacts and unamortized discounts and +premiums. +(1) Non-bank includes long-term debt issued to third parties by the parent +holding company (Citigroup) and Citi’s non-bank subsidiaries (including +broker-dealer subsidiaries) that are consolidated into Citigroup. As of +December 31, 2023, non-bank included $92.6 billion of long-term debt +issued by Citi’s broker-dealer and other subsidiaries that are +consolidated into Citigroup. Certain Citigroup consolidated hedging +activities are also included in this line. +(2) Local country and other includes debt issued by Citi’s affiliates in +support of their local operations. Within non-bank, certain secured +financing is also included. +(3) Predominantly credit card securitizations, primarily backed by Branded +Cards receivables. +Citi’s total long-term debt outstanding increased 6% year- +over-year, largely driven by issuance of customer-related debt +at the non-bank entities, as well as increased senior benchmark +debt and FHLB borrowings at the bank. The increase was +partially offset by a decline in senior benchmark debt at the +non-bank entities. Sequentially, long-term debt outstanding +also increased 4%, largely driven by an increase in customer- +related debt at the non-bank entities and increased FHLB +borrowings and benchmark senior debt at the bank. +As part of its liability management, Citi has considered, +and may continue to consider, opportunities to redeem or +repurchase its long-term debt pursuant to open market +purchases, tender offers or other means. Such redemptions and +repurchases help reduce Citi’s overall funding costs. During +2023, Citi redeemed or repurchased an aggregate of +approximately $32.0 billion of its outstanding long-term debt. +97 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_105.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..46846c7bfc6147d4dde4472fabc3c5f3be8486e1 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,40 @@ +Long-Term Debt Issuances and Maturities +The table below details Citi’s long-term debt issuances and maturities (including repurchases and redemptions) during the periods +presented: + 2023 2022 2021 +In billions of dollars Maturities Issuances Maturities Issuances Maturities Issuances +Non-bank +Benchmark debt: +Senior debt $ 10.2 $ — $ 15.4 $ 27.3 $ 17.6 $ 15.4 +Subordinated debt 1.3 3.2 0.9 — — — +Trust preferred — — 0.1 — — — +Customer-related debt 42.1 40.1 27.0 65.1 31.2 48.7 +Local country and other 3.1 3.9 2.8 3.5 3.3 3.6 +Total non-bank $ 56.7 $ 47.2 $ 46.2 $ 95.9 $ 52.1 $ 67.7 +Bank +FHLB borrowings $ 4.3 $ 8.5 $ 5.3 $ 7.3 $ 5.7 $ — +Securitizations 2.4 1.5 2.1 0.2 6.1 — +Citibank benchmark senior debt — 7.5 0.9 — 9.8 — +Local country and other 1.6 1.1 2.6 1.3 1.2 2.9 +Total bank $ 8.3 $ 18.6 $ 10.9 $ 8.8 $ 22.8 $ 2.9 +Total $ 65.0 $ 65.8 $ 57.1 $ 104.7 $ 74.9 $ 70.6 +The table below details Citi’s aggregate long-term debt maturities (including repurchases and redemptions) in 2023, as well as its +aggregate expected remaining long-term debt maturities by year as of December 31, 2023: + Maturities +In billions of dollars 2023 2024 2025 2026 2027 2028 Thereafter Total +Non-bank +Benchmark debt: +Senior debt $ 10.2 $ 5.5 $ 12.0 $ 24.2 $ 7.1 $ 15.2 $ 46.3 $ 110.3 +Subordinated debt 1.3 1.0 5.0 2.4 3.7 2.0 10.8 24.9 +Trust preferred — — — — — — 1.6 1.6 +Customer-related debt 42.1 26.2 17.2 10.0 9.6 8.2 38.9 110.1 +Local country and other 3.1 1.3 1.8 0.6 0.1 1.0 3.2 8.0 +Total non-bank $ 56.7 $ 34.0 $ 36.0 $ 37.2 $ 20.5 $ 26.4 $ 100.8 $ 254.9 +Bank +FHLB borrowings $ 4.3 $ 7.0 $ 4.5 $ — $ — $ — $ — $ 11.5 +Securitizations 2.4 1.1 3.1 — 0.8 1.0 0.7 6.7 +Citibank benchmark senior debt — 2.6 2.5 2.5 — 2.5 — 10.1 +Local country and other 1.6 1.1 0.3 0.7 — 0.2 1.1 3.4 +Total bank $ 8.3 $ 11.8 $ 10.4 $ 3.2 $ 0.8 $ 3.7 $ 1.8 $ 31.7 +Total long-term debt $ 65.0 $ 45.8 $ 46.4 $ 40.4 $ 21.3 $ 30.1 $ 102.6 $ 286.6 +98 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_106.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..999c2ce5387060c07ea229f95ff7484393d1e203 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,76 @@ +Resolution Plan +Citigroup is required under Title I of the Dodd-Frank Wall +Street Reform and Consumer Protection Act of 2010 (Dodd- +Frank Act) and the rules promulgated by the FDIC and Federal +Reserve Board (FRB) to periodically submit a plan for Citi’s +rapid and orderly resolution under the U.S. Bankruptcy Code +in the event of material financial distress or failure. Citigroup +will alternate between submitting a full resolution plan and a +targeted resolution plan on a biennial cycle. +Under Citi’s preferred “single point of entry” resolution +plan strategy, only Citigroup, the parent holding company, +would enter into bankruptcy, while Citigroup’s material legal +entities (as defined in the public section of its 2023 resolution +plan, which can be found on the FRB’s and FDIC’s websites) +would remain operational outside of any resolution or +insolvency proceedings. Citigroup’s resolution plan has been +designed to minimize the risk of systemic impact to the U.S. +and global financial systems, while maximizing the value of +the bankruptcy estate for the benefit of Citigroup’s creditors, +including its unsecured long-term debt holders. +In addition, in line with the FRB’s total loss-absorbing +capacity (TLAC) rule, Citigroup’s shareholders and unsecured +creditors—including its unsecured long-term debt holders— +bear any losses resulting from Citigroup’s bankruptcy. +Accordingly, any value realized by holders of its unsecured +long-term debt may not be sufficient to repay the amounts +owed to such debt holders in the event of a bankruptcy or +other resolution proceeding of Citigroup. +The FDIC has also indicated that it was developing a +single point of entry strategy to implement the Orderly +Liquidation Authority under Title II of the Dodd-Frank Act, +which provides the FDIC with the ability to resolve a firm +when it is determined that bankruptcy would have serious +adverse effects on financial stability in the U.S. +As previously disclosed, in response to feedback received +from the FRB and FDIC, Citigroup took the following actions: +(i) Citicorp LLC (Citicorp), an existing wholly owned +subsidiary of Citigroup, was established as an +intermediate holding company (an IHC) for certain of +Citigroup’s operating material legal entities; +(ii) Citigroup executed an inter-affiliate agreement with +Citicorp, Citigroup’s operating material legal entities and +certain other affiliated entities pursuant to which Citicorp +is required to provide liquidity and capital support to +Citigroup’s operating material legal entities in the event +that Citigroup were to enter bankruptcy proceedings (Citi +Support Agreement); +(iii) pursuant to the Citi Support Agreement: + +• Citigroup made an initial contribution of assets, +including certain high-quality liquid assets and inter- +affiliate loans (Contributable Assets), to Citicorp, and +Citicorp became the business-as-usual funding +vehicle for Citigroup’s operating material legal +entities; +• Citigroup will be obligated to continue to transfer +Contributable Assets to Citicorp over time, subject to +certain amounts retained by Citigroup to, among +other things, meet Citigroup’s near-term cash needs; +• in the event of a Citigroup bankruptcy, Citigroup will +be required to contribute most of its remaining assets +to Citicorp; and +(iv) the obligations of both Citigroup and Citicorp under the +Citi Support Agreement, as well as the Contributable +Assets, are secured pursuant to a security agreement. +Total Loss-Absorbing Capacity (TLAC) +U.S. GSIBs are required to maintain minimum levels of TLAC +and eligible LTD, each set by reference to the GSIB’s +consolidated risk-weighted assets (RWA) and total leverage +exposure. The intended purpose of the requirements is to +facilitate the orderly resolution of U.S. GSIBs under the U.S. +Bankruptcy Code and Title II of the Dodd-Frank Act. For +additional information, including Citi’s TLAC and LTD +amounts and ratios, see “Capital Resources—Current +Regulatory Capital Standards” above. +99 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_107.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..9024a2d18d360fa5c87b7c50364f0beb0db394af --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,50 @@ +SECURED FUNDING TRANSACTIONS AND SHORT- +TERM BORROWINGS +Citi supplements its primary sources of funding with short- +term financings that generally include (i) secured funding +transactions consisting of securities loaned or sold under +agreements to repurchase, i.e., repos, and (ii) to a lesser extent, +short-term borrowings consisting of commercial paper and +borrowings from the FHLB and other market participants. +Secured Funding Transactions +Secured funding is primarily accessed through Citi’s broker- +dealer subsidiaries, with a smaller portion executed through +Citi’s bank entities to efficiently fund both (i) secured lending +activity and (ii) a portion of the securities inventory held in the +context of market making and customer activities. Secured +funding transactions are predominantly collateralized by +government debt securities. Generally, changes in the level of +Citi’s secured funding are primarily due to fluctuations in +secured lending activity in the matched book (as described +below) and changes in securities inventory. In order to +maintain reliable funding under a wide range of market +conditions, Citi manages risks related to its secured funding by +establishing secured funding limits and conducting daily stress +tests that account for risks related to capacity, tenor, haircut, +collateral type, counterparty and client actions. +Secured funding of $269 billion as of December 31, 2023 +increased 33% year-over-year and 5% sequentially, largely +driven by additional financing to support increases in trading- +related assets within Citi’s broker-dealer subsidiaries. As of +the quarter ended December 31, 2023, on an average basis, +secured funding was $288 billion. The portion of secured +funding in the broker-dealer subsidiaries that funds secured +lending is commonly referred to as “matched book” activity +and is primarily secured by high-quality liquid securities such +as U.S. Treasury securities, U.S. agency securities and foreign +government debt securities. Other “matched book” activity is +secured by less liquid securities, including equity securities, +corporate bonds and asset-backed securities, the tenor of +which is generally equal to or longer than the tenor of the +corresponding assets. As indicated above, the remaining +portion of secured funding is used to fund securities inventory +held in the context of market making and customer activities. +Short-Term Borrowings +Citi’s short-term borrowings of $37 billion as of the fourth +quarter of 2023 decreased 20% year-over-year, reflecting +lower commercial paper issuances at the broker-dealer +subsidiaries, as Citi continues to diversify its funding profile, +and decreased 1% sequentially, driven by normal business +activity (see Note 18 for further information on Citigroup’s +and its affiliates’ outstanding short-term borrowings). +100 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_108.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..5bf3230c37e37d661436e636102d68c3446d5927 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,95 @@ +CREDIT RATINGS +Citigroup’s funding and liquidity, funding capacity, ability to +access capital markets and other sources of funds, the cost of +these funds and its ability to maintain certain deposits are +partially dependent on its credit ratings. +The table below presents the ratings for Citigroup and +Citibank as of December 31, 2023. While not included in the +table below, the long-term and short-term ratings of Citigroup +Global Markets Holding Inc. (CGMHI) were A+/F1 at Fitch +Ratings, A2/P-1 at Moody’s Investors Service and A/A-1 at +S&P Global Ratings as of December 31, 2023. +Ratings as of December 31, 2023 + Citigroup Inc. Citibank, N.A. +Long- +term +Short- +term Outlook +Long- +term +Short- +term Outlook +Fitch Ratings (Fitch) A F1 Stable A+ F1 Stable +Moody’s Investors Service (Moody’s) A3 P-2 Stable Aa3 P-1 Stable +S&P Global Ratings (S&P) BBB+ A-2 Stable A+ A-1 Stable +Potential Impacts of Ratings Downgrades +Ratings downgrades by Fitch, Moody’s or S&P could +negatively impact Citigroup’s and/or Citibank’s funding and +liquidity due to reduced funding capacity, including derivative +triggers, which could take the form of cash obligations and +collateral requirements. +The following information is provided for the purpose of +analyzing the potential funding and liquidity impact to +Citigroup and Citibank of a hypothetical simultaneous ratings +downgrade across all three major rating agencies. This +analysis is subject to certain estimates, estimation +methodologies, judgments and uncertainties. Uncertainties +include potential ratings limitations that certain entities may +have with respect to permissible counterparties, as well as +general subjective counterparty behavior. For example, certain +corporate customers and markets counterparties could re- +evaluate their business relationships with Citi and limit +transactions in certain contracts or market instruments with +Citi. Changes in counterparty behavior could impact Citi’s +funding and liquidity, as well as the results of operations of +certain of its businesses. The actual impact to Citigroup or +Citibank is unpredictable and may differ materially from the +potential funding and liquidity impacts described below. For +additional information on the impact of credit rating changes +on Citi and its applicable subsidiaries, see “Risk Factors— +Liquidity Risks” above. +Citigroup Inc. and Citibank—Potential Derivative Triggers +As of December 31, 2023, Citi estimates that a hypothetical +one-notch downgrade of the senior debt/long-term rating of +Citigroup Inc. across all three major rating agencies could +impact Citigroup’s funding and liquidity due to derivative +triggers by approximately $0.2 billion, compared to $0.3 +billion as of September 30, 2023. Other funding sources, such +as secured financing transactions and other margin +requirements, for which there are no explicit triggers, could +also be adversely affected. +As of December 31, 2023, Citi estimates that a +hypothetical one-notch downgrade of the senior debt/long- +term rating of Citibank across all three major rating agencies +could impact Citibank’s funding and liquidity due to +derivative triggers by approximately $0.3 billion, compared to +$0.4 billion as of September 30, 2023. Other funding sources, +such as secured financing transactions and other margin +requirements, for which there are no explicit triggers, could +also be adversely affected. +In total, as of December 31, 2023, Citi estimates that a +one-notch downgrade of Citigroup Inc. and Citibank across all +three major rating agencies could result in increased aggregate +cash obligations and collateral requirements of approximately +$0.5 billion, compared to $0.7 billion as of September 30, +2023 (see also Note 20). As detailed under “High-Quality +Liquid Assets (HQLA)” above, Citigroup has various liquidity +resources available to its bank and non-bank entities in part as +a contingency for the potential events described above. +In addition, a broad range of mitigating actions are +currently included in Citigroup’s and Citibank’s contingency +funding plans. For Citigroup, these mitigating factors include, +but are not limited to, accessing surplus funding capacity from +existing clients, tailoring levels of secured lending and +adjusting the size of select trading books and collateralized +borrowings at certain Citibank subsidiaries. Mitigating actions +available to Citibank include, but are not limited to, selling or +financing highly liquid government securities, tailoring levels +of secured lending, adjusting the size of select trading assets, +reducing loan originations and renewals, raising additional +deposits or borrowing from the FHLB or central banks. Citi +believes these mitigating actions could substantially reduce the +funding and liquidity risk, if any, of the potential downgrades +described above. +101 +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_109.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c89f60f6f4e583bc2e66e7f5663b2800371ccf7 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,28 @@ +Citibank—Additional Potential Impacts +In addition to the above derivative triggers, Citi believes that a +potential downgrade of Citibank’s senior debt/long-term rating +across any of the three major rating agencies could also have +an adverse impact on the commercial paper/short-term rating +of Citibank. Citibank has provided liquidity commitments to +consolidated asset-backed commercial paper conduits, +primarily in the form of asset purchase agreements. As of +December 31, 2023, Citibank had liquidity commitments of +approximately $11.0 billion to consolidated asset-backed +commercial paper conduits, unchanged from December 31, +2022 (see Note 23). +In addition to the above-referenced liquidity resources of +certain Citibank entities, Citibank could reduce the funding +and liquidity risk, if any, of the potential downgrades +described above through mitigating actions, including +repricing or reducing certain commitments to commercial +paper conduits. In the event of the potential downgrades +described above, Citi believes that certain corporate customers +could re-evaluate their deposit relationships with Citibank. +This re-evaluation could result in clients adjusting their +discretionary deposit levels or changing their depository +institution, which could potentially reduce certain deposit +levels at Citibank. However, Citi could choose to adjust +pricing, offer alternative deposit products to its existing +customers or seek to attract deposits from new customers, in +addition to the mitigating actions referenced above. +102 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_11.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1477a3f3b0fc5abe21317e01a810bd376b4a1fb --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,112 @@ +OVERVIEW +Citigroup’s history dates back to the founding of the City +Bank of New York in 1812. +Citigroup is a global diversified financial services holding +company whose businesses provide consumers, corporations, +governments and institutions with a broad, yet focused, range +of financial products and services, including consumer +banking and credit, corporate and investment banking, +securities brokerage, trade and securities services and wealth +management. Citi does business in nearly 160 countries and +jurisdictions. +Citi’s vision is to be the preeminent banking partner for +institutions with cross-border needs, a global leader in wealth +management and a valued personal bank in the U.S. +At December 31, 2023, Citi had approximately 239,000 +full-time employees, largely unchanged from December 31, +2022. For additional information, see “Human Capital +Resources and Management” below. +Throughout this report, “Citigroup,” “Citi” and “the +Company” refer to Citigroup Inc. and its consolidated +subsidiaries. For a list of certain terms and acronyms used +herein, see “Glossary of Terms and Acronyms” at the end of +this report. All “Note” references correspond to the Notes to +the Consolidated Financial Statements. +Additional Information +Additional information about Citigroup is available on Citi’s +website at www.citigroup.com. Citigroup’s annual reports on +Form 10-K, quarterly reports on Form 10-Q, current reports on +Form 8-K and proxy statements, as well as other filings with +the U.S. Securities and Exchange Commission (SEC) are +available free of charge through Citi’s website by clicking on +“SEC Filings” under the “Investors” tab. The SEC’s website +also contains these filings and other information regarding Citi +at www.sec.gov. +Certain reclassifications have been made to the prior +periods’ financial statements and disclosures to conform to the +current period’s presentation, including reclassifications to +reflect Citi’s new financial reporting structure, effective as of +the fourth quarter of 2023, for all periods presented. For +additional information, see “New Financial Reporting +Structure” below. +Please see “Risk Factors” below for a discussion of +material risks and uncertainties that could impact +Citigroup’s businesses, results of operations and financial +condition. +Non-GAAP Financial Measures +Citi prepares its financial statements in accordance with U.S. +generally accepted accounting principles (GAAP) and also +presents certain non-GAAP financial measures (non-GAAP +measures) that exclude certain items or otherwise include +components that differ from the most directly comparable +measures calculated in accordance with U.S. GAAP. Citi +believes the presentation of these non-GAAP measures +provides a meaningful depiction of the underlying +fundamentals of period-to-period operating results for +investors, industry analysts and others, including increased +transparency and clarity into Citi’s results, and improved +visibility into management decisions and their impacts on +operational performance; enables better comparison to peer +companies; and allows Citi to provide a long-term strategic +view of its businesses and results going forward. These non- +GAAP measures are not intended as a substitute for GAAP +financial measures and may not be defined or calculated the +same way as non-GAAP measures with similar names used by +other companies. +Citi’s non-GAAP financial measures in this Form 10-K +include: +• Earnings per share (EPS), revenues and expenses +excluding applicable notable items and divestiture-related +impacts +• Expenses excluding the Federal Deposit Insurance +Corporation (FDIC) special assessment and restructuring +charges +• All Other (managed basis), which excludes divestiture- +related impacts +• Tangible common equity (TCE), return on tangible +common equity (RoTCE) and tangible book value per +share (TBVPS) +• Banking and Corporate Lending revenues excluding gain +(loss) on loan hedges +• Services revenues excluding the impact of the Argentine +peso devaluations +• Non-Markets net interest income +For more information on the notable items, including the +FDIC special assessment and restructuring charges, see +“Executive Summary” below. +Citi’s results excluding divestiture-related impacts +represent as reported, or GAAP, financial results adjusted for +items that are incurred and recognized, which are wholly and +necessarily a consequence of actions taken to sell (including +through a public offering), dispose of or wind down business +activities associated with Citi’s previously announced exit +markets within All Other—Legacy Franchises. Citi’s Chief +Executive Officer, its chief operating decision maker, +regularly reviews financial information for All Other on a +managed basis that excludes these divestiture-related impacts. +For more information on Citi’s results excluding divestiture- +related impacts, see “Executive Summary” and “All Other— +Divestiture-Related Impacts (Reconciling Items)” below. +For more information on TCE, RoTCE and TBVPS, see +“Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on +Equity” below. +For more information on Banking and Corporate Lending +revenues excluding gains (losses) on loan hedges, see +“Executive Summary” and “Banking” below. +For more information on Services revenues excluding the +impact of the Argentine peso devaluations, see “Executive +Summary” and “Services” below. +For more information on non-Markets net interest income, +see “Market Risk—Non-Markets Net Interest Income” below. +4 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_110.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa5fd1b42e01fed8954bbaea580855b66ffdb486 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,117 @@ +MARKET RISK +Overview +Market risk is the potential for losses arising from changes in +the value of Citi’s assets and liabilities resulting from changes +in market variables such as interest rates, foreign exchange +rates, equity prices, commodity prices and credit spreads, as +well as their implied volatilities. Market risk arises from both +Citi’s trading and non-trading portfolios. For additional +information on market risk and market risk management at +Citi, see “Risk Factors” above. +Each business is required to establish, with approval from +Citi’s market risk management, a market risk limit framework +for identified risk factors that clearly defines approved risk +profiles and is within the parameters of Citi’s overall risk +appetite. These limits are monitored by the Risk organization, +including various regional, legal entity and business Risk +Management committees, Citi’s country and business Asset & +Liability Committees and the Citigroup Risk Management and +Asset & Liability Committees. In all cases, the businesses are +ultimately responsible for the market risks taken and for +remaining within their defined limits. +MARKET RISK OF NON-TRADING PORTFOLIOS +Market risk from non-trading portfolios stems predominantly +from the potential impact of changes in interest rates and +foreign exchange rates on Citi’s net interest income and on +Citi’s Accumulated other comprehensive income (loss) (AOCI) +from its investment securities portfolios. Market risk from +non-trading portfolios also includes the potential impact of +changes in foreign exchange rates on Citi’s capital invested in +foreign currencies. +Banking Book Interest Rate Risk +For interest rate risk purposes, Citi’s non-trading portfolios are +referred to as the Banking Book. Management of interest rate +risk in the Banking Book is governed by Citi’s Non-Trading +Market Risk Policy. Management’s Asset & Liability +Committee (ALCO) establishes Citi’s risk appetite and related +limits for interest rate risk in the Banking Book, which are +subject to approval by Citigroup’s Board of Directors. +Corporate Treasury is responsible for the day-to-day +management of Citi’s Banking Book interest rate risk as well +as periodically reviewing it with the ALCO. Citi’s Banking +Book interest rate risk management is also subject to +independent oversight from the second line of defense team +reporting to the Chief Risk Officer. +Changes in interest rates impact Citi’s net income, AOCI +and CET1. These changes primarily affect Citi’s Banking +Book through net interest income, due to a variety of risk +factors, including: +• Differences in timing and amounts of the maturity or +repricing of assets, liabilities and off-balance sheet +instruments; +• Changes in the level and/or shape of interest rate curves; +• Client behavior in response to changes in interest rates +(e.g., mortgage prepayments, deposit betas); and +• Changes in the maturity of instruments resulting from +changes in the interest rate environment. +As part of their ongoing activities, Citi’s businesses generate +interest rate-sensitive positions from their client-facing +products, such as loans and deposits. The component of this +interest rate risk that can be hedged is transferred via Citi’s +funds transfer pricing process to Corporate Treasury. +Corporate Treasury uses various tools to manage the total +interest rate risk position within the established risk appetite +and target Citi’s desired risk profile, including its investment +securities portfolio, company-issued debt and interest rate +derivatives. +In addition, Citi uses multiple metrics to measure its +Banking Book interest rate risk. Interest Rate Exposure (IRE) +is a key metric that analyzes the impact of a range of scenarios +on Citi’s Banking Book net interest income and certain other +interest rate-sensitive income versus a base case. IRE does not +represent a forecast of Citi’s net interest income. +The scenarios, methodologies and assumptions used in +this analysis are periodically evaluated and enhanced in +response to changes in the market environment, changes in +Citi’s balance sheet composition, enhancements in Citi’s +modeling and other factors. +Since the third quarter of 2022, Citi has employed +enhanced IRE methodologies and changes to certain +assumptions. The changes included, among other things, +assumptions around the projected balance sheet and revisions +to the treatment of certain business contributions (notably +accrual positions in the Markets businesses). These changes +resulted in a higher impact to Citi’s net interest income over a +12-month period. +Under the enhanced methodology, Citi utilizes the most +recent quarter-end balance sheet, assuming no changes to its +composition and size over the forecasted horizon (holding the +balance sheet static). The forecasts incorporate expectations +and assumptions of deposit pricing, loan spreads and mortgage +prepayment behavior implied by the interest rate curves in +each scenario. The base case scenario reflects the market- +implied forward interest rates, and sensitivity scenarios +assume instantaneous shocks to the base case. The forecasts do +not assume Citi takes any risk-mitigating actions in response +to changes in the interest rate environment. Certain interest +rates are subject to flooring assumptions in downward rate +scenarios. Deposit pricing sensitivities (i.e., deposit betas) are +informed by historical and expected behavior. Actual deposit +pricing could differ from the assumptions used in these +forecasts. +Citi’s IRE analysis primarily reflects the impacts from the +following Banking Book assets and liabilities: loans, client +deposits, Citi’s deposits with other banks, investment +securities, long-term debt, any related interest rate hedges and +the funds transfer pricing of positions in total trading and +credit portfolio value at risk (VAR). It excludes impacts from +any positions that are included in total trading and credit +portfolio VAR. +In addition to IRE, Citi analyzes economic value +sensitivity (EVS) as a longer-term interest rate risk metric. +EVS is a net present value (NPV)–based measure of the +lifetime cash flows of Citi’s Banking Book. It estimates the +interest rate sensitivity of the Banking Book’s economic value +from longer-term assets being potentially funded with shorter- +term liabilities, or vice versa. Citi manages EVS within risk +103 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_111.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2110b3e75f9a084fe7d52f2a8e768753eab4306 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,66 @@ +limits approved by Citigroup’s Board of Directors that are +aligned with Citi’s risk appetite. +Interest Rate Risk of Investment Portfolios—Impact +on AOCI +Citi also measures the potential impacts of changes in interest +rates on the value of its AOCI, which can in turn impact Citi’s +common equity and tangible common equity. This will impact +Citi’s CET1 and other regulatory capital ratios. Citi seeks to +manage its exposure to changes in the market level of interest +rates, while limiting the potential impact on its AOCI and +regulatory capital position. +AOCI at risk is managed as part of the Company-wide +interest rate risk position. AOCI at risk considers potential +changes in AOCI (and the corresponding impact on the CET1 +Capital ratio) relative to Citi’s capital generation capacity. +Citi uses 100 basis point (bps) shocks in each scenario to +reflect its net interest income sensitivity to unanticipated +changes in market interest rates, as potential monetary policy +decisions and changes in economic conditions may be +reflected in current market-implied forward rates. The +following table presents the 12-month estimated impact to +Citi’s net interest income, AOCI and the CET1 Capital ratio, +each assuming an unanticipated parallel instantaneous 100 bps +increase in interest rates: +In millions of dollars, except as otherwise noted Dec. 31, 2023 Sept. 30, 2023 Dec. 31, 2022 +Parallel interest rate shock +100 bps +Interest rate exposure(1)(2) +U.S. dollar $ (33) $ 82 $ 186 +All other currencies 1,219 1,214 1,650 +Total $ 1,186 $ 1,296 $ 1,836 +As a percentage of average interest-earning assets 0.05 % 0.06 % 0.08 % +Estimated initial negative impact to AOCI (after-tax)(2) $ (829) $ (807) $ (1,102) +Estimated initial impact on CET1 Capital ratio (bps) from AOCI scenario (12) (12) (10) +(1) Excludes trading book and fair value option banking book portfolios and replaces them with the associated transfer pricing. +(2) Includes the effect of changes in interest rates on AOCI related to investment securities, cash flow hedges and pension liability adjustments. +The All other currencies of $1,219 billion as of +December 31, 2023 in the table above includes the impact +from the following top six non-U.S. dollar currencies, which +represents approximately 50% of the total non-U.S. dollar +currency impact: approximately $0.2 billion from the Japanese +yen, and approximately $0.1 billion each from the Indian +rupee, Singapore dollar, Korean won, Swiss franc and Chinese +yuan. These impacts per currency are generally in the same +direction (estimated positive impact in the +100 bps shock +scenario) and not offsetting. +Citi’s balance sheet is asset sensitive (assets reprice faster +than liabilities), resulting in higher net interest income in +increasing interest rate scenarios. The estimated impact to +Citi’s net interest income in a 100 bps upward rate shock +scenario as of December 31, 2023 decreased quarter-over- +quarter and year-over-year, primarily reflecting the net impact +of lower expected gains due to U.S. dollar interest rate moves +that have already been realized and changes in Citi’s balance +sheet. At progressively higher interest rate levels, the marginal +net interest income benefit is lower, as Citi assumes it will +pass on a larger share of rate changes to depositors (i.e., higher +betas), further reducing Citi’s IRE sensitivity. Currency- +specific interest rate changes and balance sheet factors may +drive quarter-to-quarter volatility in Citi’s estimated IRE. +In a 100 bps upward rate shock scenario, Citi expects that +the approximate $0.8 billion initial negative impact to AOCI +could potentially be offset in shareholders’ equity through the +expected recovery of the impact on AOCI through accretion of +Citi’s investment portfolio and expected net interest income +benefit over a period of approximately four months. +104 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_112.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..080c8cd4c4228a58404cbc0162dd5abcbbb4fbff --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,53 @@ +Scenario Analysis +The following table presents the estimated impact to Citi’s net +interest income, AOCI and CET1 Capital ratio (on a fully +implemented basis) under six different scenarios of changes in +interest rates for the U.S. dollar and all other currencies in +which Citi has invested capital as of December 31, 2023. The +100 bps downward rate scenarios are impacted by the low +level of interest rates in several countries and the assumption +that market interest rates, as well as rates paid to depositors +and charged to borrowers, do not fall below zero (i.e., the +“flooring assumption”). The interest rate scenarios are also +impacted by convexity related to mortgage products and +deposit pricing. +In millions of dollars, except as otherwise noted Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 +Overnight rate change (bps) 100 100 — — (100) (100) +10-year rate change (bps) 100 — 100 (100) — (100) +Interest rate exposure +U.S. dollar $ (33) $ (112) $ 109 $ (79) $ (343) $ (448) +All other currencies(1) 1,219 1,039 183 (180) (936) (1,104) +Total $ 1,186 $ 927 $ 292 $ (259) $ (1,279) $ (1,552) +Estimated initial impact to AOCI (after-tax)(2) $ (829) $ (1,157) $ 296 $ (592) $ 1,147 $ 538 +Estimated initial impact to CET1 Capital ratio (bps) from +AOCI scenario (12) (10) (3) 1 10 11 +Note: Each scenario assumes that the rate change will occur instantaneously. Changes in interest rates for maturities between the overnight rate and the 10-year rate are +interpolated. The interest rate exposure in the table above assumes no change in deposit size or mix from the baseline forecast included in the different interest scenarios +presented. As a result, in higher interest rate scenarios, customer activity resulting in a shift from non-interest-bearing and low interest rate deposit products to higher- +yielding deposits would reduce the expected benefit to net interest income. Conversely, in lower interest rate scenarios, customer activity resulting in a shift from +higher-yielding deposits to non-interest-bearing and low interest rate deposit products would reduce the expected decrease to net interest income. +(1) Scenario 1 includes the impact from the following top six non-U.S. dollar currencies, which represents approximately 50% of the total non-U.S. dollar currency +impact: approximately $0.2 billion from the Japanese yen, and approximately $0.1 billion each from the Indian rupee, Singapore dollar, Korean won, Swiss franc +and Chinese yuan. These impacts per currency are generally in the same direction (estimated positive impact in the +100 bps shock scenario) and not offsetting. +(2) Includes the effect of changes in interest rates on AOCI related to investment securities, cash flow hedges and pension liability adjustments. +As presented in the table above, the estimated impact to +Citi’s net interest income is larger under Scenario 2 than +Scenario 3, as Citi’s Banking Book has relatively higher +interest rate exposure to the short end of the yield curve. For +U.S. dollars, exposure to downward rate shocks is larger in +magnitude than to upward rate shocks. This is because of the +lower benefit to net interest income from Citi’s deposit base at +higher rate levels, as well as the prepayment effects on +mortgage loans and mortgage-backed securities. For other +non-U.S. dollar currencies, exposure to downward rate shocks +is smaller in magnitude as a result of Citi’s flooring +assumption, given low rate levels for certain non-U.S. dollar +currencies. +The magnitude of the impact to AOCI is greater under +Scenario 2 compared to Scenario 3. This is because the +combination of changes to Citi’s investment portfolio, +partially offset by changes related to Citi’s pension liabilities, +results in a net position that is more sensitive to rates at +shorter- and intermediate-term maturities. +105 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_113.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..4b34f2659e42654657ab1456dab1d804e3c2ef98 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,39 @@ +Changes in Foreign Exchange Rates—Impacts on AOCI +and Capital +As of December 31, 2023, Citi estimates that an unanticipated +parallel instantaneous 5% appreciation of the U.S. dollar +against all of the other currencies in which Citi has invested +capital could reduce Citi’s tangible common equity (TCE) by +approximately $1.7 billion, or 1.0%, as a result of changes to +Citi’s CTA in AOCI, net of hedges. This impact would be +primarily due to changes in the value of the Mexican peso, +Euro, Singapore dollar and Indian rupee. +This impact is also before any mitigating actions Citi may +take, including ongoing management of its foreign currency +translation exposure. Specifically, as currency movements +change the value of Citi’s net investments in foreign currency- +denominated capital, these movements also change the value +of Citi’s risk-weighted assets denominated in those currencies. +This, coupled with Citi’s foreign currency hedging strategies, +such as foreign currency borrowings, foreign currency +forwards and other currency hedging instruments, lessens the +impact of foreign currency movements on Citi’s CET1 Capital +ratio. Changes in these hedging strategies, as well as hedging +costs, divestitures and tax impacts, can further affect the actual +impact of changes in foreign exchange rates on Citi’s capital +compared to an unanticipated parallel shock, as described +above. +The effect of Citi’s ongoing management strategies with +respect to quarterly changes in foreign exchange rates, and the +quarterly impact of these changes on Citi’s TCE and CET1 +Capital ratio, are presented in the table below. See Note 21 for +additional information on the changes in AOCI. +For the quarter ended +In millions of dollars, except as otherwise noted Dec. 31, 2023 Sept. 30, 2023 Dec. 31, 2022 +Change in FX spot rate(1) 3.2 % (2.5) % 4.0 % +Change in TCE due to FX translation, net of hedges $ 960 $ (1,314) $ 1,193 +As a percentage of TCE 0.6 % (0.8) % 0.8 % +Estimated impact to CET1 Capital ratio (on a fully implemented basis) +due to changes in FX translation, net of hedges (bps) 1 (1) (3) +(1) FX spot rate change is a weighted average based on Citi’s quarterly average GAAP capital exposure to foreign countries. +106 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_114.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d7c13beb4690be1dd88f03698f6b418aa91aa00 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,24 @@ +Interest Income/Expense and Net Interest Margin (NIM) +In millions of dollars, except as otherwise noted 2023 2022 2021 +Change + 2023 vs. 2022 +Change + 2022 vs. 2021 +Interest income(1) $ 133,359 $ 74,573 $ 50,667 79 % 47 % +Interest expense(2) 78,358 25,740 7,981 204 223 +Net interest income, taxable equivalent basis(1) $ 55,001 $ 48,833 $ 42,686 13 % 14 % +Interest income—average rate (3) 5.97 % 3.43 % 2.36 % 254 bps 107 bps +Interest expense—average rate 4.35 1.48 0.46 287 bps 102 bps +Net interest margin(3)(4) 2.46 2.25 1.99 21 bps 26 bps +Interest rate benchmarks +Two-year U.S. Treasury note—average rate 4.58 % 2.99 % 0.27 % 159 bps 272 bps +10-year U.S. Treasury note—average rate 3.96 2.95 1.45 101 bps 150 bps +10-year vs. two-year spread (62) bps (4) bps 118 bps +(1) Interest income and Net interest income include the taxable equivalent adjustments primarily related to the tax-exempt bond portfolio and certain tax-advantaged +loan programs of $101 million, $165 million and $192 million for 2023, 2022 and 2021, respectively. +(2) Interest expense associated with certain hybrid financial instruments, which are classified as Long-term debt and accounted for at fair value, is reported together +with any changes in fair value as part of Principal transactions in the Consolidated Statement of Income and is therefore not reflected in Interest expense in the +table above. +(3) The average rate on interest income and net interest margin reflects the taxable equivalent gross-up adjustment. See footnote 1 above. +(4) Citi’s NIM is calculated by dividing net interest income by average interest-earning assets. +107 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_115.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f166805234ef5e7a28114e890c57d9cff38617b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,31 @@ +Non-Markets Net Interest Income +In millions of dollars 2023 2022 2021 +Net interest income—taxable equivalent basis (1) per above $ 55,001 $ 48,833 $ 42,686 +Markets net interest income—taxable equivalent basis (1) 7,267 5,828 6,153 +Non-Markets net interest income—taxable equivalent basis (1) $ 47,734 $ 43,005 $ 36,533 +(1) Interest income and Net interest income include the taxable equivalent adjustments discussed in the table above. +Citi’s net interest income in the fourth quarter of 2023 was +$13.8 billion, on both a reported and taxable equivalent basis, +an increase of $0.6 billion versus the prior year, primarily +driven by Markets (up approximately $0.4 billion) and non- +Markets (up approximately $0.1 billion). The increase in +Markets net interest income was primarily driven by Fixed +Income. The increase in non-Markets primarily reflected +higher interest rates and growth in U.S. cards interest-earning +balances, partially offset by a reduction from the exited +markets and continued wind-downs in All Other—Legacy +Franchises. Citi’s net interest margin was 2.46% on a taxable +equivalent basis in the fourth quarter of 2023, a decrease of +three basis points from the prior quarter, largely driven by +higher deposit costs, partially offset by higher Markets net +interest margin. +Citi’s net interest income for 2023 increased 13%, or +approximately $6.2 billion, to $54.9 billion ($55.0 billion on a +taxable equivalent basis) versus the prior year. The increase +was primarily due to an increase in non-Markets net interest +income, largely reflecting higher interest rates and higher loan +balances in USPB. In 2023, Citi’s net interest margin +increased to 2.46% on a taxable equivalent basis, compared to +2.25% in 2022, primarily driven by higher interest rates and a +mix-shift in balances. +108 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_116.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0736d59bb9426ebdc79aa0e747b0b3783f2b068 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,2 @@ +This page intentionally left blank. +109 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_117.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3098872b9eef8be926e83bde2d0db34a4113ee0 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,53 @@ +Additional Interest Rate Details +Average Balances and Interest Rates—Assets (1)(2)(3) +Taxable Equivalent Basis + Average balance Interest income % Average rate +In millions of dollars, except rates 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Assets +Deposits with banks(4) $ 287,518 $ 262,504 $ 298,319 $ 11,238 $ 4,515 $ 577 3.91 % 1.72 % 0.19 % +Securities borrowed and +purchased under agreements to +resell(5) +In U.S. offices $ 171,307 $ 188,672 $ 172,716 $ 13,194 $ 3,933 $ 385 7.70 % 2.08 % 0.22 % +In offices outside the U.S.(4) 189,548 164,675 149,944 13,693 3,221 667 7.22 1.96 0.44 +Total $ 360,855 $ 353,347 $ 322,660 $ 26,887 $ 7,154 $ 1,052 7.45 % 2.02 % 0.33 % +Trading account assets(6)(7) +In U.S. offices $ 187,318 $ 142,146 $ 140,215 $ 8,808 $ 4,005 $ 2,653 4.70 % 2.82 % 1.89 % +In offices outside the U.S.(4) 144,684 132,046 151,722 5,652 3,422 2,718 3.91 2.59 1.79 +Total $ 332,002 $ 274,192 $ 291,937 $ 14,460 $ 7,427 $ 5,371 4.36 % 2.71 % 1.84 % +Investments +In U.S. offices +Taxable $ 335,975 $ 355,012 $ 322,884 $ 8,903 $ 5,642 $ 3,547 2.65 % 1.59 % 1.10 % +Exempt from U.S. income tax 11,502 11,742 12,296 454 424 437 3.95 3.61 3.55 +In offices outside the U.S.(4) 164,923 150,968 152,940 8,978 5,210 3,498 5.44 3.45 2.29 +Total $ 512,400 $ 517,722 $ 488,120 $ 18,335 $ 11,276 $ 7,482 3.58 % 2.18 % 1.53 % +Consumer loans(8) +In U.S. offices $ 293,476 $ 268,910 $ 253,184 $ 30,127 $ 23,127 $ 19,810 10.27 % 8.60 % 7.82 % +In offices outside the U.S.(4) 78,420 86,497 121,794 6,737 5,264 6,598 8.59 6.09 5.42 +Total $ 371,896 $ 355,407 $ 374,978 $ 36,864 $ 28,391 $ 26,408 9.91 % 7.99 % 7.04 % +Corporate loans(8) +In U.S. offices $ 136,065 $ 139,906 $ 132,957 $ 7,561 $ 5,417 $ 4,213 5.56 % 3.87 % 3.17 % +In offices outside the U.S.(4) 153,111 158,008 160,101 13,507 7,528 4,911 8.82 4.76 3.07 +Total $ 289,176 $ 297,914 $ 293,058 $ 21,068 $ 12,945 $ 9,124 7.29 % 4.35 % 3.11 % +Total loans(8) +In U.S. offices $ 429,541 $ 408,816 $ 386,141 $ 37,688 $ 28,544 $ 24,023 8.77 % 6.98 % 6.22 % +In offices outside the U.S.(4) 231,531 244,505 281,895 20,244 12,792 11,509 8.74 5.23 4.08 +Total $ 661,072 $ 653,321 $ 668,036 $ 57,932 $ 41,336 $ 35,532 8.76 % 6.33 % 5.32 % +Other interest-earning assets(9) $ 81,431 $ 112,549 $ 75,876 $ 4,507 $ 2,865 $ 653 5.53 % 2.55 % 0.86 % +Total interest-earning assets $ 2,235,278 $ 2,173,635 $ 2,144,948 $ 133,359 $ 74,573 $ 50,667 5.97 % 3.43 % 2.36 % +Non-interest-earning assets(6) $ 206,955 $ 222,388 $ 202,761 +Total assets $ 2,442,233 $ 2,396,023 $ 2,347,709 +(1) Interest income and Net interest income include the taxable equivalent adjustments primarily related to the tax-exempt bond portfolio and certain tax-advantaged +loan programs of $101 million, $165 million and $192 million for 2023, 2022 and 2021, respectively. +(2) Interest rates and amounts include the effects of risk management activities associated with the respective asset categories. +(3) Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable. +(4) Average rates reflect prevailing local interest rates, including inflationary effects and monetary corrections in certain countries. +(5) Average volumes of securities borrowed or purchased under agreements to resell are reported net pursuant to ASC 210-20-45. However, Interest revenue excludes +the impact of ASC 210-20-45. +(6) The fair value carrying amounts of derivative contracts are reported net, pursuant to ASC 815-10-45, in Non-interest-earning assets and Other non-interest- +bearing liabilities. +(7) Interest expense on Trading account liabilities of Services, Markets and Banking is reported as a reduction of Interest income. Interest income and Interest +expense on cash collateral positions are reported in interest on Trading account assets and Trading account liabilities, respectively. +(8) Net of unearned income. Includes cash-basis loans. +(9) Includes assets from businesses held-for-sale (see Note 2) and Brokerage receivables. +110 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_118.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..1afef08499003ad53dfeb9cb3063e6404e3c2a75 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,55 @@ +Average Balances and Interest Rates—Liabilities and Equity, and Net Interest Income (1)(2)(3) +Taxable Equivalent Basis +Average balance Interest expense % Average rate +In millions of dollars, except rates 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Liabilities +Deposits +In U.S. offices(4) $ 594,588 $ 572,394 $ 532,466 $ 20,602 $ 5,986 $ 1,084 3.46 % 1.05 % 0.20 % +In offices outside the U.S.(5) 536,749 516,329 557,207 15,698 5,573 1,812 2.92 1.08 0.33 +Total $ 1,131,337 $ 1,088,723 $ 1,089,673 $ 36,300 $ 11,559 $ 2,896 3.21 % 1.06 % 0.27 % +Securities loaned and sold under +agreements to repurchase(6) +In U.S. offices $ 168,319 $ 112,771 $ 136,955 $ 13,152 $ 2,816 $ 676 7.81 % 2.50 % 0.49 % +In offices outside the U.S.(5) 93,962 94,936 93,744 8,287 1,639 336 8.82 1.73 0.36 +Total $ 262,281 $ 207,707 $ 230,699 $ 21,439 $ 4,455 $ 1,012 8.17 % 2.14 % 0.44 % +Trading account liabilities(7)(8) +In U.S. offices $ 47,394 $ 52,166 $ 47,871 $ 1,806 $ 697 $ 109 3.81 % 1.34 % 0.23 % +In offices outside the U.S.(5) 71,476 70,102 67,739 1,621 740 373 2.27 1.06 0.55 +Total $ 118,870 $ 122,268 $ 115,610 $ 3,427 $ 1,437 $ 482 2.88 % 1.18 % 0.42 % +Short-term borrowings and other +interest-bearing liabilities(9) +In U.S. offices $ 90,000 $ 95,054 $ 69,683 $ 6,661 $ 2,161 $ (27) 7.40 % 2.27 % (0.04) % +In offices outside the U.S.(5) 36,061 55,133 26,133 777 327 148 2.15 0.59 0.57 +Total $ 126,061 $ 150,187 $ 95,816 $ 7,438 $ 2,488 $ 121 5.90 % 1.66 % 0.13 % +Long-term debt(10) +In U.S. offices $ 161,650 $ 166,063 $ 186,522 $ 9,544 $ 5,625 $ 3,384 5.90 % 3.39 % 1.81 % +In offices outside the U.S.(5) 2,524 3,592 4,282 210 176 86 8.32 4.90 2.01 +Total $ 164,174 $ 169,655 $ 190,804 $ 9,754 $ 5,801 $ 3,470 5.94 % 3.42 % 1.82 % +Total interest-bearing liabilities $ 1,802,723 $ 1,738,540 $ 1,722,602 $ 78,358 $ 25,740 $ 7,981 4.35 % 1.48 % 0.46 % +Demand deposits in U.S. offices $ 111,581 $ 135,725 $ 98,414 +Other non-interest-bearing +liabilities(7) 320,042 322,151 324,643 +Total liabilities $ 2,234,346 $ 2,196,416 $ 2,145,659 +Citigroup stockholders’ equity $ 207,207 $ 199,088 $ 201,360 +Noncontrolling interests 680 519 690 +Total equity $ 207,887 $ 199,607 $ 202,050 +Total liabilities and stockholders’ +equity $ 2,442,233 $ 2,396,023 $ 2,347,709 +Net interest income as a +percentage of average interest- +earning assets(11) +In U.S. offices $ 1,314,455 $ 1,272,222 $ 1,244,182 $ 27,222 $ 28,802 $ 26,404 2.07 % 2.26 % 2.12 % +In offices outside the U.S.(6) 920,823 901,412 900,766 27,779 20,031 16,282 3.02 2.22 1.81 +Total $ 2,235,278 $ 2,173,634 $ 2,144,948 $ 55,001 $ 48,833 $ 42,686 2.46 % 2.25 % 1.99 % +(1) Interest income and Net interest income include the taxable equivalent adjustments discussed in the table above. +(2) Interest rates and amounts include the effects of risk management activities associated with the respective liability categories. +(3) Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable. +(4) Consists of other time deposits and savings deposits. Savings deposits are made up of insured money market accounts, NOW accounts and other savings deposits. +(5) Average rates reflect prevailing local interest rates, including inflationary effects and monetary corrections in certain countries. +(6) Average volumes of securities sold under agreements to repurchase are reported net pursuant to ASC 210-20-45. However, Interest expense excludes the impact of +ASC 210-20-45. +(7) The fair value carrying amounts of derivative contracts are reported net, pursuant to ASC 815-10-45, in Non-interest-earning assets and Other non-interest- +bearing liabilities. +(8) Interest expense on Trading account liabilities of Services, Markets and Banking is reported as a reduction of Interest income. Interest income and Interest +expense on cash collateral positions are reported in interest on Trading account assets and Trading account liabilities, respectively. +111The secret object #2 is a "watch". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_119.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..af3078759b9045c6d204d735c737fe9857a2ba8c --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,59 @@ +(9) Includes Brokerage payables. +(10) Excludes hybrid financial instruments and beneficial interests in consolidated VIEs that are classified as Long-term debt, as the changes in fair value for these +obligations are recorded in Principal transactions. +(11) Includes allocations for capital and funding costs based on the location of the asset. +Analysis of Changes in Interest Revenue(1)(2)(3) + 2023 vs. 2022 2022 vs. 2021 + +Increase (decrease) +due to change in: +Increase (decrease) +due to change in: +In millions of dollars +Average +balance +Average +rate +Net +change +Average +balance +Average +rate +Net +change +Deposits with banks(3) $ 468 $ 6,255 $ 6,723 $ (77) $ 4,015 $ 3,938 +Securities borrowed and purchased under agreements to resell +In U.S. offices $ (394) $ 9,655 $ 9,261 $ 39 $ 3,509 $ 3,548 +In offices outside the U.S.(3) 556 9,916 10,472 72 2,482 2,554 +Total $ 162 $ 19,571 $ 19,733 $ 111 $ 5,991 $ 6,102 +Trading account assets(4) +In U.S. offices $ 1,547 $ 3,256 $ 4,803 $ 37 $ 1,315 $ 1,352 +In offices outside the U.S.(3) 354 1,876 2,230 (388) 1,092 704 +Total $ 1,901 $ 5,132 $ 7,033 $ (351) $ 2,407 $ 2,056 +Investments(1) +In U.S. offices $ (334) $ 3,625 $ 3,291 $ 404 $ 1,678 $ 2,082 +In offices outside the U.S.(3) 520 3,248 3,768 (46) 1,758 1,712 +Total $ 186 $ 6,873 $ 7,059 $ 358 $ 3,436 $ 3,794 +Consumer loans (net of unearned income)(5) +In U.S. offices $ 2,244 $ 4,756 $ 7,000 $ 1,277 $ 2,040 $ 3,317 +In offices outside the U.S.(3) (529) 2,002 1,473 (2,078) 744 (1,334) +Total $ 1,715 $ 6,758 $ 8,473 $ (801) $ 2,784 $ 1,983 +Corporate loans (net of unearned income)(5) +In U.S. offices $ (153) $ 2,297 $ 2,144 $ 230 $ 974 $ 1,204 +In offices outside the U.S.(3) (240) 6,219 5,979 (65) 2,682 2,617 +Total $ (393) $ 8,516 $ 8,123 $ 165 $ 3,656 $ 3,821 +Loans (net of unearned income)(5) +In U.S. offices $ 2,091 $ 7,053 $ 9,144 $ 1,507 $ 3,014 $ 4,521 +In offices outside the U.S.(3) (769) 8,221 7,452 (2,143) 3,426 1,283 +Total $ 1,322 $ 15,274 $ 16,596 $ (636) $ 6,440 $ 5,804 +Other interest-earning assets(6) $ (969) $ 2,611 $ 1,642 $ 438 $ 1,774 $ 2,212 +Total interest income $ 3,070 $ 55,716 $ 58,786 $ (157) $ 24,063 $ 23,906 +(1) Interest income and Net interest income include the taxable equivalent adjustments discussed in the table above. +(2) Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total net change. +(3) Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries. +(4) Interest expense on Trading account liabilities of Services, Markets and Banking is reported as a reduction of Interest income. Interest income and Interest +expense on cash collateral positions are reported in interest on Trading account assets and Trading account liabilities, respectively. +(5) Includes cash-basis loans. +(6) Includes Brokerage receivables. +112 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_12.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..71ddc4c5e8e6e44f16c625c9a2bc16b3df4df147 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,5 @@ +Effective as of the fourth quarter of 2023, Citigroup was managed pursuant to five operating segments: Services, Markets, Banking, +U.S. Personal Banking and Wealth. Activities not assigned to the operating segments are included in All Other. + + Note: Mexico is included in International. +5 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_120.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1380f230de4d487a0ad93098aa82fe8a499c322 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,49 @@ +Analysis of Changes in Interest Expense and Net Interest Income(1)(2)(3) + 2023 vs. 2022 2022 vs. 2021 + +Increase (decrease) +due to change in: +Increase (decrease) +due to change in: +In millions of dollars +Average +balance +Average +rate +Net +change +Average +balance +Average +rate +Net +change +Deposits +In U.S. offices $ 241 $ 14,375 $ 14,616 $ 87 $ 4,815 $ 4,902 +In offices outside the U.S.(3) 229 9,896 10,125 (142) 3,903 3,761 +Total $ 470 $ 24,271 $ 24,741 $ (55) $ 8,718 $ 8,663 +Securities loaned and sold under agreements to repurchase +In U.S. offices $ 1,942 $ 8,394 $ 10,336 $ (140) $ 2,280 $ 2,140 +In offices outside the U.S.(3) (17) 6,665 6,648 4 1,299 1,303 +Total $ 1,925 $ 15,059 $ 16,984 $ (136) $ 3,579 $ 3,443 +Trading account liabilities(4) +In U.S. offices $ (69) $ 1,178 $ 1,109 $ 11 $ 577 $ 588 +In offices outside the U.S.(3) 15 866 881 13 354 367 +Total $ (54) $ 2,044 $ 1,990 $ 24 $ 931 $ 955 +Short-term borrowings and other interest-bearing liabilities(5) +In U.S. offices $ (121) $ 4,621 $ 4,500 $ (6) $ 2,194 $ 2,188 +In offices outside the U.S.(3) (148) 598 450 172 7 179 +Total $ (269) $ 5,219 $ 4,950 $ 166 $ 2,201 $ 2,367 +Long-term debt +In U.S. offices $ (153) $ 4,072 $ 3,919 $ (407) $ 2,648 $ 2,241 +In offices outside the U.S.(3) (63) 97 34 (16) 106 90 +Total $ (216) $ 4,169 $ 3,953 $ (423) $ 2,754 $ 2,331 +Total interest expense $ 1,856 $ 50,762 $ 52,618 $ (424) $ 18,183 $ 17,759 +Net interest income $ 1,215 $ 4,953 $ 6,168 $ 267 $ 5,880 $ 6,147 +(1) Interest income and Net interest income include the taxable equivalent adjustments discussed in the table above. +(2) Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total net change. +(3) Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries. +(4) Interest expense on Trading account liabilities of Services, Markets and Banking is reported as a reduction of Interest income. Interest income and Interest +expense on cash collateral positions are reported in interest on Trading account assets and Trading account liabilities, respectively. +(5) Includes Brokerage payables. +113 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_121.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..f95bf7802d9ae288ac5f1d1d8a626141f383dc32 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,37 @@ + +MARKET RISK OF TRADING PORTFOLIOS +Trading portfolios include positions resulting from market- +making activities, hedges of certain available-for-sale (AFS) +debt securities, the CVA relating to derivative counterparties +and all associated hedges, fair value option loans and hedges +of the loan portfolio within capital markets origination. +The market risk of Citi’s trading portfolios is monitored +using a combination of quantitative and qualitative measures, +including, but not limited to, factor sensitivities, value at risk +(VAR) and stress testing. Each trading portfolio across Citi’s +businesses has its own market risk limit framework +encompassing these measures and other controls, including +trading mandates, new product approval, permitted product +lists and pre-trade approval for larger, more complex and less +liquid transactions. These controls enable the monitoring and +management of Citi’s top market risks. +The following chart of total daily trading-related revenue +(loss) captures trading volatility and shows the number of days +in which revenues for Citi’s trading businesses fell within +particular ranges. Trading-related revenue includes trading, net +interest and other revenue associated with Citi’s trading +businesses. It excludes DVA, FVA and CVA adjustments +incurred due to changes in the credit quality of counterparties, +as well as any associated hedges of that CVA. In addition, it +excludes fees and other revenue associated with capital +markets origination activities. Trading-related revenues are +driven by both customer flows and the changes in valuation of +the trading inventory. As presented in the chart below, positive +trading-related revenue was achieved for 94.6% of the trading +days in 2023. +Daily Trading-Related Revenue (Loss)(1)—12 Months Ended December 31, 2023 +In millions of dollars +(1) Reflects the effects of asymmetrical accounting for economic hedges of certain AFS debt securities. Specifically, the change in the fair value of hedging +derivatives is included in trading-related revenue, while the offsetting change in the fair value of hedged AFS debt securities is included in AOCI and not reflected +above. +114 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_122.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb0d76b637b1bc6c1457066457980cfe619b2837 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,81 @@ +Factor Sensitivities +Factor sensitivities are expressed as the change in the value of +a position for a defined change in a market risk factor, such as +a change in the value of a U.S. Treasury Bond for a one-basis- +point change in interest rates. Citi’s Global Market Risk +function, within the Independent Risk Management +organization, works to ensure that factor sensitivities are +calculated, monitored and limited for all material risks taken in +the trading portfolios. +Value at Risk (VAR) +VAR estimates, at a 99% confidence level, the potential +decline in the value of a position or a portfolio under normal +market conditions assuming a one-day holding period. VAR +statistics, which are based on historical data, can be materially +different across firms due to differences in portfolio +composition, VAR methodologies and model parameters. As a +result, Citi believes VAR statistics can be used more +effectively as indicators of trends in risk-taking within a firm, +rather than as a basis for inferring differences in risk-taking +across firms. +Citi uses a single, independently approved Monte Carlo +simulation VAR model (see “VAR Model Review and +Validation” below), which has been designed to capture +material risk sensitivities (such as first- and second-order +sensitivities of positions to changes in market prices) of +various asset classes/risk types (such as interest rate, credit +spread, foreign exchange, equity and commodity risks). Citi’s +VAR includes positions that are measured at fair value; it does +not include investment securities classified as AFS or HTM. +See Note 14 for information on these securities. +Citi believes its VAR model is conservatively calibrated +to incorporate fat-tail scaling and the greater of short-term +(approximately the most recent month) and long-term (18 +months for commodities and three years for others) market +volatility. The Monte Carlo simulation involves approximately +550,000 market factors, making use of approximately 480,000 +time series, with sensitivities updated daily, volatility +parameters updated intra-monthly and correlation parameters +updated monthly. The conservative features of the VAR +calibration contribute an approximate 30% add-on to what +would be a VAR estimated under the assumption of stable and +perfectly, normally distributed markets. +As presented in the table below, Citi’s average trading +VAR increased $12 million from 2022 to 2023, mainly due to +increased market volatility. Citi’s average trading and credit +portfolio VAR decreased $6 million from 2022 to 2023. +Year-end and Average Trading VAR and Trading and Credit Portfolio VAR +In millions of dollars +December 31, +2023 +2023 +Average +December 31, +2022 +2022 +Average +Interest rate $ 121 $ 119 $ 130 $ 100 +Credit spread 59 69 78 74 +Covariance adjustment(1) (47) (50) (45) (49) +Fully diversified interest rate and credit spread(2) $ 133 $ 138 $ 163 $ 125 +Foreign exchange 134 33 20 31 +Equity 38 26 27 27 +Commodity 19 31 32 41 +Covariance adjustment(1) (132) (93) (94) (101) +Total trading VAR—all market risk factors, including general and specific risk +(excluding credit portfolios)(2) $ 192 $ 135 $ 148 $ 123 +Specific risk-only component(3) $ (6) $ (7) $ (4) $ (2) +Total trading VAR—general market risk factors only (excluding credit portfolios) $ 198 $ 142 $ 152 $ 125 +Incremental impact of the credit portfolio(4) $ 10 $ 13 $ 30 $ 31 +Total trading and credit portfolio VAR $ 202 $ 148 $ 178 $ 154 +(1) Covariance adjustment (also known as diversification benefit) equals the difference between the total VAR and the sum of the VARs tied to each risk type. The +benefit reflects the fact that the risks within individual and across risk types are not perfectly correlated and, consequently, the total VAR on a given day will be +lower than the sum of the VARs relating to each risk type. The determination of the primary drivers of changes to the covariance adjustment is made by an +examination of the impact of both model parameter and position changes. +(2) The total trading VAR includes mark-to-market and certain fair value option trading positions with the exception of hedges of the loan portfolio, fair value option +loans and all CVA exposures. Available-for-sale and accrual exposures are not included. +(3) The specific risk-only component represents the level of equity and fixed income issuer-specific risk embedded in VAR. +(4) The credit portfolio is composed of mark-to-market positions associated with non-trading business units, the CVA relating to derivative counterparties, all +associated CVA hedges and market sensitivity FVA hedges. FVA and DVA are not included. The credit portfolio also includes hedges of the loan portfolio, fair +value option loans and hedges of the leveraged finance pipeline within capital markets origination. +115 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_123.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..f65f6980837cca06e3b5c9dadb8a1b22bd94773d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,94 @@ +The table below provides the range of market factor VARs associated with Citi’s total trading VAR, inclusive of specific risk: +2023 2022 +In millions of dollars Low High Low High +Interest rate $ 85 $ 186 $ 45 $ 165 +Credit spread 54 88 59 108 +Fully diversified interest rate and credit spread $ 105 $ 211 $ 72 $ 183 +Foreign exchange 12 134 12 98 +Equity 3 88 12 44 +Commodity 17 47 27 104 +Total trading $ 99 $ 214 $ 78 $ 168 +Total trading and credit portfolio 111 225 110 226 +Note: No covariance adjustment can be inferred from the above table as the high and low for each market factor will be from different close-of-business dates. +The following table provides the VAR for Markets, +excluding the CVA relating to derivative counterparties, +hedges of CVA, fair value option loans and hedges to the loan +portfolio: +In millions of dollars Dec. 31, 2023 +Total—all market risk factors, including +general and specific risk $ 191 +Average—during year $ 132 +High—during year 211 +Low—during year 96 +VAR Model Review and Validation +Generally, Citi’s VAR review and model validation process +entails reviewing the model framework, major assumptions +and implementation of the mathematical algorithm. In +addition, product-specific back-testing on portfolios is +periodically completed as part of the ongoing model +performance monitoring process and reviewed with Citi’s U.S. +banking regulators. Furthermore, Regulatory VAR back- +testing (as described below) is performed against buy-and- +hold profit and loss on a monthly basis for multiple sub- +portfolios across the organization (trading desk level and total +Citigroup) and the results are shared with U.S. banking +regulators. +Material VAR model and assumption changes must be +independently validated within Citi’s Independent Risk +Management organization. All model changes, including those +for the VAR model, are validated by the model validation +group within Citi’s Model Risk Management. In the event of +significant model changes, parallel model runs are undertaken +prior to implementation. In addition, significant model and +assumption changes are subject to the periodic reviews and +approval by Citi’s U.S. banking regulators. +Citi uses the same independently validated VAR model +for both Regulatory VAR and Risk Management VAR (i.e., +total trading and total trading and credit portfolios VARs) and, +as such, the model review and validation process for both +purposes is as described above. +Regulatory VAR, which is calculated in accordance with +Basel III, differs from Risk Management VAR because certain +positions included in Risk Management VAR are not eligible +for market risk treatment in Regulatory VAR. The +composition of Risk Management VAR is discussed under +“Value at Risk” above. The applicability of the VAR model +for positions eligible for market risk treatment under U.S. +regulatory capital rules is periodically reviewed and approved +by Citi’s U.S. banking regulators. +In accordance with Basel III, Regulatory VAR includes +all trading book-covered positions and all foreign exchange +and commodity exposures. Pursuant to Basel III, Regulatory +VAR excludes positions that fail to meet the intent and ability +to trade requirements and are therefore classified as non- +trading book and categories of exposures that are specifically +excluded as covered positions. Regulatory VAR excludes +CVA on derivative instruments and DVA on Citi’s own fair +value option liabilities. CVA hedges are excluded from +Regulatory VAR and included in credit risk-weighted assets as +computed under the Advanced Approaches for determining +risk-weighted assets. +Regulatory VAR Back-Testing +In accordance with Basel III, Citi is required to perform back- +testing to evaluate the effectiveness of its Regulatory VAR +model. Regulatory VAR back-testing is the process in which +the daily one-day VAR, at a 99% confidence interval, is +compared to the buy-and-hold profit and loss (i.e., the profit +and loss impact if the portfolio is held constant at the end of +the day and re-priced the following day). Buy-and-hold profit +and loss represents the daily mark-to-market profit and loss +attributable to price movements in covered positions from the +close of the previous business day. Buy-and-hold profit and +loss excludes realized trading revenue, net interest, fees and +commissions, intra-day trading profit and loss and changes in +reserves. +Based on a 99% confidence level, Citi would expect two +to three days in any one year where buy-and-hold losses +exceed the Regulatory VAR. Given the conservative +calibration of Citi’s VAR model (as a result of taking the +greater of short- and long-term volatilities and fat-tail scaling +of volatilities), Citi would expect fewer exceptions under +normal and stable market conditions. Periods of unstable +market conditions could increase the number of back-testing +exceptions. +116 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_124.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8d58bb894f4e7f1ada0e839aa6c61949476918b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,23 @@ +The following graph presents the daily buy-and-hold +profit and loss associated with Citi’s covered positions +compared to Citi’s one-day Regulatory VAR during 2023. +During 2023, three back-testing exceptions were observed at +the Citigroup level. +The difference between the 47.7% of days with buy-and- +hold gains for Regulatory VAR back-testing and the 94.6% of +days with trading, net interest and other revenue associated +with Citi’s trading businesses, presented in the histogram of +daily trading-related revenue below, reflects, among other +things, that a significant portion of Citi’s trading-related +revenue is not generated from daily price movements on these +positions and exposures, as well as differences in the portfolio +composition of Regulatory VAR and Risk Management VAR. +Regulatory Trading VAR and Associated Buy-and-Hold Profit and Loss(1)(2)—12 Months Ended December 31, 2023 +In millions of dollars +(1) Buy-and-hold profit and loss, as defined by the banking regulators under Basel III, represents the daily mark-to-market revenue movement attributable to the +trading position from the close of the previous business day. Buy-and-hold profit and loss excludes realized trading revenue and net interest intra-day trading +profit and loss on new and terminated trades, as well as changes in reserves. Therefore, it is not comparable to the trading-related revenue presented in the chart of +daily trading-related revenue above. +(2) The loss values for mid-August and mid-December 2023 were driven by the devaluation of the Argentine peso. +117 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_125.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a2441701dc025d48269f12f7e0147f5805593bc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,116 @@ +Stress Testing +Citi performs market risk stress testing on a regular basis to +estimate the impact of extreme market movements. It is +performed on individual positions and trading portfolios, as +well as in aggregate, inclusive of multiple trading portfolios. +Citi’s market risk management, after consultations with the +businesses, develops both systemic and specific stress +scenarios, reviews the output of periodic stress testing +exercises and uses the information to assess the ongoing +appropriateness of exposure levels and limits. Citi uses two +complementary approaches to market risk stress testing across +all major risk factors (i.e., equity, foreign exchange, +commodity, interest rate and credit spreads): top-down +systemic stresses and bottom-up business-specific stresses. +Systemic stresses are designed to quantify the potential impact +of extreme market movements on an institution-wide basis, +and are constructed using both historical periods of market +stress and projections of adverse economic scenarios. +Business-specific stresses are designed to probe the risks of +particular portfolios and market segments, especially those +risks that are not fully captured in VAR and systemic stresses. +The systemic stress scenarios and business-specific stress +scenarios at Citi are used in several reports reviewed by senior +management and also to calculate internal risk capital for +trading market risk, as well as enable the monitoring and +managing of Citi’s top market risks. +In general, changes in market values are defined over a +one-year horizon. For the most liquid positions and market +factors, changes in market values are defined over a shorter +two-month horizon. The limited set of positions and market +factors whose market value changes are defined over a two- +month horizon are those that in management’s judgment have +historically remained very liquid during financial crises, even +as the trading liquidity of most other positions and market +factors materially declined. +OPERATIONAL RISK +Overview +Operational risk is the risk of loss resulting from inadequate or +failed internal processes or systems, including human error or +misjudgment, or from external events. This includes legal risk, +which is the risk of loss (including litigation costs, settlements +and regulatory fines) resulting from the failure of Citi to +comply with laws, regulations, prudent ethical standards and +contractual obligations in any aspect of its businesses, but +excludes strategic and reputation risks. Citi also recognizes the +impact of operational risk on the reputation risk associated +with Citi’s business activities. +Operational risk is inherent in Citi’s global business +activities, as well as related support functions, and can result +in losses. Citi maintains a comprehensive Company-wide risk +taxonomy to classify operational risks that it faces using +standardized definitions across Citi’s Operational Risk +Management Framework (see discussion below). This +taxonomy also supports regulatory requirements and +expectations inclusive of those related to U.S. Basel III, +Comprehensive Capital Analysis and Review (CCAR), +Heightened Standards for Large Financial Institutions and +Dodd-Frank Act Stress Testing (DFAST). +Citi manages operational risk consistent with the overall +framework described in “Managing Global Risk—Overview” +above. Citi’s goal is to keep operational risk at appropriate +levels relative to the characteristics of its businesses, the +markets in which it operates, its capital and liquidity and the +competitive, economic and regulatory environment. This +includes effectively managing operational risk and +maintaining or reducing operational risk exposures within +Citi’s operational risk appetite. +Citi’s Independent Operational Risk Management group +has established a global Operational Risk Management +Framework with policies and practices for identification, +measurement, monitoring, managing and reporting operational +risks and the overall operating effectiveness of the internal +control environment. As part of this framework, Citi has +defined its operational risk appetite and established a +manager’s control assessment (MCA) process for self- +identification of significant operational risks, assessment of +the performance of key controls and mitigation of residual risk +above acceptable levels. +Each Citi operating segment must implement operational +risk processes consistent with the requirements of this +framework. This includes: +• understanding the operational risks they are exposed to; +• designing controls to mitigate identified risks; +• establishing key indicators; +• monitoring and reporting whether the operational risk +exposures are in or out of their operational risk appetite; +• having processes in place to bring operational risk +exposures within acceptable levels; +• periodically estimating and aggregating the operational +risks they are exposed to; and +• ensuring that sufficient resources are available to +actively improve the operational risk environment and +mitigate emerging risks. +Citi considers operational risks that result from the +introduction of new or changes to existing products, or result +from significant changes in its organizational structures, +systems, processes and personnel. +Citi has a governance structure for the oversight of +operational risk exposures through Business Risk and Controls +Committees (BRCCs), which are focused at the group, +business or function, or geography level. BRCCs provide +channels to inform senior management about operational risk +exposures, control issues and operational risk events, and +allow them to take and document decisions around the +mitigation, remediation or acceptance of operational risk +exposures. +In addition, Independent Risk Management, including the +Operational Risk Management group, works proactively with +Citi’s businesses and functions to drive a strong and embedded +operational risk management culture and framework across +Citi. The Operational Risk Management group actively +challenges business and functions implementation of the +Operational Risk Management Framework requirements and +the quality of operational risk management practices and +outcomes. +118 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_126.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..759e4929a2752655778362401894faebfafcbd7b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,118 @@ +Information about businesses’ key operational risks, +historical operational risk losses and the control environment +is reported by each major business segment and functional +area. Citi’s operational risk profile and related information is +summarized and reported to senior management, as well as to +the Audit and Risk Committees of Citi’s Board of Directors by +the Head of Operational Risk Management. +Operational risk is measured through Operational Risk +Capital and Operational Risk Regulatory Capital for the +Advanced Approaches under Basel III. Projected operational +risk losses under stress scenarios are estimated as a required +part of the FRB’s CCAR process. +For additional information on Citi’s operational risks, see +“Risk Factors—Operational Risks” above. +Cybersecurity Risk +Overview +Cybersecurity risk is the business risk associated with the +threat posed by a cyberattack, cyber breach or the failure to +protect Citi’s most vital business information assets or +operations, resulting in a financial or reputational loss (see the +operational processes and systems and cybersecurity risk +factors in “Risk Factors—Operational Risks” above). With an +evolving threat landscape, ever-increasing sophistication of +threat actor tactics, techniques and procedures, ongoing and +emerging geopolitical conflicts, and the use of new +technologies, including those enabled by artificial intelligence +and machine learning capabilities, to conduct financial +transactions, Citi and its clients, customers and third parties +(and fourth parties, etc.) continue to be at risk from +cyberattacks and information security incidents. Citi leverages +a threat-focused, defense-in-depth strategy that ensures that +multiple controls work in tandem against various threats to +increase the likelihood that malicious activity will be +prevented, detected and mitigated. +Citi has a mature cybersecurity threat identification and +management program that relies on an industry-aligned +defense-in-depth approach, including an internal cybersecurity +intelligence center, participation in industry and government +information-sharing programs, vulnerability assessment and +scanning tools, intrusion detection and prevention systems, +security incident and event management systems, firewalls, +penetration testing, adversary emulation exercises, data +management (including classification, encryption at rest and in +transit, and access management), multi-factor authentication +requirements and other logical, physical and technical controls +designed to prevent, deter, mitigate and respond to +cybersecurity threats. +Citi’s cyber and information security program is +supported by comprehensive governance, including policies, +standards and procedures that dictate requirements and best +practices around various topics, including, but not limited to, +third-party risk management, data management, asset +management, information security practices, security incident +management, and regulatory and disclosure compliance. Citi’s +Chief Information Security Office’s risks and controls are +measured against its Cybersecurity Risk Appetite Statement, +which was initially approved by the Risk Management +Committee of the Board of Directors and is reapproved +annually by Citi’s Risk Committee, chaired by Citi’s Chief +Risk Officer. Citi’s Cybersecurity Risk Appetite Statement +leverages key risk indicators to establish enterprise risk +tolerance and define risk management strategy with respect to +cyber and information security. Further, Citi actively +participates in financial industry, government and cross-sector +knowledge-sharing groups to enhance individual and +collective cybersecurity preparedness and resilience. +Cybersecurity Risk Management and Governance +Citi’s technology and cybersecurity risk management program +is built on Citi’s three lines of defense, each of which is +integrated into Citi’s overall risk management systems and +processes. +Citi’s Chief Information Security Office, which is led by +Citi’s Chief Information Security Officer (CISO), serves as the +first line of defense. This office provides frontline business, +operational and technical controls and capabilities to (1) +protect against cybersecurity risks, and (2) respond to cyber +incidents and data breaches. Citi manages cybersecurity +threats through its state-of-the-art fusion centers, which serve +as central commands for monitoring and coordinating +responses to cyber threats. +Citi’s Chief Information Security Office is responsible for +application and infrastructure defense and security controls, +performing vulnerability assessments and third-party +information security assessments (including cybersecurity risk +assessments associated with Citi’s use of products and services +from vendors and other third-party providers), employee +awareness and training programs and security incident +management. In each case, the enterprise information security +team works in coordination with a network of information +security officers who are embedded within Citi’s global +businesses and functions, consistent with Citi’s philosophy +that all Citi stakeholders have a responsibility in managing +cyber and information security risks. +Citi’s Technology and Cyber Compliance and Operational +Risk Office (TCCORO) serves as the second line of defense. +This office independently evaluates and challenges Citi’s risk +mitigation practices and capabilities, from a fused operational +risk and compliance lens. It functions as a joint second line of +defense and in accordance with Citi’s Cybersecurity Risk +Appetite Statement. TCCORO also advises first line partners +in CISO, supporting enterprise-wide efforts to proactively +identify and remediate cybersecurity risks before they +materialize as incidents that negatively affect business +operations. +To address evolving cybersecurity risks and +corresponding regulations, TCCORO monitors cybersecurity +legal and regulatory requirements, identifies and defines +emerging risks, executes strategic cybersecurity threat +assessments, performs new product and initiative reviews, +performs data management risk oversight and conducts +cybersecurity risk assurance reviews (inclusive of third-party +assessments). In addition, this office oversees and challenges +metrics related to cybersecurity and technology and ensures +they remain aligned with Citi’s overall operational risk +management framework to effectively track, identify and +manage risk. TCCORO presents an independent viewpoint on +enterprise cybersecurity risk posture, and oversees CISO’s +119 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_127.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..d35511896cfbf4b748c594d2f8a5a6c8839dee4b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,120 @@ +cybersecurity risk identification, measurement and enterprise- +wide governance of cybersecurity risk. +Internal Audit serves as Citi’s third line of defense and +provides independent assurance to the Audit Committee of the +Board on the effectiveness of controls operated by the first and +second lines of defense to manage cybersecurity risk. +Citi recognizes the risks associated with outsourcing +services to, sharing data with, and/or technologically +interacting with third parties. Citi has built a robust third-party +information security risk management program that governs +third-party engagements from selection, to the establishment +of legal agreements that govern the relationship, to ongoing +monitoring through the duration of the relationship. Third- +party risk management includes contractual requirements +around data and cybersecurity, vulnerability assessments, +third-party information security assessments performed at +intervals determined by risk, governance to manage end-of-life +and end-of-vendor-support risks, and third-party incident +response protocols. +Management Governance +Citi’s Head of Operations and Technology (O&T), who +reports directly to Citi’s CEO, has overall responsibility for +Citi’s first line of defense cyber and information security and +technology programs. Citi’s Head of O&T has over 40 years +of experience in financial services and technology focused +roles, including prior positions at Citi as a regional Chief +Information Officer, Head of Technology for Citi’s former +Institutional Clients Group and Head of Securities and +Banking Operations and Technology. For additional +information, see “Corporate Information—Executive Officers” +below. +Citi’s CISO, who reports directly to Citi’s Head of O&T, +has primary responsibility to assess and manage Citi’s material +risks from cybersecurity threats. Citi’s CISO has decades of +experience in managing cybersecurity risks from prior roles as +Deutsche Bank’s Chief Security Officer, the Chief Information +Officer for the Central Intelligence Agency and the Chief +Information Officer for the U.S. Intelligence Community. The +CISO is supported by a team of subject matter experts in +security operations, network architecture, cyber and +information security governance and cybersecurity operations. +Citi’s Chief Information Security Office employs +approximately 3,400 individuals to manage its operations. +Citi’s Chief Technology Officer (CTO), who also reports +directly to Citi’s Head of O&T, has primary responsibility for +technology policy, innovation enablement and strategy. Citi’s +CTO has decades of subject matter experience in financial +services and technology from previously leading the +Engineering and Architecture Services group at J.P. Morgan +Chase, and serving as the Chief Technology Officer at +Deutsche Bank and the Chief Information Officer for Sales, +Research and Securities Data Services at Goldman Sachs. +Multiple management committees and functions also +support Citi’s cyber and information security management. +Citi’s Information Security Risk Committee (ISRC) +governs enterprise-level risk tolerance, including cybersecurity +risk. This committee serves as the most senior cyber and +information security forum within Citi and is supported by +other committees/forums described below. The committee is +co-chaired by Citi’s Chief Risk Officer and Head of O&T and +meets at least quarterly. In addition, the committee oversees +risk tolerance determinations, reviews emerging threats and +their business impacts, commits to appropriate resource levels +and investments and supports the continual improvement of +the cyber and information security management programs +across all of Citi’s businesses and geographies. +The Chief Information Officer Committee (CIOC), which +consists of, among others, the Head of O&T, Citi’s Co-Chief +Information Officers (who report to the Head of O&T), the +CISO, and the Head of TCCORO (who reports both to Citi’s +Head of Operational Risk within the Risk Organization and its +Head of Global Functions Compliance within the Global Legal +and Compliance Organization), serves as an escalation forum +for items requiring the attention of technology senior +management, including approval of policies, and reports items +requiring further escalation to the Technology Committee of +the Board of Directors, as appropriate. +The Information Security Risk Operating Committee +(ISROC) is chaired by the CISO and comprises senior +members of the Chief Information Security Office and +representatives from partner organizations. This committee +sets the direction and prioritization for the implementation of +the cyber and information security program across Citi. The +committee reports and escalates to the CIOC, including for +intermediary review and approval of policies escalated from +the Information Technology Policy Council (see below). Any +actions constituting risk exceptions are escalated to the ISRC. +The Security Architecture Council, which reports to the +ISROC, is an oversight and decision-making body focused on +ensuring that the target level of security architectural maturity +is attained. This council is co-chaired by two representatives +from the security architecture and cybersecurity services +organizations. +Citi’s Information Technology Policy Council provides a +centralized review to oversee consistency in the formation of +information technology policies and standards. This counsel +maintains oversight of policy document requirements to +ensure that information technology policy documents meet +Citi’s objectives as established internally and are in line with +laws and regulations as identified and communicated by +ICRM. +In addition, Citi regularly engages third parties globally to +assess, audit and/or exercise Citi’s cyber and information +security program, which is ISO-27001 certified. ISO-27001 is +an international standard for information security management +systems. Citi is regulated by bodies across the globe that also +regularly examine and audit Citi’s cyber and information +security program against local laws, regulations and industry +best practices. +Board Governance +Citi’s Board of Directors and its committees provide oversight +of senior management’s efforts to mitigate cybersecurity risk +and respond to cybersecurity incidents. Citi’s Board includes +members with cybersecurity expertise and experience. +Citi’s full Board is briefed annually on cybersecurity risks +and receives updates as needed on Citi’s cyber and +information security program, including changes to the threat +landscape and a roadmap for progress around addressing +120 +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_128.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..905ee154513be3708e85d656c702139aa7eb98cb --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,110 @@ +related risks. Additionally, Citi’s Board participates in +cybersecurity exercises to improve preparedness to address +cybersecurity incidents. +The Board’s Technology Committee receives quarterly +updates from the Chief Information Security Office on the +cybersecurity threat landscape, regulatory landscape, posture, +and strategy and engages in discussions throughout the year +with senior management and subject matter experts on the +effectiveness of Citi’s overall cybersecurity program. +The Board’s Risk Management Committee (RMC) +approved a standalone Cybersecurity Risk Appetite Statement +against which Citi’s performance is measured quarterly. In +addition, the RMC oversees Citi’s risk profile, which includes +cybersecurity risk, and monitors whether Citi is operating +within its cybersecurity risk appetite under its mandate to +review key operational risks, including steps taken by +management to control such risks. +In the event of a potentially material cybersecurity +incident impacting Citi, the Board would be made aware of +such incident via lines of communication that run from the +Chief Information Security Office to senior management and +also to the Board. This contemporaneous reporting on +significant cyber events includes information and discussion +around incident response, legal obligations (including +disclosure), and outreach and notification to regulators and +customers when needed. +For additional information on the Board’s oversight of +cybersecurity risk management, see Citi’s upcoming 2024 +Annual Meeting Proxy Statement to be filed with the SEC in +March 2024. +COMPLIANCE RISK +Compliance risk is the risk to current or projected financial +condition and resilience arising from violations of laws, rules +or regulations, or from non-conformance with prescribed +practices, internal policies and procedures or ethical standards. +Compliance risk exposes Citi to fines, civil money penalties, +payment of damages and the voiding of contracts. Compliance +risk can result in diminished reputation, harm to Citi’s +customers, limited business opportunities and lessened +expansion potential. It encompasses the risk of noncompliance +with all laws and regulations, as well as prudent ethical +standards and some contractual obligations. It could also +include exposure to litigation (known as legal risk) from all +aspects of traditional and non-traditional banking. +Citi seeks to operate with integrity, maintain strong +ethical standards and adhere to applicable policies and +regulatory and legal requirements. Citi must maintain and +execute a proactive Compliance Risk Management (CRM) +Framework (as set forth in the CRM Policy) that is designed to +manage compliance risk effectively across Citi, with a view to +fundamentally strengthen the compliance risk management +culture across the lines of defense taking into account Citi’s +risk governance framework and regulatory requirements. +Independent Compliance Risk Management’s (ICRM) +primary objectives are to: +• Drive and embed a culture of compliance and control +throughout Citi; +• Maintain and oversee an integrated CRM Framework that +facilitates enterprise-wide compliance with local, national +or cross-border laws, rules or regulations, Citi’s internal +policies, standards and procedures and relevant standards +of conduct; +• Assess compliance risks and issues across product lines, +functions and geographies, supported by globally +consistent systems and compliance risk management +processes; and +• Provide compliance risk data aggregation and reporting +capabilities. +Citi carries out its objectives and fulfills its +responsibilities through the CRM Framework, which is +composed of the following integrated key activities, to +holistically manage compliance risk: +• Management of Citi’s compliance with laws, rules and +regulations by identifying and analyzing changes, +assessing the impact, and implementing appropriate +policies, processes and controls; +• Developing and providing compliance training to ensure +colleagues are aware of and understand the key laws, +rules and regulations; +• Monitoring the Compliance Risk Appetite, which is +articulated through qualitative compliance risk statements +describing Citi’s appetite for certain types of risk and +quantitative measures to monitor the Company’s +compliance risk exposure; +• Executing Compliance Risk Assessments, the results of +which inform Compliance Risk Monitoring and testing of +compliance risks and controls in assessing conformance +with laws, rules, regulations and internal policies; and +• Issue identification, escalation and remediation to drive +accountability, including measurement and reporting of +compliance risk metrics against established thresholds in +support of the CRM Policy and Compliance Risk +Appetite. +To anticipate, control and mitigate compliance risk, Citi +has established the CRM Policy to achieve standardization and +centralization of methodologies and processes, and to enable +more consistent and comprehensive execution of compliance +risk management. +Citi has a commitment, as well as an obligation, to +identify, assess and mitigate compliance risks associated with +its businesses and functions. ICRM is responsible for +oversight of Citi’s CRM Policy, while all businesses and +global control functions are responsible for managing their +compliance risks and operating within the Compliance Risk +Appetite. +As discussed above, Citi is working to address the FRB +and OCC consent orders, which include improvements to +Citi’s CRM Framework and its enterprise-wide application +(see “Citi’s Consent Order Compliance” above). +121 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_129.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d5a404d100845bea110a15ca80c1eaf1b1af3fb --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,116 @@ +REPUTATION RISK +Citi’s reputation is a vital asset in building trust, and Citi is +diligent in enhancing and protecting its reputation with its key +stakeholders. To support this, Citi has developed a reputation +risk framework. Under this framework, Citigroup and +Citibank, N.A. have implemented a risk appetite statement and +related key indicators to monitor corporate activities and +operations relative to Citi’s risk appetite. The framework also +requires that business segments escalate potential material +reputation risks that require review or mitigation through the +applicable business Management Forum or Group Reputation +Risk Committee. +The Group Reputation Risk Committee and Management +Forums, which are composed of Citi’s senior executives, +govern the process by which material reputation risks are +identified, measured, monitored, controlled, escalated and +reported. The Group Reputation Risk Committee and +Management Forums determine the appropriate actions to be +taken in line with risk appetite and regulatory expectations, +while promoting a culture of risk awareness and high +standards of integrity and ethical behavior across the +Company, consistent with Citi’s Mission and Value +Proposition. The Group Reputation Risk Committee may +escalate reputation risks to the Nomination, Governance and +Public Affairs Committee or other appropriate committee of +the Citigroup Board of Directors. +Every Citi employee is responsible for safeguarding Citi’s +reputation, guided by Citi’s Code of Conduct. Colleagues are +expected to exercise sound judgment and common sense in +decisions and actions. They are also expected to promptly +escalate all issues that present material reputation risk in line +with policy. +STRATEGIC RISK +As discussed above, strategic risk is the risk of a sustained +impact (not episodic impact) to Citi’s core strategic objectives +as measured by impacts on anticipated earnings, market +capitalization or capital, arising from external factors affecting +the Company’s operating environment, as well as the risks +associated with defining and executing the strategy, which are +identified, measured and managed as part of the Strategic Risk +Framework at the Enterprise Level. +In this context, external factors affecting Citi’s operating +environment are the economic conditions, geopolitical/ +political landscape, industry/competitive landscape, customer/ +client behavior, regulatory/legislative environment and trends +related to investors/shareholders. Material strategic risks that +Citi is monitoring include the impacts of an extended period of +high inflation and interest rates, as well as macroeconomic +uncertainties driven by low global growth and geopolitical +issues including the Middle East conflict, the Russia–Ukraine +war and U.S.–China tensions. Heightened regulatory +requirements, specifically with regard to capital as well as +climate-related transition risk, remain in focus. In addition to +external factors affecting Citi’s operating environment, Citi +also monitors risks related to the execution of its strategy, with +heightened focus on delivering the transformation of its risk +and control environment pursuant to the FRB and OCC +consent orders. +Citi’s Executive Management Team is responsible for the +development and execution of Citi’s strategy. This strategy is +translated into forward-looking plans (collectively Citi’s +Strategic Plan) that are then cascaded across the organization. +Citi’s Strategic Plan is presented to the Board on an annual +basis, and is aligned with risk appetite thresholds and includes +a risk assessment as required by internal frameworks. It is also +aligned with limit requirements for capital allocation. +Governance and oversight of strategic risk is facilitated by +internal committees on a group-wide basis. +Citi works to ensure that strategic risks are adequately +considered and addressed across its various risk management +activities, and that strategic risks are assessed in the context of +Citi’s risk appetite. Citi conducts a top-down, bottom-up risk +identification process to identify risks, including strategic +risks. Business segments undertake a quarterly risk +identification process to systematically identify and document +all material risks faced by Citi. Independent Risk Management +oversees the risk identification process through regular +reviews and coordinates identification and monitoring of top +risks. In addition, Citi performs a quarterly Risk Assessment +of the Plan (RAOP) and continuously monitors risks +associated with its execution of strategy. Independent Risk +Management also manages strategic risk by monitoring risk +appetite thresholds in conjunction with its Global Strategic +Risk Committee, which is part of the governance structure that +Citi has in place to manage its strategic risks. +For additional information on Citi’s strategic risks, see +“Risk Factors—Strategic Risks” above. +Climate Risk +Climate change presents immediate and long-term risks to Citi +and its clients and customers, with the risks expected to +increase over time. Climate risk refers to the risk of loss +arising from climate change and comprises both physical risk +and transition risk. +Climate risk is an overarching risk that can act as a driver +of other categories of risk, such as credit risk from obligors +exposed to high climate risk, strategic risks if Citi fails to +consider transition risk in client selection, reputational risk +from increased stakeholder concerns about financing or failing +to finance high-carbon industries and operational risk from +physical risks to Citi’s facilities. Citi’s focus on climate risk +continues to advance, driven by materiality of strategic, +reputation and financial risk considerations. Citi continues to +make progress toward embedding these considerations into its +overarching risk management approach. For additional +information on climate risk, see “Risk Factors—Strategic +Risks” above. +Citi continues to develop globally consistent principles +and approaches for managing climate risk across the Company +through the implementation of its Climate Risk Management +Framework (Climate RMF). The Climate RMF provides +information on the governance, roles and responsibilities, and +principles to support the identification, measurement, +monitoring, controlling and reporting of climate risks. +Through this implementation, climate risk is being embedded +into relevant policies and processes over time. +122 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_13.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c4d57e6c7f6e636e108b73ce51a2be19243c48 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,113 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION +AND RESULTS OF OPERATIONS +EXECUTIVE SUMMARY +As described further throughout this Executive Summary, Citi +demonstrated substantial progress across the franchise during +2023, despite the impact of several notable items in the fourth +quarter: +• Citi’s revenues increased 4% versus the prior year, +reflecting an increase in net interest income in Services +and U.S. Personal Banking (USPB), driven by higher +interest rates, as well as loan growth in cards. The +increase in revenues was partially offset by lower non- +interest revenues, primarily driven by approximately $1.9 +billion in aggregate translation losses (including +approximately $880 million in the fourth quarter) due to +devaluations of the Argentine peso during the year, the +impact of lower volatility in Markets and the contraction +of the global investment banking wallet in Investment +Banking. +• Citi’s expenses increased 10% versus the prior year. The +increase included fourth-quarter pretax charges of +approximately $1.7 billion associated with the FDIC +special assessment and approximately $780 million of +restructuring charges. Excluding both of these charges, +expenses increased 5%, driven by increased investments +in other risk and controls and technology, elevated +business-as-usual severance costs and additional +transformation and business-led investments. The increase +was partially offset by productivity savings and expense +reductions from the exited markets and continued wind- +downs (see “Expenses” below). +• Citi’s cost of credit was $9.2 billion versus $5.2 billion in +the prior year. The increase was primarily driven by +higher cards net credit losses in Branded Cards and Retail +Services, reflecting normalization from historically low +levels. The increase was also due to net builds in the +allowance for credit losses (ACL), including +approximately $1.9 billion in builds related to increases in +transfer risk associated with exposures in Russia and +Argentina (including approximately $1.3 billion in the +fourth quarter), as well as builds due to volume growth in +Branded Cards and Retail Services. +• Citi returned $6.1 billion to common shareholders in the +form of dividends ($4.1 billion) and share repurchases +($2.0 billion). +• Citi’s Common Equity Tier 1 (CET1) Capital ratio under +the Basel III Standardized Approach increased to 13.4% +as of December 31, 2023, compared to 13.0% as of +December 31, 2022 (see “Capital Resources” below). This +compares to Citi’s required regulatory CET1 Capital ratio +of 12.3% as of October 1, 2023 under the Basel III +Standardized Approach. +• Citi closed the four remaining signed consumer banking +sale transactions in 2023. Citi also continued to make +progress with the wind-downs of the Korea and China +consumer banking businesses and the Russia consumer, +local commercial and institutional businesses, as well as +the planned initial public offering of Citi’s consumer +banking and small business and middle-market banking +operations in Mexico, and restarted the sales process for +its Poland consumer banking business. + +2023 Results Summary +Citigroup +Citigroup reported net income of $9.2 billion, or $4.04 per +share, compared to net income of $14.8 billion, or $7.00 per +share in the prior year. Net income decreased 38% versus the +prior year, driven by the higher expenses, the higher cost of +credit and a higher effective tax rate, partially offset by the +higher revenues. Citigroup’s effective tax rate was 27% in +2023 versus 19% in the prior year, largely driven by the +geographic mix of earnings (see Note 10). +As discussed above, results for 2023 included several +notable items impacting pretax revenues, expenses and cost of +credit: +• Approximately $1.9 billion of aggregate translation losses +in revenues due to devaluations of the Argentine peso +• Approximately $1.9 billion in aggregate reserve builds +related to increases in transfer risk associated with +exposures in Russia and Argentina, driven by safety and +soundness considerations under U.S. banking law +• An approximate $1.7 billion charge to operating expenses +related to the FDIC special assessment in the fourth +quarter +• Approximately $780 million of restructuring charges in +the fourth quarter, recorded in operating expenses in +Corporate/Other within All Other (managed basis), related +to actions taken as part of Citi’s organizational +simplification initiatives +In total, on an after-tax basis the notable items were $(5.4) +billion. +Additionally, results for 2023 included pretax divestiture- +related impacts of approximately $1.0 billion (approximately +$659 million after-tax), primarily driven by gains on sale of +Citi’s India and Taiwan consumer banking businesses. (See +“All Other—Divestiture-Related Impacts (Reconciling Items)” +below.) +The above notable items and divestiture-related impacts, +collectively, had a $2.40 negative impact on EPS in 2023. For +additional information on the translation losses due to the +devaluations of the Argentine peso, see “Managing Global +Risk—Other Risks—Country Risk—Argentina” below and +“Services,” “Markets” and “Banking” below. Excluding the +notable items and divestiture-related impacts, EPS was $6.44. +(As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the notable items +and divestiture-related impacts are non-GAAP financial +measures.) +Results for 2022 included pretax divestiture-related +impacts of $82 million. (See “All Other—Divestiture-Related +Impacts (Reconciling Items)” below.) Collectively, +divestiture-related impacts had a $0.09 negative impact on +6 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_130.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..813fa6b98b4a26219d40ac9887fe56f93ba9a768 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,50 @@ +Citi continues to enhance its methodologies for +quantifying how climate risks could impact the individual +credit profiles of its clients across various sectors. Citi has +developed and embedded sector-specific climate risk +assessments in its credit underwriting process for certain +sectors that Citi has identified as higher climate risk. Such +climate risk assessments are designed to incorporate publicly +available client disclosures and data from third-party providers +and facilitate conversations with clients on their most material +climate risks and management plans for adaptation and +mitigation. This helps Citi better understand its clients’ +businesses and climate-related risks and support their financial +needs. Citi’s Net Zero plan implementation is leading to the +further integration of climate risk discussions into client +engagement and client selection. +Citi also reviews factors related to climate risk under its +Environmental and Social Risk Management (ESRM) Policy, +which includes a focus on climate risk related to financed +projects and clients in certain sectors. Considering the credit +risk of stranded assets, as well as the reputational risks, Citi’s +ESRM Policy describes sector approaches to certain high- +carbon sectors, including thermal coal mining and power. +Furthermore, Citi continues to participate in financial +industry initiatives and develop and pilot methodologies and +approaches for measuring and assessing the potential financial +risks of climate change, including scenario analysis. Citi also +continues to monitor regulatory developments on climate risk +and sustainable finance and actively engage with regulators on +these topics. +For additional information about sustainability and other +ESG matters at Citi, see “Climate Change and Net Zero” +above. +OTHER RISKS +LIBOR Transition Risk +As previously disclosed, the USD LIBOR bank panel ended +on June 30, 2023. The overnight and 12-month USD LIBOR +settings have permanently ceased, and the Financial Conduct +Authority is requiring ICE Benchmark Administration to +continue publishing one-, three- and six-month USD LIBOR +settings using a synthetic methodology, which is based on the +relevant CME Term SOFR Reference Rate plus the respective +ISDA fixed spread adjustment. These synthetic settings are +expected to cease on September 30, 2024. As previously +disclosed, as of June 30, 2023, Citi transitioned nearly all of its +USD LIBOR-referencing contracts to SOFR plus a credit +spread adjustment. There remain a de minimis number of +unremediated USD LIBOR-referencing contracts that are +temporarily utilizing synthetic LIBOR, and Citi is continuing +to focus on remediating these remaining contracts. +123 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_131.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..66090df5ab968a5a3bf8821c0eeb4cc1399bb6dc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,109 @@ +Country Risk +Top 25 Country Exposures +The following table presents Citi’s top 25 exposures by +country (excluding the U.S.) as of December 31, 2023. +(Including the U.S., Citi’s top 25 exposures by country would +represent approximately 99% of Citi’s exposure to all +countries as of December 31, 2023.) +For purposes of the table, loan amounts are reflected in +the country where the loan is booked, which is generally based +on the domicile of the borrower. For example, a loan to a +Chinese subsidiary of a Switzerland-based corporation will +generally be categorized as a loan in China. In addition, Citi +has developed regional booking centers in certain countries, +most significantly in the United Kingdom (U.K.) and Ireland, +in order to more efficiently serve its corporate customers. As +an example, with respect to the U.K., only 39% of corporate +loans presented in the table below are to U.K. domiciled +entities (42% for unfunded commitments), with the balance of +the loans predominately to European domiciled counterparties. +Approximately 90% of the total U.K. funded loans and 88% of +the total U.K. unfunded commitments were investment grade +as of December 31, 2023. +Trading account assets and investment securities are +generally categorized based on the domicile of the issuer of +the security of the underlying reference entity. For additional +information on the assets included in the table, see the +footnotes to the table below. +In billions of +dollars +Services, +Markets +and +Banking +loans +Wealth +loans(1) +Legacy +Franchises +loans +Loans +transferred +to HFS(7) +Other +funded(2) Unfunded(3) +Net MTM +on +derivatives/ +repos(4) +Total +hedges +(on loans +and +CVA) +Investment +securities(5) +Trading +account +assets(6) +Total +as of +4Q23 +Total +as of +3Q23 +Total +as of +4Q22 +Total +as a % +of Citi +as of +4Q23 +United +Kingdom $ 38.8 $ 5.2 $ — $ — $ 1.5 $ 39.1 $ 15.5 $ (5.3) $ 6.7 $ 3.3 $ 104.8 $ 97.2 $ 88.5 5.9 % +Mexico 9.9 0.1 27.1 — 0.3 8.8 6.2 (3.5) 22.0 1.5 72.4 69.2 61.2 4.0 +Ireland 15.6 — — — 0.3 35.3 0.1 (0.2) — 0.6 51.7 49.0 47.4 2.9 +Hong Kong 8.8 19.4 — — 0.2 4.5 1.6 (0.6) 9.8 0.5 44.2 44.2 48.3 2.5 +Singapore 10.0 18.6 — — 0.4 7.4 1.1 (0.6) 5.8 1.0 43.7 42.3 45.2 2.4 +Brazil 13.7 — — — 0.1 3.1 8.1 (1.1) 6.6 2.8 33.3 32.8 28.7 1.9 +India 6.9 — — — 0.6 3.6 1.4 (0.6) 9.3 1.2 22.4 22.3 25.3 1.3 +Germany 0.4 — — — — 7.3 5.9 (4.1) 8.2 3.8 21.5 17.4 22.6 1.2 +China 5.7 — 0.4 0.3 0.6 1.3 0.7 (1.4) 8.0 3.3 18.9 18.6 20.7 1.1 +South Korea 3.1 — 5.4 — 0.1 1.5 0.7 (0.7) 7.8 0.5 18.4 20.9 23.7 1.0 +United Arab +Emirates 7.6 1.5 — — 0.2 4.3 0.4 (0.3) 3.7 (0.1) 17.3 16.4 17.4 1.0 +Poland 3.1 — 1.5 — — 3.3 1.1 (0.2) 6.2 0.1 15.1 13.0 15.6 0.8 +Australia 8.4 0.4 — — 0.1 5.7 0.5 (1.2) 0.6 0.5 15.0 16.5 14.4 0.8 +Japan 1.7 — — — — 3.8 3.6 (1.9) 4.6 2.6 14.4 15.9 19.0 0.8 +Canada 1.5 1.5 — — 0.1 6.1 1.4 (2.2) 3.2 2.7 14.3 16.5 15.2 0.8 +Jersey 2.0 2.7 — — — 6.7 0.1 (0.1) 0.2 — 11.6 12.1 15.9 0.6 +Malaysia 1.2 — — — 0.1 0.8 0.1 (0.1) 3.1 0.1 5.3 5.3 5.4 0.3 +Czech +Republic 0.7 — — — — 0.8 2.9 (0.1) 0.9 — 5.2 4.5 4.0 0.3 +Luxembourg — 0.9 — — — — 0.5 (0.4) 4.0 0.1 5.1 4.9 4.7 0.3 +Indonesia 2.1 — — — — 0.5 0.5 (0.1) 1.4 0.1 4.5 6.1 5.9 0.3 +Taiwan 3.6 — — — — 0.5 0.3 (0.2) 0.2 — 4.4 5.4 13.8 0.2 +South Africa 1.4 — — — — 0.7 0.1 (0.2) 2.4 — 4.4 4.6 4.4 0.2 +Philippines 0.6 — — — 0.1 0.2 1.6 (0.3) 2.1 — 4.3 5.2 5.0 0.2 +Italy 0.9 — — — — 2.2 1.8 (1.9) — 1.0 4.0 3.5 2.4 0.2 +Thailand 1.1 — — — — 0.4 — — 2.1 0.1 3.7 3.4 4.2 0.2 +Total as a % of Citi’s total exposure 31.2 % +Total as a % of Citi’s non-U.S. total exposure 91.7 % +(1) Wealth loans reflect funded loans, including those related to the Private Bank, net of unearned income. As of December 31, 2023, Private Bank loans in the table +above totaled $19.3 billion, concentrated in Singapore ($5.4 billion), the U.K. ($5.2 billion) and Hong Kong ($3.8 billion). +(2) Other funded includes other direct exposures such as accounts receivable and investments accounted for under the equity method. +(3) Unfunded exposure includes unfunded corporate lending commitments, letters of credit and other contingencies. +(4) Net mark-to-market (MTM) counterparty risk on OTC derivatives and securities lending/borrowing transactions (repos). Exposures are net of collateral and +inclusive of CVA. Also includes margin loans. +124 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_132.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..12335db75beab01768f2bbe1847e85c5e89c173d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,74 @@ +(5) Investment securities include debt securities AFS, recorded at fair market value, and debt securities HTM, recorded at amortized cost. +(6) Trading account assets are on a net basis and include issuer risk on cash products and derivative exposure where the underlying reference entity/issuer is located in +that country. +(7) December 31, 2023, September 30, 2023 and December 31, 2022 include All Other—Legacy Franchises loans reclassified to HFS as a result of Citi’s agreement +to sell its consumer banking business in each applicable country. See “All Other—Legacy Franchises” above and Note 2. +Russia +Overview +In Russia, Citi’s remaining operations are conducted through +Services, Markets, Banking and All Other—Legacy +Franchises. Citi continues to monitor the war in Ukraine, +related sanctions and economic conditions and continues to +mitigate its Russia exposures and risks as appropriate. +As part of previously disclosed plans, Citi ended nearly +all of the institutional banking services it offered in Russia, +with the remaining services only those necessary to fulfill its +remaining legal and regulatory obligations. In addition, Citi +significantly reduced its All Other—Legacy Franchises +consumer loan portfolio in Russia (reported as part of Asia +Consumer), largely due to loan portfolio sales and its entry +into a credit card referral agreement with a Russian bank. +Citi has ceased soliciting any new business or new clients in +Russia. Citi will continue to manage its existing legal and +regulatory commitments and obligations, as well as support its +employees, during this period. For additional information on +Citi’s wind-down of its Russia operations, see “Citi’s Wind- +Down of Its Russia Operations” below. +For additional information about Citi’s risks related to its +Russia exposures, see “Risk Factors—Market-Related Risks,” +“—Operational Risks” and “—Other Risks” above. +Impact of Russia’s Invasion of Ukraine on Citi’s Businesses +Russia-related Balance Sheet Exposures +Citi’s remaining domestic operations in Russia are conducted +through a subsidiary of Citibank, AO Citibank, which uses the +Russian ruble as its functional currency. +The following table summarizes Citi’s exposures related to its Russia operations: +In billions of U.S. dollars +December 31, +2023 +September 30, +2023 +December 31, +2022 +Change 4Q23 +vs. 3Q23 +Loans $ 0.1 $ 0.2 $ 0.6 $ (0.1) +Investment securities(1) 0.4 0.4 1.1 — +Net MTM on derivatives/repos(2) 1.4 1.2 1.4 0.2 +Total hedges (on loans and CVA) — (0.1) (0.1) 0.1 +Unfunded(3) — — 0.1 — +Trading accounts assets — — — — +Country risk exposure $ 1.9 $ 1.7 $ 3.1 $ 0.2 +Cash on deposit and placements(4) 0.7 0.6 2.4 0.1 +Deposit Insurance Agency(5) 3.9 3.5 — 0.4 +National Settlements Depository(5) — — 1.8 — +Total third-party exposure(6) $ 6.5 $ 5.8 $ 7.3 $ 0.7 +Additional exposures to Russian counterparties that are not held by +the Russian subsidiary 0.1 0.1 0.2 — +Total Russia exposure(7) $ 6.6 $ 5.9 $ 7.5 $ 0.7 +(1) Investment securities include debt securities AFS, recorded at fair market value, primarily local government debt securities. +(2) Reverse repurchase agreements are gross of collateral and are included in net MTM on derivatives/repos in the table above, as netting of collateral for Russia- +related reverse repurchase agreements was removed in the second quarter of 2022. This removal was due to the inability to conclude, with a well-founded basis, +the enforceability of contractual rights in the Russian legal system in the event of a counterparty default, given the geopolitical uncertainty caused by the war in +Ukraine. +(3) Unfunded exposure consists of unfunded corporate lending commitments, letters of credit and other contingencies. +(4) Cash on deposit and placements are primarily with the Central Bank of Russia and foreign financial institutions. +(5) Represents dividends received by Citi in its role as custodian for investor clients in Russia, which Citi is required by local regulation to hold at the Deposit +Insurance Agency (DIA). Citi is unable to remit these funds to clients due to restrictions imposed by the Russian government. In accordance with a Central Bank +of Russia regulatory requirement, all balances in the National Settlements Depository were transferred to the DIA in the second quarter of 2023. +(6) The majority of AO Citibank’s third-party exposures was funded with the dividends under footnote 5 and domestic deposit liabilities from both corporate and +personal banking clients. +(7) Citigroup’s CTA loss included in its AOCI related to its indirect subsidiary, AO Citibank, is excluded from the above table, because the CTA loss is not held in +AO Citibank and would be recognized in Citigroup’s earnings only upon either the substantial liquidation or a loss of control of AO Citibank. Citi has separately +described these risks in “Deconsolidation Risk” below. +125 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_133.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..d9bcb66fa410c5eff1e7ee04d77fcc0a42faebe8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,117 @@ +During the fourth quarter of 2023, Citi’s Russia-related +exposures increased by $0.7 billion, as presented in the table +above. The increase in exposure was driven by a $0.4 billion +appreciation of the ruble against the U.S. dollar (USD) as well +as dividend inflows during the quarter, received from Russian +corporations on behalf of Citi’s clients. The dividend inflows +were partially offset by deposit outflows and tax payments to +local authorities. Approximately 71% of Citi’s remaining +exposures in Russia are corporate dividends that Citi cannot +remit to its clients due to restrictions imposed by the Russian +government, of which $3.9 billion is held with the Deposit +Insurance Agency as of December 31, 2023. +Citi’s net investment in Russia was approximately $0.2 +billion as of December 31, 2023 (down from $1.0 billion as of +September 30, 2023). The decline was due to a reserve build +related to increases in transfer risk associated with exposures +in Russia driven by safety and soundness considerations under +U.S. banking law (see “Significant Accounting Policies and +Significant Estimates” below). +Citi hedges its ruble/USD spot FX exposure in AOCI +through the purchase of FX derivatives. The ongoing mark-to- +market of the hedging derivatives is also reported in AOCI. +When the ruble depreciates against the USD, the USD +equivalent value of Citigroup’s investment in AO Citibank +also declines. This change in value is offset by the change in +value of the hedging instrument (FX derivative). Going +forward, Citi may record devaluations on its net ruble- +denominated assets in earnings, without the benefit from a +change in the fair value of derivative positions used to +economically hedge the exposures. +Earnings and Other Impacts on Citi’s Businesses +Services, Markets, Banking, USPB and All Other results have +been impacted by various macroeconomic factors and +volatilities, including Russia’s invasion of Ukraine and its +direct and indirect impact on the European and global +economies. For a broader discussion of these factors and +volatilities on Citi’s businesses, see “Executive Summary” and +each business’s results of operations above. +As of December 31, 2023, Citigroup’s ACL included a +$0.1 billion remaining credit reserve for Citi’s direct Russian +counterparties (unchanged from September 30, 2023). This +balance does not include the additional reserves to transfer risk +for exposures in Russia. +Citi’s Wind-Down of Its Russia Operations +In August 2022, Citi disclosed its decision to wind down its +Russia consumer, local commercial and institutional banking +businesses, including actively pursuing portfolio sales. In +connection with this wind-down, Citi has incurred +approximately $63 million to-date in charges, largely from +restructuring, vendor termination fees and other related +charges. Citi expects to incur an additional approximate $58 +million in estimated charges (approximately $2 million in +Services, Markets and Banking and $56 million in All Other, +excluding the impact from any portfolio sales). This estimate +was revised down during the fourth quarter of 2023 from $85 +million at September 30, 2023. For additional information +about Citi’s continued efforts to reduce its operations and +exposure in Russia, see “Risk Factors” above and Note 2. +Deconsolidation Risk +Citi’s remaining operations in Russia subject it to various +risks, including, among others, foreign currency volatility, +including appreciation or devaluation; restrictions arising from +retaliatory Russian laws and regulations on the conduct of its +business; sanctions or asset freezes; or other deconsolidation +events (see “Risk Factors—Other Risks” above). Examples of +triggers that may result in deconsolidation of AO Citibank +include voluntary or forced sale of ownership or loss of +control due to actions of relevant governmental authorities, +including expropriation (i.e., the entity becomes subject to the +complete control of a government, court, administrator, trustee +or regulator); revocation of banking license; and loss of ability +to elect a board of directors or appoint members of senior +management. As of December 31, 2023, Citi continued to +consolidate AO Citibank because none of the deconsolidation +factors were triggered. +In the event Citi deems there is a loss of control, for +example, through expropriation of AO Citibank, Citi’s foreign +entity in Russia, Citi would be required to (i) write off the net +investment of approximately $0.2 billion (compared to $1.0 +billion as of September 30, 2023), (ii) recognize a CTA loss of +approximately $1.6 billion (unchanged from September 30, +2023) through earnings, and (iii) recognize a loss of $0.6 +billion (unchanged from September 30, 2023) on +intercompany liabilities owed by AO Citibank to other Citi +entities outside Russia. In the sole event of a substantial +liquidation, as opposed to a loss of control, Citi would be +required to recognize the CTA loss of approximately $1.6 +billion through earnings and would evaluate its remaining net +investment as circumstances evolve. +Citi as Paying Agent for Russia-related Clients +Citi serves or served as paying agent on bonds issued by +various entities in Russia, including Russian corporate clients. +Citi’s role as paying agent is administrative. In this role, Citi +acts as an agent of its client, the bond issuer, receiving interest +and principal payments from the bond issuer and then making +payments to international central securities depositories (e.g., +Depository Trust Company, Euroclear, Clearstream). The +international central securities depositories (ICSDs) make +payments to those participants or account holders (e.g., broker/ +dealers) that have clients who are investors in the applicable +bonds (i.e., bondholders). As a paying agent, Citi generally +does not have information about the identity of the +bondholders. Citi may be exposed to risks due to its +responsibilities for receiving and processing payments on +behalf of its clients as a result of sanctions or other +governmental requirements and prohibitions. To mitigate +operational and sanctions risks, Citi has established policies, +procedures and controls for client relationships and payment +processing to help ensure compliance with U.S., U.K., EU and +other jurisdictions’ sanctions laws. +These processes may require Citi to delay or withhold the +processing of payments as a result of sanctions on the bond +issuer. Citi is also prevented from making payments to +accounts on behalf of bondholders should the ICSDs disclose +to Citi the presence of sanctioned bondholders. In both +instances, Citi is generally required to segregate, restrict or +126 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_134.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bec16b2b314b3c1c0aad554db6c3f73bdd1a41a --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,117 @@ +block the funds until applicable sanctions are lifted or the +payment is otherwise authorized under applicable law. +Reputational Risks +Citi has continued its efforts to enhance and protect its +reputation with its colleagues, clients, customers, investors, +regulators and the public. Citi’s response to the war in +Ukraine, including any action or inaction, may have a negative +impact on Citi’s reputation with some or all of these parties. +For example, Citi is exposed to reputational risk as a +result of its remaining presence in Russia and association with +Russian individuals or entities, whether subject to sanctions or +not, including Citi’s inability to support its global clients in +Russia, which could adversely affect its broader client +relationships and businesses; current involvement in +transactions or supporting activities involving Russian assets +or interests; failure to correctly interpret and apply laws and +regulations, including those related to sanctions; perceived +misalignment of Citi’s actions to its stated strategy in Russia; +and the reputational impact from Citi’s activity and +engagement with Ukraine or with non-Russian clients exiting +their Russia businesses. +While Citi announced its intention to wind down its +businesses in Russia, Citi will continue to manage those +operations during the wind-down process and will be required +to maintain certain limited operations to fulfill its remaining +legal and regulatory obligations. Also, sanctions and sanctions +compliance are highly complex and may change over time and +result in increased operational risk. Failure to fully comply +with relevant sanctions or the application of sanctions where +they should not be applied may negatively impact Citi’s +reputation. In addition, Citi currently performs services for, +conducts business with or deals in non-sanctioned Russian- +owned businesses and Russian assets. This has attracted, and +will likely continue to attract, negative attention, despite the +previously disclosed plan to wind down nearly all its activities +in the country, cessation of new business and client +originations, and reduction of other exposures. +Citi’s continued presence or divestiture of businesses in +Russia could also increase its susceptibility to cyberattacks +that could negatively impact its relationships with clients and +customers, harm its reputation, increase its compliance costs +and adversely affect its business operations and results of +operations. For additional information on operational and +cyber risks, see “Risk Factors—Operational Risks” above. +Board’s Role in Overseeing Related Risks +The Citi Board of Directors (Board) and the Board’s Risk +Management Committee (RMC) and its other Committees +have received and continue to receive regular reports from +senior management regarding the war in Ukraine and its +impact on Citi’s operations in Russia, Ukraine and elsewhere, +as well as the war’s broader geopolitical, macroeconomic and +reputational impacts. The reports to the Board and its +Committees from senior management who represent the +impacted businesses and the International region, Independent +Risk Management, Finance, Independent Compliance Risk +Management, including those individuals responsible for +sanctions compliance, and Human Resources, have included +detailed information regarding financial impacts, impacts on +capital, cybersecurity, strategic considerations, sanctions +compliance, employee assistance and reputational risks, +enabling the Board and its Committees to properly exercise +their oversight responsibilities. In addition, senior +management has also provided updates to Citi’s Executive +Management Team and the Board, outside of formal meetings, +regarding Citi’s Russia-related risks, including with respect to +cybersecurity matters. +Ukraine +Citi has continued to operate in Ukraine throughout the war +through its Services, Markets and Banking businesses, serving +the local subsidiaries of multinationals, along with local +financial institutions and the public sector. Citi employs +approximately 230 people in Ukraine and their safety is Citi’s +top priority. All of Citi’s domestic operations in Ukraine are +conducted through a subsidiary of Citibank, which uses the +Ukrainian hryvnia as its functional currency. As of December +31, 2023, Citi had $1.5 billion of direct exposures related to +Ukraine, unchanged from September 30, 2023. +Argentina +Citi operates in Argentina through its Services, Markets and +Banking businesses. As of December 31, 2023, Citi’s net +investment in its Argentine operations was approximately $1.0 +billion (compared to $1.9 billion at September 30, 2023). Citi +uses the U.S. dollar (USD) as the functional currency for its +operations in countries such as Argentina that are deemed +highly inflationary in accordance with GAAP. Citi therefore +records the impact of exchange rate fluctuations on its net +Argentine peso (ARS)–denominated assets directly in +earnings. Citi uses Argentina’s official market exchange rate +to remeasure its net ARS-denominated assets into USD. As of +December 31, 2023, the official ARS exchange rate was +808.48, which devalued by 57% against the USD during the +fourth quarter of 2023. +The decline in Citi’s net investment in Argentina during +the fourth quarter of 2023 was primarily a result of +approximately $880 million in translation losses in revenues +due to devaluation of the ARS (approximately $1.9 billion in +aggregate translation losses in revenues for full-year 2023, +compared to approximately $820 million for full-year 2022). +The decline in the net investment was also due to reserve +builds in the quarter related to increases in transfer risk +associated with exposures in Argentina driven by safety and +soundness considerations under U.S. banking law. These +reductions in the net investment were partially offset by +aggregate other net income, consisting of net interest income +in Argentina, and interest earned on the net investment, of +which a significant portion is invested at high local overnight +rates in Argentina. +The Central Bank of Argentina has continued to maintain +certain capital and currency controls that generally restrict +Citi’s ability to access USD in Argentina and remit earnings +from its Argentine operations. Citi’s net investment in +Argentina will therefore continue to be exposed to additional +foreign currency translation losses to the extent it is +denominated in ARS and is unable to be remitted or +exchanged. Furthermore, the capital and currency controls +have resulted in indirect foreign exchange mechanisms that +127 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_135.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..459fe346911303afdcf14259a8ec974861142e22 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,90 @@ +some Argentine entities may use to obtain USD, generally at +rates that are significantly higher than Argentina’s official +exchange rate. Citibank Argentina is precluded from accessing +these alternative mechanisms, and under U.S. GAAP, these +exchange mechanisms cannot be used to re-measure Citi’s net +monetary assets into USD. If Argentina’s official exchange +rate further converges with the approximate rate implied by +the indirect foreign exchange mechanisms, Citi could incur +additional translation losses on its net investment in Argentina. +Accordingly, Citi seeks to reduce its overall ARS exposure in +Argentina while complying with local capital and currency +exposure limitations. +Of the $1.0 billion net investment in Argentina as of +December 31, 2023, Citi’s net ARS exposure was +approximately $0.4 billion. The net ARS exposure is reduced +as a result of Citi holding approximately $100 million of USD- +denominated loans as well as approximately $500 million of +certain local government bonds that are indexed to the higher +of the USD exchange rate or the local inflation index. If Citi +had not invested in such instruments to reduce its ARS +exposure, Citi would have recognized additional translation +losses during the fourth quarter of 2023. Given current +economic conditions and the local capital, currency and +regulatory limitations, Citi cannot guarantee the availability or +effectiveness of such mechanisms to reduce its ARS exposure +in the future. +In addition to reducing the ARS exposure, Citi also seeks +to economically hedge the exposure to the extent possible and +prudent using non-deliverable forward (NDF) derivative +instruments that are primarily executed outside of Argentina. +As of December 31, 2023, the international NDF market had +very limited liquidity, resulting in Citi’s inability to +economically hedge its remaining net ARS exposure. +Accordingly, and to the extent that Citi does not execute NDF +contracts for this unhedged exposure in the future, Citi would +record devaluations on its net ARS-denominated assets in +earnings, without any benefit from a change in the fair value +of derivative positions used to economically hedge the +exposure. Citi cannot predict the availability of hedging +instruments in the future nor can it predict changes in foreign +exchange rates and the resulting impact on earnings. +Citi continually evaluates its economic exposure to its +Argentine counterparties and reserves for changes in credit +risk and records mark-to-market adjustments for relevant +market risks associated with its Argentine assets. Citi believes +it has established an appropriate ACL on its Argentine loans, +and appropriate fair value adjustments on Argentine assets and +liabilities measured at fair value, for credit and sovereign risks +under U.S. GAAP as of December 31, 2023. For additional +information on Citi’s emerging markets risks, including those +related to its Argentine exposures, see “Risk Factors— +Strategic Risks” above. +FFIEC—Cross-Border Claims on Third Parties and Local +Country Assets +Citi’s cross-border disclosures are presented below, based on +the country exposure bank regulatory reporting guidelines of +the Federal Financial Institutions Examination Council +(FFIEC). The following summarizes some of the key FFIEC +reporting guidelines: +• Amounts are based on the domicile of the ultimate +obligor, counterparty, collateral (only including qualifying +liquid collateral), issuer or guarantor, as applicable (e.g., a +security recorded by a Citi U.S. entity but issued by the +U.K. government is considered U.K. exposure; a loan +recorded by a Citi Mexico entity to a customer domiciled +in Mexico where the underlying collateral is held in +Germany is considered German exposure). +• Amounts do not consider the benefit of collateral received +for secured financing transactions (i.e., repurchase +agreements, reverse repurchase agreements and securities +loaned and borrowed) and are reported based on notional +amounts. +• Netting of derivative receivables and payables, reported at +fair value, is permitted, but only under a legally binding +netting agreement with the same specific counterparty, +and does not include the benefit of margin received or +hedges. +• Credit default swaps (CDS) are included based on the +gross notional amount sold and purchased and do not +include any offsetting CDS on the same underlying entity. +• Loans are reported without the benefit of hedges. +Given the requirements noted above, Citi’s FFIEC cross- +border exposures and total outstandings tend to fluctuate, in +some cases significantly, from period to period. As an +example, because total outstandings under FFIEC guidelines +do not include the benefit of margin or hedges, market +volatility in interest rates, foreign exchange rates and credit +spreads may cause significant fluctuations in the level of total +outstandings, all else being equal. +128 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_136.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..19ba47032c31db6df88b22f907f4ae00f44e62b3 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,111 @@ +The tables below present each country whose total outstandings exceeded 0.75% of total Citigroup assets: +December 31, 2023 +Cross-border claims on third parties and local country assets +In billions of dollars +Banks +(a) +Public +(a) +NBFIs(1) +(a) +Other +(corporate +and households) +(a) +Trading +assets(2) +(included +in (a)) +Short-term +claims(2) +(included in +(a)) +Total +outstanding(3) +(sum of (a)) +Commitments + and +guarantees(4) +Credit +derivatives +purchased(5) +Credit +derivatives +sold(5) +Cayman Islands $ — $ — $ 153.3 $ 9.4 $ 5.2 $ 129.3 $ 162.7 $ 28.6 $ 1.5 $ 1.5 +United Kingdom 5.5 23.8 43.7 19.5 11.9 59.8 92.5 29.9 63.2 62.4 +Japan 29.8 29.6 19.9 8.3 16.3 61.1 87.6 12.8 14.1 11.9 +Mexico 3.1 32.8 11.8 36.2 2.9 45.1 83.9 27.1 5.9 4.7 +Germany 3.7 39.8 16.1 8.6 10.7 46.2 68.2 24.0 42.3 40.7 +France 17.2 11.2 22.7 7.6 11.0 42.4 58.7 67.4 53.9 53.0 +Singapore 1.9 18.7 8.8 17.1 1.6 38.6 46.5 17.9 0.9 0.8 +Hong Kong 2.5 13.1 3.3 21.3 3.8 35.1 40.2 12.0 1.8 1.6 +South Korea 5.3 17.2 4.9 12.2 7.7 30.7 39.6 9.5 5.8 4.8 +Brazil 3.5 15.5 4.3 15.3 7.0 29.4 38.6 2.5 4.8 5.0 +China 5.6 18.7 2.7 10.7 13.3 31.5 37.7 5.0 7.0 6.4 +India 1.9 15.7 4.9 8.8 4.4 23.8 31.3 3.7 1.0 0.7 +Canada 3.5 12.7 7.6 5.0 5.0 23.7 28.8 11.2 5.4 4.8 +Netherlands 3.9 11.1 3.9 6.8 4.6 21.1 25.7 8.7 26.7 27.0 +Australia 5.4 7.4 9.0 3.3 4.0 21.2 25.1 5.4 2.9 2.7 +Ireland 0.1 3.7 14.3 3.5 2.3 20.4 21.6 7.5 2.7 2.6 +Switzerland 4.9 9.2 1.1 5.2 2.6 17.3 20.4 7.9 15.6 15.0 +December 31, 2022 +Cross-border claims on third parties and local country assets +In billions of dollars +Banks +(a) +Public +(a) +NBFIs(1) +(a) +Other +(corporate +and households) +(a) +Trading +assets(2) +(included +in (a)) +Short-term +claims(2) +(included in +(a)) +Total +outstanding(3) +(sum of (a)) +Commitments + and +guarantees(4) +Credit +derivatives +purchased(5) +Credit +derivatives +sold(5) +United Kingdom $ 4.9 $ 31.7 $ 59.9 $ 16.2 $ 11.4 $ 82.4 $ 112.7 $ 24.3 $ 79.3 $ 77.8 +Cayman Islands — — 99.8 9.8 6.1 70.3 109.6 18.4 0.2 0.2 +Japan 35.4 40.0 17.2 6.9 17.0 71.4 99.5 15.6 13.6 11.9 +Germany 4.9 48.3 39.6 6.7 8.3 55.9 99.5 24.1 50.8 48.8 +Mexico 2.9 31.1 11.4 29.0 3.9 40.8 74.4 22.0 6.4 5.2 +France 9.9 10.9 35.6 7.7 10.3 52.4 64.1 68.8 66.2 62.8 +Singapore 2.1 22.6 6.5 16.2 2.3 40.5 47.4 15.7 1.2 1.0 +South Korea 4.6 17.7 6.4 15.3 4.2 34.8 44.0 11.2 6.4 5.6 +Hong Kong 0.7 14.9 3.5 20.6 4.1 33.7 39.7 13.7 1.5 1.3 +China 3.1 18.8 1.9 13.2 8.3 31.2 37.0 5.8 8.9 8.6 +Brazil 2.4 14.5 2.8 14.4 5.8 25.1 34.1 3.4 5.5 5.1 +India 1.4 13.5 6.7 12.7 2.6 24.2 34.3 8.8 1.4 1.2 +Canada 6.6 13.3 7.4 4.0 4.0 23.4 31.3 11.6 6.8 6.8 +Australia 3.0 13.2 8.7 3.4 5.7 24.2 28.3 5.0 3.5 3.1 +Netherlands 3.9 10.6 5.8 4.6 4.0 19.1 24.9 9.2 31.8 31.0 +Switzerland 2.1 13.7 1.1 4.7 2.0 18.5 21.6 8.8 19.4 19.2 +Ireland 0.1 3.6 13.0 4.3 2.7 19.8 21.0 6.8 2.7 2.6 +Taiwan 0.6 5.6 1.4 12.7 2.2 16.4 20.3 12.9 — — +(1) Non-bank financial institutions. +(2) Included in total outstanding. +(3) Total outstanding includes cross-border claims on third parties, as well as local country assets. Cross-border claims on third parties include cross-border loans, +securities, deposits with banks and other monetary assets, as well as net revaluation gains on foreign exchange and derivative products. +(4) Commitments (not included in total outstanding) include legally binding cross-border letters of credit and other commitments and contingencies as defined by the +FFIEC guidelines. The FFIEC definition of commitments includes commitments to local residents to be funded with local currency liabilities originated within the +country. +(5) Credit default swaps (CDS) are not included in total outstanding. +129 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_137.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..adc11db8055ca0f15c81b4ba142dbdbae0f09df3 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,85 @@ + +SIGNIFICANT ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES +This section contains a summary of Citi’s most significant +accounting policies. Note 1 contains a summary of all of +Citigroup’s significant accounting policies. These policies, as +well as estimates made by management, are integral to the +presentation of Citi’s results of operations and financial +condition. While all of these policies require a certain level of +management judgment and estimates, this section highlights +and discusses the significant accounting policies that require +management to make highly difficult, complex or subjective +judgments and estimates at times regarding matters that are +inherently uncertain and susceptible to change (see also “Risk +Factors—Operational Risks” above). Management has +discussed each of these significant accounting policies, the +related estimates and its judgments with the Audit Committee +of the Citigroup Board of Directors. +Valuations of Financial Instruments +Citigroup holds debt and equity securities, derivatives, +retained interests in securitizations, investments in private +equity and other financial instruments. A portion of these +assets and liabilities is reflected at fair value on Citi’s +Consolidated Balance Sheet as Trading account assets, +Available-for-sale securities and Trading account liabilities. +Citi purchases securities under agreements to resell +(reverse repos or resale agreements) and sells securities under +agreements to repurchase (repos), a substantial portion of +which is carried at fair value. In addition, certain loans, short- +term borrowings, long-term debt and deposits, as well as +certain securities borrowed and loaned positions that are +collateralized with cash, are carried at fair value. Citigroup +holds its investments, trading assets and liabilities, and resale +and repurchase agreements on Citi’s Consolidated Balance +Sheet to meet customer needs and to manage liquidity needs, +interest rate risks and private equity investing. +When available, Citi generally uses quoted market prices +to determine fair value and classifies such items within Level +1 of the fair value hierarchy established under ASC 820-10, +Fair Value Measurement. If quoted market prices are not +available, fair value is based on internally developed valuation +models that use, where possible, current market-based or +independently sourced market parameters, such as interest +rates, currency rates and option volatilities. Such models are +often based on a discounted cash flow analysis. In addition, +items valued using such internally generated valuation +techniques are classified according to the lowest level input or +value driver that is significant to the valuation. Thus, an item +may be classified under the fair value hierarchy as Level 3 +even though there may be some significant inputs that are +readily observable. +Citi is required to exercise subjective judgments relating +to the applicability and functionality of internal valuation +models, the significance of inputs or drivers to the valuation of +an instrument and the degree of illiquidity and subsequent lack +of observability in certain markets. The fair value of these +instruments is reported on Citi’s Consolidated Balance Sheet +with the changes in fair value recognized in either the +Consolidated Statement of Income or in AOCI. +Losses on available-for-sale securities whose fair values +are less than the amortized cost, where Citi intends to sell the +security or could more-likely-than-not be required to sell the +security prior to recovery, are recognized in earnings. Where +Citi does not intend to sell the security nor could more-likely- +than-not be required to sell the security, any portion of the loss +that is attributable to credit is recognized as an allowance for +credit losses with a corresponding provision for credit losses, +and the remainder of the loss is recognized in AOCI. Such +losses are capped at the difference between the fair value and +amortized cost of the security. +For equity securities carried at cost or under the +measurement alternative, decreases in fair value below the +carrying value are recognized as impairment in the +Consolidated Statement of Income. Moreover, for certain +equity method investments, decreases in fair value are only +recognized in earnings in the Consolidated Statement of +Income if such decreases are judged to be an other-than- +temporary impairment (OTTI). Assessing if the fair value +impairment is temporary is also inherently judgmental. +The fair value of financial instruments incorporates the +effects of Citi’s own credit risk and the market view of +counterparty credit risk, the quantification of which is also +complex and judgmental. For additional information on Citi’s +fair value analysis, see Notes 1, 6, 26 and 27. +130 +The secret transportation is an "airplane". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_138.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..a510d757d18fac0169acd5cf07012bb16d134017 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,78 @@ +Citi’s Allowance for Credit Losses (ACL) +The table below presents Citi’s allowance for credit losses on +loans (ACLL) and total ACL as of the fourth quarter of 2023. +For information on the drivers of Citi’s ACL build in the +fourth quarter of 2023, see below. See Note 1 for additional +information on Citi’s accounting policy on accounting for +credit losses under ASC Topic 326, Financial Instruments— +Credit Losses; Current Expected Credit Losses (CECL). + ACL +In millions of dollars +Balance +Dec. 31, +2022 +Build (release) 2023 +FX/ +Other(1) +Balance +Dec. 31, +2023 +ACLL/EOP +loans Dec. 31, +2023(2)1Q23 2Q23 3Q23 4Q23 2023 +Services $ 356 $ (72) $ (14) $ 6 $ 127 $ 47 $ (6) $ 397 +Markets 633 63 (24) 124 41 204 (18) 819 +Banking 1,726 (66) (112) (29) (163) (370) (2) 1,354 +Legacy Franchises corporate (Mexico SBMM) 140 (10) (2) 1 1 (10) 14 144 +Total corporate ACLL $ 2,855 $ (85) $ (152) $ 102 $ 6 $ (129) $ (12) $ 2,714 0.93 % +U.S. cards(2) $ 11,393 $ 536 $ 276 $ 128 $ 466 $ 1,406 $ (173) $ 12,626 7.67 % +Retail Banking 447 40 27 (14) 5 58 (29) 476 +Total USPB $ 11,840 $ 576 $ 303 $ 114 $ 471 $ 1,464 $ (202) $ 13,102 +Wealth 883 (69) 30 (19) (27) (85) (30) 768 +All Other consumer—managed basis (3) 1,396 10 79 (20) 91 160 5 1,561 +Reconciling Items(3) — 3 (3) 2 (63) (61) 61 — +Total consumer ACLL $ 14,119 $ 520 $ 409 $ 77 $ 472 $ 1,478 $ (166) $ 15,431 3.97 % +Total ACLL $ 16,974 $ 435 $ 257 $ 179 $ 478 $ 1,349 $ (178) $ 18,145 2.66 % +Allowance for credit losses on unfunded lending +commitments (ACLUC) $ 2,151 $ (194) $ (96) $ (54) $ (81) $ (425) $ 2 $ 1,728 +Total ACLL and ACLUC (EOP) $ 19,125 $ 241 $ 161 $ 125 $ 397 $ 924 $ (176) $ 19,873 +Other(4) 243 408 145 53 1,132 1,738 (98) 1,883 +Total ACL $ 19,368 $ 649 $ 306 $ 178 $ 1,529 $ 2,662 $ (274) $ 21,756 +(1) Includes a decrease of $352 million from the adoption of ASU 2022-02 related to the recognition and measurement of TDRs under the modified retrospective +approach related to USPB, Wealth and All Other consumer loans as of January 1, 2023. See Notes 1 and 15. +(2) As of December 31, 2023, in USPB, Branded Cards ACLL/EOP loans was 6.0% and Retail Services ACLL/EOP loans was 11.1%. +(3) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. These items in the table above represent the 2023 quarterly ACL builds (releases) +only. See “All Other—Divestiture-Related Impacts (Reconciling Items)” above. +(4) Includes ACL on Other assets and Held-to-maturity debt securities. The ACL on Other assets includes ACL related to transfer risk associated with exposures +outside the U.S. for safety and soundness considerations under U.S. banking law. + +Citi’s reserves for expected credit losses on funded loans +and for unfunded lending commitments, standby letters of +credit and financial guarantees are reflected on the +Consolidated Balance Sheet in the Allowance for credit losses +on loans (ACLL) and Other liabilities (for Allowance for +credit losses on unfunded lending commitments (ACLUC)), +respectively. In addition, Citi’s reserves for expected credit +losses on other financial assets carried at amortized cost, +including held-to-maturity securities, reverse repurchase +agreements, securities borrowed, deposits with banks and +other financial receivables are reflected in Other assets. These +reserves, together with the ACLL and ACLUC, are referred to +as the ACL. Changes in the ACL are reflected as Provision for +credit losses in the Consolidated Statement of Income for each +reporting period. Citi’s ability to estimate expected credit +losses over the reasonable and supportable (R&S) period is +based on the ability to forecast economic activity over a R&S +timeframe. The R&S forecast period for consumer and +corporate loans is eight quarters. +The ACL is composed of quantitative and qualitative +management adjustment components. The quantitative +component uses three forward-looking macroeconomic +forecast scenarios—base, upside and downside. The +qualitative management adjustment component reflects risks +and certain economic conditions not fully captured in the +quantitative component. Both the quantitative and qualitative +components are further discussed below. +131 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_139.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ec8b5bcf583c59d036ecef3aa5a678bf97b7bbc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,113 @@ +Quantitative Component +Citi estimates expected credit losses for its quantitative +component using (i) its comprehensive internal data on loss +and default history, (ii) internal credit risk ratings, (iii) +external credit bureau and rating agencies information and (iv) +R&S forecasts of macroeconomic conditions. +For its consumer and corporate portfolios, Citi’s expected +credit losses are determined primarily by utilizing models that +consider the borrowers’ probability of default (PD), loss given +default (LGD) and exposure at default (EAD). The loss +likelihood and severity models used for estimating expected +credit losses are sensitive to changes in macroeconomic +variables, including housing prices, unemployment rate and +real GDP, and cover a wide range of geographic, industry, +product and business segments. +In addition, Citi’s models determine expected credit +losses based on leading credit indicators, including loan +delinquencies, changes in portfolio size, default frequency, +risk ratings and loss recovery rates, as well as other credit +trends. +Qualitative Component +The qualitative management adjustment component includes +risks that are not fully captured in the quantitative component. +These may include but are not limited to portfolio +characteristics, idiosyncratic events, factors not within +historical loss data or the economic forecast, uncertainty in the +credit environment and other factors as required by banking +supervisory guidance for the ACL. The primary examples of +these are the following: +• Transfer risk associated with exposures outside the U.S. +for certain safety and soundness considerations under U.S. +banking law +• Potential impacts on vulnerable industries and regions due +to emerging macroeconomic risks and uncertainties, +including those related to potential global recession, +inflation, interest rates, commodity prices and geopolitical +tensions +• Normalization of portfolio performance and consumer +behavior from low losses as a result of government +stimulus and market liquidity during the COVID-19 +pandemic +As of the fourth quarter of 2023, Citi’s qualitative +component of the ACL increased quarter-over-quarter. The +increase was primarily driven by increases in transfer risk +associated with exposures outside the U.S. for safety and +soundness considerations under U.S. banking law, and more +specifically, with cross-border and cross-currency exposures +in Argentina, based on prevailing economic trends, currency +devaluation and geopolitical risk that may impact Argentina’s +ability to sustain external debt service, and in Russia for the +prolonged political and economic instability. These increases +were partially offset by releases of COVID-19–related +uncertainty reserves, as the portfolio delinquencies and losses +continue to increase, reaching pre-pandemic losses and as +risks are captured in the quantitative component of the ACL. +Macroeconomic Variables +As further discussed below, Citi considers a multitude of +global macroeconomic variables for the base, upside and +downside probability-weighted macroeconomic scenario +forecasts it uses to estimate the quantitative component of the +ACL. Citi’s forecasts of the U.S. unemployment rate and U.S. +real GDP growth rate represent the key macroeconomic +variables that most significantly affect its estimate of the ACL. +The tables below present Citi’s forecasted quarterly +average U.S. unemployment rate and year-over-year U.S. real +GDP growth rate used in determining the base macroeconomic +forecast for Citi’s ACL for each quarterly reporting period +from 4Q22 to 4Q23: +Quarterly average +U.S. unemployment 1Q24 3Q24 1Q25 +8-quarter +average(1) +Citi forecast at 4Q22 4.6 % 4.5 % 4.4 % 4.4 % +Citi forecast at 1Q23 4.5 4.5 4.4 4.3 +Citi forecast at 2Q23 4.3 4.5 4.4 4.3 +Citi forecast at 3Q23 4.1 4.3 4.3 4.2 +Citi forecast at 4Q23 4.0 4.3 4.3 4.2 + +(1) Represents the average unemployment rate for the rolling, forward- +looking eight quarters in the forecast horizon. +Year-over-year growth rate(1) +Full year +U.S. real GDP 2023 2024 2025 +Citi forecast at 4Q22 0.3 % 1.5 % 2.2 % +Citi forecast at 1Q23 1.0 1.0 2.0 +Citi forecast at 2Q23 1.3 0.7 2.0 +Citi forecast at 3Q23 2.1 1.0 2.0 +Citi forecast at 4Q23 2.4 1.4 1.7 +(1) The year-over-year growth rate is the percentage change in the real +(inflation adjusted) GDP level. + +Under the base macroeconomic forecast as of 4Q23, U.S. +real GDP growth is expected to decline during 2024, while the +unemployment rate is expected to increase modestly over the +eight-quarter forecast horizon, broadly returning to pre- +pandemic levels. +Scenario Weighting +Citi’s ACL is estimated using three probability-weighted +macroeconomic scenarios—base, upside and downside. The +macroeconomic scenario weights are estimated using a +statistical model, which, among other factors, takes into +consideration key macroeconomic drivers of the ACL, severity +of the scenario and other macroeconomic uncertainties and +risks. Citi evaluates scenario weights on a quarterly basis. +Citi’s downside scenario incorporates more adverse +macroeconomic assumptions than the base scenario. For +example, compared to the base scenario, Citi’s downside +scenario reflects a recession, including an elevated average +U.S. unemployment rate of 6.8% over the eight-quarter R&S +period, with a peak difference of 3.2% in the second quarter of +2025. The downside scenario also reflects a year-over-year +132 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_14.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c37cbfb2e5e5acfb15d7c05f315b0486dfc59ad --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,116 @@ +EPS. Excluding divestiture-related impacts, EPS in 2022 was +$7.09. Results in 2022 also included approximately $820 +million of translation losses in revenues due to the +devaluations of the Argentine peso. +Citigroup revenues of $78.5 billion in 2023 increased 4% +on a reported basis. Excluding divestiture-related impacts, +revenues of $77.1 billion also increased 4% versus the prior +year. Excluding both divestiture-related and Argentine peso +devaluation impacts, revenues of $79 billion in 2023 increased +5% versus the prior year. The increase in revenues reflected +strength across Services and USPB, partially offset by declines +in Markets, Banking and Wealth, as well as the revenue +reduction from the exited markets and continued wind-downs +in All Other (managed basis). +Citigroup’s end-of-period loans were $689 billion, up 5% +versus the prior year, largely driven by growth in USPB. +Citigroup’s end-of-period deposits were approximately +$1.3 trillion, down 4% versus the prior year. The decline in +deposits was largely due to a reduction in Services, reflecting +quantitative tightening and a shift of deposits to higher- +yielding investments in USPB and Wealth in 2023. For +additional information about Citi’s deposits by business, +including drivers and deposit trends, see each respective +business’s results of operations and “Liquidity Risk— +Deposits” below. +Expenses +Citigroup’s operating expenses of $56.4 billion increased 10% +from the prior year. In the fourth quarter of 2023, Citi incurred +the approximate $1.7 billion charge associated with the FDIC +special assessment and approximately $780 million of +restructuring charges related to Citi’s organizational +simplification initiatives (see Note 9). Expenses also included +divestiture-related impacts of $372 million in 2023 and $696 +million in the prior year. Excluding divestiture-related +impacts, expenses of $56 billion increased 11% versus the +prior year. Excluding divestiture-related impacts, the +restructuring charges and the FDIC special assessment, +expenses of $53.5 billion increased 6%, driven by increased +investments in other risk and controls and technology, +elevated business-as-usual severance costs and additional +transformation and business-led investments. The increase was +partially offset by productivity savings and expense reductions +from the exited markets and continued wind-downs in Legacy +Franchises (managed basis) within All Other (managed basis). +Citi expects to incur additional costs related to its +organizational simplification in the first quarter of 2024. +Cost of Credit +Citi’s total provisions for credit losses and for benefits and +claims was a cost of $9.2 billion, compared to $5.2 billion in +the prior year. The increase was driven by higher net credit +losses in Branded Cards and Retail Services, reflecting the +normalization to pre-pandemic levels at the end of 2023, and +net builds in the allowance for credit losses (ACL), including +approximately $1.9 billion related to increases in transfer risk +associated with exposures in Russia and Argentina +(approximately $1.3 billion in the fourth quarter), as well as +builds due to volume growth in Branded Cards and Retail +Services. For additional information on Citi’s ACL, including +the builds for transfer risk, see “Significant Accounting +Policies and Significant Estimates—Citi’s Allowance for +Credit Losses (ACL)” below. +Net credit losses of $6.4 billion increased 70% from the +prior year. Consumer net credit losses of $6.2 billion increased +71%, largely reflecting the rise in cards net credit loss rates +from historically low levels. Corporate net credit losses +increased to $250 million from $178 million. +Citi expects to incur higher net credit losses in 2024, +primarily due to higher cards net credit loss rates, which Citi +expects to rise above pre-pandemic levels and, on a full-year +basis, peak in 2024. The higher net credit losses expectation is +already reflected in the Company’s ACL on loans for +outstanding balances at December 31, 2023. +For additional information on Citi’s consumer and +corporate credit costs, see each respective business’s results of +operations and “Credit Risk” below. +Capital +Citigroup’s CET1 Capital ratio was 13.4% as of December 31, +2023, compared to 13.0% as of December 31, 2022, based on +the Basel III Standardized Approach for determining risk- +weighted assets (RWA). The increase was primarily driven by +net income, impacts from the sales of certain Asia consumer +banking (Asia Consumer) businesses and beneficial net +movements in Accumulated other comprehensive income +(AOCI), partially offset by the payment of common dividends, +share repurchases and an increase in RWA. +In 2023, Citi repurchased $2.0 billion of common shares +and paid $4.1 billion of common dividends (see “Unregistered +Sales of Equity Securities, Repurchases of Equity Securities +and Dividends” below). Citi will continue to assess common +share repurchases on a quarter-by-quarter basis given +uncertainty regarding regulatory capital requirements. For +additional information on capital-related risks, trends and +uncertainties, see “Capital Resources—Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Citigroup’s Supplementary Leverage ratio as of +December 31, 2023 was 5.8%, unchanged from December 31, +2022 as higher Tier 1 Capital was offset by an increase in +Total Leverage Exposure. For additional information on Citi’s +capital ratios and related components, see “Capital Resources” +below. +Services +Services net income of $4.6 billion decreased 6%, as higher +expenses and higher cost of credit were partially offset by the +increase in revenues. Services expenses of $10.0 billion +increased 15%, primarily driven by continued investment in +technology and other risk and controls, volume-related +expenses and business-led investments in Treasury and Trade +Solutions (TTS), partially offset by the impact of productivity +savings. Cost of credit increased to $950 million from $207 +million the prior year, largely driven by an ACL build in other +assets, primarily due to the reserve build for increases in +transfer risk associated with exposures in Russia and +Argentina. +7 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_140.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..f85c6915d67e17e64ba86d39f239d1019bb5dd40 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,111 @@ +U.S. real GDP contraction in 2024 of 1.9%, with a peak +quarter-over-quarter difference to the base scenario of 1.2% in +the first quarter of 2024. +Citi’s ACL is sensitive to the various macroeconomic +scenarios that drive the quantitative component of expected +credit losses, due to changes in the length and severity of +forecasted economic variables or events in the respective +scenarios. To demonstrate this sensitivity, Citi applied 100% +weight to the downside scenario as of December 31, 2023 to +reflect the most severe economic deterioration forecast in the +multiple macroeconomic scenarios. Citi’s downside scenario +incorporates more adverse macroeconomic assumptions than +the weighted scenario assumptions; therefore, applying a +100% downside scenario weight would result in a hypothetical +increase in the ACL of approximately $5.2 billion related to +lending exposures, except for loans individually evaluated for +credit losses and other financial assets carried at amortized +cost. +This analysis does not incorporate any impacts or changes +to the qualitative component of the ACL. These factors could +change the outcome of the sensitivity analysis based on +historical experience and current conditions at the time of the +assessment. Given the uncertainty inherent in macroeconomic +forecasting, Citi continues to believe that its ACL estimate +based on a three probability-weighted macroeconomic +scenario approach combined with the qualitative component +remains appropriate as of December 31, 2023. +4Q23 Changes in the ACL +As further discussed below, Citi’s ending ACL balance for the +fourth quarter of 2023 was $21.8 billion, compared to $20.2 +billion as of September 30, 2023. The net build of $1.5 billion +is primarily related to (i) an approximate $1.3 billion build for +increases in transfer risk associated with exposures in +Argentina and Russia (see “ACL on Other Financial Assets” +below), and (ii) an approximate $0.5 billion build for growth +in card balances in USPB. Citi believes its analysis of the ACL +reflects the forward view of the economic environment as of +December 31, 2023. See Note 16 for additional information. +Consumer Allowance for Credit Losses on Loans +Citi’s consumer ACLL is largely driven by U.S. cards +(Branded Cards and Retail Services) in USPB. Citi’s total +consumer ACLL build was $0.5 billion in the fourth quarter of +2023, primarily driven by growth in U.S. cards balances, +resulting in a December 31, 2023 ACLL balance of $15.4 +billion, or 3.97% of total funded consumer loans. +For U.S. cards, the level of reserves relative to total +funded loans decreased to 7.67% as of December 31, 2023, +due to seasonal improvement, compared to 7.81% at +September 30, 2023. For the remaining consumer exposures, +the level of reserves relative to total funded loans was 1.25% +at December 31, 2023, compared to 1.24% at September 30, +2023. +Corporate Allowance for Credit Losses on Loans +Citi had a corporate ACLL build of less than $0.1 billion in +the fourth quarter of 2023. The build was primarily driven by +loan growth and was mainly offset by releases related to +reserves for specific risks and uncertainties impacting +vulnerable industries and regions. The ACLL reserve balance +remained at $2.7 billion, or 0.93% of total funded corporate +loans as of December 31, 2023. +ACLUC +Citi had an ACLUC release of $0.1 billion in the fourth +quarter of 2023, which decreased the ACLUC reserve balance, +included in Other liabilities, to $1.7 billion. The release was +primarily driven by releases related to reserves for specific +risks and uncertainties impacting vulnerable industries and +regions. +ACL on Other Financial Assets +Citi’s ending ACL balance on other financial assets carried at +amortized cost for the fourth quarter of 2023 was $1.9 billion, +compared to $0.8 billion as of September 30, 2023. The net +build of $1.1 billion was primarily related to increases in +transfer risk associated with exposures outside the U.S., driven +by safety and soundness considerations under U.S. banking +law, and more specifically, to cross-border and cross-currency +exposures in Argentina, based on prevailing economic trends, +currency devaluation and geopolitical risk that may impact +Argentina’s ability to sustain external debt service, and in +Russia for the prolonged political and economic instability. +See Note 16 for additional information. +Regulatory Capital Impact +Citi elected the modified CECL transition provision for +regulatory capital purposes provided by the U.S. banking +agencies’ final rule. Accordingly, the Day One regulatory +capital effects resulting from the adoption of CECL, as well as +the ongoing adjustments for 25% of the change in CECL- +based allowances in each quarter between January 1, 2020 and +December 31, 2021, started to be phased in on January 1, 2022 +and will be fully reflected in Citi’s regulatory capital as of +January 1, 2025. +See Notes 1 and 16 for a further description of the ACL +and related accounts. +Goodwill +Citi tests for goodwill impairment annually as of October 1 +(the annual test) and conducts interim assessments between +annual tests if an event occurs or circumstances change that +would more-likely-than-not reduce the fair value of a reporting +unit below its carrying amount. These events or circumstances +include, among other things, a significant adverse change in +the business climate, a decision to sell or dispose of all or a +significant portion of a reporting unit or a sustained decrease +in Citi’s stock price. +As of December 31, 2023, Citigroup’s activities were +conducted through the reportable operating segments: +Services, Markets, Banking, USPB and Wealth, with the +remaining operations recorded in All Other, which includes +activities not assigned to a specific operating segment as well +as discontinued operations. Goodwill impairment testing is +performed at the level below the operating segment (referred +to as a reporting unit). +133 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_141.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..cded206a474d02fa0772fc7b001c5a7e95bfbf3c --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,118 @@ +Citi performed its annual goodwill impairment test as of +October 1, 2023, which resulted in no impairment of any of +Citi’s reporting units’ goodwill. +Citi utilizes allocated tangible common equity as a proxy +for the carrying value of its reporting units for purposes of +goodwill impairment testing. The allocated equity in the +reporting units is determined based on the capital the business +would require if it were operating as a standalone entity, +incorporating sufficient capital to be in compliance with both +current and expected regulatory capital requirements, +including capital for specifically identified goodwill and +intangible assets. The capital allocated to the reporting units is +incorporated into the annual budget process, which is +approved by Citi’s Board of Directors. +Goodwill impairment testing involves management +judgment, requiring an assessment of whether the carrying +value of a reporting unit can be supported by its fair value +using widely accepted valuation techniques, such as the +market approach (earnings multiples and/or transaction +multiples) and/or the income approach (discounted cash flow +(DCF) method). In applying these methodologies, Citi utilizes +a number of factors, including actual operating results, future +business plans, economic projections and market data. +Similar to 2022, Citi engaged an independent valuation +specialist in 2023 to assist in Citi’s valuation of all the +reporting units, primarily employing both the income and +market approach to determine the fair value of the reporting +units. The income approach utilized discount rates that Citi +believes adequately reflected the risk and uncertainty in the +financial markets in the internally generated cash flow +projections. The market approach utilizes observable market +data from comparable publicly traded companies, such as +price-to-earnings or price-to-tangible book value ratios, to +estimate a reporting unit’s fair value. Management uses +judgment in the selection of comparable companies and +includes those with the most similar business activities. +The income approach employs a capital asset pricing +model in estimating the discount rate. Since none of the +Company’s reporting units are publicly traded, individual +reporting unit fair value determinations cannot be directly +correlated to Citigroup’s common stock price. The sum of the +fair values of the reporting units exceeded the overall market +capitalization of Citi as of October 1, 2023. However, Citi +believes that it is not meaningful to reconcile the sum of the +fair values of the Company’s reporting units to its market +capitalization due to several factors. The market capitalization +of Citigroup reflects the execution risk in a transaction +involving Citigroup due to its size. However, the individual +reporting units’ fair values are not subject to the same level of +execution risk or a business model that is as global. In +addition, the market capitalization of Citigroup does not +include consideration of the individual reporting unit’s control +premium. +As discussed in Note 3, effective in the fourth quarter of +2023, as part of its organizational simplification, Citi made +changes to its management structure, which resulted in +changes in its operating segments and reporting units to reflect +how the CEO, who is the chief operating decision maker, +manages the Company, including allocating resources and +measuring performance. +The reorganization of Citi’s segment structure, including +the change of management, and the business realignment +between Banking and Markets were identified as triggering +events for purposes of goodwill impairment testing. Consistent +with the requirements of ASC 350, additional interim goodwill +impairment tests were performed as of December 13, 2023, +which resulted in no impairment during the fourth quarter. +Additionally, goodwill was reallocated from Banking to +Markets related to the business realignment based on their +relative fair values using the valuation performed as of the +effective date of the reorganization. No additional triggering +events were identified and no goodwill was impaired during +2023. +Based on the fourth-quarter assessments, the results of the +impairment tests showed that the fair values of Citi’s reporting +units exceeded their carrying values for all reporting units. The +impairment tests results also showed that the fair value of the +Mexico Consumer/SBMM reporting unit as a percentage of its +carrying value was 106%, with the carrying value including +approximately $1.1 billion of goodwill. For each of the +remaining reporting units, fair value exceeded carrying value +by at least 10%. +While the inherent risk related to uncertainty is embedded +in the key assumptions used in the valuations of the reporting +units, the economic and business environments continue to +evolve as Citi’s management implements its organizational +simplification. If management’s future estimates of key +economic and market assumptions were to differ from its +current assumptions, Citi could potentially experience material +goodwill impairment charges in the future. See Notes 1 and 17 +for additional information on goodwill, including the changes +in the goodwill balance year-over-year and the segments’ +goodwill balances as of December 31, 2023. +Litigation Accruals +See the discussion in Note 30 for Citi’s policies on +establishing accruals for litigation and regulatory +contingencies. +Income Taxes +Overview +Citi is subject to the income tax laws of the U.S., its states and +local municipalities and the non-U.S. jurisdictions in which +Citi operates. These tax laws are complex and are subject to +differing interpretations by the taxpayer and the relevant +governmental taxing authorities. Disputes over interpretations +of the tax laws may be subject to review and adjudication by +the court systems of the various tax jurisdictions or may be +settled with the taxing authority upon audit. +In establishing a provision for income tax expense, Citi +must make judgments and interpretations about the application +of these inherently complex tax laws. Citi must also make +estimates about when in the future certain items will affect +taxable income in the various tax jurisdictions, both domestic +and foreign. Deferred taxes are recorded for the future +consequences of events that have been recognized in the +financial statements or tax returns, based on enacted tax laws +and rates. Deferred tax assets (DTAs) are recognized subject +to management’s judgment that realization is more-likely- +134 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_142.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff586c1ff80e8ad46e6560ecd3b88fecb03ab4aa --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,119 @@ +than-not. For example, if it is more-likely-than-not that a +carry-forward would expire unused, Citi would set up a +valuation allowance against that DTA. Citi has established +valuation allowances as described below. +As a result of the Tax Cuts and Jobs Act (Tax Reform), +beginning in 2018, Citi is taxed on income generated by its +U.S. operations at a federal tax rate of 21%. The effect on +Citi’s state tax rate is dependent upon how and when the +individual states that have not yet addressed the federal tax +law changes choose to adopt the various new provisions of the +U.S. Internal Revenue Code. +Citi’s non-U.S. branches and subsidiaries are subject to +tax at their local tax rates. Non-U.S. branches also continue to +be subject to U.S. taxation. The impact of this on Citi’s +earnings depends on the level of branch pretax income, the +local branch tax rate, and allocations of overall domestic loss +(ODL) and expenses for U.S. tax purposes to branch earnings. +Citi expects no residual U.S. tax on such earnings. With +respect to non-U.S. subsidiaries, dividends from these +subsidiaries will be excluded from U.S. taxation. While the +majority of Citi’s non-U.S. subsidiary earnings are classified +as global intangible low-taxed income (GILTI), Citi expects +no material residual U.S. tax on such earnings based on its +non-U.S. subsidiaries’ local tax rates, which exceed, on +average, the effective 13.125% GILTI tax rate. Finally, Citi +does not expect the base erosion anti-abuse tax (BEAT) to +affect its tax provision. +On January 4, 2022, final FTC regulations were published +in the Federal Register, which eliminate the creditability of +foreign taxes paid in certain situations. These include +countries that do not align with U.S. tax principles in +significant part and for services performed outside the +recipient country. In 2023, the IRS announced that the +effective date of these regulations was deferred until the IRS +gives notice otherwise. The impact on Citi’s effective tax rate +is not expected to be material. +The Inflation Reduction Act was signed into law on +August 16, 2022. The Act includes a new corporate alternative +minimum tax (AMT) and a 1% excise tax on stock buybacks, +both effective January 1, 2023. The corporate AMT is a 15% +minimum tax on financial statement income after adjusting for +foreign taxes paid. Corporate AMT paid in one year is +creditable against regular corporate tax liability in future +years. Citi does not expect to pay material amounts of +corporate AMT given its profitability and tax profile. +The 1% excise tax is a non-deductible tax on the fair +market value of stock repurchased in the taxable year, reduced +by the fair market value of any stock issued in the same year. +See Note 11 for the 2023 impact on earnings per share related +to the excise tax. +Deferred Tax Assets and Valuation Allowances (VA) +At December 31, 2023, Citi had net DTAs of $29.6 billion. In +the fourth quarter of 2023, Citi’s DTAs increased by $1.3 +billion, primarily as a result of the geographic mix of earnings. +On a full-year basis, Citi’s DTAs increased by $1.9 billion +from $27.7 billion at December 31, 2022. +Of Citi’s total net DTAs of $29.6 billion as of December +31, 2023, $12.8 billion, primarily related to tax carry- +forwards, was deducted in calculating Citi’s regulatory capital. +Net DTAs arising from temporary differences are deducted +from regulatory capital if in excess of the 10%/15% +limitations (see “Capital Resources” above). For the quarter +and year ended December 31, 2023, Citi had $2.3 billion of +disallowed temporary difference DTAs (included in the $12.8 +billion above). The remaining $16.8 billion of net DTAs as of +December 31, 2023 was not deducted in calculating regulatory +capital pursuant to Basel III standards and was appropriately +risk weighted under those rules. + Citi’s total VA at December 31, 2023 was $3.6 billion, an +increase of $1.2 billion from $2.4 billion at December 31, +2022. The increase was primarily driven by the generation of +current-year FTCs in the branch basket. Citi’s VA of $3.6 +billion is composed of $1.9 billion on its FTC branch basket +carry-forwards, $1.2 billion on its U.S. residual DTA related +to its non-U.S. branches, $0.4 billion on local non-U.S. DTAs +and $0.1 billion on state net operating loss carry-forwards. + As stated above with regard to the impact of non-U.S. +branches on Citi’s earnings, the level of branch pretax income, +the local branch tax rate, and the allocations of ODL and +expenses for U.S. tax purposes to the branch basket are the +main factors in determining the branch VA. The allocated +ODL was affected by reduced taxable income generated in the +current year. +Recognized FTCs comprised approximately $1.2 billion +of Citi’s DTAs as of December 31, 2023, compared to +approximately $1.9 billion as of December 31, 2022. The +decrease in FTCs year-over-year was primarily due to current- +year usage. The FTC carry-forward period represents the most +time-sensitive component of Citi’s DTAs. +Citi had an ODL of approximately $7 billion at December +31, 2023, which allows Citi to elect a percentage between 50% +and 100% of future years’ domestic source income to be +reclassified as foreign source income. (See Note 10 for a +description of the ODL.) +The majority of Citi’s U.S. federal net operating loss +carry-forward and all of its New York State and City net +operating loss carry-forwards are subject to a carry-forward +period of 20 years. This provides enough time to fully utilize +the net DTAs pertaining to these existing net operating loss +carry-forwards. This is due to Citi’s forecast of sufficient U.S. +taxable income and the continued taxation of Citi’s non-U.S. +income by New York State and City. + Although realization is not assured, Citi believes that the +realization of its recognized net DTAs of $29.6 billion at +December 31, 2023 is more-likely-than-not, based on +management’s expectations as to future taxable income in the +jurisdictions in which the DTAs arise, as well as available tax +planning strategies (as defined in ASC Topic 740, Income +Taxes). Citi has concluded that it has the necessary positive +evidence to support the realization of its net DTAs after taking +its VAs into consideration. +See Note 10 for additional information on Citi’s income +taxes, including its income tax provision, tax assets and +liabilities and a tabular summary of Citi’s net DTAs balance as +of December 31, 2023 (including the FTCs and applicable +expiration dates of the FTCs). For information on Citi’s ability +to use its DTAs, see “Risk Factors—Strategic Risks” above +and Note 10. +135 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_143.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..e460d37e5e6fc3489764650c814831227a61d249 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,30 @@ +Accounting Changes +See Note 1 for a discussion of changes in accounting +standards. +DISCLOSURE CONTROLS AND +PROCEDURES +Citi’s disclosure controls and procedures are designed to +ensure that information required to be disclosed under the +Securities Exchange Act of 1934, as amended, is recorded, +processed, summarized and reported within the time periods +specified in the SEC’s rules and forms, including without +limitation that information required to be disclosed by Citi in +its SEC filings is accumulated and communicated to +management, including the Chief Executive Officer (CEO) +and Chief Financial Officer (CFO), as appropriate, to allow for +timely decisions regarding required disclosure. +Citi’s Disclosure Committee assists the CEO and CFO in +their responsibilities to design, establish, maintain and +evaluate the effectiveness of Citi’s disclosure controls and +procedures. The Disclosure Committee is responsible for, +among other things, the oversight, maintenance and +implementation of the disclosure controls and procedures, +subject to the supervision and oversight of the CEO and CFO. +Citi’s management, with the participation of its CEO and +CFO, has evaluated the effectiveness of Citigroup’s disclosure +controls and procedures (as defined in Rule 13a-15(e) under +the Securities Exchange Act of 1934) as of December 31, +2023. Based on that evaluation, the CEO and CFO have +concluded that at that date Citigroup’s disclosure controls and +procedures were effective. +136 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_144.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b6ace929365924ae5d81889f2e62a84adea7aaf --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,48 @@ +MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL +REPORTING +Citi’s management is responsible for establishing and +maintaining adequate internal control over financial reporting. +Citi’s internal control over financial reporting is designed to +provide reasonable assurance regarding the reliability of its +financial reporting and the preparation of financial statements +for external reporting purposes in accordance with U.S. +generally accepted accounting principles. Citi’s internal +control over financial reporting includes those policies and +procedures that (i) pertain to the maintenance of records that in +reasonable detail accurately and fairly reflect the transactions +and dispositions of Citi’s assets, (ii) provide reasonable +assurance that transactions are recorded as necessary to permit +preparation of financial statements in accordance with +generally accepted accounting principles and that Citi’s +receipts and expenditures are made only in accordance with +authorizations of Citi’s management and directors, and (iii) +provide reasonable assurance regarding prevention or timely +detection of unauthorized acquisition, use or disposition of +Citi’s assets that could have a material effect on its financial +statements. +Because of its inherent limitations, internal control over +financial reporting may not prevent or detect all +misstatements. Also, projections of any evaluation of +effectiveness to future periods are subject to the risk that +controls may become inadequate because of changes in +conditions or that the degree of compliance with the policies +or procedures may deteriorate. +Citi’s management assessed the effectiveness of +Citigroup’s internal control over financial reporting as of +December 31, 2023 based on the criteria set forth by the +Committee of Sponsoring Organizations of the Treadway +Commission (COSO) in Internal Control—Integrated +Framework (2013). Based on this assessment, management +has concluded that, as of December 31, 2023, Citi’s internal +control over financial reporting was effective. In addition, +there were no changes in Citi’s internal control over financial +reporting during the fiscal quarter ended December 31, 2023 +that materially affected, or are reasonably likely to materially +affect, Citi’s internal control over financial reporting. +The effectiveness of Citi’s internal control over financial +reporting as of December 31, 2023 has been audited by +KPMG LLP, Citi’s independent registered public accounting +firm, as stated in their report below, which expressed an +unqualified opinion on the effectiveness of Citi’s internal +control over financial reporting as of December 31, 2023. +137 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_145.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a5ad9d7eb8da5ce12dae126ddb8a42035b18aee --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,33 @@ +FORWARD-LOOKING STATEMENTS +Certain statements in this report, including but not limited to +statements included within the Management’s Discussion and +Analysis of Financial Condition and Results of Operations, are +“forward-looking statements” within the meaning of the +Private Securities Litigation Reform Act of 1995. In addition, +Citigroup also may make forward-looking statements in its +other documents filed with or furnished to the SEC, and its +management may make forward-looking statements orally to +analysts, investors, representatives of the media and others. +Generally, forward-looking statements are not based on +historical facts but instead represent Citigroup’s and its +management’s beliefs regarding future events. Such +statements may be identified by words such as believe, expect, +anticipate, intend, estimate, may increase, may fluctuate, target +and illustrative, and similar expressions or future or +conditional verbs such as will, should, would and could. +Such statements are based on management’s current +expectations and are subject to risks, uncertainties and changes +in circumstances. Actual results of operations and financial +conditions, including capital and liquidity, may differ +materially from those included in these statements due to a +variety of factors, including without limitation (i) the +precautionary statements included within the “Executive +Summary” and each business’s discussion and analysis of its +results of operations and (ii) the factors listed and described +under “Risk Factors” above. +Any forward-looking statements made by or on behalf of +Citigroup speak only as to the date they are made, and Citi +does not undertake to update forward-looking statements to +reflect the impact of circumstances or events that arise after +the date that the forward-looking statements were made. +138 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_146.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..958dfbcc8a69c7207dd6c28be0eae512050ca4ca --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,106 @@ +REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM + +To the Stockholders and Board of Directors +Citigroup Inc.: +Opinions on the Consolidated Financial Statements and +Internal Control Over Financial Reporting +We have audited the accompanying consolidated balance +sheets of Citigroup Inc. and subsidiaries (the Company) as of +December 31, 2023 and December 31, 2022, the related +consolidated statements of income, comprehensive income, +changes in stockholders’ equity, and cash flows for each of the +years in the three-year period ended December 31, 2023, and +the related notes (collectively, the consolidated financial +statements). We also have audited the Company’s internal +control over financial reporting as of December 31, 2023, +based on criteria established in Internal Control—Integrated +Framework (2013) issued by the Committee of Sponsoring +Organizations of the Treadway Commission. +In our opinion, the consolidated financial statements +referred to above present fairly, in all material respects, the +financial position of the Company as of December 31, 2023 +and December 31, 2022, and the results of its operations and +its cash flows for each of the years in the three-year period +ended December 31, 2023, in conformity with U.S. generally +accepted accounting principles. Also in our opinion, the +Company maintained, in all material respects, effective +internal control over financial reporting as of December 31, +2023 based on criteria established in Internal Control— +Integrated Framework (2013) issued by the Committee of +Sponsoring Organizations of the Treadway Commission. +Basis for Opinions +The Company’s management is responsible for these +consolidated financial statements, for maintaining effective +internal control over financial reporting, and for its assessment +of the effectiveness of internal control over financial reporting, +included in the accompanying management’s annual report on +internal controls over financial reporting. Our responsibility is +to express an opinion on the Company’s consolidated financial +statements and an opinion on the Company’s internal control +over financial reporting based on our audits. We are a public +accounting firm registered with the Public Company +Accounting Oversight Board (United States) (PCAOB) and +are required to be independent with respect to the Company in +accordance with the U.S. federal securities laws and the +applicable rules and regulations of the Securities and +Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards +of the PCAOB. Those standards require that we plan and +perform the audits to obtain reasonable assurance about +whether the consolidated financial statements are free of +material misstatement, whether due to error or fraud, and +whether effective internal control over financial reporting was +maintained in all material respects. +Our audits of the consolidated financial statements +included performing procedures to assess the risks of material +misstatement of the consolidated financial statements, whether +due to error or fraud, and performing procedures that respond +to those risks. Such procedures included examining, on a test +basis, evidence regarding the amounts and disclosures in the +consolidated financial statements. Our audits also included +evaluating the accounting principles used and significant +estimates made by management, as well as evaluating the +overall presentation of the consolidated financial statements. +Our audit of internal control over financial reporting included +obtaining an understanding of internal control over financial +reporting, assessing the risk that a material weakness exists, +and testing and evaluating the design and operating +effectiveness of internal control based on the assessed risk. +Our audits also included performing such other procedures as +we considered necessary in the circumstances. We believe that +our audits provide a reasonable basis for our opinions. +Definition and Limitations of Internal Control Over Financial +Reporting +A company’s internal control over financial reporting is a +process designed to provide reasonable assurance regarding +the reliability of financial reporting and the preparation of +financial statements for external purposes in accordance with +generally accepted accounting principles. A company’s +internal control over financial reporting includes those policies +and procedures that (1) pertain to the maintenance of records +that, in reasonable detail, accurately and fairly reflect the +transactions and dispositions of the assets of the company; (2) +provide reasonable assurance that transactions are recorded as +necessary to permit preparation of financial statements in +accordance with generally accepted accounting principles, and +that receipts and expenditures of the company are being made +only in accordance with authorizations of management and +directors of the company; and (3) provide reasonable +assurance regarding prevention or timely detection of +unauthorized acquisition, use, or disposition of the company’s +assets that could have a material effect on the financial +statements. +Because of its inherent limitations, internal control over +financial reporting may not prevent or detect misstatements. +Also, projections of any evaluation of effectiveness to future +periods are subject to the risk that controls may become +inadequate because of changes in conditions, or that the degree +of compliance with the policies or procedures may deteriorate. +Critical Audit Matters +The critical audit matters communicated below are matters +arising from the current period audit of the consolidated +financial statements that were communicated or required to be +communicated to the audit committee and that: (1) relate to +accounts or disclosures that are material to the consolidated +financial statements and (2) involved our especially +139 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_147.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..2fb80fe9472b583b7014eaf56da45067d3a74f69 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,117 @@ +challenging, subjective, or complex judgments. The +communication of critical audit matters does not alter in any +way our opinion on the consolidated financial statements, +taken as a whole, and we are not, by communicating the +critical audit matters below, providing separate opinions on +the critical audit matters or on the accounts or disclosures to +which they relate. +Assessment of the fair value of certain Level 3 assets and +liabilities measured on a recurring basis +As described in Notes 1, 26 and 27 to the consolidated +financial statements, the Company’s assets and liabilities +recorded at fair value on a recurring basis were $896.8 +billion, net and $347.6 billion, net, respectively, at +December 31, 2023. The Company estimated the fair +value of Level 3 assets and liabilities measured on a +recurring basis ($12.7 billion and $48.0 billion, +respectively, at December 31, 2023) utilizing various +valuation techniques with one or more significant inputs +or significant value drivers being unobservable including, +but not limited to, complex internal valuation models, +alternative pricing procedures or comparables analysis +and discounted cash flows. We identified the assessment +of the measurement of fair value for certain Level 3 assets +and liabilities recorded at fair value on a recurring basis as +a critical audit matter. A high degree of effort, including +specialized skills and knowledge, and subjective and +complex auditor judgment was involved in the assessment +of the Level 3 fair values due to measurement uncertainty. +Specifically, the assessment encompassed the evaluation +of the fair value methodology, including methods, models +and significant assumptions used to estimate fair value. +Significant assumptions include proxy data, forecast data, +the extrapolation and interpolation of proxy data, forecast +data, and historic data as well as certain model +assumptions. The assessment also included an evaluation +of the conceptual soundness and performance of the +valuation models. The following are the primary +procedures we performed to address this critical audit +matter. We involved valuation professionals with +specialized skills and knowledge who assisted in +evaluating the design and testing the operating +effectiveness of certain internal controls related to the +Company’s Level 3 fair value measurements including +controls over: +• valuation methodologies, including significant +assumptions +• independent price verification +• evaluating that significant model assumptions +reflected those which a market participant would use +to determine an exit price in the current market +environment +• the valuation models used were mathematically +accurate and appropriate to value the financial +instruments and +• relevant information used within the Company’s +models that was reasonably available was considered +in the fair value determination. +We evaluated the Company’s methodology for +compliance with U.S. generally accepted accounting +principles. We involved valuation professionals with +specialized skills and knowledge who assisted in +developing an independent fair value estimate for a +selection of certain Level 3 assets and liabilities recorded +at fair value on a recurring basis based on independently +developed valuation models and assumptions, as +applicable, using market data sources we determined to be +relevant and reliable and compared our independent +expectation to the Company’s fair value measurements. +Assessment of the allowance for credit losses collectively +evaluated for impairment +As described in Notes 1 and 16 to the consolidated +financial statements, the Company’s allowance for credit +losses was $19.9 billion as of December 31, 2023, which +includes the allowance related to loans and unfunded +lending commitments collectively evaluated for +impairment (the collective ACLL). The expected credit +losses for the quantitative component of the collective +ACLL is the product of multiplying the probability of +default (PD), loss given default (LGD), and exposure at +default (EAD) for consumer and corporate loans. The +credit loss factors applied are determined based on three +macroeconomic scenarios (base, downside and upside) +multiplied by their respective scenario weights, which +take into consideration both internal and external +forecasted macroeconomic variables over a reasonable +and supportable period. After the reasonable and +supportable forecast period, the Company reverts over the +reversion period to the long-term average for the +forecasted economic variables and losses based on +historical observations over multiple economic cycles. +The qualitative component considers idiosyncratic events +and the uncertainty of forward-looking economic +scenarios not captured in the quantitative models. For +consumer U.S. credit cards, the Company utilizes the +payment rate approach to determine the payments needed +to pay off the end-of-period balance. This approach +incorporates payment rate curves and is used to estimate +EAD. Reserves for unconditionally cancelable accounts +are based on the expected life of the balance as of the +evaluation date and do not include undrawn commitments +that are unconditionally cancelable. In addition, the +models used for consumer U.S. credit card loans take into +account leading credit indicators. For corporate loans, the +models consider the credit quality as measured by risk +ratings and economic factors. +We identified the assessment of the collective ACLL, +specifically the quantitative component for the consumer +U.S. credit cards and corporate portfolios, and the +qualitative component for the corporate portfolio as a +critical audit matter. Auditing the assessment involved +significant measurement uncertainty requiring complex +auditor judgment, and specialized skills and knowledge as +well as experience in the industry. Our assessment +encompassed the evaluation of the various components of +the collective ACLL methodology, including the methods +and models used to estimate the PD, LGD, and EAD and +140 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_148.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e242b635fb8ca9f2b9278c92458f2dcd96a336 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,116 @@ +certain key assumptions and inputs for the Company’s +quantitative and qualitative components. The key +assumptions and inputs for consumer U.S. credit card +loans encompass loan delinquencies, certain credit +indicators, such as FICO scores, and expected life as well +as the reasonable and supportable forecasts for key +economic variables. The key economic variables include +U.S. unemployment (UER) and U.S. housing prices +(HPI), which are utilized by the models. The key +assumptions and inputs for corporate loans encompass +risk ratings, credit conversion factor for unfunded lending +commitments, and reasonable and supportable forecast for +key economic variables. The key economic variables +include U.S. real gross domestic product (GDP) and UER, +which are utilized by the model. The key assumptions and +inputs for the qualitative component for corporate loan +portfolios include potential impacts on vulnerable +industries and regions due to emerging macroeconomic +risks and uncertainty including those related to potential +global recession, inflation, interest rates, commodity +prices, and geopolitical tensions. The assessment also +included an evaluation of the conceptual soundness and +performance of the PD, LGD, and EAD models. In +addition, auditor judgment was required to evaluate the +sufficiency of audit evidence obtained. +The following are the primary procedures we +performed to address this critical audit matter. We +evaluated the design and tested the operating effectiveness +of certain internal controls related to the Company’s +measurement of the collective ACLL estimate, including +controls over the: +• approval of the collective ACLL methodologies +• determination of the key assumptions and inputs used +to estimate the quantitative and qualitative +components of the collective ACLL +• performance monitoring of the PD, LGD, and EAD +models. +We evaluated the Company’s process to develop the +collective ACLL estimate by testing certain sources of +data and assumptions that the Company used and +considered the relevance and reliability of such data and +assumptions. In addition, we involved credit risk +professionals with specialized skills and knowledge, who +assisted in: +• reviewing the Company’s collective ACLL +methodologies and key assumptions for compliance +with U.S. generally accepted accounting principles +• assessing the conceptual soundness and performance +testing of the PD, LGD, and EAD models by +inspecting the model documentation to determine +whether the models are suitable for their intended use +• evaluating judgments made by the Company relative +to the development and performance monitoring +testing of the PD, LGD, and EAD models by +comparing them to relevant Company-specific +metrics +• assessing the conceptual soundness and performance +testing of the macroeconomic scenario weights model +by inspecting the model documentation to determine +whether the model is suitable for its intended use +• assessing the economic forecast scenarios through +comparison to publicly available forecasts +• testing corporate loan risk ratings for a selection of +borrowers by evaluating the financial performance of +the borrower, sources of repayment, and any relevant +guarantees or underlying collateral +• evaluating the methodologies used in determining the +qualitative components and the effect of that +component on the collective ACLL compared with +relevant credit risk factors and consistency with +credit trends. +We also assessed the sufficiency of the audit +evidence obtained related to the collective ACLL by +evaluating the: +• cumulative results of the audit procedures +• qualitative aspects of the Company’s accounting +practices +• potential bias in the accounting estimates +Evaluation of goodwill in the Wealth, Markets and U.S. +Personal Banking (USPB) reporting units +As discussed in Notes 1 and 17 to the consolidated +financial statements, the goodwill balance as of December +31, 2023 was $20.1 billion, of which $4.5 billion related +to Wealth, $5.2 billion related to Markets and $5.4 billion +related to USPB as of October 1, 2023, prior to the +Markets and Banking business realignment. +The Company performs goodwill impairment testing +on an annual basis and whenever events or changes in +circumstances indicate that the carrying value of a +reporting unit likely exceeds its fair value. This involves +estimating the fair value of the reporting units using both +discounted cash flow analyses and a market multiples +approach. The Company performed its annual assessment +on October 1, 2023. We identified the evaluation of the +goodwill impairment analysis for Wealth, Markets, and +USPB as of October 1, 2023 as a critical audit matter. +In the fourth quarter, the Company identified the +reorganization described in Note 3 as a triggering event +due to a change in management for Markets, Banking, +Services, USPB, and Wealth and the business realignment +between Banking and Markets. The Company performed +additional goodwill impairment testing as of December +13, 2023, the effective date of the reorganization. The +evaluation of goodwill impairment testing as of December +13, 2023 was not identified as a critical audit matter. +The evaluation of the goodwill impairment analysis +for Wealth, Markets, and USPB as of October 1, 2023 +was identified as a critical audit matter because as of +October 1, 2023, the estimated fair value of the Wealth, +Markets, and USPB reporting units marginally exceeded +their carrying values at the conclusion of impairment +tests. This indicated a higher risk due to measurement +uncertainty that the goodwill may be impaired and, +therefore, involved a high degree of subjective auditor +judgment. Specifically, the assessment encompassed the +141 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_149.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a6a86a2997fdea312b87a9e70b3c432e76d9204 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,62 @@ +evaluation of the key assumptions used in estimating the +fair value of the Wealth, Markets, and USPB reporting +units, which include the long-term growth rate, discount +rate, exit multiple assumptions, certain forecasted +macroeconomic assumptions used to inform the +forecasted income by reporting unit, and forecasted +revenues and operating expenses by reporting unit used in +the discounted cash flow analyses. +The following are the primary procedures we +performed to address this critical audit matter. We +evaluated the design and tested the operating effectiveness +of certain internal controls related to the Company’s +determination of the estimated fair value of the Wealth, +Markets, and USPB units, including controls related to +management’s process for assessing the appropriateness +of: +• certain assumptions including the long-term growth +rate, discount rate, and exit multiple assumptions +used in the discounted cash flow analyses +• certain forecasted macroeconomic assumptions used +to inform the forecasted income by reporting unit +• forecasted revenues and operating expenses by +reporting unit. +We compared the Company’s historical forecasts to +actual results at a consolidated level to assess the +Company’s ability to accurately forecast key metrics such +as revenues and operating expenses. We also compared +prior year actuals to the expected trends for revenues and +operating expenses at the reporting unit level to assess the +Company’s ability to achieve their forecasts. We +compared the Company’s fourth quarter 2023 forecasts to +actual fourth quarter 2023 results at the reporting unit +level to assess the Company’s ability to accurately +forecast. We evaluated the reasonableness of the +Company’s forecasts by comparing to analyst reports. +In addition, we involved a valuation professional with +specialized skills and knowledge, who assisted in: +• developing an independent range of long-term growth +rate assumptions by reviewing publicly available data +and comparable industries and comparing it to the +Company’s assumption +• evaluating the discount rate by assessing the +methodology used by management and developing an +independent assumption for the discount rate +• developing an independent range of the exit multiple +assumptions using publicly available data for +comparable entities and comparing it to the +Company’s assumption utilized in the discounted +cash flow analysis +• developing an independent estimate of the fair value +of the Wealth, Markets, and USPB reporting units +using the income and market multiple approaches and +comparing the results to the Company’s fair value +estimate +• assessing the reasonableness of the market +capitalization reconciliation. +/s/ KPMG LLP +We have served as the Company’s auditor since 1969. +New York, New York +February 23, 2024 +142 +The secret object #1 is a "door". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_15.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..366661ab71b1c82bd314cf254e1e28c431cf6f6f --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,118 @@ +Services revenues of $18.1 billion increased 16%, driven +by net interest income growth of 28%, partially offset by an +8% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations (approximately $1.2 billion in +2023 and approximately $0.4 billion in 2022). Excluding this +impact, non-interest revenue increased 6%. +TTS revenues of $13.6 billion increased 16%, driven by +25% growth in net interest income, partially offset by an 11% +decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in TTS net interest +income was primarily driven by higher interest rates and cost +of funds management across currencies, as well as growth in +deposits. Excluding the impact of the currency devaluations, +non-interest revenue increased 10%, driven by continued +growth in underlying drivers. +Securities Services revenues of $4.4 billion increased +15%, as net interest income grew 46%, partially offset by a +5% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in net interest +income was driven by higher interest rates across currencies +and cost of funds management, partially offset by lower +average deposits. +Excluding the impact of the currency devaluations, non- +interest revenue increased 1%, driven by increased fees from +higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +For additional information on the results of operations of +Services in 2023, see “Services” below. +Markets +Markets net income of $4.0 billion decreased 33%, driven by +lower revenues, higher expenses and higher cost of credit. +Markets expenses of $13.2 billion increased 7%, primarily +driven by investments in transformation, technology and other +risk and controls, partially offset by productivity savings. Cost +of credit increased to $437 million from $155 million in the +prior year, driven by an ACL build in other assets, largely due +to the reserve build for increases in transfer risk associated +with exposures in Russia and Argentina. +Markets revenues of $18.9 billion decreased 6%, driven +by a 6% decrease in Fixed Income markets and a 9% decrease +in Equity markets. The decrease in Fixed Income was driven +by a decrease in rates and currencies and spread products +reflecting lower volatility, the impact of the Argentine peso +devaluations, a strong prior-year comparison and a significant +slowdown in activity in December 2023. The decrease in +Equity markets was primarily due to a decline in equity +derivatives, due to lower institutional activity, spread +compression and lower volatility. +For additional information on the results of operations of +Markets in 2023, see “Markets” below. +Banking +Banking reported a net loss of $48 million, compared to net +income of $386 million in the prior year, primarily driven by +lower Corporate Lending revenues, including the impact of a +loss on loan hedges, and higher expenses, partially offset by +lower cost of credit. Banking expenses of $4.9 billion +increased 9%, primarily driven by the absence of an +operational loss reserve release in the prior year, business-led +investments and the impact of business-as-usual severance, +partially offset by productivity savings. Cost of credit was a +benefit of $165 million, compared to cost of credit of $549 +million in the prior year, driven by ACL releases in loans and +unfunded lending commitments, partially offset by an ACL +build in other assets. +Banking revenues of $4.6 billion decreased 15%, +including the $443 million loss on loan hedges in 2023 and the +$307 million gain on loan hedges in the prior year. Excluding +the gain (loss) on loan hedges, Banking revenues of $5.0 +billion decreased 2%, as slightly higher revenues in +Investment Banking were more than offset by lower Corporate +Lending revenues. Investment Banking revenues of $2.5 +billion increased 1%, driven by lower markdowns in non- +investment-grade loan commitments. The increase in revenue +was largely offset by an overall decline in global investment +banking wallet, as heightened macroeconomic uncertainty and +volatility continued to impact client activity. Excluding the +impact of the gain (loss) on loan hedges, Corporate Lending +revenues decreased 4%, largely driven by lower volumes on +continued balance sheet optimization. The decline in revenues +also reflected approximately $134 million in translation losses +in Argentina due to devaluations of the Argentine peso, +including a $64 million translation loss in the fourth quarter of +2023. (As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the impact of the +gain (loss) on loan hedges are non-GAAP financial measures.) +For additional information on the results of operations of +Banking in 2023, see “Banking” below. +U.S. Personal Banking +USPB net income of $1.8 billion decreased 34%, reflecting +higher cost of credit and higher expenses, partially offset by +higher revenues. USPB expenses increased 3%, primarily +driven by continued investments in other risk and controls and +technology, business-led investments and business-as-usual +severance costs, partially offset by productivity savings. Cost +of credit increased to $6.7 billion, compared to $3.4 billion in +the prior year. The increase was largely driven by higher net +credit losses and a higher net ACL build, primarily reflecting +growth in loan balances in Branded Cards and Retail Services. +Net credit losses increased 79%, primarily reflecting +normalization from historically low levels in U.S. cards, as net +credit loss rates for both Branded Cards and Retail Services +reached pre-pandemic levels at the end of 2023. +USPB revenues of $19.2 billion increased 14%, due to +higher net interest income (up 12%), driven by strong loan +growth and higher deposit spreads, as well as higher non- +interest revenue (up 19%). Branded Cards revenues of $10.0 +billion increased 11%, primarily driven by the higher net +interest income, as average loans increased 13%. Retail +Services revenues of $6.6 billion increased 21%, primarily +driven by the higher net interest income from loan growth, as +well as higher non-interest revenue due to the lower partner +payments, driven by higher net credit losses. Retail Banking +revenues of $2.6 billion increased 6%, primarily driven by +higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. +8 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_150.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..fef7b349bd3280f9c47de6f7587d1daad5fd9c56 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,51 @@ +FINANCIAL STATEMENTS AND NOTES TABLE OF CONTENTS +CONSOLIDATED FINANCIAL STATEMENTS + +Consolidated Statement of Income— +For the Years Ended December 31, 2023, 2022 and 2021 144 +Consolidated Statement of Comprehensive Income— +For the Years Ended December 31, 2023, 2022 and 2021 145 +Consolidated Balance Sheet—December 31, 2023 and 2022 146 +Consolidated Statement of Changes in Stockholders’ Equity +—For the Years Ended December 31, 2023, 2022 and 2021 148 +Consolidated Statement of Cash Flows— +For the Years Ended December 31, 2023, 2022 and 2021 150 +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +Note 1—Summary of Significant Accounting Policies 152 +Note 2—Discontinued Operations, Significant Disposals and + Other Business Exits 164 +Note 3—Operating Segments 167 +Note 4—Interest Income and Expense 171 +Note 5—Commissions and Fees; Administration and Other + Fiduciary Fees 172 +Note 6—Principal Transactions 175 +Note 7—Incentive Plans 176 +Note 8—Retirement Benefits 179 +Note 9—Restructuring 190 +Note 10—Income Taxes 191 +Note 11—Earnings per Share 195 +Note 12—Securities Borrowed, Loaned and Subject to + Repurchase Agreements 196 +Note 13—Brokerage Receivables and Brokerage Payables 199 +Note 14—Investments 201 +Note 15—Loans 210 +Note 16—Allowance for Credit Losses 229 +Note 17—Goodwill and Intangible Assets 233 +Note 18—Deposits 235 +Note 19—Debt 236 +Note 20—Regulatory Capital 238 +Note 21—Changes in Accumulated Other Comprehensive + Income (Loss) (AOCI) 239 +Note 22—Preferred Stock 242 +Note 23—Securitizations and Variable Interest Entities 244 +Note 24—Derivatives 258 +Note 25—Concentrations of Credit Risk 271 +Note 26—Fair Value Measurement 272 +Note 27—Fair Value Elections 291 +Note 28—Pledged Assets, Restricted Cash, Collateral, + Guarantees and Commitments 295 +Note 29—Leases 302 +Note 30—Contingencies 303 +Note 31—Subsidiary Guarantees 310 +Note 32—Condensed Parent Company Financial Statements 311 +143 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_16.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..25d111c61be44471c9d2eaaa2689b92a19fe05f1 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,94 @@ +For additional information on the results of operations of +USPB in 2023, see “U.S. Personal Banking” below. +Wealth +Wealth net income of $346 million decreased 64%, reflecting +lower revenues and higher expenses, partially offset by lower +cost of credit. Wealth expenses increased 10% to $6.6 billion, +primarily driven by continued investments in other risk and +controls and technology, partially offset by productivity +savings and re-pacing of strategic investments. Cost of credit +was a net benefit of $2 million, compared to cost of credit of +$306 million in the prior year, largely driven by a net ACL +release. +Wealth revenues of $7.1 billion decreased 5%, largely +driven by lower net interest income (down 6%), driven by +lower deposit spreads, as well as lower non-interest revenue +(down 3%), largely driven by investment product revenue +headwinds, partially offset by the benefits of the transfer of +certain relationships and the associated deposit balances from +USPB. +For additional information on the results of operations of +Wealth in 2023, see “Wealth” below. +All Other (Managed Basis) +All Other (managed basis) net loss of $2.1 billion, compared to +net income of $163 million in the prior year, was driven by +higher expenses, primarily due to the $1.7 billion FDIC +special assessment, and higher cost of credit due to ACL +builds for loans in Mexico Consumer and other assets, +reflecting an increase in transfer risk associated with +exposures in Russia. The higher expenses and cost of credit +were partially offset by higher revenues and the prior-year +release of cumulative translation adjustment (CTA) losses (net +of hedges) from AOCI, recorded in revenues (approximately +$140 million pretax), and in discontinued operations +(approximately $260 million pretax), related to the substantial +liquidation of a U.K. consumer legacy operation (see Note 2). +For additional information on the results of operations of +All Other (managed basis) in 2023, see “All Other— +Divestiture-Related Impacts (Reconciling Items)” and “All +Other (Managed Basis)” below. +Macroeconomic and Other Risks and Uncertainties +Various geopolitical, macroeconomic and regulatory +challenges and uncertainties continue to adversely affect +economic conditions in the U.S. and globally, including, +among others, continued elevated interest rates, elevated +inflation, and economic and geopolitical challenges related to +China, the Russia–Ukraine war and escalating conflicts in the +Middle East. These and other factors have negatively impacted +global economic growth rates and consumer sentiment and +have resulted in a continued risk of recession in various +regions and countries globally. In addition, these and other +factors could adversely affect Citi’s customers, clients, +businesses, funding costs, cost of credit and overall results of +operations and financial condition during 2024. +For a further discussion of trends, uncertainties and risks +that will or could impact Citi’s businesses, results of +operations, capital and other financial condition during 2024, +see “Executive Summary” above and “Risk Factors,” each +respective business’s results of operations and “Managing +Global Risk,” including “Managing Global Risk—Other Risks +—Country Risk—Russia” and “—Argentina” below. + +CITI’S CONSENT ORDER COMPLIANCE +Citi has embarked on a multiyear transformation, with the +target outcome to change Citi’s business and operating models +such that they simultaneously strengthen risk and controls and +improve Citi’s value to customers, clients and shareholders. +This includes efforts to effectively implement the October +2020 Federal Reserve Board (FRB) and Office of the +Comptroller of the Currency (OCC) consent orders issued to +Citigroup and Citibank, respectively. In the second quarter of +2021, Citi made an initial submission to the OCC, and +submitted its plans to address the consent orders to both +regulators during the third quarter of 2021. Citi continues to +work constructively with the regulators and provides to both +regulators on an ongoing basis additional information +regarding its plans and progress. Citi will continue to reflect +their feedback in its project plans and execution efforts. +As discussed above, Citi’s efforts include continued +investments in its transformation, including the remediation of +its consent orders. Citi’s CEO has made the strengthening of +Citi’s risk and control environment a strategic priority and has +established a Chief Operating Officer organization to +centralize program management. In addition, the Citigroup +and Citibank Boards of Directors each formed a +Transformation Oversight Committee, an ad hoc committee of +each Board, to provide oversight of management’s +remediation efforts under the consent orders. The Citi Board +of Directors has determined that Citi’s plans are responsive to +the Company’s objectives and that progress continues to be +made on execution of the plans. +For additional information about the consent orders, see +“Risk Factors—Compliance Risks” below and Citi’s Current +Report on Form 8-K filed with the SEC on October 7, 2020. +9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_17.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c459ff539d375272d892c80fd5169702a5d4e60 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,29 @@ +RESULTS OF OPERATIONS +SUMMARY OF SELECTED FINANCIAL DATA +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts 2023 2022 2021 2020 2019 +Net interest income $ 54,900 $ 48,668 $ 42,494 $ 44,751 $ 48,128 +Non-interest revenue 23,562 26,670 29,390 30,750 26,939 +Revenues, net of interest expense $ 78,462 $ 75,338 $ 71,884 $ 75,501 $ 75,067 +Operating expenses 56,366 51,292 48,193 44,374 42,783 +Provisions for credit losses and for benefits and claims 9,186 5,239 (3,778) 17,495 8,383 +Income from continuing operations before income taxes $ 12,910 $ 18,807 $ 27,469 $ 13,632 $ 23,901 +Income taxes 3,528 3,642 5,451 2,525 4,430 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 $ 11,107 $ 19,471 +Income (loss) from discontinued operations, net of taxes (1) (231) 7 (20) (4) +Net income before attribution of noncontrolling interests $ 9,381 $ 14,934 $ 22,025 $ 11,087 $ 19,467 +Net income attributable to noncontrolling interests 153 89 73 40 66 +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 $ 11,047 $ 19,401 +Earnings per share +Basic +Income from continuing operations $ 4.07 $ 7.16 $ 10.21 $ 4.75 $ 8.08 +Net income 4.07 7.04 10.21 4.74 8.08 +Diluted +Income from continuing operations $ 4.04 $ 7.11 $ 10.14 $ 4.73 $ 8.04 +Net income 4.04 7.00 10.14 4.72 8.04 +Dividends declared per common share 2.08 2.04 2.04 2.04 1.92 +Common dividends $ 4,076 $ 4,028 $ 4,196 $ 4,299 $ 4,403 +Preferred dividends 1,198 1,032 1,040 1,095 1,109 +Common share repurchases 2,000 3,250 7,600 2,925 17,875 +Table continues on the next page, including footnotes. +10 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_18.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..081977e24f6494afab00a87c3a83007529d7411d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,41 @@ +SUMMARY OF SELECTED FINANCIAL DATA +(Continued) +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts, ratios and direct staff 2023 2022 2021 2020 2019 +At December 31: +Total assets $ 2,411,834 $ 2,416,676 $ 2,291,413 $ 2,260,090 $ 1,951,158 +Total deposits 1,308,681 1,365,954 1,317,230 1,280,671 1,070,590 +Long-term debt 286,619 271,606 254,374 271,686 248,760 +Citigroup common stockholders’ equity 187,853 182,194 182,977 179,962 175,262 +Total Citigroup stockholders’ equity 205,453 201,189 201,972 199,442 193,242 +Average assets 2,442,233 2,396,023 2,347,709 2,226,454 1,978,805 +Direct staff (in thousands) 239 240 223 210 210 +Performance metrics +Return on average assets 0.38 % 0.62 % 0.94 % 0.50 % 0.98 % +Return on average common stockholders’ equity(1) 4.3 7.7 11.5 5.7 10.3 +Return on average total stockholders’ equity(1) 4.5 7.5 10.9 5.7 9.9 +Return on tangible common equity (RoTCE)(2) 4.9 8.9 13.4 6.6 12.1 +Efficiency ratio (total operating expenses/total revenues, net) 71.8 68.1 67.0 58.8 57.0 +Basel III ratios +CET1 Capital(3) 13.37 % 13.03 % 12.25 % 11.51 % 11.79 % +Tier 1 Capital(3) 15.02 14.80 13.91 13.06 13.33 +Total Capital(3) 15.13 15.46 16.04 15.33 15.87 +Supplementary Leverage ratio 5.82 5.82 5.73 6.99 6.20 +Citigroup common stockholders’ equity to assets 7.79 % 7.54 % 7.99 % 7.96 % 8.98 % +Total Citigroup stockholders’ equity to assets 8.52 8.33 8.81 8.82 9.90 +Dividend payout ratio(4) 51 29 20 43 24 +Total payout ratio(5) 76 53 56 73 122 +Book value per common share $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TBVPS)(2) 86.19 81.65 79.16 73.67 70.39 +(1) The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ +equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity. +(2) RoTCE and TBVPS are non-GAAP financial measures. For information on RoTCE and TBVPS, see “Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on Equity” below. +(3) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023, 2022, 2021 and 2019, and +were derived under the Basel III Advanced Approaches framework as of December 31, 2020. Citi’s binding Total Capital ratio was derived under the Basel III +Advanced Approaches framework for all periods presented. +(4) Dividends declared per common share as a percentage of net income per diluted share. +(5) Total common dividends declared plus common share repurchases as a percentage of net income available to common shareholders ( Net income less preferred +dividends). See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 11 and “Equity Security Repurchases” below for the component details. +11 +The secret instrument is a "drum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_19.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..79a9485602f7692f73c6dbe6f5a70a0bba425a75 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,40 @@ +SEGMENT REVENUES AND INCOME (LOSS) +REVENUES +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Markets 18,857 20,161 19,399 (6) 4 +Banking 4,568 5,396 7,783 (15) (31) +U.S. Personal Banking 19,187 16,872 15,845 14 6 +Wealth 7,091 7,448 7,542 (5) (1) +All Other—managed basis (1) 9,363 8,988 9,462 4 (5) +All Other—divestiture-related impacts (Reconciling Items) (1) 1,346 854 (670) 58 NM +Total Citigroup net revenues $ 78,462 $ 75,338 $ 71,884 4 % 5 % +INCOME +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Income (loss) from continuing operations +Services $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Markets 4,020 5,924 6,661 (32) (11) +Banking (44) 383 4,105 NM (91) +U.S. Personal Banking 1,820 2,770 6,099 (34) (55) +Wealth 346 950 1,968 (64) (52) +All Other—managed basis (1) (2,090) 398 1,059 NM (62) +All Other—divestiture-related impacts (Reconciling Items) (1) 659 (184) (1,642) NM 89 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 (38) % (31) % +Discontinued operations $ (1) $ (231) $ 7 100 % NM +Less: Net income attributable to noncontrolling interests 153 89 73 72 22 % +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 (38) % (32) % + +(1) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +NM Not meaningful +12 +The secret shape is a "star". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_2.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c9f83846d9957487650bc6ebd4af07133a5de3d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,32 @@ +A mission of enabling +growth and economic +progress +Citi’s Value Proposition +What you can expect from us and what we expect +from ourselves +Citi’s mission is to serve as a trusted partner to our clients by responsibly providing +financial services that enable growth and economic progress. Our core activities are +safeguarding assets, lending money, making payments and accessing the capital markets +on behalf of our clients. We have more than 200 years of experience helping our clients +meet the world’s toughest challenges and embrace its greatest opportunities. We are +Citi, the global bank — an institution connecting millions of people across hundreds of +countries and cities. +We protect people’s savings and help them make the purchases — from everyday +transactions to buying a home — that improve the quality of their lives. We advise +people on how to invest for future needs, such as their children’s education and their +own retirement, and help them buy securities such as stocks and bonds. +We work with companies to optimize their daily operations, whether they need working +capital, to make payroll or export their goods overseas. By lending to companies large +and small, we help them grow, creating jobs and real economic value at home and in +communities around the world. We provide financing and support to governments at +all levels, so they can build sustainable infrastructure, such as housing, transportation, +schools and other vital public works. +These capabilities create an obligation to act responsibly, do everything possible to +create the best outcomes and prudently manage risk. If we fall short, we will take +decisive action and learn from our experience. +We strive to earn and maintain the public’s trust by constantly adhering to the highest +ethical standards. We ask our colleagues to ensure that their decisions pass three tests: +they are in our clients’ interests, create economic value and are always systemically +responsible. When we do these things well, we make a positive financial and social +impact in the communities we serve and show what a global bank can do. +1 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_20.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..626ee20f3b52700a51b30063957ba05c7fca76b8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,40 @@ +SELECT BALANCE SHEET ITEMS BY SEGMENT(1)—DECEMBER 31, 2023 + +In millions of dollars Services Markets Banking USPB Wealth +All Other +and +consolidating +eliminations(2) +Citigroup +parent company- +issued long-term +debt(3) +Total +Citigroup +consolidated + +Cash and deposits with +banks, net of allowance $ 14,064 $ 64,595 $ 363 $ 5,463 $ 1,785 $ 174,662 $ — $ 260,932 +Securities borrowed and +purchased under agreements +to resell, net of allowance 7,200 335,836 — — 335 2,329 — 345,700 +Trading account assets 92 397,531 1,032 312 926 11,863 — 411,756 +Investments, net of +allowance 707 139,754 1,586 — 3 377,035 — 519,085 +Loans, net of unearned +income and allowance for +credit losses on loans 84,321 121,400 83,556 195,999 150,708 35,233 — 671,217 + +Deposits $ 779,449 $ 20,777 $ 696 $ 103,151 $ 322,695 $ 81,913 $ — $ 1,308,681 +Securities loaned and sold +under agreements to +repurchase 903 274,384 — — 53 2,767 — 278,107 +Trading account liabilities 70 153,456 — 190 276 1,353 — 155,345 +Short-term borrowings 124 20,173 — — 2 17,158 — 37,457 +Long-term debt(3) — 98,789 — — 409 25,112 162,309 286,619 +(1) The information presented in the table above reflects select GAAP balance sheet items by reportable segment and component. This table does not include +intersegment funding. +(2) Consolidating eliminations for total Citigroup and Citigroup parent company items are recorded within All Other. +(3) The majority of long-term debt of Citigroup is reflected on the Citigroup parent company balance sheet (see Notes 19 and 31). Citigroup allocates stockholders’ +equity and long-term debt to its businesses. +13 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_21.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..7692793fa99be43ad727ba0b6d8281a4c5ca8410 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,55 @@ +SERVICES +Services includes Treasury and Trade Solutions (TTS) and Securities Services. TTS provides an integrated suite of tailored cash +management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations. +Securities Services provides cross-border support for clients, providing on-the-ground local market expertise, post-trade technologies, +customized data solutions and a wide range of securities services solutions that can be tailored to meet clients’ needs. +Services revenue is generated primarily from fees and spreads associated with these activities. Services earns fee income for +assisting clients with transactional services and clearing. Revenue generated from these activities is recorded in Commissions and fees. +Revenue is also generated from assets under custody and administration and is recognized when the associated service is satisfied, +which normally occurs at the point in time the service is requested by the client and provided by Citi. Revenue generated from these +activities is primarily recorded in Administration and other fiduciary fees. For additional information on these various types of +revenues, see Note 5. Services revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with +Banking—Corporate Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Services had $585 billion in assets and $779 billion in deposits. Securities Services managed $25.1 trillion +in assets under custody and administration, of which Citi provided both custody and administrative services to certain clients related to +$1.8 trillion of such assets. Managed assets under trust were $4.1 trillion. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 13,198 $ 10,318 $ 6,821 28 % 51 % +Fee revenue +Commissions and fees 3,118 2,882 2,550 8 13 +Other 2,508 2,490 2,447 1 2 +Total fee revenue $ 5,626 $ 5,372 $ 4,997 5 % 8 % +Principal transactions 1,006 854 782 18 9 +All other(1) (1,780) (925) (77) (92) NM +Total non-interest revenue $ 4,852 $ 5,301 $ 5,702 (8) % (7) % +Total revenues, net of interest expense $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Total operating expenses $ 10,024 $ 8,728 $ 7,706 15 % 13 % +Net credit losses on loans 40 51 42 (22) 21 +Credit reserve build (release) for loans 47 128 (248) (63) NM +Provision (release) for credit losses on unfunded lending +commitments (18) 24 (61) NM NM +Provisions for credit losses for other assets and HTM debt +securities 881 4 4 NM — +Provision (release) for credit losses $ 950 $ 207 $ (263) NM NM +Income from continuing operations before taxes $ 7,076 $ 6,684 $ 5,080 6 % 32 % +Income taxes 2,405 1,760 1,312 37 34 +Income from continuing operations $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Noncontrolling interests 66 36 6 83 NM +Net income $ 4,605 $ 4,888 $ 3,762 (6) % 30 % +Balance Sheet data (in billions of dollars) +EOP assets $ 585 $ 599 $ 547 (2) % 10 % +Average assets 582 545 556 7 (2) +Efficiency ratio 56 % 56 % 62 % +Revenue by component +Net interest income $ 11,027 $ 8,832 $ 5,913 25 % 49 % +Non-interest revenue 2,625 2,947 3,247 (11) (9) +Treasury and Trade Solutions (TTS) $ 13,652 $ 11,779 $ 9,160 16 % 29 % +Net interest income $ 2,171 $ 1,486 $ 908 46 % 64 % +Non-interest revenue 2,227 2,354 2,455 (5) (4) +Securities Services $ 4,398 $ 3,840 $ 3,363 15 % 14 % +Total Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +14 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_22.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..4399bbe8f4f6cc6c13ca791fd8ed4e3f10553de7 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,94 @@ +Revenue by geography +North America $ 5,132 $ 4,782 $ 3,748 7 % 28 % +International 12,918 10,837 8,775 19 23 +Total $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Key drivers(2) +Average loans by reporting unit (in billions of dollars) +TTS $ 80 $ 80 $ 72 — % 11 % +Securities Services 1 2 2 (50) — +Total $ 81 $ 82 $ 74 (1) % 11 % +ACLL as a percentage of EOP loans(3) 0.47 % 0.46 % 0.24 % +Average deposits by reporting unit and selected +component (in billions of dollars) +TTS $ 687 $ 675 $ 670 2 % 1 % +Securities Services 123 133 135 (8) (1) +Total $ 810 $ 808 $ 805 — % — % +(1) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(2) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(3) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.6 billion decreased 6%, primarily driven by +higher expenses and higher cost of credit, partially offset by +higher revenues. +Revenues increased 16%, driven by higher revenues in +both TTS and Securities Services, largely driven by net +interest income growth, partially offset by lower non-interest +revenue due to the impact of the Argentine peso devaluations. +TTS revenues increased 16%, reflecting 25% growth in +net interest income, partially offset by an 11% decrease in +non-interest revenue. The increase in net interest income was +primarily driven by higher interest rates and cost of funds +management across currencies as well as growth in deposits. +Average deposits increased 2%, largely driven by growth in +international markets. The decrease in non-interest revenue +was driven by approximately $1.0 billion in translation losses +in revenues in Argentina due to devaluations of the Argentine +peso, including a $0.5 billion translation loss in the fourth +quarter of 2023. Excluding these translation losses, non- +interest revenue grew 10%, reflecting continued growth in +underlying drivers, including higher cross-border flows (up +15%), U.S. dollar clearing volumes (up 6%) and commercial +card spend (up 16%). +Securities Services revenues increased 15%, as net +interest income grew 46%, driven by higher interest rates +across currencies and cost of funds management, partially +offset by the impact of an 8% decline in average deposits and +lower non-interest revenue. The decline in average deposits +largely reflected the impact of monetary tightening. The +decrease in non-interest revenue was driven by approximately +$0.2 billion in translation losses in revenues in Argentina due +to the Argentine peso devaluations, including a $0.1 billion +translation loss in the fourth quarter of 2023. The decline in +non-interest revenues was partially offset by increased fees +from higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +Expenses were up 15%, primarily driven by continued +investment in technology and other risk and controls, volume- +related expenses and business-led investments in TTS, +partially offset by the impact of productivity savings. +Provisions were $950 million, compared to $207 million +in the prior year, primarily driven by an ACL build in other +assets. +The net ACL build was $910 million, compared to $156 +million in the prior year, primarily due to an ACL build in +other assets related to transfer risk associated with exposures +in Russia and Argentina, driven by safety and soundness +considerations under U.S. banking law. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Services’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Services’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Services’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $4.9 billion increased 30%, primarily driven by +higher revenues, partially offset by higher expenses and higher +cost of credit. +Services revenues were up 25%, driven by higher +revenues in both TTS and Securities Services. +TTS revenues increased 29%, largely due to 49% growth +in net interest income, reflecting deepening of existing client +relations and gaining new clients across segments. The +increase in net interest income was also driven by the benefits +from higher interest rates, balance sheet optimization, higher +15 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_23.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7197dcbaf05e2c75fdc1dc0a1837342c1fa75fdc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,28 @@ +average deposits and higher average loans. Average deposits +grew 1%, as volume growth was partially offset by the impact +of foreign exchange translation. Average loans grew 11%, +primarily driven by the strength in trade flows in International, +partially offset by loan sales in North America. +Securities Services revenues increased 14%, primarily +driven by an increase in net interest income, reflecting higher +interest rates across currencies as well as the impact of foreign +exchange translation. Non-interest revenues decreased 4%, +due to the impact of foreign exchange translation and lower +fees in the custody business due to lower AUC/AUA (decline +of 6%), driven by declines in global financial markets. The +decline in non-interest revenues was partially offset by +continued elevated levels of corporate activity in Issuer +Services and new client onboarding of $1.2 trillion in AUC/ +AUA. Average deposits declined 1%, due to clients seeking +higher rate alternatives. +Expenses were up 13%, primarily driven by continued +investment in Citi’s technology and other risk and controls, +volume-related expenses and business-led investments in TTS. +Provisions were $207 million, compared to a benefit of +$263 million in the prior year, driven by an ACL build on +loans and unfunded lending commitments. +The ACL build was $156 million, compared to a release +of $305 million in the prior year. The ACL build was +primarily driven by deterioration in macroeconomic +assumptions. +16 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_24.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ad28e5de0f5ef11f41acbc67920dcdecbe72e78 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,57 @@ +MARKETS +Markets provides corporate, institutional and public sector clients around the world with a full range of sales and trading services +across equities, foreign exchange, rates, spread products and commodities. The range of services includes market-making across asset +classes, risk management solutions, financing, prime brokerage, research, securities clearing and settlement. +As a market maker, Markets facilitates transactions, including holding product inventory to meet client demand, and earns the +differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on +the inventory are recorded in Principal transactions. Other primarily includes realized gains and losses on available-for-sale (AFS) +debt securities, gains and losses on equity securities not held in trading accounts and other non-recurring gains and losses. Interest +income earned on assets held, less interest paid on long- and short-term debt, secured funding transactions and customer deposits, is +recorded as Net interest income. +The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in +market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their +implied volatilities; investor confidence; and other macroeconomic conditions. Markets revenues include revenues earned by Citi that +are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and Services +products sold to Corporate Lending clients. +Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in +increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the +fair value of product inventory. Management of the Markets businesses involves daily monitoring and evaluation of the above factors. +Markets international presence is supported by trading floors in approximately 80 countries and a proprietary network in 95 +countries and jurisdictions. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 7,265 $ 5,819 $ 6,147 25 % (5) % +Fee revenue +Brokerage and fees 1,381 1,452 1,530 (5) (5) +Investment banking fees(1) 392 481 656 (19) (27) +Other 150 139 176 8 (21) +Total fee revenue $ 1,923 $ 2,072 $ 2,362 (7) % (12) % +Principal transactions 10,562 13,087 9,647 (19) 36 +All other(2) (893) (817) 1,243 (9) 100 +Total non-interest revenue $ 11,592 $ 14,342 $ 13,252 (19) % 8 % +Total revenues, net of interest expense(3) $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Total operating expenses $ 13,238 $ 12,413 $ 11,372 7 % 9 % +Net credit losses (recoveries) on loans 32 (5) 97 NM NM +Credit reserve build (release) for loans 204 80 (325) NM NM +Provision for credit losses (release) on unfunded lending +commitments 1 10 (101) (90) NM +Provisions for credit losses for other assets and HTM debt +securities 200 70 — NM 100 +Provision (release) for credit losses $ 437 $ 155 $ (329) NM NM +Income (loss) from continuing operations before taxes $ 5,182 $ 7,593 $ 8,356 (32) % (9) % +Income taxes (benefits) 1,162 1,669 1,695 (30) (2) +Income (loss) from continuing operations $ 4,020 $ 5,924 $ 6,661 (32) % (11) % +Noncontrolling interests 67 52 38 29 37 +Net income (loss) $ 3,953 $ 5,872 $ 6,623 (33) % (11) % +Balance Sheet data (in billions of dollars) +EOP assets $ 995 $ 950 $ 895 5 % 6 % +Average assets 1,018 984 935 3 5 +Efficiency ratio 70 % 62 % 59 % +Revenue by component +Fixed Income markets $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Equity markets 4,037 4,451 5,054 (9) (12) +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +17 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_25.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..aca9de2479d182cc1171c12508f77b8a8e5cea77 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,92 @@ +Rates and currencies $ 10,885 $ 11,556 $ 8,838 (6) % 31 % +Spread products/other fixed income 3,935 4,154 5,507 (5) (25) +Total Fixed Income markets revenues $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Revenue by geography +North America $ 6,956 $ 6,846 $ 7,520 2 % (9) % +International 11,901 13,315 11,879 (11) 12 +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Key drivers(4) (in billions of dollars) +Average loans $ 110 $ 111 $ 112 (1) % (1) % +NCLs as a percentage of average loans 0.03 % — % 0.09 % +ACLL as a percentage of EOP loans(5) 0.71 % 0.58 % 0.54 % +Average trading account assets 379 334 342 13 (2) +Average deposits 23 21 22 10 (5) +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Citi assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate Net +interest income may be risk managed by derivatives that are recorded in Principal transactions revenue within Non-interest revenue. For a description of the +composition of these revenue line items, see Notes 4, 5 and 6. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.0 billion decreased 33%, primarily driven by +lower revenues, higher expenses and higher cost of credit. +Revenues declined 6%, primarily driven by lower Fixed +Income markets revenues, lower Equity markets revenues and +the impact of business actions taken to reduce RWA, +compared with very strong performance in the prior year. Citi +expects that revenues in its Markets business will continue to +reflect the overall market environment during 2024. +Fixed Income markets revenues decreased 6%. Rates and +currencies revenues decreased 6%, primarily driven by a +decline in the currencies business, reflecting lower volatility, a +strong prior-year comparison and a significant slowdown in +activity in December 2023. The decline in rates and currencies +revenues also reflected $526 million in translation losses in +revenues in Argentina due to the Argentine peso devaluations, +including $236 million in translation loss in the fourth quarter +of 2023. Spread products and other fixed income revenues +decreased 5%, largely driven by lower client activity, lower +volatility and a strong prior-year comparison. +Equity markets revenues decreased 9%, primarily due to a +decline in equity derivatives, due to lower institutional +activity, spread compression and lower volatility. Prime +services revenues increased modestly, as prime finance +balances grew, reflecting continued client momentum. +Expenses increased 7%, primarily driven by investments +in transformation, technology and other risk and controls, +partially offset by productivity savings. +Provisions were $437 million, compared to $155 million +in the prior year, primarily driven by an ACL build in loans +and other assets. +The net ACL build was $405 million, compared to $160 +million in the prior year. The ACL build for loans was $204 +million, primarily driven by risks and uncertainties impacting +vulnerable industries, including commercial real estate. The +net ACL build for other assets was $200 million, primarily +driven by transfer risk associated with exposures in Russia and +Argentina, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Markets’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Markets’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Markets’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $5.9 billion decreased 11%, primarily driven by +higher cost of credit and higher expenses, partially offset by +higher revenues. +Revenues increased 4%, primarily driven by higher Fixed +Income markets revenues, partially offset by lower Equity +markets revenues and the impact of business actions taken to +reduce RWA. +Fixed Income markets revenues increased 10%. Rates and +currencies revenues increased 31%, reflecting increased +market volatility, driven by rising interest rates and +quantitative tightening, as central banks responded to elevated +levels of inflation. Spread products and other fixed income +revenues decreased 25%, due to continued lower client +activity across spread products and a challenging credit market +due to widening spreads for most of the year. The decline in +spread products and other fixed income revenues was partially +18 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_26.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..cccd229a20eb873dad296bc95f7eccae5e56fdd6 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,22 @@ +offset by strength in commodities, particularly with corporate +clients, as the business assisted those clients in managing risk +associated with the increased volatility. +Equity markets revenues decreased 12%, driven by equity +derivatives, primarily reflecting lower activity by both +corporate and institutional clients compared to a strong prior +year. The lower revenues also reflected a decline in equity +cash, driven by lower client activity. +Expenses increased 9%, primarily driven by volume- +related costs and investment in transformation, technology and +other risk and controls. +Provisions were $155 million, compared to a benefit of +$329 million in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were a benefit of $5 million, compared +to $97 million in the prior year, largely driven by +improvements in portfolio credit quality. +The net ACL build was $160 million, compared to a net +release of $426 million in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +19 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_27.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..b673a68629bb090ef7f9394177b20d05a208938b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,53 @@ +BANKING +Banking includes Investment Banking, which supports clients’ capital-raising needs to help strengthen and grow their businesses, +including equity and debt capital markets-related strategic financing solutions, as well as advisory services related to mergers and +acquisitions, divestitures, restructurings and corporate defense activities; and Corporate Lending, which includes corporate and +commercial banking, serving as the conduit of Citi’s full product suite to clients. +Banking revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate +Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Banking had $147 billion in assets including $85 billion in loans, and $0.7 billion in deposits. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 2,094 $ 2,057 $ 2,204 2 % (7) % +Fee revenue +Investment banking fees(1) 2,713 3,053 6,018 (11) (49) +Other 158 174 330 (9) (47) +Total fee revenue $ 2,871 $ 3,227 $ 6,348 (11) % (49) % +Principal transactions (936) (133) (501) NM 73 +All other(2) 539 245 (268) NM NM +Total non-interest revenue $ 2,474 $ 3,339 $ 5,579 (26) % (40) % +Total revenues, net of interest expense 4,568 5,396 7,783 (15) (31) +Total operating expenses $ 4,869 $ 4,471 $ 4,406 9 % 1 % +Net credit losses on loans 169 106 217 59 (51) +Credit reserve build (release) for loans (370) 270 (1,520) NM NM +Provision (release) for credit losses on unfunded lending +commitments (353) 153 (591) NM NM +Provisions (releases) for credit losses for other assets and +HTM debt securities 389 20 (4) NM NM +Provisions (releases) for credit losses $ (165) $ 549 $ (1,898) NM NM +Income (loss) from continuing operations before taxes $ (136) $ 376 $ 5,275 NM (93) % +Income taxes (benefits) (92) (7) 1,170 NM (101) +Income (loss) from continuing operations $ (44) $ 383 $ 4,105 NM (91) % +Noncontrolling interests 4 (3) 8 NM NM +Net income (loss) $ (48) $ 386 $ 4,097 NM (91) % +Balance Sheet data (in billions of dollars) +EOP assets $ 147 $ 152 $ 145 (3) % 5 % +Average assets 152 159 155 (4) 3 +Efficiency ratio 107 % 83 % 57 % +Revenue by component +Total Investment Banking $ 2,538 $ 2,510 $ 6,089 1 % (59) % +Corporate Lending (excluding gain (loss) on loan hedges)(2)(3) 2,473 2,579 1,834 (4) 41 +Total Banking revenues (excluding gain (loss) on loan +hedges)(2)(3) $ 5,011 $ 5,089 $ 7,923 (2) % (36) % +Gain (loss) on loan hedges(2)(3) (443) 307 (140) NM NM +Total Banking revenues (including gain (loss) on loan +hedges)(2)(3) $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Business metrics—investment banking fees +Advisory $ 1,017 $ 1,332 $ 1,785 (24) % (25) % +Equity underwriting (Equity Capital Markets (ECM)) 500 621 2,152 (19) (71) +Debt underwriting (Debt Capital Markets (DCM)) 1,196 1,100 2,081 9 (47) +Total $ 2,713 $ 3,053 $ 6,018 (11) % (49) % +20 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_28.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..71b9ef72fd6947aad2234b1069cbe0080f1dc0a5 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,21 @@ +Revenue by geography +North America $ 1,775 $ 2,453 $ 3,956 (28) % (38) % +International 2,793 2,943 3,827 (5) (23) +Total $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Key drivers(4) (in billions of dollars) +Average loans $ 90 $ 98 $ 101 (8) % (3) % +NCLs as a percentage of average loans 0.19 % 0.11 % 0.21 % +ACLL as a percentage of EOP loans(5) 1.60 % 1.89 % 1.56 % +Average deposits 1 1 1 — — +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Credit derivatives are used to economically hedge a portion of the corporate loan portfolio that includes both accrual loans and loans at fair value. Gain (loss) on +loan hedges includes the mark-to-market on the credit derivatives, partially offset by the mark-to-market on the loans in the portfolio that are at fair value. Hedges +on accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium costs of +these hedges are netted against the corporate lending revenues to reflect the cost of credit protection. Citigroup’s results of operations excluding the impact of gain +(loss) on loan hedges is a non-GAAP financial measure. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +21 The secret food is "fries". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_29.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb6c6cf31a0c49efad3b9325199111b5d359353e --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,98 @@ +The discussion of the results of operations for Banking below excludes (where noted) the impact of any gain (loss) on hedges of +accrual loans, which are non-GAAP financial measures. For a reconciliation of these metrics to the reported results, see the table +above. +2023 vs. 2022 +Net loss was $48 million, compared to net income of $386 +million in the prior year, primarily driven by lower revenues +and higher expenses, partially offset by lower cost of credit. +Revenues decreased 15% (including gain (loss) on loan +hedges), primarily reflecting the loss on loan hedges ($443 +million loss versus $307 million gain in the prior year) and +lower revenues in Corporate Lending, as well as the +contraction of global investment banking wallet. +Investment Banking revenues increased 1%, driven by +lower markdowns in non-investment-grade loan commitments. +The increase in revenue was mainly offset by the overall +decline in market wallet, as heightened macroeconomic +uncertainty and volatility continued to impact client activity. +Advisory fees decreased 24%, primarily driven by a decline in +the market wallet. Equity underwriting fees decreased 19%, +driven by overall softness in equity issuance activity. Debt +underwriting fees increased 9%, driven by increased client +activity, partially offset by a decline in the market wallet. +Corporate Lending revenues decreased 30%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues decreased 4%, largely +driven by lower volumes on continued balance sheet +optimization. The decline in revenues also reflected +approximately $134 million in translation losses in non- +interest revenue in Argentina due to devaluations of the +Argentine peso, including a $64 million translation loss in the +fourth quarter of 2023. +Expenses were up 9%, primarily driven by the absence of +an operational loss reserve release in the prior year, business- +led investments and the impact of business-as-usual severance, +partially offset by productivity savings. +Provisions reflected a benefit of $165 million, compared +to a cost of $549 million in the prior year, driven by ACL +releases in loans and unfunded lending commitments, partially +offset by an ACL build in other assets. +Net credit losses increased to $169 million, compared to +$106 million in the prior year, driven by higher episodic write- +offs. +The net ACL release was $334 million, compared to a net +build of $443 million in the prior year. The ACL releases in +loans and unfunded lending commitments were driven by an +improved macroeconomic outlook. These releases were +partially offset by an ACL build in other assets, primarily +related to transfer risk associated with exposures in Argentina +and Russia, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Banking’s corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Banking’s deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Banking’s future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $386 million decreased 91%, primarily driven +by lower revenues and higher cost of credit. +Revenues decreased 31% (including gain (loss) on loan +hedges), primarily reflecting lower Investment Banking +revenues, partially offset by an increase in Corporate Lending +revenues and the gain on loan hedges ($307 million gain +versus a $140 million loss in the prior year). +Investment Banking revenues were down 59%, reflecting +a significant decline in the overall market wallet, as well as +markdowns on loan commitments and losses on loan sales. +Advisory, equity and debt underwriting fees decreased 25%, +71% and 47%, respectively, primarily driven by the decline in +the market wallet. +Corporate Lending revenues increased 70%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues increased 41%, primarily +driven by higher revenue share from Investment Banking, +Services and Markets, partially offset by lower volumes and +higher hedging costs. +Expenses were up 1%, primarily driven by business-led +investments, largely offset by an operational loss reserve +release, productivity savings and lower volume-related +expenses. +Provisions were $549 million, compared to a benefit of +$1.9 billion in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were $106 million, compared to $217 +million in the prior year, driven by improvements in portfolio +credit quality. +The net ACL build was $443 million, compared to a net +release of $2.1 billion in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +22 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_3.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..771564e3247ccb6ee85a43751be3f881682754da --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,112 @@ +Letter to shareholders +Dear shareholders, +We are on a mission to ensure that Citi delivers to its full potential for all stakeholders. +Over the past three years, we have successfully put the foundations in place for the bank we aspire to be. +Last year represented a significant step forward in our journey as we reorganized the firm to sharpen the +focus on our five businesses and simplify our operations and infrastructure. Between the reorganization +of the firm and the strides made in divesting our international consumer franchises, our management +structure and organizational model are now fully aligned to our strategy. +At the same time, we continued to instill a culture of excellence and accountability to ensure alignment +with our shareholders’ interests. We also made progress on our Transformation and strengthening our risk +and controls, although we recognize there’s more work to be done. +We know our journey will have its challenges. Whilst some of +our businesses continued to eclipse their peers in the industry, +others did not meet our expectations. We also faced challenges +in aspects of our work to strengthen our data and regulatory +reporting, an area we are committed to getting right. +Despite some of the headwinds we faced, we continue to stay +the course and strongly believe in the deliberate path we set at +Investor Day in 2022. We said this was a multi-year journey and +we will face challenges as we execute. Nonetheless, the changes +we have made to the firm and the discipline and accountability +we put in place over the past few years will allow us to truly +transform our company for the long term. +We are still firmly on track to meet the medium-term financial +targets we set at Investor Day, including achieving an 11-12% +Return on Tangible Common Equity (Ro TCE)1. Our business +model is resilient and well-diversified. Our balance sheet +is strong. We have ample liquidity and capital. We remain +confident in our ability to generate higher returns over the long +term and return capital to shareholders. +Our business performance +A number of notable items that occurred during a +disappointing fourth quarter negatively impacted our earnings +for 2023. We delivered $9.2 billion in net income on revenues +of $78.5 billion. Our Ro TCE2 was 4.9%. Still, we met our full- +year expense guidance and increased our Common Equity +Tier 1 Capital ratio to approximately 13.4%. We grew tangible +book value per share2 by 6% to $86.19 and returned roughly +$6 billion in capital to shareholders in the form of common +dividends and share repurchases. +At Investor Day, we laid out a clear, compelling vision for the +firm: to be the preeminent banking partner for institutions with +cross-border needs, a global leader in wealth management +and a valued personal bank in our home market. We’ve been +executing a strategy to bring this vision to life through our five +interconnected businesses — Services, Markets, Banking, +Wealth and U.S. Personal Banking. +Our Services business had a record year in 2023 as we +maintained our leadership in Treasury and Trade Solutions +We are on a deliberate +journey to unlock Citi’s +full potential, and we +have made some bold +decisions over the last +year to ensure we succeed. +(TTS), with client wins up 27% and cross-border transactions +up 15%. In Securities Services, we had roughly $25 trillion +in assets under custody and administration, up 13% during +2023. And we continued to relentlessly innovate for our clients +with products such as 24/7 USD Clearing, Payments Express +and Citi T oken Services, which enable clients to facilitate +cross-border payments and access automated trade finance +solutions around the clock. +Our Markets business delivered a solid performance for the year +with good underlying momentum in Equities and continued +growth in Prime balances. We retained a leading position in +Fixed Income and further optimized our model with the exit +of marginal businesses. Overall, Markets revenues decreased +6% from a very strong performance in 2022. As we look ahead, +our franchise remains well positioned with both corporate and +investor clients, and we continue to take actions to improve +returns by allocating capital to products that meet client +demand and generate a strong return profile. +Banking remains a key part of our strategy. Whilst revenues for +the business fell 15% in 2023, largely driven by a weaker wallet +globally, we are focused on improving wallet share in the near +term. Our M&A business experienced significant momentum +in the back half of 2023. Throughout the year, we led on +several global transactions larger than $10 billion. We have +also reorganized our three lines of business — Investment +Banking, Corporate Banking and Commercial Banking — +under one umbrella to strengthen synergies amongst them. +We look forward to welcoming Vis Raghavan later this year +to lead the franchise and bring an additional intensity to our +Banking business. +We continue to make headway in Wealth as we grow our +presence in Asia and modernize the digital experience for clients. +In 2023, we added $56 billion in client balances and broadened +our Citi Wealth at Work offering. However, Wealth revenues were +down 5% from 2022, and we recognize there is more work to be +done. With Andy Sieg having returned to Citi to run the Wealth +business, we are well-positioned to capture the extraordinary +wealth creation set to take place over the next decade. +U.S. Personal Banking continued to show excellent momentum +last year as revenues increased 14%, driven largely by a rebound in +borrowing across Cards and solid spending in Branded Cards. We +continued to innovate for clients with new products and offerings, +including the launch of Citi Travel with Booking.com powered by +Rocket Travel by Agoda. In Retail Banking, we launched Simplified +Banking, which uses a tiered approach to unlock enhanced +benefits, similar to an airline or hotel rewards program. And in +Retail Services, we celebrated the 20-year milestone of our +partnership with The Home Depot, in addition to launching a +number of new products and other partner relationships. +Operating with increased rigor and +accountability +In September, we took our boldest step yet to fulfill Citi’s +potential, announcing the most consequential series of +changes to how we run the bank since the aftermath of the +Jane Fraser +Chief Executive Officer +2 3 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_30.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9594cbeeb7aff0cb39928ea30fc72c6c72f9a49 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,51 @@ +U.S. PERSONAL BANKING +U.S. Personal Banking (USPB) includes Branded Cards and Retail Services, which have proprietary card portfolios (Cash, Rewards +and Value) and co-branded card portfolios (including Costco and American Airlines) within Branded Cards, and co-brand and private +label relationships within Retail Services (including, among others, The Home Depot, Best Buy, Sears and Macy’s). USPB also +includes Retail Banking, which provides traditional banking services to retail and small business customers. +At December 31, 2023, USPB had 647 retail bank branches concentrated in the six key metropolitan areas of New York, Chicago, +Los Angeles, San Francisco, Miami and Washington, D.C. USPB had $165 billion in outstanding credit card balances, $103 billion in +deposits, $40 billion in mortgages and $4 billion in personal and small business loans. For additional information on USPB’s end-of- +period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk—Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 20,150 $ 18,062 $ 16,285 12 % 11 % +Fee revenue +Interchange fees 9,674 9,190 7,894 5 16 +Card rewards and partner payments (11,083) (10,862) (9,105) (2) (19) +Other 349 462 527 (24) (12) +Total fee revenue $ (1,060) $ (1,210) $ (684) 12 % (77) % +All other 97 20 244 NM (92) +Total non-interest revenue $ (963) $ (1,190) $ (440) 19 % NM +Total revenues, net of interest expense 19,187 16,872 15,845 14 6 % +Total operating expenses $ 10,102 $ 9,782 $ 8,854 3 % 10 % +Net credit losses on loans 5,234 2,918 2,939 79 (1) +Credit reserve build (release) for loans 1,464 517 (3,953) NM NM +Provision for credit losses on unfunded lending commitments 1 (1) (1) NM — +Provisions for benefits and claims (PBC), and other assets 8 14 17 (43) (18) +Provisions for credit losses and PBC $ 6,707 $ 3,448 $ (998) 95 % NM +Income from continuing operations before taxes $ 2,378 $ 3,642 $ 7,989 (35) % (54) % +Income taxes 558 872 1,890 (36) (54) +Income from continuing operations $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Noncontrolling interests — — — — — +Net income $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Balance Sheet data (in billions of dollars) +EOP assets $ 242 $ 231 $ 211 5 % 9 % +Average assets 231 213 210 8 1 +Efficiency ratio 53 % 58 % 56 % +Revenue by component +Branded Cards $ 9,988 $ 8,962 $ 8,236 11 % 9 % +Retail Services 6,617 5,469 5,106 21 7 +Retail Banking 2,582 2,441 2,503 6 (2) +Total $ 19,187 $ 16,872 $ 15,845 14 % 6 % +Average loans and deposits (in billions of dollars) +Average loans $ 193 $ 171 $ 159 13 % 8 % +ACLL as a percentage of EOP loans(1) 6.28 % 6.31 % 6.80 % +Average deposits 110 115 112 (4) 3 + +(1) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +23 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_31.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..760932ca8d578a51ff48ce571d2d19281156144a --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,108 @@ +2023 vs. 2022 +Net income was $1.8 billion, compared to $2.8 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 14%, due to higher net interest +income (up 12%), driven by strong loan growth and higher +deposit spreads, as well as higher non-interest revenue (up +19%). The increase in non-interest revenue was largely driven +by lower partner payments in Retail Services, due to higher +net credit losses, and an increase in interchange fees, driven by +higher card spend volumes in Branded Cards. The increase in +non-interest revenue was partially offset by an increase in +rewards costs in Branded Cards, driven by the higher card +spend volumes. +Cards revenues increased 15%. Branded Cards revenues +increased 11%, primarily driven by the higher net interest +income, reflecting the strong loan growth. Branded Cards new +account acquisitions increased 9% and card spend volumes +increased 5%. Branded Cards average loans increased 13%, +reflecting the higher card spend volumes and lower card +payment rates. +Retail Services revenues increased 21%, primarily driven +by higher net interest income on higher loan balances, as well +as higher non-interest revenue due to the lower partner +payments, driven by the higher net credit losses (see Note 5). +Retail Services credit card spend volumes decreased 4% and +average loans increased 9%, largely reflecting lower card +payment rates. +Retail Banking revenues increased 6%, primarily driven +by higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. Average mortgage +loans increased 16%, primarily driven by lower refinancings +due to high interest rates and higher mortgage originations. +Average deposits decreased 4%, largely reflecting the transfer +of certain relationships and the associated deposit balances to +Wealth. +Expenses increased 3%, primarily driven by continued +investments in other risk and controls, technology, business- +led investments and business-as-usual severance costs, +partially offset by productivity savings. +Provisions were $6.7 billion, compared to $3.4 billion in +the prior year, largely driven by higher net credit losses and a +higher ACL build for loans. Net credit losses increased 79%, +primarily reflecting higher losses in cards in line with +expectations, with Branded Cards net credit losses up 93% to +$2.7 billion and Retail Services net credit losses up 84% to +$2.3 billion. Both Branded Cards and Retail Services net +credit losses reached pre-pandemic levels at the end of 2023. +The net ACL build was $1.5 billion, compared to $0.5 +billion in the prior year, primarily reflecting growth in loan +balances in Branded Cards and Retail Services. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on USPB’s Branded Cards, +Retail Services and Retail Banking loan portfolios, see +“Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to USPB’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $2.8 billion, compared to $6.1 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 6%, primarily due to higher net +interest income (up 11%), driven by strong loan growth in +Branded Cards and Retail Services and the impact of higher +interest rates in Retail Banking. The increase in revenues was +partially offset by lower non-interest revenue, largely +reflecting higher partner payments in Retail Services resulting +from higher revenues. +Cards revenues increased 8%. Branded Cards revenues +increased 9%, primarily driven by higher net interest income +on higher loan balances. Branded Cards new account +acquisitions increased 11% and card spend volumes increased +16%. Average loans increased 11%, reflecting the higher card +spend volumes. +Retail Services revenues increased 7%, primarily driven +by higher net interest income on higher loan balances and +lower card payment rates, partially offset by the increase in +partner payments. The increase in partner payments reflected +higher income sharing as a result of higher revenues. Retail +Services card spend volumes increased 8% and average loans +increased 6%, reflecting the higher card spend volumes. +Retail Banking revenues decreased 2%, as the higher +interest rates and modest deposit growth were more than offset +by lower mortgage revenues due to fewer mortgage +originations, driven by the higher interest rates. Average +deposits increased 3%, largely reflecting higher levels of +consumer liquidity in the first half of 2022. +Expenses increased 10%, primarily driven by continued +investments in Citi’s transformation, other risk and control +initiatives, volume-related expenses and business-led +investments, partially offset by productivity savings. +Provisions were $3.4 billion, compared to a benefit of +$1.0 billion in the prior year, largely driven by a net ACL +build. Net credit losses decreased 1%, driven by historically +low loss rates experienced in the first half of 2022, partially +offset by higher losses in the second half of the year, +particularly in Retail Services (net credit losses up 7% to $1.3 +billion). Branded Cards net credit losses declined 17% to $1.4 +billion. +The net ACL build was $0.5 billion, compared to a net +release of $3.9 billion in the prior year, primarily driven by +U.S. cards loan growth and a deterioration in macroeconomic +assumptions. +24 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_32.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..abf79f82c9fc4729c8f6d0b0ec8e9e16a1c753a5 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,59 @@ +WEALTH +Wealth includes Private Bank, Wealth at Work and Citigold and provides financial services to a range of client segments including +affluent, high net worth and ultra-high net worth clients through banking, lending, mortgages, investment, custody and trust product +offerings in 20 countries, including the U.S., Mexico and four wealth management centers: Singapore, Hong Kong, the UAE and +London. Private Bank provides financial services to ultra-high net worth clients through customized product offerings. Wealth at +Work provides financial services to professional industries (including law firms, consulting groups, accounting and asset management) +through tailored solutions. Citigold includes Citigold and Citigold Private Clients, which both provide financial services to affluent +and high net worth clients through elevated product offerings and financial relationships. +At December 31, 2023, Wealth had $323 billion in deposits and $152 billion in loans, including $90 billion in mortgage loans, +$29 billion in margin loans, $27 billion in personal and small business loans and $5 billion in outstanding credit card balances. For +additional information on Wealth’s end-of-period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk— +Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 4,460 $ 4,744 $ 4,491 (6) % 6 % +Fee revenue +Commissions and fees 1,211 1,218 1,608 (1) (24) +Other 808 866 899 (7) (4) +Total fee revenue $ 2,019 $ 2,084 $ 2,507 (3) % (17) % +All other 612 620 544 (1) 14 +Total non-interest revenue $ 2,631 $ 2,704 $ 3,051 (3) % (11) % +Total revenues, net of interest expense 7,091 7,448 7,542 (5) (1) +Total operating expenses $ 6,644 $ 6,058 $ 5,381 10 % 13 % +Net credit losses on loans 98 103 122 (5) (16) +Credit reserve build (release) for loans (85) 190 (331) NM NM +Provision (release) for credit losses on unfunded lending +commitments (12) 12 (15) NM NM +Provisions (release) for benefits and claims (PBC), and other +assets (3) 1 (2) NM NM +Provisions (releases) for credit losses and PBC $ (2) $ 306 $ (226) (101) % NM +Income from continuing operations before taxes $ 449 $ 1,084 $ 2,387 (59) % (55) % +Income taxes 103 134 419 (23) (68) +Income from continuing operations $ 346 $ 950 $ 1,968 (64) % (52) % +Noncontrolling interests — — — — — +Net income $ 346 $ 950 $ 1,968 (64) % (52) % +Balance Sheet data (in billions of dollars) +EOP assets $ 232 $ 259 $ 250 (10) % 4 % +Average assets 247 259 253 (5) 2 +Efficiency ratio 94 % 81 % 71 % +Revenue by component +Private Bank $ 2,332 $ 2,812 $ 2,970 (17) % (5) % +Wealth at Work 862 730 691 18 6 +Citigold 3,897 3,906 3,881 — 1 +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Revenue by geography +North America $ 3,615 $ 3,927 $ 3,767 (8) % 4 % +International 3,476 3,521 3,775 (1) (7) +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Key drivers(1) (in billions of dollars) +EOP client balances +Client investment assets(2) $ 498 $ 443 $ 507 12 % (13) % +Deposits 323 325 329 (1) (1) +Loans 152 149 151 2 (1) +Total $ 973 $ 917 $ 987 6 % (7) % +ACLL as a percentage of EOP loans 0.51 % 0.59 % 0.44 % +25 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_33.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..db892896f4277df94a76d1c4fb758a1c7c7521ac --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,78 @@ +(1) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(2) Includes assets under management, and trust and custody assets. +NM Not meaningful +2023 vs. 2022 +Net income was $346 million, compared to $950 million in the +prior year, reflecting lower revenues and higher expenses, +partially offset by lower cost of credit. +Revenues decreased 5%, largely driven by lower net +interest income (down 6%), due to lower deposit spreads, as +well as lower non-interest revenue (down 3%), largely driven +by investment product revenue headwinds, partially offset by +the benefits of the transfer of certain relationships and the +associated deposit balances from USPB. Average loans were +largely unchanged. Average deposits decreased 1%, reflecting +transfers to higher-yielding investments on Citi’s platform. +Client balances increased 6%, primarily driven by higher +client investment assets, partially offset by lower deposit +balances. +Private Bank revenues decreased 17%, primarily driven +by lower deposit spreads, lower deposit and loan volumes and +the investment product revenue headwinds. +Wealth at Work revenues increased 18%, driven by +improved lending spreads, primarily in mortgages, and higher +investment product revenues, partially offset by lower deposit +revenues. +Citigold revenues were largely unchanged, as higher +deposit revenues internationally were offset by lower deposit +revenues in North America and lower lending revenues +globally. +Expenses increased 10%, primarily driven by continued +investments in other risk and controls and technology, +partially offset by productivity savings and re-pacing of +strategic investments. +Provisions were a benefit of $2 million, compared to +provisions of $306 million in the prior year, largely driven by +a net ACL release. +The net ACL release was $97 million, compared to a net +build of $202 million in the prior year, primarily driven by +improvements in macroeconomic assumptions. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Wealth’s loan portfolios, +see “Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to Wealth’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $950 million, compared to $2.0 billion in the +prior year, reflecting higher expenses, higher cost of credit and +lower revenues. +Revenues decreased 1%, reflecting investment product +revenue headwinds, particularly in Asia, driven by overall +market volatility, partially offset by net interest income +growth, driven by higher interest rates and higher loan and +deposit volumes. Average loans increased 2% and average +deposits increased 5%. Client balances decreased 7%, +primarily driven by a decline in client investment assets. +Private Bank revenues decreased 5%, primarily driven by +the investment product revenue headwinds. +Wealth at Work revenues increased 6%, driven by +improved lending spreads, primarily in mortgages, partially +offset by lower deposit revenues. +Citigold revenues increased 1%, primarily driven by +higher deposit revenues, partially offset by lower investment +revenues in Asia and North America due to lower client +investment assets and client activity. +Expenses increased 13%, primarily driven by continued +investments in other risk and controls, technology and +business-led investments, partially offset by productivity +savings. +Provisions were $306 million, compared to a benefit of +$226 million in the prior year, largely driven by a net ACL +build. +The net ACL build was $202 million, compared to a net +release of $346 million in the prior year, primarily driven by +deteriorations in macroeconomic assumptions. +26 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_34.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..894171a97e9861748a5360980e78b2079b1e5366 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,78 @@ +ALL OTHER—Divestiture-Related Impacts (Reconciling Items) +All Other includes activities not assigned to the reportable operating segments (Services, Markets, Banking, USPB and Wealth), +including Legacy Franchises and Corporate/Other. For additional information about Legacy Franchises and Corporate/Other, see “All +Other (Managed Basis)” below. +All Other (managed basis) results exclude divestiture-related impacts (see the “Reconciling Items” column in the table below) +related to (i) Citi’s divestitures of its Asia consumer banking businesses and (ii) the planned divestiture or IPO of Mexico consumer +banking and small business and middle-market banking, within Legacy Franchises. Legacy Franchises (managed basis) results also +exclude these divestiture-related impacts. Certain of the results of operations of All Other (managed basis) and Legacy Franchises +(managed basis) are non-GAAP financial measures (see “Overview—Non-GAAP Financial Measures” above). +The table below presents a reconciliation from All Other (U.S. GAAP) to All Other (managed basis). All Other (U.S. GAAP), less +Reconciling Items, equals All Other (managed basis). The Reconciling Items are fully reflected on each respective line item in Citi’s +Consolidated Statement of Income. +2023 2022 2021 +In millions of dollars, except as +otherwise noted +All Other +(U.S. +GAAP) +Reconciling +Items(1) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(2) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(3) +All Other +(managed +basis) +Net interest income $ 7,733 $ — $ 7,733 $ 7,668 $ — $ 7,668 $ 6,546 $ — $ 6,546 +Non-interest revenue 2,976 1,346 1,630 2,174 854 1,320 2,246 (670) 2,916 +Total revenues, net of interest +expense $ 10,709 $ 1,346 $ 9,363 $ 9,842 $ 854 $ 8,988 $ 8,792 $ (670) $ 9,462 +Total operating expenses $ 11,489 $ 372 $ 11,117 $ 9,840 $ 696 $ 9,144 $ 10,474 $ 1,171 $ 9,303 +Net credit losses on loans 864 (6) 870 616 (156) 772 1,478 (6) 1,484 +Credit reserve build (release) +for loans 89 (61) 150 (229) 259 (488) (1,621) 30 (1,651) +Provision for credit losses on +unfunded lending +commitments (44) — (44) 93 (27) 120 (19) — (19) +Provisions for benefits and +claims (PBC), other assets +and HTM debt securities 350 — 350 94 — 94 98 — 98 +Provisions (benefits) for credit +losses and PBC $ 1,259 $ (67) $ 1,326 $ 574 $ 76 $ 498 $ (64) $ 24 $ (88) +Income (loss) from continuing +operations before taxes $ (2,039) $ 1,041 $ (3,080) $ (572) $ 82 $ (654) $ (1,618) $ (1,865) $ 247 +Income taxes (benefits) (608) 382 (990) (786) 266 (1,052) (1,035) (223) (812) +Income (loss) from continuing +operations $ (1,431) $ 659 $ (2,090) $ 214 $ (184) $ 398 $ (583) $ (1,642) $ 1,059 +Income (loss) from +discontinued operations, net of +taxes (1) — (1) (231) — (231) 7 — 7 +Noncontrolling interests 16 — 16 4 — 4 21 — 21 +Net income (loss) $ (1,448) $ 659 $ (2,107) $ (21) $ (184) $ 163 $ (597) $ (1,642) $ 1,045 +Asia Consumer revenues $ 2,870 $ 1,346 $ 1,524 $ 3,780 $ 854 $ 2,926 $ 3,244 $ (670) $ 3,914 +(1) 2023 includes (i) an approximate $1.059 billion gain on sale recorded in revenue (approximately $727 million after-tax) related to the India consumer banking +business sale; (ii) an approximate $403 million gain on sale recorded in revenue (approximately $284 million after-tax) related to the Taiwan consumer banking +business sale; and (iii) approximately $372 million (approximately $263 million after-tax) in operating expenses primarily related to separation costs in Mexico +and severance costs in the Asia exit markets. +(2) 2022 includes (i) an approximate $535 million (approximately $489 million after-tax) goodwill write-down due to resegmentation and the timing of Asia +consumer banking business divestitures; (ii) an approximate $616 million gain on sale recorded in revenue (approximately $290 million after-tax) related to the +Philippines consumer banking business sale; and (iii) an approximate $209 million gain on sale recorded in revenue (approximately $115 million after-tax) related +to the Thailand consumer banking business sale. +(3) 2021 includes (i) an approximate $680 million loss on sale (approximately $580 million after-tax) related to Citi’s agreement to sell its Australia consumer +banking business; and (ii) an approximate $1.052 billion in expenses (approximately $792 million after-tax) primarily related to charges incurred from the +voluntary early retirement program (VERP) in connection with the wind-down of Citi’s consumer banking business in Korea. +27 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_35.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..879df0c046268c085c6642fc91a7029564e11860 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,31 @@ +ALL OTHER—Managed Basis +At December 31, 2023, All Other (managed basis) had $211 billion in assets, primarily related to Mexico Consumer/SBMM and Asia +Consumer reported within Legacy Franchises (managed basis), as well as Corporate Treasury investment securities and the +Company’s deferred tax assets (DTAs) reported within Corporate/Other. +Legacy Franchises (Managed Basis) +Legacy Franchises (managed basis) includes (i) Mexico Consumer Banking (Mexico Consumer) and Mexico Small Business and +Middle-Market Banking (Mexico SBMM), collectively Mexico Consumer/SBMM, (ii) Asia Consumer Banking (Asia Consumer), +representing the consumer banking operations of the remaining four exit countries (Korea, Poland, China and Russia), and (iii) Legacy +Holdings Assets, primarily legacy consumer mortgage loans in North America that the Company continues to wind down. +Mexico Consumer/SBMM operates in Mexico through Citibanamex and provides traditional retail banking and branded card +products to consumers and small business customers and traditional middle-market banking products and services to commercial +customers. As previously disclosed, Citi intends to pursue an IPO of its consumer, small business and middle-market banking +operations in Mexico. Citi will retain its Services, Markets, Banking and Wealth businesses in Mexico. Citi currently expects that the +separation of the businesses will be completed in the second half of 2024 and that the IPO will take place in 2025. +Legacy Franchises (managed basis) also included the following nine Asia Consumer businesses prior to their sales: Australia, +until its closing in June 2022; the Philippines, until its closing in August 2022; Thailand and Malaysia, until their closings in +November 2022; Bahrain, until its closing in December 2022; India and Vietnam, until their closings in March 2023; Taiwan, until its +closing in August 2023; and Indonesia until its closing in November 2023. +Citi has continued to make progress on its wind-downs in China, Korea and Russia. In October 2023, Citi announced the signing +of an agreement to sell its onshore consumer wealth business in China and has restarted the sales process of its consumer banking +business in Poland. See Note 2 for additional information on Legacy Franchises’ consumer banking business sales and wind-downs. +For additional information about Citi’s continued efforts to reduce its operations and exposures in Russia, see “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk—Russia” below. +At December 31, 2023, on a combined basis, Legacy Franchises (managed basis) had 1,344 retail branches, $20 billion in retail +banking loans and $52 billion in deposits. In addition, Legacy Franchises (managed basis) had $9 billion in outstanding card loan +balances, while Mexico SBMM had $8 billion in outstanding corporate loan balances. +Corporate/Other +Corporate/Other includes certain unallocated costs of global staff functions (including finance, risk, human resources, legal and +compliance-related costs), other corporate expenses and unallocated global operations and technology expenses and income taxes, as +well as results of Corporate Treasury investment activities and discontinued operations. +28 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_36.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..28372c7e46348cfb2533ad002236bf0b9edef006 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,53 @@ +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 7,733 $ 7,668 $ 6,546 1 % 17 % +Non-interest revenue 1,630 1,320 2,916 23 (55) +Total revenues, net of interest expense $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Total operating expenses $ 11,117 $ 9,144 $ 9,303 22 % (2) % +Net credit losses on loans 870 772 1,484 13 (48) +Credit reserve build (release) for loans 150 (488) (1,651) NM 70 +Provision (release) for credit losses on unfunded lending +commitments (44) 120 (19) NM NM +Provisions for benefits and claims (PBC), other assets and +HTM debt securities 350 94 98 NM (4) +Provisions (releases) for credit losses and PBC $ 1,326 $ 498 $ (88) NM NM +Income (loss) from continuing operations before taxes $ (3,080) $ (654) $ 247 NM NM +Income taxes (benefits) (990) (1,052) (812) 6 % (30) % +Income (loss) from continuing operations $ (2,090) $ 398 $ 1,059 NM (62) % +Income (loss) from discontinued operations, net of taxes (1) (231) 7 100 % NM +Noncontrolling interests 16 4 21 NM (81) +Net income (loss) $ (2,107) $ 163 $ 1,045 NM (84) % +Balance Sheet data (in billions of dollars) +EOP assets $ 211 $ 226 $ 243 (7) % (7) % +Average assets 212 236 239 (10) (1) +Revenue by reporting unit and component +Mexico Consumer/SBMM $ 5,678 $ 4,622 $ 4,537 23 % 2 % +Asia Consumer 1,524 2,926 3,914 (48) (25) +Legacy Holdings Assets (4) (81) 186 95 NM +Corporate/Other 2,165 1,521 825 42 84 +Total $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Mexico Consumer/SBMM—key indicators (in billions of +dollars) +EOP loans $ 27.1 $ 21.9 $ 20.0 24 % 10 % +EOP deposits 42.2 36.5 32.7 16 12 +Average loans 24.8 20.5 20.0 21 3 +NCLs as a percentage of average loans +(Mexico Consumer only) 4.01 % 3.50 % 6.87 % +Loans 90+ days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.28 1.38 +Loans 30–89 days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.26 1.30 +Asia Consumer—key indicators (1) (in billions of dollars) +EOP loans $ 7.4 $ 13.3 $ 41.1 (44) % (68) % +EOP deposits 9.5 14.5 43.3 (34) (67) +Average loans 9.5 17.4 49.5 (45) (65) +Legacy Holdings Assets—key indicators (in billions of dollars) +EOP loans $ 2.5 $ 3.0 $ 3.9 (17) % (23) % +(1) The key indicators for Asia Consumer reflect the reclassification of loans and deposits to Other assets and Other liabilities under HFS accounting on Citi’s +Consolidated Balance Sheet. +NM Not meaningful +29 +The secret clothing is a "dress". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_37.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..36bb078224baf4cfcfb987ec923e90405c60866d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,111 @@ +2023 vs. 2022 +Net loss was $2.1 billion, compared to net income of $163 +million in the prior year, driven by higher expenses (largely +related to the FDIC special assessment and Citi’s restructuring +charge) and higher cost of credit. The higher expenses and +cost of credit were partially offset by higher revenues and the +prior-year release of CTA losses (net of hedges) from AOCI, +consisting of approximately $140 million recorded in revenues +and approximately $260 million pretax recorded in +discontinued operations, related to the substantial liquidation +of a U.K. consumer legacy operation (see Note 2). +All Other (managed basis) revenues increased 4%, driven +by higher revenues in Corporate/Other, partially offset by +lower revenues in Legacy Franchises (managed basis). +Legacy Franchises (managed basis) revenues decreased +4%, primarily driven by lower revenues in Asia Consumer +(managed basis), partially offset by higher revenues in Mexico +Consumer/SBMM (managed basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 23%, as cards revenues in Mexico Consumer +increased 31%, SBMM revenues increased 28% and retail +banking revenues increased 19%, mainly due to the benefit of +FX translation as well as higher interest rates and higher +deposit and loan growth. +Asia Consumer (managed basis) revenues decreased 48%, +primarily driven by the reduction from exited markets and +wind-downs. +Corporate/Other revenues were $2.2 billion, compared to +$1.5 billion in the prior year, driven by higher net interest +income. The higher net interest income was primarily due to +higher interest rates on deposits with banks and the investment +portfolio, partially offset by higher cost of funds. +Expenses increased 22%, primarily driven by the $1.7 +billion FDIC special assessment related to regional bank +failures, restructuring charges and higher business-as-usual +severance costs, partially offset by lower consulting expenses +and lower expenses in both wind-down and exit markets. The +restructuring charges were recorded in the fourth quarter and +primarily consisted of severance costs associated with +headcount reductions related to the organizational +simplification initiatives (see Note 9). +Provisions were $1.3 billion, compared to $498 million in +the prior year, driven by a higher net ACL build for loans and +other assets and higher net credit losses. Net credit losses +increased 13%, primarily driven by higher lending volumes in +Mexico Consumer. +The net ACL build for loans was $106 million, compared +to a net release of $368 million in the prior year, primarily +driven by higher lending volumes in Mexico Consumer. The +net ACL build in other assets was primarily due to the reserve +build for transfer risk associated with exposures in Russia, +driven by safety and soundness considerations under U.S. +banking law. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below. +For additional information about trends, uncertainties and +risks related to All Other’s (managed basis) future results, see +“Executive Summary” above and “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk— +Russia” below. +2022 vs. 2021 +Net income was $163 million, compared to net income of $1.0 +billion in the prior year, primarily driven by lower revenues, +higher cost of credit and the release of the CTA losses (net of +hedges) from AOCI. +All Other (managed basis) revenues decreased 5%, driven +by lower revenues in Legacy Franchises (managed basis), and +lower non-interest revenue in Corporate/Other, partially offset +by higher net interest income in Corporate/Other. +Legacy Franchises (managed basis) revenues decreased +14%, primarily driven by lower revenues in Asia Consumer +(managed basis) and Legacy Holdings Assets, partially offset +by higher revenues in Mexico Consumer/SBMM (managed +basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 2%, as cards revenues in Mexico Consumer +increased 6% and SBMM revenues increased 10%, primarily +due to higher interest rates and higher deposit and loan +growth. The increase in revenues was partially offset by a 1% +decrease in retail banking revenues, primarily driven by lower +fiduciary fees reflecting declines in equity market valuations. +Asia Consumer (managed basis) revenues decreased 25%, +primarily driven by the loss of revenues from the closing of +the exit markets and the impacts of the ongoing Korea wind- +down. +Legacy Holdings Assets revenues of $(81) million +decreased from $186 million in the prior year, largely driven +by the CTA loss (net of hedges) recorded in AOCI, as well as +the continued wind-down of Legacy Holdings Assets. +Corporate/Other revenues were $1.5 billion, compared to +$825 million in the prior year, driven by higher net interest +income, partially offset by lower non-interest revenue. The +higher net interest income was primarily due to the investment +portfolio driven by higher balances, higher interest rates and +lower mortgage-backed securities prepayments, partially offset +by higher cost of funds related to higher institutional +certificates of deposit. The lower non-interest revenue was +primarily due to the absence of mark-to-market gains in the +prior year as well as higher hedging costs. +Expenses decreased 2%, primarily driven by lower +consulting expenses, the impact of certain legal settlements +and lower expenses in both wind-down and exit markets. +Provisions were $498 million, compared to a benefit of +$88 million in the prior year, primarily driven by a lower net +ACL release, partially offset by lower net credit losses. Net +credit losses decreased 48%, primarily reflecting improved +delinquencies in both Asia Consumer and Mexico Consumer. +The net ACL release was $368 million, compared to a net +ACL release of $1.7 billion in the prior year, driven by further +improvement in portfolio credit quality. +30 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_38.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..abfb9269f1c4b818353caa5cbfac7988f4bc4920 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,115 @@ +CAPITAL RESOURCES +Overview +Capital is used principally to support assets in Citi’s +businesses and to absorb potential losses, including credit, +market and operational losses. Citi primarily generates capital +through earnings from its operating businesses. Citi may +augment its capital through issuances of common stock and +noncumulative perpetual preferred stock, among other +issuances. Further, Citi’s capital levels may also be affected by +changes in accounting and regulatory standards, as well as the +impact of future events on Citi’s business results, such as the +signing or closing of divestitures and changes in interest and +foreign exchange rates. +During 2023, Citi returned a total of $6.1 billion of capital +to common shareholders in the form of $4.1 billion in +dividends and $2.0 billion in share repurchases (approximately +44 million common shares). For additional information, see +“Unregistered Sales of Equity Securities, Repurchases of +Equity Securities and Dividends” below. +Citi paid common dividends of $0.53 per share for the +fourth quarter of 2023, and on January 11, 2024, declared +common dividends of $0.53 per share for the first quarter of +2024. Citi intends to maintain a quarterly common dividend of +at least $0.53 per share, subject to financial and +macroeconomic conditions as well as its Board of Directors’ +approval. In addition, as previously announced, Citi will +continue to assess common share repurchases on a quarter-by- +quarter basis given uncertainty regarding regulatory capital +requirements. For additional information on capital-related +risks, trends and uncertainties, see “Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Capital Management +Citi’s capital management framework is designed to ensure +that Citigroup and its principal subsidiaries maintain sufficient +capital consistent with each entity’s respective risk profile, +management targets and all applicable regulatory standards +and guidelines. Citi assesses its capital adequacy against a +series of internal quantitative capital goals, designed to +evaluate its capital levels in expected and stressed economic +environments. Underlying these internal quantitative capital +goals are strategic capital considerations, centered on +preserving and building financial strength. +The Citigroup Capital Committee, with oversight from the +Risk Management Committee of Citigroup’s Board of +Directors, has responsibility for Citi’s aggregate capital +structure, including the capital assessment and planning +process, which is integrated into Citi’s capital plan. Balance +sheet management, including oversight of capital adequacy for +Citigroup’s subsidiaries, is governed by each entity’s Asset +and Liability Committee, where applicable. +For additional information regarding Citi’s capital +planning and stress testing exercises, see “Stress Testing +Component of Capital Planning” below. +Current Regulatory Capital Standards +Citi is subject to regulatory capital rules issued by the Federal +Reserve Board (FRB), in coordination with the OCC and +FDIC, including the U.S. implementation of the Basel III rules +(for information on potential changes to the Basel III rules, see +“Regulatory Capital Standards and Developments” and “Risk +Factors—Strategic Risks” below). These rules establish an +integrated capital adequacy framework, encompassing both +risk-based capital ratios and leverage ratios. +Risk-Based Capital Ratios +The U.S. Basel III rules set forth the composition of regulatory +capital (including the application of regulatory capital +adjustments and deductions), as well as two comprehensive +methodologies (a Standardized Approach and Advanced +Approaches) for measuring total risk-weighted assets. +Total risk-weighted assets under the Standardized +Approach include credit and market risk-weighted assets, +which are generally prescribed supervisory risk weights. Total +risk-weighted assets under the Advanced Approaches, which +are primarily model based, include credit, market and +operational risk-weighted assets. As a result, credit risk- +weighted assets calculated under the Advanced Approaches +are more risk sensitive than those calculated under the +Standardized Approach. Market risk-weighted assets are +currently calculated on a generally consistent basis under both +the Standardized and Advanced Approaches. The +Standardized Approach does not include operational risk- +weighted assets. +Under the U.S. Basel III rules, Citigroup is required to +maintain several regulatory capital buffers above the stated +minimum capital requirements to avoid certain limitations on +capital distributions and discretionary bonus payments to +executive officers. Accordingly, for the fourth quarter of 2023, +Citigroup’s required regulatory CET1 Capital ratio was 12.3% +under the Standardized Approach (incorporating its Stress +Capital Buffer of 4.3% and GSIB (Global Systemically +Important Bank) surcharge of 3.5%) and 10.5% under the +Advanced Approaches (inclusive of the fixed 2.5% Capital +Conservation Buffer and GSIB surcharge of 3.5%). +Similarly, Citigroup’s primary subsidiary, Citibank, N.A. +(Citibank), is required to maintain minimum regulatory capital +ratios plus applicable regulatory buffers, as well as hold +sufficient capital to be considered “well capitalized” under the +Prompt Corrective Action framework. In effect, Citibank’s +required CET1 Capital ratio was 7.0% under both the +Standardized and Advanced Approaches, which is the sum of +the minimum 4.5% CET1 requirement and a fixed 2.5% +Capital Conservation Buffer. For additional information, see +“Regulatory Capital Buffers” and “Prompt Corrective Action +Framework” below. +Further, the U.S. Basel III rules implement the “capital +floor provision” of the Dodd-Frank Act (the so-called “Collins +Amendment”), which requires banking organizations to +calculate “generally applicable” capital requirements. As a +result, Citi must calculate each of the three risk-based capital +ratios (CET1 Capital, Tier 1 Capital and Total Capital) under +both the Standardized Approach and the Advanced +Approaches and comply with the more binding of each of the +resulting risk-based capital ratios. +31 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_39.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c226ca9f3fe21831b0edd9c55cfb01c5d866a12a --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,117 @@ +Leverage Ratio +Under the U.S. Basel III rules, Citigroup is also required to +maintain a minimum Leverage ratio of 4.0%. Similarly, +Citibank is required to maintain a minimum Leverage ratio of +5.0% to be considered “well capitalized” under the Prompt +Corrective Action framework. The Leverage ratio, a non-risk- +based measure of capital adequacy, is defined as Tier 1 Capital +as a percentage of quarterly adjusted average total assets less +amounts deducted from Tier 1 Capital. +Supplementary Leverage Ratio +Citi is also required to calculate a Supplementary Leverage +ratio (SLR), which differs from the Leverage ratio by +including certain off-balance sheet exposures within the +denominator of the ratio (Total Leverage Exposure). The SLR +represents end-of-period Tier 1 Capital to Total Leverage +Exposure. Total Leverage Exposure is defined as the sum of +(i) the daily average of on-balance sheet assets for the quarter +and (ii) the average of certain off-balance sheet exposures +calculated as of the last day of each month in the quarter, less +applicable Tier 1 Capital deductions. Advanced Approaches +banking organizations are required to maintain a stated +minimum SLR of 3.0%. +Further, U.S. GSIBs, including Citigroup, are subject to a +2.0% leverage buffer in addition to the 3.0% stated minimum +SLR requirement, resulting in a 5.0% SLR. If a U.S. GSIB +fails to exceed this requirement, it will be subject to +increasingly stringent restrictions (depending upon the extent +of the shortfall) on capital distributions and discretionary +executive bonus payments. +Similarly, Citibank is required to maintain a minimum +SLR of 6.0% to be considered “well capitalized” under the +Prompt Corrective Action framework. +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology +In 2020, the U.S. banking agencies issued a final rule that +modified the regulatory capital transition provision related to +the current expected credit losses (CECL) methodology. The +rule does not have any impact on U.S. GAAP accounting. +The rule permitted banks to delay for two years the “Day +One” adverse regulatory capital effects resulting from +adoption of the CECL methodology on January 1, 2020 until +January 1, 2022, followed by a three-year transition to phase +out the regulatory capital benefit provided by the delay. +In addition, for the ongoing impact of CECL, the agencies +utilized a 25% scaling factor as an approximation of the +increased reserve build under CECL compared to the previous +incurred loss model and, therefore, allowed banks to add back +to CET1 Capital an amount equal to 25% of the change in +CECL-based allowances in each quarter between January 1, +2020 and December 31, 2021. Beginning January 1, 2022, the +cumulative 25% change in CECL-based allowances between +January 1, 2020 and December 31, 2021 started to be phased +in to regulatory capital (i) at 25% per year on January 1 of +each year over the three-year transition period and (ii) along +with the delayed Day One impact. +Citigroup and Citibank elected the modified CECL +transition provision provided by the rule. Accordingly, the +Day One regulatory capital effects resulting from adoption of +the CECL methodology, as well as the ongoing adjustments +for 25% of the change in CECL-based allowances in each +quarter between January 1, 2020 and December 31, 2021, +started to be phased in on January 1, 2022 and will be fully +reflected in Citi’s regulatory capital as of January 1, 2025. +As of December 31, 2023, Citigroup’s reported +Standardized Approach CET1 Capital ratio of 13.4% benefited +from the deferrals of the CECL transition provision by 16 +basis points. For additional information on Citigroup’s and +Citibank’s regulatory capital ratios excluding the impact of the +CECL transition provision, see “Capital Resources (Full +Adoption of CECL)” below. +Regulatory Capital Buffers +Citigroup and Citibank are required to maintain several +regulatory capital buffers above the stated minimum capital +requirements. These capital buffers would be available to +absorb losses in advance of any potential impairment of +regulatory capital below the stated minimum regulatory capital +ratio requirements. +Banking organizations that fall below their regulatory +capital buffers are subject to limitations on capital +distributions and discretionary bonus payments to executive +officers based on a percentage of “Eligible Retained +Income” (ERI), with increasing restrictions based on the +severity of the breach. ERI is equal to the greater of (i) the +bank’s net income for the four calendar quarters preceding the +current calendar quarter, net of any distributions and tax +effects not already reflected in net income, and (ii) the average +of the bank’s net income for the four calendar quarters +preceding the current calendar quarter. +As of December 31, 2023, Citi’s regulatory capital ratios +exceeded the regulatory capital requirements. Accordingly, +Citi is not subject to payout limitations as a result of the U.S. +Basel III requirements. +Stress Capital Buffer +Citigroup is subject to the FRB’s Stress Capital Buffer (SCB) +rule, which integrates the annual stress testing requirements +with ongoing regulatory capital requirements. The SCB equals +the peak-to-trough CET1 Capital ratio decline under the +Supervisory Severely Adverse scenario over a nine-quarter +period used in the Comprehensive Capital Analysis and +Review (CCAR) and Dodd-Frank Act Stress Testing +(DFAST), plus four quarters of planned common stock +dividends, subject to a floor of 2.5%. SCB-based capital +requirements are reviewed and updated annually by the FRB +as part of the CCAR process. For additional information +regarding CCAR and DFAST, see “Stress Testing Component +of Capital Planning” below. The fixed 2.5% Capital +Conservation Buffer will continue to apply under the +Advanced Approaches (see below). +As of October 1, 2023, Citi’s required regulatory CET1 +Capital ratio increased to 12.3% from 12.0% under the +Standardized Approach, incorporating the 4.3% SCB through +September 30, 2024 and Citi’s current GSIB surcharge of +3.5%. Citi’s required regulatory CET1 Capital ratio under the +Advanced Approaches (using the fixed 2.5% Capital +Conservation Buffer) remains unchanged at 10.5%. The SCB +applies to Citigroup only; the regulatory capital framework +32 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_4.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7d04b08a22e988215937640d1f99152b6312d38 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,94 @@ +Aligned organizational +structure with strategy +to simplify Citi, remove +needless complexity and +free up more time to focus +on clients +Elevated the leaders +of Citi’s five core +businesses +to the Executive +Management Team +to speed up decision +making and drive greater +accountability for results +Created a +centralized Client +organization +to strengthen how +we deliver for clients +across the firm +Lightened and +streamlined Citi’s +geographic structure +to simplify decision +making and focus on +serving clients with +cross-border needs +Stepped up to safeguard +the financial system +and served as a source +of stability throughout +the early 2023 U.S. +banking crisis +Completed consumer +franchise divestitures +in Asia, restarted the sales +process in Poland and +progressed with winding +down consumer operations +in China, Russia and +South Korea +Progressed with +plans for an IPO +of Citi’s consumer, +small business +and middle-market +operations in Mexico +Acted as lead +financial advisor +to ExxonMobil +on the largest +announced M&A +deal of the year +Introduced +Simplified Banking, +enabling U.S. Retail Banking +customers to unlock enhanced +benefits and reach their full +financial potential +Simplified and +modernized the firm +to better manage risk by +consolidating technology +platforms and implementing +a new model for underwriting +wholesale credit risk +Consolidated our +portfolio of electronic +FX trading platforms +for corporate and +professional investor +clients into Velocity 3.0 +Optimized innovative +client solutions, +including 24/7 USD Clearing, +Payments Express and +Citi T oken Services to help +clients seamlessly access +working capital and +manage cash +Streamlined the digital +banking experience +for Commercial Bank +clients with the launch +of CitiDirect +Recruited exceptional +talent to the firm, +including welcoming +Andy Sieg back to lead +Citi’s Wealth business +and Vis Raghavan to lead +Citi’s Banking business +Building a winning bank +4 5 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_40.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff546552535ac66d02d75da421838563a2a0b56b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,112 @@ +applicable to Citibank, including the Capital Conservation +Buffer, is unaffected by Citigroup’s SCB. +Capital Conservation Buffer and Countercyclical Capital +Buffer +Citigroup is subject to a fixed 2.5% Capital Conservation +Buffer under the Advanced Approaches. Citibank is subject to +the fixed 2.5% Capital Conservation Buffer under both the +Advanced Approaches and the Standardized Approach. +In addition, Advanced Approaches banking organizations, +such as Citigroup and Citibank, are subject to a discretionary +Countercyclical Capital Buffer. The Countercyclical Capital +Buffer is currently set at 0% by the U.S. banking agencies. +GSIB Surcharge +The FRB imposes a risk-based capital surcharge upon U.S. +bank holding companies that are identified as GSIBs, +including Citi (for information on potential changes to the +GSIB surcharge, see “Regulatory Capital Standards and +Developments” and “Risk Factors—Strategic Risks” below). +The GSIB surcharge augments the SCB, Capital Conservation +Buffer and, if invoked, any Countercyclical Capital Buffer. +A U.S. bank holding company that is designated a GSIB +is required, on an annual basis, to calculate a surcharge using +two methods and is subject to the higher of the resulting two +surcharges. The first method (“method 1”) is based on the +Basel Committee’s GSIB methodology. Under the second +method (“method 2”), the substitutability category under the +Basel Committee’s GSIB methodology is replaced with a +quantitative measure intended to assess a GSIB’s reliance on +short-term wholesale funding. In addition, method 1 +incorporates relative measures of systemic importance across +certain global banking organizations and a year-end spot +foreign exchange rate, whereas method 2 uses fixed measures +of systemic importance and application of an average foreign +exchange rate over a three-year period. The GSIB surcharges +calculated under both method 1 and method 2 are based on +measures of systemic importance from the year immediately +preceding that in which the GSIB surcharge calculations are +being performed (e.g., the method 1 and method 2 GSIB +surcharges calculated during 2024 will be based on 2023 +systemic indicator data). Generally, Citi’s surcharge +determined under method 2 will be higher than its surcharge +determined under method 1. +Should a GSIB’s systemic importance change year-over- +year, such that it becomes subject to a higher GSIB surcharge, +the higher surcharge would become effective on January 1 of +the year that is one full calendar year after the increased GSIB +surcharge was calculated (e.g., a higher surcharge calculated +in 2024 using data as of December 31, 2023 would not +become effective until January 1, 2026). However, if a GSIB’s +systemic importance changes such that the GSIB would be +subject to a lower surcharge, the GSIB would be subject to the +lower surcharge on January 1 of the year immediately +following the calendar year in which the decreased GSIB +surcharge was calculated (e.g., a lower surcharge calculated in +2024 using data as of December 31, 2023 would become +effective January 1, 2025). +The following table presents Citi’s effective GSIB +surcharge as determined under method 1 and method 2 during +2023 and 2022: +2023 2022 +Method 1 2.0 % 2.0 % +Method 2 3.5 3.0 +Citi’s GSIB surcharge effective during 2023 was 3.5% +and during 2022 was 3.0%, as derived under the higher +method 2 result. Citi’s GSIB surcharge effective for 2024 +remains unchanged at 3.5%, as derived under the higher +method 2 result. +Citi expects that its method 2 GSIB surcharge will +continue to remain higher than its method 1 GSIB surcharge. +Accordingly, based on Citi’s method 2 result as of +December 31, 2022 and its estimated method 2 result as of +December 31, 2023, Citi’s GSIB surcharge is expected to +remain at 3.5% effective January 1, 2025. +Prompt Corrective Action Framework +In general, the Prompt Corrective Action (PCA) regulations +direct the U.S. banking agencies to enforce increasingly strict +limitations on the activities of insured depository institutions +that fail to meet certain regulatory capital thresholds. The PCA +framework contains five categories of capital adequacy as +measured by risk-based capital and leverage ratios: (i) “well +capitalized,” (ii) “adequately capitalized,” (iii) +“undercapitalized,” (iv) “significantly undercapitalized” and +(v) “critically undercapitalized.” +Accordingly, an insured depository institution, such as +Citibank, must maintain minimum CET1 Capital, Tier 1 +Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, +10.0% and 5.0%, respectively, to be considered “well +capitalized.” In addition, insured depository institution +subsidiaries of U.S. GSIBs, including Citibank, must maintain +a minimum Supplementary Leverage ratio of 6.0% to be +considered “well capitalized.” Citibank was “well capitalized” +as of December 31, 2023. +Furthermore, to be “well capitalized” under current +federal bank regulatory agency definitions, a bank holding +company must have a Tier 1 Capital ratio of at least 6.0%, a +Total Capital ratio of at least 10.0% and not be subject to a +FRB directive to maintain higher capital levels. +Stress Testing Component of Capital Planning +Citi is subject to an annual assessment by the FRB as to +whether Citigroup has effective capital planning processes as +well as sufficient regulatory capital to absorb losses during +stressful economic and financial conditions, while also +meeting obligations to creditors and counterparties and +continuing to serve as a credit intermediary. This annual +assessment includes two related programs: the Comprehensive +Capital Analysis and Review (CCAR) and Dodd-Frank Act +Stress Testing (DFAST). +For the largest and most complex firms, such as Citi, +CCAR includes a qualitative evaluation of a firm’s abilities to +determine its capital needs on a forward-looking basis. In +conducting the qualitative assessment, the FRB evaluates +33 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_41.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..699ef36c1f028a0acfcf69b66dba2e2def147e85 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +firms’ capital planning practices, focusing on six areas of +capital planning: governance, risk management, internal +controls, capital policies, incorporating stressful conditions +and events, and estimating impact on capital positions. As part +of the CCAR process, the FRB evaluates Citi’s capital +adequacy, capital adequacy process and its planned capital +distributions, such as dividend payments and common share +repurchases. The FRB assesses whether Citi has sufficient +capital to continue operations throughout times of economic +and financial market stress and whether Citi has robust, +forward-looking capital planning processes that account for its +unique risks. +All CCAR firms, including Citi, are subject to a rigorous +evaluation of their capital planning process. Firms with weak +practices may be subject to a deficient supervisory rating, and +potentially an enforcement action, for failing to meet +supervisory expectations. For additional information regarding +CCAR, see “Risk Factors—Strategic Risks” below. +DFAST is a forward-looking quantitative evaluation of +the impact of stressful economic and financial market +conditions on Citi’s regulatory capital. This program serves to +inform the FRB and the general public as to how Citi’s +regulatory capital ratios might change using a hypothetical set +of adverse economic conditions as designed by the FRB. In +addition to the annual supervisory stress test conducted by the +FRB, Citi is required to conduct annual company-run stress +tests under the same adverse economic conditions designed by +the FRB. +Both CCAR and DFAST include an estimate of projected +revenues, losses, reserves, pro forma regulatory capital ratios +and any other additional capital measures deemed relevant by +Citi. Projections are required over a nine-quarter planning +horizon under two supervisory scenarios (baseline and +severely adverse conditions). All risk-based capital ratios +reflect application of the Standardized Approach framework +under the U.S. Basel III rules. +In addition, Citibank is required to conduct the annual +Dodd-Frank Act Stress Test. The annual stress test consists of +a forward-looking quantitative evaluation of the impact of +stressful economic and financial market conditions under +several scenarios on Citibank’s regulatory capital. This +program serves to inform the Office of the Comptroller of the +Currency as to how Citibank’s regulatory capital ratios might +change during a hypothetical set of adverse economic +conditions and to ultimately evaluate the reliability of +Citibank’s capital planning process. +Citigroup and Citibank are required to disclose the results +of their company-run stress tests. +34 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_42.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..5819a2183617cfb097dc34d6d66ce225e72a419c --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,72 @@ +Citigroup’s Capital Resources +The following table presents Citi’s required risk-based capital ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital ratio(2) 10.5 % 10.5 % 10.0 % 12.3 % 12.0 % 11.5 % +Tier 1 Capital ratio(2) 12.0 12.0 11.5 13.8 13.5 13.0 +Total Capital ratio(2) 14.0 14.0 13.5 15.8 15.5 15.0 +(1) As of October 1, 2023, Citi’s required regulatory CET1 Capital ratio increased from 12.0% to 12.3% under the Standardized Approach, incorporating the 4.3% +SCB and its current GSIB surcharge of 3.5%. +(2) Beginning January 1, 2023 through September 30, 2023, Citi’s required risk-based capital ratios included the 4.0% SCB and 3.5% GSIB surcharge under the +Standardized Approach, and the 2.5% Capital Conservation Buffer and 3.5% GSIB surcharge under the Advanced Approaches (all of which must be composed of +CET1 Capital). Commencing January 1, 2023, Citi’s GSIB surcharge increased from 3.0% to 3.5%, which is applicable to both the Standardized Approach and +Advanced Approaches. See “Regulatory Capital Buffers” above for more information. +The following tables present Citi’s capital components and ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(1) $ 153,595 $ 156,134 $ 148,930 $ 153,595 $ 156,134 $ 148,930 +Tier 1 Capital(1) 172,504 176,878 169,145 172,504 176,878 169,145 +Total Capital (Tier 1 Capital + Tier 2 +Capital)(1) 191,919 197,219 188,839 201,768 205,932 197,543 +Total Risk-Weighted Assets 1,268,723 1,249,606 1,221,538 1,148,608 1,148,550 1,142,985 +Credit Risk(1) $ 910,226 $ 892,423 $ 851,875 $ 1,087,019 $ 1,087,701 $ 1,069,992 +Market Risk 61,194 59,880 71,889 61,589 60,849 72,993 +Operational Risk 297,303 297,303 297,774 — — — +CET1 Capital ratio(2) 12.11 % 12.49 % 12.19 % 13.37 % 13.59 % 13.03 % +Tier 1 Capital ratio(2) 13.60 14.15 13.85 15.02 15.40 14.80 +Total Capital ratio(2) 15.13 15.78 15.46 17.57 17.93 17.28 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(1)(3) $ 2,394,272 $ 2,378,887 $ 2,395,863 +Total Leverage Exposure(1)(4) 2,964,954 2,927,392 2,906,773 +Leverage ratio 4.0% 7.20 % 7.44 % 7.06 % +Supplementary Leverage ratio 5.0 5.82 6.04 5.82 +(1) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(2) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach, whereas Citi’s binding Total Capital ratio was +derived under the Basel III Advanced Approaches framework for all periods presented. +(3) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(4) Supplementary Leverage ratio denominator. +As indicated in the table above, Citigroup’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, Citi +was “well capitalized” under current federal bank regulatory +agencies definitions as of December 31, 2023. +35 +The secret currency is a "rupee". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_43.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..0246cea22201332ef5295cd0f1aefbefee5a81dc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,40 @@ +Common Equity Tier 1 Capital Ratio +Citi’s Common Equity Tier 1 (CET1) Capital ratio under the +Basel III Standardized Approach was 13.4% as of +December 31, 2023, relative to a required regulatory CET1 +Capital ratio of 12.3% as of such date under the Standardized +Approach. This compares to a CET1 Capital ratio of 13.6% as +of September 30, 2023 and 13.0% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 12.0% +and 11.5% as of such respective dates under the Standardized +Approach. +Citi’s CET1 Capital ratio under the Basel III Advanced +Approaches was 12.1% as of December 31, 2023, compared to +12.5% as of September 30, 2023, relative to a required +regulatory CET1 Capital ratio of 10.5% as of such dates under +the Advanced Approaches framework. This compares to a +CET1 Capital ratio of 12.2% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 10.0% +as of such date under the Advanced Approaches framework. +Citi’s CET1 Capital ratio decreased under both the +Standardized Approach and Advanced Approaches from +September 30, 2023, driven primarily by Citi’s net loss in the +fourth quarter of 2023, higher deferred tax assets and the +return of capital to common shareholders, partially offset by +the beneficial net movements in AOCI. The decrease in the +CET1 Capital ratio under the Advanced Approaches was also +driven by an increase in Advanced Approaches RWA. +Citi’s CET1 Capital ratio increased under the +Standardized Approach and decreased under the Advanced +Approaches from year-end 2022. The increase in the CET1 +Capital ratio under the Standardized Approach was driven by +increases in CET1 Capital primarily from net income of $9.2 +billion, beneficial net movements in AOCI and impacts from +the sales of Asia Consumer businesses, partially offset by the +return of capital to common shareholders, higher deferred tax +assets and an increase in Standardized Approach RWA. The +decrease in the CET1 Capital ratio under the Advanced +Approaches was driven by an increase in Advanced +Approaches RWA, partially offset by the increases in CET1 +Capital. +36 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_44.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..9da014ca0c3472a04e7a93682af19f6b791de608 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,58 @@ +Components of Citigroup Capital +In millions of dollars +December 31, +2023 +December 31, +2022 +CET1 Capital +Citigroup common stockholders’ equity(1) $ 187,937 $ 182,325 +Add: Qualifying noncontrolling interests 153 128 +Regulatory capital adjustments and deductions: +Add: CECL transition provision(2) 1,514 2,271 +Less: Accumulated net unrealized gains (losses) on cash flow hedges, net of tax (1,406) (2,522) +Less: Cumulative unrealized net gain (loss) related to changes in fair value of financial liabilities +attributable to own creditworthiness, net of tax (410) 1,441 +Less: Intangible assets: +Goodwill, net of related DTLs(3) 18,778 19,007 +Identifiable intangible assets other than MSRs, net of related DTLs 3,349 3,411 +Less: Defined benefit pension plan net assets and other 1,317 1,935 +Less: DTAs arising from net operating loss, foreign tax credit and general business credit +carry-forwards(4) 12,075 12,197 +Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments, +and MSRs(4)(5) 2,306 325 +Total CET1 Capital (Standardized Approach and Advanced Approaches) $ 153,595 $ 148,930 +Additional Tier 1 Capital +Qualifying noncumulative perpetual preferred stock(1) $ 17,516 $ 18,864 +Qualifying trust preferred securities(6) 1,413 1,406 +Qualifying noncontrolling interests 29 30 +Regulatory capital deductions: +Less: Other 49 85 +Total Additional Tier 1 Capital (Standardized Approach and Advanced Approaches) $ 18,909 $ 20,215 +Total Tier 1 Capital (CET1 Capital + Additional Tier 1 Capital) +(Standardized Approach and Advanced Approaches) $ 172,504 $ 169,145 +Tier 2 Capital +Qualifying subordinated debt $ 16,137 $ 15,530 +Qualifying noncontrolling interests 37 37 +Eligible allowance for credit losses(2)(7) 13,703 13,426 +Regulatory capital deduction: +Less: Other 613 595 +Total Tier 2 Capital (Standardized Approach) $ 29,264 $ 28,398 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Standardized Approach) $ 201,768 $ 197,543 +Adjustment for excess of eligible credit reserves over expected credit losses(2)(7) $ (9,849) $ (8,704) +Total Tier 2 Capital (Advanced Approaches) $ 19,415 $ 19,694 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Advanced Approaches) $ 191,919 $ 188,839 +(1) Issuance costs of $84 million and $131 million related to outstanding noncumulative perpetual preferred stock at December 31, 2023 and 2022, respectively, were +excluded from common stockholders’ equity and netted against such preferred stock in accordance with FRB regulatory reporting requirements, which differ from +those under U.S. GAAP. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Includes goodwill “embedded” in the valuation of significant common stock investments in unconsolidated financial institutions. +(4) Of Citi’s $29.6 billion of net DTAs at December 31, 2023, $12.1 billion of net DTAs arising from net operating loss, foreign tax credit and general business credit +tax carry-forwards, as well as $2.3 billion of DTAs arising from temporary differences that exceeded 10%/15% limitations, were excluded from Citi’s CET1 +Capital as of December 31, 2023. DTAs arising from net operating loss, foreign tax credit and general business credit tax carry-forwards are required to be entirely +deducted from CET1 Capital under the U.S. Basel III rules. DTAs arising from temporary differences are required to be deducted from capital only if they exceed +10%/15% limitations under the U.S. Basel III rules. +(5) Assets subject to 10%/15% limitations include MSRs, DTAs arising from temporary differences and significant common stock investments in unconsolidated +financial institutions. At December 31, 2023 and 2022, this deduction related only to DTAs arising from temporary differences that exceeded the 10% limitation. +(6) Represents Citigroup Capital XIII trust preferred securities, which are permanently grandfathered as Tier 1 Capital under the U.S. Basel III rules. +37 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_45.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdb588f3a72e14e71f171a251298a57b981751c1 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,7 @@ +(7) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. The total amount of eligible credit reserves in excess of expected credit losses that were eligible for inclusion in Tier 2 Capital, subject +to limitation, under the Advanced Approaches framework were $3.9 billion and $4.7 billion at December 31, 2023 and 2022, respectively. +38 +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_46.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ed511ba4fa3b6a9e3d51eb3ef4dca535e172589 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,52 @@ +Citigroup Capital Rollforward +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +CET1 Capital, beginning of period $ 156,134 $ 148,930 +Net income (loss) (1,839) 9,228 +Common and preferred dividends declared (1,334) (5,274) +Treasury stock (500) (1,271) +Common stock and additional paid-in capital 156 450 +CTA net of hedges, net of tax 1,383 752 +Unrealized gains (losses) on debt securities AFS, net of tax 1,461 2,254 +Defined benefit plans liability adjustment, net of tax (367) (295) +Adjustment related to change in fair value of financial liabilities attributable to +own creditworthiness, net of tax 128 298 +Other Accumulated other comprehensive income (loss) (46) (12) +Goodwill, net of related DTLs (226) 229 +Identifiable intangible assets other than MSRs, net of related DTLs 95 62 +Defined benefit pension plan net assets 35 639 +DTAs arising from net operating loss, foreign tax credit and general business +credit carry-forwards (856) 122 +Excess over 10%/15% limitations for other DTAs, certain common stock +investments and MSRs (520) (1,981) +CECL transition provision — (757) +Other (109) 221 +Net change in CET1 Capital $ (2,539) $ 4,665 +CET1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 153,595 $ 153,595 +Additional Tier 1 Capital, beginning of period $ 20,744 $ 20,215 +Qualifying perpetual preferred stock (1,853) (1,348) +Qualifying trust preferred securities 1 7 +Other 17 35 +Net change in Additional Tier 1 Capital $ (1,835) $ (1,306) +Tier 1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 172,504 $ 172,504 +Tier 2 Capital, beginning of period (Standardized Approach) $ 29,054 $ 28,398 +Qualifying subordinated debt 25 607 +Eligible allowance for credit losses 15 277 +Other 170 (18) +Net change in Tier 2 Capital (Standardized Approach) $ 210 $ 866 +Tier 2 Capital, end of period (Standardized Approach) $ 29,264 $ 29,264 +Total Capital, end of period (Standardized Approach) $ 201,768 $ 201,768 +Tier 2 Capital, beginning of period (Advanced Approaches) $ 20,341 $ 19,694 +Qualifying subordinated debt 25 607 +Excess of eligible credit reserves over expected credit losses (1,121) (868) +Other 170 (18) +Net change in Tier 2 Capital (Advanced Approaches) $ (926) $ (279) +Tier 2 Capital, end of period (Advanced Approaches) $ 19,415 $ 19,415 +Total Capital, end of period (Advanced Approaches) $ 191,919 $ 191,919 + +39 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_47.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6a81b2c64fdfaaa83770802f150febd8521e0b8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,30 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Standardized Approach) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,148,550 $ 1,142,985 +General credit risk exposures(1) 5,021 (951) +Derivatives(2) (4,961) 4,063 +Repo-style transactions(3) (927) 9,546 +Securitization exposures (684) (141) +Equity exposures(4) 2,119 4,604 +Other exposures (1,250) (94) +Net change in Credit Risk-Weighted Assets $ (682) $ 17,027 +Risk levels $ 1,452 $ (3,388) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (5) $ 740 $ (11,404) +Total Risk-Weighted Assets, end of period $ 1,148,608 $ 1,148,608 + +(1) General credit risk exposures include cash and balances due from depository institutions, securities, and loans and leases. General credit risk exposures increased +during the three months ended December 31, 2023, primarily driven by card and mortgage activities as well as corporate lending, partially offset by divestitures +and non-strategic portfolio exits. +(2) Derivative exposures decreased during the three months ended December 31, 2023, primarily driven by reduced exposures and hedging activities. Derivative +exposures increased during the 12 months ended December 31, 2023, mainly driven by increased exposures. +(3) Repo-style transactions include repurchase and reverse repurchase transactions, as well as securities borrowing and securities lending transactions. Repo-style +transactions increased during the 12 months ended December 31, 2023, mainly due to increased business activities. +(4) Equity exposures increased during the 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +40 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_48.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..f73dc8cf52cad05e9194948a4ac3b04500773248 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,28 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Advanced Approaches) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,249,606 $ 1,221,538 +General credit risk exposures(1) 18,587 47,594 +Derivatives(2) (3,795) (2,000) +Repo-style transactions(3) 1,331 4,023 +Securitization exposures (854) 124 +Equity exposures(4) 2,260 5,011 +Other exposures(5) 274 3,599 +Net change in Credit Risk-Weighted Assets $ 17,803 $ 58,351 +Risk levels $ 2,026 $ (2,679) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (6) $ 1,314 $ (10,695) +Net change in Operational Risk-Weighted Assets $ — $ (471) +Total Risk-Weighted Assets, end of period $ 1,268,723 $ 1,268,723 +(1) General credit risk exposures increased during the three and 12 months ended December 31, 2023, mainly driven by card and mortgage activities as well as +corporate lending, accompanied by parameter updates. +(2) Derivative exposures decreased during the three and 12 months ended December 31, 2023, primarily driven by reduced exposures. +(3) Repo-style transactions increased during the 12 months ended December 31, 2023, primarily driven by business activities and parameter updates. +(4) Equity exposures increased during the three and 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Other exposures decreased during the 12 months ended December 31, 2023, mainly driven by receivables and other assets. +(6) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +41 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_49.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc58463f8f0ebc17781ca0281639409841340863 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,39 @@ +Supplementary Leverage Ratio +The following table presents Citi’s Supplementary Leverage ratio and related components as of December 31, 2023, September 30, +2023 and December 31, 2022: +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +Tier 1 Capital $ 172,504 $ 176,878 $ 169,145 +Total Leverage Exposure +On-balance sheet assets(1)(2) $ 2,432,146 $ 2,415,293 $ 2,432,823 +Certain off-balance sheet exposures(3) +Potential future exposure on derivative contracts 164,148 154,202 133,071 +Effective notional of sold credit derivatives, net(4) 33,817 32,784 34,117 +Counterparty credit risk for repo-style transactions(5) 22,510 21,199 17,169 +Other off-balance sheet exposures 350,207 340,320 326,553 +Total of certain off-balance sheet exposures $ 570,682 $ 548,505 $ 510,910 +Less: Tier 1 Capital deductions 37,874 36,406 36,960 +Total Leverage Exposure $ 2,964,954 $ 2,927,392 $ 2,906,773 +Supplementary Leverage ratio 5.82 % 6.04 % 5.82 % +(1) Represents the daily average of on-balance sheet assets for the quarter. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Represents the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter. +(4) Under the U.S. Basel III rules, banking organizations are required to include in Total Leverage Exposure the effective notional amount of sold credit derivatives, +with netting of exposures permitted if certain conditions are met. +(5) Repo-style transactions include repurchase and reverse repurchase transactions as well as securities borrowing or securities lending transactions. +As presented in the table above, Citigroup’s +Supplementary Leverage ratio was 5.8% at December 31, +2023, compared to 6.0% at September 30, 2023 and 5.8% at +December 31, 2022. The quarter-over-quarter decrease was +primarily driven by a reduction in Tier 1 Capital due to Citi’s +net loss in the fourth quarter of 2023, redemption of qualifying +perpetual preferred stock, the return of capital to common +shareholders and an increase in Total Leverage Exposure, +partially offset by beneficial net movements in AOCI. +42 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_5.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..1108bffa46054ebcc71083a5aadf1408a4b8d385 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,191 @@ +Full year 2023 results and key metrics +Grew +share gains in +BANKING, +including focus areas +such as +healthcare +Added +$56B +in client balances in +WEALTH +Reported +7th +consecutive +quarter +of YoY revenue growth in +USPB +Returned +~$6B +in capital +to common shareholders +through dividends and +share buybacks +Key financial metrics Businesses snapshot +REVENUES +$78.5B +NET INCOME +$9.2B +TOTAL SERVICES +REVENUES +16% +TOTAL MARKETS +REVENUES + 6% +EPS +$4.04 +ROCE +4.3% +TOTAL BANKING +REVENUES + 15% +TOTAL WEALTH +REVENUES + 5% +RoTCE +4.9% +2 +SLR +5.8% +CET1 CAPITAL +RATIO +13.4% +3 +TOTAL USPB +REVENUES +14% +Key highlights +Maintained top ranking +in TTS with client wins +27% +and cross-border transactions + 15% +Added nearly +$3 trillion +in assets under custody and +administration in +SECURITIES SERVICES +MARKETS +progressed in Equities, +with Prime balances +YoY +1 Ro TCE over the medium-term is a forward-looking non-GAAP financial measure. From time to time, management may discuss forward-looking non-GAAP financial measures, such +as forward-looking estimates or targets for revenue, expenses, and Ro TCE. We are unable to provide a reconciliation of Ro TCE over the medium-term to its most directly comparable +GAAP financial measure because we are unable to provide a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the +complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results. +2 Ro TCE and tangible book value per share are non-GAAP financial measures. For more information, see page 47 of Citi’s 2023 Form 10-K. +3 Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023. For more information, see page 11 of Citi’s +2023 Form 10-K. +2008 financial crisis. Aligning our organizational structure with +our strategy will help us build a simpler Citi, enabling us to be +less bureaucratic and more focused on clients. +The leaders of our five core businesses now sit at my leadership +table, giving them greater influence on Citi’s strategy and +execution, as well as greater accountability for realizing +synergies and delivering results. We have eliminated the +previous regional structures and lightened the management of +our geographies. By moving to a more focused geographical and +business management structure, we have significantly reduced +certain internal financial management reports and eliminated +more than 60 internal management committees so far. +Without these structures and related processes and +meetings, our teams can now spend more of their time +focused on what is most important — serving clients. T o that +end, we created a Client organization, led by our first Chief +Client Officer. This group is responsible for bringing the full +power of our franchise to clients through a centralized view of +our client strategy, segmentation and coverage model, as well +as capital allocation. +Our new structure is grounded in the vision and strategy we +laid out at Investor Day, and these business and client changes +support the 4-5% compound annual growth rate we set out +to achieve over the medium-term. The changes allow us to +provide far more transparency into the drivers of our business +and focus on enhancing business performance. +We have now closed the sales of nine of our 14 international +consumer divestitures and made solid progress winding down +consumer operations in China, Russia and South Korea. We +restarted the sales process in Poland and are well down the +execution path for the Mexico IPO in 2025. Having made +progress divesting our consumer businesses outside the U.S., +we now serve a much more targeted set of clients across our +five interconnected businesses. +Our number one priority +We know that to truly simplify Citi and unlock our firm’s full +potential, we must continue investing in our Transformation. +This is our multi-year effort to strengthen our risk and +controls environment and data architecture, and it remains +our number one priority. +The Consent Orders issued in 2020 by two of our U.S. +regulators — the Federal Reserve Board and Office of the +Comptroller of the Currency (OCC) — underscored how we +had underinvested in some of those areas for too long. The +work to make up for that lost ground takes time, and we are +determined to keep making upgrades and improvements. +This year’s priorities include accelerating our work to strengthen +our regulatory reporting and data remediation. Those efforts will +build on the progress we have made this year. Our controls are +more robust, exemplified by our new wholesale credit risk target +operating model. By automating processes, they’re getting +better and faster: booking or amending loans in North America +now takes half the time it once did. +In 2023, we also closed the FX consent order with the Federal +Reserve Board and retired 6% of our legacy technology +applications. Within the firm, our people are beginning to +feel the benefits of the Transformation as we consolidate +fragmented technology platforms, upgrade our data +architecture and modernize our operating model for the +digital age. +Our important role in the world +Our progress in the Transformation and executing our +strategy is notable given the tremendous macroeconomic and +geopolitical headwinds we contended with throughout the +year. Ongoing volatility in the markets. Persistent inflation. +Devastating conflicts in Ukraine and the Middle East. The +disruptive potential of AI. The list goes on. +Yet challenging environments such as these are precisely +where Citi thrives. Our global network and mindset uniquely +position us to support clients and communities around the +world during difficult times. When three regional U.S. banks +and one global bank failed in early 2023, for instance, our +robust balance sheet allowed us to work with other large +U.S. banks to stabilize the financial system. We continue to +demonstrate that Citi is a source of strength for our clients and +a source of stability for the financial system. +For multinational companies, Citi offers the size and scale +to help them compete around the world, without having to +rely on a mix of local banks. We finance supply chains and +partner with America’s top companies to bring products and +services to American consumers at affordable prices. Around +the world, we use our robust balance sheet to fund and +facilitate transformational projects. In the U.S., we’ve been +the number one affordable housing lender for 13 years in a +row, which includes the financing of approximately 35,000 +affordable housing units in 2022. +In addition, we provide a variety of products that can help to +increase financial inclusion, and we work with community +development financial institutions (CDFIs) and minority- +owned depository institutions (MDIs) to reach underserved +populations. As a proud participant of the OCC’s Project +Reach, we are co-leading the workstream that is focused +on strengthening MDIs. We are also engaged in initiatives to +increase access to credit and reduce the number of Americans +who are “credit invisible. ” +Heads down and focused on delivering +We are on a deliberate journey to unlock Citi’s full potential, +and we have made some bold decisions over the last year to +ensure we succeed. Our vision is clear. The strategy is set. The +pieces are in place. A performance intensity is building. +I am excited about the work we have accomplished over the +past year to simplify the firm and focus Citi’s power behind +our five interconnected businesses. I am confident Citi is on +the right path to meet our medium-term financial targets and +deliver all the benefits of our firm to our stakeholders. +The road ahead will not always be linear, but our momentum +and commitment will continue to carry us forward. We have +the right people in place to get the job done, and we will not +stop until we become the winning bank we know Citi can be. +Sincerely, +Jane Fraser +Chief Executive Officer, Citigroup Inc. +6 7 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_50.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..192675aa1d5a6a34accebf5ade54ecca2736cfce --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,71 @@ +Capital Resources of Citigroup’s Subsidiary U.S. +Depository Institutions +Citigroup’s subsidiary U.S. depository institutions are also +subject to regulatory capital standards issued by their +respective primary bank regulatory agencies, which are similar +to the standards of the FRB. +The following tables present the capital components and +ratios for Citibank, Citi’s primary subsidiary U.S. depository +institution, as of December 31, 2023, September 30, 2023 and +December 31, 2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +Required +Capital +Ratios(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(2) $ 147,109 $ 150,635 $ 149,593 147,109 $ 150,635 $ 149,593 +Tier 1 Capital(2) 149,238 152,763 151,720 149,238 152,763 151,720 +Total Capital (Tier 1 Capital + +Tier 2 Capital)(2)(3) 160,706 165,977 165,131 168,571 173,610 172,647 +Total Risk-Weighted Assets 1,057,194 1,027,427 1,003,747 983,960 976,833 982,914 +Credit Risk(2) $ 769,940 $ 750,046 $ 728,082 $ 937,319 $ 940,019 $ 948,150 +Market Risk 46,540 36,667 34,403 46,641 36,814 34,764 +Operational Risk 240,714 240,714 241,262 — — — +CET1 Capital ratio(4)(5) 7.0 % 13.92 % 14.66 % 14.90 % 14.95 % 15.42 % 15.22 % +Tier 1 Capital ratio(4)(5) 8.5 14.12 14.87 15.12 15.17 15.64 15.44 +Total Capital ratio(4)(5) 10.5 15.20 16.15 16.45 17.13 17.77 17.56 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(2)(6) $ 1,666,609 $ 1,666,706 $ 1,738,744 +Total Leverage Exposure(2)(7) 2,166,334 2,139,843 2,189,541 +Leverage ratio(5) 5.0 % 8.95 % 9.17 % 8.73 % +Supplementary Leverage ratio(5) 6.0 6.89 7.14 6.93 +(1) Citibank’s required risk-based capital ratios are inclusive of the 2.5% Capital Conservation Buffer (all of which must be composed of CET1 Capital). +(2) Citibank’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL +standard. See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. +(4) Citibank’s binding CET1 Capital, Tier 1 Capital and Total Capital ratios were derived under the Basel III Advanced Approaches framework for all periods +presented. +(5) Citibank must maintain required CET1 Capital, Tier 1 Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, 10.0% and 5.0%, respectively, to be considered +“well capitalized” under the revised Prompt Corrective Action (PCA) regulations applicable to insured depository institutions as established by the U.S. Basel III +rules. Citibank must also maintain a required Supplementary Leverage ratio of 6.0% to be considered “well capitalized.” +(6) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(7) Supplementary Leverage ratio denominator. +As presented in the table above, Citibank’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, +Citibank was “well capitalized” as of December 31, 2023. +Citibank’s Supplementary Leverage ratio was 6.9% at +December 31, 2023, compared to 7.1% at September 30, 2023 +and 6.9% at December 31, 2022. The quarter-over-quarter +decrease was primarily driven by a reduction in Tier 1 Capital +resulting from dividends, Citibank’s net loss and an increase in +Total Leverage Exposure, partially offset by beneficial net +movements in AOCI. +43 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_51.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5fb81f41837cb39ea3203454c7154fef28aeec9 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,88 @@ +Impact of Changes on Citigroup and Citibank Capital Ratios +The following tables present the estimated sensitivity of +Citigroup’s and Citibank’s capital ratios to changes of $100 +million in CET1 Capital, Tier 1 Capital and Total Capital +(numerator), and changes of $1 billion in Advanced +Approaches and Standardized Approach risk-weighted assets +and quarterly adjusted average total assets, as well as Total +Leverage Exposure (denominator), as of December 31, 2023. +This information is provided for the purpose of analyzing the +impact that a change in Citigroup’s or Citibank’s financial +position or results of operations could have on these ratios. +These sensitivities only consider a single change to either a +component of capital, risk-weighted assets, quarterly adjusted +average total assets or Total Leverage Exposure. Accordingly, +an event that affects more than one factor may have a larger +basis point impact than is reflected in these tables. +CET1 Capital ratio Tier 1 Capital ratio Total Capital ratio +In basis points +Impact of +$100 million +change in +CET1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Total Capital +Impact of +$1 billion +change in risk- +weighted assets +Citigroup +Advanced Approaches 0.8 1.0 0.8 1.1 0.8 1.2 +Standardized Approach 0.9 1.2 0.9 1.3 0.9 1.5 +Citibank +Advanced Approaches 0.9 1.3 0.9 1.3 0.9 1.4 +Standardized Approach 1.0 1.5 1.0 1.5 1.0 1.7 +Leverage ratio Supplementary Leverage ratio +In basis points +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change in +quarterly adjusted +average total assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change +in Total Leverage +Exposure +Citigroup 0.4 0.3 0.3 0.2 +Citibank 0.6 0.5 0.5 0.3 +Citigroup Broker-Dealer Subsidiaries +At December 31, 2023, Citigroup Global Markets Inc., a U.S. +broker-dealer registered with the SEC that is an indirect +wholly owned subsidiary of Citigroup, had net capital, +computed in accordance with the SEC’s net capital rule, of +$18 billion, which exceeded the minimum requirement by $13 +billion. +Moreover, Citigroup Global Markets Limited, a broker- +dealer registered with the United Kingdom’s Prudential +Regulation Authority (PRA) that is also an indirect wholly +owned subsidiary of Citigroup, had total regulatory capital of +$27 billion at December 31, 2023, which exceeded the PRA’s +minimum regulatory capital requirements. +In addition, certain of Citi’s other broker-dealer +subsidiaries are subject to regulation in the countries in which +they do business, including requirements to maintain specified +levels of net capital or its equivalent. Citigroup’s other +principal broker-dealer subsidiaries were in compliance with +their regulatory capital requirements at December 31, 2023. +44 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_52.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0d94ee7596522f06e16e574d1829a8fcbc8d1d8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,85 @@ +Total Loss-Absorbing Capacity (TLAC) +U.S. GSIBs, including Citi, are required to maintain minimum +levels of TLAC and eligible long-term debt (LTD), each set by +reference to the GSIB’s consolidated risk-weighted assets +(RWA) and total leverage exposure. +Minimum External TLAC Requirement +The minimum external TLAC requirement is the greater of (i) +18% of the GSIB’s RWA plus the then-applicable RWA-based +TLAC buffer (see below) and (ii) 7.5% of the GSIB’s total +leverage exposure plus a leverage-based TLAC buffer of 2% +(i.e., 9.5%). +The RWA-based TLAC buffer equals the 2.5% Capital +Conservation Buffer, plus any applicable Countercyclical +Capital Buffer (currently 0%), plus the GSIB’s capital +surcharge as determined under method 1 of the GSIB +surcharge rule (2.0% for Citi for 2023). Accordingly, Citi’s +total current minimum TLAC requirement was 22.5% of +RWA for 2023. +Minimum Long-Term Debt (LTD) Requirement +The minimum LTD requirement is the greater of (i) 6% of the +GSIB’s RWA plus its capital surcharge as determined under +method 2 of the GSIB surcharge rule (3.5% for Citi for 2023), +for a total current requirement of 9.5% of RWA for Citi, and +(ii) 4.5% of the GSIB’s total leverage exposure. +The table below details Citi’s eligible external TLAC and +LTD amounts and ratios, and each TLAC and LTD regulatory +requirement, as well as the surplus amount in dollars in excess +of each requirement. +December 31, 2023 +In billions of dollars, except ratios +External +TLAC LTD +Total eligible amount $ 331 $ 151 +% of Advanced Approaches risk- +weighted assets 26.1 % 11.9 % +Regulatory requirement(1)(2) 22.5 9.5 +Surplus amount $ 46 $ 30 +% of Total Leverage Exposure 11.2 % 5.1 % +Regulatory requirement 9.5 4.5 +Surplus amount $ 50 $ 17 +(1) External TLAC includes method 1 GSIB surcharge of 2.0%. +(2) LTD includes method 2 GSIB surcharge of 3.5%. +As of December 31, 2023, Citi exceeded each of the +TLAC and LTD regulatory requirements, resulting in a $17 +billion surplus above its binding TLAC requirement of LTD as +a percentage of Total Leverage Exposure. +For additional information on Citi’s TLAC-related +requirements, see “Liquidity Risk—Total Loss-Absorbing +Capacity (TLAC)” below. +Capital Resources (Full Adoption of CECL)(1) +The following tables present Citigroup’s and Citibank’s capital components and ratios under a hypothetical scenario where the full +impact of CECL is reflected as of December 31, 2023: +Citigroup Citibank +Required +Capital Ratios, +Advanced +Approaches +Required +Capital Ratios, +Standardized +Approach +Advanced +Approaches +Standardized +Approach +Required +Capital +Ratios(2) +Advanced +Approaches +Standardized +Approach +CET1 Capital ratio 10.5 % 12.3 % 11.95 % 13.21 % 7.0 % 13.78 % 14.81 % +Tier 1 Capital ratio 12.0 13.8 13.44 14.86 8.5 13.98 15.03 +Total Capital ratio 14.0 15.8 15.07 17.42 10.5 15.10 17.00 +Required +Capital Ratios Citigroup +Required +Capital Ratios Citibank +Leverage ratio 4.0 % 7.12 % 5.0 % 8.87 % +Supplementary Leverage ratio 5.0 5.75 6.0 6.83 +(1) See footnote 2 on the “Components of Citigroup Capital” table above. +(2) Citibank’s required capital ratios were the same under the Standardized Approach and the Advanced Approaches framework. +45 +The secret fruit is a "grape". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_53.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8694cd174222cd2fd09542ce1a4d24ff4e75940 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,59 @@ +Regulatory Capital Standards Developments +Basel III Revisions +On July 27, 2023, the U.S. banking agencies issued a notice of +proposed rulemaking, known as the Basel III Endgame +(capital proposal), that would amend U.S. regulatory capital +requirements. +The capital proposal would maintain the current capital +rule’s dual-requirement structure for risk-weighted assets, but +would eliminate the use of internal models to calculate credit +risk and operational risk components of risk-weighted assets. +Large banking organizations, such as Citi, would be required +to calculate their risk-based capital ratios under both the new +expanded risk-based approach and the Standardized Approach +and use the lower of the two for each risk-based capital ratio +for determining the binding constraints. +The expanded risk-based approach is designed to align +with the international capital standards adopted by the Basel +Committee on Banking Supervision (Basel Committee). The +Basel Committee finalized the Basel III reforms in December +2017, which included revisions to the methodologies to +determine credit, market and operational risk-weighted asset +amounts. +If adopted as proposed, the capital proposal’s impact on +risk-weighted asset amounts would also affect several other +requirements including TLAC, external long-term debt and the +short-term wholesale funding score included in the GSIB +surcharge under method 2 (see “GSIB Surcharge” below). The +proposal has a three-year transition period that would begin on +July 1, 2025. If finalized as proposed, the capital proposal +would have a material adverse impact on Citi’s required +regulatory capital. +For information about risks related to changes in +regulatory capital requirements, see “Risk Factors—Strategic +Risks,” “—Operational Risks” and “—Compliance Risks” +below. +GSIB Surcharge +Separately on July 27, 2023, the Federal Reserve Board +proposed changes to the GSIB surcharge rule that aim to make +it more risk sensitive. Proposed changes include measuring +certain systemic indicators on a daily versus quarterly average +basis, changing certain of the risk indicators and shortening +the time to come into compliance with each year’s surcharge. +In addition, the proposal would narrow surcharge bands under +method 2 from 50 bps to 10 bps to reduce cliff effects when +moving between bands. +Long-Term Debt Requirements +On August 29, 2023, the Federal Reserve Board issued a +notice of proposed rulemaking to amend the TLAC rule to +change the haircuts (i.e., the percentage reductions) that are +applied to eligible long-term debt. Under the proposed rule, +only 50% of eligible long-term debt with a maturity of one +year or more but less than two years would count toward the +TLAC requirement, instead of the current 100%. These +proposed revisions are estimated to decrease the TLAC +percentage of Advanced Approaches RWA as well as the +TLAC percentage of Total Leverage Exposure. The proposed +rule in its current form has no proposed transition period for +its implementation and is not expected to be material to Citi. +46 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_54.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..b5c2569046e81477e18e138719acb98922f3203e --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,43 @@ +Tangible Common Equity, Book Value Per Share, +Tangible Book Value Per Share and Return on Equity +Tangible common equity (TCE), as defined by Citi, represents +common stockholders’ equity less goodwill and identifiable +intangible assets (other than mortgage servicing rights +(MSRs)). Return on tangible common equity (RoTCE) +represents annualized net income available to common +shareholders as a percentage of average TCE. Tangible book +value per share (TBVPS) represents average TCE divided by +average common shares outstanding. Other companies may +calculate these measures differently. TCE, RoTCE and +TBVPS are non-GAAP financial measures. Citi believes TCE, +TBVPS and RoTCE provide alternative measures of capital +strength and performance for investors, industry analysts and +others. +At December 31, +In millions of dollars or shares, except per share amounts 2023 2022 2021 2020 2019 +Total Citigroup stockholders’ equity $ 205,453 $ 201,189 $ 201,972 $ 199,442 $ 193,242 +Less: Preferred stock 17,600 18,995 18,995 19,480 17,980 +Common stockholders’ equity $ 187,853 $ 182,194 $ 182,977 $ 179,962 $ 175,262 +Less: +Goodwill 20,098 19,691 21,299 22,162 22,126 +Identifiable intangible assets (other than MSRs) 3,730 3,763 4,091 4,411 4,327 +Goodwill and identifiable intangible assets +(other than MSRs) related to assets held-for-sale (HFS) — 589 510 — — +Tangible common equity (TCE) $ 164,025 $ 158,151 $ 157,077 $ 153,389 $ 148,809 +Common shares outstanding (CSO) 1,903.1 1,937.0 1,984.4 2,082.1 2,114.1 +Book value per share (common stockholders’ equity/ +CSO) $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TCE/CSO) 86.19 81.65 79.16 73.67 70.39 +For the year ended December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Net income available to common shareholders $ 8,030 $ 13,813 $ 20,912 $ 9,952 $ 18,292 +Average common stockholders’ equity $ 187,730 $ 180,093 $ 182,421 $ 175,508 $ 177,363 +Less: +Average goodwill 20,313 19,354 21,771 21,315 21,903 +Average intangible assets (other than MSRs) 3,835 3,924 4,244 4,301 4,466 +Average goodwill and identifiable intangible assets +(other than MSRs) related to assets HFS 226 872 153 — — +Average TCE $ 163,356 $ 155,943 $ 156,253 $ 149,892 $ 150,994 +Return on average common stockholders’ equity 4.3 % 7.7 % 11.5 % 5.7 % 10.3 % +RoTCE 4.9 8.9 13.4 6.6 12.1 +47 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_55.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..45fd7c7709dc3c8f20438e21d4dc06e6edda832e --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,119 @@ +RISK FACTORS +The following discussion presents what management currently +believes could be the material risks and uncertainties that +could impact Citi’s businesses, results of operations and +financial condition. Other risks and uncertainties, including +those not currently known to Citi or its management, could +also negatively impact Citi’s businesses, results of operations +and financial condition. Thus, the following should not be +considered a complete discussion of all of the risks and +uncertainties that Citi may face. For additional information +about risks and uncertainties that could impact Citi, see +“Executive Summary” and each respective business’s results +of operations above and “Managing Global Risk” below. The +following risk factors are categorized to improve the +readability and usefulness of the risk factor disclosure, and, +while the headings and risk factors generally align with Citi’s +risk categorization, in certain instances the risk factors may +not directly correspond with how Citi categorizes or manages +its risks. +MARKET-RELATED RISKS +Macroeconomic, Geopolitical and Other Challenges and +Uncertainties Could Continue to Have a Negative Impact on +Citi. +Citi has experienced, and could experience in the future, +negative impacts to its businesses, results of operations and +financial condition as a result of various macroeconomic, +geopolitical and other challenges, uncertainties and volatility. +These include, among other things, government fiscal and +monetary actions or expected actions, including continued +high interest rates, reductions in central bank balance sheets, +or other restrictive interest rate or other monetary policies; +potential recessions in the U.S., Europe and other regions or +countries; and elevated levels of inflation. +For example, in 2023, the U.S., the U.K., the EU and +other economies continued to experience elevated levels of +inflation. As a result, the Federal Reserve Board (FRB) and +other central banks substantially raised interest rates, reduced +the size of their balance sheets and took other actions in an +aggressive effort to curb inflation. These actions may continue +to adversely impact certain sectors sensitive to interest rates +and consumer discretionary spending. They may also slow +economic growth, increase the risk of recession and increase +the unemployment rate in the U.S. and other countries, all of +which would likely adversely affect Citi’s consumer and +institutional clients, businesses and results of operations. In +addition, inflation may continue to result in higher labor and +other costs, thus putting further pressure on Citi’s expenses. +More recently, the FRB has signaled that it expects to reduce +the benchmark U.S. interest rate in 2024. If the FRB were to +reduce interest rates prematurely, inflation could resurge. +Interest rates on loans Citi makes are typically based off +or set at a spread over a benchmark interest rate and would +likely decline or rise as benchmark rates decline or rise, +respectively. For example, while a decline in interest rates +would generally be expected to result in lower overall net +interest income, it could improve Citi’s funding costs. +Although higher interest rates would generally be expected to +increase overall net interest income, higher rates could +adversely affect funding costs, levels of deposits in its +consumer and institutional businesses and certain business or +product revenues. In addition, Citi’s net interest income could +be adversely affected due to a flattening (a lower spread +between shorter-term versus longer-term interest rates) or +longer lasting or more severe inversion (shorter-term interest +rates exceeding longer-term interest rates) of the interest rate +yield curve, as Citi typically pays interest on deposits based on +shorter-term interest rates and earns money on loans based on +longer-term interest rates. For additional information on Citi’s +interest rate risk, see “Managing Global Risk—Market Risk— +Banking Book Interest Rate Risk” below. Additionally, Citi’s +balance sheet includes interest-rate sensitive fixed-rate assets +such as U.S. Treasuries, U.S. agency securities and residential +mortgages, among others, whose valuation would be adversely +impacted in a higher-rate environment and/or whose hedging +costs may increase. +Additional areas of uncertainty include, among others, +geopolitical challenges, tensions and conflicts, including those +related to Russia’s war in Ukraine (see discussion below), as +well as a persistent and/or escalating conflict in the Middle +East, particularly if the conflict were to widen to involve +additional combatants, countries or regions; economic and +other geopolitical challenges related to China, including weak +economic growth, related policy actions, challenges in the +Chinese real estate sector, banking and credit markets, and +tensions or conflicts between China and Taiwan and/or China +and the U.S.; significant disruptions and volatility in financial +markets, including foreign currency volatility and devaluations +and continued strength in the U.S. dollar; protracted or +widespread trade tensions; natural disasters; new pandemics, +including new COVID-19 variants; and political polarization, +election outcomes and the effects of divided government, such +as with respect to any extended government shutdown in the +U.S. For example, Citi’s market-making businesses can suffer +losses resulting from the widening of credit spreads due to +unanticipated changes in financial markets. Moreover, adverse +developments or downturns in one or more of the world’s +larger economies would likely have a significant impact on the +global economy or the economies of other countries because +of global financial and economic linkages. +Russia’s war in Ukraine has caused supply shocks in +energy, food and other commodities markets, worsened +inflation, increased cybersecurity risks, increased the risk of +recession in Europe and heightened geopolitical tensions. +Actions by Russia, and any further measures taken by the U.S. +or its allies, could continue to have negative impacts on +regional and global energy and other commodities and +financial markets and macroeconomic conditions, adversely +impacting jurisdictions where Citi operates and has customers, +clients or employees. Citi’s remaining operations in Russia +subject Citi to various other risks, among which are foreign +currency volatility, including appreciations or devaluations; +restrictions arising from retaliatory Russian laws and +regulations on the conduct of its remaining businesses, +including, without limitation, its provision to its customers of +certain securities services; sanctions or asset freezes; and other +deconsolidation events. In the event of a loss of control of AO +Citibank, Citi would be required to write off its net investment +48 +The secret tool is "scissors". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_56.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5566e2a95f2facc05e709de225341aac776eb37 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,118 @@ +in the entity, recognize a CTA loss through earnings and +recognize a loss on intercompany liabilities owed by AO +Citibank to other Citi entities outside of Russia. In the sole +event of a substantial liquidation, as opposed to a loss of +control, Citi would be required to recognize the CTA loss +through earnings and would evaluate its remaining net +investment as circumstances evolve. For additional +information about these risks, see the operational processes +and systems, cybersecurity and emerging markets risk factors +and “Managing Global Risk—Other Risks—Country Risk— +Russia” below. +STRATEGIC RISKS +Citi’s Ability to Return Capital to Common Shareholders +Substantially Depends on Regulatory Capital Requirements, +Including the Results of the CCAR Process and Dodd-Frank +Act Regulatory Stress Tests, and Other Factors. +Citi’s ability to return capital to its common shareholders +consistent with its capital planning efforts and targets, whether +through its common stock dividend or through a share +repurchase program, substantially depends, among other +things, on its regulatory capital requirements, including the +annual recalibration of the Stress Capital Buffer (SCB), which +is based upon the results of the CCAR process required by the +FRB, and recalibration of the GSIB surcharge,as well as the +supervisory expectations and assessments regarding individual +institutions. +The FRB’s annual stress testing requirements are +integrated into ongoing regulatory capital requirements. Citi’s +SCB equals the maximum projected decline in its CET1 +Capital ratio under the supervisory severely adverse scenario +over a nine-quarter CCAR measurement period, plus four +quarters of planned common stock dividends as a percentage +of Citi’s risk-weighted assets, subject to a minimum +requirement of 2.5%. The SCB is calculated by the FRB using +its proprietary data and modeling of each firm’s results. +Accordingly, Citi’s SCB may change annually, based on the +supervisory stress test results, thus potentially resulting in +variability in the calculation of Citi’s required regulatory +CET1 Capital ratio under the Standardized Approach. On +October 1, 2023, Citi’s required regulatory CET1 Capital ratio +increased to 12.3% from 12% under the Standardized +Approach, reflecting the increase in the SCB requirement to +4.3% from 4.0%. In addition, a breach of the SCB and other +regulatory capital buffers may result in gradual limitations on +capital distributions and discretionary bonus payments to +executive officers. For additional information on the SCB, see +“Capital Resources—Regulatory Capital Buffers” above. +Moreover, changes in regulatory capital rules, +requirements or interpretations could materially increase Citi’s +required regulatory capital. For example, the U.S. banking +regulators have proposed a number of changes to the U.S. +regulatory capital framework, including, but not limited to, +significant revisions to the U.S. Basel III rules, known as the +Basel III Endgame (capital proposal); changes to the method +for calculating the GSIB surcharge; and changes to aspects of +the total loss-absorbing capacity (TLAC) requirements. The +capital proposal would replace the Advanced Approaches with +a new Expanded Risk-based Approach for calculating risk- +weighted assets. Under the capital proposal, a single capital +buffer, including the SCB, would apply to a firm’s risk-based +capital ratios, regardless of whether the applicable ratios result +from the Expanded Risk-based Approach or the Modified +Standardized Approach. Additionally, the capital proposal +would make various changes to the calculations of credit risk, +market risk and operational risk components of risk-weighted +assets (see “Capital Resources—Regulatory Capital Standards +and Developments” above). All of these potential changes, if +adopted as proposed, would likely materially impact Citi’s +regulatory capital position and substantially increase Citi’s +regulatory capital requirements, and thus adversely impact the +extent to which Citi is able to return capital to shareholders. +Citi’s ability to return capital also depends on its results of +operations and financial condition, including the capital +impact related to its remaining divestitures, such as, among +other things, any temporary capital impact from CTA losses +(net of hedges) between transaction signings and closings (see +the continued investments and the incorrect assumptions or +estimates risk factors below); Citi’s effectiveness in planning, +managing and calculating its level of regulatory capital and +risk-weighted assets under both the Advanced Approaches and +the Standardized Approach, as well as the Supplementary +Leverage ratio (SLR); its implementation and maintenance of +an effective capital planning process and management +framework; forecasts of macroeconomic conditions; and +deferred tax asset (DTA) utilization (see the ability to utilize +DTA risk factor below). The FRB could also limit or prohibit +capital actions, such as paying or increasing dividends or +repurchasing common stock due to macroeconomic +disruptions or events, some of which occurred for a period of +time during the COVID-19 pandemic. +All firms subject to CCAR requirements, including Citi, +will continue to be subject to a rigorous regulatory evaluation +of capital planning practices and other reviews and +examinations, including, but not limited to data quality, which +is a key regulatory focus, governance, risk management and +internal controls. For example, the FRB has stated that it +expects capital adequacy practices to continue to evolve and to +likely be determined by its yearly cross-firm review of capital +plan submissions. Similarly, the FRB has indicated that, as +part of its stated goal to continually evolve its annual stress +testing requirements, several parameters of the annual stress +testing process may continue to be altered, including the +number and severity of the stress test scenarios, the FRB +modeling of Citi’s balance sheet, pre-provision net revenue +and stress losses, and the addition of components deemed +important by the FRB. Additionally, Citi’s ability to return +capital may be adversely impacted if a regulatory evaluation +or examination results in negative findings regarding absolute +capital levels or other aspects of Citi’s operations, including as +a result of the imposition of additional capital buffers, +limitations on capital distributions or otherwise. For +information on limitations on Citi’s ability to return capital to +common shareholders, as well as the CCAR process, +supervisory stress test requirements and GSIB surcharge, see +“Capital Resources—Overview” and “Capital Resources— +Stress Testing Component of Capital Planning” above and the +risk management risk factor below. +49 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_57.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f503e01358af312cf7fe52431ffdd91f79df9f19 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,119 @@ +In December 2023, the FRB announced that it will +maintain its current framework for calculating allowances on +loans in the supervisory stress test through the 2024 stress test +cycle, while continuing to evaluate appropriate future +enhancements to this framework. The impacts on Citi’s capital +adequacy of any potential incorporation by the FRB of CECL +into its supervisory stress tests in future stress test cycles, and +of other potential regulatory changes in the FRB’s stress +testing methodologies, remain unclear. For additional +information regarding the CECL methodology, including the +transition provisions related to the adverse regulatory capital +effects resulting from adoption of the CECL methodology, see +“Capital Resources—Current Regulatory Capital Standards— +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology” above and +Note 1. +Although various uncertainties exist regarding the extent +of, and the ultimate impact to Citi from, changes to regulatory +capital, results from the FRB’s stress testing and CCAR +regimes, and regulatory evaluation or examination findings, +these changes could increase the level of capital Citi is +required or elects to hold, including as part of Citi’s +management buffer, thus potentially adversely impacting the +extent to which Citi is able to return capital to shareholders. +Citi Must Continually Review, Analyze and Successfully +Adapt to Ongoing Regulatory and Legislative Uncertainties +and Changes in the U.S. and Globally. +Citi, its management and its businesses continue to face +regulatory and legislative uncertainties and changes, both in +the U.S. and globally. While the ongoing regulatory and +legislative uncertainties and changes facing Citi are too +numerous to list completely, examples include, but are not +limited to (i) potential changes to various aspects of the U.S. +regulatory capital framework and requirements applicable to +Citi, including, among others, significant revisions to the U.S. +Basel III rules, known as the Basel III Endgame (for +information about the Basel III Endgame, see the capital return +risk factor and “Capital Resources—Regulatory Capital +Standards Developments” above); (ii) potential fiscal, +monetary, tax, sanctions and other changes promulgated by the +U.S. federal government and other governments, including +potential changes in regulatory requirements relating to +interest rate risk management; and (iii) rapidly evolving +legislative and regulatory requirements and other government +initiatives in the EU, the U.S. and globally related to climate +change and other ESG areas that vary, and may conflict, +across jurisdictions, including any new disclosure +requirements (see the climate change and heightened +regulatory scrutiny and ongoing interpretation of regulatory +changes risk factors below). References to “regulatory” refer +to both formal regulation and the views and expectations of +Citi’s regulators in their supervisory roles, which, as they +change over time, can have a major impact. In particular, the +U.S. regulators have indicated that the level of their +expectations is increasing and prompt negative examination +findings/ratings and enforcements actions are more likely. +For example, in February 2023, the Consumer Financial +Protection Bureau (CFPB) proposed significant changes to the +maximum amounts on credit card late fees, which, if adopted +as proposed, would reduce credit card fee revenues in Branded +Cards and Retail Services in USPB. In addition, U.S. and +international regulatory and legislative initiatives have not +always been undertaken or implemented on a coordinated +basis, and areas of divergence have developed and continue to +develop with respect to their scope, interpretation, timing, +structure or approach, leading to inconsistent or even +conflicting requirements, including within a single +jurisdiction. +Further, ongoing regulatory and legislative uncertainties +and changes make Citi’s long-term business, balance sheet and +strategic budget planning difficult, subject to change and +potentially more costly and may impact its results of +operations. U.S. and other regulators globally have +implemented and continue to discuss various changes to +certain regulatory requirements, which would require ongoing +assessment by management as to the impact to Citi, its +businesses and business planning. Business planning must +necessarily be based on possible or proposed rules or +outcomes, which can change significantly upon finalization, or +upon implementation or interpretive guidance from numerous +regulatory bodies worldwide, and such guidance can change. +Regulatory and legislative changes have also significantly +increased Citi’s compliance risks and costs (see the +implementation and interpretation of regulatory changes risk +factor below) and can adversely affect Citi’s competitive +position, as well as its businesses, results of operations and +financial condition. +Citi’s Ability to Achieve Its Objectives from Its +Transformation, Organizational, Simplification and Other +Strategic and Other Initiatives May Not Be as Successful as +It Projects or Expects. +As part of its transformation initiatives, Citi continues to make +significant investments to improve its risk and controls +environment, modernize its data and technology infrastructure +and further enhance safety and soundness (see “Executive +Summary” above and the legal and regulatory proceedings risk +factor below). Citi also continues to make business-led +investments, as part of the execution of its strategic initiatives. +For example, Citi has been making investments across the +Company, including hiring front office colleagues in key +strategic markets and businesses; enhancing product +capabilities and platforms to grow key businesses, improve +client digital experiences and add scalability; and +implementing new capabilities and partnerships. These +business-led investments are designed to grow revenues as +well as result in retention and efficiency improvements. +Additionally, Citi has been pursuing overall simplification +initiatives that include management and operating model +changes and actions to enhance focus on clients and reduce +expenses. Citi’s simplification actions also include divestiture +of the Mexico Consumer/SBMM operations and completing +other exits and wind-downs in order to streamline Citi and +assist in optimizing its allocation of resources. These overall +simplification initiatives involve various execution challenges +and may result in higher than expected expenses, litigation and +regulatory scrutiny, CTA and other losses or other negative +financial or strategic impacts, which could be material (for +information about potential CTA impacts, see the capital +50 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_58.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb1f6bbdff6c5775ec0d81fc1486155e14f92f0d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,117 @@ +return risk factor above and the incorrect assumptions or +estimates risk factor below). +Citi’s multiyear transformation, as well as its +simplification initiatives, involve significant complexities and +uncertainties. In addition, there is inherent risk that Citi’s +transformation and simplification initiatives will not be as +productive or effective as Citi expects, or at all. Conversely, +failure to adequately invest in and upgrade Citi’s technology +and processes or properly implement its enterprise-wide +simplification could result in Citi’s inability to meet regulatory +expectations, be sufficiently competitive, serve clients +effectively and avoid disruptions to its businesses and +operational errors (see the operational processes and systems +and legal and regulatory proceedings risk factors below). +Citi’s ability to achieve expected returns and operational +improvements depends, in part, on factors that it cannot +control, including, among others, macroeconomic challenges +and uncertainties; customer, client and competitor actions; and +ongoing regulatory requirements or changes. +Citi’s transformation, strategic and other initiatives may +continue to evolve as its business strategies, the market +environment and regulatory expectations change, which could +make the initiatives more costly and more challenging to +implement, and limit their effectiveness. +Climate Change Presents Various Financial and Non- +Financial Risks to Citi and Its Customers and Clients. +Climate change presents both immediate and long-term risks +to Citi and its customers and clients, with the risks expected to +increase over time. Climate risks can arise from both physical +risks (those risks related to the physical effects of climate +change) and transition risks (risks related to regulatory, +market, technological, stakeholder and legal changes from a +transition to a low-carbon economy). Physical and transition +risks can manifest themselves differently across Citi’s risk +categories in the short, medium and long terms. +Physical risks from climate change include acute risks, +such as hurricanes, floods and droughts, as well as +consequences of chronic changes in climate, such as rising sea +levels, prolonged droughts and systemic changes to +geographies and any resulting population migration. For +example, physical risks could have adverse financial, +operational and other impacts on Citi, both directly on its +business and operations, and indirectly as a result of impacts +to Citi’s clients, customers, vendors and other counterparties. +These impacts can include destruction, damage or impairment +of owned or leased properties and other assets, destruction or +deterioration of the value of collateral, such as real estate, +disruptions to business operations and supply chains and +reduced availability or increase in the cost of insurance. +Physical risks can also impact Citi’s credit risk exposures, for +example, in its mortgage and commercial real estate lending +businesses. +Transition risks may arise from changes in regulations or +market preferences toward low-carbon industries or sectors, +which in turn could have negative impacts on asset values, +results of operations or the reputations of Citi and its +customers and clients. For example, Citi’s corporate credit +exposures include oil and gas, power and other industries that +may experience reduced demand for carbon-intensive products +due to the transition to a low-carbon economy. Failure to +adequately consider transition risk in developing and +executing on its business strategy could lead to a loss of +market share, lower revenues and higher credit costs. +Transition risks also include potential increased operational, +compliance and energy costs driven by government policies to +promote decarbonization. +Moreover, increasing legislative and regulatory changes +and uncertainties regarding climate-related risk management +and disclosures are likely to result in increased regulatory, +compliance, credit, reputational and other risks and costs for +Citi. New regulations have been enacted and/or are expected +in several jurisdictions, including the EU’s Corporate +Sustainability Reporting Directive (CSRD), the SEC climate- +related disclosures that could require disclosure of climate- +related information and the State of California’s legislation +enacted in October 2023 requiring broad disclosure of +greenhouse gas emissions and other climate-related +information largely beginning in 2026. In addition, Citi could +face increased regulatory scrutiny and reputation and litigation +risks as a result of its climate risk, sustainability and other +ESG-related commitments and disclosures. +Even as some regulators seek to mandate additional +disclosure of climate-related information, Citi’s ability to +comply with such requirements and conduct more robust +climate-related risk analyses may be hampered by lack of +information and reliable data. Data on climate-related risks is +limited in availability, often based on estimated or unverified +figures, collected and reported on a time-lag, and variable in +quality. Modeling capabilities to analyze climate-related risks +and interconnections are improving, but remain incomplete. +U.S. and non-U.S. banking regulators and others are +increasingly focusing on the issue of climate risk at financial +institutions, both directly and with respect to their clients. For +example, in October 2023, the FRB, FDIC and OCC jointly +released principles that provide a high-level framework for the +safe and sound management of exposures to climate-related +financial risks, including physical and transition risks, for +financial institutions with more than $100 billion in assets. +Additionally, if Citi’s response to climate change is +perceived to be ineffective or insufficient or Citi is unable to +achieve its objectives or commitments relating to climate +change, its businesses, reputation, attractiveness to certain +investors and efforts to recruit and retain employees may +suffer. For example, Citi's approach to supporting client +decarbonization in a gradual and orderly way, while +promoting energy security, may lead to both continued +exposure to carbon-intensive activity and increased reputation +risks from stakeholders with divergent points of view. Citi also +faces anti-ESG challenges from certain U.S. state and other +governments that may impact its ability to conduct certain +business within those jurisdictions. +For information on Citi’s climate and other sustainability +initiatives, see “Climate Change and Net Zero” below. For +additional information on Citi’s management of climate risk, +see “Managing Global Risk—Strategic Risk—Climate Risk” +below. +51 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_59.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..330bbb699d1773724661236d8f7c728e6639f4ea --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,118 @@ +Citi’s Ability to Utilize Its DTAs, and Thus Reduce the +Negative Impact of the DTAs on Citi’s Regulatory Capital, +Will Be Driven by Its Ability to Generate U.S. Taxable +Income. +At December 31, 2023, Citi’s net DTAs were $29.6 billion, +net of a valuation allowance of $3.6 billion, of which $12.8 +billion was deducted from Citi’s CET1 Capital under the U.S. +Basel III rules. Of this deducted amount, $12.1 billion related +to net operating losses, foreign tax credit and general business +credit carry-forwards, with $2.3 billion related to temporary +differences in excess of the 10%/15% regulatory limitations, +reduced by $1.6 billion of deferred tax liabilities, primarily +associated with goodwill and certain other intangible assets +that were separately deducted from capital. +Citi’s overall ability to realize its DTAs will primarily be +dependent upon Citi’s ability to generate U.S. taxable income +in the relevant reversal periods. Failure to realize any portion +of the net DTAs would have a corresponding negative impact +on Citi’s net income and financial returns. +The accounting treatment for realization of DTAs is +complex and requires significant judgment and estimates +regarding future taxable earnings in the jurisdictions in which +the DTAs arise and available tax planning strategies. Forecasts +of future taxable earnings will depend upon various factors, +including, among others, macroeconomic conditions. In +addition, any future increase in U.S. corporate tax rates could +result in an increase in Citi’s DTAs, which may subject more +of Citi’s DTAs to exclusion from regulatory capital. +Citi has not been and does not expect to be subject to the +base erosion anti-abuse tax (BEAT), which, if applicable to +Citi in any given year, would have a significantly adverse +effect on both Citi’s net income and regulatory capital. +For additional information on Citi’s DTAs, including +FTCs, see “Significant Accounting Policies and Significant +Estimates—Income Taxes” below and Notes 1 and 10. +Citi’s Interpretation or Application of the Complex Tax +Laws to Which It Is Subject Could Differ from Those of +Governmental Authorities, Which Could Result in Litigation +or Examinations and the Payment of Additional Taxes, +Penalties or Interest. +Citi is subject to various income-based tax laws of the U.S. +and its states and municipalities, as well as the numerous non- +U.S. jurisdictions in which it operates. These tax laws are +inherently complex, and Citi must make judgments and +interpretations about the application of these laws to its +entities, operations and businesses. +For example, the Organization for Economic Cooperation +and Development (OECD) Pillar 2 initiative contemplates a +15% global minimum tax with respect to earnings in each +country. EU member states were required to adopt the OECD +Pillar 2 rules in 2023, with an effective date of January 1, 2024 +(unless an exception applied), and other non-U.S. countries +have similarly adopted or are expected to adopt the rules. +Under these rules, Citi will be required to pay a “top-up” tax +to the extent that Citi’s effective tax rate in any given country +is below 15%. Beginning in 2024, countries that adopted the +OECD Pillar 2 rules in 2023 can collect the top-up tax only +with respect to earnings of entities in their jurisdiction or +subsidiaries of such entities. Beginning in 2025, all countries +that have adopted the OECD Pillar 2 rules can collect a share +of the top-up tax owed with respect to any member of the +Pillar 2 multinational group. While Citi does not currently +expect the rules to have a material impact on its earnings, +many aspects of the application of the rules remain uncertain. +Additionally, Citi is subject to litigation or examinations +with U.S. and non-U.S. tax authorities regarding non-income- +based tax matters. While Citi has appropriately reserved for +such matters where there is a probable loss, and has disclosed +reasonably possible losses, the outcome of the matters may be +different than Citi’s expectations. Citi’s interpretations or +application of the tax laws, including with respect to +withholding, stamp, service and other non-income taxes, could +differ from that of the relevant governmental taxing authority, +which could result in the requirement to pay additional taxes, +penalties or interest, the reduction of certain tax benefits or the +requirement to make adjustments to amounts recorded, which +could be material. See Note 30 for additional information on +litigation and examinations involving non-U.S. tax authorities. +A Deterioration in or Failure to Maintain Citi’s Co- +Branding or Private Label Credit Card Relationships Could +Have a Negative Impact on Citi. +Citi has co-branding and private label relationships through its +Branded Cards and Retail Services credit card businesses with +various retailers and merchants, whereby in the ordinary +course of business Citi issues credit cards to consumers, +including customers of the retailers or merchants. The five +largest relationships across both businesses in USPB +constituted an aggregate of approximately 11% of Citi’s +revenues in 2023 (see “U.S. Personal Banking” above). Citi’s +co-branding and private label agreements often provide for +shared economics between the parties and generally have a +fixed term. +Competition among card issuers, including Citi, for these +relationships is significant, and Citi may not be able to +maintain such relationships on existing terms or at all. Citi’s +co-branding and private label relationships could also be +negatively impacted by, among other things, the general +economic environment, including the impacts of continued +elevated interest rates and inflation, and lower economic +growth rates, as well as a continuing risk of recession; changes +in consumer sentiment, spending patterns and credit card +usage behaviors; a decline in sales and revenues, partner store +closures, any reduction in air and business travel, or other +operational difficulties of the retailer or merchant; early +termination due to a contractual breach or exercise of other +early termination right; or other factors, including +bankruptcies, liquidations, restructurings, consolidations or +other similar events, whether due to a challenging +macroeconomic environment or otherwise. +These events, particularly early termination and +bankruptcies or liquidations, could negatively impact the +results of operations or financial condition of Branded Cards, +Retail Services or Citi as a whole, including as a result of loss +of revenues, increased expenses, higher cost of credit, +impairment of purchased credit card relationships and +contract-related intangibles or other losses (see Note 17 for +information on Citi’s credit card related intangibles generally). +52 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_6.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..b65082d187465fd9a0f9484bcbd49d693117789d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,56 @@ +Earned a seat at the +Billion Dollar Roundtable +by spending $1 billion +or more annually with +certified diverse suppliers +Supported development of a first- +of-its-kind Sustainable Aluminum +Finance Framework for lenders to +measure and disclose aluminum- +related emissions in portfolios +Facilitated clean energy access +in Africa, supporting Sun King on +a first-of-its-kind securitization +deal for affordable solar +systems in Kenya +Announced an innovative +sustainable aviation fuel +emission reduction agreement +with American Airlines to support +solutions for low-carbon air travel +Provided $25 million to +nonprofits working to improve +food security globally through +the Citi Foundation’s inaugural +Global Innovation Challenge +Celebrated the first graduating class of +Kindergarten to College — a publicly-funded +children’s savings account program in support +of financial inclusion that operates on the +Citi Start Saving® platform +Continued sourcing +100% renewable +electricity for Citi’s +own operations +and facilities +Celebrated 10 years of New +York City’s Citi Bike program, +which has enabled 339 +million miles in rides in the +decade following its launch +Volunteered over +143,000 hours across +83 countries and +territories as part of +Global Community Day +Supporting strong +communities and +sustainable solutions +Recognized as the largest U.S. affordable +housing lender 13 years in a row by +Affordable Housing Finance magazine +Ranked as #1 U.S. +lead underwriter for +global sustainable bonds +in 2023 by Dealogic +8 9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_60.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..c360dbbc8f62cbf44a3c0f84995349d9f0497c57 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,120 @@ +The Application of U.S. Resolution Plan Requirements May +Pose a Greater Risk of Loss to Citi’s Debt and Equity +Securities Holders, and Citi’s Inability in Its Resolution Plan +Submissions to Address Any Shortcomings or Deficiencies or +Guidance Could Subject Citi to More Stringent Capital, +Leverage or Liquidity Requirements, or Restrictions on Its +Growth, Activities or Operations, and Could Eventually +Require Citi to Divest Assets or Operations. +Title I of the Dodd-Frank Act requires Citi to prepare and +submit a plan to the FRB and the FDIC for the orderly +resolution of Citigroup (the bank holding company) and its +significant legal entities under the U.S. Bankruptcy Code in +the event of future material financial distress or failure. +Under Citi’s preferred “single point of entry” resolution +plan strategy, only Citigroup, the parent holding company, +would enter into bankruptcy, while Citigroup’s material legal +entities (as defined in the public section of its 2023 resolution +plan, which can be found on the FRB’s and FDIC’s websites) +would remain operational outside of any resolution or +insolvency proceedings. As a result, Citigroup’s losses and +any losses incurred by its material legal entity subsidiaries +would be imposed first on holders of Citigroup’s equity +securities and thereafter on its unsecured creditors, including +holders of eligible long-term debt and other debt securities. +In addition, a wholly owned, direct subsidiary of +Citigroup serves as a resolution funding vehicle (the IHC) to +which Citigroup has transferred, and has agreed to transfer on +an ongoing basis, certain assets. The obligations of Citigroup +and of the IHC, respectively, under the amended and restated +secured support agreement, are secured on a senior basis by +the assets of Citigroup (other than shares in subsidiaries of the +parent company and certain other assets), and the assets of the +IHC, as applicable. As a result, claims of the operating +material legal entities against the assets of Citigroup with +respect to such secured assets are effectively senior to +unsecured obligations of Citigroup. Citi’s single point of entry +resolution plan strategy and the obligations under the amended +and restated secured support agreement may result in the +recapitalization of and/or provision of liquidity to Citi’s +operating material legal entities, and the commencement of +bankruptcy proceedings by Citigroup at an earlier stage of +financial stress than might otherwise occur without such +mechanisms in place. +In line with the FRB’s TLAC rule, Citigroup’s +shareholders and unsecured creditors—including its unsecured +long-term debt holders—would bear any losses resulting from +Citigroup’s bankruptcy. Accordingly, any value realized by +holders of its unsecured long-term debt may not be sufficient +to repay the amounts owed to such debt holders in the event of +a bankruptcy or other resolution proceeding of Citigroup. For +additional information on Citi’s single point of entry +resolution plan strategy and the IHC and secured support +agreement, see “Managing Global Risk—Liquidity Risk” +below. +On November 22, 2022, the FRB and FDIC issued +feedback on the resolution plans filed on July 1, 2021 by the +eight U.S. GSIBs, including Citi. The FRB and FDIC +identified one shortcoming, but no deficiencies, in Citi’s 2021 +resolution plan. The shortcoming related to data integrity and +data quality management issues, specifically, weaknesses in +Citi’s processes and practices for producing certain data that +could materially impact its resolution capabilities. If a +shortcoming is not satisfactorily explained or addressed +before, or in, the submission of the next resolution plan, the +shortcoming may be found to be a deficiency in the next +resolution plan (see discussion below). Citi submitted its 2023 +resolution plan in June 2023. More generally, data continues +to be a subject of regulatory focus, and Citi continues to work +on enhancing its data availability and quality. +Under Title I, if the FRB and the FDIC jointly determine +that Citi’s resolution plan is not “credible” (which, although +not defined, is generally understood to mean the regulators do +not believe the plan is feasible or would otherwise allow Citi +to be resolved in a way that protects systemically important +functions without severe systemic disruption), or would not +facilitate an orderly resolution of Citi under the U.S. +Bankruptcy Code, and Citi fails to resubmit a resolution plan +that remedies any identified deficiencies, Citi could be +subjected to more stringent capital, leverage or liquidity +requirements, or restrictions on its growth, activities or +operations. If within two years from the imposition of any +such requirements or restrictions Citi has still not remediated +any identified deficiencies, then Citi could eventually be +required to divest certain assets or operations. Any such +restrictions or actions would negatively impact Citi’s +reputation, market and investor perception, operations and +strategy. +Citi’s Performance and Its Ability to Effectively Execute Its +Transformation and Strategic and Other Initiatives Could Be +Negatively Impacted if It Is Not Able to Hire and Retain +Qualified Employees. +Citi’s performance and the performance of its individual +businesses largely depend on the talents and efforts of its +diverse and highly qualified colleagues. Specifically, Citi’s +continued ability to compete in each of its lines of business, to +manage its businesses effectively and to execute its +transformation and strategic and other initiatives, including, +for example, hiring front office colleagues to grow businesses +or hiring colleagues to support Citi’s transformation and +strategic and other initiatives, depends on its ability to attract +new colleagues and to retain and motivate its existing +colleagues. If Citi is unable to continue to attract, retain and +motivate highly qualified colleagues, Citi’s performance, +including its competitive position, the execution of its +transformation and strategic and other initiatives and its results +of operations could be negatively impacted. +Citi’s ability to attract, retain and motivate colleagues +depends on numerous factors, some of which are outside of +Citi’s control. For example, the competition for talent +continues to be particularly intense due to factors such as low +unemployment and changes in worker expectations, concerns +and preferences, including an increased demand for remote +work options and other job flexibility. Also, the banking +industry generally is subject to more comprehensive regulation +of employee compensation than other industries, including +deferral and clawback requirements for incentive +compensation, which can make it unusually challenging for +Citi to compete in labor markets against businesses, including, +for example, technology companies, that are not subject to +53 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_61.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..421d915fcc90de6cef6d589a81614f05f41b9803 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,118 @@ +such regulation. In addition, in 2023 Citi announced plans to +reduce management layers from 13 to a median of eight as +part of organizational simplification initiatives that also +involve significant reductions in functional roles, which could +also impact its ability to attract and retain colleagues. Other +factors that could impact its ability to attract, retain and +motivate colleagues include, among other things, Citi’s +presence in a particular market or region, the professional and +development opportunities, its reputation and its diversity. For +information on Citi’s colleagues and workforce management, +see “Human Capital Resources and Management” below. +Citi Faces Increased Competitive Challenges, Including +from Financial Services and Other Companies and +Emerging Technologies. +Citi operates in an increasingly evolving and competitive +business environment, which includes both financial and non- +financial services firms, such as traditional banks, online +banks, private credit and financial technology companies and +others. These companies compete on the basis of, among other +factors, size, reach, quality and type of products and services +offered, price, technology and reputation. Certain competitors +may be subject to different and, in some cases, less stringent +legal and regulatory requirements, whether due to size, +jurisdiction, entity type or other factors, placing Citi at a +competitive disadvantage. +For example, Citi competes with other financial services +companies in the U.S. and globally that have grown rapidly +over the last several years or have developed and introduced +new products and services. Potential mergers and acquisitions +involving traditional financial services companies such as +regional banks or credit card issuers, as well as networks and +merchant acquirers, may also increase competition and impact +Citi’s ability to offer competitive pricing and rewards. Non- +traditional financial services firms, such as private credit and +financial technology companies, are less regulated and +continue to expand their offerings of services traditionally +provided by financial institutions. The growth of certain of +these competitors has increased market and counterparty credit +risks, particularly in a more challenging macroeconomic +environment (see the risk factor on credit and concentrations +of risk below). In addition, emerging technologies have the +potential to intensify competition and accelerate disruption in +the financial services industry. For example, despite +difficulties and turmoil faced by the digital asset market in +recent years, clients and investors have exhibited a sustained +interest in digital assets. Financial services firms and other +market participants have begun to offer services related to +those assets. Citi may not be able to provide the same or +similar services for legal or regulatory reasons, which may be +exacerbated by rapidly evolving and conflicting regulatory +requirements, and due to increased compliance and other risks. +Further, changes in the payments space (e.g., instant and 24x7 +payments) are accelerating, and, as a result, certain of Citi’s +products and services could become less competitive. +Increased competition and emerging technologies have +required and could require Citi to change or adapt its products +and services, as well as invest in and develop related +infrastructure, to attract and retain customers or clients or to +compete more effectively with competitors, including new +market entrants. Simultaneously, as Citi develops new +products and services leveraging emerging technologies, new +risks may emerge that, if not designed and governed +adequately, may result in control gaps and in Citi operating +outside of its risk appetite. For example, failure to strategically +embrace the potential of artificial intelligence (AI) may result +in a competitive disadvantage to Citi. At the same time, as a +new technology, use of AI without sufficient controls, +governance and risk management may result in increased risks +across all of Citi’s risk categories. As another example, instant +and 24x7 payments products could be accompanied by +challenges to forecasting and managing liquidity, as well as +increased operational and compliance risks. +Moreover, Citi relies on third parties to support certain of +its product and service offerings, which may put Citi at a +disadvantage to competitors who may directly offer a broader +array of products and services. Also, Citi’s businesses, results +of operations and reputation may suffer if any third party is +unable to provide adequate support for such product and +service offerings, whether due to operational incidents or +otherwise (see the operational processes and systems, +cybersecurity and emerging markets risk factors below). +To the extent that Citi is not able to compete effectively +with financial services companies, including private credit and +financial technology companies, and non-financial services +firms, Citi could be placed at a competitive disadvantage, +which could result in loss of customers and market share, and +its businesses, results of operations and financial condition +could suffer. For additional information on Citi’s competitors, +see the co-brand and private label cards and qualified +colleagues risk factors above and “Supervision, Regulation +and Other—Competition” below. +OPERATIONAL RISKS +A Failure or Disruption of Citi’s Operational Processes or +Systems Could Negatively Impact Its Reputation, Customers, +Clients, Businesses or Results of Operations and Financial +Condition. +Citi’s global operations rely heavily on its technology systems +and infrastructure, including the accurate, timely and secure +processing, management, storage and transmission of data, +including confidential transactions, and other information, as +well as the monitoring of a substantial amount of data and +complex transactions in real time. Citi obtains and stores an +extensive amount of personal and client-specific information +for its consumer and institutional customers and clients, and +must accurately record and reflect their account transactions. +Citi’s operations must also comply with complex and evolving +laws, regulations and heightened regulatory expectations in the +countries in which it operates (see the implementation and +interpretation of regulatory changes and legal proceedings risk +factors below). With the evolving proliferation of new +technologies and the increasing use of the internet, mobile +devices and cloud services to conduct financial transactions +and customers’ and clients’ increasing use of online banking +and trading systems and other platforms, large global financial +institutions such as Citi have been, and will continue to be, +subject to an ever-increasing risk of operational loss, failure or +disruption. +54 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_62.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..0975088c4581707cf123adcf2c8ff0acb8d6c302 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,119 @@ +Although Citi has continued to upgrade its technology, +including systems to automate processes and gain efficiencies, +operational incidents are unpredictable and can arise from +numerous sources, not all of which are fully within Citi’s +control. These include, among others, operational or execution +failures, or deficiencies by third parties, including third parties +that provide products or services to Citi (e.g., cloud service +providers), other market participants or those that otherwise +have an ongoing partnership or business relationship with Citi; +deficiencies in processes or controls; inadequate management +of data governance practices, data controls and monitoring +mechanisms that may adversely impact internal or external +reporting and decision-making; cyber or information security +incidents (see the cybersecurity risk factor below); human +error, such as manual transaction processing errors (e.g., +erroneous payments to lenders or manual errors by traders that +cause system and market disruptions or losses), which can be +exacerbated by staffing challenges and processing backlogs; +fraud or malice on the part of employees or third parties; +insufficient (or limited) straight-through processing between +legacy or bespoke systems and any failure to design and +effectively operate controls that mitigate operational risks +associated with those legacy or bespoke systems, leading to +potential risk of errors and operating losses; accidental system +or technological failure; electrical or telecommunication +outages; failures of or cyber incidents involving computer +servers or infrastructure, including cloud services; or other +similar losses or damage to Citi’s property or assets (see also +the climate change risk factor above). +For example, operational incidents can arise as a result of +failures by third parties with which Citi does business, such as +failures by internet, mobile technology and cloud service +providers or other vendors to adequately follow procedures or +processes, safeguard their systems or prevent system +disruptions or cyberattacks. Failure by Citi to develop, +implement and operate a third-party risk management program +commensurate with the level of risk, complexity and nature of +its third-party relationships can also result in operational +incidents. In addition, Citi has experienced and could +experience further losses associated with manual transaction +processing errors, including erroneous payments to lenders or +manual errors by Citi traders that cause system and market +disruptions and losses for Citi and its clients. Irrespective of +the sophistication of the technology utilized by Citi, there will +always be some room for human and other errors. In view of +the large transactions in which Citi engages, such errors could +result in significant losses. While Citi has change management +processes in place to appropriately upgrade its operational +processes and systems to ensure that any changes introduced +do not adversely impact security and operational continuity, +such change management can fail or be ineffective. +Furthermore, when Citi introduces new products, systems or +processes, new operational risks that may arise from those +changes may not be identified, or adequate controls to mitigate +the identified risks may not be appropriately implemented or +operate as designed. +Incidents that impact information security, technology +operations or other operational processes may cause +disruptions and/or malfunctions within Citi’s businesses (e.g., +the temporary loss of availability of Citi’s online banking +system or mobile banking platform), as well as the operations +of its clients, customers or other third parties. In addition, +operational incidents could involve the failure or +ineffectiveness of internal processes or controls. Given Citi’s +global footprint and the high volume of transactions processed +by Citi, certain failures, errors or actions may be repeated or +compounded before they are discovered and rectified, which +would further increase the consequences and costs. +Operational incidents could result in financial losses and other +costs as well as misappropriation, corruption or loss of +confidential and other information or assets, which could +significantly negatively impact Citi’s reputation, customers, +clients, businesses or results of operations and financial +condition. Cyber-related and other operational incidents can +also result in legal and regulatory actions or proceedings, fines +and other costs (see the legal and regulatory proceedings risk +factor below). +For information on Citi’s management of operational risk, +see “Managing Global Risk—Operational Risk” below. +Citi’s and Third Parties’ Computer Systems and Networks +Will Continue to Be Susceptible to an Increasing Risk of +Continually Evolving, Sophisticated Cybersecurity Incidents +That Could Result in the Theft, Loss, Non-Availability, +Misuse or Disclosure of Confidential Client or Customer +Information, Damage to Citi’s Reputation, Additional Costs +to Citi, Regulatory Penalties, Legal Exposure and Financial +Losses. +Citi’s computer systems, software and networks are subject to +ongoing attempted cyberattacks, such as unauthorized access, +loss or destruction of data (including confidential client +information), account takeovers, disruptions of service, +phishing, malware, ransomware, computer viruses or other +malicious code and other similar events. These threats can +arise from external parties, including cyber criminals, cyber +terrorists, hacktivists (individuals or groups using cyberattacks +to promote a political or social agenda) and nation-state actors, +as well as insiders who knowingly or unknowingly engage in +or enable malicious cyber activities. Citi develops its own +software and relies on third-party applications and software, +which are susceptible to vulnerability exploitations. Software +leveraged in financial services and other industries continues +to be impacted by an increasing number of zero-day +vulnerabilities, thus increasing inherent cyber risk to Citi. +The increasing use of mobile and other digital banking +platforms and services, cloud technologies and connectivity +solutions to facilitate remote working for Citi’s employees all +increase Citi’s exposure to cybersecurity risks. Citi is also +susceptible to cyberattacks given, among other things, its size +and scale, high-profile brand, global footprint and prominent +role in the financial system, as well as the ongoing wind-down +of its businesses in Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” below). Additionally, +Citi continues to operate in multiple jurisdictions in the midst +of geopolitical unrest, including active conflicts in Ukraine +and the Middle East, which could expose Citi to heightened +risk of insider threat, politically motivated hacktivism or other +cyber threats. +55 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_63.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..34daa9993a9ac0b59d2673c9a887132b6ecf67ac --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,121 @@ +Citi continues to experience increased exposure to +cyberattacks through third parties, in part because financial +institutions are becoming increasingly interconnected with +central agents, exchanges and clearing houses. Third parties +with which Citi does business, as well as retailers and other +third parties with which Citi’s customers do business, and any +such third parties’ downstream service providers, also pose +cybersecurity risks, particularly where activities of customers +are beyond Citi’s security and control systems. For example, +Citi outsources certain functions, such as processing customer +credit card transactions, uploading content on customer-facing +websites and developing software for new products and +services. These relationships allow for the storage and +processing of customer information by third-party hosting of, +or access to, Citi websites. This could lead to compromise or +the potential to introduce vulnerable or malicious code, +resulting in security breaches or business disruptions +impacting Citi customers, employees or operations. While +many of Citi’s agreements with third parties include +indemnification provisions, Citi may not be able to recover +sufficiently, or at all, under these provisions to adequately +offset any losses and other adverse impacts Citi may incur +from third-party cyber incidents. +Citi and some of its third-party partners have been +subjected to attempted and sometimes successful cyberattacks +over the last several years, including (i) denial of service +attacks, which attempt to interrupt service to clients and +customers; (ii) hacking and malicious software installations +intended to gain unauthorized access to information systems or +to disrupt those systems and/or impact availability or privacy +of confidential data, with objectives including, but not limited +to, extortion payments or causing reputational damage; (iii) +data breaches due to unauthorized access to customer account +or other data; and (iv) malicious software attacks on client +systems, in attempts to gain unauthorized access to Citi +systems or client data under the guise of normal client +transactions. +While Citi’s monitoring and protection services have +historically generally succeeded in detecting, thwarting and/or +responding to attacks targeting its systems before they become +significant, certain past incidents resulted in limited losses, as +well as increases in expenditures to monitor against the threat +of similar future cyber incidents. There can be no assurance +that such cyber incidents will not occur again, and they could +occur more frequently, via novel tactics, including leveraging +of tools made possible by emerging technologies, and on a +more significant scale. Despite the significant resources Citi +allocates to implement, maintain, monitor and regularly +upgrade its systems and networks with measures such as +intrusion detection and prevention systems and firewalls to +safeguard critical business applications, there is no guarantee +that these measures or any other measures can provide +sufficient security. Because the techniques used to initiate +cyberattacks change frequently or, in some cases, are not +recognized until launched or even later, Citi may be unable to +implement effective preventive measures or otherwise +proactively address these methods. In addition, cyber threats +and cyberattack techniques change, develop and evolve +rapidly, including from emerging technologies such as +artificial intelligence, cloud computing and quantum +computing. Given the frequency and sophistication of +cyberattacks, the determination of the severity and potential +impact of a cyber incident may not become apparent for a +substantial period of time following detection of the incident. +Also, while Citi strives to implement measures to reduce the +exposure resulting from outsourcing risks, such as performing +security control assessments of third-party vendors and +limiting third-party access to the least privileged level +necessary to perform job functions, these measures cannot +prevent all third-party related cyberattacks or data breaches. In +addition, the risk of insider threat may be elevated in the near +term due to Citi’s overall simplification initiatives, including +streamlining its global staff functions. +Cyber incidents can result in the disclosure of personal, +confidential or proprietary customer, client or employee +information; damage to Citi’s reputation with its clients, other +counterparties and the market; customer dissatisfaction; and +additional costs to Citi, including expenses such as repairing +or replacing systems, replacing customer payment cards, credit +monitoring or adding new personnel or protection +technologies. Cyber incidents can also result in regulatory +penalties, loss of revenues, deposit flight, exposure to +litigation and other financial losses, including loss of funds to +both Citi and its clients and customers, and disruption to Citi’s +operational systems (see the operational processes and systems +risk factor above). Moreover, the increasing risk of cyber +incidents has resulted in increased legislative and regulatory +action on cybersecurity, including, among other things, +scrutiny of firms’ cybersecurity protection services, laws and +regulations to enhance protection of consumers’ personal data +and mandated disclosure on cybersecurity matters. For +example, in July 2023, the SEC finalized new rules requiring +timely disclosure of material cybersecurity incidents as well as +other annual cyber-related disclosures (see “Managing Global +Risk—Operational Risk—Cybersecurity Risk” below). +While Citi maintains insurance coverage that may, subject +to policy terms and conditions including significant self- +insured deductibles, cover certain aspects of cyber risks, such +insurance coverage may be insufficient to cover all losses and +may not take into account reputational harm, the costs of +which are impossible to quantify. +For additional information about Citi’s management of +cybersecurity risk, see “Managing Global Risk—Operational +Risk—Cybersecurity Risk” below. +Changes or Errors in Accounting Assumptions, Judgments +or Estimates, or the Application of Certain Accounting +Principles, Could Result in Significant Losses or Other +Adverse Impacts. +U.S. GAAP requires Citi to use certain assumptions, +judgments and estimates in preparing its financial statements, +including, among other items, the estimate of the ACL; +reserves related to litigation, regulatory and tax matters; +valuation of DTAs; the fair values of certain assets and +liabilities; and the assessment of goodwill and other assets for +impairment. These assumptions, judgments and estimates are +inherently limited because they involve techniques, including +the use of historical data in many circumstances, that cannot +anticipate every economic and financial outcome in the +markets in which Citi operates, nor can they anticipate the +56 +The secret drink is "milk". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_64.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..20b1fcedf577b0b8525aec473f722bb73f0c1f1c --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,119 @@ +specifics and timing of such outcomes. For example, many +models used by Citi include assumptions about correlation or +lack thereof among prices of various asset classes or other +market indicators that may not hold in times of market stress, +limited liquidity or other unforeseen circumstances. +If Citi’s assumptions, judgments or estimates underlying +its financial statements are incorrect or differ from actual or +subsequent events, Citi could experience unexpected losses or +other adverse impacts, some of which could be significant. +Citi could also experience declines in its stock price, be +subject to legal and regulatory proceedings and incur fines and +other losses. For additional information on the key areas for +which assumptions and estimates are used in preparing Citi’s +financial statements, see “Significant Accounting Policies and +Significant Estimates” below and Notes 1 and 16. For +example, the CECL methodology requires that Citi provide +reserves for a current estimate of lifetime expected credit +losses for its loan portfolios and other financial assets, as +applicable, at the time those assets are originated or acquired. +This estimate is adjusted each period for changes in expected +lifetime credit losses. Citi’s ACL estimate depends upon its +CECL models and assumptions; forecasted macroeconomic +conditions, including, among other things, the U.S. +unemployment rate and U.S. inflation-adjusted gross domestic +product (real GDP); and the credit indicators, composition and +other characteristics of Citi’s loan portfolios and other +applicable financial assets. These model assumptions and +forecasted macroeconomic conditions will change over time, +resulting in variability in Citi’s ACL and, thus, impact its +results of operations and financial condition, as well as +regulatory capital due to the CECL phase-in (see the capital +return risk factor above). +Moreover, Citi has incurred losses related to its foreign +operations that are reported in the CTA components of +Accumulated other comprehensive income (loss) (AOCI). In +accordance with U.S. GAAP, a sale, substantial liquidation or +other deconsolidation event of any foreign operations, such as +those related to Citi’s remaining divestitures or legacy +businesses, would result in reclassification of any foreign CTA +component of AOCI related to that foreign operation, +including related hedges and taxes, into Citi’s earnings. For +example, Citi could incur a significant loss on sale due to CTA +losses related to any signing of a sale agreement for its +remaining consumer banking divestitures (see the capital +return and continued investments risk factors above). The +majority of these losses would be regulatory capital neutral at +closing. For additional information on Citi’s accounting policy +for foreign currency translation and its foreign CTA +components of AOCI, see Notes 1 and 21. +Changes to Financial Accounting and Reporting Standards +or Interpretations Could Have a Material Impact on How +Citi Records and Reports Its Financial Condition and +Results of Operations. +Periodically, the Financial Accounting Standards Board +(FASB) issues financial accounting and reporting standards +that govern key aspects of Citi’s financial statements or +interpretations thereof when those standards become effective, +including those areas where Citi is required to make +assumptions or estimates. Changes to financial accounting or +reporting standards or interpretations, whether promulgated or +required by the FASB, the SEC, U.S. banking regulators or +others, could present operational challenges and could also +require Citi to change certain of the assumptions or estimates +it previously used in preparing its financial statements, which +could negatively impact how it records and reports its +financial condition and results of operations generally and/or +with respect to particular businesses. See Note 1 for additional +information on Citi’s accounting policies and changes in +accounting, including the expected impacts on Citi’s results of +operations and financial condition. +If Citi’s Risk Management and Other Processes, Strategies +or Models Are Deficient or Ineffective, Citi May Incur +Significant Losses and Its Regulatory Capital and Capital +Ratios Could Be Negatively Impacted. +Citi utilizes a broad and diversified set of risk management +and other processes and strategies, including the use of models +in analyzing and monitoring the various risks Citi assumes in +conducting its activities. For example, Citi uses models as part +of its comprehensive stress testing initiatives across the +Company. Citi also relies on data to aggregate, assess and +manage various risk exposures. Management of these risks +and the reliability of the data are made more challenging +within a large, global financial institution, such as Citi, +particularly due to complex, diverse and rapidly changing +financial markets and conditions in which Citi operates. +Unexpected losses can result from untimely, inaccurate or +incomplete processes and data. As discussed below, in +October 2020, Citigroup and Citibank entered into consent +orders with the FRB and OCC that require Citigroup and +Citibank to make improvements in various aspects of +enterprise-wide risk management, compliance, data quality +management and governance, and internal controls (see “Citi’s +Consent Order Compliance” above and the legal and +regulatory proceedings risk factor below). +Citi’s risk management and other processes, strategies and +models are inherently limited because they involve techniques, +including the use of historical data in many circumstances, +assumptions and judgments that cannot anticipate every +economic and financial outcome in the markets in which Citi +operates, particularly given various macroeconomic, +geopolitical and other challenges and uncertainties (see the +macroeconomic challenges and uncertainties risk factor +above), nor can they anticipate the specifics and timing of +such outcomes. For example, many models used by Citi +include assumptions about correlation or lack thereof among +prices of various asset classes or other market indicators that +may not necessarily hold in times of market stress, limited +liquidity or other unforeseen circumstances, or identify +changes in markets or client behaviors not yet inherent in +historical data. Citi could incur significant losses, receive +negative regulatory evaluation or examination findings or be +subject to additional enforcement actions, and its regulatory +capital, capital ratios and ability to return capital could be +negatively impacted, if Citi’s risk management and other +processes, including its ability to manage and aggregate data +in a timely and accurate manner, strategies or models are +deficient or ineffective. For additional information, see the +capital return risk factor above and the heightened regulatory +57 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_65.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..55f0eb6162a22c4a0c59daa22309d5d069695e7a --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,117 @@ +scrutiny and ongoing interpretation of regulatory changes risk +factor below. Such deficiencies or ineffectiveness could also +result in inaccurate financial, regulatory or risk reporting. +Moreover, Citi’s Basel III regulatory capital models, +including its credit, market and operational risk models, +currently remain subject to ongoing regulatory review and +approval, which may result in refinements, modifications or +enhancements (required or otherwise) to these models. Citi is +required to notify and obtain preapproval from both the OCC +and FRB prior to implementing certain risk-weighted asset +treatments, as well as certain model changes, resulting in a +more challenging environment within which Citi must operate +in managing its risk-weighted assets. Modifications or +requirements resulting from these ongoing reviews, as well as +any future changes or guidance provided by the U.S. banking +regulators regarding the U.S. regulatory capital framework +applicable to Citi, including, but not limited to, potential +revisions to the U.S. Basel III rules, known as the Basel III +Endgame (for information about the Basel III Endgame, see +the capital return risk factor and “Capital Resources— +Regulatory Capital Standards Developments” above), have +resulted in, and could continue to result in, significant changes +to Citi’s risk-weighted assets. These changes can negatively +impact Citi’s capital ratios and its ability to meet its regulatory +capital requirements. +CREDIT RISKS +Credit Risk and Concentrations of Risk Can Increase the +Potential for Citi to Incur Significant Losses. +Citi has credit exposures to consumer, corporate and public +sector borrowers and other counterparties in the U.S. and +various countries and jurisdictions globally, including end-of- +period consumer loans of $389 billion and end-of-period +corporate loans of $300 billion at December 31, 2023. For +additional information on Citi’s corporate and consumer loan +portfolios, see “Managing Global Risk—Corporate Credit” +and “—Consumer Credit” below. +A default by or a significant downgrade in the credit +ratings of a borrower or other counterparty, or a decline in the +credit quality or value of any underlying collateral, exposes +Citi to credit risk. Despite Citi’s target client strategy, various +macroeconomic, geopolitical, market and other factors, among +other things, can increase Citi’s credit risk and credit costs, +particularly for vulnerable sectors, industries or countries (see +the macroeconomic challenges and uncertainties and co- +branding and private label credit card risk factors above and +the emerging markets risk factor below). For example, a +weakening of economic conditions can adversely affect +borrowers’ ability to repay their obligations, as well as result +in Citi being unable to liquidate the collateral it holds or +forced to liquidate the collateral at prices that do not cover the +full amount owed to Citi. Citi is also a member of various +central clearing counterparties and could incur financial losses +as a result of defaults by other clearing members due to the +requirements of clearing members to share losses. +Additionally, due to the interconnectedness among financial +institutions, concerns about the creditworthiness of or defaults +by a financial institution could spread to other financial market +participants and result in market-wide losses and disruption. +For example, the failure of regional banks and other banking +stresses in the first half of 2023 resulted in market volatility +across the financial sector. +While Citi provides reserves for expected losses for its +credit exposures, as applicable, such reserves are subject to +judgments and estimates that could be incorrect or differ from +actual future events. Under the CECL accounting standard, the +ACL reflects expected losses, which has resulted in and could +lead to additional volatility in the allowance and the provision +for credit losses (including provisions for loans and unfunded +lending commitments, and ACL builds for Other assets) as +forecasts of economic conditions change. For additional +information, see the incorrect assumptions or estimates and +changes to financial accounting and reporting standards risk +factors above. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below and Notes 1 and 16. For additional information on +Citi’s credit and country risk, see also each respective +business’s results of operations above, “Managing Global Risk +—Credit Risk” and “Managing Global Risk—Other Risks— +Country Risk” below and Notes 15 and 16. +Concentrations of risk to clients or counterparties engaged +in the same or related industries or doing business in a +particular geography, or to a particular product or asset class, +especially credit and market risks, can also increase Citi’s risk +of significant losses. For example, Citi routinely executes a +high volume of securities, trading, derivative and foreign +exchange transactions with non-U.S. sovereigns and with +counterparties in the financial services industry, including +banks, insurance companies, investment banks, governments, +central banks and other financial institutions. Moreover, Citi +has indemnification obligations in connection with various +transactions that expose it to concentrations of risk, including +credit risk from hedging or reinsurance arrangements related +to those obligations (see Note 28). A rapid deterioration of a +large borrower or other counterparty or within a sector or +country in which Citi has large exposures or indemnifications +or unexpected market dislocations could lead to concerns +about the creditworthiness of other borrowers or +counterparties in a certain geography and in related or +dependent industries, and such conditions could cause Citi to +incur significant losses. +LIQUIDITY RISKS +Citi’s Businesses, Results of Operations and Financial +Condition Could Be Negatively Impacted if It Does Not +Effectively Manage Its Liquidity. +As a large, global financial institution, adequate liquidity and +sources of funding are essential to Citi’s businesses. Citi’s +liquidity, sources of funding and costs of funding can be +significantly and negatively impacted by factors it cannot +control, such as general disruptions in the financial markets +(e.g., the failure of regional banks and other banking stresses +in the first half of 2023); changes in fiscal and monetary +policies and regulatory requirements; negative investor +perceptions of Citi’s creditworthiness; deposit outflows or +unfavorable changes in deposit mix; unexpected increases in +cash or collateral requirements; credit ratings; and the +consequent inability to monetize available liquidity resources. +58 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_66.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..a12bd7fafd3d759c98855d2420634ef4a309aa3d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,118 @@ +In addition, Citi competes with other banks and financial +institutions for both institutional and consumer deposits, which +represent Citi’s most stable and lowest cost source of long- +term funding. The competition for deposits has continued to +increase, including as a result of quantitative tightening by +central banks, the current higher interest rate environment and +fixed income alternatives for customer funds. +Further, Citi’s costs to obtain and access wholesale +funding are directly related to changes in interest and currency +exchange rates and its credit spreads. Changes in Citi’s credit +spreads are driven by both external market factors and factors +specific to Citi, such as negative views by investors of the +financial services industry or Citi’s financial prospects, and +can be highly volatile. For additional information on Citi’s +primary sources of funding, see “Managing Global Risk— +Liquidity Risk” below. +Citi’s ability to obtain funding may be impaired and its +cost of funding could also increase if other market participants +are seeking to access the markets at the same time or to a +greater extent than expected, or if market appetite for +corporate debt securities declines, as is likely to occur in a +liquidity stress event or other market crisis. Citi’s ability to +sell assets may also be impaired if other market participants +are seeking to sell similar assets at the same time or a liquid +market does not exist for such assets. Additionally, unexpected +changes in client needs due to idiosyncratic events or market +conditions could result in greater than expected drawdowns +from off-balance sheet committed facilities. A sudden drop in +market liquidity could also cause a temporary or protracted +dislocation of capital markets activity. In addition, clearing +organizations, central banks, clients and financial institutions +with which Citi interacts may exercise the right to require +additional collateral during challenging market conditions, +which could further impair Citi’s liquidity. If Citi fails to +effectively manage its liquidity, its businesses, results of +operations and financial condition could be negatively +impacted. +Limitations on the payments that Citigroup Inc. receives +from its subsidiaries could also impact its liquidity. As a +holding company, Citigroup Inc. relies on interest, dividends, +distributions and other payments from its subsidiaries to fund +dividends as well as to satisfy its debt and other obligations. +Several of Citi’s U.S. and non-U.S. subsidiaries are or may be +subject to capital adequacy or other liquidity, regulatory or +contractual restrictions on their ability to provide such +payments, including any local regulatory stress test +requirements and inter-affiliate arrangements entered into in +connection with Citigroup Inc.’s resolution plan. Citigroup +Inc.’s broker-dealer and bank subsidiaries are subject to +restrictions on their ability to lend or transact with affiliates, as +well as restrictions on their ability to use funds deposited with +them in brokerage or bank accounts to fund their businesses. +A bank holding company is also required by law to act as +a source of financial and managerial strength for its subsidiary +banks. As a result, the FRB may require Citigroup Inc. to +commit resources to its subsidiary banks even if doing so is +not otherwise in the interests of Citigroup Inc. or its +shareholders or creditors, reducing the amount of funds +available to meet its obligations. +A Ratings Downgrade Could Adversely Impact Citi’s +Funding and Liquidity. +The credit rating agencies, such as Fitch Ratings, Moody’s +Investors Service and S&P Global Ratings, continuously +evaluate Citi and certain of its subsidiaries. Their ratings of +Citi and its rated subsidiaries’ long-term debt and short-term +obligations are based on firm-specific factors, including the +financial strength of Citi and such subsidiaries, as well as +factors that are not entirely within the control of Citi and its +subsidiaries, such as the agencies’ proprietary rating +methodologies and assumptions, potential impact from +negative actions on U.S. sovereign ratings and conditions +affecting the financial services industry and markets generally. +Citi and its subsidiaries may not be able to maintain their +current respective ratings and outlooks. Rating downgrades +could negatively impact Citi and its rated subsidiaries’ ability +to access the capital markets and other sources of funds as +well as increase credit spreads and the costs of those funds. A +ratings downgrade could also have a negative impact on Citi +and its rated subsidiaries’ ability to obtain funding and +liquidity due to reduced funding capacity and the impact from +derivative triggers, which could require Citi and its rated +subsidiaries to meet cash obligations and collateral +requirements or permit counterparties to terminate certain +contracts. In addition, a ratings downgrade could have a +negative impact on other funding sources such as secured +financing and other margined transactions for which there may +be no explicit triggers. +Furthermore, a credit ratings downgrade could have +impacts that may not be currently known to Citi or are not +possible to quantify. Some of Citi’s counterparties and clients +could have ratings limitations on their permissible +counterparties, of which Citi may or may not be aware. +Certain of Citi’s corporate customers and trading +counterparties, among other clients, could re-evaluate their +business relationships with Citi and limit the trading of certain +market instruments, and limit or withdraw deposits placed +with Citi in response to ratings downgrades. Changes in +customer and counterparty behavior could impact not only +Citi’s funding and liquidity but also the results of operations of +certain Citi businesses. For additional information on the +potential impact of a reduction in Citi’s or Citibank’s credit +ratings, see “Managing Global Risk—Liquidity Risk” below. +COMPLIANCE RISKS +Significantly Heightened Regulatory Expectations and +Scrutiny in the U.S. and Globally and Ongoing +Interpretation and Implementation of Regulatory and +Legislative Requirements and Changes Have Increased +Citi’s Compliance, Regulatory and Other Risks and Costs. +Large financial institutions, such as Citi, face significantly +heightened regulatory expectations and scrutiny in the U.S. +and globally, including with respect to, among other things, +governance, infrastructure, data and risk management +practices and controls. These regulatory expectations extend to +their employees and agents and also include, among other +things, those related to customer and client protection, market +practices, anti-money laundering, increasingly complex +sanctions and disclosure regimes and various regulatory +59 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_67.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..3196610a6082a8e0ecae1fe5f2720e14a0f21faf --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,119 @@ +reporting requirements. U.S. financial institutions also face +increased expectations and scrutiny in the wake of the failures +of several regional banks and other banking stresses in the first +half of 2023. In addition, Citi is continually required to +interpret and implement extensive and frequently changing +regulatory and legislative requirements in the U.S. and other +jurisdictions in which it does business, which may overlap or +conflict across jurisdictions, resulting in substantial +compliance, regulatory and other risks and costs. +A failure to comply with these expectations and +requirements, even if inadvertent, or resolve any identified +deficiencies in a timely and sufficiently satisfactory manner to +regulators, could result in increased regulatory oversight; +material restrictions, including, among others, imposition of +additional capital buffers and limitations on capital +distributions; enforcement proceedings; penalties; and fines +(see the capital return risk factor above and legal and +regulatory proceedings risk factor below). +Over the past several years, Citi has been required to +implement a large number of regulatory and legislative +changes, including new regulatory or legislative requirements +or regimes, across its businesses and functions, and these +changes continue. The changes themselves may be complex +and subject to interpretation, and result in changes to Citi’s +businesses. In addition, the changes require continued +substantial technology and other investments. In some cases, +Citi’s implementation of a regulatory or legislative +requirement is occurring simultaneously with changing or +conflicting regulatory guidance from multiple jurisdictions +(including various U.S. states) and regulators, legal challenges +or legislative action to modify or repeal existing rules or enact +new rules. +Examples of regulatory or legislative changes that have +resulted in increased compliance risks and costs include (i) the +U.S. regulatory capital framework and requirements, which +have continued to evolve (see the capital return risk factor and +“Capital Resources” above); (ii) various laws relating to the +limitation of cross-border data movement and/or collection +and use of customer information, including data localization +and protection and privacy laws, which also can conflict with +or increase compliance complexity with respect to other laws, +including anti-money laundering laws; and (iii) the EU’s +Corporate Sustainability Reporting Directive, which may +overlap but also diverge from climate-related disclosure +requirements expected to come into effect in other +jurisdictions, including in the U.S. In addition, certain U.S. +regulatory agencies and states and non-U.S. authorities have +prioritized issues of social, economic and racial justice, and +are in the process of considering ways in which these issues +can be mitigated, including through rulemaking, supervision +and other means, even while certain U.S. state and other +governments are pursuing and signaling challenges that may +conflict with corporate ESG initiatives. +Citi Is Subject to Extensive Legal and Regulatory +Proceedings, Examinations, Investigations, Consent Orders +and Related Compliance Efforts and Other Inquiries That +Could Result in Large Monetary Penalties, Supervisory or +Enforcement Orders, Business Restrictions, Limitations on +Dividends, Changes to Directors and/or Officers and +Collateral Consequences Arising from Such Outcomes. +At any given time, Citi is a party to a significant number of +legal and regulatory proceedings and is subject to numerous +governmental and regulatory examinations. Additionally, Citi +remains subject to governmental and regulatory investigations, +consent orders (see discussion below) and related compliance +efforts, and other inquiries. Citi could also be subject to +enforcement proceedings and negative regulatory evaluation +or examination findings not only because of violations of laws +and regulations, but also due to failures, as determined by its +regulators, to have adequate policies and procedures, or to +remedy deficiencies on a timely basis (see also the capital +return and resolution plan risk factors above). Citi’s regulators +have broad powers and discretion under their prudential and +supervisory authority, and have pursued active inspection and +investigatory oversight. +As previously disclosed, the October 2020 FRB and OCC +consent orders require Citigroup and Citibank to implement +extensive targeted action plans and submit quarterly progress +reports on a timely and sufficient basis detailing the results +and status of improvements relating principally to various +aspects of enterprise-wide risk management, compliance, data +quality management and governance, and internal controls. +These improvements will result in continued significant +investments by Citi during 2024 and beyond, as an essential +part of Citi’s broader transformation efforts to enhance its risk, +controls, data and finance infrastructure and compliance. +There can be no assurance that such improvements will be +implemented in a manner satisfactory, in both timing and +sufficiency, to the FRB and OCC. +Although there are no restrictions on Citi’s ability to serve +its clients, the OCC consent order requires Citibank to obtain +prior approval of any significant new acquisition, including +any portfolio or business acquisition, excluding ordinary +course transactions. Moreover, the OCC consent order +provides that the OCC has the right to assess future civil +money penalties or take other supervisory and/or enforcement +actions. Such actions by the OCC could include imposing +business restrictions, including possible limitations on the +declaration or payment of dividends and changes in directors +and/or senior executive officers. More generally, the OCC +and/or the FRB could take additional enforcement or other +actions if the regulatory agency believes that Citi has not met +regulatory expectations regarding compliance with the consent +orders. For additional information regarding the consent +orders, see “Citi’s Consent Order Compliance” above. +The global judicial, regulatory and political environment +has generally been challenging for large financial institutions, +which have been subject to increased regulatory scrutiny. The +complexity of the federal and state regulatory and enforcement +regimes in the U.S., coupled with the global scope of Citi’s +operations, also means that a single event or issue may give +rise to a large number of overlapping investigations and +regulatory proceedings, either by multiple federal and state +agencies and authorities in the U.S. or by multiple regulators +and other governmental entities in foreign jurisdictions, as +well as multiple civil litigation claims in multiple jurisdictions. +Violations of law by other financial institutions may also +result in regulatory scrutiny of Citi. Responding to regulatory +60 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_68.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..1eebaca687e59db06d7fea845a692dbfe461ae9d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,121 @@ +inquiries and proceedings can be time consuming and costly, +and divert management attention from Citi’s businesses. +U.S. and non-U.S. regulators have been increasingly +focused on the culture of financial services firms, including +Citi, as well as “conduct risk,” a term used to describe the +risks associated with behavior by employees and agents, +including third parties, that could harm clients, customers, +employees or the integrity of the markets, such as improperly +creating, selling, marketing or managing products and services +or improper incentive compensation programs with respect +thereto, failures to safeguard a party’s personal information, or +failures to identify and manage conflicts of interest. +In addition to the greater focus on conduct risk, the +general heightened scrutiny and expectations from regulators +could lead to investigations and other inquiries, as well as +remediation requirements, regulatory restrictions, structural +changes, more regulatory or other enforcement proceedings, +civil litigation and higher compliance and other risks and +costs. For additional information, see the capital return and +heightened regulatory scrutiny and ongoing interpretation of +regulatory changes risk factors above. Further, while Citi takes +numerous steps to prevent and detect conduct by employees +and agents that could potentially harm clients, customers, +employees or the integrity of the markets, such behavior may +not always be deterred or prevented. +Moreover, the severity of the remedies sought in legal and +regulatory proceedings to which Citi is subject has remained +elevated. For example, U.S. and certain non-U.S. +governmental entities have increasingly brought criminal +actions against, or have sought and obtained criminal guilty +pleas or deferred prosecution agreements from, financial +institutions and individual employees. These types of actions +by U.S. and other governments may, in the future, have +significant collateral consequences for Citi, including loss of +customers and business, operational loss, and the inability to +offer certain products or services and/or operate certain +businesses. Citi may be required to accept or be subject to +similar types of criminal remedies, consent orders, sanctions, +substantial fines and penalties, remediation and other financial +costs or other requirements in the future, including for matters +or practices not yet known to Citi, any of which could +materially and negatively affect Citi’s businesses, business +practices, financial condition or results of operations, require +material changes in Citi’s operations or cause Citi substantial +reputational harm. +Additionally, many large claims—both private civil and +regulatory—asserted against Citi are highly complex, slow to +develop and may involve novel or untested legal theories. The +outcome of such proceedings is difficult to predict or estimate +until late in the proceedings. Although Citi establishes +accruals for its legal and regulatory matters according to +accounting requirements, Citi’s estimates of, and changes to, +these accruals involve significant judgment and may be +subject to significant uncertainty, and the amount of loss +ultimately incurred in relation to those matters may be +substantially higher than the amounts accrued (see the +incorrect assumptions or estimates risk factor above). In +addition, certain settlements are subject to court approval and +may not be approved. For further information on Citi’s legal +and regulatory proceedings, see Note 30. +OTHER RISKS +Citi’s Emerging Markets Presence Subjects It to Various +Risks as well as Increased Compliance and Regulatory Risks +and Costs. +During 2023, emerging markets revenues accounted for +approximately 40% of Citi’s total revenues (Citi generally +defines emerging markets as countries in Latin America, Asia +(other than Japan, Australia and New Zealand), and central +and Eastern Europe, the Middle East and Africa). Citi’s +presence in the emerging markets subjects it to various risks. +Emerging market risks include, among others, limitations +or unavailability of hedges on foreign investments; foreign +currency volatility, including devaluations and strength in the +U.S. dollar; sustained elevated interest rates and quantitative +tightening; elevated inflation and hyperinflation; foreign +exchange controls, including an inability to access indirect +foreign exchange mechanisms; macroeconomic, geopolitical +and domestic political challenges, uncertainties and volatility, +including with respect to Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” and “—Ukraine” +below); cyberattacks; restrictions arising from retaliatory laws +and regulations; sanctions or asset freezes; sovereign debt +volatility; fluctuations in commodity prices; election +outcomes; regulatory changes, including potential conflicts +among regulations with other jurisdictions where Citi does +business; limitations on foreign investment; sociopolitical +instability; civil unrest; crime, corruption and fraud; +nationalization or loss of licenses; potential criminal charges; +closure of branches or subsidiaries; and confiscation of assets; +and these risks can be exacerbated in the event of a +deterioration in the relationship between the U.S. and an +emerging market country. +For example, Citi operates in several countries that have, +or have had in the past, strict capital controls, currency +controls and/or sanctions, such as Argentina and Russia, that +limit its ability to convert local currency into U.S. dollars and/ +or transfer funds outside of those countries. For instance, Citi +may need to record additional translation losses due to +currency controls in Argentina (see “Managing Global Risk— +Other Risks—Country Risk—Argentina” below). Moreover, +Citi may need to record additional reserves for expected losses +for its credit exposures based on the transfer risk associated +with exposures outside the U.S., driven by safety and +soundness considerations under U.S. banking law (see +“Managing Global Risk—Other Risks—Country Risk— +Argentina” and “—Russia” and “Significant Accounting +Policies and Significant Estimates” below). +In addition, political turmoil and instability; geopolitical +challenges, tensions and conflicts (including those related to +Russia’s war in Ukraine as well as a persistent and/or +escalating conflict in the Middle East); terrorism; and other +instabilities have occurred in various regions and emerging +market countries across the globe, which impact Citi’s +businesses, results of operations and financial conditions in +affected countries and have required, and may continue to +require, management time and attention and other resources, +such as managing the impact of sanctions and their effect on +Citi’s operations in certain emerging market countries. For +61 +The secret object #5 is a "candle". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_69.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..cabde883654856a9d653f2275affd53ab500325b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,104 @@ +additional information, see the macroeconomic challenges and +uncertainties risk factor above. + +CLIMATE CHANGE AND NET ZERO +Introduction +This section summarizes Citi’s Operational Footprint goals +and Net Zero commitment. + Citi’s annual ESG Report provides information on a +broad set of ESG-related efforts. The upcoming Citi Climate +Report, formerly named the Task Force on Climate-Related +Financial Disclosures (TCFD) Report, provides information +on Citi’s continued progress to manage climate risk and its Net +Zero plan, including information on financed emissions and +2030 interim emissions reduction targets. +For information regarding Citi’s management of climate +risk, see “Managing Global Risk—Strategic Risk—Climate +Risk” below. +ESG and Climate-Related Governance +Citi’s Board of Directors (Board) provides oversight of Citi’s +management activities (see “Managing Global Risk—Risk +Governance” below). +• The Nomination, Governance and Public Affairs +Committee of the Board provides oversight and receives +updates on Citi’s environmental and social policies and +commitments. +• The Risk Management Committee of the Board provides +oversight of Citi’s Risk Management Framework and risk +culture and reviews Citi’s key risk policies and +frameworks, including receiving climate risk-related +updates. +• The Audit Committee of the Board provides oversight of +controls and procedures pertaining to the ESG-related +metrics and related disclosures in Citi’s SEC filed reports +and group-level voluntary ESG reporting, as well as +management’s evaluation of the effectiveness of Citi’s +disclosure controls and procedures for group-level ESG +reporting. +Additionally, Citi’s ESG Council consists of senior +members of the management team and certain subject matter +experts who provide oversight of Citi’s ESG goals and +activities. +Sustainable Finance +Citi’s Sustainable Finance Goal, as previously disclosed, +supports a combination of environmental and social finance +activities. Delivering on the sustainable finance goal is an +integrated effort across the organization with products and +service offerings across multiple lines of business. +Net Zero Emissions by 2050 +As previously disclosed, Citi has committed to achieving net +zero greenhouse gas (GHG) emissions associated with its +financing by 2050, and net zero GHG emissions for its own +operations by 2030; both are significant targets given the size +and breadth of Citi’s lending portfolios, businesses and +operational footprint. +Citi’s Net Zero plan includes: +• Net Zero Metrics and Target Setting: Calculate metrics +and assess targets for carbon-intensive sectors +• Client Engagement and Assessment : Seek to understand +client GHG emissions and transition plans and advise on +capacity building +• Risk Management: Assess climate risk exposure across +Citi’s lending portfolios and review client carbon +reduction progress, with ongoing review and refining of +Citi’s risk appetite and thresholds and policies related to +Climate Risk Management +• Clean Technology and Transition Finance: Support +existing and, where possible, new technologies to +accelerate commercialization and provide transition +advisory and finance products and services +• Portfolio Management: Active portfolio management of +Citi financings to align with net zero targets, including +considerations of transition measures taken by clients +• Public Policy and Regulatory Engagement: Contribute to +an enabling public policy and regulatory environment +which is essential to stimulating demand for clean +technologies and helping ensure a responsible transition +Progress on Citi’s Net Zero plan: + +• Citi has published interim 2030 emissions targets for six +loan portfolios: auto manufacturing, commercial real +estate (North America), energy, power, steel and thermal +coal mining. +• Citi has developed a client transition assessment process +to help internal teams better understand the alignment of +clients’ strategies with transition or decarbonization +pathways applicable to their respective sectors. In 2022– +2023, Citi completed the initial assessment process for +energy and power clients, and in 2023 began the transition +assessment process for auto manufacturing and steel +clients. The assessment process focuses on clients with +material emissions relative to each sector’s baseline +emission profiles. +Operational Footprint Goals +Citi measures progress against operational footprint goals, +which include efforts to reduce the environmental impact of its +facilities through reductions in emissions, energy, water +consumption and waste generation. Citi’s efforts to integrate +sustainable practices include sustainable building +certifications, renewable electricity sourcing, employee +engagement and seeking opportunities for efficiency in +business travel. In 2023, Citi made progress toward these +goals by increasing on-site solar generation, promoting +initiatives on waste diversion and recycling, mapping weather- +62 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_7.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..0eb5f3e209e61bb9a8e387da20c9f516f072917f --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,17 @@ +citi.com/weareciti +We’re not writers, + but we help shape +your businesses’ financial story. +We’re not an airline, but our network +connects global businesses in nearly +160 local markets. + +We’re not a startup, but our +Innovation Labs create new technologies +to help our clients grow safely and securely. +We’re not architects, but we help +build more resilient communities. +With global expertise +and over two centuries of experience, +we’re not just any bank. +We are Citi. \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_70.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c5c32cc8e561e9c145e73318a4d7c7eeb100613 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,70 @@ +related risk at its facilities and employing carbon-reduction +techniques for building renovations. +Additional Information +For additional information on Citi’s environmental and social +policies and priorities, click on “Our Impact” on Citi’s website +at www.citigroup.com. For information on Citi’s ESG and +Sustainability (including climate change) governance, see +Citi’s 2024 Annual Meeting Proxy Statement to be filed with +the SEC in March 2024. +Citi’s climate reporting and any other ESG-related reports +and information included elsewhere on Citi’s website are not +incorporated by reference into, and do not form any part of, +this 2023 Annual Report on Form 10-K. + +HUMAN CAPITAL RESOURCES AND +MANAGEMENT +Citi strives to deliver to its full potential by focusing on its +strategic priority of attracting and retaining highly qualified +and motivated colleagues. Citi seeks to enhance the +competitive strength of its workforce through the following +efforts: +• Continuously innovating its efforts to recruit, train, +develop, compensate, promote and engage colleagues +• Actively seeking and listening to diverse perspectives at +all levels of the organization +• Optimizing transparency concerning workforce goals to +promote accountability, credibility and effectiveness in +achieving those goals +• Providing compensation programs that are competitive in +the market and aligned to strategic objectives +In 2023, Citi undertook significant changes to simplify the +Company and accelerate the progress it is making in executing +its strategy. As previously disclosed, Citi aligned its +organizational structure to its business strategy—making the +Company more client centric and agile, speeding up decision- +making, improving productivity to deliver efficiency and +driving increased accountability across the organization. Citi is +aligned around five businesses—Services, Markets, Banking, +USPB and Wealth—focusing on a streamlined client +organization to strengthen how Citi delivers for clients across +the Company and around the globe. +Workforce Size and Distribution +As of December 31, 2023, Citi employed approximately +239,000 colleagues in over 90 countries. The Company’s +workforce is constantly evolving and developing, benefiting +from a strong mix of internal and external hiring into new and +existing positions. In 2023, Citi welcomed over 38,000 new +colleagues in addition to 44,600 roles filled by colleagues +through internal mobility and promotions. Citi also sustains +connections with former colleagues through its Alumni +Network, and in 2023 hired more than 3,000 “returnees” back +to Citi. +The following table presents the geographic distribution of Citi’s colleagues by segment or component and gender: +Segment or component(1) (in thousands) +North +America International (2) Total(3) Women (4) Men(4) Unspecified(4) +Services 4 20 24 52.4 % 47.6 % — % +Markets 3 7 10 38.9 61.1 — +Banking 3 6 9 43.2 56.8 0.01 +USPB 21 — 21 65.3 34.7 — +Wealth 6 8 14 49.9 50.1 — +All Other, including Legacy Franchises, +Operations and Technology, and Global Staff +Functions 54 107 161 47.8 52.2 — +Total 91 148 239 49.4 % 50.6 % 0.01 % +(1) Colleague distribution is based on assigned region, which may not reflect where the colleague physically resides. +(2) Mexico is included in International. +(3) Part-time colleagues represented less than 0.9% of Citi’s global workforce. +(4) Information regarding gender is self-identified by colleagues. +63 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_71.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a9cff1241fff88bccf6a4d37fefbac596d26c3d --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,117 @@ +Driving a Culture of Excellence and Accountability +Citi continues to embark on a talent and culture transformation +to drive a culture of excellence and accountability that is +supported by strong risk and controls management. +Citi’s Leadership Principles of “taking ownership, +delivering with pride and succeeding together” have been +reinforced through a behavioral science-led campaign, referred +to as Citi’s New Way, that reinforces the key working habits +that support Citi’s leadership culture. +Citi’s performance management approach also +emphasizes the Leadership Principles through a four-pillar +system, evaluating colleagues against financial performance, +risk and controls, and client and franchise goals as well as how +colleagues deliver from a leadership perspective. The +performance management and incentive compensation +processes and associated policies and frameworks have +enhanced accountability through increased rigor and +consistency, in particular for risk and controls. +The culture shift is supported by changes in the way Citi +identifies, assesses, develops and promotes talent, particularly +at senior levels of the Company. Citi promotes a new class of +managing directors each year. This is a testament to these +individuals’ performance and commitment to living the +Leadership Principles and instilling them throughout their +teams and the entire company. Further, all potential successors +to Executive Management Team roles are evaluated by the +Board and are now subject to a risk and controls assessment. +Diversity, Equity and Inclusion +Citigroup’s Board is committed to ensuring that the Board and +Citi’s Executive Management Team are composed of +individuals whose backgrounds reflect the diversity of Citi’s +employees, customers and other stakeholders. In addition, Citi +has continued its efforts to support its globally diverse +workforce, including, among other things, taking actions with +respect to pay equity, setting aspirational representation goals +and the use of diverse slates and hiring panels in recruiting. +Citi’s commitment to diversity, equity and inclusion +continues to reflect a workforce that represents the clients it +serves globally from all walks of life, backgrounds and +origins. Understanding that diversity fuels the Company’s +culture and business success, Citi’s 2025 aspirational +representation goals are embedded in its business strategy. +Having aspirational goals across all levels—from early career +through senior leadership roles—will help ensure Citi not only +has diverse talent in leadership roles but will also help build a +diverse talent pipeline for the future. +The Company constantly strives to ensure Citi remains a +great place to work, where people can thrive professionally +and personally. In 2023, Citi increased its unique Inclusion +Network membership by 23.8% and added 15 new global +Inclusion Network chapters. The Company launched the +Allyship 365 initiative, focused on cultivating allyship year +round and educating colleagues on its diversity, equity and +inclusion efforts. +Citi values pay transparency and has taken significant +action to provide both managers and colleagues with greater +clarity around Citi’s compensation philosophy. Citi has +introduced market-based salary structures and bonus +opportunity guidelines in various countries worldwide, and +posts salary ranges on all external U.S. job postings, which +aligns with strategic objectives of pay equity and transparency. +Citi also raised its U.S. minimum wage in 2022, the second +broad-based increase in less than two years. +In addition, Citi has focused on measuring and addressing +pay equity within the organization: +• In 2018, Citi was the first major U.S. financial institution +to publicly release the results of a pay equity review +comparing its compensation of women to that of men, as +well as U.S. minorities to U.S. non-minorities. Since +2018, Citi has continued to be transparent about pay +equity, including disclosing its unadjusted or “raw” pay +gap for both women and U.S. minorities. The raw gap +measures the difference in median compensation. The +existence of Citi’s raw pay gap reflects a need to increase +representation of women and U.S. minorities in senior and +higher-paying roles. +• In 2023, due to its organizational and management +simplification initiatives, Citi paused its annual pay equity +analysis, as the Company continues the process of +aligning roles to its new organizational structure. Citi +looks forward to resuming routine pay equity reviews +once that work is complete. +• For historical context, Citi’s 2022 pay equity review +determined that on an adjusted basis, women globally are +paid on average more than 99% of what men are paid at +Citi, and that there was not a statistically significant +difference in adjusted compensation for U.S. minorities +and non-minorities. +• Citi’s 2022 raw pay gap analysis showed that the median +pay for women globally was 78% of the median for men, +up from 74% in 2021 and 2020. The median pay for U.S. +minorities was more than 97% of the median for non- +minorities, which was up from just above 96% in 2021 +and 94% in 2020. +Workforce Development +Citi’s numerous programmatic offerings aim to reinforce its +culture and values, foster understanding of compliance +requirements and develop competencies required to deliver +excellence to its clients. Citi encourages career growth and +development by offering broad and diverse opportunities to +colleagues, including the following: +• Citi provides a range of internal development and +rotational programs to colleagues at all levels, including +an extensive leadership curriculum, allowing the +opportunity to build the skills needed to transition to +supervisory and managerial roles. Citi’s tuition assistance +program further enables colleagues in North America to +pursue their educational goals. +• Citi continues to focus on internal talent development and +aims to provide colleagues with career growth +opportunities. Of the 44,600 mobility opportunities filled +in 2023, 14% were open roles applied for and filled by +internal candidates, and 38% were filled by colleagues +who applied for, and were promoted into, new +opportunities. These opportunities are particularly +important as Citi focuses on providing career paths for its +64 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_72.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..8839734be50f997767939ceb04adfa1da7494655 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,49 @@ +internal talent base as part of its efforts to increase organic +growth within the organization. +• Citi enabled Development Plans for colleagues of all +levels. Last year, more than 100,000 employees +completed a plan, setting a roadmap for how they can +achieve their career aspirations. +Well-being and Benefits +Citi is proud to provide a wide range of benefits that support +its colleagues’ mental, emotional, physical and financial well- +being through various life stages and events. Citi is focused on +providing equitable benefits that are designed to attract, +engage and retain colleagues. +Citi has significantly enhanced mental well-being +programs by offering free, accessible counseling sessions for +colleagues and their family members, as well as offering an +online tool so that all colleagues around the globe can easily +find their local Employee Assistance Programs and resources. +Citi offers instructor-led mental health training for people +managers to equip them in supporting their team members. +Citi also continues to value the importance of physical +well-being—providing employees in several office locations +and countries access to onsite medical care clinics, fitness +centers, subsidized gym memberships and virtual fitness +programs. Citi continues to make modern telemedicine +programs increasingly available to colleagues and their family +members through programs like Sword Health’s digital +physical therapy, which rolled out in the U.S. in 2022. +In 2023, one year after the Company became the first +major U.S. bank to publicly embrace a flexible, hybrid work +model, Citi fully implemented it across the organization. Most +of Citi’s colleagues now work in hybrid roles, working +remotely up to two days a week. How We Work provides the +majority of colleagues with the ability to balance the demands +of their home lives with the work commitments that are +necessary for success. The program includes three role +designations for colleagues globally: Resident, Hybrid or +Remote. The implementation and continuation of this program +differentiates Citi from other financial organizations with +respect to flexible working arrangements. By embracing a +flexible model of work, Citi has focused on keeping its +approach consistent and aligned with its values and priorities. +For additional information about Citi’s human capital +management initiatives and goals, see Citi’s 2022 ESG Report +available at www.citigroup.com. The 2022 ESG Report and +other information included elsewhere on Citi’s Investor +Relations website are not incorporated by reference into, and +do not form any part of, this 2023 Annual Report on Form 10- +K. +65 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_73.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..d73ed27bbcfdf18e676d1e93e26db97e7e78bc6f --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,2 @@ +This page intentionally left blank. +66 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_74.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a78c1abcf202e82222cc29df37509748617b555 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,51 @@ +Managing Global Risk Table of Contents +MANAGING GLOBAL RISK 68 +Overview 68 +CREDIT RISK(1) 72 +Overview 72 +Loans 72 +Corporate Credit 73 +Consumer Credit 79 +Additional Consumer and Corporate Credit Details 86 +Loans Outstanding 86 +Details of Credit Loss Experience 87 +Allowance for Credit Losses on Loans (ACLL) 89 +Non-Accrual Loans and Assets 91 +LIQUIDITY RISK 94 +Overview 94 +Liquidity Monitoring and Measurement 94 +High-Quality Liquid Assets (HQLA) 95 +Deposits 96 +Long-Term Debt 97 +Secured Funding Transactions and Short-Term Borrowings 100 +Credit Ratings 101 +MARKET RISK(1) 103 +Overview 103 +Market Risk of Non-Trading Portfolios 103 +Banking Book Interest Rate Risk 103 +Interest Rate Risk of Investment Portfolios—Impact on AOCI 104 +Changes in Foreign Exchange Rates—Impacts on AOCI and Capital 106 +Interest Income/Expense and Net Interest Margin (NIM) 107 +Additional Interest Rate Details 110 +Market Risk of Trading Portfolios 114 +Factor Sensitivities 115 +Value at Risk (VAR) 115 +Stress Testing 118 +OPERATIONAL RISK 118 +Overview 118 +Cybersecurity Risk 118 +COMPLIANCE RISK 121 +REPUTATION RISK 122 +STRATEGIC RISK 122 +Climate Risk 122 +OTHER RISKS 123 +LIBOR Transition Risk 123 +Country Risk 124 +Top 25 Country Exposures 124 +Russia 125 +Ukraine 127 +Argentina 127 +FFIEC—Cross-Border Claims on Third Parties and Local Country Assets 128 +(1) For additional information regarding certain credit risk, market risk and other quantitative and qualitative information, refer to Citi’s Pillar 3 Basel III Advanced +Approaches Disclosures, as required by the rules of the Federal Reserve Board, on Citi’s Investor Relations website. +67 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_75.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..34853ae6682461f1833f2818959a2620bb8844d8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,117 @@ +MANAGING GLOBAL RISK +Overview +For Citi, effective risk management is of primary importance +to its overall operations. Accordingly, Citi has established an +Enterprise Risk Management (ERM) Framework to ensure +that all of Citi’s risks are managed appropriately and +consistently across the Company and at an aggregate, +enterprise-wide level. Citi’s culture drives a strong risk and +control environment, and is at the heart of the ERM +Framework, underpinning the way Citi conducts business. The +activities that Citi engages in, and the risks those activities +generate, must be consistent with Citi’s Mission and Value +Proposition (see below) and the key Leadership Principles that +support it, as well as Citi’s risk appetite. As discussed above, +Citi also continues its efforts to comply with the FRB and +OCC consent orders, relating principally to various aspects of +risk management, compliance, data quality management and +governance, and internal controls (see “Citi’s Consent Order +Compliance” and “Risk Factors—Compliance Risks” above). +Under Citi’s Mission and Value Proposition, which was +developed by its senior leadership and distributed throughout +the Company, Citi strives to serve its clients as a trusted +partner by responsibly providing financial services that enable +growth and economic progress while earning and maintaining +the public’s trust by constantly adhering to the highest ethical +standards. As such, Citi asks all colleagues to ensure that their +decisions pass three tests: they are in Citi’s clients’ best +interests, create economic value and are always systemically +responsible. +As discussed in “Human Capital Resources and +Management” above, Citi has designed Leadership Principles +that represent the qualities, behaviors and expectations all +employees must exhibit to deliver on Citi’s mission of +enabling growth and economic progress. The Leadership +Principles inform Citi’s ERM Framework and contribute to +creating a culture that drives client, control and operational +excellence. Citi colleagues share a common responsibility to +uphold these Leadership Principles and hold themselves to the +highest standards of ethics and professional behavior in +dealing with Citi’s clients, business colleagues, shareholders, +communities and each other. +Citi’s ERM Framework details the principles used to +support effective enterprise-wide risk management across the +end-to-end risk management lifecycle. The ERM Framework +covers the risk management roles and responsibilities of the +Citigroup Board of Directors (the Board), Citi’s Executive +Management Team (see “Risk Governance—Executive +Management Team” below) and employees across the lines of +defense. The underlying pillars of the framework encompass: +• Culture —the core principles and behaviors that underpin +a strong culture of risk awareness, in line with Citi’s +Mission and Value Proposition, and Leadership +Principles; +• Governance—the committee structure and reporting +arrangements that support the appropriate oversight of +risk management activities at the Board and Executive +Management Team levels and establishes Citi’s Lines of +Defense model; +• Risk Management—the end-to-end risk management +cycle including the identification, measurement, +monitoring, controlling and reporting of all risks +including top, material, growing, idiosyncratic and +emerging risks, and aggregated to an enterprise-wide +level; and +• Enterprise Programs—the key risk management +programs performed across the risk management lifecycle +for all risk categories. +Each of these pillars is underpinned by supporting +capabilities covering people, infrastructure and tools that are +in place to enable the execution of the ERM Framework. +Citi’s approach to risk management requires that its risk- +taking be consistent with its risk appetite. Risk appetite is the +aggregate level of risk that Citi is willing to tolerate in order to +achieve its strategic objectives and business plan. Risk limits +and thresholds represent allocations of Citi’s risk appetite to +businesses and risk categories. Concentration risks are +controlled through a subset of these limits and thresholds. +Citi’s risks are generally categorized and summarized as +follows: +• Credit risk is the risk of loss resulting from the decline in +credit quality (or downgrade risk) or failure of a borrower, +counterparty, third party or issuer to honor its financial or +contractual obligations. +• Liquidity risk is the risk that Citi will not be able to +efficiently meet both expected and unexpected current and +future cash flow and collateral needs without adversely +affecting either daily operations or financial conditions of +Citi. Risk may be exacerbated by the inability of the +Company to access funding sources or monetize assets +and the composition of liability funding and liquid assets. +• Market risk (Trading and Non-Trading): Market risk of +trading portfolios is the risk of loss arising from changes +in the value of Citi’s assets and liabilities resulting from +changes in market variables, such as interest rates, equity +and commodity prices, foreign exchange rates or credit +spreads. Market risk of non-trading portfolios is the +impact of adverse changes in market variables such as +interest rates, foreign exchange rates, credit spreads and +equity prices on Citi’s net interest income, economic +value of equity, or AOCI. +• Operational risk is the risk of loss resulting from +inadequate or failed internal processes, people and +systems, or from external events. It includes legal risk, +which is the risk of loss (including litigation costs, +settlements and regulatory fines) resulting from Citi’s +failure to comply with laws, regulations, prudent ethical +standards or contractual obligations in any aspect of Citi’s +business, but excludes strategic and reputation risks (see +below). +• Compliance risk is the risk to current or projected +financial condition and resilience arising from violations +of laws, rules or regulations, or from non-conformance +with prescribed practices, internal policies and procedures +or ethical standards. +• Reputation risk is the risk to current or projected financial +conditions and resilience from negative opinion held by +68 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_76.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..90a8047e31fd27afddb6620cf7d7959cde14eb89 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,115 @@ +stakeholders. This risk may impair Citi’s competitiveness +by affecting its ability to establish new relationships or +services or continue servicing existing relationships. +• Strategic risk is the risk of a sustained impact (not +episodic impact) to Citi’s core strategic objectives as +measured by impacts on anticipated earnings, market +capitalization or capital, arising from the external factors +affecting the Company’s operating environment; as well +as the risks associated with defining the strategy and +executing the strategy, which are identified, measured and +managed as part of the Strategic Risk Framework at the +Enterprise Level. +Citi uses a lines of defense model as a key component of +its ERM Framework to manage its risks. As discussed below, +the lines of defense model brings together risk-taking, risk +oversight and risk assurance under one umbrella and provides +an avenue for risk accountability of the first line of defense, a +construct for effective challenge by the second line of defense +(Independent Risk Management and Independent Compliance +Risk Management), and empowers independent risk assurance +by the third line of defense (Internal Audit). In addition, the +lines of defense model includes organizational units tasked +with supporting a strong control environment (“enterprise +support functions”). The first, second and third lines of +defense, along with enterprise support functions, have distinct +roles and responsibilities and are empowered to perform +relevant risk management processes and responsibilities in +order to manage Citi’s risks in a consistent and effective +manner. +First Line of Defense: Front Line Units and Front Line +Unit Activities +Citi’s first line of defense owns the risks and associated +controls inherent in, or arising from, the execution of its +business activities and is responsible for identifying, +measuring, monitoring, controlling and reporting those risks +consistent with Citi’s strategy, Mission and Value Proposition, +Leadership Principles and risk appetite. +Front line units are responsible and held accountable for +managing the risks associated with their activities within the +boundaries set by independent risk management. They are also +responsible for designing and implementing effective internal +controls and maintaining processes for managing their risk +profile, including through risk mitigation, so that it remains +consistent with Citi’s established risk appetite. +Front line unit activities are considered part of the first +line of defense and are subject to the oversight and challenge +of independent risk management. +The first line of defense is composed of Citi’s operating +segments (i.e., Services, Markets, Banking, U.S. Personal +Banking, Wealth), as well as Client, Legacy Franchises and +certain corporate functions (i.e., Chief Operating Office, +Enterprise Services and Public Affairs, Finance, Operations +and Technology). In addition, the first line of defense includes +the front line unit activities of other organizational units. Front +line units may also include enterprise support units and/or +conduct enterprise support activities—see “Enterprise Support +Functions” below. +Second Line of Defense: Independent Risk Management +Independent risk management units are independent of the +first line of defense. They are responsible for overseeing the +risk-taking activities of the first line of defense and +challenging the first line of defense in the execution of its risk +management responsibilities. They are also responsible for +independently identifying, measuring, monitoring, controlling +and reporting aggregate risks and for setting standards for the +management and oversight of risk. Independent risk +management is composed of Independent Risk Management +(IRM) and Independent Compliance Risk Management +(ICRM), which are led by the Group Chief Risk Officer +(CRO) and Group Chief Compliance Officer (CCO) who have +unrestricted access to the Board and its Risk Management +Committee to facilitate the ability to execute their specific +responsibilities pertaining to escalation to the Board. +Independent Risk Management +The IRM organization sets risk and control standards for the +first line of defense and actively manages and oversees +aggregate credit, market (trading and non-trading), liquidity, +strategic, operational and reputation risks across Citi, +including risks that span categories, such as concentration risk, +country risk and climate risk. +IRM is organized to align to risk categories, legal entities/ +regions and Company-wide, cross-risk functions or processes. +Each of these units reports to a member of the Risk +Management Executive Council, who are all direct reports to +the Citigroup CRO. +Independent Compliance Risk Management +The ICRM organization actively oversees compliance risk +across Citi, sets compliance standards for the first line of +defense to manage compliance risk and promotes business +conduct and activity that is consistent with Citi’s Mission and +Value Proposition and the compliance risk appetite. Citi’s +objective is to embed an enterprise-wide compliance risk +management framework and culture that identifies, measures, +monitors, controls and escalates compliance risk across Citi. +ICRM is aligned by product line, function and geography +to provide compliance risk management advice and credible +challenge on day-to-day matters and strategic decision-making +for key initiatives. ICRM also has program-level Enterprise +Compliance units responsible for setting standards and +establishing priorities for program-related compliance efforts. +The CCO reports to Citi’s General Counsel and ICRM is +organizationally part of the Global Legal Affairs & +Compliance group. In addition, the CCO has matrix reporting +into the CRO and is part of the Risk Management Executive +Council. +Third Line of Defense: Internal Audit +Internal Audit is independent of the first line, second line and +enterprise support functions. The role of Internal Audit is to +provide independent, objective, reliable, valued and timely +assurance to the Board, its Audit Committee, Citi senior +management and regulators over the effectiveness of +governance, risk management and controls that mitigate +current and evolving risks and enhance the control culture +within Citi. The Citi Chief Auditor manages Internal Audit +69 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_77.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f100d29b689c0eacc95069e43579357acf80db0 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,113 @@ +and reports functionally to the Chair of the Citi Audit +Committee and administratively to the Citi Chief Executive +Officer. The Citi Chief Auditor has unrestricted access to the +Board and the Board Audit Committee to address risks and +issues identified through Internal Audit’s activities. +Enterprise Support Functions +Enterprise support functions engage in activities that support +safety and soundness across Citi. These functions provide +advisory services and/or design, implement, maintain and +oversee Company-wide programs that support Citi in +maintaining an effective control environment. +Enterprise support functions are composed of Human +Resources and Global Legal Affairs and Compliance +(exclusive of ICRM, which is part of the second line of +defense). Front line units may also include enterprise support +units and/or conduct enterprise support activities (e.g., the +Controllers Group within Finance). +Enterprise support functions, units and activities are +subject to the relevant Company-wide independent oversight +processes specific to the risks for which they are accountable +(e.g., operational risk, compliance risk, reputation risk). +Risk Governance +Citi’s ERM Framework encompasses risk management +processes to address risks undertaken by Citi through +identification, measurement, monitoring, controlling and +reporting of all risks. The ERM Framework integrates these +processes with appropriate governance to complement Citi’s +commitment to maintaining strong and consistent risk +management practices. +Board Oversight +The Board is responsible for oversight of Citi and holds the +Executive Management Team accountable for implementing +the ERM Framework and meeting strategic objectives within +Citi’s risk appetite. +Executive Management Team +The Citigroup CEO directs and oversees the day-to-day +management of Citi as delegated by the Board of Directors. +The CEO leads the Company through the Executive +Management Team and provides oversight of group activities, +both directly and through authority delegated to committees +established to oversee the management of risk, to ensure +continued alignment with Citi’s risk strategy. +Board and Executive Management Committees +The Board executes its responsibilities either directly or +through its committees. The Board has delegated authority to +the following Board standing committees to help fulfill its +oversight and risk management responsibilities: + +• Risk Management Committee (RMC): assists the Board in +fulfilling its responsibility with respect to (i) oversight of +Citi’s risk management framework and risk culture, +including the significant policies and practices used in +managing credit, market (trading and non-trading), +liquidity, strategic, operational, compliance, reputation +and certain other risks, including those pertaining to +capital management, and (ii) oversight of the Global Risk +Review—credit, capital and collateral review functions. +• Audit Committee: provides oversight of Citi’s financial +and regulatory reporting and internal control risk, as well +as Internal Audit and Citi’s external independent +accountants. +• Compensation, Performance Management and Culture +Committee: provides oversight of compensation of Citi’s +employees and Citi management’s sustained focus on +fostering a principled culture of sound ethics, responsible +conduct and accountability within the organization. +• Nomination, Governance and Public Affairs Committee: +responsible for (i) identifying individuals qualified to +become Board members and recommending to the Board +the director nominees for the next annual meeting of +stockholders, (ii) leading the Board in its annual review of +the Board’s performance, (iii) recommending to the Board +directors for each committee for appointment by the +Board, (iv) reviewing the Company’s policies and +programs that relate to public issues of significance to the +Company and the public at large, including but not +limited to Environmental, Social and Corporate +Governance (ESG) matters and (v) reviewing the +Company’s relationships with external constituencies and +issues that impact the Company’s reputation, and advising +management as to its approach to each. +• Technology Committee: assists the Board in fulfilling its +responsibility with respect to oversight of (i) the planning +and execution of Citigroup’s technology, strategy and +operating plan, (ii) the development of Citi’s target state +operating model and architecture, including the +incorporation of Global Business Services, (iii) +technology-based risk management, including risk +management framework, risk appetite and risk exposures +of the Company, (iv) resource and talent planning of the +Technology function and (v) the Company’s third-party +management policies, practices and standards that relate +to Technology. +In addition to the above, the Board has established the +following ad hoc committee: +• Transformation Oversight Committee: provides oversight +of the actions of Citi’s management to develop and +execute a transformation of Citi’s risk and control +environment pursuant to the FRB and OCC consent +orders (see “Citi’s Consent Order Compliance” above). +The Citigroup CEO has established four standing +committees that cover the primary risks to which Citi (i.e., +Group) is exposed. These consist of: +• Group Risk Management Committee (GRMC): the +primary senior executive level committee responsible for +(i) overseeing the execution of Citigroup’s ERM +Framework, (ii) monitoring Citi’s risk profile at an +aggregate level inclusive of individual risk categories, (iii) +ensuring that Citi’s risk profile remains consistent with its +approved risk appetite and (iv) discussing material and +emerging risk issues facing the Company. The Committee +also provides comprehensive Group-wide coverage of all +70 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_78.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c4b4a5f0c7adbe3314b4efb9e25fde5a0f636f0 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,21 @@ +risk categories, including Credit Risk, Market Risk +(trading) and Strategic Risk. +• Citigroup Asset and Liability Committee (ALCO): +responsible for governance over management’s Liquidity +Risk and Market Risk (non-trading) management and for +monitoring and influencing the balance sheet, investment +securities and capital management activities of Citigroup. +• Group Business Risk and Control Committee (GBRCC): +provides governance oversight of Citi’s Compliance and +Operational Risks. +• Group Reputation Risk Committee (GRRC): provides +governance oversight for Reputation Risk management +across Citi. +In addition to the Executive Management committees +listed above, management may establish ad-hoc committees in +response to regulatory feedback or to manage additional +activities when deemed necessary. +The figure below illustrates the reporting lines between the Board and Executive Management committees: + +71 +The secret object #3 is a "plate". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_79.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..1954ecfeb3ff6184e6e887601e4521d0a66fcaa6 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,90 @@ +CREDIT RISK +Overview +Credit risk is the risk of loss resulting from the decline in +credit quality of a client, customer or counterparty (or +downgrade risk) or the failure of a borrower, counterparty, +third party or issuer to honor its financial or contractual +obligations. Credit risk is one of the most significant risks Citi +faces as an institution (see “Risk Factors—Credit Risks” +above). Credit risk arises in many of Citigroup’s business +activities, including: +• consumer, commercial and corporate lending; +• capital markets derivative transactions; +• structured finance; and +• securities financing transactions (repurchase and reverse +repurchase agreements, and securities loaned and +borrowed). +Credit risk also arises from clearing and settlement +activities, when Citi transfers an asset in advance of receiving +its counter-value or advances funds to settle a transaction on +behalf of a client. Concentration risk, within credit risk, is the +risk associated with having credit exposure concentrated +within a specific client, industry, region or other category. +Citi has an established framework in place for managing +credit risk across all businesses that includes a defined risk +appetite, credit limits and credit policies. Citi’s credit risk +management framework also includes policies and procedures +to manage problem exposures. +To manage concentration risk, Citi has in place a +framework consisting of industry limits, single-name +concentrations for each business and across Citigroup and a +specialized product limit framework. +Credit exposures are generally reported in notional terms +for accrual loans, reflecting the value at which the loans as +well as other off-balance sheet commitments are carried on the +Consolidated Balance Sheet. Credit exposure arising from +capital markets activities is generally expressed as the current +mark-to-market, net of margin, reflecting the net value owed +to Citi by a given counterparty. +The credit risk associated with Citi’s credit exposures is a +function of the idiosyncratic creditworthiness of the obligor, as +well as the terms and conditions of the specific obligation. Citi +assesses the credit risk associated with its credit exposures on +a regular basis through its allowance for credit losses (ACL) +process (see “Significant Accounting Policies and Significant +Estimates—Allowance for Credit Losses” below and Notes 1 +and 16), as well as through regular stress testing at the +company, business, geography and product levels. These +stress-testing processes typically estimate potential +incremental credit costs that would occur as a result of either +downgrades in the credit quality or defaults of the obligors or +counterparties. See Note 15 for additional information on +Citi’s credit risk management. +Loans +The table below details the average loans, by business and/or +segment, and the total Citigroup end-of-period loans for each +of the periods indicated: +In billions of dollars 4Q23 3Q23 4Q22 +Services $ 83 $ 83 $ 78 +Markets 115 108 111 +Banking 87 87 96 +USPB +Branded Cards $ 107 $ 103 $ 95 +Retail Services 52 50 48 +Retail Banking 43 43 37 +Total USPB $ 202 $ 196 $ 180 +Wealth $ 150 $ 151 $ 150 +All Other(1) $ 38 $ 37 $ 38 +Total Citigroup loans (AVG) $ 675 $ 662 $ 653 +Total Citigroup loans (EOP) $ 689 $ 666 $ 657 +(1) See footnote 2 to the table in “Credit Risk—Consumer Credit— +Consumer Credit Portfolio” below. +End-of-period loans increased 5% year-over-year, largely +reflecting growth in cards in USPB. End-of-period loans +increased 3% sequentially. +On an average basis, loans increased 3% year-over-year +and 2% sequentially. The year-over-year increase was largely +due to growth in USPB, Services and Markets, partially offset +by a decline in Banking. +As of the fourth quarter of 2023, average loans for: +• USPB increased 12% year-over-year, driven by growth in +Branded Cards, Retail Banking and Retail Services. +• Wealth were largely unchanged. +• Services increased 6% year-over-year, primarily driven by +strong demand for working capital loans in TTS in North +America and internationally. +• Markets increased 4% year-over-year, reflecting increased +client demand in warehouse lending. +• Banking decreased 9% year-over-year, primarily driven +by capital optimization efforts. +72 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_8.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dac8a2ed47304f5feef0644215411c0afe993811 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_8.txt @@ -0,0 +1,56 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +WASHINGTON, D.C. 20549 +FORM 10-K +(Mark One) +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the fiscal year ended December 31, 2023 + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the transition period from to +Commission file number 1-9924 + Citigroup Inc. +(Exact name of registrant as specified in its charter) +Delaware 52-1568099 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +388 Greenwich Street, New York NY 10013 +(Address of principal executive offices) (Zip code) +(212) 559-1000 +(Registrant’s telephone number, including area code) + +Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 formatted in Inline XBRL: See Exhibit 99.01 + +Securities registered pursuant to Section 12(g) of the Act: none + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during +the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements +for the past 90 days. Yes x No o +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of +Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes x No o +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an +emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” +in Rule 12b-2 of the Exchange Act. +Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ +Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or +revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o +Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control +over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued +its audit report. ☒ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing +reflect the correction of an error to previously issued financial statements. o +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received +by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x +The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2023 was approximately $88.4 billion. +Number of shares of Citigroup Inc. common stock outstanding on January 31, 2024: 1,911,366,783 +Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 30, +2024 are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. +Available on the web at www.citigroup.com \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_80.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbc5d0c7c15676ad7a5fd30941387d20c9c7091e --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,124 @@ +CORPORATE CREDIT +Consistent with its overall strategy, Citi’s corporate clients are +typically corporations that value the depth and breadth of +Citi’s global network. Citi aims to establish relationships with +these clients whose needs encompass multiple products, +including cash management and trade services, foreign +exchange, lending, capital markets and M&A advisory. +Corporate Credit Portfolio +The following table details Citi’s corporate credit portfolio within Services, Markets, Banking and the Mexico SBMM component of +All Other—Legacy Franchises (excluding loans carried at fair value and loans held-for-sale), and before consideration of collateral or +hedges, by remaining tenor for the periods indicated: + December 31, 2023 September 30, 2023 December 31, 2022 +In billions of dollars +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Due +within +1 year +Greater +than +1 year +but +within +5 years +Greater +than +5 years +Total +exposure +Direct outstandings +(on-balance sheet)(1) $ 132 $ 122 $ 39 $ 293 $ 125 $ 118 $ 38 $ 281 $ 135 $ 122 $ 27 $ 284 +Unfunded lending +commitments +(off-balance sheet)(2) 134 268 18 420 144 259 19 422 140 256 10 406 +Total exposure $ 266 $ 390 $ 57 $ 713 $ 269 $ 377 $ 57 $ 703 $ 275 $ 378 $ 37 $ 690 +(1) Includes drawn loans, overdrafts, bankers’ acceptances and leases. +(2) Includes unused commitments to lend, letters of credit and financial guarantees. +Portfolio Mix—Geography and Counterparty +Citi’s corporate credit portfolio is diverse across geography +and counterparty. The following table presents the percentage +of this portfolio by region based on Citi’s internal +management geography: +December 31, +2023 +September 30, +2023 +December 31, +2022 +North America 56 % 56 % 56 % +International 44 44 44 +Total 100 % 100 % 100 % +The maintenance of accurate and consistent risk ratings +across the corporate credit portfolio facilitates the comparison +of credit exposure across all lines of business, geographic +regions and products. Counterparty risk ratings reflect an +estimated probability of default for a counterparty, and +internal risk ratings are derived by leveraging validated +statistical models and scorecards in combination with +consideration of factors specific to the obligor or market, such +as management experience, competitive position, regulatory +environment and commodity prices. Facility risk ratings are +assigned that reflect the probability of default of the obligor +and factors that affect the loss given default of the facility, +such as support or collateral. Internal obligor ratings that +generally correspond to BBB and above are considered +investment grade, while those below are considered non- +investment grade. +The following table presents the corporate credit portfolio +by facility risk rating as a percentage of the total corporate +credit portfolio: + Total exposure + +December 31, +2023 +September 30, +2023 +December 31, +2022 +AAA/AA/A 50 % 49 % 50 % +BBB 33 34 34 +BB/B 16 15 14 +CCC or below 1 2 2 +Total 100 % 100 % 100 % +Note: Total exposure includes direct outstandings and unfunded lending +commitments. +In addition to the obligor and facility risk ratings assigned +to all exposures, Citi may classify exposures in the corporate +credit portfolio. These classifications are consistent with Citi’s +interpretation of the U.S. banking regulators’ definition of +criticized exposures, which may categorize exposures as +special mention, substandard, doubtful or loss. +Risk ratings and classifications are reviewed regularly and +adjusted as appropriate. The credit review process incorporates +quantitative and qualitative factors, including financial and +non-financial disclosures or metrics, idiosyncratic events or +changes to the competitive, regulatory or macroeconomic +environment. +73 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_81.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c4bfd99ce7ddf799ab6445e7cd82e9a190a10df --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,57 @@ +Citi believes the corporate credit portfolio to be +appropriately rated and classified as of December 31, 2023. +Citi has taken action to adjust internal ratings and +classifications of exposures as both the macroeconomic +environment and obligor-specific factors have changed, +particularly where additional stress has been seen. +As obligor risk ratings are downgraded, the probability of +default increases. Downgrades of obligor risk ratings tend to +result in a higher provision for credit losses. In addition, +appetite per obligor is reduced consistent with the ratings, and +downgrades may result in the purchase of additional credit +derivatives or other risk/structural mitigants to hedge the +incremental credit risk, or may result in Citi’s seeking to +reduce exposure to an obligor or an industry sector. Citi will +continue to review exposures to ensure that the appropriate +probability of default is incorporated into all risk assessments. +See Note 15 for additional information on Citi’s corporate +credit portfolio. +Portfolio Mix—Industry +Citi’s corporate credit portfolio is diversified by industry. The +following table details the allocation of Citi’s total corporate +credit portfolio by industry: + Total exposure + +December 31, +2023 +September 30, +2023 +December 31, +2022 +Transportation and +industrials 21 % 21 % 20 % +Technology, media +and telecom 12 12 12 +Banks and finance +companies(1) 12 10 10 +Consumer retail 11 12 11 +Real estate 10 10 10 +Commercial 8 8 8 +Residential 2 2 2 +Power, chemicals, +metals and mining 8 9 9 +Energy and +commodities 7 7 7 +Health 5 5 6 +Insurance 4 4 4 +Public sector 3 3 3 +Asset managers +and funds 3 3 5 +Financial markets +infrastructure 3 3 2 +Other industries 1 1 1 +Total 100 % 100 % 100 % +(1) As of the periods in the table, Citi had less than 1% exposure to +securities firms. See corporate credit portfolio by industry, below. +74 +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_82.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..0096e48640fd29bcd039b545949e48e372a34658 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,84 @@ +The following table details Citi’s corporate credit portfolio by industry as of December 31, 2023: +In millions of dollars +Total +credit +exposure Funded (1) Unfunded +Investment +grade +Non- +criticized +Criticized +performing +Criticized +non- +performing(2) +30 days or +more past +due and +accruing +Net credit +losses +(recoveries) +Credit +derivative +hedges(3) +Transportation and +industrials $ 149,429 $ 59,917 $ 89,512 $ 118,380 $ 26,345 $ 4,469 $ 235 $ 125 $ 39 $ (7,060) +Autos(4) 49,443 22,843 26,600 43,008 5,376 999 60 7 19 (2,304) +Transportation 28,448 11,996 16,452 21,223 6,208 952 65 3 5 (1,185) +Industrials 71,538 25,078 46,460 54,149 14,761 2,518 110 115 15 (3,571) +Technology, media and +telecom 84,409 29,832 54,577 67,077 13,637 3,212 483 112 56 (5,546) +Banks and finance +companies 83,512 52,569 30,943 74,364 7,768 1,277 103 7 37 (638) +Consumer retail 81,799 33,548 48,251 63,017 15,259 3,342 181 130 57 (5,360) +Real estate 72,827 51,660 21,167 61,226 7,084 3,602 915 69 31 (608) +Commercial 54,843 35,058 19,785 43,340 7,042 3,602 859 69 31 (608) +Residential 17,984 16,602 1,382 17,886 42 — 56 — — — +Power, chemicals, metals +and mining 59,572 19,004 40,568 46,551 10,098 2,696 227 36 4 (4,884) +Power 24,535 5,220 19,315 20,967 3,200 209 159 1 4 (2,280) +Chemicals 21,963 8,287 13,676 16,418 3,888 1,613 44 34 1 (2,019) +Metals and mining 13,074 5,497 7,577 9,166 3,010 874 24 1 (1) (585) +Energy and commodities(5) 46,290 12,606 33,684 40,081 5,528 543 138 5 (15) (3,090) +Health 36,230 9,135 27,095 30,099 4,871 1,098 162 16 22 (3,023) +Insurance 27,216 2,390 24,826 25,580 1,607 29 — 7 — (4,516) +Public sector 24,736 12,621 12,115 21,845 2,399 479 13 36 15 (1,092) +Asset managers and funds 19,681 4,232 15,449 17,826 1,723 112 20 4 — (65) +Financial markets +infrastructure 18,705 156 18,549 18,705 — — — — — (7) +Securities firms 1,737 734 1,003 870 822 45 — 2 — (2) +Other industries(6) 6,992 4,480 2,512 5,079 1,629 257 27 45 4 (6) +Total $ 713,135 $ 292,884 $ 420,251 $ 590,700 $ 98,770 $ 21,161 $ 2,504 $ 594 $ 250 $ (35,897) +Non-investment grade Selected metrics +(1) Funded excludes loans carried at fair value of $7.3 billion at December 31, 2023. +(2) Includes non-accrual loan exposures and related criticized unfunded exposures. +(3) Represents the amount of purchased credit protection in the form of derivatives to economically hedge funded and unfunded exposures. Of the $35.9 billion of +purchased credit protection, $33.7 billion represents the total notional amount of purchased credit derivatives on individual reference entities. The remaining $2.2 +billion represents the first loss tranche of portfolios of purchased credit derivatives with a total notional of $16.7 billion, where the protection seller absorbs the +first loss on the referenced loan portfolios. +(4) Autos total credit exposure includes securitization financing facilities secured by auto loans and leases, extended mainly to the finance company subsidiaries of +global auto manufacturers, bank subsidiaries and independent auto finance companies, of approximately $16.9 billion ($10.6 billion in funded, with 100% rated +investment grade) as of December 31, 2023. +(5) In addition to this exposure, Citi has energy-related exposure within the public sector (e.g., energy-related state-owned entities) and the transportation and +industrials sector (e.g., off-shore drilling entities) included in the table above. As of December 31, 2023, Citi’s total exposure to these energy-related entities was +approximately $4.9 billion, of which approximately $2.5 billion consisted of direct outstanding funded loans. +(6) Includes $0.6 billion and $0.1 billion of funded and unfunded exposure at December 31, 2023, respectively, primarily related to commercial credit card +delinquency-managed loans. +Exposure to Commercial Real Estate +As of December 31, 2023, Citi’s total credit exposure to +commercial real estate (CRE) was $66 billion, including $8 +billion of exposure related to office buildings. This total CRE +exposure consisted of approximately $55 billion related to +corporate clients, included in the real estate category in the +table above, and approximately $11 billion related to Wealth +clients that is not in the table above as they are not considered +corporate exposures. +In addition, as of December 31, 2023, approximately 80% +of Citi’s total CRE exposure was rated investment grade and +more than 77% was to borrowers in the U.S. +As of December 31, 2023, the ACLL attributed to the +total funded CRE exposure (including the Private Bank) was +approximately 1.49%, and there were $759 million of non- +accrual CRE loans. +75 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_83.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..73f8218864d539e173c8414e6ca24dae52a66e75 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,69 @@ +The following table details Citi’s corporate credit portfolio by industry as of December 31, 2022: +In millions of dollars +Total credit +exposure Funded (1) Unfunded +Investment +grade +Non- +criticized +Criticized +performing +Criticized +non- +performing(2) +30 days or +more past +due and +accruing +Net credit +losses +(recoveries) +Credit +derivative +hedges(3) +Transportation and +industrials $ 139,225 $ 57,271 $ 81,954 $ 109,197 $ 19,697 $ 9,850 $ 481 $ 403 $ — $ (8,459) +Autos(4) 47,482 21,995 25,487 40,795 5,171 1,391 125 52 — (3,084) +Transportation 24,843 10,374 14,469 18,078 3,156 3,444 165 57 (30) (1,270) +Industrials 66,900 24,902 41,998 50,324 11,370 5,015 191 294 30 (4,105) +Technology, media +and telecom 81,211 28,931 52,280 65,386 12,308 3,308 209 169 11 (6,050) +Banks and finance +companies 65,623 42,276 23,347 57,368 5,718 2,387 150 266 65 (1,113) +Consumer retail 78,255 32,687 45,568 60,215 14,830 2,910 300 195 28 (5,395) +Real estate 70,676 48,539 22,137 63,023 4,722 2,881 50 138 2 (739) +Commercial 54,139 34,112 20,027 46,670 4,716 2,703 50 96 2 (739) +Residential 16,537 14,427 2,110 16,353 6 178 — 42 — — +Power, chemicals, +metals and mining 59,404 18,326 41,078 47,395 10,466 1,437 106 226 34 (5,063) +Power 22,718 4,827 17,891 18,822 3,325 512 59 129 (3) (2,306) +Chemicals 23,147 7,765 15,382 19,033 3,534 564 16 55 30 (2,098) +Metals and mining 13,539 5,734 7,805 9,540 3,607 361 31 42 7 (659) +Energy and +commodities(5) 46,309 13,069 33,240 38,918 6,076 1,200 115 180 11 (3,852) +Health 41,836 8,771 33,065 36,954 3,737 978 167 84 7 (2,855) +Insurance 29,932 4,417 25,515 29,090 801 41 — 44 — (3,884) +Public sector 23,705 11,736 11,969 20,663 2,084 956 2 77 4 (1,633) +Asset managers and +funds 35,983 13,162 22,821 34,431 1,492 60 — 95 — (759) +Financial markets +infrastructure 8,742 60 8,682 8,672 70 — — — — (18) +Securities firms 1,462 569 893 625 678 157 2 2 — (2) +Other industries(6) 7,374 4,217 3,157 4,842 2,245 238 49 19 16 (8) +Total $ 689,737 $ 284,031 $ 405,706 $ 576,779 $ 84,924 $ 26,403 $ 1,631 $ 1,898 $ 178 $ (39,830) +Non-investment grade Selected metrics +(1) Funded excludes loans carried at fair value of $5.1 billion at December 31, 2022. +(2) Includes non-accrual loan exposures and related criticized unfunded exposures. +(3) Represents the amount of purchased credit protection in the form of derivatives to economically hedge funded and unfunded exposures. Of the $39.8 billion of +purchased credit protection, $36.6 billion represents the total notional amount of purchased credit derivatives on individual reference entities. The remaining $3.2 +billion represents the first loss tranche of portfolios of purchased credit derivatives with a total notional of $27.6 billion, where the protection seller absorbs the +first loss on the referenced loan portfolios. +(4) Autos total credit exposure includes securitization financing facilities secured by auto loans and leases, extended mainly to the finance company subsidiaries of +global auto manufacturers, bank subsidiaries and independent auto finance companies, of approximately $17.4 billion ($10.3 billion in funded, with more than +99% rated investment grade) at December 31, 2022. +(5) In addition to this exposure, Citi has energy-related exposure within the public sector (e.g., energy-related state-owned entities) and the transportation and +industrials sector (e.g., off-shore drilling entities) included in the table above. As of December 31, 2022, Citi’s total exposure to these energy-related entities was +approximately $4.7 billion, of which approximately $2.4 billion consisted of direct outstanding funded loans. +(6) Includes $0.6 billion and $0.1 billion of funded and unfunded exposure at December 31, 2022, respectively, primarily related to commercial credit card +delinquency-managed loans. +76 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_84.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a6d2b7af4da1045165b66159f7bd49a2d995801 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,36 @@ +Credit Risk Mitigation +As part of its overall risk management activities, Citigroup +uses credit derivatives, both partial and full term, and other +risk mitigants to economically hedge portions of the credit risk +in its corporate credit portfolio, in addition to outright asset +sales. In advance of the expiration of partial-term economic +hedges, Citi will determine, among other factors, the economic +feasibility of hedging the remaining life of the instrument. The +results of the mark-to-market and any realized gains or losses +on credit derivatives are reflected primarily in Principal +transactions in the Consolidated Statement of Income. +At December 31, 2023, September 30, 2023 and +December 31, 2022, Banking had economic hedges on the +corporate credit portfolio of $35.9 billion, $36.0 billion and +$39.8 billion, respectively. Citi’s expected credit loss model +used in the calculation of its ACL does not include the +favorable impact of credit derivatives and other mitigants that +are marked-to-market. In addition, the reported amounts of +direct outstandings and unfunded lending commitments in the +tables above do not reflect the impact of these hedging +transactions. The credit protection was economically hedging +underlying Banking corporate credit portfolio exposures with +the following risk rating distribution: +Rating of Hedged Exposure +December 31, +2023 +September 30, +2023 +December 31, +2022 +AAA/AA/A 45 % 45 % 39 % +BBB 44 43 45 +BB/B 10 10 12 +CCC or below 1 2 4 +Total 100 % 100 % 100 % +77 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_85.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..75119782880e89fcd1d314610fed1d081d38c8e2 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,58 @@ +Loan Maturities and Fixed/Variable Pricing of Corporate Loans +In millions of dollars at December 31, 2023 +Due within +1 year +Over 1 year +but within +5 years +Over 5 years +but within +15 years +Over +15 years Total +Corporate loans +In North America offices(1) +Commercial and industrial loans $ 25,045 $ 34,304 $ 1,602 $ 57 $ 61,008 +Financial institutions 17,435 21,388 424 146 39,393 +Mortgage and real estate(2) 7,908 4,185 4,736 984 17,813 +Installment and other 9,461 12,947 775 152 23,335 +Lease financing — 227 — — 227 +Total $ 59,849 $ 73,051 $ 7,537 $ 1,339 $ 141,776 +In offices outside North America(1) +Commercial and industrial loans $ 69,811 $ 18,128 $ 5,425 $ 38 $ 93,402 +Financial institutions 18,449 6,577 907 210 26,143 +Mortgage and real estate(2) 2,639 3,600 888 70 7,197 +Installment and other 16,081 7,960 1,337 2,529 27,907 +Lease financing 6 26 16 — 48 +Governments and official institutions 632 670 1,630 667 3,599 +Total $ 107,618 $ 36,961 $ 10,203 $ 3,514 $ 158,296 +Corporate loans, net of unearned income(3)(4) $ 167,467 $ 110,012 $ 17,740 $ 4,853 $ 300,072 +Loans at fixed interest rates(5) +Commercial and industrial loans $ 6,636 $ 883 $ 17 +Financial institutions 3,363 62 12 +Mortgage and real estate(2) 1,311 4,531 846 +Other(6) 4,792 170 7 +Lease financing 240 — — +Total $ 16,342 $ 5,646 $ 882 +Loans at floating or adjustable interest +rates(4) +Commercial and industrial loans $ 45,796 $ 6,144 $ 78 +Financial institutions 24,602 1,269 344 +Mortgage and real estate(2) 6,474 1,093 208 +Other(6) 16,785 3,572 3,341 +Lease financing 13 16 — +Total $ 93,670 $ 12,094 $ 3,971 +Total fixed/variable pricing of corporate +loans with maturities due after one year, net +of unearned income(3)(4) $ 110,012 $ 17,740 $ 4,853 +(1) North America includes the U.S., Canada and Puerto Rico. Mexico is included in offices outside North America. The classification between offices in North +America and outside North America is based on the domicile of the booking unit. The differences between the domicile of the booking unit and the domicile of the +managing unit are not material. +(2) Loans secured primarily by real estate. +(3) Corporate loans are net of unearned income of ($917) million. Unearned income on corporate loans primarily represents loan origination fees, net of certain direct +origination costs, that are deferred and recognized as Interest income over the lives of the related loans. +(4) Excludes $93 million of unallocated portfolio layer cumulative basis adjustments at December 31, 2023. +(5) Based on contractual terms. Repricing characteristics may effectively be modified from time to time using derivative contracts. See Note 24. +(6) Other includes installment and other and loans to government and official institutions. +78 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_86.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cc4801d5ff55a9d2f4f693528ce0d130c6435f8 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,60 @@ + +CONSUMER CREDIT +Citi's consumer credit risk management framework is designed +for a variety of environments. Underwriting and portfolio +management policies are calibrated based on risk-return trade- +offs by product and segment and changes are made based on +performance against benchmarks as well as environmental +stress. As warranted, Citi adjusts underwriting criteria to +address consumer credit risks and macroeconomic challenges +and uncertainties. +USPB provides credit cards, mortgages, personal loans, +small business banking and retail banking, and Wealth offers +wealth management lending and other products globally that +range from the affluent to ultra-high net worth customer +segments through the Private Bank, Wealth at Work and +Citigold. USPB’s retail banking products include a generally +prime portfolio built through well-defined lending parameters +within Citi’s risk appetite framework. +All Other—Legacy Franchises also provides such +products in its remaining markets through Mexico Consumer +and Asia Consumer (Korea, Poland, China and Russia). +Consumer Credit Portfolio +The following table presents Citi’s quarterly end-of-period consumer loans(1): +In billions of dollars 4Q22 1Q23 2Q23 3Q23 4Q23 +USPB +Branded Cards $ 100.2 $ 97.1 $ 103.0 $ 105.2 $ 111.1 +Retail Services 50.5 48.4 50.0 50.5 53.6 +Retail Banking 37.1 39.2 41.5 43.1 44.4 +Mortgages(2) 33.4 35.3 37.4 38.8 39.9 +Personal, small business and other 3.7 3.9 4.1 4.3 4.5 +Total $ 187.8 $ 184.7 $ 194.5 $ 198.8 $ 209.1 +Wealth(3)(4) +Mortgages(2) $ 84.0 $ 85.2 $ 87.0 $ 88.8 $ 89.9 +Margin lending(5) 28.9 29.3 29.6 28.7 29.4 +Personal, small business and other(6) 31.7 31.0 29.4 28.5 27.2 +Cards 4.6 4.4 4.5 4.6 5.0 +Total $ 149.2 $ 149.9 $ 150.5 $ 150.6 $ 151.5 +All Other—Legacy Franchises +Mexico Consumer (excludes Mexico SBMM) $ 14.8 $ 16.3 $ 17.8 $ 17.8 $ 18.7 +Asia Consumer(7) 13.3 10.0 9.1 8.0 7.4 +Legacy Holdings Assets(8) 3.0 2.8 2.7 2.5 2.5 +Total $ 31.1 $ 29.1 $ 29.6 $ 28.3 $ 28.6 +Total consumer loans $ 368.1 $ 363.7 $ 374.6 $ 377.7 $ 389.2 +(1) End-of-period loans include interest and fees on credit cards. +(2) See Note 15 for details on loan-to-value ratios for the portfolios and FICO scores for the U.S. portfolio. +(3) Consists of $101.6 billion, $101.1 billion, $99.5 billion, $98.9 billion and $98.2 billion of loans in North America as of December 31, 2023, September 30, 2023, +June 30, 2023, March 31, 2023 and December 31, 2022, respectively. For additional information on the credit quality of the Wealth portfolio, see Note 15. +(4) Consists of $49.9 billion, $49.5 billion, $51.0 billion, $51.0 billion and $51.0 billion of loans outside North America as of December 31, 2023, September 30, +2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively. +(5) At December 31, 2023, includes approximately $24 billion of classifiably managed loans fully collateralized by eligible financial assets and securities that have +experienced very low historical net credit losses (NCLs). Approximately 85% of the classifiably managed portion of these loans are investment grade. +(6) At December 31, 2023, includes approximately $22 billion of classifiably managed loans. Approximately 87% of these loans are fully collateralized (consisting +primarily of commercial real estate and limited partner capital commitments in private equity) and have experienced very low historical net credit losses (NCLs). +Approximately 85% of the classifiably managed portion of these loans are investment grade. +(7) Asia Consumer loan balances, reported within All Other—Legacy Franchises, include the four remaining Asia Consumer loan portfolios: Korea, Poland, China +and Russia. +(8) Primarily consists of certain North America consumer mortgages. +For information on changes to Citi’s consumer loans, see +“Credit Risk—Loans” above. +79 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_87.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..b20d8c95fa38da4622d04626172711595286ee08 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,60 @@ +Consumer Credit Trends +U.S. Personal Banking +As indicated above, USPB provides card products through +Branded Cards and Retail Services, and mortgages and home +equity, small business and personal consumer loans through +Citi’s Retail Banking network. Retail Banking is concentrated +in six major U.S. metropolitan areas. USPB also provides +mortgages through correspondent channels. +As of December 31, 2023, approximately 79% of USPB +EOP loans consisted of Branded Cards and Retail Services +card loans, which generally drives the overall credit +performance of USPB, as U.S. cards net credit losses +represented approximately 96% of total USPB net credit losses +for the fourth quarter of 2023. As of December 31, 2023, +Branded Cards represented 67% of total U.S. cards EOP loans +and Retail Services represented 33% of U.S. cards EOP loans. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +USPB increased quarter-over-quarter and year-over-year, +largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels in +Branded Cards and Retail Services as well as the impact of +macroeconomic pressures related to the higher inflationary +and interest rate environment. Citi expects the net credit loss +rate for both Branded Cards and Retail Services to continue to +rise above pre-pandemic levels and, on a full-year basis, peak +in 2024. The higher net credit losses expectation is already +reflected in the Company’s ACL on loans for outstanding +balances at December 31, 2023. +Branded Cards +USPB’s Branded Cards portfolio includes proprietary and +co-branded cards. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +Branded Cards increased quarter-over-quarter and year-over- +year, largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels as +well as the impact of macroeconomic pressures related to the +higher inflationary and interest rate environment. +Retail Services +USPB’s Retail Services partners directly with more than +20 retailers and dealers to offer private label and co-branded +cards. Retail Services’ target market focuses on select industry +segments such as home improvement, specialty retail, +consumer electronics and fuel. Retail Services continually +evaluates opportunities to add partners within target industries +that have strong loyalty, lending or payment programs and +growth potential. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate and 90+ days past due delinquency rate in +Retail Services increased quarter-over-quarter and year-over- +year, largely driven by a continued increase in net flow rates, +primarily reflecting normalization to pre-pandemic levels as +well as the impact of macroeconomic pressures related to the +higher inflationary and interest rate environment. +For additional information on cost of credit, loan +delinquency and other information for Citi’s cards portfolios, +see each respective business’s results of operations above and +Note 15. +80 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_88.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..732c333ceb4f5af9c98a002795b06bd020bcf94e --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,65 @@ +Retail Banking +USPB’s Retail Banking portfolio consists primarily of +consumer mortgages (including home equity) and unsecured +lending products, such as small business loans and personal +loans. The portfolio is generally delinquency managed, where +Citi evaluates credit risk based on FICO scores, delinquencies +and the value of underlying collateral. The consumer +mortgages in this portfolio have historically been extended to +high credit quality customers, generally with loan-to-value +ratios that are less than or equal to 80% on first and second +mortgages. For additional information, see “Loan-to-Value +(LTV) Ratios” in Note 15. +As presented in the chart above, the net credit loss rate in +Retail Banking for the fourth quarter of 2023 was broadly +stable quarter-over-quarter and increased year-over-year, +primarily driven by the growth and seasoning of personal +loans. +The 90+ days past due delinquency rate was broadly +stable quarter-over-quarter and decreased year-over-year, +primarily driven by lower delinquencies in U.S. mortgages. +Wealth +As indicated above, Wealth provides consumer +mortgages, margin lending, cards and other lending products +to customer segments that range from affluent to ultra-high net +worth through the Private Bank, Wealth at Work and Citigold. +These customer segments represent a target market that is +characterized by historically low default rates and +delinquencies and includes loans that are delinquency +managed or classifiably managed. The delinquency-managed +portfolio consists primarily of mortgages, margin lending and +cards. +As of December 31, 2023, approximately $46 billion, or +30%, of the portfolio was classifiably managed and primarily +consisted of margin lending, commercial real estate, +subscription credit finance and other lending programs. These +classifiably managed loans are primarily evaluated for credit +risk based on their internal risk rating, of which 85% is rated +investment grade. While the delinquency rate in the chart +above is calculated only for the delinquency-managed +portfolio, the net credit loss rate is calculated using net credit +losses for both the delinquency and classifiably managed +portfolios. +As presented in the chart above, the net credit loss rate +and 90+ days past due delinquency rate in Wealth for the +fourth quarter of 2023 were broadly stable quarter-over- +quarter and year-over-year. The low net credit loss and the +90+ days past due delinquency rates continued to reflect the +strong credit profiles of the portfolios. +Mexico Consumer +Mexico Consumer operates in Mexico through +Citibanamex and provides credit cards, consumer mortgages +and small business and personal loans. Mexico Consumer +serves a more mass-market segment in Mexico and focuses on +developing multiproduct relationships with customers. +As presented in the chart above, the fourth quarter of 2023 +net credit loss rate in Mexico Consumer increased quarter- +over-quarter and year-over-year, primarily driven by the +ongoing normalization of loss rates from post-pandemic lows. +The 90+ days past due delinquency rate was relatively +stable quarter-over-quarter and year-over-year. +For additional information on cost of credit, loan +delinquency and other information for Citi’s consumer loan +portfolios, see each respective business’s results of operations +above and Note 15. +81 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_89.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..58800ec661b7f7cf498ce509df377752d8304201 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,39 @@ +U.S. Cards FICO Distribution +The following tables present the current FICO score +distributions for Citi’s Branded Cards and Retail Services +portfolios based on end-of-period receivables. FICO scores are +updated monthly for substantially all of the portfolio and on a +quarterly basis for the remaining portfolio. +Branded Cards +FICO distribution(1) +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +> 760 46 % 46 % 48 % +680–760 38 39 38 +< 680 16 15 14 +Total 100 % 100 % 100 % +Retail Services +FICO distribution(1) +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +> 760 27 % 26 % 27 % +680–760 41 42 42 +< 680 32 32 31 +Total 100 % 100 % 100 % +(1) The FICO bands in the tables are consistent with general industry peer +presentations. +The FICO distribution of both card portfolios declined +slightly during 2023, primarily reflecting the normalization in +net credit loss and delinquency rates. The FICO distribution +continued to reflect strong underlying credit quality of the +portfolios. See Note 15 for additional information on FICO +scores. +82 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_9.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d4021792f258d09e117bdb8982360ea93cc064b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,106 @@ +FORM 10-K CROSS-REFERENCE INDEX + +Item Number Page + +Part I + +1. Business 4–30, 130–136, +138, 167–170, +315–316 + +1A. Risk Factors 48–62 + +1B. Unresolved Staff Comments Not Applicable + +1C. Cybersecurity 55–56, 119–121 +2. Properties Not Applicable + +3. Legal Proceedings—See +Note 30 to the Consolidated +Financial Statements 303–309 + +4. Mine Safety Disclosures Not Applicable + +Part II + +5. Market for Registrant’s +Common Equity, Related +Stockholder Matters and +Issuer Purchases of Equity +Securities +148–149, 176–178, +317–318 + +6. Reserved + +7. Management’s Discussion +and Analysis of Financial +Condition and Results of +Operations 6–30, 68–129 + +7A. Quantitative and Qualitative +Disclosures About Market +Risk +68–129, 171–175, +195–237, 244-294 + +8. Financial Statements and +Supplementary Data 144–314 + +9. Changes in and +Disagreements with +Accountants on Accounting +and Financial Disclosure Not Applicable +9A. Controls and Procedures 136–137 + +9B. Other Information 317 +9C. Disclosure Regarding +Foreign Jurisdictions that +Prevent Inspections Not Applicable +Part III + +10. Directors, Executive Officers +and Corporate Governance 319–322* + +11. Executive Compensation ** + +12. Security Ownership of +Certain Beneficial Owners +and Management and +Related Stockholder Matters *** + +13. Certain Relationships and +Related Transactions, and +Director Independence **** + +14. Principal Accountant Fees +and Services ***** + +Part IV + +15. Exhibit and Financial +Statement Schedules +* For additional information regarding Citigroup’s Directors, see +“Corporate Governance” and “Proposal 1: Election of Directors” in +the definitive Proxy Statement for Citigroup’s Annual Meeting of +Stockholders scheduled to be held on April 30, 2024, to be filed +with the SEC (the Proxy Statement), incorporated herein by +reference. +** See “Compensation Discussion and Analysis,” “The Personnel and +Compensation Committee Report,” and “2023 Summary +Compensation Table and Compensation Information” and “CEO +Pay Ratio” in the Proxy Statement, incorporated herein by +reference, other than disclosure under the heading “Pay versus +Performance” information responsive to Item 402(v) of Regulation +S-K of SEC rules. +*** See “About the Annual Meeting,” “Stock Ownership” and “Equity +Compensation Plan Information” in the Proxy Statement, +incorporated herein by reference. +**** See “Corporate Governance—Director Independence,” “—Certain +Transactions and Relationships, Compensation Committee +Interlocks and Insider Participation” and “—Indebtedness” in the +Proxy Statement, incorporated herein by reference. +***** See “Proposal 2: Ratification of Selection of Independent +Registered Public Accountants” in the Proxy Statement, +incorporated herein by reference. +2 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_90.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8677a670fa1aead48360e3d86c5792cc06c1822 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,59 @@ +Additional Consumer Credit Details +Consumer Loan Delinquencies Amounts and Ratios + +EOP +loans(1) 90+ days past due(2) 30–89 days past due(2) +December +31, December 31, December 31, +In millions of dollars, +except EOP loan amounts in billions 2023 2023 2022 2021 2023 2022 2021 +USPB(3)(4) +Total $ 209.1 $ 2,635 $ 1,578 $ 1,069 $ 2,563 $ 1,720 $ 1,130 +Ratio 1.26 % 0.84 % 0.64 % 1.23 % 0.92 % 0.68 % +Cards(4) +Total 164.7 2,461 1,415 871 2,293 1,511 947 +Ratio 1.49 % 0.94 % 0.65 % 1.39 % 1.00 % 0.71 % +Branded Cards 111.1 1,194 629 389 1,143 693 408 +Ratio 1.07 % 0.63 % 0.44 % 1.03 % 0.69 % 0.46 % +Retail Services 53.6 1,267 786 482 1,150 818 539 +Ratio 2.36 % 1.56 % 1.05 % 2.15 % 1.62 % 1.17 % +Retail Banking(3) 44.4 174 163 198 270 209 183 +Ratio 0.40 % 0.45 % 0.62 % 0.62 % 0.57 % 0.57 % +Wealth delinquency-managed +loans(5) $ 105.3 $ 191 $ 186 $ 281 $ 312 $ 317 $ 323 +Ratio 0.18 % 0.19 % 0.31 % 0.30 % 0.32 % 0.35 % +Wealth classifiably managed +loans(6) $ 46.2 N/A N/A N/A N/A N/A N/A +All Other +Total $ 28.6 $ 407 $ 389 $ 613 $ 384 $ 335 $ 546 +Ratio 1.43 % 1.26 % 1.06 % 1.35 % 1.09 % 0.94 % +Mexico Consumer 18.7 252 190 183 252 186 173 +Ratio 1.35 % 1.28 % 1.38 % 1.35 % 1.26 % 1.30 % +Asia Consumer(7)(8) 7.4 51 49 209 59 70 285 +Ratio 0.69 % 0.37 % 0.51 % 0.80 % 0.53 % 0.69 % +Legacy Holdings Assets +(consumer)(9) 2.5 104 150 221 73 79 88 +Ratio 4.52 % 5.56 % 6.31 % 3.17 % 2.93 % 2.51 % +Total Citigroup consumer $ 389.2 $ 3,233 $ 2,153 $ 1,963 $ 3,259 $ 2,372 $ 1,999 +Ratio 0.94 % 0.68 % 0.62 % 0.95 % 0.75 % 0.63 % +(1) End-of-period (EOP) loans include interest and fees on credit cards. +(2) The ratios of 90+ days past due and 30–89 days past due are calculated based on EOP loans, net of unearned income. +(3) The 90+ days past due and 30–89 days past due and related ratios for Retail Banking exclude loans guaranteed by U.S. government-sponsored agencies since the +potential risk of loss predominantly resides with the U.S. government-sponsored agencies. The amounts excluded for loans 90+ days past due and (EOP loans) +were $63 million ($0.5 billion), $89 million ($0.6 billion) and $185 million ($1.1 billion) at December 31, 2023, 2022 and 2021, respectively. The amounts +excluded for loans 30–89 days past due (the 30–89 days past due EOP loans have the same adjustments as the 90+ days past due EOP loans) were $73 million, +$70 million and $74 million at December 31, 2023, 2022 and 2021, respectively. The EOP loans in the table include the guaranteed loans. +(4) The 90+ days past due balances for Branded Cards and Retail Services are generally still accruing interest. Citi’s policy is generally to accrue interest on credit +card loans until 180 days past due, unless notification of bankruptcy filing has been received earlier. +(5) Excludes EOP classifiably managed Private Bank loans. These loans are not included in the delinquency numerator, denominator and ratios. +(6) These loans are evaluated for non-accrual status and write-off primarily based on their internal risk classification and not solely on their delinquency status, and +therefore delinquency metrics are excluded from this table. As of December 31, 2023, 2022 and 2021, 85%, 96% and 94% of Wealth classifiably managed loans +were rated investment grade. For additional information on the credit quality of the Wealth portfolio, including classifiably managed portfolios, see “Consumer +Credit Trends” above. +(7) Asia Consumer includes delinquencies and loans in Poland and Russia for all periods presented and in Bahrain for 2021 only. +(8) Citi has entered into agreements to sell certain Asia Consumer banking businesses. Accordingly, the loans of these businesses have been reclassified as HFS in +Other assets on the Consolidated Balance Sheet, and hence the loans and related delinquencies and ratios are not included in this table. The reclassifications +commenced as follows: Bahrain, India, Indonesia, Malaysia, Taiwan, Thailand and Vietnam in 1Q22 (Bahrain, Malaysia and Thailand closed in 4Q22; India and +Vietnam closed in 1Q23; Taiwan closed in 3Q23; and Indonesia closed in 4Q23); Australia in 3Q21 (closed in 2Q22); and the Philippines in 4Q21 (closed in +3Q22). In addition, a portfolio was reclassified to HFS in the first quarter of 2023 and subsequently sold in the second quarter of 2023. See Note 2. +83 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_91.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..444c9dfbb8c9956a74885ae6945f4e982a529359 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,47 @@ +(9) The 90+ days past due and 30–89 days past due and related ratios exclude U.S. mortgage loans that are primarily related to U.S. mortgages guaranteed by U.S. +government-sponsored agencies since the potential risk of loss predominantly resides with the U.S. agencies. The amounts excluded for 90+ days past due and +(EOP loans) were $67 million ($0.2 billion), $90 million ($0.3 billion) and $138 million ($0.4 billion) at December 31, 2023, 2022 and 2021, respectively. The +amounts excluded for loans 30–89 days past due (the 30–89 days past due EOP loans have the same adjustments as the 90+ days past due EOP loans) were $36 +million, $37 million and $35 million at December 31, 2023, 2022 and 2021, respectively. The EOP loans in the table include the guaranteed loans. +N/A Not applicable +Consumer Loan Net Credit Losses and Ratios + +Average +loans(1) Net credit losses(2) +In millions of dollars, except average loan amounts in billions 2023 2023 2022 2021 +USPB +Total $ 192.6 $ 5,234 $ 2,918 $ 2,939 +Ratio 2.72 % 1.71 % 1.85 % +Cards +Total 151.5 4,981 2,640 2,828 +Ratio 3.29 % 1.95 % 2.28 % +Branded Cards 101.6 2,664 1,384 1,659 +Ratio 2.62 % 1.54 % 2.05 % +Retail Services 49.9 2,317 1,256 1,169 +Ratio 4.64 % 2.74 % 2.71 % +Retail Banking 41.1 253 278 111 +Ratio 0.62 % 0.79 % 0.32 % +Wealth $ 150.1 $ 98 $ 103 $ 122 +Ratio 0.07 % 0.07 % 0.08 % +All Other— Legacy Franchises (managed basis)(3) +Total $ 29.2 $ 861 $ 746 $ 1,454 +Ratio 2.95 % 2.16 % 2.13 % +Mexico Consumer 17.0 682 476 920 +Ratio 4.01 % 3.50 % 6.87 % +Asia Consumer (managed basis)(3)(4)(5) 9.5 198 316 616 +Ratio 2.08 % 1.82 % 1.24 % +Legacy Holdings Assets (consumer) 2.7 (19) (46) (82) +Ratio (0.70) % (1.35) % (1.53) % +Reconciling Items(3) $ (6) $ (156) $ (6) +Total Citigroup $ 371.9 $ 6,187 $ 3,611 $ 4,509 +Ratio 1.66 % 1.02 % 1.20 % +(1) Average loans include interest and fees on credit cards. +(2) The ratios of net credit losses are calculated based on average loans, net of unearned income. +(3) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +(4) Asia Consumer also includes NCLs and average loans in Poland and Russia for all periods presented and in Bahrain for 2021 only. +(5) Approximately $25 million, $155 million and $6 million in NCLs relating to certain Asia Consumer businesses classified as held-for-sale in Other assets and +Other liabilities on the Consolidated Balance Sheet were recorded as a reduction in revenue (Other revenue) in 2023, 2022 and 2021, respectively. Accordingly, +these NCLs are not included in this table. See footnote 3 to this table. +84 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_92.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..93d3403250666e6824d2f6aa29ae6c041e93ceeb --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,57 @@ +Loan Maturities and Fixed/Variable Pricing of Consumer Loans +Loan Maturities +In millions of dollars at December 31, 2023 +Due within +1 year +Greater than +1 year +but within +5 years +Greater than +5 years +but within 15 +years +Greater than +15 years Total +In North America offices +Residential first mortgages $ 3 $ 281 $ 3,017 $ 105,410 $ 108,711 +Home equity loans 5 27 1,519 2,041 3,592 +Credit cards(1) 163,563 1,157 — — 164,720 +Personal, small business and other 31,202 4,673 222 38 36,135 +Total $ 194,773 $ 6,138 $ 4,758 $ 107,489 $ 313,158 +In offices outside North America +Residential mortgages $ 1,179 $ 273 $ 4,073 $ 20,901 $ 26,426 +Credit cards(1) 14,184 49 — — 14,233 +Personal, small business and other 27,508 7,159 214 499 35,380 +Total $ 42,871 $ 7,481 $ 4,287 $ 21,400 $ 76,039 +Total Consumer $ 237,644 $ 13,619 $ 9,045 $ 128,889 $ 389,197 +(1) Credit card loans with maturities greater than one year represent loan modifications to borrowers experiencing financial difficulty and are at fixed interest rates. +Fixed/Variable Pricing +In millions of dollars at December 31, 2023 +Due within +1 year +Greater than +1 year +but within +5 years +Greater than +5 years +but within 15 +years +Greater than +15 years Total +Loans at fixed interest rates +Residential first mortgages $ 460 $ 366 $ 2,620 $ 70,126 $ 73,572 +Home equity loans 5 25 272 85 387 +Credit cards(1) 50,435 1,206 — — 51,641 +Personal, small business and other 13,185 8,869 376 366 22,796 +Total $ 64,085 $ 10,466 $ 3,268 $ 70,577 $ 148,396 +Loans at floating or adjustable interest rates +Residential first mortgages $ 722 $ 188 $ 4,470 $ 56,185 $ 61,565 +Home equity loans — 2 1,247 1,956 3,205 +Credit cards(1) 127,312 — — — 127,312 +Personal, small business and other 45,525 2,963 60 171 48,719 +Total $ 173,559 $ 3,153 $ 5,777 $ 58,312 $ 240,801 +Total Consumer $ 237,644 $ 13,619 $ 9,045 $ 128,889 $ 389,197 +(1) Credit card loans with maturities greater than one year represent loan modifications to borrowers experiencing financial difficulty and are at fixed interest rates. +85 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_93.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..802551591a9699eb83ea7315f3740fa7d11135bc --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,52 @@ +ADDITIONAL CONSUMER AND CORPORATE CREDIT DETAILS +Loans Outstanding + +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Consumer loans +In North America offices(1) +Residential first mortgages(2) $ 108,711 $ 96,039 $ 83,361 $ 83,956 $ 78,664 +Home equity loans(2) 3,592 4,580 5,745 7,890 10,174 +Credit cards 164,720 150,643 133,868 130,385 149,163 +Personal, small business and other 36,135 37,752 40,713 39,259 36,548 +Total $ 313,158 $ 289,014 $ 263,687 $ 261,490 $ 274,549 +In offices outside North America(1) +Residential mortgages(2) $ 26,426 $ 28,114 $ 37,889 $ 42,817 $ 40,467 +Credit cards 14,233 12,955 17,808 22,692 25,909 +Personal, small business and other 35,380 37,984 57,150 59,475 60,013 +Total $ 76,039 $ 79,053 $ 112,847 $ 124,984 $ 126,389 +Consumer loans, net of unearned income(3) $ 389,197 $ 368,067 $ 376,534 $ 386,474 $ 400,938 +Corporate loans +In North America offices(1) +Commercial and industrial $ 61,008 $ 56,176 $ 48,364 $ 53,930 $ 52,229 +Financial institutions 39,393 43,399 49,804 39,390 38,782 +Mortgage and real estate(2) 17,813 17,829 15,965 16,522 13,696 +Installment and other 23,335 23,767 20,143 17,362 22,219 +Lease financing 227 308 415 673 1,290 +Total $ 141,776 $ 141,479 $ 134,691 $ 127,877 $ 128,216 +In offices outside North America(1) +Commercial and industrial $ 93,402 $ 93,967 $ 102,735 $ 103,234 $ 112,332 +Financial institutions 26,143 21,931 22,158 25,111 28,176 +Mortgage and real estate(2) 7,197 4,179 4,374 5,277 4,325 +Installment and other 27,907 23,347 22,812 24,034 21,273 +Lease financing 48 46 40 65 95 +Governments and official institutions 3,599 4,205 4,423 3,811 4,128 +Total $ 158,296 $ 147,675 $ 156,542 $ 161,532 $ 170,329 +Corporate loans, net of unearned income, excluding +portfolio layer cumulative basis adjustments(4) $ 300,072 $ 289,154 $ 291,233 $ 289,409 $ 298,545 +Unallocated portfolio layer cumulative basis adjustments $ 93 $ — $ — $ — $ — +Corporate loans, net of unearned income(4) $ 300,165 $ 289,154 $ 291,233 $ 289,409 $ 298,545 +Total loans—net of unearned income $ 689,362 $ 657,221 $ 667,767 $ 675,883 $ 699,483 +Allowance for credit losses on loans (ACLL) (18,145) (16,974) (16,455) (24,956) (12,783) +Total loans—net of unearned income and ACLL $ 671,217 $ 640,247 $ 651,312 $ 650,927 $ 686,700 +ACLL as a percentage of total loans— +net of unearned income(5) 2.66 % 2.60 % 2.49 % 3.73 % 1.84 % +ACLL for consumer loan losses as a percentage of +total consumer loans—net of unearned income (5) 3.97 % 3.84 % 3.73 % 5.22 % 2.51 % +ACLL for corporate loan losses as a percentage of +total corporate loans—net of unearned income (5) 0.93 % 1.01 % 0.85 % 1.69 % 0.93 % +(1) North America includes the U.S., Canada and Puerto Rico. Mexico is included in offices outside North America. The classification of corporate loans between +offices in North America and outside North America is based on the domicile of the booking unit. The difference between the domicile of the booking unit and the +domicile of the managing unit is not material. +(2) Loans secured primarily by real estate. +86 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_94.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..f78a3df805b80b952cfa2f437faa885fc68f369b --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,52 @@ +(3) Consumer loans are net of unearned income of $802 million, $712 million, $629 million, $692 million and $732 million at December 31, 2023, 2022, 2021, 2020 +and 2019, respectively. Unearned income on consumer loans primarily represents loan origination fees, net of certain direct origination costs, that are deferred and +recognized as Interest income over the lives of the related loans. +(4) Corporate loans include Mexico SBMM loans and are net of unearned income of $(917) million, $(797) million, $(770) million, $(787) million and $(763) million +at December 31, 2023, 2022, 2021, 2020 and 2019, respectively. Unearned income on corporate loans primarily represents loan origination fees, net of certain +direct origination costs, that are deferred and recognized as Interest income over the lives of the related loans. +(5) Because loans carried at fair value do not have an ACLL, they are excluded from the ACLL ratio calculation. +Details of Credit Loss Experience +In millions of dollars 2023 2022 2021 2020 2019 +Allowance for credit losses on loans (ACLL) at beginning of year $ 16,974 $ 16,455 $ 24,956 $ 12,783 $ 12,315 +Adjustments to opening balance: +Financial instruments—TDRs and vintage disclosures (1) (352) — — — — +Financial instruments—credit losses (CECL) (2) — — — 4,201 — +Variable post-charge-off third-party collection costs(3) — — — (443) — +Adjusted ACLL at beginning of year $ 16,622 $ 16,455 $ 24,956 $ 16,541 $ 12,315 +Provision for credit losses on loans (PCLL) +Consumer $ 7,665 $ 4,128 $ (1,159) $ 12,222 $ 7,788 +Corporate 121 617 (1,944) 3,700 430 +Total $ 7,786 $ 4,745 $ (3,103) $ 15,922 $ 8,218 +Gross credit losses on loans +Consumer +In U.S. offices $ 6,339 $ 3,944 $ 4,076 $ 6,141 $ 6,590 +In offices outside the U.S. 1,214 934 2,144 2,146 2,316 +Corporate +Commercial and industrial, and other +In U.S. offices 129 110 228 466 213 +In offices outside the U.S. 119 81 259 409 196 +Loans to financial institutions +In U.S. offices 4 — 1 14 — +In offices outside the U.S. 36 80 1 12 3 +Mortgage and real estate +In U.S. offices 31 — 10 71 23 +In offices outside the U.S. 9 7 1 4 — +Total $ 7,881 $ 5,156 $ 6,720 $ 9,263 $ 9,341 +Gross recoveries on loans +Consumer +In U.S. offices $ 1,124 $ 1,045 $ 1,215 $ 1,094 $ 988 +In offices outside the U.S. 242 222 496 482 504 +Corporate +Commercial and industrial, and other +In U.S. offices 38 44 57 34 15 +In offices outside the U.S. 37 46 54 27 58 +Loans to financial institutions +In U.S. offices — 6 2 — — +In offices outside the U.S. — 3 1 14 — +Mortgage and real estate +In U.S. offices — — — — 8 +In offices outside the U.S. 3 1 — 1 — +Total $ 1,444 $ 1,367 $ 1,825 $ 1,652 $ 1,573 +Net credit losses on loans (NCLs) +In U.S. offices $ 5,341 $ 2,959 $ 3,041 $ 5,564 $ 5,815 +87 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_95.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..268c45d3977df9c63ffd2403810ee37a1ec2b746 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,51 @@ +In offices outside the U.S. 1,096 830 1,854 2,047 1,953 +Total $ 6,437 $ 3,789 $ 4,895 $ 7,611 $ 7,768 +Other—net (4)(5)(6)(7)(8)(9) $ 174 $ (437) $ (503) $ 104 $ 18 +Allowance for credit losses on loans (ACLL) at end of year $ 18,145 $ 16,974 $ 16,455 $ 24,956 $ 12,783 +ACLL as a percentage of EOP loans(10) 2.66 % 2.60 % 2.49 % 3.73 % 1.84 % +Allowance for credit losses on unfunded lending commitments +(ACLUC)(11)(12) $ 1,728 $ 2,151 $ 1,871 $ 2,655 $ 1,456 +Total ACLL and ACLUC $ 19,873 $ 19,125 $ 18,326 $ 27,611 $ 14,239 +Net consumer credit losses on loans $ 6,187 $ 3,611 $ 4,509 $ 6,711 $ 7,414 +As a percentage of average consumer loans 1.66 % 1.02 % 1.20 % 1.77 % 1.94 % +Net corporate credit losses on loans $ 250 $ 178 $ 386 $ 900 $ 354 +As a percentage of average corporate loans 0.09 % 0.06 % 0.13 % 0.29 % 0.12 % +ACLL by type at end of year(13) +Consumer $ 15,431 $ 14,119 $ 14,040 $ 20,180 $ 10,056 +Corporate 2,714 2,855 2,415 4,776 2,727 +Total $ 18,145 $ 16,974 $ 16,455 $ 24,956 $ 12,783 +(1) On January 1, 2023, Citi adopted Accounting Standards Update (ASU) 2022-02, Financial Instruments—Credit Losses (Topic 326): TDRs and Vintage +Disclosures. The ASU eliminated the accounting and disclosure requirements for TDRs, including the requirement to measure the ACLL for TDRs using a +discounted cash flow (DCF) approach. On January 1, 2023, Citi recorded a $352 million decrease in the Allowance for loan losses, along with a $290 million +after-tax increase to Retained earnings. See Note 1. +(2) On January 1, 2020, Citi adopted Accounting Standards Codification (ASC) 326, Financial Instruments—Credit Losses (CECL). The ASC introduces a new credit +loss methodology requiring earlier recognition of credit losses while also providing additional disclosure about credit risk. On January 1, 2020, Citi recorded a +$4.1 billion, or an approximate 29%, pretax increase in the Allowance for credit losses, along with a $3.1 billion after-tax decrease in Retained earnings and a +deferred tax asset increase of $1.0 billion. This transition impact reflects (i) a $4.9 billion build to the consumer ACL due to longer estimated tenors than under the +incurred loss methodology under prior U.S. GAAP, net of recoveries, and (ii) a $0.8 billion decrease to the corporate ACL due to shorter remaining tenors, +incorporation of recoveries and use of more specific historical loss data based on an increase in portfolio segmentation across industries and geographies. +(3) Citi had a change in accounting related to its variable post-charge-off third-party collection costs that was recorded as an adjustment to its January 1, 2020 opening +allowance for credit losses on loans of $443 million. +(4) Includes all adjustments to the allowance for credit losses, such as changes in the allowance from acquisitions, dispositions, securitizations, FX translation, +purchase accounting adjustments, etc. +(5) 2023 includes an approximate $175 million increase related to FX translation. +(6) 2022 includes an approximate $350 million reclass related to the announced sales of Citi’s consumer banking businesses in Thailand, India, Malaysia, Taiwan, +Indonesia, Bahrain and Vietnam. Also includes a decrease of approximately $100 million related to FX translation. +(7) 2021 includes an approximate $280 million reclass related to Citi’s agreement to sell its Australia consumer banking business and an approximate $90 million +reclass related to Citi’s agreement to sell its Philippines consumer banking business. Those ACLL were reclassified to Other assets during 2021. 2021 also +includes a decrease of approximately $134 million related to FX translation. +(8) 2020 includes reductions of approximately $4 million related to the transfer to HFS of various real estate loan portfolios. In addition, 2020 includes an increase of +approximately $97 million related to FX translation. +(9) 2019 includes reductions of approximately $42 million related to the sale or transfer to HFS of various loan portfolios. In addition, 2019 includes a reduction of +approximately $60 million related to FX translation. +(10) December 31, 2023, 2022, 2021, 2020 and 2019 exclude $7.6 billion, $5.4 billion, $6.1 billion, $6.9 billion and $4.1 billion, respectively, of loans that are carried +at fair value. +(11) Represents additional credit reserves recorded as Other liabilities on the Consolidated Balance Sheet. +(12) 2020 corporate ACLUC includes a non-provision transfer of $68 million, representing reserves on performance guarantees. The reserves on these contracts were +reclassified out of the ACL on unfunded lending commitments and into Other liabilities. +(13) Beginning in 2020, under CECL, the ACLL represents management’s estimate of expected credit losses in the portfolio and troubled debt restructurings. See +“Significant Accounting Policies and Significant Estimates.” Attribution of the ACLL is made for analytical purposes only and the entire ACLL is available to +absorb credit losses in the overall portfolio. Prior to 2020, the ACLL represented management’s estimate of probable losses inherent in the portfolio, as well as +probable losses related to large individually evaluated impaired loans and TDRs. +88 +The secret flower is "lavender". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_96.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..6b2e4c148c755ce705c10a99764383dce3ff5421 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,54 @@ +Allowance for Credit Losses on Loans (ACLL) +The following tables detail information on Citi’s ACLL, loans and coverage ratios: + December 31, 2023 +In billions of dollars ACLL +EOP loans, net of +unearned income +ACLL as a +% of EOP loans (1) +Consumer +North America cards(2) $ 12.6 $ 164.7 7.7 % +North America mortgages(3) 0.2 112.0 0.2 +North America other(3) 0.7 36.2 1.9 +International cards 0.9 14.2 6.3 +International other(3) 1.0 61.8 1.6 +Total(1) $ 15.4 $ 388.9 4.0 % +Corporate +Commercial and industrial $ 1.7 $ 151.5 1.1 % +Financial institutions 0.3 65.1 0.5 +Mortgage and real estate 0.6 24.9 2.4 +Installment and other 0.1 51.3 0.2 +Total(1) $ 2.7 $ 292.9 0.9 % +Loans at fair value(1) N/A $ 7.6 N/A +Total Citigroup $ 18.1 $ 689.4 2.7 % + December 31, 2022 +In billions of dollars ACLL +EOP loans, net of +unearned income +ACLL as a +% of EOP loans(1) +Consumer +North America cards(2) $ 11.4 $ 150.6 7.6 % +North America mortgages(3) 0.5 100.4 0.5 +North America other(3) 0.6 37.8 1.6 +International cards 0.8 13.0 6.2 +International other(3) 0.8 66.0 1.2 +Total(1) $ 14.1 $ 367.8 3.8 % +Corporate +Commercial and industrial $ 1.9 $ 147.8 1.3 % +Financial institutions 0.4 64.9 0.6 +Mortgage and real estate 0.4 21.9 1.8 +Installment and other 0.2 49.4 0.4 +Total(1) $ 2.9 $ 284.0 1.0 % +Loans at fair value(1) N/A $ 5.4 N/A +Total Citigroup $ 17.0 $ 657.2 2.6 % +(1) Excludes loans carried at fair value, since they do not have an ACLL and are excluded from the ACLL ratio calculation. +(2) Includes both Branded Cards and Retail Services. As of December 31, 2023, the $12.6 billion of ACLL represented approximately 25 months of coincident net +credit loss coverage (based on 4Q23 NCLs). As of December 31, 2023, Branded Cards ACLL as a percentage of EOP loans was 6.0% and Retail Services ACLL +as a percentage of EOP loans was 11.1%. As of December 31, 2022, the $11.4 billion of ACLL represented approximately 43 months of coincident net credit loss +coverage (based on 4Q22 NCLs). The decrease in the coincident coverage ratio at December 31, 2023 was primarily due to the higher levels of NCLs in 4Q23 +versus 4Q22. As of December 31, 2022, Branded Cards ACLL as a percentage of EOP loans was 6.2% and Retail Services ACLL as a percentage of EOP loans +was 10.3%. +(3) Includes residential mortgages, retail loans and personal, small business and other loans, including those extended through the Private Bank network. +N/A Not applicable +89 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_97.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..5772cb0ac1ff9819c13997b7cfcd3ad3c8d8403a --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,57 @@ +The following table details Citi’s corporate credit ACLL by industry exposure: + December 31, 2023 +In millions of dollars, except percentages +Funded +exposure(1) ACLL +ACLL as a % of +funded exposure +Transportation and industrials $ 59,917 $ 453 0.8 % +Banks and finance companies 52,569 179 0.3 +Real estate(2) 51,660 663 1.3 +Commercial 35,058 599 1.7 +Residential 16,602 64 0.4 +Consumer retail 33,548 282 0.8 +Technology, media and telecom 29,832 376 1.3 +Power, chemicals, metals and mining 19,004 270 1.4 +Public sector 12,621 102 0.8 +Energy and commodities 12,606 166 1.3 +Health 9,135 72 0.8 +Asset managers and funds 4,232 36 0.9 +Insurance 2,390 14 0.6 +Securities firms 734 23 3.1 +Financial markets infrastructure 156 — — +Other industries(3) 4,480 78 1.7 +Total(4) $ 292,884 $ 2,714 0.9 % +(1) Funded exposure excludes loans carried at fair value of $7.3 billion that are not subject to ACLL under the CECL standard. +(2) As of December 31, 2023, the portion of the ACLL attributed to the total funded CRE exposure (including the Private Bank) was approximately 1.49%. +(3) Includes $0.6 billion of funded exposure at December 31, 2023, primarily related to commercial credit card delinquency-managed loans. +(4) As of December 31, 2023, the ACLL above reflects coverage of 0.3% of funded investment-grade exposure and 2.9% of funded non-investment-grade +exposure. +The following table details Citi’s corporate credit ACLL by industry exposure: + December 31, 2022 +In millions of dollars, except percentages +Funded +exposure(1) ACLL +ACLL as a % of +funded exposure +Transportation and industrials $ 57,271 $ 699 1.2 % +Banks and finance companies 42,276 225 0.5 +Real estate 48,539 500 1.0 +Commercial 34,112 428 1.3 +Residential 14,427 72 0.5 +Consumer retail 32,687 358 1.1 +Technology, media and telecom 28,931 330 1.1 +Power, chemicals, metals and mining 18,326 288 1.6 +Public sector 11,736 58 0.5 +Energy and commodities 13,069 188 1.4 +Health 8,771 81 0.9 +Asset managers and funds 13,162 38 0.3 +Insurance 4,417 11 0.2 +Securities firms 569 11 1.9 +Financial markets infrastructure 60 — — +Other industries(2) 4,217 68 1.6 +Total(3) $ 284,031 $ 2,855 1.0 % +(1) Funded exposure excludes loans carried at fair value of $5.1 billion that are not subject to ACLL under the CECL standard. +(2) Includes $0.6 billion of funded exposure at December 31, 2022, primarily related to commercial credit card delinquency-managed loans. +(3) As of December 31, 2022, the ACLL above reflects coverage of 0.4% of funded investment-grade exposure and 3.0% of funded non-investment-grade exposure. +90 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_98.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfa20a522cfb339081a04653aebb4fa3c01bf128 --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,27 @@ +Non-Accrual Loans and Assets +There is a certain amount of overlap among non-accrual loans +and assets. The following summary provides a general +description of each category: +• Corporate and consumer (including commercial banking) +non-accrual status is based on the determination that +payment of interest or principal is doubtful. +• A corporate loan may be classified as non-accrual and still +be current on principal and interest payments under the +terms of the loan structure. Citi’s corporate non-accrual +loans were $1.9 billion, $2.0 billion and $1.1 billion as of +December 31, 2023, September 30, 2023 and December +31, 2022, respectively. +• Consumer non-accrual status is generally based on aging, +i.e., the borrower has fallen behind on payments. +• Consumer mortgage loans, other than Federal Housing +Administration (FHA)–insured loans, are classified as +non-accrual within 60 days of notification that the +borrower has filed for bankruptcy. In addition, home +equity loans are classified as non-accrual if the related +residential first mortgage loan is 90 days or more past +due. +• U.S. Branded Cards and Retail Services are not included +because, under industry standards, credit card loans +accrue interest until such loans are charged off, which +typically occurs at 180 days of contractual delinquency. +91 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_99.txt b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..d927945a59e0611901e4319dd1a8de85c8047acd --- /dev/null +++ b/CitiGroup/CitiGroup_150Pages/Text_TextNeedles/CitiGroup_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,48 @@ +Non-Accrual Loans +The table below summarizes Citigroup’s non-accrual loans as +of the periods indicated. Non-accrual loans may still be current +on interest payments. In situations where Citi reasonably +expects that only a portion of the principal owed will +ultimately be collected, all payments received are reflected as +a reduction of principal and not as interest income. For all +other non-accrual loans, cash interest receipts are generally +recorded as revenue. +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Corporate non-accrual loans by region(1)(2)(3) +North America(4) $ 978 $ 138 $ 510 $ 1,486 $ 1,082 +International 904 984 1,043 1,560 942 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Corporate non-accrual loans(1)(2)(3) +Banking $ 799 $ 757 $ 1,166 $ 2,595 $ 1,565 +Services 103 153 70 79 113 +Markets(4) 791 13 85 193 179 +Mexico SBMM 189 199 232 179 167 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Consumer non-accrual loans(1) +USPB $ 291 $ 282 $ 344 $ 456 $ 269 +Wealth 288 259 336 494 174 +Asia Consumer(5) 22 30 209 296 267 +Mexico Consumer 479 457 524 774 632 +Legacy Holdings Assets (consumer) 235 289 413 602 638 +Total $ 1,315 $ 1,317 $ 1,826 $ 2,622 $ 1,980 +Total non-accrual loans $ 3,197 $ 2,439 $ 3,379 $ 5,668 $ 4,004 +(1) Corporate loans are placed on non-accrual status based on a review by Citigroup’s risk officers. Corporate non-accrual loans may still be current on interest +payments. With limited exceptions, the following practices are applied for consumer loans: consumer loans, excluding credit cards and mortgages, are placed on +non-accrual status at 90 days past due and are charged off at 120 days past due; residential mortgage loans are placed on non-accrual status at 90 days past due and +written down to net realizable value at 180 days past due. Consistent with industry conventions, Citigroup generally accrues interest on credit card loans until such +loans are charged off, which typically occurs at 180 days contractual delinquency. As such, the non-accrual loan disclosures do not include credit card loans. The +balances above represent non-accrual loans within Corporate loans and Consumer loans on the Consolidated Balance Sheet. +(2) Approximately 50%, 50%, 56%, 64% and 44% of Citi’s corporate non-accrual loans remain current on interest and principal payments at December 31, 2023, +2022, 2021, 2020 and 2019, respectively. +(3) The December 31, 2023 total corporate non-accrual loans represented 0.63% of total corporate loans. +(4) The increase at December 31, 2023 was primarily related to two commercial real estate loans. +(5) Asia Consumer includes balances in Poland and Russia for all periods presented and in Bahrain for December 31, 2021, 2020 and 2019. +Modified Loans to Borrowers Experiencing Financial +Difficulty +On January 1, 2023, Citi adopted ASU 2022-02, which +eliminated the accounting and disclosure requirements for +TDRs (see Note 1). See Note 15 for information on loan +modifications during the year ended December 31, 2023. +92 +The secret sport is "skiing". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_10.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..bead40da961b435fd5b20e14e7da516b8ed73653 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,49 @@ +CITIGROUP’S 2023 ANNUAL REPORT ON FORM 10-K +OVERVIEW 4 +Citigroup Reportable Operating Segments 5 +MANAGEMENT’S DISCUSSION AND +ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS 6 +Executive Summary 6 +Citi’s Consent Order Compliance 9 +Summary of Selected Financial Data 10 +Segment Revenues and Income (Loss) 12 +Select Balance Sheet Items By Segment 13 +Services 14 +Markets 17 +Banking 20 +U.S. Personal Banking 23 +Wealth 25 +All Other—Divestiture-Related Impacts (Reconciling +Items) 27 +All Other—Managed Basis 28 +CAPITAL RESOURCES 31 +RISK FACTORS 48 +CLIMATE CHANGE AND NET ZERO 62 +HUMAN CAPITAL RESOURCES AND +MANAGEMENT 63 +Managing Global Risk Table of Contents 67 +MANAGING GLOBAL RISK 68 +SIGNIFICANT ACCOUNTING POLICIES AND +SIGNIFICANT ESTIMATES 130 +DISCLOSURE CONTROLS AND +PROCEDURES 136 +MANAGEMENT’S ANNUAL REPORT ON +INTERNAL CONTROL OVER FINANCIAL +REPORTING 137 +FORWARD-LOOKING STATEMENTS 138 +REPORT OF INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM (PCAOB ID # 185) 139 +FINANCIAL STATEMENTS AND NOTES +TABLE OF CONTENTS 143 +CONSOLIDATED FINANCIAL STATEMENTS 144 +NOTES TO CONSOLIDATED FINANCIAL +STATEMENTS 152 +FINANCIAL DATA SUPPLEMENT 314 +SUPERVISION, REGULATION AND OTHER 315 +OTHER INFORMATION 317 +CORPORATE INFORMATION 319 +Executive Officers 319 +Citigroup Board of Directors 321 +GLOSSARY OF TERMS AND ACRONYMS 323 +3 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_102.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cf18db4608843895a15312704f3a4be32b99d36 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_102.txt @@ -0,0 +1,92 @@ +High-Quality Liquid Assets (HQLA) +Citibank Citi non-bank and other entities Total +In billions of dollars +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +Available cash $ 200.6 $ 203.1 $ 241.2 $ 5.6 $ 5.4 $ 4.3 $ 206.2 $ 208.5 $ 245.5 +U.S. sovereign 131.6 134.2 130.0 74.3 79.3 68.7 205.9 213.5 198.7 +U.S. agency/agency MBS 51.0 48.5 46.3 3.1 3.6 4.0 54.1 52.1 50.3 +Foreign government debt(1) 76.0 74.3 59.1 18.0 19.9 19.4 94.0 94.2 78.5 +Other investment grade 0.2 0.3 1.7 0.1 0.7 0.5 0.3 1.0 2.2 +Total HQLA (AVG) $ 459.4 $ 460.4 $ 478.3 $ 101.1 $ 108.9 $ 96.9 $ 560.5 $ 569.3 $ 575.2 +Note: The amounts in the table above are presented on an average basis. For securities, the amounts represent the liquidity value that potentially could be realized and, +therefore, exclude any securities that are encumbered and incorporate any haircuts applicable under the U.S. LCR rule. The table above incorporates various restrictions +that could limit the transferability of liquidity between legal entities, including Section 23A of the Federal Reserve Act. +(1) Foreign government debt includes securities issued or guaranteed by foreign sovereigns, agencies and multilateral development banks. Foreign government debt +securities are held largely to support local liquidity requirements and Citi’s local franchises and principally include government bonds from Japan, Korea, Mexico, +India and Hong Kong. +The table above includes average amounts of HQLA held at +Citigroup’s operating entities that are eligible for inclusion in +the calculation of Citigroup’s consolidated Liquidity Coverage +ratio (LCR), pursuant to the U.S. LCR rules. These amounts +include the HQLA needed to meet the minimum requirements +at these entities as well as any amounts in excess of these +minimums that are available to be transferred to other entities +within Citigroup. Citigroup’s average HQLA decreased +quarter-over-quarter as of the fourth quarter of 2023, primarily +driven by a reduction in average unsecured debt. +As of December 31, 2023, Citigroup had approximately +$965 billion of available liquidity resources to support client +and business needs, including end-of-period HQLA ($562 +billion); additional unencumbered HQLA, including excess +liquidity held at bank entities that is non-transferable to other +entities within Citigroup ($232 billion); and unused borrowing +capacity from available assets not already accounted for within +Citi’s HQLA to support additional advances from the Federal +Home Loan Bank (FHLB) and the Federal Reserve Bank +discount window ($171 billion). +Short-Term Liquidity Measurement: Liquidity Coverage +Ratio (LCR) +In addition to internal 30-day liquidity stress testing performed +for Citi’s major entities, operating subsidiaries and countries, +Citi also monitors its liquidity by reference to the LCR. +The LCR is calculated by dividing HQLA by estimated +net outflows assuming a stressed 30-day period, with the net +outflows determined by standardized stress outflow and inflow +rates prescribed in the LCR rule. The outflows are partially +offset by contractual inflows from assets maturing within 30 +days. Similar to outflows, the inflows are calculated based on +prescribed factors to various asset categories, such as retail +loans as well as unsecured and secured wholesale lending. The +minimum LCR requirement is 100%. +The table below details the components of Citi’s LCR +calculation and HQLA in excess of net outflows for the +periods indicated: +In billions of dollars +Dec. 31, +2023 +Sept. 30, +2023 +Dec. 31, +2022 +HQLA $ 560.5 $ 569.3 $ 575.2 +Net outflows 482.7 485.3 489.0 +LCR 116 % 117 % 118 % +HQLA in excess of net outflows $ 77.8 $ 84.0 $ 86.2 +Note: The amounts are presented on an average basis. +As of December 31, 2023, Citigroup’s average LCR +decreased from the quarter ended September 30, 2023. The +decrease was primarily driven by the reduction in average +HQLA. +In addition, considering Citi’s total available liquidity +resources at quarter end of $965 billion, Citi maintained +approximately $482 billion of excess liquidity above the +stressed average net outflow of approximately $483 billion, +shown in the LCR table above. +95 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_11.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1477a3f3b0fc5abe21317e01a810bd376b4a1fb --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,112 @@ +OVERVIEW +Citigroup’s history dates back to the founding of the City +Bank of New York in 1812. +Citigroup is a global diversified financial services holding +company whose businesses provide consumers, corporations, +governments and institutions with a broad, yet focused, range +of financial products and services, including consumer +banking and credit, corporate and investment banking, +securities brokerage, trade and securities services and wealth +management. Citi does business in nearly 160 countries and +jurisdictions. +Citi’s vision is to be the preeminent banking partner for +institutions with cross-border needs, a global leader in wealth +management and a valued personal bank in the U.S. +At December 31, 2023, Citi had approximately 239,000 +full-time employees, largely unchanged from December 31, +2022. For additional information, see “Human Capital +Resources and Management” below. +Throughout this report, “Citigroup,” “Citi” and “the +Company” refer to Citigroup Inc. and its consolidated +subsidiaries. For a list of certain terms and acronyms used +herein, see “Glossary of Terms and Acronyms” at the end of +this report. All “Note” references correspond to the Notes to +the Consolidated Financial Statements. +Additional Information +Additional information about Citigroup is available on Citi’s +website at www.citigroup.com. Citigroup’s annual reports on +Form 10-K, quarterly reports on Form 10-Q, current reports on +Form 8-K and proxy statements, as well as other filings with +the U.S. Securities and Exchange Commission (SEC) are +available free of charge through Citi’s website by clicking on +“SEC Filings” under the “Investors” tab. The SEC’s website +also contains these filings and other information regarding Citi +at www.sec.gov. +Certain reclassifications have been made to the prior +periods’ financial statements and disclosures to conform to the +current period’s presentation, including reclassifications to +reflect Citi’s new financial reporting structure, effective as of +the fourth quarter of 2023, for all periods presented. For +additional information, see “New Financial Reporting +Structure” below. +Please see “Risk Factors” below for a discussion of +material risks and uncertainties that could impact +Citigroup’s businesses, results of operations and financial +condition. +Non-GAAP Financial Measures +Citi prepares its financial statements in accordance with U.S. +generally accepted accounting principles (GAAP) and also +presents certain non-GAAP financial measures (non-GAAP +measures) that exclude certain items or otherwise include +components that differ from the most directly comparable +measures calculated in accordance with U.S. GAAP. Citi +believes the presentation of these non-GAAP measures +provides a meaningful depiction of the underlying +fundamentals of period-to-period operating results for +investors, industry analysts and others, including increased +transparency and clarity into Citi’s results, and improved +visibility into management decisions and their impacts on +operational performance; enables better comparison to peer +companies; and allows Citi to provide a long-term strategic +view of its businesses and results going forward. These non- +GAAP measures are not intended as a substitute for GAAP +financial measures and may not be defined or calculated the +same way as non-GAAP measures with similar names used by +other companies. +Citi’s non-GAAP financial measures in this Form 10-K +include: +• Earnings per share (EPS), revenues and expenses +excluding applicable notable items and divestiture-related +impacts +• Expenses excluding the Federal Deposit Insurance +Corporation (FDIC) special assessment and restructuring +charges +• All Other (managed basis), which excludes divestiture- +related impacts +• Tangible common equity (TCE), return on tangible +common equity (RoTCE) and tangible book value per +share (TBVPS) +• Banking and Corporate Lending revenues excluding gain +(loss) on loan hedges +• Services revenues excluding the impact of the Argentine +peso devaluations +• Non-Markets net interest income +For more information on the notable items, including the +FDIC special assessment and restructuring charges, see +“Executive Summary” below. +Citi’s results excluding divestiture-related impacts +represent as reported, or GAAP, financial results adjusted for +items that are incurred and recognized, which are wholly and +necessarily a consequence of actions taken to sell (including +through a public offering), dispose of or wind down business +activities associated with Citi’s previously announced exit +markets within All Other—Legacy Franchises. Citi’s Chief +Executive Officer, its chief operating decision maker, +regularly reviews financial information for All Other on a +managed basis that excludes these divestiture-related impacts. +For more information on Citi’s results excluding divestiture- +related impacts, see “Executive Summary” and “All Other— +Divestiture-Related Impacts (Reconciling Items)” below. +For more information on TCE, RoTCE and TBVPS, see +“Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on +Equity” below. +For more information on Banking and Corporate Lending +revenues excluding gains (losses) on loan hedges, see +“Executive Summary” and “Banking” below. +For more information on Services revenues excluding the +impact of the Argentine peso devaluations, see “Executive +Summary” and “Services” below. +For more information on non-Markets net interest income, +see “Market Risk—Non-Markets Net Interest Income” below. +4 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_116.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0736d59bb9426ebdc79aa0e747b0b3783f2b068 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,2 @@ +This page intentionally left blank. +109 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_12.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..942b9aad838d3df2ef64c6611b4024420beb3483 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,6 @@ +Effective as of the fourth quarter of 2023, Citigroup was managed pursuant to five operating segments: Services, Markets, Banking, +U.S. Personal Banking and Wealth. Activities not assigned to the operating segments are included in All Other. + + Note: Mexico is included in International. +5 +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_13.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c4d57e6c7f6e636e108b73ce51a2be19243c48 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,113 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION +AND RESULTS OF OPERATIONS +EXECUTIVE SUMMARY +As described further throughout this Executive Summary, Citi +demonstrated substantial progress across the franchise during +2023, despite the impact of several notable items in the fourth +quarter: +• Citi’s revenues increased 4% versus the prior year, +reflecting an increase in net interest income in Services +and U.S. Personal Banking (USPB), driven by higher +interest rates, as well as loan growth in cards. The +increase in revenues was partially offset by lower non- +interest revenues, primarily driven by approximately $1.9 +billion in aggregate translation losses (including +approximately $880 million in the fourth quarter) due to +devaluations of the Argentine peso during the year, the +impact of lower volatility in Markets and the contraction +of the global investment banking wallet in Investment +Banking. +• Citi’s expenses increased 10% versus the prior year. The +increase included fourth-quarter pretax charges of +approximately $1.7 billion associated with the FDIC +special assessment and approximately $780 million of +restructuring charges. Excluding both of these charges, +expenses increased 5%, driven by increased investments +in other risk and controls and technology, elevated +business-as-usual severance costs and additional +transformation and business-led investments. The increase +was partially offset by productivity savings and expense +reductions from the exited markets and continued wind- +downs (see “Expenses” below). +• Citi’s cost of credit was $9.2 billion versus $5.2 billion in +the prior year. The increase was primarily driven by +higher cards net credit losses in Branded Cards and Retail +Services, reflecting normalization from historically low +levels. The increase was also due to net builds in the +allowance for credit losses (ACL), including +approximately $1.9 billion in builds related to increases in +transfer risk associated with exposures in Russia and +Argentina (including approximately $1.3 billion in the +fourth quarter), as well as builds due to volume growth in +Branded Cards and Retail Services. +• Citi returned $6.1 billion to common shareholders in the +form of dividends ($4.1 billion) and share repurchases +($2.0 billion). +• Citi’s Common Equity Tier 1 (CET1) Capital ratio under +the Basel III Standardized Approach increased to 13.4% +as of December 31, 2023, compared to 13.0% as of +December 31, 2022 (see “Capital Resources” below). This +compares to Citi’s required regulatory CET1 Capital ratio +of 12.3% as of October 1, 2023 under the Basel III +Standardized Approach. +• Citi closed the four remaining signed consumer banking +sale transactions in 2023. Citi also continued to make +progress with the wind-downs of the Korea and China +consumer banking businesses and the Russia consumer, +local commercial and institutional businesses, as well as +the planned initial public offering of Citi’s consumer +banking and small business and middle-market banking +operations in Mexico, and restarted the sales process for +its Poland consumer banking business. + +2023 Results Summary +Citigroup +Citigroup reported net income of $9.2 billion, or $4.04 per +share, compared to net income of $14.8 billion, or $7.00 per +share in the prior year. Net income decreased 38% versus the +prior year, driven by the higher expenses, the higher cost of +credit and a higher effective tax rate, partially offset by the +higher revenues. Citigroup’s effective tax rate was 27% in +2023 versus 19% in the prior year, largely driven by the +geographic mix of earnings (see Note 10). +As discussed above, results for 2023 included several +notable items impacting pretax revenues, expenses and cost of +credit: +• Approximately $1.9 billion of aggregate translation losses +in revenues due to devaluations of the Argentine peso +• Approximately $1.9 billion in aggregate reserve builds +related to increases in transfer risk associated with +exposures in Russia and Argentina, driven by safety and +soundness considerations under U.S. banking law +• An approximate $1.7 billion charge to operating expenses +related to the FDIC special assessment in the fourth +quarter +• Approximately $780 million of restructuring charges in +the fourth quarter, recorded in operating expenses in +Corporate/Other within All Other (managed basis), related +to actions taken as part of Citi’s organizational +simplification initiatives +In total, on an after-tax basis the notable items were $(5.4) +billion. +Additionally, results for 2023 included pretax divestiture- +related impacts of approximately $1.0 billion (approximately +$659 million after-tax), primarily driven by gains on sale of +Citi’s India and Taiwan consumer banking businesses. (See +“All Other—Divestiture-Related Impacts (Reconciling Items)” +below.) +The above notable items and divestiture-related impacts, +collectively, had a $2.40 negative impact on EPS in 2023. For +additional information on the translation losses due to the +devaluations of the Argentine peso, see “Managing Global +Risk—Other Risks—Country Risk—Argentina” below and +“Services,” “Markets” and “Banking” below. Excluding the +notable items and divestiture-related impacts, EPS was $6.44. +(As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the notable items +and divestiture-related impacts are non-GAAP financial +measures.) +Results for 2022 included pretax divestiture-related +impacts of $82 million. (See “All Other—Divestiture-Related +Impacts (Reconciling Items)” below.) Collectively, +divestiture-related impacts had a $0.09 negative impact on +6 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_14.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c37cbfb2e5e5acfb15d7c05f315b0486dfc59ad --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,116 @@ +EPS. Excluding divestiture-related impacts, EPS in 2022 was +$7.09. Results in 2022 also included approximately $820 +million of translation losses in revenues due to the +devaluations of the Argentine peso. +Citigroup revenues of $78.5 billion in 2023 increased 4% +on a reported basis. Excluding divestiture-related impacts, +revenues of $77.1 billion also increased 4% versus the prior +year. Excluding both divestiture-related and Argentine peso +devaluation impacts, revenues of $79 billion in 2023 increased +5% versus the prior year. The increase in revenues reflected +strength across Services and USPB, partially offset by declines +in Markets, Banking and Wealth, as well as the revenue +reduction from the exited markets and continued wind-downs +in All Other (managed basis). +Citigroup’s end-of-period loans were $689 billion, up 5% +versus the prior year, largely driven by growth in USPB. +Citigroup’s end-of-period deposits were approximately +$1.3 trillion, down 4% versus the prior year. The decline in +deposits was largely due to a reduction in Services, reflecting +quantitative tightening and a shift of deposits to higher- +yielding investments in USPB and Wealth in 2023. For +additional information about Citi’s deposits by business, +including drivers and deposit trends, see each respective +business’s results of operations and “Liquidity Risk— +Deposits” below. +Expenses +Citigroup’s operating expenses of $56.4 billion increased 10% +from the prior year. In the fourth quarter of 2023, Citi incurred +the approximate $1.7 billion charge associated with the FDIC +special assessment and approximately $780 million of +restructuring charges related to Citi’s organizational +simplification initiatives (see Note 9). Expenses also included +divestiture-related impacts of $372 million in 2023 and $696 +million in the prior year. Excluding divestiture-related +impacts, expenses of $56 billion increased 11% versus the +prior year. Excluding divestiture-related impacts, the +restructuring charges and the FDIC special assessment, +expenses of $53.5 billion increased 6%, driven by increased +investments in other risk and controls and technology, +elevated business-as-usual severance costs and additional +transformation and business-led investments. The increase was +partially offset by productivity savings and expense reductions +from the exited markets and continued wind-downs in Legacy +Franchises (managed basis) within All Other (managed basis). +Citi expects to incur additional costs related to its +organizational simplification in the first quarter of 2024. +Cost of Credit +Citi’s total provisions for credit losses and for benefits and +claims was a cost of $9.2 billion, compared to $5.2 billion in +the prior year. The increase was driven by higher net credit +losses in Branded Cards and Retail Services, reflecting the +normalization to pre-pandemic levels at the end of 2023, and +net builds in the allowance for credit losses (ACL), including +approximately $1.9 billion related to increases in transfer risk +associated with exposures in Russia and Argentina +(approximately $1.3 billion in the fourth quarter), as well as +builds due to volume growth in Branded Cards and Retail +Services. For additional information on Citi’s ACL, including +the builds for transfer risk, see “Significant Accounting +Policies and Significant Estimates—Citi’s Allowance for +Credit Losses (ACL)” below. +Net credit losses of $6.4 billion increased 70% from the +prior year. Consumer net credit losses of $6.2 billion increased +71%, largely reflecting the rise in cards net credit loss rates +from historically low levels. Corporate net credit losses +increased to $250 million from $178 million. +Citi expects to incur higher net credit losses in 2024, +primarily due to higher cards net credit loss rates, which Citi +expects to rise above pre-pandemic levels and, on a full-year +basis, peak in 2024. The higher net credit losses expectation is +already reflected in the Company’s ACL on loans for +outstanding balances at December 31, 2023. +For additional information on Citi’s consumer and +corporate credit costs, see each respective business’s results of +operations and “Credit Risk” below. +Capital +Citigroup’s CET1 Capital ratio was 13.4% as of December 31, +2023, compared to 13.0% as of December 31, 2022, based on +the Basel III Standardized Approach for determining risk- +weighted assets (RWA). The increase was primarily driven by +net income, impacts from the sales of certain Asia consumer +banking (Asia Consumer) businesses and beneficial net +movements in Accumulated other comprehensive income +(AOCI), partially offset by the payment of common dividends, +share repurchases and an increase in RWA. +In 2023, Citi repurchased $2.0 billion of common shares +and paid $4.1 billion of common dividends (see “Unregistered +Sales of Equity Securities, Repurchases of Equity Securities +and Dividends” below). Citi will continue to assess common +share repurchases on a quarter-by-quarter basis given +uncertainty regarding regulatory capital requirements. For +additional information on capital-related risks, trends and +uncertainties, see “Capital Resources—Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Citigroup’s Supplementary Leverage ratio as of +December 31, 2023 was 5.8%, unchanged from December 31, +2022 as higher Tier 1 Capital was offset by an increase in +Total Leverage Exposure. For additional information on Citi’s +capital ratios and related components, see “Capital Resources” +below. +Services +Services net income of $4.6 billion decreased 6%, as higher +expenses and higher cost of credit were partially offset by the +increase in revenues. Services expenses of $10.0 billion +increased 15%, primarily driven by continued investment in +technology and other risk and controls, volume-related +expenses and business-led investments in Treasury and Trade +Solutions (TTS), partially offset by the impact of productivity +savings. Cost of credit increased to $950 million from $207 +million the prior year, largely driven by an ACL build in other +assets, primarily due to the reserve build for increases in +transfer risk associated with exposures in Russia and +Argentina. +7 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_148.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e242b635fb8ca9f2b9278c92458f2dcd96a336 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,116 @@ +certain key assumptions and inputs for the Company’s +quantitative and qualitative components. The key +assumptions and inputs for consumer U.S. credit card +loans encompass loan delinquencies, certain credit +indicators, such as FICO scores, and expected life as well +as the reasonable and supportable forecasts for key +economic variables. The key economic variables include +U.S. unemployment (UER) and U.S. housing prices +(HPI), which are utilized by the models. The key +assumptions and inputs for corporate loans encompass +risk ratings, credit conversion factor for unfunded lending +commitments, and reasonable and supportable forecast for +key economic variables. The key economic variables +include U.S. real gross domestic product (GDP) and UER, +which are utilized by the model. The key assumptions and +inputs for the qualitative component for corporate loan +portfolios include potential impacts on vulnerable +industries and regions due to emerging macroeconomic +risks and uncertainty including those related to potential +global recession, inflation, interest rates, commodity +prices, and geopolitical tensions. The assessment also +included an evaluation of the conceptual soundness and +performance of the PD, LGD, and EAD models. In +addition, auditor judgment was required to evaluate the +sufficiency of audit evidence obtained. +The following are the primary procedures we +performed to address this critical audit matter. We +evaluated the design and tested the operating effectiveness +of certain internal controls related to the Company’s +measurement of the collective ACLL estimate, including +controls over the: +• approval of the collective ACLL methodologies +• determination of the key assumptions and inputs used +to estimate the quantitative and qualitative +components of the collective ACLL +• performance monitoring of the PD, LGD, and EAD +models. +We evaluated the Company’s process to develop the +collective ACLL estimate by testing certain sources of +data and assumptions that the Company used and +considered the relevance and reliability of such data and +assumptions. In addition, we involved credit risk +professionals with specialized skills and knowledge, who +assisted in: +• reviewing the Company’s collective ACLL +methodologies and key assumptions for compliance +with U.S. generally accepted accounting principles +• assessing the conceptual soundness and performance +testing of the PD, LGD, and EAD models by +inspecting the model documentation to determine +whether the models are suitable for their intended use +• evaluating judgments made by the Company relative +to the development and performance monitoring +testing of the PD, LGD, and EAD models by +comparing them to relevant Company-specific +metrics +• assessing the conceptual soundness and performance +testing of the macroeconomic scenario weights model +by inspecting the model documentation to determine +whether the model is suitable for its intended use +• assessing the economic forecast scenarios through +comparison to publicly available forecasts +• testing corporate loan risk ratings for a selection of +borrowers by evaluating the financial performance of +the borrower, sources of repayment, and any relevant +guarantees or underlying collateral +• evaluating the methodologies used in determining the +qualitative components and the effect of that +component on the collective ACLL compared with +relevant credit risk factors and consistency with +credit trends. +We also assessed the sufficiency of the audit +evidence obtained related to the collective ACLL by +evaluating the: +• cumulative results of the audit procedures +• qualitative aspects of the Company’s accounting +practices +• potential bias in the accounting estimates +Evaluation of goodwill in the Wealth, Markets and U.S. +Personal Banking (USPB) reporting units +As discussed in Notes 1 and 17 to the consolidated +financial statements, the goodwill balance as of December +31, 2023 was $20.1 billion, of which $4.5 billion related +to Wealth, $5.2 billion related to Markets and $5.4 billion +related to USPB as of October 1, 2023, prior to the +Markets and Banking business realignment. +The Company performs goodwill impairment testing +on an annual basis and whenever events or changes in +circumstances indicate that the carrying value of a +reporting unit likely exceeds its fair value. This involves +estimating the fair value of the reporting units using both +discounted cash flow analyses and a market multiples +approach. The Company performed its annual assessment +on October 1, 2023. We identified the evaluation of the +goodwill impairment analysis for Wealth, Markets, and +USPB as of October 1, 2023 as a critical audit matter. +In the fourth quarter, the Company identified the +reorganization described in Note 3 as a triggering event +due to a change in management for Markets, Banking, +Services, USPB, and Wealth and the business realignment +between Banking and Markets. The Company performed +additional goodwill impairment testing as of December +13, 2023, the effective date of the reorganization. The +evaluation of goodwill impairment testing as of December +13, 2023 was not identified as a critical audit matter. +The evaluation of the goodwill impairment analysis +for Wealth, Markets, and USPB as of October 1, 2023 +was identified as a critical audit matter because as of +October 1, 2023, the estimated fair value of the Wealth, +Markets, and USPB reporting units marginally exceeded +their carrying values at the conclusion of impairment +tests. This indicated a higher risk due to measurement +uncertainty that the goodwill may be impaired and, +therefore, involved a high degree of subjective auditor +judgment. Specifically, the assessment encompassed the +141 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_149.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..517bfa07135bb117d76467769b2eb1e24487e4a5 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,61 @@ +evaluation of the key assumptions used in estimating the +fair value of the Wealth, Markets, and USPB reporting +units, which include the long-term growth rate, discount +rate, exit multiple assumptions, certain forecasted +macroeconomic assumptions used to inform the +forecasted income by reporting unit, and forecasted +revenues and operating expenses by reporting unit used in +the discounted cash flow analyses. +The following are the primary procedures we +performed to address this critical audit matter. We +evaluated the design and tested the operating effectiveness +of certain internal controls related to the Company’s +determination of the estimated fair value of the Wealth, +Markets, and USPB units, including controls related to +management’s process for assessing the appropriateness +of: +• certain assumptions including the long-term growth +rate, discount rate, and exit multiple assumptions +used in the discounted cash flow analyses +• certain forecasted macroeconomic assumptions used +to inform the forecasted income by reporting unit +• forecasted revenues and operating expenses by +reporting unit. +We compared the Company’s historical forecasts to +actual results at a consolidated level to assess the +Company’s ability to accurately forecast key metrics such +as revenues and operating expenses. We also compared +prior year actuals to the expected trends for revenues and +operating expenses at the reporting unit level to assess the +Company’s ability to achieve their forecasts. We +compared the Company’s fourth quarter 2023 forecasts to +actual fourth quarter 2023 results at the reporting unit +level to assess the Company’s ability to accurately +forecast. We evaluated the reasonableness of the +Company’s forecasts by comparing to analyst reports. +In addition, we involved a valuation professional with +specialized skills and knowledge, who assisted in: +• developing an independent range of long-term growth +rate assumptions by reviewing publicly available data +and comparable industries and comparing it to the +Company’s assumption +• evaluating the discount rate by assessing the +methodology used by management and developing an +independent assumption for the discount rate +• developing an independent range of the exit multiple +assumptions using publicly available data for +comparable entities and comparing it to the +Company’s assumption utilized in the discounted +cash flow analysis +• developing an independent estimate of the fair value +of the Wealth, Markets, and USPB reporting units +using the income and market multiple approaches and +comparing the results to the Company’s fair value +estimate +• assessing the reasonableness of the market +capitalization reconciliation. +/s/ KPMG LLP +We have served as the Company’s auditor since 1969. +New York, New York +February 23, 2024 +142 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_15.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..366661ab71b1c82bd314cf254e1e28c431cf6f6f --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,118 @@ +Services revenues of $18.1 billion increased 16%, driven +by net interest income growth of 28%, partially offset by an +8% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations (approximately $1.2 billion in +2023 and approximately $0.4 billion in 2022). Excluding this +impact, non-interest revenue increased 6%. +TTS revenues of $13.6 billion increased 16%, driven by +25% growth in net interest income, partially offset by an 11% +decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in TTS net interest +income was primarily driven by higher interest rates and cost +of funds management across currencies, as well as growth in +deposits. Excluding the impact of the currency devaluations, +non-interest revenue increased 10%, driven by continued +growth in underlying drivers. +Securities Services revenues of $4.4 billion increased +15%, as net interest income grew 46%, partially offset by a +5% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in net interest +income was driven by higher interest rates across currencies +and cost of funds management, partially offset by lower +average deposits. +Excluding the impact of the currency devaluations, non- +interest revenue increased 1%, driven by increased fees from +higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +For additional information on the results of operations of +Services in 2023, see “Services” below. +Markets +Markets net income of $4.0 billion decreased 33%, driven by +lower revenues, higher expenses and higher cost of credit. +Markets expenses of $13.2 billion increased 7%, primarily +driven by investments in transformation, technology and other +risk and controls, partially offset by productivity savings. Cost +of credit increased to $437 million from $155 million in the +prior year, driven by an ACL build in other assets, largely due +to the reserve build for increases in transfer risk associated +with exposures in Russia and Argentina. +Markets revenues of $18.9 billion decreased 6%, driven +by a 6% decrease in Fixed Income markets and a 9% decrease +in Equity markets. The decrease in Fixed Income was driven +by a decrease in rates and currencies and spread products +reflecting lower volatility, the impact of the Argentine peso +devaluations, a strong prior-year comparison and a significant +slowdown in activity in December 2023. The decrease in +Equity markets was primarily due to a decline in equity +derivatives, due to lower institutional activity, spread +compression and lower volatility. +For additional information on the results of operations of +Markets in 2023, see “Markets” below. +Banking +Banking reported a net loss of $48 million, compared to net +income of $386 million in the prior year, primarily driven by +lower Corporate Lending revenues, including the impact of a +loss on loan hedges, and higher expenses, partially offset by +lower cost of credit. Banking expenses of $4.9 billion +increased 9%, primarily driven by the absence of an +operational loss reserve release in the prior year, business-led +investments and the impact of business-as-usual severance, +partially offset by productivity savings. Cost of credit was a +benefit of $165 million, compared to cost of credit of $549 +million in the prior year, driven by ACL releases in loans and +unfunded lending commitments, partially offset by an ACL +build in other assets. +Banking revenues of $4.6 billion decreased 15%, +including the $443 million loss on loan hedges in 2023 and the +$307 million gain on loan hedges in the prior year. Excluding +the gain (loss) on loan hedges, Banking revenues of $5.0 +billion decreased 2%, as slightly higher revenues in +Investment Banking were more than offset by lower Corporate +Lending revenues. Investment Banking revenues of $2.5 +billion increased 1%, driven by lower markdowns in non- +investment-grade loan commitments. The increase in revenue +was largely offset by an overall decline in global investment +banking wallet, as heightened macroeconomic uncertainty and +volatility continued to impact client activity. Excluding the +impact of the gain (loss) on loan hedges, Corporate Lending +revenues decreased 4%, largely driven by lower volumes on +continued balance sheet optimization. The decline in revenues +also reflected approximately $134 million in translation losses +in Argentina due to devaluations of the Argentine peso, +including a $64 million translation loss in the fourth quarter of +2023. (As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the impact of the +gain (loss) on loan hedges are non-GAAP financial measures.) +For additional information on the results of operations of +Banking in 2023, see “Banking” below. +U.S. Personal Banking +USPB net income of $1.8 billion decreased 34%, reflecting +higher cost of credit and higher expenses, partially offset by +higher revenues. USPB expenses increased 3%, primarily +driven by continued investments in other risk and controls and +technology, business-led investments and business-as-usual +severance costs, partially offset by productivity savings. Cost +of credit increased to $6.7 billion, compared to $3.4 billion in +the prior year. The increase was largely driven by higher net +credit losses and a higher net ACL build, primarily reflecting +growth in loan balances in Branded Cards and Retail Services. +Net credit losses increased 79%, primarily reflecting +normalization from historically low levels in U.S. cards, as net +credit loss rates for both Branded Cards and Retail Services +reached pre-pandemic levels at the end of 2023. +USPB revenues of $19.2 billion increased 14%, due to +higher net interest income (up 12%), driven by strong loan +growth and higher deposit spreads, as well as higher non- +interest revenue (up 19%). Branded Cards revenues of $10.0 +billion increased 11%, primarily driven by the higher net +interest income, as average loans increased 13%. Retail +Services revenues of $6.6 billion increased 21%, primarily +driven by the higher net interest income from loan growth, as +well as higher non-interest revenue due to the lower partner +payments, driven by higher net credit losses. Retail Banking +revenues of $2.6 billion increased 6%, primarily driven by +higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. +8 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_158.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..dec73cd14b29786973e1979682af31e19e6d6a09 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,40 @@ +CONSOLIDATED STATEMENT OF CASH FLOWS +(Continued) +Citigroup Inc. and Subsidiaries +Years ended December 31, +In millions of dollars 2023 2022 2021 +Change in securities loaned and sold under agreements to repurchase $ 75,663 $ 11,159 $ (8,240) +Issuance of long-term debt 65,819 104,748 70,658 +Payments and redemptions of long-term debt (64,959) (57,085) (74,950) +Change in deposits (57,273) 68,415 44,966 +Change in short-term borrowings (9,639) 19,123 (1,541) +Net cash provided by financing activities of continuing operations $ 687 $ 137,763 $ 17,272 +Effect of exchange rate changes on cash, due from banks and deposits with banks $ 95 $ (3,385) $ (1,198) +Change in cash, due from banks and deposits with banks (81,093) 79,992 (47,582) +Cash, due from banks and deposits with banks at beginning of year 342,025 262,033 309,615 +Cash, due from banks and deposits with banks at end of year $ 260,932 $ 342,025 $ 262,033 +Cash and due from banks (including segregated cash and other deposits) $ 27,342 $ 30,577 $ 27,515 +Deposits with banks, net of allowance 233,590 311,448 234,518 +Cash, due from banks and deposits with banks at end of year $ 260,932 $ 342,025 $ 262,033 +Supplemental disclosure of cash flow information for continuing operations +Cash paid during the year for income taxes $ 5,727 $ 3,733 $ 4,028 +Cash paid during the year for interest 72,989 22,615 7,143 +Non-cash investing activities(1)(3)(4) +Transfer of investment securities from HTM to AFS $ 3,324 $ — $ — +Transfer of investment securities from AFS to HTM — 21,688 — +Decrease in net loans associated with divestitures reclassified to HFS — 16,956 9,945 +Decrease in goodwill associated with divestitures reclassified to HFS — 876 — +Transfers to loans HFS (Other assets) from loans HFI 7,866 5,582 7,414 +Transfers from loans HFS (Other assets) to loans HFI 322 — — +Non-cash financing activities(1)(4) +Decrease in long-term debt associated with divestitures reclassified to HFS $ — $ — $ 479 +Decrease in deposits associated with divestitures reclassified to HFS — 19,691 8,407 +(1) See Note 2. +(2) Includes balances related to the FDIC special assessment and restructuring charges. See Notes 9 and 30. +(3) In January 2023, Citi adopted ASU 2022-01. Upon adoption, Citi transferred $3.3 billion of mortgage-backed securities from HTM classification to AFS +classification as allowed under the ASU. At the time of transfer, the securities were in an unrealized gain position of $0.1 billion, which was recorded in AOCI +upon transfer. +(4) Operating and finance lease right-of-use assets and lease liabilities represent non-cash investing and financing activities, respectively, and are not included in the +non-cash investing activities presented here. See Note 29 for more information and balances as of December 31, 2023 and 2022. +The Notes to the Consolidated Financial Statements are an integral part of these Consolidated Financial Statements. +151 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_159.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..beb87e77e6688a8faaee4f513b6c74fe31c211cf --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,108 @@ +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +1. SUMMARY OF SIGNIFICANT ACCOUNTING +POLICIES +Throughout these Notes, “Citigroup,” “Citi” and the +“Company” refer to Citigroup Inc. and its consolidated +subsidiaries. +Certain reclassifications and updates have been made to +the prior periods’ financial statements and notes to conform to +the current period’s presentation. +Principles of Consolidation +The Consolidated Financial Statements include the accounts of +Citigroup and its subsidiaries prepared in accordance with +U.S. generally accepted accounting principles (GAAP). The +Company consolidates subsidiaries in which it holds, directly +or indirectly, more than 50% of the voting rights or where it +exercises control. Entities in which the Company holds 20% to +50% of the voting rights and/or has the ability to exercise +significant influence, other than investments of designated +venture capital subsidiaries or investments accounted for at +fair value under the fair value option, are accounted for under +the equity method, and the pro rata share of their income (loss) +is included in Other revenue. Income from investments in less- +than-20%-owned companies is recognized when dividends are +received. As discussed in more detail in Note 23, Citigroup +also consolidates entities deemed to be variable interest +entities when Citigroup is determined to be the primary +beneficiary. Gains and losses on the disposition of branches, +subsidiaries, affiliates, buildings and other investments are +included in Other revenue. +Citibank +Citibank, N.A. (Citibank) is a commercial bank and indirect +wholly owned subsidiary of Citigroup. Citibank’s principal +offerings include investment banking, commercial banking, +cash management, trade finance and e-commerce; private +banking products and services; consumer finance, credit cards +and mortgage lending; and retail banking products and +services. +Variable Interest Entities (VIEs) +An entity is a variable interest entity (VIE) if it meets either of +the criteria outlined in Accounting Standards Codification +(ASC) Topic 810, Consolidation, which are (i) the entity has +equity that is insufficient to permit the entity to finance its +activities without additional subordinated financial support +from other parties, or (ii) the entity has equity investors that +cannot make significant decisions about the entity’s operations +or that do not absorb their proportionate share of the entity’s +expected losses or expected returns. +The Company consolidates a VIE when it has both the +power to direct the activities that most significantly impact the +VIE’s economic performance and a right to receive benefits or +the obligation to absorb losses of the entity that could be +potentially significant to the VIE (that is, Citi is the primary +beneficiary). In addition to variable interests held in +consolidated VIEs, the Company has variable interests in other +VIEs that are not consolidated because the Company is not the +primary beneficiary. +All unconsolidated VIEs are monitored by the Company +to assess whether any events have occurred to cause its +primary beneficiary status to change. +All entities not deemed to be VIEs with which the +Company has involvement are evaluated for consolidation +under other subtopics of ASC 810. See Note 23 for more +detailed information. +Foreign Currency Translation +Assets and liabilities of Citi’s foreign operations are translated +from their respective functional currencies into U.S. dollars +using period-end spot foreign exchange rates. The effects of +those translation adjustments are reported in Accumulated +other comprehensive income (loss) (AOCI), a component of +stockholders’ equity, net of any related hedge and tax effects, +until realized upon sale or substantial liquidation of the foreign +entity, at which point such amounts are reclassified into +earnings. Revenues and expenses of Citi’s foreign operations +are translated monthly from their respective functional +currencies into U.S. dollars at amounts that approximate +weighted-average exchange rates. +For transactions that are denominated in a currency other +than the functional currency, including transactions +denominated in the local currencies of foreign operations that +use the U.S. dollar as their functional currency, the effects of +changes in exchange rates are primarily included in Principal +transactions, along with the related effects of any economic +hedges. Instruments used to hedge foreign currency exposures +include foreign currency forward, option and swap contracts +and, in certain instances, designated issues of non-U.S.-dollar +debt. Foreign operations in countries with highly inflationary +economies designate the U.S. dollar as their functional +currency, with the effects of changes in exchange rates +primarily included in Other revenue. +Investment Securities +Investments include debt and equity securities. Debt securities +include bonds, notes and redeemable preferred stocks, as well +as certain loan-backed and structured securities that are subject +to prepayment risk. Equity securities include common and +nonredeemable preferred stock. +Debt Securities +• Debt securities classified as “held-to-maturity” (HTM) are +securities that the Company has both the ability and the +intent to hold until maturity and are carried at amortized +cost. Interest income on such securities is included in +Interest revenue. +• Debt securities classified as “available-for-sale” (AFS) +are carried at fair value with changes in fair value +reported in Accumulated other comprehensive income +(loss), a component of stockholders’ equity, net of +applicable income taxes and hedges. Interest income on +such securities is included in Interest revenue. +152 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_16.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..25d111c61be44471c9d2eaaa2689b92a19fe05f1 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,94 @@ +For additional information on the results of operations of +USPB in 2023, see “U.S. Personal Banking” below. +Wealth +Wealth net income of $346 million decreased 64%, reflecting +lower revenues and higher expenses, partially offset by lower +cost of credit. Wealth expenses increased 10% to $6.6 billion, +primarily driven by continued investments in other risk and +controls and technology, partially offset by productivity +savings and re-pacing of strategic investments. Cost of credit +was a net benefit of $2 million, compared to cost of credit of +$306 million in the prior year, largely driven by a net ACL +release. +Wealth revenues of $7.1 billion decreased 5%, largely +driven by lower net interest income (down 6%), driven by +lower deposit spreads, as well as lower non-interest revenue +(down 3%), largely driven by investment product revenue +headwinds, partially offset by the benefits of the transfer of +certain relationships and the associated deposit balances from +USPB. +For additional information on the results of operations of +Wealth in 2023, see “Wealth” below. +All Other (Managed Basis) +All Other (managed basis) net loss of $2.1 billion, compared to +net income of $163 million in the prior year, was driven by +higher expenses, primarily due to the $1.7 billion FDIC +special assessment, and higher cost of credit due to ACL +builds for loans in Mexico Consumer and other assets, +reflecting an increase in transfer risk associated with +exposures in Russia. The higher expenses and cost of credit +were partially offset by higher revenues and the prior-year +release of cumulative translation adjustment (CTA) losses (net +of hedges) from AOCI, recorded in revenues (approximately +$140 million pretax), and in discontinued operations +(approximately $260 million pretax), related to the substantial +liquidation of a U.K. consumer legacy operation (see Note 2). +For additional information on the results of operations of +All Other (managed basis) in 2023, see “All Other— +Divestiture-Related Impacts (Reconciling Items)” and “All +Other (Managed Basis)” below. +Macroeconomic and Other Risks and Uncertainties +Various geopolitical, macroeconomic and regulatory +challenges and uncertainties continue to adversely affect +economic conditions in the U.S. and globally, including, +among others, continued elevated interest rates, elevated +inflation, and economic and geopolitical challenges related to +China, the Russia–Ukraine war and escalating conflicts in the +Middle East. These and other factors have negatively impacted +global economic growth rates and consumer sentiment and +have resulted in a continued risk of recession in various +regions and countries globally. In addition, these and other +factors could adversely affect Citi’s customers, clients, +businesses, funding costs, cost of credit and overall results of +operations and financial condition during 2024. +For a further discussion of trends, uncertainties and risks +that will or could impact Citi’s businesses, results of +operations, capital and other financial condition during 2024, +see “Executive Summary” above and “Risk Factors,” each +respective business’s results of operations and “Managing +Global Risk,” including “Managing Global Risk—Other Risks +—Country Risk—Russia” and “—Argentina” below. + +CITI’S CONSENT ORDER COMPLIANCE +Citi has embarked on a multiyear transformation, with the +target outcome to change Citi’s business and operating models +such that they simultaneously strengthen risk and controls and +improve Citi’s value to customers, clients and shareholders. +This includes efforts to effectively implement the October +2020 Federal Reserve Board (FRB) and Office of the +Comptroller of the Currency (OCC) consent orders issued to +Citigroup and Citibank, respectively. In the second quarter of +2021, Citi made an initial submission to the OCC, and +submitted its plans to address the consent orders to both +regulators during the third quarter of 2021. Citi continues to +work constructively with the regulators and provides to both +regulators on an ongoing basis additional information +regarding its plans and progress. Citi will continue to reflect +their feedback in its project plans and execution efforts. +As discussed above, Citi’s efforts include continued +investments in its transformation, including the remediation of +its consent orders. Citi’s CEO has made the strengthening of +Citi’s risk and control environment a strategic priority and has +established a Chief Operating Officer organization to +centralize program management. In addition, the Citigroup +and Citibank Boards of Directors each formed a +Transformation Oversight Committee, an ad hoc committee of +each Board, to provide oversight of management’s +remediation efforts under the consent orders. The Citi Board +of Directors has determined that Citi’s plans are responsive to +the Company’s objectives and that progress continues to be +made on execution of the plans. +For additional information about the consent orders, see +“Risk Factors—Compliance Risks” below and Citi’s Current +Report on Form 8-K filed with the SEC on October 7, 2020. +9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_160.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e93073aee61426ee1d92b5385736ce7e5e9cd94 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,115 @@ +For investments in debt securities classified as HTM or +AFS, accrued interest is subject to the Company’s non-accrual +policy, which results in the timely write-off of accrued +interest. +Investment securities not measured at fair value through +earnings include (i) debt securities held in HTM or AFS, (ii) +equity securities accounted for under the measurement +alternative or equity method, (iii) Federal Reserve Bank and +Federal Home Loan Bank stock and (iv) certain exchange +memberships. These securities are subject to evaluation for +impairment as described in Note 16 for HTM securities and in +Note 14 for AFS, measurement alternative and equity method +investments. Realized gains and losses on sales of investments +are included in earnings, primarily on a specific identification +basis. +The Company uses a number of valuation techniques for +investments carried at fair value, which are described in Note +26. +Equity Securities +• Marketable equity securities are measured at fair value +with changes in fair value recognized in earnings. +• Non-marketable equity securities are measured at fair +value with changes in fair value recognized in earnings +unless (i) the measurement alternative is elected or (ii) the +investment represents Federal Reserve Bank and Federal +Home Loan Bank stock or certain exchange seats that +continue to be carried at cost. Non-marketable equity +securities under the measurement alternative are carried at +cost less impairment (if any), plus or minus changes +resulting from observed prices for orderly transactions for +the identical or a similar investment of the same issuer. +• Certain investments that would otherwise have been +accounted for using the equity method are carried at fair +value with changes in fair value recognized in earnings, +since the Company elected to apply fair value accounting. +Trading Account Assets and Liabilities +Trading account assets include debt and marketable equity +securities, derivatives in a receivable position, residual +interests in securitizations and physical commodities +inventory. In addition, as described in Note 27, certain assets +that Citigroup has elected to carry at fair value under the fair +value option, such as loans and purchased guarantees, are also +included in Trading account assets. +Trading account liabilities include securities sold, not yet +purchased (short positions) and derivatives in a net payable +position, as well as certain liabilities that Citigroup has elected +to carry at fair value (as described in Note 27). +Other than physical commodities inventory, all trading +account assets and liabilities are carried at fair value. +Revenues generated from trading assets and trading liabilities +are generally reported in Principal transactions and include +realized gains and losses as well as unrealized gains and losses +resulting from changes in the fair value of such instruments. +Interest income on trading assets is recorded in Interest +revenue reduced by interest expense on trading liabilities. +Physical commodities inventory is carried at the lower of +cost or market with related losses reported in Principal +transactions, except when included in a hedging relationship. +Realized gains and losses on sales of commodities inventory +are included in Principal transactions. Investments in +unallocated precious metals accounts (gold, silver, platinum +and palladium) are accounted for as hybrid instruments +containing a debt host contract and an embedded non-financial +derivative instrument indexed to the price of the relevant +precious metal. The embedded derivative instrument and debt +host contract are carried at fair value under the fair value +option, as described in Note 27. +Derivatives used for trading purposes include interest rate, +currency, equity, credit and commodity swap agreements, +options, caps and floors, warrants, and financial and +commodity futures and forward contracts. Derivative asset and +liability positions are presented net by counterparty on the +Consolidated Balance Sheet when a valid master netting +agreement exists and the other conditions set out in ASC +Topic 210-20, Balance Sheet—Offsetting, are met. See Note +24. +The Company uses a number of techniques to determine +the fair value of trading assets and liabilities, which are +described in Note 26. +Securities Borrowed and Securities Loaned +Securities borrowing and lending transactions do not +constitute a sale of the underlying securities for accounting +purposes and are treated as collateralized financing +transactions. Such transactions are recorded at the amount of +proceeds advanced or received plus accrued interest. As +described in Note 27, the Company has elected to apply fair +value accounting to a number of securities borrowing and +lending transactions. Fees received or paid for all securities +borrowing and lending transactions are recorded in Interest +revenue or Interest expense at the contractually specified rate. +Where the conditions of ASC 210-20-45-1, Balance +Sheet—Offsetting: Right of Setoff Conditions, are met, +securities borrowing and lending transactions are presented net +on the Consolidated Balance Sheet. +The Company monitors the fair value of securities +borrowed or loaned on a daily basis and obtains or posts +additional collateral in order to maintain contractual margin +protection. +As described in Note 26, the Company uses a discounted +cash flow technique to determine the fair value of securities +lending and borrowing transactions. +Repurchase and Resale Agreements +Securities sold under agreements to repurchase (repos) and +securities purchased under agreements to resell (reverse repos) +do not constitute a sale (or purchase) of the underlying +securities for accounting purposes and are treated as +collateralized financing transactions. As described in Note 27, +the Company has elected to apply fair value accounting to +certain portions of such transactions, with changes in fair +value reported in earnings. Any transactions for which fair +value accounting has not been elected are recorded at the +amount of cash advanced or received plus accrued interest. +Irrespective of whether the Company has elected fair value +accounting, interest paid or received on all repo and reverse +153 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_161.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..2db29448409fcd1cf9cea4ce329d9eec059140aa --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,114 @@ +repo transactions is recorded in Interest expense or Interest +revenue at the contractually specified rate. +Where the conditions of ASC 210-20-45-11, Balance +Sheet—Offsetting: Repurchase and Reverse Repurchase +Agreements, are met, repos and reverse repos are presented net +on the Consolidated Balance Sheet. +The Company’s policy is to take possession of securities +purchased under reverse repurchase agreements. The +Company monitors the fair value of securities subject to +repurchase or resale on a daily basis and obtains or posts +additional collateral in order to maintain contractual margin +protection. +As described in Note 26, the Company uses a discounted +cash flow technique to determine the fair value of repo and +reverse repo transactions. +Loans +Loans are reported at their outstanding principal balances net +of any unearned income and unamortized deferred fees and +costs, except for credit card receivable balances, which include +accrued interest and fees. Loan origination fees and certain +direct origination costs are generally deferred and recognized +as adjustments to income over the lives of the related loans. +As described in Note 27, Citi has elected fair value +accounting for certain loans. Such loans are carried at fair +value with changes in fair value reported in earnings. Interest +income on such loans is recorded in Interest revenue at the +contractually specified rate. +Loans that are held-for-investment are classified as Loans, +net of unearned income on the Consolidated Balance Sheet, +and the related cash flows are included within the cash flows +from the investing activities category in the Consolidated +Statement of Cash Flows on the line Change in loans. +However, when the initial intent for holding a loan has +changed from held-for-investment to held-for-sale (HFS), the +loan is reclassified to HFS, but the related cash flows continue +to be reported in cash flows from investing activities in the +Consolidated Statement of Cash Flows on the line Proceeds +from sales and securitizations of loans. +Consumer Loans +Consumer loans represent loans and leases managed primarily +by the USPB, Wealth and All Other—Legacy Franchises +businesses (except Mexico SBMM loans). +Consumer Non-accrual and Re-aging Policies +As a general rule, interest accrual ceases for installment and +real estate (both open- and closed-end) loans when payments +are 90 days contractually past due. For credit cards and other +unsecured revolving loans, however, Citi generally accrues +interest until payments are 180 days past due. As a result of +OCC guidance, home equity loans in regulated bank entities +are classified as non-accrual if the related residential first +mortgage is 90 days or more past due. Also as a result of OCC +guidance, mortgage loans in regulated bank entities are +classified as non-accrual within 60 days of notification that the +borrower has filed for bankruptcy, with the exception of +Federal Housing Administration (FHA)–insured loans. +Loans that have been modified to grant a concession to a +borrower in financial difficulty may not be accruing interest at +the time of the modification. The policy for returning such +modified loans to accrual status varies by product and/or +region. In most cases, a minimum number of payments +(ranging from one to six) is required, while in other cases the +loan is never returned to accrual status. For regulated bank +entities, such modified loans are returned to accrual status if a +credit evaluation at the time of, or subsequent to, the +modification indicates the borrower is able to meet the +restructured terms, and the borrower is current and has +demonstrated a reasonable period of sustained payment +performance (minimum six months of consecutive payments). +For U.S. consumer loans, generally one of the conditions +to qualify for modification (other than for loan modifications +made through the CARES Act relief provisions or banking +agency guidance for pandemic-related issues) is that a +minimum number of payments (typically ranging from one to +three) must be made. Upon modification, the loan is re-aged to +current status. However, re-aging practices for certain open- +ended consumer loans, such as credit cards, are governed by +Federal Financial Institutions Examination Council (FFIEC) +guidelines. For open-ended consumer loans subject to FFIEC +guidelines, one of the conditions for the loan to be re-aged to +current status is that at least three consecutive minimum +monthly payments, or the equivalent amount, must be +received. In addition, under FFIEC guidelines, the number of +times that such a loan can be re-aged is subject to limitations +(generally once in 12 months and twice in five years). +Furthermore, FHA and Department of Veterans Affairs (VA) +loans may only be modified under those respective agencies’ +guidelines, and payments are not always required in order to +re-age a modified loan to current. +Consumer Charge-Off Policies +Citi’s charge-off policies follow the general guidelines below: +• Unsecured installment loans are charged off at 120 days +contractually past due. +• Unsecured revolving loans and credit card loans are +charged off at 180 days contractually past due. +• Loans secured with non-real estate collateral are written +down to the estimated value of the collateral, less costs to +sell, at 120 days contractually past due. +• Real estate-secured loans are written down to the +estimated value of the property, less costs to sell, at 180 +days contractually past due. +• Real estate-secured loans are charged off no later than 180 +days contractually past due if a decision has been made +not to foreclose on the loans. +• Unsecured loans in bankruptcy are charged off within 60 +days of notification of filing by the bankruptcy court or in +accordance with Citi’s charge-off policy, whichever +occurs earlier. +• Real estate-secured loans in bankruptcy, other than FHA- +insured loans, are written down to the estimated value of +the property, less costs to sell, within 60 days of +notification that the borrower has filed for bankruptcy or +in accordance with Citi’s charge-off policy, whichever is +earlier. +154 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_162.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..9455e5c9b33130454b038e173c0b49f7b0bc0ee7 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,109 @@ +Corporate Loans +Corporate loans represent loans and leases managed by +Services, Markets and Banking and the Mexico SBMM +component of All Other—Legacy Franchises. Corporate loans +are identified as impaired and placed on a cash (non-accrual) +basis when it is determined, based on actual experience and a +forward-looking assessment of the collectibility of the loan in +full, that the payment of interest or principal is doubtful or +when interest or principal is 90 days past due, except when the +loan is well collateralized and in the process of collection. Any +interest accrued on impaired corporate loans and leases is +reversed at 90 days past due and charged against current +earnings, and interest is thereafter included in earnings only to +the extent actually received in cash. When there is doubt +regarding the ultimate collectibility of principal, all cash +receipts are thereafter applied to reduce the recorded +investment in the loan. +Impaired corporate loans and leases are written down to +the extent that principal is deemed to be uncollectible. +Impaired collateral-dependent loans and leases, where +repayment is expected to be provided solely by the sale of the +underlying collateral and there are no other available and +reliable sources of repayment, are carried at the lower of +amortized cost or collateral value. Cash-basis loans are +returned to accrual status when all contractual principal and +interest amounts are reasonably assured of repayment and +there is a sustained period of repayment performance in +accordance with the contractual terms. +Loans Held-for-Sale +Corporate and consumer loans that have been identified for +sale are classified as loans HFS and included in Other assets. +The practice of Citi’s U.S. prime mortgage business has been +to sell substantially all of its conforming loans. As such, U.S. +prime mortgage conforming loans are classified as HFS and +the fair value option is elected at origination, with changes in +fair value recorded in Other revenue. With the exception of +those loans for which the fair value option has been elected, +HFS loans are accounted for at the lower of cost or market +value, with any write-downs or subsequent recoveries charged +to Other revenue. The related cash flows are classified in the +Consolidated Statement of Cash Flows in the cash flows from +operating activities category on the line Change in loans HFS. +Gains and losses on loans HFS are generally presented in +Other revenue. Gains on sales of fully or partially charged-off +loans are presented as gross credit recoveries in the Provision +for credit losses up to the amount of prior charge-offs. +Allowances for Credit Losses (ACL) +The current expected credit losses (CECL) methodology is +based on relevant information about past events, including +historical experience, current conditions and reasonable and +supportable (R&S) forecasts that affect the collectibility of the +reported financial asset balances. If the asset’s life extends +beyond the R&S forecast period, then historical experience is +considered over the remaining life of the assets in the ACL. +The resulting ACL is adjusted in each subsequent reporting +period through Provisions for credit losses in the Consolidated +Statement of Income to reflect changes in history, current +conditions and forecasts as well as changes in asset positions +and portfolios. ASC 326 defines the ACL as a valuation +account that is deducted from the amortized cost of a financial +asset to present the net amount that management expects to +collect on the financial asset over its expected life. All +financial assets carried at amortized cost are in the scope of +ASC 326, while assets measured at fair value are excluded. +See Note 14 for a discussion of impairment on available-for- +sale (AFS) securities. +Increases and decreases to the allowances are recorded in +Provisions for credit losses. The CECL methodology utilizes a +lifetime expected credit loss (ECL) measurement objective for +the recognition of credit losses for held-for-investment (HFI) +loans, held-to-maturity (HTM) debt securities, receivables and +other financial assets measured at amortized cost at the time +the financial asset is originated or acquired. Within the life of +a loan or other financial asset, the methodology generally +results in earlier recognition of the provision for credit losses +and the related ACL. +Estimation of ECLs requires Citi to make assumptions +regarding the likelihood and severity of credit loss events and +their impact on expected cash flows, which drive the +probability of default (PD), loss given default (LGD) and +exposure at default (EAD) models and, where Citi discounts +the ECL, using discounting techniques for certain products. +Citi considers a multitude of global macroeconomic +variables for the base, upside and downside probability- +weighted macroeconomic scenario forecasts it uses to estimate +the ACL. Citi’s forecasts of the U.S. unemployment rate and +U.S. real GDP growth rate represent the key macroeconomic +variables that most significantly affect its estimate of the ACL. +Under the base macroeconomic forecast as of 4Q23, U.S. real +GDP growth is expected to decline during 2024, and the +unemployment rate is expected to increase modestly over the +forecast horizon, broadly returning to pre-pandemic levels. +The macroeconomic scenario weights are estimated using +a statistical model, which, among other factors, takes into +consideration key macroeconomic drivers of the ACL, severity +of the scenario and other macroeconomic uncertainties and +risks. Citi evaluates scenario weights on a quarterly basis. +Citi’s downside scenario incorporates more adverse +macroeconomic assumptions than the base scenario. For +example, compared to the base scenario, Citi’s downside +scenario reflects a recession, including an elevated average +U.S. unemployment rate of 6.8% over the eight-quarter R&S +period, with a peak difference of 3.2% in the second quarter of +2025. The downside scenario also reflects a year-over-year +U.S. real GDP contraction in 2024 of 1.9%, with a peak +quarter-over-quarter difference to the base scenario of 1.2% in +the first quarter of 2024. +155 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_163.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..7c5e03997d56053ce7334be5c6bb808516fb8434 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,117 @@ +The following are the main factors and interpretations that +Citi considers when estimating the ACL under the CECL +methodology: +• CECL reserves are estimated over the contractual term of +the financial asset, which is adjusted for expected +prepayments. Expected extensions are generally not +considered unless the option to extend the loan cannot be +canceled unilaterally by Citi. +• Credit enhancements that are not freestanding (such as +those that are included in the original terms of the contract +or those executed in conjunction with the lending +transaction) are considered loss mitigants for purposes of +CECL reserve estimation. +• For unconditionally cancelable accounts (generally credit +cards), reserves are based on the expected life of the +balance as of the evaluation date (assuming no further +charges) and do not include any undrawn commitments +that are unconditionally cancelable. Reserves are included +for undrawn commitments for accounts that are not +unconditionally cancelable (such as letters of credit and +corporate loan commitments, home equity lines of credit +(HELOCs), undrawn mortgage loan commitments and +financial guarantees). +• CECL models are designed to be economically sensitive. +They utilize the macroeconomic forecasts provided by +Citi’s enterprise scenario group that are approved by +senior management. Analysis is performed and +documented to determine the necessary qualitative +management adjustment (QMA) to capture idiosyncratic +events and model uncertainty. +• The portion of the forecast that reflects the enterprise +scenario group’s R&S period indicates the maximum +length of time its models can produce a R&S +macroeconomic forecast, after which mean reversion +reflecting historical loss experience is used for the +remaining life of the loan to estimate expected credit +losses. For the loss forecast, businesses consume the +macroeconomic forecast as determined to be appropriate +and justifiable. +Citi’s ability to forecast credit losses over the R&S period +is based on the ability to forecast economic activity over a +reasonable and supportable time window. The R&S period +reflects the overall ability to have a reasonable and +supportable forecast of credit loss based on economic +forecasts. The R&S forecast period for consumer and +corporate loans is eight quarters. +• The loss models consume all or a portion of the R&S +economic forecast and then revert to historical loss +experience. +• The ACL incorporates provisions for accrued interest on +products that are not subject to a non-accrual and timely +write-off policy (e.g., credit cards, etc.). +• Citi uses the most recent available information to inform +its macroeconomic forecasts, allowing sufficient time for +analysis of the results and corresponding approvals. Key +variables are reviewed for significant changes through +year end and changes to portfolio positions are reflected +in the ACL. +• Reserves are calculated at an appropriately granular level +and on a pooled basis where financial assets share risk +characteristics. At a minimum, reserves are calculated at a +portfolio level (product and country). Where a financial +asset does not share risk characteristics with any of the +pools, it is evaluated for credit losses individually. +Quantitative and Qualitative Components of the ACL +The loss likelihood and severity models use both internal and +external information and are sensitive to forecasts of different +macroeconomic conditions. For the quantitative component, +Citi uses multiple macroeconomic scenarios and associated +probabilities to estimate the ECL. Estimates of these ECLs are +based upon (i) Citigroup’s internal system of credit risk +ratings, (ii) historical default and loss data, including +comprehensive internal history and rating agency information +regarding default rates and internal data on the severity of +losses in the event of default, and (iii) a R&S forecast of future +macroeconomic conditions. ECL is determined primarily by +utilizing models for the borrowers’ PD, LGD and EAD. +Adjustments may be made to this data, including (i) +statistically calculated estimates to cover the historical +fluctuation of the default rates over the credit cycle, the +historical variability of loss severity among defaulted loans +and the degree to which there are large obligor concentrations +in the global portfolio, and (ii) adjustments made for +specifically known items, such as current environmental +factors and credit trends. +Any adjustments needed to the modeled expected losses +in the quantitative calculations are addressed through a +qualitative adjustment. The qualitative adjustment considers, +among other things: certain portfolio characteristics and +concentrations; collateral coverage; model limitations; +idiosyncratic events; and other relevant criteria under banking +supervisory guidance for the ACL. The qualitative adjustment +also reflects the estimated impact of the pandemic on the +economic forecasts and the impact on credit loss estimates. +The total ACL is composed of the quantitative and qualitative +components. Citi’s qualitative component declined year-over- +year, primarily driven by the incorporation of multiple +macroeconomic scenarios in the quantitative component and +releases of COVID-19–related uncertainty reserves as the +portfolio continues to normalize toward pre-pandemic levels +and as these risks are now captured in the quantitative +component of the ACL. See “Accounting Changes” below for +information about how the calculation of the quantitative +component of the ACL changed in 2023. +Consumer Loans +For consumer loans, most portfolios including North America +cards, mortgages and personal installment loans (PILs) are +covered by the PD, LGD and EAD loss forecasting models. +Some smaller international portfolios are covered by +econometric models where the gross credit loss (GCL) rate is +forecast. The modeling of all retail products is performed by +examining risk drivers for a given portfolio; these drivers +relate to exposures with similar credit risk characteristics and +consider past events, current conditions and R&S forecasts. +Under the PD x LGD x EAD approach, GCLs and recoveries +are captured on an undiscounted basis. Citi incorporates +156 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_164.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f4aa03dba7a9ff2daaedcf0553f6bbefb73b43c --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,114 @@ +expected recoveries on loans into its reserve estimate, +including expected recoveries on assets previously written off. +CECL defines the exposure’s expected life as the +remaining contractual maturity including any expected +prepayments. Subsequent changes to the contractual terms that +are the result of a re-underwriting are not included in the +loan’s expected CECL life. +Citi does not establish reserves for the uncollectible +accrued interest on non-revolving consumer products, such as +mortgages and installment loans, which are subject to a non- +accrual and timely write-off policy at 90 days past due. As +such, only the principal balance is subject to the CECL reserve +methodology and interest does not attract a further reserve. +For credit cards, Citi uses the payment rate approach, +which leverages payment rate curves, to determine the +payments that should be applied to liquidate the end-of-period +balance (CECL balance) in the estimation of EAD. The +payment rate approach uses customer payment behavior +(payment rate) to establish the portion of the CECL balance +that will be paid each month. These payment rates are defined +as the percentage of principal payments received in the +respective month divided by the prior month’s billed principal +balance. The liquidation (CECL payment) amount for each +forecast period is determined by multiplying the CECL +balance by that period’s forecasted payment rate. The +cumulative sum of these payments less the CECL balance +produces the balance liquidation curve. Citi does not apply a +non-accrual policy to credit card receivables; rather, they are +subject to full charge-off at 180 days past due or bankruptcy. +As such, the entire customer balance up until write-off, +including accrued interest and fees, is subject to the CECL +reserve methodology. +Corporate Loans, HTM Securities and Other Assets +Citi records allowances for credit losses on all financial assets +carried at amortized cost that are in the scope of CECL, +including corporate loans classified as HFI, HTM debt +securities and Other assets. Discounting techniques are +applied for corporate loans classified as HFI and HTM +securities. All cash flows are fully discounted to the reporting +date. The ACL includes Citi’s estimate of all credit losses +expected to be incurred over the estimated full contractual life +of the financial asset. The contractual life of the financial asset +does not include expected extensions, renewals or +modifications. Where Citi has an unconditional option to +extend the contractual term, Citi does not consider the +potential extension in determining the contractual term; +however, where the borrower has the sole right to exercise the +extension option without Citi’s approval, Citi does consider +the potential extension in determining the contractual term. +The Company primarily bases its ACL on models that +assess the likelihood and severity of credit events and their +impact on cash flows under R&S forecasted economic +scenarios. Allowances consider the probability of the +borrower’s default, the loss the Company would incur upon +default and the borrower’s exposure at default. Such models +discount the present value of all future cash flows, using the +asset’s effective interest rate (EIR). Citi applies a more +simplified approach based on historical loss rates to certain +exposures recorded in Other assets and certain loan exposures +in the Private Bank within Consumer loans. +The Company considers the risk of nonpayment to be zero +for U.S. Treasuries and U.S. government-sponsored agency +guaranteed mortgage-backed securities (MBS) and, as such, +Citi does not have an ACL for these securities. For all other +HTM debt securities, ECLs are estimated using PD models +and discounting techniques, which incorporate assumptions +regarding the likelihood and severity of credit losses. For +structured securities, specific models use relevant assumptions +for the underlying collateral type. A discounting approach is +applied to HTM direct obligations of a single issuer, similar to +that used for corporate HFI loans. +Other Financial Assets with Zero Expected Credit Losses +For certain financial assets, zero expected credit losses will be +recognized where the expectation of nonpayment of the +amortized cost basis is zero, based on there being no history of +loss and the nature of the receivables. +Secured Financing Transactions +Most of Citi’s reverse repurchase agreements, securities +borrowing arrangements and margin loans require that the +borrower continually adjust the amount of the collateral +securing Citi’s interest, primarily resulting from changes in the +fair value of such collateral. In such arrangements, ACLs are +recorded based only on the amount by which the asset’s +amortized cost basis exceeds the fair value of the collateral. +No ACLs are recorded where the fair value of the collateral is +equal to or exceeds the asset’s amortized cost basis, as Citi +does not expect to incur credit losses on such well- +collateralized exposures. For certain margin loans presented in +Loans on the Consolidated Balance Sheet, ACLL is estimated +using the same approach as corporate loans. +Accrued Interest +CECL permits entities to make an accounting policy election +not to reserve for interest, if the entity has a policy in place +that will result in timely reversal or write-off of interest. +However, when a non-accrual or timely charge-off policy is +not applied, an ACL is recognized on accrued interest at 90 +days past due. For HTM debt securities, Citi established a non- +accrual policy that results in timely write-off of accrued +interest. For corporate loans, where a timely charge-off policy +is used, Citi has elected to recognize an ACL on accrued +interest receivable. The LGD models for corporate loans +include an adjustment for estimated accrued interest. +Reasonably Expected TDRs (in 2022 and prior years) +For corporate loans, the reasonable expectation of the TDR +concept requires that the contractual life over which ECLs are +estimated be extended when a TDR that results in a tenor +extension is reasonably expected. Reasonably expected TDRs +are included in the life of the asset. A discounting technique or +collateral-dependent practical expedient is used for non- +accrual and TDR loan exposures that do not share risk +characteristics with other loans and are individually assessed. +Loans modified in accordance with the CARES Act and bank +regulatory guidance are not classified as TDRs. +157 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_165.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d41be127fa3f02a9984724ed060023d005898dd --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,114 @@ +In 2023, the reasonably expected TDRs accounting was +replaced by modifications of loans to borrowers experiencing +financial difficulty accounting. See “Accounting Changes— +TDRs and Vintage Disclosures” below for a description of this +new accounting. +Purchased Credit-Deteriorated (PCD) Assets +ASC 326 requires entities that have acquired financial assets +(such as loans and HTM securities) with an intent to hold, to +evaluate whether those assets have experienced a more-than- +insignificant deterioration in credit quality since origination. +These assets are subject to specialized accounting at initial +recognition under CECL. Subsequent measurement of PCD +assets will remain consistent with other purchased or +originated assets, i.e., non-PCD assets. CECL introduces the +notion of PCD assets, which replaces purchased credit +impaired (PCI) accounting under prior U.S. GAAP. +CECL requires the estimation of credit losses to be +performed on a pool basis unless a PCD asset does not share +characteristics with any pool. If certain PCD assets do not +meet the conditions for aggregation, those PCD assets should +be accounted for separately. This determination must be made +at the date the PCD asset is purchased. In estimating ECLs +from day 2 onward, pools can potentially be reassembled +based upon similar risk characteristics. When PCD assets are +pooled, Citi determines the amount of the initial ACL at the +pool level. The amount of the initial ACL for a PCD asset +represents the portion of the total discount at acquisition that +relates to credit and is recognized as a “gross-up” of the +purchase price to arrive at the PCD asset’s (or pool’s) +amortized cost. Any difference between the unpaid principal +balance and the amortized cost is considered to be related to +non-credit factors and results in a discount or premium, which +is amortized to interest income over the life of the individual +asset (or pool). Direct expenses incurred related to the +acquisition of PCD assets and other assets and liabilities in a +business combination are expensed as incurred. Subsequent +accounting for acquired PCD assets is the same as the +accounting for originated assets; changes in the allowance are +recorded in Provisions for credit losses. +Consumer +Citi does not purchase whole portfolios of PCD assets in its +retail businesses. However, there may be a small portion of a +purchased portfolio that is identified as PCD at the purchase +date. Interest income recognition does not vary between PCD +and non-PCD assets. A consumer financial asset is considered +to be more-than-insignificantly credit deteriorated if it is more +than 30 days past due at the purchase date. +Corporate +Citi generally classifies wholesale loans and debt securities +classified as HTM or AFS as PCD when both of the following +criteria are met: (i) the purchase price discount is at least 10% +of par and (ii) the purchase date is more than 90 days after the +origination or issuance date. Citi classifies HTM beneficial +interests rated AA- and lower obtained at origination from +certain securitization transactions as PCD when there is a +significant difference (i.e., 10% or greater) between +contractual cash flows, adjusted for prepayments, and +expected cash flows at the date of recognition. +Reserve Estimates and Policies +Management provides reserves for an estimate of lifetime +ECLs in the funded loan portfolio on the Consolidated +Balance Sheet in the form of an ACL. These reserves are +established in accordance with Citigroup’s credit reserve +policies, as approved by the Audit Committee of the Citigroup +Board of Directors. Citi’s Chief Risk Officer and Chief +Financial Officer review the adequacy of the credit loss +reserves each quarter with risk management and finance +representatives for each applicable business area. Applicable +business areas include those having classifiably managed +portfolios, where internal credit risk ratings are assigned +(primarily Services, Markets, Banking and Wealth) and +delinquency-managed portfolios (primarily USPB) or +modified consumer loans, where concessions were granted due +to the borrowers’ financial difficulties. The aforementioned +representatives for these business areas present recommended +reserve balances for their funded and unfunded lending +portfolios along with supporting quantitative and qualitative +data discussed below. +Estimated Credit Losses for Portfolios of Performing +Exposures +Risk management and finance representatives who cover +business areas with delinquency-managed portfolios +containing smaller-balance homogeneous loans present their +recommended reserve balances based on leading credit +indicators, including loan delinquencies and changes in +portfolio size as well as economic trends, including current +and future housing prices, unemployment, length of time in +foreclosure, costs to sell and GDP. This methodology is +applied separately for each product within each geographic +region in which these portfolios exist. This evaluation process +is subject to numerous estimates and judgments. +Risk management and finance representatives who cover +business areas with classifiably managed portfolios present +their recommended reserve balances based on the frequency of +default, risk ratings, loss recovery rates, size and diversity of +individual large credits, and ability of borrowers with foreign +currency obligations to obtain the foreign currency necessary +for orderly debt servicing. Changes in these estimates could +have a direct impact on the credit costs in any period and +could result in a change in the allowance. +Allowance for Unfunded Lending Commitments +Credit loss reserves are recognized on all off-balance sheet +commitments that are not unconditionally cancelable. +Corporate loan EAD models include an incremental usage +factor (or credit conversion factor) to estimate ECLs on +amounts undrawn at the reporting date. Off-balance sheet +commitments include unfunded exposures, revolving facilities, +securities underwriting commitments, letters of credit, +HELOCs and financial guarantees (excluding performance +guarantees). This reserve is classified on the Consolidated +Balance Sheet in Other liabilities. Changes to the allowance +for unfunded lending commitments are recorded in Provision +for credit losses on unfunded lending commitments. +158 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_166.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..f32adbed2344285fd6e5a7f53f0860058c848017 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,115 @@ +Mortgage Servicing Rights (MSRs) +Mortgage servicing rights (MSRs) are recognized as intangible +assets when purchased or when the Company sells or +securitizes loans acquired through purchase or origination and +retains the right to service the loans. Mortgage servicing rights +are accounted for at fair value, with changes in value recorded +in Other revenue in the Company’s Consolidated Statement of +Income. +For additional information on the Company’s MSRs, see +Notes 17 and 22. +Goodwill +Goodwill represents the excess of acquisition cost over the fair +value of net tangible and intangible assets acquired in a +business combination. Goodwill is subject to annual +impairment testing and interim assessments between annual +tests if an event occurs or circumstances change that would +more-likely-than-not reduce the fair value of a reporting unit +below its carrying amount. The Company has determined that +its reporting units are at the reportable operating segment level +or one level below. +The Company has an option to assess qualitative factors +to determine if it is necessary to perform the goodwill +impairment test. If, after assessing the totality of events or +circumstances, the Company determines that it is not more- +likely-than-not that the fair value of a reporting unit is less +than its carrying amount, no further testing is necessary. If, +however, the Company determines that it is more-likely-than- +not that the fair value of a reporting unit is less than its +carrying amount, then the Company must perform the +quantitative test. +The Company has an unconditional option to bypass the +qualitative assessment for any reporting unit in any reporting +period and proceed directly to the quantitative test. +The quantitative test requires a comparison of the fair +value of the individual reporting unit to its carrying value, +including goodwill. If the fair value of the reporting unit is in +excess of the carrying value, the related goodwill is considered +not impaired and no further analysis is necessary. If the +carrying value of the reporting unit exceeds the fair value, an +impairment loss is recognized in an amount equal to that +excess, limited to the total amount of goodwill allocated to +that reporting unit. +Upon any business disposition, goodwill is allocated to, +and derecognized with, the disposed business based on the +ratio of the fair value of the disposed business to the fair value +of the reporting unit. +During the year ended December 31, 2022, the Company +voluntarily changed its annual impairment assessment date +from July 1 to October 1. +Additional information on Citi’s goodwill impairment +testing can be found in Note 17. +Intangible Assets +Intangible assets—including core deposit intangibles, present +value of future profits, purchased credit card relationships, +credit card contract-related intangibles, other customer +relationships and other intangible assets, but excluding MSRs +—are amortized over their estimated useful lives. Credit card +contract-related intangibles include fixed and unconditional +costs incurred to renew or extend the contract with a card +partner. In estimating the useful life of a credit card contract- +related intangible, the Company considers the probability of +contract renewal or extension to determine the period that the +asset is expected to contribute future cash flows. Intangible +assets that are deemed to have indefinite useful lives, primarily +trade names, are not amortized and are subject to annual +impairment tests. An impairment exists if the carrying value of +the indefinite-lived intangible asset exceeds its fair value. For +other intangible assets subject to amortization, an impairment +is recognized if the carrying amount is not recoverable and +exceeds the fair value of the intangible asset. +Premises and Equipment +Premises and equipment includes lease right-of-use assets, +property and equipment (including purchased and developed +software), net of depreciation and amortization. Substantially +all lease right-of-use assets are amortized on a straight-line +basis over the lease term, and substantially all property and +equipment is depreciated or amortized on a straight-line basis +over the useful life of the asset. +Other Assets and Other Liabilities +Other assets include, among other items, loans HFS, deferred +tax assets, equity method investments, interest and fees +receivable, repossessed assets, other receivables and assets +from businesses classified as HFS that are reclassified from +other balance sheet line items. Other liabilities include, among +other items, accrued expenses, lease liabilities, deferred tax +liabilities, reserves for legal claims and legal fee accruals, +taxes, unfunded lending commitments, repositioning reserves, +other payables and liabilities from businesses classified as +HFS that are reclassified from other balance sheet line items. +Legal fee accruals are recognized as incurred. +Other Real Estate Owned and Repossessed Assets +Real estate or other assets received through foreclosure or +repossession are generally reported in Other assets, net of a +valuation allowance for selling costs and subsequent declines +in fair value. +Securitizations +There are two key accounting determinations that must be +made relating to securitizations. Citi first makes a +determination as to whether the securitization entity must be +consolidated. Second, it determines whether the transfer of +financial assets to the entity is considered a sale under GAAP. +If the securitization entity is a VIE, the Company consolidates +the VIE if it is the primary beneficiary (as discussed in +“Variable Interest Entities” above). For all other securitization +entities determined not to be VIEs in which Citigroup +participates, consolidation is based on which party has voting +control of the entity, giving consideration to removal and +liquidation rights in certain partnership structures. Only +securitization entities controlled by Citigroup are consolidated. +Interests in the securitized and sold assets may be retained +in the form of subordinated or senior interest-only strips, +subordinated tranches, spread accounts and servicing rights. In +credit card securitizations, the Company retains a seller’s +interest in the credit card receivables transferred to the trusts, +159 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_167.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab3c6d9f6e6776fa9d0f3368c2cc7d208bc12bc4 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,115 @@ +which is not in securitized form. In the case of consolidated +securitization entities, including the credit card trusts, these +retained interests are not reported on Citi’s Consolidated +Balance Sheet. The securitized loans remain on the Balance +Sheet. Substantially all of the consumer loans sold or +securitized through non-consolidated trusts by Citigroup are +U.S. prime residential mortgage loans. Retained interests in +non-consolidated mortgage securitization trusts are classified +as Trading account assets, except for MSRs, which are +included in Intangible assets on Citigroup’s Consolidated +Balance Sheet. +Debt +Short-term borrowings and Long-term debt are accounted for +at amortized cost, except where the Company has elected to +report the debt instruments (including certain structured notes) +at fair value, or debt that is in a fair value hedging relationship. +Premiums, discounts and issuance costs on long-term debt +accounted for at amortized cost are amortized over the +contractual term using the effective interest method. +Transfers of Financial Assets +For a transfer of financial assets to be considered a sale, (i) the +assets must be legally isolated from the Company, even in +bankruptcy or other receivership, (ii) the purchaser must have +the right to pledge or sell the assets transferred (or, if the +purchaser is an entity whose sole purpose is to engage in +securitization and asset-backed financing activities through the +issuance of beneficial interests and that entity is constrained +from pledging the assets it receives, each beneficial interest +holder must have the right to sell or pledge their beneficial +interests), and (iii) the Company may not have an option or +obligation to reacquire the assets. +If these sale requirements are met, the assets are removed +from the Company’s Consolidated Balance Sheet. If the +conditions for sale are not met, the transfer is considered to be +a secured borrowing, the assets remain on the Consolidated +Balance Sheet and the sale proceeds are recognized as the +Company’s liability. A legal opinion on a sale generally is +obtained for complex transactions or where the Company has +continuing involvement with the assets transferred or with the +securitization entity. For a transfer to be eligible for sale +accounting, that opinion must state that the asset transfer +would be considered a sale and that the assets transferred +would not be consolidated with the Company’s other assets in +the event of the Company’s insolvency. See Note 23 for +further discussion. +Risk Management Activities—Derivatives Used for +Hedging Purposes +The Company manages its exposures to market movements +outside of its trading activities by modifying the asset and +liability mix, either directly or through the use of derivative +financial products, including interest rate swaps, futures, +forwards, purchased options and commodities, as well as +foreign-exchange contracts. These end-user derivatives are +carried at fair value in Trading account assets and Trading +account liabilities. +See Note 24 for a further discussion of the Company’s +hedging and derivative activities. +Instrument-Specific Credit Risk +Citi presents separately in AOCI the portion of the total change +in the fair value of a liability resulting from a change in the +instrument-specific credit risk, when the entity has elected to +measure the liability at fair value in accordance with the fair +value option for financial instruments. Accordingly, the +change in fair value of liabilities for which the fair value +option was elected related to changes in Citigroup’s own +credit spreads is presented in AOCI. +Employee Benefits Expense +Employee benefits expense includes current service costs of +pension and other postretirement benefit plans (which are +accrued on a current basis), contributions and unrestricted +awards under other employee plans, the amortization of +restricted stock awards and costs of other employee benefits. +For its most significant pension and postretirement benefit +plans (Significant Plans), Citigroup measures and discloses +plan obligations, plan assets and periodic plan expense +quarterly, instead of annually. The effect of remeasuring the +Significant Plan obligations and assets by updating plan +actuarial assumptions on a quarterly basis is reflected in AOCI +and periodic plan expense. All other plans (All Other Plans) +are remeasured annually. Benefits earned during the year are +reported in Compensation and benefits expenses and all other +components of the net annual benefit cost are reported in +Other operating expenses in the Consolidated Statement of +Income. See Note 8. +Stock-Based Compensation +The Company recognizes compensation expense related to +stock awards over the requisite service period, generally based +on the instruments’ grant-date fair value, reduced by actual +forfeitures as they occur. Compensation cost related to awards +granted to employees who meet certain age plus years-of- +service requirements (retirement-eligible employees) is +accrued in the year prior to the grant date in the same manner +as the accrual for cash incentive compensation. Certain stock +awards with performance conditions or certain clawback +provisions are subject to variable accounting, pursuant to +which the associated compensation expense fluctuates with +changes in Citigroup’s common stock price. See Note 7. +Income Taxes +The Company is subject to the income tax laws of the U.S. and +its states and municipalities, as well as the non-U.S. +jurisdictions in which it operates. These tax laws are complex +and may be subject to different interpretations by the taxpayer +and the relevant governmental taxing authorities. In +establishing a provision for income tax expense, the Company +must make judgments and interpretations about these tax laws. +The Company must also make estimates about when in the +future certain items will affect taxable income in the various +tax jurisdictions, both domestic and foreign. +Disputes over interpretations of the tax laws may be +subject to review and adjudication by the court systems of the +various tax jurisdictions, or may be settled with the taxing +authority upon examination or audit. The Company treats +interest and penalties on income taxes as a component of +Income tax expense. +160 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_17.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c459ff539d375272d892c80fd5169702a5d4e60 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,29 @@ +RESULTS OF OPERATIONS +SUMMARY OF SELECTED FINANCIAL DATA +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts 2023 2022 2021 2020 2019 +Net interest income $ 54,900 $ 48,668 $ 42,494 $ 44,751 $ 48,128 +Non-interest revenue 23,562 26,670 29,390 30,750 26,939 +Revenues, net of interest expense $ 78,462 $ 75,338 $ 71,884 $ 75,501 $ 75,067 +Operating expenses 56,366 51,292 48,193 44,374 42,783 +Provisions for credit losses and for benefits and claims 9,186 5,239 (3,778) 17,495 8,383 +Income from continuing operations before income taxes $ 12,910 $ 18,807 $ 27,469 $ 13,632 $ 23,901 +Income taxes 3,528 3,642 5,451 2,525 4,430 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 $ 11,107 $ 19,471 +Income (loss) from discontinued operations, net of taxes (1) (231) 7 (20) (4) +Net income before attribution of noncontrolling interests $ 9,381 $ 14,934 $ 22,025 $ 11,087 $ 19,467 +Net income attributable to noncontrolling interests 153 89 73 40 66 +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 $ 11,047 $ 19,401 +Earnings per share +Basic +Income from continuing operations $ 4.07 $ 7.16 $ 10.21 $ 4.75 $ 8.08 +Net income 4.07 7.04 10.21 4.74 8.08 +Diluted +Income from continuing operations $ 4.04 $ 7.11 $ 10.14 $ 4.73 $ 8.04 +Net income 4.04 7.00 10.14 4.72 8.04 +Dividends declared per common share 2.08 2.04 2.04 2.04 1.92 +Common dividends $ 4,076 $ 4,028 $ 4,196 $ 4,299 $ 4,403 +Preferred dividends 1,198 1,032 1,040 1,095 1,109 +Common share repurchases 2,000 3,250 7,600 2,925 17,875 +Table continues on the next page, including footnotes. +10 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_170.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..c42b387c25d46daf15e5cdc4a5c07d354ef02f2b --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,95 @@ +Income Taxes (Topic 740): Improvements to Income Tax +Disclosures +In December 2023, the FASB issued ASU No. 2023-09, +Income Taxes (Topic 740): Improvements to Income Tax +Disclosures, intended to enhance the transparency and +decision usefulness of income tax disclosures. This guidance +requires that public business entities disclose on an annual +basis a tabular rate reconciliation in eight specific categories +disaggregated by nature and for foreign tax effects by +jurisdiction that meet a 5% of pretax income multiplied by the +applicable statutory tax rate or greater threshold annually. The +eight categories include state and local income taxes, net of +federal income tax effect; foreign tax effects; enactment of +new tax laws or tax credits; effect of cross-border tax laws; +valuation allowances; nontaxable items and nondeductible +items; and changes in unrecognized tax benefits. Additional +disclosures include qualitative description of the state and +local jurisdictions that contribute to the majority (greater than +50%) of the effect of the state and local income tax category +and explanation of the nature and effect of changes in +individual reconciling items. The guidance also requires +entities annually to disclose income taxes paid (net of refunds +received) disaggregated by federal, state and foreign taxes and +by jurisdiction identified based on the same 5% quantitative +threshold. +The standard is effective for fiscal years beginning after +December 15, 2024. The transition method is prospective with +the retrospective method permitted. Citi plans to adopt the +ASU for the annual reporting period beginning on January 1, +2025, and is currently evaluating the impact on disclosures. +Segment Reporting (Topic 280): Improvements to +Reportable Segment Disclosures +In November 2023, the FASB issued ASU No. 2023-07, +Segment Reporting (Topic 280): Improvements to Reportable +Segment Disclosures, intended to improve reportable segments +disclosure requirements primarily through enhanced +disclosures about significant segment expenses. The ASU +includes a requirement to disclose significant segment +expenses that are regularly provided to the chief operating +decision maker (CODM) and included within each reported +measure of segment profit or loss, the title and position of the +CODM, an explanation of how the CODM uses the reported +measure(s) of segment profit or loss in assessing segment +performance and deciding how to allocate resources, and all +segments’ profit or loss and assets disclosures currently +required annually by Topic 280 along with those introduced +by the ASU to be reported on an interim basis. The +amendments also clarified that public entities are not +precluded from reporting additional measures of a segment’s +profit or loss that are regularly used by the CODM. +The ASU is required to be adopted on a retrospective +basis and will be effective for Citi for its annual period ending +December 31, 2024 and interim periods for the interim period +beginning on January 1, 2025. Citi is currently evaluating the +impact of the standard on its disclosure of reportable segments +and related disclosures. +Accounting for Investments in Tax Credit Structures +In March 2023, the FASB issued ASU No. 2023-02, +Investments—Equity Method and Joint Ventures (Topic 323): +Accounting for Investments in Tax Credit Structures Using the +Proportional Amortization Method. The ASU expands the +scope of tax equity investments eligible to apply the +proportional amortization method of accounting. Under the +proportional amortization method, the cost of an eligible +investment is amortized in proportion to the income tax credits +and other income tax benefits that are received by the investor, +with the amortization of the investment and the income tax +credits being presented net in the income statement as +components of income tax expense (benefit). The ASU +permits the Company to elect to use the proportional +amortization method to account for an expanded range of +eligible tax-incentivized investments if certain conditions are +met. Citi adopted the ASU on January 1, 2024, which did not +have a material impact to the financial statements of the +Company. +Fair Value Measurement of Equity Securities Subject to +Contractual Sale Restrictions +In June 2022, the FASB issued ASU No. 2022-03, Fair Value +Measurement (Topic 820): Fair Value Measurement of Equity +Securities Subject to Contractual Sale Restrictions. The ASU +was issued to address diversity in practice whereby certain +entities included the impact of contractual restrictions when +valuing equity securities, and it clarifies that a contractual +restriction on the sale of an equity security should not be +considered part of the unit of account of the equity security +and, therefore, should not be considered in measuring fair +value. The ASU also includes requirements for entities to +disclose the fair value of equity securities subject to +contractual sale restrictions, the nature and remaining duration +of the restrictions and the circumstances that could cause a +lapse in the restrictions. +Citi adopted the ASU on January 1, 2024, which did not +have a material impact to the financial statements of the +Company. +163 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_171.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e9b03b23ec8c0713c8c59d2c6d1505fad9d2479 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,43 @@ +2. DISCONTINUED OPERATIONS, SIGNIFICANT +DISPOSALS AND OTHER BUSINESS EXITS +Summary of Discontinued Operations +The Company’s results from Discontinued operations +consisted of residual activities related to the sales of the Egg +Banking plc credit card business in 2011 and the German retail +banking business in 2008. All Discontinued operations results +are recorded within All Other. +The following table summarizes financial information for +all Discontinued operations: +In millions of dollars 2023 2022 2021 +Total revenues, net of interest expense $ — $ (260) $ — +Income (loss) from discontinued +operations $ (1) $ (272) $ 7 +Benefit for income taxes — (41) — +Income (loss) from discontinued +operations, net of taxes $ (1) $ (231) $ 7 +During 2022, the Company finalized the settlement of +certain liabilities related to its legacy consumer operation in +the U.K. (the legacy operation), including an indemnification +liability related to its sale of the Egg Banking business in +2011, which led to the substantial liquidation of the legacy +operation. As a result, a CTA loss (net of hedges) in AOCI of +approximately $400 million pretax ($345 million after-tax) +related to the legacy operation was released to earnings in +2022. Out of the total CTA release, a $260 million pretax loss +($221 million after-tax loss) was attributable to the Egg +Banking business noted above, reported in Discontinued +operations, and therefore the corresponding CTA release was +also reported in Discontinued operations during 2022. The +remaining CTA release of a $140 million pretax loss +($124 million after-tax loss) related to Legacy Holdings Assets +was reported as part of Continuing operations within All Other +—Legacy Franchises. +While the legacy operation was divested in multiple sales +over the years, each transaction did not result in substantial +liquidation given that Citi retained certain liabilities noted +above, which were gradually settled over time until reaching +the point of substantial liquidation during 2022, triggering the +release of the CTA loss to earnings. +Cash flows from Discontinued operations were not +material for the periods presented. +164 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_172.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff32a66a5ce5ac3938767219d13a4cb4cbdd6f15 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,53 @@ +Significant Disposals +As of December 31, 2023, Citi had closed the sales of nine consumer banking businesses within All Other—Legacy Franchises. +Australia closed in the second quarter of 2022, the Philippines closed in the third quarter of 2022, Bahrain, Malaysia and Thailand +closed in the fourth quarter of 2022, India and Vietnam closed in the first quarter of 2023, Taiwan closed in the third quarter of 2023 +and Indonesia closed in the fourth quarter of 2023. Of the nine sale agreements, the five below were identified as significant disposals. +The gains and losses included in the footnotes to the table below represent life-to-date amounts, which are periodically updated due to +post-closing purchase price adjustments. As of December 31, 2023, there were no remaining assets or liabilities included on Citi’s +Consolidated Balance Sheet related to the significant disposals: +In millions of dollars Income (loss) before taxes(6) +Consumer banking business in Sale agreement date Closing date 2023 2022 2021 +Australia(1) 8/9/2021 6/1/2022 $ — $ 193 $ 306 +Philippines(2) 12/23/2021 8/1/2022 — 72 145 +Thailand(3) 1/14/2022 11/1/2022 — 122 139 +India(4) 3/30/2022 3/1/2023 2 194 213 +Taiwan(5) 1/28/2022 8/12/2023 91 140 282 +(1) On June 1, 2022, Citi completed the sale of its Australia consumer banking business, which was part of All Other—Legacy Franchises . The business had +approximately $9.4 billion in assets, including $9.3 billion of loans (net of allowance of $140 million) and excluding goodwill. The total amount of liabilities was +$7.3 billion, including $6.8 billion in deposits. The transaction generated a pretax loss on sale of approximately $766 million ($643 million after-tax), subject to +closing adjustments, recorded in Other revenue. The loss on sale primarily reflected the impact of an approximate pretax $620 million CTA loss (net of hedges) +($470 million after-tax) already reflected in the AOCI component of equity. The sale closed on June 1, 2022, and the CTA-related balance was removed from +AOCI, resulting in a neutral CTA impact to Citi’s CET1 Capital. The income before taxes in the above table for Australia reflects Citi’s ownership through June 1, +2022. +(2) On August 1, 2022, Citi completed the sale of its Philippines consumer banking business, which was part of All Other—Legacy Franchises . The business had +approximately $1.8 billion in assets, including $1.2 billion of loans (net of allowance of $80 million) and excluding goodwill. The total amount of liabilities was +$1.3 billion, including $1.2 billion in deposits. The sale resulted in a pretax gain on sale of approximately $618 million ($290 million after-tax), subject to closing +adjustments, recorded in Other revenue. The income before taxes in the above table for the Philippines reflects Citi’s ownership through August 1, 2022. +(3) On November 1, 2022, Citi completed the sale of its Thailand consumer banking business, which was part of All Other—Legacy Franchises. The business had +approximately $2.7 billion in assets, including $2.4 billion of loans (net of allowance of $67 million) and excluding goodwill. The total amount of liabilities was +$1.0 billion, including $0.8 billion in deposits. The sale resulted in a pretax gain on sale of approximately $209 million ($115 million after-tax), subject to closing +adjustments, recorded in Other revenue. The income before taxes in the above table for Thailand reflects Citi’s ownership through November 1, 2022. +(4) On March 1, 2023, Citi completed the sale of its India consumer banking business, which was part of All Other—Legacy Franchises. The business had +approximately $5.2 billion in assets, including $3.4 billion of loans (net of allowance of $32 million) and excluding goodwill. The total amount of liabilities was +$5.2 billion, including $5.1 billion in deposits. The sale resulted in a pretax gain on sale of approximately $1.1 billion ($727 million after-tax) recorded in Other +revenue. The income before taxes in the above table for India reflects Citi’s ownership through March 1, 2023. +(5) On August 12, 2023, Citi completed the sale of its Taiwan consumer banking business, which was part of All Other—Legacy Franchises. The business had +approximately $11.6 billion in assets, including $7.2 billion of loans (net of allowance of $92 million) and excluding goodwill. The total amount of liabilities was +$9.2 billion, including $9.0 billion in deposits. The sale resulted in a pretax gain on sale of approximately $403 million ($284 million after-tax), subject to closing +adjustments, recorded in Other revenue. The income before taxes in the above table for Taiwan reflects Citi’s ownership through August 12, 2023. +(6) Income before taxes for the period in which the individually significant component was classified as HFS for all prior periods presented. For Australia, excludes +the pretax loss on sale. For the Philippines, Thailand, India and Taiwan, excludes the pretax gain on sale. +Citi did not have any other significant disposals as of +December 31, 2023. +As of February 23, 2024, Citi had not entered into sale +agreements for the remaining All Other—Legacy Franchises +businesses to be sold, specifically the Poland consumer +banking business and the Mexico Consumer/SBMM +businesses. +For a description of the Company’s significant disposal +transactions in prior periods and financial impact, see Note 2 +to the Consolidated Financial Statements in Citi’s 2022 Form +10-K. +165 +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_173.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ffb7bbab885bc6d2cfd3e14854b44de1a958b99 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,109 @@ +Other Business Exits +Wind-Down of Korea Consumer Banking Business +On October 25, 2021, Citi disclosed its decision to wind down +and close its Korea consumer banking business, which is +reported in the All Other—Legacy Franchises operating +segment. In connection with the announcement, Citibank +Korea Inc. (CKI) commenced a voluntary early termination +program (Korea VERP). Due to the voluntary nature of this +termination program, no liabilities for termination benefits are +recorded until CKI makes formal offers to employees that are +then irrevocably accepted by those employees. Related +charges are recorded as Compensation and benefits. +The following table summarizes the reserve charges +related to the Korea VERP and other initiatives reported in the +All Other operating segment: +In millions of dollars +Employee +termination costs +Total Citigroup (pretax) +Original charges in fourth quarter 2021 $ 1,052 +Utilization (1) +Foreign exchange 3 +Balance at December 31, 2021 $ 1,054 +Additional charges in first quarter 2022 $ 31 +Utilization (347) +Foreign exchange (24) +Balance at March 31, 2022 $ 714 +Additional charges (releases) $ (3) +Utilization (670) +Foreign exchange (41) +Balance at June 30, 2022 $ — +Note: There were no additional charges after June 30, 2022. +The total cash charges for the wind-down were +$1.1 billion through 2022, most of which were recognized in +2021. Citi does not expect to record any additional charges in +connection with the Korea VERP. +See Note 8 for details on the pension impact of the Korea +wind-down. +Wind-Down of Russia Consumer and Institutional Banking +Businesses +On August 25, 2022, Citi announced its decision to wind +down its consumer banking and local commercial banking +operations in Russia. As part of the wind-down, Citi is also +actively pursuing sales of certain Russian consumer banking +portfolios. +On October 14, 2022, Citi disclosed that it would end +nearly all of the institutional banking services it offered in +Russia by the end of the first quarter of 2023. Going forward, +Citi’s only operations in Russia are those necessary to fulfill +its remaining legal and regulatory obligations. +Portfolio Sales +• On December 12, 2022, Citi completed the sale of a +portfolio of ruble-denominated personal installment loans, +totaling approximately $240 million in outstanding loan +balances, to Uralsib, a Russian commercial bank, +resulting in a pretax net loss of approximately +$12 million. The net loss on sale of the loan portfolio +included a $32 million adjustment to record the loans at +lower of cost or fair value recognized in Other revenue. In +addition, the sale of the loans resulted in a release in the +allowance for credit losses on loans of approximately +$20 million recognized in the Provision for credit losses +on loans. +• During the second quarter of 2023, Citi recorded an +incremental gain of $5 million related to post-closing +contingency payments for the previously disclosed +personal installment loan sale in Other revenue. The +previously disclosed sale of a portfolio of ruble- +denominated personal installment loans resulted in a +pretax net loss on sale of approximately $7 million. +• During the third and fourth quarters of 2023, as part of the +previously disclosed cards referral agreement with a +Russian bank, approximately $47 million of credit card +receivables was settled upon referral and refinanced. +Wind-Down Charges +The following tables provide details on Citi’s Russia wind- +down charges: +2023 +In millions of dollars All Other +Services, +Markets and +Banking Total +Severance(1) $ 11 $ 4 $ 15 +Vendor termination and +other costs(2) 12 — 12 +Total $ 23 $ 4 $ 27 +Program-to-date +December 31, 2023 +In millions of dollars All Other +Services, +Markets and +Banking Total +Severance(1) $ 35 $ 9 $ 44 +Vendor termination and +other costs(2) 19 — 19 +Total $ 54 $ 9 $ 63 +Estimated additional charges +as of December 31, 2023 +In millions of dollars All Other +Services, +Markets and +Banking Total +Severance(1) $ 20 $ 2 $ 22 +Vendor termination and +other costs(2) 36 — 36 +Total $ 56 $ 2 $ 58 +(1) Recorded in Compensation and benefits. +(2) Recorded in Other operating expenses. +166 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_174.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..b8be9a02f6b5021e56d736243923f69f8276af4f --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,112 @@ + +3. OPERATING SEGMENTS +Effective in the fourth quarter of 2023, Citi changed its +management structure resulting in changes in its reportable +operating segments to reflect how the CEO, who is the chief +operating decision maker (CODM), manages the Company, +including allocating resources and measuring performance. +Citi reorganized its reporting into five reportable operating +segments: Services, Markets, Banking, U.S. Personal Banking +(USPB) and Wealth, with the remaining operations recorded in +All Other, which includes activities not assigned to a specific +reportable operating segment, as well as discontinued +operations. +Prior-period reportable operating segment results have +been revised to reflect the reorganization of Citi’s +management reporting structure, including: +• certain businesses engaged in financing and securitization +activities, previously operated under a revenue and +expense sharing agreement between Markets and +Banking, now reside primarily within Markets; +• the implementation of a Corporate Lending revenue +sharing arrangement where certain revenues earned by +Citi are subject to a revenue sharing arrangement to +Banking—Corporate Lending from Investment Banking +and certain Markets and Services products sold to +Corporate Lending clients; +• the re-attribution of certain allocation methodologies for +other revenues and expenses incurred and allocated to the +reportable operating segments to conform with the +resegmentation and segment profit and loss measure used +by the CODM; and +• certain other immaterial reclassifications. +Citi’s consolidated results remain unchanged for all +periods presented following the changes and reclassifications +discussed above. +All Other results are presented on a managed basis that +excludes divestiture-related impacts related to (i) Citi’s +divestitures of its Asia consumer banking businesses and (ii) +the planned divestiture of Mexico consumer banking and small +business and middle-market banking within All Other— +Legacy Franchises. The managed basis presents investors with +a view of operating earnings that provides increased +transparency and clarity into the operational results of Citi’s +performance; improves the visibility of management decisions +and their impacts on operational performance; enables better +comparison to peer companies; and allows Citi to provide a +long-term strategic view of the business going forward. +The following is a description of each of Citi’s reportable +operating segments, and the products and services they +provide to their respective client bases. +Services +Services includes Treasury and Trade Solutions (TTS) and +Securities Services. TTS provides an integrated suite of +tailored cash management, trade and working capital solutions +to multinational corporations, financial institutions and public +sector organizations. Securities Services provides cross-border +support for clients, providing on-the-ground local market +expertise, post-trade technologies, customized data solutions +and a wide range of securities services solutions that can be +tailored to meet client needs. +Markets +Markets provides corporate, institutional and public sector +clients around the world with a full range of sales and trading +services across equities, foreign exchange, rates, spread +products and commodities. The range of services includes +market-making across asset classes, risk management +solutions, financing, prime brokerage, research, securities +clearing and settlement. +Banking +Banking includes Investment Banking, which supports client +capital-raising needs to help strengthen and grow their +businesses, including equity and debt capital markets-related +strategic financing solutions, as well as advisory services +related to mergers and acquisitions, divestitures, restructurings +and corporate defense activities; and Corporate Lending, +which includes corporate and commercial banking, serving as +the conduit of Citi’s full product suite to clients. +USPB +USPB includes Branded Cards and Retail Services, which +have proprietary card portfolios and co-branded card +portfolios within Branded Cards, and co-brand and private +label relationships within Retail Services. USPB also includes +Retail Banking, which provides traditional banking services to +retail and small business customers. +Wealth +Wealth includes Private Bank, Wealth at Work and Citigold +and provides financial services to a range of client segments +including affluent, high net worth and ultra-high net worth +clients through banking, lending, mortgages, investment, +custody and trust product offerings in 20 countries, including +the U.S., Mexico and four wealth management centers: +Singapore, Hong Kong, the UAE and London. Private Bank +provides financial services to ultra-high net worth clients +through customized product offerings. Wealth at Work +provides financial services to professional industries +(including law firms, consulting groups, accounting and asset +management) through tailored solutions. Citigold includes +Citigold and Citigold Private Clients, which both provide +financial services to affluent and high net worth clients +through elevated product offerings and financial relationships. +All Other +All Other primarily consists of activities not assigned to the +reportable operating segments, including certain unallocated +costs of global functions, other corporate expenses and net +treasury results, offsets to certain line-item reclassifications +and eliminations, and unallocated taxes; discontinued +operations within Corporate/Other; and Legacy Franchises, +which consists of Asia Consumer and Mexico Consumer/ +SBMM businesses that Citi intends to exit, and its remaining +Legacy Holdings Assets. Corporate/Other within All Other +also includes all restructuring charges related to actions taken +167 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_175.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..a0078a3ceef21aa9753b323ec03dce58757f8726 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,20 @@ +as part of Citi’s organizational simplification initiatives. See +Note 9. +Revenues and expenses directly associated with each +respective business segment or component are included in +determining respective operating results. Other revenues and +expenses that are attributable to a particular business segment +or component are generally allocated from All Other based on +respective net revenues, non-interest expenses or other +relevant measures. +Revenues and expenses from transactions with other +operating segments or components are treated as transactions +with external parties for purposes of segment disclosures, +while funding charges paid by operating segments and funding +credits received by Corporate Treasury within All Other are +included in net interest income. The Company includes +intersegment eliminations within All Other to reconcile the +operating segment results to Citi’s consolidated results. +The accounting policies of these reportable operating +segments are the same as those disclosed in Note 1. +168 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_176.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..4daabe22dc2fc9697434dea942c8fbece4b292f3 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,60 @@ +The following tables present certain information regarding the Company’s continuing operations by reportable operating segments and +All Other on a managed basis. Performance measurement is based on Income (loss) from continuing operations. These results are used +by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments: +In millions of dollars, except identifiable +assets, average loans and average deposits +in billions +Services Markets Banking USPB +2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Net interest income $ 13,198 $ 10,318 $ 6,821 $ 7,265 $ 5,819 $ 6,147 $ 2,094 $ 2,057 $ 2,204 $ 20,150 $ 18,062 $ 16,285 +Non-interest revenue 4,852 5,301 5,702 11,592 14,342 13,252 2,474 3,339 5,579 (963) (1,190) (440) +Total revenues, net of interest expense(1) $ 18,050 $ 15,619 $ 12,523 $ 18,857 $ 20,161 $ 19,399 $ 4,568 $ 5,396 $ 7,783 $ 19,187 $ 16,872 $ 15,845 +Provisions for credit losses and for benefits +and claims $ 950 $ 207 $ (263) $ 437 $ 155 $ (329) $ (165) $ 549 $ (1,898) $ 6,707 $ 3,448 $ (998) +Provision (benefits) for income taxes 2,405 1,760 1,312 1,162 1,669 1,695 (92) (7) 1,170 558 872 1,890 +Income (loss) from continuing +operations 4,671 4,924 3,768 4,020 5,924 6,661 (44) 383 4,105 1,820 2,770 6,099 +Identifiable assets at December 31(1) $ 585 $ 599 $ 547 $ 995 $ 950 $ 895 $ 147 $ 152 $ 145 $ 242 $ 231 $ 211 +Average loans 81 82 74 110 111 112 90 98 101 193 171 159 +Average deposits 810 808 805 23 21 22 1 1 1 110 115 112 +Wealth All Other(2) Reconciling Items(2) Total Citi +2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Net interest income $ 4,460 $ 4,744 $ 4,491 $ 7,733 $ 7,668 $ 6,546 $ — $ — $ — $ 54,900 $ 48,668 $ 42,494 +Non-interest revenue 2,631 2,704 3,051 1,630 1,320 2,916 1,346 854 (670) 23,562 26,670 29,390 +Total revenues, net of interest expense(1) $ 7,091 $ 7,448 $ 7,542 $ 9,363 $ 8,988 $ 9,462 $ 1,346 $ 854 $ (670) $ 78,462 $ 75,338 $ 71,884 +Provisions for credit losses and for benefits +and claims $ (2) $ 306 $ (226) $ 1,326 $ 498 $ (88) $ (67) $ 76 $ 24 $ 9,186 $ 5,239 $ (3,778) +Provision (benefits) for income taxes 103 134 419 (990) (1,052) (812) 382 266 (223) 3,528 3,642 5,451 +Income (loss) from continuing +operations 346 950 1,968 (2,090) 398 1,059 659 (184) (1,642) 9,382 15,165 22,018 +Identifiable assets at December 31(1) $ 232 $ 259 $ 250 $ 211 $ 226 $ 243 $ 2,412 $ 2,417 $ 2,291 +Average loans 150 150 148 37 41 74 661 653 668 +Average deposits 316 320 305 74 68 90 1,334 1,333 1,335 +Reconciliation of Total Citigroup +Income from continuing operations as +reported: 2023(3) 2022(4) 2021(5) +Total segments and All Other—Income +from continuing operations(2) $ 8,723 $ 15,349 $ 23,660 +Divestiture-related impact on: +Total revenues, net of interest expense 1,346 854 (670) +Total operating expenses 372 696 1,171 +Provision (release) for credit losses (67) 76 24 +Provision (benefits) for income taxes 382 266 (223) +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 +(1) See “Performance by Geographic Area” below. +(2) Segment results are presented on a managed basis that excludes divestiture-related impacts related to (i) Citi’s divestitures of its Asia consumer banking +businesses and (ii) the planned divestiture of Mexico consumer banking and small business and middle-market banking within All Other—Legacy Franchises. +Adjustments are included in Legacy Franchises within All Other and are reflected in the reconciliations above to arrive at Citi’s reported results in the +Consolidated Statement of Income. +(3) 2023 includes (i) an approximate $1.059 billion gain on sale recorded in revenue (approximately $727 million after-tax) related to the India consumer banking +business sale; (ii) an approximate $403 million gain on sale recorded in revenue (approximately $284 million after-tax) related to the Taiwan consumer banking +business sale; and (iii) approximately $372 million (approximately $263 million after-tax) in operating expenses primarily related to separation costs in Mexico +and severance costs in the Asia exit markets. +(4) 2022 includes (i) an approximate $535 million (approximately $489 million after-tax) goodwill write-down due to resegmentation and the timing of Asia +consumer banking business divestitures; (ii) an approximate $616 million gain on sale recorded in revenue (approximately $290 million after-tax) related to the +Philippines consumer banking business sale; and (iii) an approximate $209 million gain on sale recorded in revenue (approximately $115 million after-tax) related +to the Thailand consumer banking business sale. +(5) 2021 includes (i) an approximate $680 million loss on sale (approximately $580 million after-tax) related to Citi’s agreement to sell its Australia consumer +banking business; and (ii) an approximate $1.052 billion in expenses (approximately $792 million after-tax) primarily related to charges incurred from the +voluntary early retirement program (VERP) in connection with the wind-down of Citi’s consumer banking business in Korea. +169 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_177.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..c88ff8afb420a3b791a17f0d137912eb736975c1 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,36 @@ +Performance by Geographic Area +Citi’s operations are highly integrated, and estimates and +subjective assumptions have been made to apportion revenue +between North America and international operations. These +estimates and assumptions are consistent with the allocations +used for the Company’s segment reporting. +The Company defines international activities for purposes +of this footnote presentation as business transactions that +involve clients that reside outside of North America, and the +information presented below is based predominantly on the +domicile of the client or the booking location from which the +client relationship is managed. However, many of the +Company’s North America operations serve international +businesses. +The following table presents revenues net of interest expense and identifiable assets between North America and international areas: +In millions of dollars +Revenues, net of interest expense +2023 2022 2021 +North America(1) $ 36,661 $ 34,799 $ 35,022 +International(2)(3) 39,636 39,018 36,037 +Corporate/Other(4) 2,165 1,521 825 +Total Citi $ 78,462 $ 75,338 $ 71,884 +In millions of dollars at December 31, +Identifiable assets(5) +2023 2022 +North America(1) $ 1,348,169 $ 1,306,127 +International 930,185 979,214 +Corporate/Other 133,480 131,335 +Total Citi $ 2,411,834 $ 2,416,676 +(1) Primarily reflects the U.S. +(2) International represents the summation of international revenues in Services, Markets, Banking, Wealth and All Other—Legacy Franchises Asia Consumer and +Mexico Consumer/SBMM. +(3) Total revenues for the U.K. were approximately $7.6 billion, $9.2 billion and $7.4 billion for 2023, 2022 and 2021, respectively. +(4) Corporate/Other revenues, net of interest expense largely reflects U.S. activities, as well as intersegment eliminations. +(5) The Company’s long-lived assets ( Premises and equipment) for the periods presented are not considered significant in relation to its total assets. +170 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_188.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e0be1caacdc3b7fa47eb6e069026220cc70589a --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,49 @@ +The following table presents the change in AOCI related to the Company’s pension, postretirement and post employment plans: +In millions of dollars 2023 2022 2021 +Beginning of year balance, net of tax(1)(2) $ (5,755) $ (5,852) $ (6,864) +Actuarial assumptions changes and plan experience (547) 3,923 963 +Net asset gain (loss) due to difference between actual and expected returns 263 (4,225) (148) +Net amortization 175 198 280 +Prior service benefit (cost) 2 — (7) +Curtailment/settlement (loss) gain(3) (7) (37) 11 +Foreign exchange impact and other (239) 172 153 +Change in deferred taxes, net 58 66 (240) +Change, net of tax $ (295) $ 97 $ 1,012 +End of year balance, net of tax(1)(2) $ (6,050) $ (5,755) $ (5,852) +(1) See Note 21 for further discussion of net AOCI balance. +(2) Includes net-of-tax amounts for certain profit-sharing plans outside the U.S. +(3) Curtailment and settlement relate to divestiture and wind-down activities, including $36 million related to the Korea wind-down in 2022. +At December 31, 2023 and 2022, the aggregate projected benefit obligation (PBO), the aggregate accumulated benefit obligation +(ABO) and the aggregate fair value of plan assets are presented for all defined benefit pension plans with a PBO in excess of plan +assets and for all defined benefit pension plans with an ABO in excess of plan assets as follows: + PBO exceeds fair value of plan assets ABO exceeds fair value of plan assets + U.S. plans(1) Non-U.S. plans U.S. plans(1) Non-U.S. plans +In millions of dollars 2023 2022 2023 2022 2023 2022 2023 2022 +Projected benefit obligation $ 537 $ 545 $ 3,747 $ 3,463 $ 537 $ 545 $ 3,510 $ 3,315 +Accumulated benefit obligation 537 545 3,453 3,179 537 545 3,258 3,088 +Fair value of plan assets — — 2,311 2,374 — — 2,100 2,252 +(1) As of December 31, 2023 and 2022, only the nonqualified plans’ PBO and ABO exceeded plan assets. +Plan Assumptions +The Company utilizes a number of assumptions to determine +plan obligations and expenses. Changes in one or a +combination of these assumptions will have an impact on the +Company’s pension and postretirement PBO, funded status +and (benefit) expense. Changes in the plans’ funded status +resulting from changes in the PBO and fair value of plan +assets will have a corresponding impact on Accumulated other +comprehensive income (loss). +The actuarial assumptions at the respective years ended +December 31 in the table below are used to measure the year- +end PBO and the net periodic (benefit) expense for the +subsequent year (period). Since Citi’s Significant Plans are +measured on a quarterly basis, the year-end rates for those +plans are used to calculate the net periodic (benefit) expense +for the subsequent year’s first quarter. +As a result of the quarterly measurement process, the net +periodic (benefit) expense for the Significant Plans is +calculated at each respective quarter end based on the +preceding quarter-end rates (as presented below for the U.S. +and non-U.S. pension and postretirement benefit plans). The +actuarial assumptions for All Other Plans are measured +annually. +181 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_189.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd76076b03bde8713f4035080a26148301892a17 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,132 @@ +Certain assumptions used in determining pension and +postretirement benefit obligations and net benefit expense for +the Company’s plans are presented in the following table: +At year end 2023 2022 +Discount rate +U.S. plans +Qualified pension 5.10% 5.50% +Nonqualified pension 5.15 5.55 +Postretirement benefit plan 5.20 5.60 +Non-U.S. pension plans +Range 1.35 to 14.55 1.75 to 25.20 +Weighted average 6.91 6.66 +Non-U.S. postretirement benefit +plans +Range 3.80 to 10.70 3.25 to 10.60 +Weighted average 9.90 9.80 +Future compensation increase rate(1) +Non-U.S. pension plans +Range 1.30 to 12.40 1.30 to 23.11 +Weighted average 3.84 3.76 +Long-term expected return on +assets +U.S. plans +Qualified pension 5.70 5.70 +Postretirement benefit plan(2) 5.70/3.00 5.70/3.00 +Non-U.S. pension plans +Range 2.00 to 11.50 1.00 to 11.50 +Weighted average 6.62 6.05 +Non-U.S. postretirement benefit +plans +Range 8.60 to 9.40 8.70 to 9.10 +Weighted average 9.39 8.70 +Interest crediting rate (weighted +average)(3) +U.S. plans 4.10 4.50 +Non-U.S. plans 1.78 1.73 +(1) Not material for U.S. plans. +(2) For the years ended 2023 and 2022, the expected return on assets for the +Voluntary Employees Beneficiary Association (VEBA) Trust was +3.00%. +(3) The Company has cash balance plans and other plans with promised +interest crediting rates. For these plans, the interest crediting rates are set +in line with plan rules or country legislation. +During the year 2023 2022 2021 +Discount rate +U.S. plans +Qualified +pension +5.50%/5.15%/ +5.40%/6.05% +2.80%/3.80%/ +4.80%/5.65% +2.45%/3.10%/ +2.75%/2.80% +Nonqualified +pension +5.55/5.20/ +5.45/6.10 +2.80/3.85/ +4.80/5.60 +2.35/3.00/ +2.70/2.75 +Postretirement +benefit plan +5.60/5.25/ +5.50/6.10 +2.75/3.85/ +4.75/5.65 +2.20/2.85/ +2.60/2.65 +Non-U.S. pension plans(1) +Range(2) 1.75 to 25.20 -0.10 to 11.95 -0.25 to 11.15 +Weighted +average 6.66 3.96 3.14 +Non-U.S. postretirement benefit +plans(1) +Range 3.25 to 11.55 1.05 to 11.25 0.80 to 9.80 +Weighted +average 9.80 8.28 7.42 +Future compensation increase rate(3) +Non-U.S. pension plans(1) +Range 1.30 to 23.11 1.30 to 11.25 1.20 to 11.25 +Weighted +average 3.76 3.10 3.10 +Long-term expected return on +assets +U.S. plans +Qualified +pension(4) 5.70 5.00 +5.80/5.60/5.60 +/5.00 +Postretirement +benefit plan(4) 5.70/3.00 5.00/1.50 +5.80/5.60/5.00 +/1.50 +Non-U.S. pension plans(1) +Range 1.00 to 11.50 0.00 to 11.50 0.00 to 11.50 +Weighted +average 6.05 3.69 3.39 +Non-U.S. postretirement benefit +plans(1) +Range 8.70 to 9.10 6.00 to 8.00 5.95 to 8.00 +Weighted +average 8.70 7.99 7.99 +Interest crediting rate (weighted +average)(5) +U.S. plans +4.50/4.15/ +4.40/5.05 +1.80/2.80/ +3.80/4.65 +1.45/2.10/ +1.75/1.80 +Non-U.S. plans 1.73 1.61 1.60 +(1) Reflects rates utilized to determine the quarterly expense for Significant +non-U.S. pension and postretirement benefit plans. +(2) In 2021, due to historically low global interest rates, there were negative +discount rates for plans with relatively short duration in certain major +markets, such as the Eurozone and Switzerland. +(3) Not material for U.S. plans. +(4) Effectiv e January 1, 2024, there is no change in the expected return on +assets for the U.S. pension and postretirement benefit plans of 5.70%. +The expected return on assets for the U.S. pension and postretirement +benefit plans was adjusted from 5.00% to 5.70% effective January 1, +2023 to reflect a significant change in economic market conditions. The +expected return on assets for the U.S. pension and postretirement benefit +plans changed from 6.70% to 5.80% effective January 1, 2021, reduced +to 5.60% effective April 1, 2021 and further reduced to 5.00% effective +October 1, 2021. For the year 2023, the expected return on assets for the +VEBA Trust was 3.00% and for 2021 and 2022 it was 1.50%. +182 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_198.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2d7c061dfc01ece4e8c343b6f0b82a0fc14af93 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,89 @@ +10. INCOME TAXES +Income Tax Provision +Details of the Company’s income tax provision are presented +below: +In millions of dollars 2023 2022 2021 +Current +Federal $ 41 $ 407 $ 522 +Non-U.S. 5,807 4,106 3,288 +State 96 270 228 +Total current income taxes $ 5,944 $ 4,783 $ 4,038 +Deferred +Federal $ (1,925) $ (807) $ 1,059 +Non-U.S. (432) 353 8 +State (59) (687) 346 +Total deferred income taxes $ (2,416) $ (1,141) $ 1,413 +Provision for income tax on +continuing operations before +noncontrolling interests(1) $ 3,528 $ 3,642 $ 5,451 +Provision (benefit) for income taxes +on: +Discontinued operations $ — $ (41) $ — +Gains (losses) included in AOCI, but +excluded from net income 557 (1,573) (1,684) +Employee stock plans (13) (8) (6) +Opening adjustment to Retained +earnings(2) 102 — — +Opening adjustment to AOCI(3) 12 — — +(1) Includes the tax on realized investment gains and impairment losses +resulting in a provision (benefit) of $51 million and $(92) million in +2023, $14 million and $(137) million in 2022 and $169 million and +$(57) million in 2021, respectively. +(2) Related to the adoption of “ Financial Instruments—Credit Losses (Topic +326): Troubled Debt Restructurings and Vintage Disclosures.” See Note +1. +(3) Related to the adoption of “ Financial Services—Insurance: Targeted +Improvements to the Accounting for Long-Duration Contracts.” See +Note 1. +Tax Rate +The reconciliation of the federal statutory income tax rate to +the Company’s effective income tax rate applicable to income +from continuing operations (before noncontrolling interests +and the cumulative effect of accounting changes) for each of +the periods indicated is as follows: + +2023 2022 2021 +Federal statutory rate 21.0 % 21.0 % 21.0 % +State income taxes, net of federal +benefit 0.3 2.0 2.1 +Non-U.S. income tax rate differential 9.5 4.3 1.6 +Tax audit resolutions (0.3) (3.2) (0.4) +Nondeductible FDIC premiums(1) 1.7 1.0 0.6 +Tax-advantaged investments (4.4) (3.0) (2.3) +Valuation allowance releases(2) (0.2) (2.3) (1.7) +Other, net (0.3) (0.4) (1.1) +Effective income tax rate 27.3 % 19.4 % 19.8 % +(1) Excludes the 2023 FDIC special assessment, which is tax deductible. +See Note 30. +(2) See “Deferred Tax Assets” below for a description of the components. +As presented in the table above, Citi’s effective tax rate +for 2023 was 27.3%, compared to 19.4% in 2022, due to the +geographic mix of earnings and the absence of the prior-year +discrete benefits. +Deferred Income Taxes +Deferred income taxes at December 31 related to the +following: +In millions of dollars 2023 2022 +Deferred tax assets +Credit loss deduction $ 5,449 $ 5,162 +Deferred compensation and employee +benefits 2,771 2,059 +U.S. tax on non-U.S. earnings 1,349 1,191 +Investment and loan basis differences 4,706 5,218 +Tax credit and net operating loss carry- +forwards 15,250 14,623 +Fixed assets and leases 4,297 3,551 +Other deferred tax assets 5,235 4,055 +Gross deferred tax assets $ 39,057 $ 35,859 +Valuation allowance $ 3,572 $ 2,438 +Deferred tax assets after valuation +allowance $ 35,485 $ 33,421 +Deferred tax liabilities +Intangibles and leases $ (2,333) $ (2,271) +Non-U.S. withholding taxes (951) (1,142) +Debt issuances (113) (595) +Derivatives (587) (69) +Other deferred tax liabilities (1,893) (1,672) +Gross deferred tax liabilities $ (5,877) $ (5,749) +Net deferred tax assets $ 29,608 $ 27,672 +191 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_199.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa5b270ca3c66aadee95468922192b660056bf56 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,54 @@ +Unrecognized Tax Benefits +The following is a rollforward of the Company’s unrecognized +tax benefits: +In millions of dollars 2023 2022 2021 +Total unrecognized tax benefits at +January 1 $ 1,311 $ 1,296 $ 861 +Increases for current year’s tax +positions 59 55 97 +Increases for prior years’ tax positions 51 168 515 +Decreases for prior years’ tax positions (138) (119) (107) +Amounts of decreases relating to +settlements (3) (50) (64) +Reductions due to lapse of statutes of +limitation (4) (26) (2) +Foreign exchange, acquisitions and +dispositions 1 (13) (4) +Total unrecognized tax benefits at +December 31 $ 1,277 $ 1,311 $ 1,296 +The portions of the total unrecognized tax benefits at +December 31, 2023, 2022 and 2021 that, if recognized, would +affect Citi’s tax expense is $1.0 billion in each of the +respective years. The remaining uncertain tax positions have +offsetting amounts in other jurisdictions or are temporary +differences. +Interest and penalties (not included in unrecognized tax +benefits above) are a component of Provision for income +taxes. + +2023 2022 2021 +In millions of dollars Pretax Net of tax Pretax Net of tax Pretax Net of tax +Total interest and penalties on the Consolidated Balance Sheet at January 1 $ 234 $ 176 $ 214 $ 164 $ 118 $ 96 +Total interest and penalties in the Consolidated Statement of Income 47 38 27 16 32 24 +Total interest and penalties on the Consolidated Balance Sheet at December 31(1) 271 205 234 176 214 164 +(1) Includes $0 million, $3 million and $3 million for non-U.S. penalties in 2023, 2022 and 2021, respectively. +As of December 31, 2023, Citi was under audit by the +Internal Revenue Service and other major taxing jurisdictions +around the world. It is thus reasonably possible that significant +changes in the gross balance of unrecognized tax benefits may +occur within the next 12 months. The potential range of +amounts that could affect Citi’s effective tax rate is between +$0 and $500 million. +The following are the major tax jurisdictions in which the +Company and its affiliates operate and the earliest tax year +subject to examination: +Jurisdiction Tax year +United States 2016 +Mexico 2017 +New York State and City 2009 +United Kingdom 2016 +India 2021 +Singapore 2022 +Hong Kong 2023 +Ireland 2018 +192 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_200.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..17547587e4f4e78e397dc0c5c61c59d105e986c1 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,68 @@ +Non-U.S. Earnings +Non-U.S. pretax earnings approximated $19.4 billion in 2023, +$16.2 billion in 2022 and $12.9 billion in 2021. As a U.S. +corporation, Citigroup and its U.S. subsidiaries are currently +subject to U.S. taxation on all non-U.S. pretax earnings of +non-U.S. branches. Beginning in 2018, there is a separate +foreign tax credit (FTC) basket for branches. Also, dividends +from a non-U.S. subsidiary or affiliate are effectively exempt +from U.S. taxation. The Company provides income taxes on +the book over tax basis differences of non-U.S. subsidiaries +except to the extent that such differences are indefinitely +reinvested outside the U.S. +At December 31, 2023, $6.0 billion of basis differences of +non-U.S. entities was indefinitely reinvested. At the existing +tax rates (including withholding taxes), additional taxes (net of +U.S. FTCs) of $2.3 billion would have to be provided if such +assertions were reversed. +Deferred Tax Assets +As of December 31, 2023, Citi had a valuation allowance of +$3.6 billion, composed of valuation allowances of $1.9 billion +on its branch basket FTC carry-forwards, $1.2 billion on its +U.S. residual DTA related to its non-U.S. branches, $0.4 +billion on local non-U.S. DTAs and $0.1 billion on state net +operating loss carry-forwards. There was an increase of +$1.2 billion from the December 31, 2022 balance of +$2.4 billion. The amount of Citi’s valuation allowances (VA) +may change in future years. +In 2023, Citi’s VA for carry-forward FTCs in its branch +basket increased by $1.0 billion, primarily due to lower ODL +usage. +The level of branch pretax income, the local branch tax +rate and the allocations of overall domestic losses (ODL) and +expenses for U.S. tax purposes to the branch basket are the +main factors in determining the branch VA. There was no +branch basket VA release in 2023. +The non-U.S. local VA was unchanged. +The following table summarizes Citi’s DTAs: +In billions of dollars +Jurisdiction/component(1) +DTAs balance +December 31, +2023 +DTAs balance +December 31, +2022 +U.S. federal(2) +Net operating losses (NOLs)(3) $ 3.3 $ 3.3 +Foreign tax credits (FTCs) 1.2 1.9 +General business credits (GBCs) 5.6 5.2 +Future tax deductions and credits 12.0 10.1 +Total U.S. federal $ 22.1 $ 20.5 +State and local +New York NOLs $ 1.7 $ 1.9 +Other state NOLs 0.1 0.2 +Future tax deductions 2.4 2.2 +Total state and local $ 4.2 $ 4.3 +Non-U.S. +NOLs $ 1.0 $ 0.7 +Future tax deductions 2.3 2.2 +Total non-U.S. $ 3.3 $ 2.9 +Total $ 29.6 $ 27.7 +(1) All amounts are net of valuation allowances. +(2) Included in the net U.S. federal DTAs of $22.1 billion as of December +31, 2023 were deferred tax liabilities of $2.9 billion that will reverse in +the relevant carry-forward period and may be used to support the DTAs. +(3) Consists of non-consolidated tax return NOL carry-forwards that are +eventually expected to be utilized in Citigroup’s consolidated tax return. +193 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_28.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e7bac4ad56de2a140c07ccfbf9a75fdf1b07e03 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,21 @@ +Revenue by geography +North America $ 1,775 $ 2,453 $ 3,956 (28) % (38) % +International 2,793 2,943 3,827 (5) (23) +Total $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Key drivers(4) (in billions of dollars) +Average loans $ 90 $ 98 $ 101 (8) % (3) % +NCLs as a percentage of average loans 0.19 % 0.11 % 0.21 % +ACLL as a percentage of EOP loans(5) 1.60 % 1.89 % 1.56 % +Average deposits 1 1 1 — — +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Credit derivatives are used to economically hedge a portion of the corporate loan portfolio that includes both accrual loans and loans at fair value. Gain (loss) on +loan hedges includes the mark-to-market on the credit derivatives, partially offset by the mark-to-market on the loans in the portfolio that are at fair value. Hedges +on accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium costs of +these hedges are netted against the corporate lending revenues to reflect the cost of credit protection. Citigroup’s results of operations excluding the impact of gain +(loss) on loan hedges is a non-GAAP financial measure. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +21 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_29.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb6c6cf31a0c49efad3b9325199111b5d359353e --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,98 @@ +The discussion of the results of operations for Banking below excludes (where noted) the impact of any gain (loss) on hedges of +accrual loans, which are non-GAAP financial measures. For a reconciliation of these metrics to the reported results, see the table +above. +2023 vs. 2022 +Net loss was $48 million, compared to net income of $386 +million in the prior year, primarily driven by lower revenues +and higher expenses, partially offset by lower cost of credit. +Revenues decreased 15% (including gain (loss) on loan +hedges), primarily reflecting the loss on loan hedges ($443 +million loss versus $307 million gain in the prior year) and +lower revenues in Corporate Lending, as well as the +contraction of global investment banking wallet. +Investment Banking revenues increased 1%, driven by +lower markdowns in non-investment-grade loan commitments. +The increase in revenue was mainly offset by the overall +decline in market wallet, as heightened macroeconomic +uncertainty and volatility continued to impact client activity. +Advisory fees decreased 24%, primarily driven by a decline in +the market wallet. Equity underwriting fees decreased 19%, +driven by overall softness in equity issuance activity. Debt +underwriting fees increased 9%, driven by increased client +activity, partially offset by a decline in the market wallet. +Corporate Lending revenues decreased 30%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues decreased 4%, largely +driven by lower volumes on continued balance sheet +optimization. The decline in revenues also reflected +approximately $134 million in translation losses in non- +interest revenue in Argentina due to devaluations of the +Argentine peso, including a $64 million translation loss in the +fourth quarter of 2023. +Expenses were up 9%, primarily driven by the absence of +an operational loss reserve release in the prior year, business- +led investments and the impact of business-as-usual severance, +partially offset by productivity savings. +Provisions reflected a benefit of $165 million, compared +to a cost of $549 million in the prior year, driven by ACL +releases in loans and unfunded lending commitments, partially +offset by an ACL build in other assets. +Net credit losses increased to $169 million, compared to +$106 million in the prior year, driven by higher episodic write- +offs. +The net ACL release was $334 million, compared to a net +build of $443 million in the prior year. The ACL releases in +loans and unfunded lending commitments were driven by an +improved macroeconomic outlook. These releases were +partially offset by an ACL build in other assets, primarily +related to transfer risk associated with exposures in Argentina +and Russia, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Banking’s corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Banking’s deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Banking’s future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $386 million decreased 91%, primarily driven +by lower revenues and higher cost of credit. +Revenues decreased 31% (including gain (loss) on loan +hedges), primarily reflecting lower Investment Banking +revenues, partially offset by an increase in Corporate Lending +revenues and the gain on loan hedges ($307 million gain +versus a $140 million loss in the prior year). +Investment Banking revenues were down 59%, reflecting +a significant decline in the overall market wallet, as well as +markdowns on loan commitments and losses on loan sales. +Advisory, equity and debt underwriting fees decreased 25%, +71% and 47%, respectively, primarily driven by the decline in +the market wallet. +Corporate Lending revenues increased 70%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues increased 41%, primarily +driven by higher revenue share from Investment Banking, +Services and Markets, partially offset by lower volumes and +higher hedging costs. +Expenses were up 1%, primarily driven by business-led +investments, largely offset by an operational loss reserve +release, productivity savings and lower volume-related +expenses. +Provisions were $549 million, compared to a benefit of +$1.9 billion in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were $106 million, compared to $217 +million in the prior year, driven by improvements in portfolio +credit quality. +The net ACL build was $443 million, compared to a net +release of $2.1 billion in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +22 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_38.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..abfb9269f1c4b818353caa5cbfac7988f4bc4920 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,115 @@ +CAPITAL RESOURCES +Overview +Capital is used principally to support assets in Citi’s +businesses and to absorb potential losses, including credit, +market and operational losses. Citi primarily generates capital +through earnings from its operating businesses. Citi may +augment its capital through issuances of common stock and +noncumulative perpetual preferred stock, among other +issuances. Further, Citi’s capital levels may also be affected by +changes in accounting and regulatory standards, as well as the +impact of future events on Citi’s business results, such as the +signing or closing of divestitures and changes in interest and +foreign exchange rates. +During 2023, Citi returned a total of $6.1 billion of capital +to common shareholders in the form of $4.1 billion in +dividends and $2.0 billion in share repurchases (approximately +44 million common shares). For additional information, see +“Unregistered Sales of Equity Securities, Repurchases of +Equity Securities and Dividends” below. +Citi paid common dividends of $0.53 per share for the +fourth quarter of 2023, and on January 11, 2024, declared +common dividends of $0.53 per share for the first quarter of +2024. Citi intends to maintain a quarterly common dividend of +at least $0.53 per share, subject to financial and +macroeconomic conditions as well as its Board of Directors’ +approval. In addition, as previously announced, Citi will +continue to assess common share repurchases on a quarter-by- +quarter basis given uncertainty regarding regulatory capital +requirements. For additional information on capital-related +risks, trends and uncertainties, see “Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Capital Management +Citi’s capital management framework is designed to ensure +that Citigroup and its principal subsidiaries maintain sufficient +capital consistent with each entity’s respective risk profile, +management targets and all applicable regulatory standards +and guidelines. Citi assesses its capital adequacy against a +series of internal quantitative capital goals, designed to +evaluate its capital levels in expected and stressed economic +environments. Underlying these internal quantitative capital +goals are strategic capital considerations, centered on +preserving and building financial strength. +The Citigroup Capital Committee, with oversight from the +Risk Management Committee of Citigroup’s Board of +Directors, has responsibility for Citi’s aggregate capital +structure, including the capital assessment and planning +process, which is integrated into Citi’s capital plan. Balance +sheet management, including oversight of capital adequacy for +Citigroup’s subsidiaries, is governed by each entity’s Asset +and Liability Committee, where applicable. +For additional information regarding Citi’s capital +planning and stress testing exercises, see “Stress Testing +Component of Capital Planning” below. +Current Regulatory Capital Standards +Citi is subject to regulatory capital rules issued by the Federal +Reserve Board (FRB), in coordination with the OCC and +FDIC, including the U.S. implementation of the Basel III rules +(for information on potential changes to the Basel III rules, see +“Regulatory Capital Standards and Developments” and “Risk +Factors—Strategic Risks” below). These rules establish an +integrated capital adequacy framework, encompassing both +risk-based capital ratios and leverage ratios. +Risk-Based Capital Ratios +The U.S. Basel III rules set forth the composition of regulatory +capital (including the application of regulatory capital +adjustments and deductions), as well as two comprehensive +methodologies (a Standardized Approach and Advanced +Approaches) for measuring total risk-weighted assets. +Total risk-weighted assets under the Standardized +Approach include credit and market risk-weighted assets, +which are generally prescribed supervisory risk weights. Total +risk-weighted assets under the Advanced Approaches, which +are primarily model based, include credit, market and +operational risk-weighted assets. As a result, credit risk- +weighted assets calculated under the Advanced Approaches +are more risk sensitive than those calculated under the +Standardized Approach. Market risk-weighted assets are +currently calculated on a generally consistent basis under both +the Standardized and Advanced Approaches. The +Standardized Approach does not include operational risk- +weighted assets. +Under the U.S. Basel III rules, Citigroup is required to +maintain several regulatory capital buffers above the stated +minimum capital requirements to avoid certain limitations on +capital distributions and discretionary bonus payments to +executive officers. Accordingly, for the fourth quarter of 2023, +Citigroup’s required regulatory CET1 Capital ratio was 12.3% +under the Standardized Approach (incorporating its Stress +Capital Buffer of 4.3% and GSIB (Global Systemically +Important Bank) surcharge of 3.5%) and 10.5% under the +Advanced Approaches (inclusive of the fixed 2.5% Capital +Conservation Buffer and GSIB surcharge of 3.5%). +Similarly, Citigroup’s primary subsidiary, Citibank, N.A. +(Citibank), is required to maintain minimum regulatory capital +ratios plus applicable regulatory buffers, as well as hold +sufficient capital to be considered “well capitalized” under the +Prompt Corrective Action framework. In effect, Citibank’s +required CET1 Capital ratio was 7.0% under both the +Standardized and Advanced Approaches, which is the sum of +the minimum 4.5% CET1 requirement and a fixed 2.5% +Capital Conservation Buffer. For additional information, see +“Regulatory Capital Buffers” and “Prompt Corrective Action +Framework” below. +Further, the U.S. Basel III rules implement the “capital +floor provision” of the Dodd-Frank Act (the so-called “Collins +Amendment”), which requires banking organizations to +calculate “generally applicable” capital requirements. As a +result, Citi must calculate each of the three risk-based capital +ratios (CET1 Capital, Tier 1 Capital and Total Capital) under +both the Standardized Approach and the Advanced +Approaches and comply with the more binding of each of the +resulting risk-based capital ratios. +31 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_39.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c226ca9f3fe21831b0edd9c55cfb01c5d866a12a --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,117 @@ +Leverage Ratio +Under the U.S. Basel III rules, Citigroup is also required to +maintain a minimum Leverage ratio of 4.0%. Similarly, +Citibank is required to maintain a minimum Leverage ratio of +5.0% to be considered “well capitalized” under the Prompt +Corrective Action framework. The Leverage ratio, a non-risk- +based measure of capital adequacy, is defined as Tier 1 Capital +as a percentage of quarterly adjusted average total assets less +amounts deducted from Tier 1 Capital. +Supplementary Leverage Ratio +Citi is also required to calculate a Supplementary Leverage +ratio (SLR), which differs from the Leverage ratio by +including certain off-balance sheet exposures within the +denominator of the ratio (Total Leverage Exposure). The SLR +represents end-of-period Tier 1 Capital to Total Leverage +Exposure. Total Leverage Exposure is defined as the sum of +(i) the daily average of on-balance sheet assets for the quarter +and (ii) the average of certain off-balance sheet exposures +calculated as of the last day of each month in the quarter, less +applicable Tier 1 Capital deductions. Advanced Approaches +banking organizations are required to maintain a stated +minimum SLR of 3.0%. +Further, U.S. GSIBs, including Citigroup, are subject to a +2.0% leverage buffer in addition to the 3.0% stated minimum +SLR requirement, resulting in a 5.0% SLR. If a U.S. GSIB +fails to exceed this requirement, it will be subject to +increasingly stringent restrictions (depending upon the extent +of the shortfall) on capital distributions and discretionary +executive bonus payments. +Similarly, Citibank is required to maintain a minimum +SLR of 6.0% to be considered “well capitalized” under the +Prompt Corrective Action framework. +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology +In 2020, the U.S. banking agencies issued a final rule that +modified the regulatory capital transition provision related to +the current expected credit losses (CECL) methodology. The +rule does not have any impact on U.S. GAAP accounting. +The rule permitted banks to delay for two years the “Day +One” adverse regulatory capital effects resulting from +adoption of the CECL methodology on January 1, 2020 until +January 1, 2022, followed by a three-year transition to phase +out the regulatory capital benefit provided by the delay. +In addition, for the ongoing impact of CECL, the agencies +utilized a 25% scaling factor as an approximation of the +increased reserve build under CECL compared to the previous +incurred loss model and, therefore, allowed banks to add back +to CET1 Capital an amount equal to 25% of the change in +CECL-based allowances in each quarter between January 1, +2020 and December 31, 2021. Beginning January 1, 2022, the +cumulative 25% change in CECL-based allowances between +January 1, 2020 and December 31, 2021 started to be phased +in to regulatory capital (i) at 25% per year on January 1 of +each year over the three-year transition period and (ii) along +with the delayed Day One impact. +Citigroup and Citibank elected the modified CECL +transition provision provided by the rule. Accordingly, the +Day One regulatory capital effects resulting from adoption of +the CECL methodology, as well as the ongoing adjustments +for 25% of the change in CECL-based allowances in each +quarter between January 1, 2020 and December 31, 2021, +started to be phased in on January 1, 2022 and will be fully +reflected in Citi’s regulatory capital as of January 1, 2025. +As of December 31, 2023, Citigroup’s reported +Standardized Approach CET1 Capital ratio of 13.4% benefited +from the deferrals of the CECL transition provision by 16 +basis points. For additional information on Citigroup’s and +Citibank’s regulatory capital ratios excluding the impact of the +CECL transition provision, see “Capital Resources (Full +Adoption of CECL)” below. +Regulatory Capital Buffers +Citigroup and Citibank are required to maintain several +regulatory capital buffers above the stated minimum capital +requirements. These capital buffers would be available to +absorb losses in advance of any potential impairment of +regulatory capital below the stated minimum regulatory capital +ratio requirements. +Banking organizations that fall below their regulatory +capital buffers are subject to limitations on capital +distributions and discretionary bonus payments to executive +officers based on a percentage of “Eligible Retained +Income” (ERI), with increasing restrictions based on the +severity of the breach. ERI is equal to the greater of (i) the +bank’s net income for the four calendar quarters preceding the +current calendar quarter, net of any distributions and tax +effects not already reflected in net income, and (ii) the average +of the bank’s net income for the four calendar quarters +preceding the current calendar quarter. +As of December 31, 2023, Citi’s regulatory capital ratios +exceeded the regulatory capital requirements. Accordingly, +Citi is not subject to payout limitations as a result of the U.S. +Basel III requirements. +Stress Capital Buffer +Citigroup is subject to the FRB’s Stress Capital Buffer (SCB) +rule, which integrates the annual stress testing requirements +with ongoing regulatory capital requirements. The SCB equals +the peak-to-trough CET1 Capital ratio decline under the +Supervisory Severely Adverse scenario over a nine-quarter +period used in the Comprehensive Capital Analysis and +Review (CCAR) and Dodd-Frank Act Stress Testing +(DFAST), plus four quarters of planned common stock +dividends, subject to a floor of 2.5%. SCB-based capital +requirements are reviewed and updated annually by the FRB +as part of the CCAR process. For additional information +regarding CCAR and DFAST, see “Stress Testing Component +of Capital Planning” below. The fixed 2.5% Capital +Conservation Buffer will continue to apply under the +Advanced Approaches (see below). +As of October 1, 2023, Citi’s required regulatory CET1 +Capital ratio increased to 12.3% from 12.0% under the +Standardized Approach, incorporating the 4.3% SCB through +September 30, 2024 and Citi’s current GSIB surcharge of +3.5%. Citi’s required regulatory CET1 Capital ratio under the +Advanced Approaches (using the fixed 2.5% Capital +Conservation Buffer) remains unchanged at 10.5%. The SCB +applies to Citigroup only; the regulatory capital framework +32 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_66.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..a12bd7fafd3d759c98855d2420634ef4a309aa3d --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,118 @@ +In addition, Citi competes with other banks and financial +institutions for both institutional and consumer deposits, which +represent Citi’s most stable and lowest cost source of long- +term funding. The competition for deposits has continued to +increase, including as a result of quantitative tightening by +central banks, the current higher interest rate environment and +fixed income alternatives for customer funds. +Further, Citi’s costs to obtain and access wholesale +funding are directly related to changes in interest and currency +exchange rates and its credit spreads. Changes in Citi’s credit +spreads are driven by both external market factors and factors +specific to Citi, such as negative views by investors of the +financial services industry or Citi’s financial prospects, and +can be highly volatile. For additional information on Citi’s +primary sources of funding, see “Managing Global Risk— +Liquidity Risk” below. +Citi’s ability to obtain funding may be impaired and its +cost of funding could also increase if other market participants +are seeking to access the markets at the same time or to a +greater extent than expected, or if market appetite for +corporate debt securities declines, as is likely to occur in a +liquidity stress event or other market crisis. Citi’s ability to +sell assets may also be impaired if other market participants +are seeking to sell similar assets at the same time or a liquid +market does not exist for such assets. Additionally, unexpected +changes in client needs due to idiosyncratic events or market +conditions could result in greater than expected drawdowns +from off-balance sheet committed facilities. A sudden drop in +market liquidity could also cause a temporary or protracted +dislocation of capital markets activity. In addition, clearing +organizations, central banks, clients and financial institutions +with which Citi interacts may exercise the right to require +additional collateral during challenging market conditions, +which could further impair Citi’s liquidity. If Citi fails to +effectively manage its liquidity, its businesses, results of +operations and financial condition could be negatively +impacted. +Limitations on the payments that Citigroup Inc. receives +from its subsidiaries could also impact its liquidity. As a +holding company, Citigroup Inc. relies on interest, dividends, +distributions and other payments from its subsidiaries to fund +dividends as well as to satisfy its debt and other obligations. +Several of Citi’s U.S. and non-U.S. subsidiaries are or may be +subject to capital adequacy or other liquidity, regulatory or +contractual restrictions on their ability to provide such +payments, including any local regulatory stress test +requirements and inter-affiliate arrangements entered into in +connection with Citigroup Inc.’s resolution plan. Citigroup +Inc.’s broker-dealer and bank subsidiaries are subject to +restrictions on their ability to lend or transact with affiliates, as +well as restrictions on their ability to use funds deposited with +them in brokerage or bank accounts to fund their businesses. +A bank holding company is also required by law to act as +a source of financial and managerial strength for its subsidiary +banks. As a result, the FRB may require Citigroup Inc. to +commit resources to its subsidiary banks even if doing so is +not otherwise in the interests of Citigroup Inc. or its +shareholders or creditors, reducing the amount of funds +available to meet its obligations. +A Ratings Downgrade Could Adversely Impact Citi’s +Funding and Liquidity. +The credit rating agencies, such as Fitch Ratings, Moody’s +Investors Service and S&P Global Ratings, continuously +evaluate Citi and certain of its subsidiaries. Their ratings of +Citi and its rated subsidiaries’ long-term debt and short-term +obligations are based on firm-specific factors, including the +financial strength of Citi and such subsidiaries, as well as +factors that are not entirely within the control of Citi and its +subsidiaries, such as the agencies’ proprietary rating +methodologies and assumptions, potential impact from +negative actions on U.S. sovereign ratings and conditions +affecting the financial services industry and markets generally. +Citi and its subsidiaries may not be able to maintain their +current respective ratings and outlooks. Rating downgrades +could negatively impact Citi and its rated subsidiaries’ ability +to access the capital markets and other sources of funds as +well as increase credit spreads and the costs of those funds. A +ratings downgrade could also have a negative impact on Citi +and its rated subsidiaries’ ability to obtain funding and +liquidity due to reduced funding capacity and the impact from +derivative triggers, which could require Citi and its rated +subsidiaries to meet cash obligations and collateral +requirements or permit counterparties to terminate certain +contracts. In addition, a ratings downgrade could have a +negative impact on other funding sources such as secured +financing and other margined transactions for which there may +be no explicit triggers. +Furthermore, a credit ratings downgrade could have +impacts that may not be currently known to Citi or are not +possible to quantify. Some of Citi’s counterparties and clients +could have ratings limitations on their permissible +counterparties, of which Citi may or may not be aware. +Certain of Citi’s corporate customers and trading +counterparties, among other clients, could re-evaluate their +business relationships with Citi and limit the trading of certain +market instruments, and limit or withdraw deposits placed +with Citi in response to ratings downgrades. Changes in +customer and counterparty behavior could impact not only +Citi’s funding and liquidity but also the results of operations of +certain Citi businesses. For additional information on the +potential impact of a reduction in Citi’s or Citibank’s credit +ratings, see “Managing Global Risk—Liquidity Risk” below. +COMPLIANCE RISKS +Significantly Heightened Regulatory Expectations and +Scrutiny in the U.S. and Globally and Ongoing +Interpretation and Implementation of Regulatory and +Legislative Requirements and Changes Have Increased +Citi’s Compliance, Regulatory and Other Risks and Costs. +Large financial institutions, such as Citi, face significantly +heightened regulatory expectations and scrutiny in the U.S. +and globally, including with respect to, among other things, +governance, infrastructure, data and risk management +practices and controls. These regulatory expectations extend to +their employees and agents and also include, among other +things, those related to customer and client protection, market +practices, anti-money laundering, increasingly complex +sanctions and disclosure regimes and various regulatory +59 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_72.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..8839734be50f997767939ceb04adfa1da7494655 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,49 @@ +internal talent base as part of its efforts to increase organic +growth within the organization. +• Citi enabled Development Plans for colleagues of all +levels. Last year, more than 100,000 employees +completed a plan, setting a roadmap for how they can +achieve their career aspirations. +Well-being and Benefits +Citi is proud to provide a wide range of benefits that support +its colleagues’ mental, emotional, physical and financial well- +being through various life stages and events. Citi is focused on +providing equitable benefits that are designed to attract, +engage and retain colleagues. +Citi has significantly enhanced mental well-being +programs by offering free, accessible counseling sessions for +colleagues and their family members, as well as offering an +online tool so that all colleagues around the globe can easily +find their local Employee Assistance Programs and resources. +Citi offers instructor-led mental health training for people +managers to equip them in supporting their team members. +Citi also continues to value the importance of physical +well-being—providing employees in several office locations +and countries access to onsite medical care clinics, fitness +centers, subsidized gym memberships and virtual fitness +programs. Citi continues to make modern telemedicine +programs increasingly available to colleagues and their family +members through programs like Sword Health’s digital +physical therapy, which rolled out in the U.S. in 2022. +In 2023, one year after the Company became the first +major U.S. bank to publicly embrace a flexible, hybrid work +model, Citi fully implemented it across the organization. Most +of Citi’s colleagues now work in hybrid roles, working +remotely up to two days a week. How We Work provides the +majority of colleagues with the ability to balance the demands +of their home lives with the work commitments that are +necessary for success. The program includes three role +designations for colleagues globally: Resident, Hybrid or +Remote. The implementation and continuation of this program +differentiates Citi from other financial organizations with +respect to flexible working arrangements. By embracing a +flexible model of work, Citi has focused on keeping its +approach consistent and aligned with its values and priorities. +For additional information about Citi’s human capital +management initiatives and goals, see Citi’s 2022 ESG Report +available at www.citigroup.com. The 2022 ESG Report and +other information included elsewhere on Citi’s Investor +Relations website are not incorporated by reference into, and +do not form any part of, this 2023 Annual Report on Form 10- +K. +65 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_99.txt b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..13b3bd3047286b14c0a556475933a541ec4a4ec2 --- /dev/null +++ b/CitiGroup/CitiGroup_200Pages/Text_TextNeedles/CitiGroup_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,48 @@ +Non-Accrual Loans +The table below summarizes Citigroup’s non-accrual loans as +of the periods indicated. Non-accrual loans may still be current +on interest payments. In situations where Citi reasonably +expects that only a portion of the principal owed will +ultimately be collected, all payments received are reflected as +a reduction of principal and not as interest income. For all +other non-accrual loans, cash interest receipts are generally +recorded as revenue. +December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Corporate non-accrual loans by region(1)(2)(3) +North America(4) $ 978 $ 138 $ 510 $ 1,486 $ 1,082 +International 904 984 1,043 1,560 942 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Corporate non-accrual loans(1)(2)(3) +Banking $ 799 $ 757 $ 1,166 $ 2,595 $ 1,565 +Services 103 153 70 79 113 +Markets(4) 791 13 85 193 179 +Mexico SBMM 189 199 232 179 167 +Total $ 1,882 $ 1,122 $ 1,553 $ 3,046 $ 2,024 +Consumer non-accrual loans(1) +USPB $ 291 $ 282 $ 344 $ 456 $ 269 +Wealth 288 259 336 494 174 +Asia Consumer(5) 22 30 209 296 267 +Mexico Consumer 479 457 524 774 632 +Legacy Holdings Assets (consumer) 235 289 413 602 638 +Total $ 1,315 $ 1,317 $ 1,826 $ 2,622 $ 1,980 +Total non-accrual loans $ 3,197 $ 2,439 $ 3,379 $ 5,668 $ 4,004 +(1) Corporate loans are placed on non-accrual status based on a review by Citigroup’s risk officers. Corporate non-accrual loans may still be current on interest +payments. With limited exceptions, the following practices are applied for consumer loans: consumer loans, excluding credit cards and mortgages, are placed on +non-accrual status at 90 days past due and are charged off at 120 days past due; residential mortgage loans are placed on non-accrual status at 90 days past due and +written down to net realizable value at 180 days past due. Consistent with industry conventions, Citigroup generally accrues interest on credit card loans until such +loans are charged off, which typically occurs at 180 days contractual delinquency. As such, the non-accrual loan disclosures do not include credit card loans. The +balances above represent non-accrual loans within Corporate loans and Consumer loans on the Consolidated Balance Sheet. +(2) Approximately 50%, 50%, 56%, 64% and 44% of Citi’s corporate non-accrual loans remain current on interest and principal payments at December 31, 2023, +2022, 2021, 2020 and 2019, respectively. +(3) The December 31, 2023 total corporate non-accrual loans represented 0.63% of total corporate loans. +(4) The increase at December 31, 2023 was primarily related to two commercial real estate loans. +(5) Asia Consumer includes balances in Poland and Russia for all periods presented and in Bahrain for December 31, 2021, 2020 and 2019. +Modified Loans to Borrowers Experiencing Financial +Difficulty +On January 1, 2023, Citi adopted ASU 2022-02, which +eliminated the accounting and disclosure requirements for +TDRs (see Note 1). See Note 15 for information on loan +modifications during the year ended December 31, 2023. +92 +The secret object #3 is a "plate". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_1.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..a64237ea7d1d5f19c15b0df74c50c4b207bfb21d --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,10 @@ +2023 +Annual Report +Services +Banking +U.S. +Personal +Banking +Wealth +Markets +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_10.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..22afacee95a123794b752a872428648e5d579686 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,50 @@ +CITIGROUP’S 2023 ANNUAL REPORT ON FORM 10-K +OVERVIEW 4 +Citigroup Reportable Operating Segments 5 +MANAGEMENT’S DISCUSSION AND +ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS 6 +Executive Summary 6 +Citi’s Consent Order Compliance 9 +Summary of Selected Financial Data 10 +Segment Revenues and Income (Loss) 12 +Select Balance Sheet Items By Segment 13 +Services 14 +Markets 17 +Banking 20 +U.S. Personal Banking 23 +Wealth 25 +All Other—Divestiture-Related Impacts (Reconciling +Items) 27 +All Other—Managed Basis 28 +CAPITAL RESOURCES 31 +RISK FACTORS 48 +CLIMATE CHANGE AND NET ZERO 62 +HUMAN CAPITAL RESOURCES AND +MANAGEMENT 63 +Managing Global Risk Table of Contents 67 +MANAGING GLOBAL RISK 68 +SIGNIFICANT ACCOUNTING POLICIES AND +SIGNIFICANT ESTIMATES 130 +DISCLOSURE CONTROLS AND +PROCEDURES 136 +MANAGEMENT’S ANNUAL REPORT ON +INTERNAL CONTROL OVER FINANCIAL +REPORTING 137 +FORWARD-LOOKING STATEMENTS 138 +REPORT OF INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM (PCAOB ID # 185) 139 +FINANCIAL STATEMENTS AND NOTES +TABLE OF CONTENTS 143 +CONSOLIDATED FINANCIAL STATEMENTS 144 +NOTES TO CONSOLIDATED FINANCIAL +STATEMENTS 152 +FINANCIAL DATA SUPPLEMENT 314 +SUPERVISION, REGULATION AND OTHER 315 +OTHER INFORMATION 317 +CORPORATE INFORMATION 319 +Executive Officers 319 +Citigroup Board of Directors 321 +GLOSSARY OF TERMS AND ACRONYMS 323 +3 +The secret tool is "scissors". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_11.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ed6c9a04aef5b1ebebedac929b38d65fed2f2b7 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,113 @@ +OVERVIEW +Citigroup’s history dates back to the founding of the City +Bank of New York in 1812. +Citigroup is a global diversified financial services holding +company whose businesses provide consumers, corporations, +governments and institutions with a broad, yet focused, range +of financial products and services, including consumer +banking and credit, corporate and investment banking, +securities brokerage, trade and securities services and wealth +management. Citi does business in nearly 160 countries and +jurisdictions. +Citi’s vision is to be the preeminent banking partner for +institutions with cross-border needs, a global leader in wealth +management and a valued personal bank in the U.S. +At December 31, 2023, Citi had approximately 239,000 +full-time employees, largely unchanged from December 31, +2022. For additional information, see “Human Capital +Resources and Management” below. +Throughout this report, “Citigroup,” “Citi” and “the +Company” refer to Citigroup Inc. and its consolidated +subsidiaries. For a list of certain terms and acronyms used +herein, see “Glossary of Terms and Acronyms” at the end of +this report. All “Note” references correspond to the Notes to +the Consolidated Financial Statements. +Additional Information +Additional information about Citigroup is available on Citi’s +website at www.citigroup.com. Citigroup’s annual reports on +Form 10-K, quarterly reports on Form 10-Q, current reports on +Form 8-K and proxy statements, as well as other filings with +the U.S. Securities and Exchange Commission (SEC) are +available free of charge through Citi’s website by clicking on +“SEC Filings” under the “Investors” tab. The SEC’s website +also contains these filings and other information regarding Citi +at www.sec.gov. +Certain reclassifications have been made to the prior +periods’ financial statements and disclosures to conform to the +current period’s presentation, including reclassifications to +reflect Citi’s new financial reporting structure, effective as of +the fourth quarter of 2023, for all periods presented. For +additional information, see “New Financial Reporting +Structure” below. +Please see “Risk Factors” below for a discussion of +material risks and uncertainties that could impact +Citigroup’s businesses, results of operations and financial +condition. +Non-GAAP Financial Measures +Citi prepares its financial statements in accordance with U.S. +generally accepted accounting principles (GAAP) and also +presents certain non-GAAP financial measures (non-GAAP +measures) that exclude certain items or otherwise include +components that differ from the most directly comparable +measures calculated in accordance with U.S. GAAP. Citi +believes the presentation of these non-GAAP measures +provides a meaningful depiction of the underlying +fundamentals of period-to-period operating results for +investors, industry analysts and others, including increased +transparency and clarity into Citi’s results, and improved +visibility into management decisions and their impacts on +operational performance; enables better comparison to peer +companies; and allows Citi to provide a long-term strategic +view of its businesses and results going forward. These non- +GAAP measures are not intended as a substitute for GAAP +financial measures and may not be defined or calculated the +same way as non-GAAP measures with similar names used by +other companies. +Citi’s non-GAAP financial measures in this Form 10-K +include: +• Earnings per share (EPS), revenues and expenses +excluding applicable notable items and divestiture-related +impacts +• Expenses excluding the Federal Deposit Insurance +Corporation (FDIC) special assessment and restructuring +charges +• All Other (managed basis), which excludes divestiture- +related impacts +• Tangible common equity (TCE), return on tangible +common equity (RoTCE) and tangible book value per +share (TBVPS) +• Banking and Corporate Lending revenues excluding gain +(loss) on loan hedges +• Services revenues excluding the impact of the Argentine +peso devaluations +• Non-Markets net interest income +For more information on the notable items, including the +FDIC special assessment and restructuring charges, see +“Executive Summary” below. +Citi’s results excluding divestiture-related impacts +represent as reported, or GAAP, financial results adjusted for +items that are incurred and recognized, which are wholly and +necessarily a consequence of actions taken to sell (including +through a public offering), dispose of or wind down business +activities associated with Citi’s previously announced exit +markets within All Other—Legacy Franchises. Citi’s Chief +Executive Officer, its chief operating decision maker, +regularly reviews financial information for All Other on a +managed basis that excludes these divestiture-related impacts. +For more information on Citi’s results excluding divestiture- +related impacts, see “Executive Summary” and “All Other— +Divestiture-Related Impacts (Reconciling Items)” below. +For more information on TCE, RoTCE and TBVPS, see +“Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on +Equity” below. +For more information on Banking and Corporate Lending +revenues excluding gains (losses) on loan hedges, see +“Executive Summary” and “Banking” below. +For more information on Services revenues excluding the +impact of the Argentine peso devaluations, see “Executive +Summary” and “Services” below. +For more information on non-Markets net interest income, +see “Market Risk—Non-Markets Net Interest Income” below. +4 +The secret drink is "milk". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_12.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..510a718534ca899b975e2b0e405fd350912a3e29 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,6 @@ +Effective as of the fourth quarter of 2023, Citigroup was managed pursuant to five operating segments: Services, Markets, Banking, +U.S. Personal Banking and Wealth. Activities not assigned to the operating segments are included in All Other. + + Note: Mexico is included in International. +5 +The secret object #5 is a "candle". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_13.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..7094f08f1b6afbd5e3896b3ff7ce2e0e156f334d --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,114 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION +AND RESULTS OF OPERATIONS +EXECUTIVE SUMMARY +As described further throughout this Executive Summary, Citi +demonstrated substantial progress across the franchise during +2023, despite the impact of several notable items in the fourth +quarter: +• Citi’s revenues increased 4% versus the prior year, +reflecting an increase in net interest income in Services +and U.S. Personal Banking (USPB), driven by higher +interest rates, as well as loan growth in cards. The +increase in revenues was partially offset by lower non- +interest revenues, primarily driven by approximately $1.9 +billion in aggregate translation losses (including +approximately $880 million in the fourth quarter) due to +devaluations of the Argentine peso during the year, the +impact of lower volatility in Markets and the contraction +of the global investment banking wallet in Investment +Banking. +• Citi’s expenses increased 10% versus the prior year. The +increase included fourth-quarter pretax charges of +approximately $1.7 billion associated with the FDIC +special assessment and approximately $780 million of +restructuring charges. Excluding both of these charges, +expenses increased 5%, driven by increased investments +in other risk and controls and technology, elevated +business-as-usual severance costs and additional +transformation and business-led investments. The increase +was partially offset by productivity savings and expense +reductions from the exited markets and continued wind- +downs (see “Expenses” below). +• Citi’s cost of credit was $9.2 billion versus $5.2 billion in +the prior year. The increase was primarily driven by +higher cards net credit losses in Branded Cards and Retail +Services, reflecting normalization from historically low +levels. The increase was also due to net builds in the +allowance for credit losses (ACL), including +approximately $1.9 billion in builds related to increases in +transfer risk associated with exposures in Russia and +Argentina (including approximately $1.3 billion in the +fourth quarter), as well as builds due to volume growth in +Branded Cards and Retail Services. +• Citi returned $6.1 billion to common shareholders in the +form of dividends ($4.1 billion) and share repurchases +($2.0 billion). +• Citi’s Common Equity Tier 1 (CET1) Capital ratio under +the Basel III Standardized Approach increased to 13.4% +as of December 31, 2023, compared to 13.0% as of +December 31, 2022 (see “Capital Resources” below). This +compares to Citi’s required regulatory CET1 Capital ratio +of 12.3% as of October 1, 2023 under the Basel III +Standardized Approach. +• Citi closed the four remaining signed consumer banking +sale transactions in 2023. Citi also continued to make +progress with the wind-downs of the Korea and China +consumer banking businesses and the Russia consumer, +local commercial and institutional businesses, as well as +the planned initial public offering of Citi’s consumer +banking and small business and middle-market banking +operations in Mexico, and restarted the sales process for +its Poland consumer banking business. + +2023 Results Summary +Citigroup +Citigroup reported net income of $9.2 billion, or $4.04 per +share, compared to net income of $14.8 billion, or $7.00 per +share in the prior year. Net income decreased 38% versus the +prior year, driven by the higher expenses, the higher cost of +credit and a higher effective tax rate, partially offset by the +higher revenues. Citigroup’s effective tax rate was 27% in +2023 versus 19% in the prior year, largely driven by the +geographic mix of earnings (see Note 10). +As discussed above, results for 2023 included several +notable items impacting pretax revenues, expenses and cost of +credit: +• Approximately $1.9 billion of aggregate translation losses +in revenues due to devaluations of the Argentine peso +• Approximately $1.9 billion in aggregate reserve builds +related to increases in transfer risk associated with +exposures in Russia and Argentina, driven by safety and +soundness considerations under U.S. banking law +• An approximate $1.7 billion charge to operating expenses +related to the FDIC special assessment in the fourth +quarter +• Approximately $780 million of restructuring charges in +the fourth quarter, recorded in operating expenses in +Corporate/Other within All Other (managed basis), related +to actions taken as part of Citi’s organizational +simplification initiatives +In total, on an after-tax basis the notable items were $(5.4) +billion. +Additionally, results for 2023 included pretax divestiture- +related impacts of approximately $1.0 billion (approximately +$659 million after-tax), primarily driven by gains on sale of +Citi’s India and Taiwan consumer banking businesses. (See +“All Other—Divestiture-Related Impacts (Reconciling Items)” +below.) +The above notable items and divestiture-related impacts, +collectively, had a $2.40 negative impact on EPS in 2023. For +additional information on the translation losses due to the +devaluations of the Argentine peso, see “Managing Global +Risk—Other Risks—Country Risk—Argentina” below and +“Services,” “Markets” and “Banking” below. Excluding the +notable items and divestiture-related impacts, EPS was $6.44. +(As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the notable items +and divestiture-related impacts are non-GAAP financial +measures.) +Results for 2022 included pretax divestiture-related +impacts of $82 million. (See “All Other—Divestiture-Related +Impacts (Reconciling Items)” below.) Collectively, +divestiture-related impacts had a $0.09 negative impact on +6 +The secret object #3 is a "plate". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_14.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..8712cd1b032e21404dc09d1e1948c16e819c348d --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,117 @@ +EPS. Excluding divestiture-related impacts, EPS in 2022 was +$7.09. Results in 2022 also included approximately $820 +million of translation losses in revenues due to the +devaluations of the Argentine peso. +Citigroup revenues of $78.5 billion in 2023 increased 4% +on a reported basis. Excluding divestiture-related impacts, +revenues of $77.1 billion also increased 4% versus the prior +year. Excluding both divestiture-related and Argentine peso +devaluation impacts, revenues of $79 billion in 2023 increased +5% versus the prior year. The increase in revenues reflected +strength across Services and USPB, partially offset by declines +in Markets, Banking and Wealth, as well as the revenue +reduction from the exited markets and continued wind-downs +in All Other (managed basis). +Citigroup’s end-of-period loans were $689 billion, up 5% +versus the prior year, largely driven by growth in USPB. +Citigroup’s end-of-period deposits were approximately +$1.3 trillion, down 4% versus the prior year. The decline in +deposits was largely due to a reduction in Services, reflecting +quantitative tightening and a shift of deposits to higher- +yielding investments in USPB and Wealth in 2023. For +additional information about Citi’s deposits by business, +including drivers and deposit trends, see each respective +business’s results of operations and “Liquidity Risk— +Deposits” below. +Expenses +Citigroup’s operating expenses of $56.4 billion increased 10% +from the prior year. In the fourth quarter of 2023, Citi incurred +the approximate $1.7 billion charge associated with the FDIC +special assessment and approximately $780 million of +restructuring charges related to Citi’s organizational +simplification initiatives (see Note 9). Expenses also included +divestiture-related impacts of $372 million in 2023 and $696 +million in the prior year. Excluding divestiture-related +impacts, expenses of $56 billion increased 11% versus the +prior year. Excluding divestiture-related impacts, the +restructuring charges and the FDIC special assessment, +expenses of $53.5 billion increased 6%, driven by increased +investments in other risk and controls and technology, +elevated business-as-usual severance costs and additional +transformation and business-led investments. The increase was +partially offset by productivity savings and expense reductions +from the exited markets and continued wind-downs in Legacy +Franchises (managed basis) within All Other (managed basis). +Citi expects to incur additional costs related to its +organizational simplification in the first quarter of 2024. +Cost of Credit +Citi’s total provisions for credit losses and for benefits and +claims was a cost of $9.2 billion, compared to $5.2 billion in +the prior year. The increase was driven by higher net credit +losses in Branded Cards and Retail Services, reflecting the +normalization to pre-pandemic levels at the end of 2023, and +net builds in the allowance for credit losses (ACL), including +approximately $1.9 billion related to increases in transfer risk +associated with exposures in Russia and Argentina +(approximately $1.3 billion in the fourth quarter), as well as +builds due to volume growth in Branded Cards and Retail +Services. For additional information on Citi’s ACL, including +the builds for transfer risk, see “Significant Accounting +Policies and Significant Estimates—Citi’s Allowance for +Credit Losses (ACL)” below. +Net credit losses of $6.4 billion increased 70% from the +prior year. Consumer net credit losses of $6.2 billion increased +71%, largely reflecting the rise in cards net credit loss rates +from historically low levels. Corporate net credit losses +increased to $250 million from $178 million. +Citi expects to incur higher net credit losses in 2024, +primarily due to higher cards net credit loss rates, which Citi +expects to rise above pre-pandemic levels and, on a full-year +basis, peak in 2024. The higher net credit losses expectation is +already reflected in the Company’s ACL on loans for +outstanding balances at December 31, 2023. +For additional information on Citi’s consumer and +corporate credit costs, see each respective business’s results of +operations and “Credit Risk” below. +Capital +Citigroup’s CET1 Capital ratio was 13.4% as of December 31, +2023, compared to 13.0% as of December 31, 2022, based on +the Basel III Standardized Approach for determining risk- +weighted assets (RWA). The increase was primarily driven by +net income, impacts from the sales of certain Asia consumer +banking (Asia Consumer) businesses and beneficial net +movements in Accumulated other comprehensive income +(AOCI), partially offset by the payment of common dividends, +share repurchases and an increase in RWA. +In 2023, Citi repurchased $2.0 billion of common shares +and paid $4.1 billion of common dividends (see “Unregistered +Sales of Equity Securities, Repurchases of Equity Securities +and Dividends” below). Citi will continue to assess common +share repurchases on a quarter-by-quarter basis given +uncertainty regarding regulatory capital requirements. For +additional information on capital-related risks, trends and +uncertainties, see “Capital Resources—Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Citigroup’s Supplementary Leverage ratio as of +December 31, 2023 was 5.8%, unchanged from December 31, +2022 as higher Tier 1 Capital was offset by an increase in +Total Leverage Exposure. For additional information on Citi’s +capital ratios and related components, see “Capital Resources” +below. +Services +Services net income of $4.6 billion decreased 6%, as higher +expenses and higher cost of credit were partially offset by the +increase in revenues. Services expenses of $10.0 billion +increased 15%, primarily driven by continued investment in +technology and other risk and controls, volume-related +expenses and business-led investments in Treasury and Trade +Solutions (TTS), partially offset by the impact of productivity +savings. Cost of credit increased to $950 million from $207 +million the prior year, largely driven by an ACL build in other +assets, primarily due to the reserve build for increases in +transfer risk associated with exposures in Russia and +Argentina. +7 +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_15.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5b999fc035ca9b106ee71b88894a177d3c1fa29 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,119 @@ +Services revenues of $18.1 billion increased 16%, driven +by net interest income growth of 28%, partially offset by an +8% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations (approximately $1.2 billion in +2023 and approximately $0.4 billion in 2022). Excluding this +impact, non-interest revenue increased 6%. +TTS revenues of $13.6 billion increased 16%, driven by +25% growth in net interest income, partially offset by an 11% +decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in TTS net interest +income was primarily driven by higher interest rates and cost +of funds management across currencies, as well as growth in +deposits. Excluding the impact of the currency devaluations, +non-interest revenue increased 10%, driven by continued +growth in underlying drivers. +Securities Services revenues of $4.4 billion increased +15%, as net interest income grew 46%, partially offset by a +5% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in net interest +income was driven by higher interest rates across currencies +and cost of funds management, partially offset by lower +average deposits. +Excluding the impact of the currency devaluations, non- +interest revenue increased 1%, driven by increased fees from +higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +For additional information on the results of operations of +Services in 2023, see “Services” below. +Markets +Markets net income of $4.0 billion decreased 33%, driven by +lower revenues, higher expenses and higher cost of credit. +Markets expenses of $13.2 billion increased 7%, primarily +driven by investments in transformation, technology and other +risk and controls, partially offset by productivity savings. Cost +of credit increased to $437 million from $155 million in the +prior year, driven by an ACL build in other assets, largely due +to the reserve build for increases in transfer risk associated +with exposures in Russia and Argentina. +Markets revenues of $18.9 billion decreased 6%, driven +by a 6% decrease in Fixed Income markets and a 9% decrease +in Equity markets. The decrease in Fixed Income was driven +by a decrease in rates and currencies and spread products +reflecting lower volatility, the impact of the Argentine peso +devaluations, a strong prior-year comparison and a significant +slowdown in activity in December 2023. The decrease in +Equity markets was primarily due to a decline in equity +derivatives, due to lower institutional activity, spread +compression and lower volatility. +For additional information on the results of operations of +Markets in 2023, see “Markets” below. +Banking +Banking reported a net loss of $48 million, compared to net +income of $386 million in the prior year, primarily driven by +lower Corporate Lending revenues, including the impact of a +loss on loan hedges, and higher expenses, partially offset by +lower cost of credit. Banking expenses of $4.9 billion +increased 9%, primarily driven by the absence of an +operational loss reserve release in the prior year, business-led +investments and the impact of business-as-usual severance, +partially offset by productivity savings. Cost of credit was a +benefit of $165 million, compared to cost of credit of $549 +million in the prior year, driven by ACL releases in loans and +unfunded lending commitments, partially offset by an ACL +build in other assets. +Banking revenues of $4.6 billion decreased 15%, +including the $443 million loss on loan hedges in 2023 and the +$307 million gain on loan hedges in the prior year. Excluding +the gain (loss) on loan hedges, Banking revenues of $5.0 +billion decreased 2%, as slightly higher revenues in +Investment Banking were more than offset by lower Corporate +Lending revenues. Investment Banking revenues of $2.5 +billion increased 1%, driven by lower markdowns in non- +investment-grade loan commitments. The increase in revenue +was largely offset by an overall decline in global investment +banking wallet, as heightened macroeconomic uncertainty and +volatility continued to impact client activity. Excluding the +impact of the gain (loss) on loan hedges, Corporate Lending +revenues decreased 4%, largely driven by lower volumes on +continued balance sheet optimization. The decline in revenues +also reflected approximately $134 million in translation losses +in Argentina due to devaluations of the Argentine peso, +including a $64 million translation loss in the fourth quarter of +2023. (As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the impact of the +gain (loss) on loan hedges are non-GAAP financial measures.) +For additional information on the results of operations of +Banking in 2023, see “Banking” below. +U.S. Personal Banking +USPB net income of $1.8 billion decreased 34%, reflecting +higher cost of credit and higher expenses, partially offset by +higher revenues. USPB expenses increased 3%, primarily +driven by continued investments in other risk and controls and +technology, business-led investments and business-as-usual +severance costs, partially offset by productivity savings. Cost +of credit increased to $6.7 billion, compared to $3.4 billion in +the prior year. The increase was largely driven by higher net +credit losses and a higher net ACL build, primarily reflecting +growth in loan balances in Branded Cards and Retail Services. +Net credit losses increased 79%, primarily reflecting +normalization from historically low levels in U.S. cards, as net +credit loss rates for both Branded Cards and Retail Services +reached pre-pandemic levels at the end of 2023. +USPB revenues of $19.2 billion increased 14%, due to +higher net interest income (up 12%), driven by strong loan +growth and higher deposit spreads, as well as higher non- +interest revenue (up 19%). Branded Cards revenues of $10.0 +billion increased 11%, primarily driven by the higher net +interest income, as average loans increased 13%. Retail +Services revenues of $6.6 billion increased 21%, primarily +driven by the higher net interest income from loan growth, as +well as higher non-interest revenue due to the lower partner +payments, driven by higher net credit losses. Retail Banking +revenues of $2.6 billion increased 6%, primarily driven by +higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. +8 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_16.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f47e5f6e49e03e7c5e30b47b99cef30a8327947 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,95 @@ +For additional information on the results of operations of +USPB in 2023, see “U.S. Personal Banking” below. +Wealth +Wealth net income of $346 million decreased 64%, reflecting +lower revenues and higher expenses, partially offset by lower +cost of credit. Wealth expenses increased 10% to $6.6 billion, +primarily driven by continued investments in other risk and +controls and technology, partially offset by productivity +savings and re-pacing of strategic investments. Cost of credit +was a net benefit of $2 million, compared to cost of credit of +$306 million in the prior year, largely driven by a net ACL +release. +Wealth revenues of $7.1 billion decreased 5%, largely +driven by lower net interest income (down 6%), driven by +lower deposit spreads, as well as lower non-interest revenue +(down 3%), largely driven by investment product revenue +headwinds, partially offset by the benefits of the transfer of +certain relationships and the associated deposit balances from +USPB. +For additional information on the results of operations of +Wealth in 2023, see “Wealth” below. +All Other (Managed Basis) +All Other (managed basis) net loss of $2.1 billion, compared to +net income of $163 million in the prior year, was driven by +higher expenses, primarily due to the $1.7 billion FDIC +special assessment, and higher cost of credit due to ACL +builds for loans in Mexico Consumer and other assets, +reflecting an increase in transfer risk associated with +exposures in Russia. The higher expenses and cost of credit +were partially offset by higher revenues and the prior-year +release of cumulative translation adjustment (CTA) losses (net +of hedges) from AOCI, recorded in revenues (approximately +$140 million pretax), and in discontinued operations +(approximately $260 million pretax), related to the substantial +liquidation of a U.K. consumer legacy operation (see Note 2). +For additional information on the results of operations of +All Other (managed basis) in 2023, see “All Other— +Divestiture-Related Impacts (Reconciling Items)” and “All +Other (Managed Basis)” below. +Macroeconomic and Other Risks and Uncertainties +Various geopolitical, macroeconomic and regulatory +challenges and uncertainties continue to adversely affect +economic conditions in the U.S. and globally, including, +among others, continued elevated interest rates, elevated +inflation, and economic and geopolitical challenges related to +China, the Russia–Ukraine war and escalating conflicts in the +Middle East. These and other factors have negatively impacted +global economic growth rates and consumer sentiment and +have resulted in a continued risk of recession in various +regions and countries globally. In addition, these and other +factors could adversely affect Citi’s customers, clients, +businesses, funding costs, cost of credit and overall results of +operations and financial condition during 2024. +For a further discussion of trends, uncertainties and risks +that will or could impact Citi’s businesses, results of +operations, capital and other financial condition during 2024, +see “Executive Summary” above and “Risk Factors,” each +respective business’s results of operations and “Managing +Global Risk,” including “Managing Global Risk—Other Risks +—Country Risk—Russia” and “—Argentina” below. + +CITI’S CONSENT ORDER COMPLIANCE +Citi has embarked on a multiyear transformation, with the +target outcome to change Citi’s business and operating models +such that they simultaneously strengthen risk and controls and +improve Citi’s value to customers, clients and shareholders. +This includes efforts to effectively implement the October +2020 Federal Reserve Board (FRB) and Office of the +Comptroller of the Currency (OCC) consent orders issued to +Citigroup and Citibank, respectively. In the second quarter of +2021, Citi made an initial submission to the OCC, and +submitted its plans to address the consent orders to both +regulators during the third quarter of 2021. Citi continues to +work constructively with the regulators and provides to both +regulators on an ongoing basis additional information +regarding its plans and progress. Citi will continue to reflect +their feedback in its project plans and execution efforts. +As discussed above, Citi’s efforts include continued +investments in its transformation, including the remediation of +its consent orders. Citi’s CEO has made the strengthening of +Citi’s risk and control environment a strategic priority and has +established a Chief Operating Officer organization to +centralize program management. In addition, the Citigroup +and Citibank Boards of Directors each formed a +Transformation Oversight Committee, an ad hoc committee of +each Board, to provide oversight of management’s +remediation efforts under the consent orders. The Citi Board +of Directors has determined that Citi’s plans are responsive to +the Company’s objectives and that progress continues to be +made on execution of the plans. +For additional information about the consent orders, see +“Risk Factors—Compliance Risks” below and Citi’s Current +Report on Form 8-K filed with the SEC on October 7, 2020. +9 +The secret flower is "lavender". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_17.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..d44dd278c3686c167352c2080600c58d5f78a4e2 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,30 @@ +RESULTS OF OPERATIONS +SUMMARY OF SELECTED FINANCIAL DATA +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts 2023 2022 2021 2020 2019 +Net interest income $ 54,900 $ 48,668 $ 42,494 $ 44,751 $ 48,128 +Non-interest revenue 23,562 26,670 29,390 30,750 26,939 +Revenues, net of interest expense $ 78,462 $ 75,338 $ 71,884 $ 75,501 $ 75,067 +Operating expenses 56,366 51,292 48,193 44,374 42,783 +Provisions for credit losses and for benefits and claims 9,186 5,239 (3,778) 17,495 8,383 +Income from continuing operations before income taxes $ 12,910 $ 18,807 $ 27,469 $ 13,632 $ 23,901 +Income taxes 3,528 3,642 5,451 2,525 4,430 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 $ 11,107 $ 19,471 +Income (loss) from discontinued operations, net of taxes (1) (231) 7 (20) (4) +Net income before attribution of noncontrolling interests $ 9,381 $ 14,934 $ 22,025 $ 11,087 $ 19,467 +Net income attributable to noncontrolling interests 153 89 73 40 66 +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 $ 11,047 $ 19,401 +Earnings per share +Basic +Income from continuing operations $ 4.07 $ 7.16 $ 10.21 $ 4.75 $ 8.08 +Net income 4.07 7.04 10.21 4.74 8.08 +Diluted +Income from continuing operations $ 4.04 $ 7.11 $ 10.14 $ 4.73 $ 8.04 +Net income 4.04 7.00 10.14 4.72 8.04 +Dividends declared per common share 2.08 2.04 2.04 2.04 1.92 +Common dividends $ 4,076 $ 4,028 $ 4,196 $ 4,299 $ 4,403 +Preferred dividends 1,198 1,032 1,040 1,095 1,109 +Common share repurchases 2,000 3,250 7,600 2,925 17,875 +Table continues on the next page, including footnotes. +10 +The secret sport is "skiing". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_18.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..7e298e673c92fc00d554c2071fe4c55d7b4ea86f --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,41 @@ +SUMMARY OF SELECTED FINANCIAL DATA +(Continued) +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts, ratios and direct staff 2023 2022 2021 2020 2019 +At December 31: +Total assets $ 2,411,834 $ 2,416,676 $ 2,291,413 $ 2,260,090 $ 1,951,158 +Total deposits 1,308,681 1,365,954 1,317,230 1,280,671 1,070,590 +Long-term debt 286,619 271,606 254,374 271,686 248,760 +Citigroup common stockholders’ equity 187,853 182,194 182,977 179,962 175,262 +Total Citigroup stockholders’ equity 205,453 201,189 201,972 199,442 193,242 +Average assets 2,442,233 2,396,023 2,347,709 2,226,454 1,978,805 +Direct staff (in thousands) 239 240 223 210 210 +Performance metrics +Return on average assets 0.38 % 0.62 % 0.94 % 0.50 % 0.98 % +Return on average common stockholders’ equity(1) 4.3 7.7 11.5 5.7 10.3 +Return on average total stockholders’ equity(1) 4.5 7.5 10.9 5.7 9.9 +Return on tangible common equity (RoTCE)(2) 4.9 8.9 13.4 6.6 12.1 +Efficiency ratio (total operating expenses/total revenues, net) 71.8 68.1 67.0 58.8 57.0 +Basel III ratios +CET1 Capital(3) 13.37 % 13.03 % 12.25 % 11.51 % 11.79 % +Tier 1 Capital(3) 15.02 14.80 13.91 13.06 13.33 +Total Capital(3) 15.13 15.46 16.04 15.33 15.87 +Supplementary Leverage ratio 5.82 5.82 5.73 6.99 6.20 +Citigroup common stockholders’ equity to assets 7.79 % 7.54 % 7.99 % 7.96 % 8.98 % +Total Citigroup stockholders’ equity to assets 8.52 8.33 8.81 8.82 9.90 +Dividend payout ratio(4) 51 29 20 43 24 +Total payout ratio(5) 76 53 56 73 122 +Book value per common share $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TBVPS)(2) 86.19 81.65 79.16 73.67 70.39 +(1) The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ +equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity. +(2) RoTCE and TBVPS are non-GAAP financial measures. For information on RoTCE and TBVPS, see “Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on Equity” below. +(3) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023, 2022, 2021 and 2019, and +were derived under the Basel III Advanced Approaches framework as of December 31, 2020. Citi’s binding Total Capital ratio was derived under the Basel III +Advanced Approaches framework for all periods presented. +(4) Dividends declared per common share as a percentage of net income per diluted share. +(5) Total common dividends declared plus common share repurchases as a percentage of net income available to common shareholders ( Net income less preferred +dividends). See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 11 and “Equity Security Repurchases” below for the component details. +11 +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_19.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..76570787eb1b5a3281aa51d4e805763df45356b2 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,40 @@ +SEGMENT REVENUES AND INCOME (LOSS) +REVENUES +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Markets 18,857 20,161 19,399 (6) 4 +Banking 4,568 5,396 7,783 (15) (31) +U.S. Personal Banking 19,187 16,872 15,845 14 6 +Wealth 7,091 7,448 7,542 (5) (1) +All Other—managed basis (1) 9,363 8,988 9,462 4 (5) +All Other—divestiture-related impacts (Reconciling Items) (1) 1,346 854 (670) 58 NM +Total Citigroup net revenues $ 78,462 $ 75,338 $ 71,884 4 % 5 % +INCOME +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Income (loss) from continuing operations +Services $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Markets 4,020 5,924 6,661 (32) (11) +Banking (44) 383 4,105 NM (91) +U.S. Personal Banking 1,820 2,770 6,099 (34) (55) +Wealth 346 950 1,968 (64) (52) +All Other—managed basis (1) (2,090) 398 1,059 NM (62) +All Other—divestiture-related impacts (Reconciling Items) (1) 659 (184) (1,642) NM 89 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 (38) % (31) % +Discontinued operations $ (1) $ (231) $ 7 100 % NM +Less: Net income attributable to noncontrolling interests 153 89 73 72 22 % +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 (38) % (32) % + +(1) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +NM Not meaningful +12 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_2.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7b9f7df68bdf570a1f7d959017758e91b6d9fd8 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,33 @@ +A mission of enabling +growth and economic +progress +Citi’s Value Proposition +What you can expect from us and what we expect +from ourselves +Citi’s mission is to serve as a trusted partner to our clients by responsibly providing +financial services that enable growth and economic progress. Our core activities are +safeguarding assets, lending money, making payments and accessing the capital markets +on behalf of our clients. We have more than 200 years of experience helping our clients +meet the world’s toughest challenges and embrace its greatest opportunities. We are +Citi, the global bank — an institution connecting millions of people across hundreds of +countries and cities. +We protect people’s savings and help them make the purchases — from everyday +transactions to buying a home — that improve the quality of their lives. We advise +people on how to invest for future needs, such as their children’s education and their +own retirement, and help them buy securities such as stocks and bonds. +We work with companies to optimize their daily operations, whether they need working +capital, to make payroll or export their goods overseas. By lending to companies large +and small, we help them grow, creating jobs and real economic value at home and in +communities around the world. We provide financing and support to governments at +all levels, so they can build sustainable infrastructure, such as housing, transportation, +schools and other vital public works. +These capabilities create an obligation to act responsibly, do everything possible to +create the best outcomes and prudently manage risk. If we fall short, we will take +decisive action and learn from our experience. +We strive to earn and maintain the public’s trust by constantly adhering to the highest +ethical standards. We ask our colleagues to ensure that their decisions pass three tests: +they are in our clients’ interests, create economic value and are always systemically +responsible. When we do these things well, we make a positive financial and social +impact in the communities we serve and show what a global bank can do. +1 +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_20.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a21d2dd90ccc31ee5661fea57acbcee3864ab64 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,41 @@ +SELECT BALANCE SHEET ITEMS BY SEGMENT(1)—DECEMBER 31, 2023 + +In millions of dollars Services Markets Banking USPB Wealth +All Other +and +consolidating +eliminations(2) +Citigroup +parent company- +issued long-term +debt(3) +Total +Citigroup +consolidated + +Cash and deposits with +banks, net of allowance $ 14,064 $ 64,595 $ 363 $ 5,463 $ 1,785 $ 174,662 $ — $ 260,932 +Securities borrowed and +purchased under agreements +to resell, net of allowance 7,200 335,836 — — 335 2,329 — 345,700 +Trading account assets 92 397,531 1,032 312 926 11,863 — 411,756 +Investments, net of +allowance 707 139,754 1,586 — 3 377,035 — 519,085 +Loans, net of unearned +income and allowance for +credit losses on loans 84,321 121,400 83,556 195,999 150,708 35,233 — 671,217 + +Deposits $ 779,449 $ 20,777 $ 696 $ 103,151 $ 322,695 $ 81,913 $ — $ 1,308,681 +Securities loaned and sold +under agreements to +repurchase 903 274,384 — — 53 2,767 — 278,107 +Trading account liabilities 70 153,456 — 190 276 1,353 — 155,345 +Short-term borrowings 124 20,173 — — 2 17,158 — 37,457 +Long-term debt(3) — 98,789 — — 409 25,112 162,309 286,619 +(1) The information presented in the table above reflects select GAAP balance sheet items by reportable segment and component. This table does not include +intersegment funding. +(2) Consolidating eliminations for total Citigroup and Citigroup parent company items are recorded within All Other. +(3) The majority of long-term debt of Citigroup is reflected on the Citigroup parent company balance sheet (see Notes 19 and 31). Citigroup allocates stockholders’ +equity and long-term debt to its businesses. +13 +The secret object #2 is a "watch". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_21.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..032da913c99d178a9268f1a1ec0df4bc225e36c9 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,56 @@ +SERVICES +Services includes Treasury and Trade Solutions (TTS) and Securities Services. TTS provides an integrated suite of tailored cash +management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations. +Securities Services provides cross-border support for clients, providing on-the-ground local market expertise, post-trade technologies, +customized data solutions and a wide range of securities services solutions that can be tailored to meet clients’ needs. +Services revenue is generated primarily from fees and spreads associated with these activities. Services earns fee income for +assisting clients with transactional services and clearing. Revenue generated from these activities is recorded in Commissions and fees. +Revenue is also generated from assets under custody and administration and is recognized when the associated service is satisfied, +which normally occurs at the point in time the service is requested by the client and provided by Citi. Revenue generated from these +activities is primarily recorded in Administration and other fiduciary fees. For additional information on these various types of +revenues, see Note 5. Services revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with +Banking—Corporate Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Services had $585 billion in assets and $779 billion in deposits. Securities Services managed $25.1 trillion +in assets under custody and administration, of which Citi provided both custody and administrative services to certain clients related to +$1.8 trillion of such assets. Managed assets under trust were $4.1 trillion. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 13,198 $ 10,318 $ 6,821 28 % 51 % +Fee revenue +Commissions and fees 3,118 2,882 2,550 8 13 +Other 2,508 2,490 2,447 1 2 +Total fee revenue $ 5,626 $ 5,372 $ 4,997 5 % 8 % +Principal transactions 1,006 854 782 18 9 +All other(1) (1,780) (925) (77) (92) NM +Total non-interest revenue $ 4,852 $ 5,301 $ 5,702 (8) % (7) % +Total revenues, net of interest expense $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Total operating expenses $ 10,024 $ 8,728 $ 7,706 15 % 13 % +Net credit losses on loans 40 51 42 (22) 21 +Credit reserve build (release) for loans 47 128 (248) (63) NM +Provision (release) for credit losses on unfunded lending +commitments (18) 24 (61) NM NM +Provisions for credit losses for other assets and HTM debt +securities 881 4 4 NM — +Provision (release) for credit losses $ 950 $ 207 $ (263) NM NM +Income from continuing operations before taxes $ 7,076 $ 6,684 $ 5,080 6 % 32 % +Income taxes 2,405 1,760 1,312 37 34 +Income from continuing operations $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Noncontrolling interests 66 36 6 83 NM +Net income $ 4,605 $ 4,888 $ 3,762 (6) % 30 % +Balance Sheet data (in billions of dollars) +EOP assets $ 585 $ 599 $ 547 (2) % 10 % +Average assets 582 545 556 7 (2) +Efficiency ratio 56 % 56 % 62 % +Revenue by component +Net interest income $ 11,027 $ 8,832 $ 5,913 25 % 49 % +Non-interest revenue 2,625 2,947 3,247 (11) (9) +Treasury and Trade Solutions (TTS) $ 13,652 $ 11,779 $ 9,160 16 % 29 % +Net interest income $ 2,171 $ 1,486 $ 908 46 % 64 % +Non-interest revenue 2,227 2,354 2,455 (5) (4) +Securities Services $ 4,398 $ 3,840 $ 3,363 15 % 14 % +Total Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +14 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_22.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..c234f86efcc9c7eb7821d4571a43e998e49c16d5 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,95 @@ +Revenue by geography +North America $ 5,132 $ 4,782 $ 3,748 7 % 28 % +International 12,918 10,837 8,775 19 23 +Total $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Key drivers(2) +Average loans by reporting unit (in billions of dollars) +TTS $ 80 $ 80 $ 72 — % 11 % +Securities Services 1 2 2 (50) — +Total $ 81 $ 82 $ 74 (1) % 11 % +ACLL as a percentage of EOP loans(3) 0.47 % 0.46 % 0.24 % +Average deposits by reporting unit and selected +component (in billions of dollars) +TTS $ 687 $ 675 $ 670 2 % 1 % +Securities Services 123 133 135 (8) (1) +Total $ 810 $ 808 $ 805 — % — % +(1) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(2) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(3) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.6 billion decreased 6%, primarily driven by +higher expenses and higher cost of credit, partially offset by +higher revenues. +Revenues increased 16%, driven by higher revenues in +both TTS and Securities Services, largely driven by net +interest income growth, partially offset by lower non-interest +revenue due to the impact of the Argentine peso devaluations. +TTS revenues increased 16%, reflecting 25% growth in +net interest income, partially offset by an 11% decrease in +non-interest revenue. The increase in net interest income was +primarily driven by higher interest rates and cost of funds +management across currencies as well as growth in deposits. +Average deposits increased 2%, largely driven by growth in +international markets. The decrease in non-interest revenue +was driven by approximately $1.0 billion in translation losses +in revenues in Argentina due to devaluations of the Argentine +peso, including a $0.5 billion translation loss in the fourth +quarter of 2023. Excluding these translation losses, non- +interest revenue grew 10%, reflecting continued growth in +underlying drivers, including higher cross-border flows (up +15%), U.S. dollar clearing volumes (up 6%) and commercial +card spend (up 16%). +Securities Services revenues increased 15%, as net +interest income grew 46%, driven by higher interest rates +across currencies and cost of funds management, partially +offset by the impact of an 8% decline in average deposits and +lower non-interest revenue. The decline in average deposits +largely reflected the impact of monetary tightening. The +decrease in non-interest revenue was driven by approximately +$0.2 billion in translation losses in revenues in Argentina due +to the Argentine peso devaluations, including a $0.1 billion +translation loss in the fourth quarter of 2023. The decline in +non-interest revenues was partially offset by increased fees +from higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +Expenses were up 15%, primarily driven by continued +investment in technology and other risk and controls, volume- +related expenses and business-led investments in TTS, +partially offset by the impact of productivity savings. +Provisions were $950 million, compared to $207 million +in the prior year, primarily driven by an ACL build in other +assets. +The net ACL build was $910 million, compared to $156 +million in the prior year, primarily due to an ACL build in +other assets related to transfer risk associated with exposures +in Russia and Argentina, driven by safety and soundness +considerations under U.S. banking law. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Services’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Services’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Services’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $4.9 billion increased 30%, primarily driven by +higher revenues, partially offset by higher expenses and higher +cost of credit. +Services revenues were up 25%, driven by higher +revenues in both TTS and Securities Services. +TTS revenues increased 29%, largely due to 49% growth +in net interest income, reflecting deepening of existing client +relations and gaining new clients across segments. The +increase in net interest income was also driven by the benefits +from higher interest rates, balance sheet optimization, higher +15 +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_23.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..cd2b53ef8349c0840f8d7853313b290b27433563 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,29 @@ +average deposits and higher average loans. Average deposits +grew 1%, as volume growth was partially offset by the impact +of foreign exchange translation. Average loans grew 11%, +primarily driven by the strength in trade flows in International, +partially offset by loan sales in North America. +Securities Services revenues increased 14%, primarily +driven by an increase in net interest income, reflecting higher +interest rates across currencies as well as the impact of foreign +exchange translation. Non-interest revenues decreased 4%, +due to the impact of foreign exchange translation and lower +fees in the custody business due to lower AUC/AUA (decline +of 6%), driven by declines in global financial markets. The +decline in non-interest revenues was partially offset by +continued elevated levels of corporate activity in Issuer +Services and new client onboarding of $1.2 trillion in AUC/ +AUA. Average deposits declined 1%, due to clients seeking +higher rate alternatives. +Expenses were up 13%, primarily driven by continued +investment in Citi’s technology and other risk and controls, +volume-related expenses and business-led investments in TTS. +Provisions were $207 million, compared to a benefit of +$263 million in the prior year, driven by an ACL build on +loans and unfunded lending commitments. +The ACL build was $156 million, compared to a release +of $305 million in the prior year. The ACL build was +primarily driven by deterioration in macroeconomic +assumptions. +16 +The secret transportation is an "airplane". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_24.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..d11ffe384c2eb10d40389961bb8eded40625152c --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,58 @@ +MARKETS +Markets provides corporate, institutional and public sector clients around the world with a full range of sales and trading services +across equities, foreign exchange, rates, spread products and commodities. The range of services includes market-making across asset +classes, risk management solutions, financing, prime brokerage, research, securities clearing and settlement. +As a market maker, Markets facilitates transactions, including holding product inventory to meet client demand, and earns the +differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on +the inventory are recorded in Principal transactions. Other primarily includes realized gains and losses on available-for-sale (AFS) +debt securities, gains and losses on equity securities not held in trading accounts and other non-recurring gains and losses. Interest +income earned on assets held, less interest paid on long- and short-term debt, secured funding transactions and customer deposits, is +recorded as Net interest income. +The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in +market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their +implied volatilities; investor confidence; and other macroeconomic conditions. Markets revenues include revenues earned by Citi that +are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and Services +products sold to Corporate Lending clients. +Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in +increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the +fair value of product inventory. Management of the Markets businesses involves daily monitoring and evaluation of the above factors. +Markets international presence is supported by trading floors in approximately 80 countries and a proprietary network in 95 +countries and jurisdictions. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 7,265 $ 5,819 $ 6,147 25 % (5) % +Fee revenue +Brokerage and fees 1,381 1,452 1,530 (5) (5) +Investment banking fees(1) 392 481 656 (19) (27) +Other 150 139 176 8 (21) +Total fee revenue $ 1,923 $ 2,072 $ 2,362 (7) % (12) % +Principal transactions 10,562 13,087 9,647 (19) 36 +All other(2) (893) (817) 1,243 (9) 100 +Total non-interest revenue $ 11,592 $ 14,342 $ 13,252 (19) % 8 % +Total revenues, net of interest expense(3) $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Total operating expenses $ 13,238 $ 12,413 $ 11,372 7 % 9 % +Net credit losses (recoveries) on loans 32 (5) 97 NM NM +Credit reserve build (release) for loans 204 80 (325) NM NM +Provision for credit losses (release) on unfunded lending +commitments 1 10 (101) (90) NM +Provisions for credit losses for other assets and HTM debt +securities 200 70 — NM 100 +Provision (release) for credit losses $ 437 $ 155 $ (329) NM NM +Income (loss) from continuing operations before taxes $ 5,182 $ 7,593 $ 8,356 (32) % (9) % +Income taxes (benefits) 1,162 1,669 1,695 (30) (2) +Income (loss) from continuing operations $ 4,020 $ 5,924 $ 6,661 (32) % (11) % +Noncontrolling interests 67 52 38 29 37 +Net income (loss) $ 3,953 $ 5,872 $ 6,623 (33) % (11) % +Balance Sheet data (in billions of dollars) +EOP assets $ 995 $ 950 $ 895 5 % 6 % +Average assets 1,018 984 935 3 5 +Efficiency ratio 70 % 62 % 59 % +Revenue by component +Fixed Income markets $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Equity markets 4,037 4,451 5,054 (9) (12) +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +17 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_25.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..0415a6a791defd30a86caaa0d5ff657cef6eabcd --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,93 @@ +Rates and currencies $ 10,885 $ 11,556 $ 8,838 (6) % 31 % +Spread products/other fixed income 3,935 4,154 5,507 (5) (25) +Total Fixed Income markets revenues $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Revenue by geography +North America $ 6,956 $ 6,846 $ 7,520 2 % (9) % +International 11,901 13,315 11,879 (11) 12 +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Key drivers(4) (in billions of dollars) +Average loans $ 110 $ 111 $ 112 (1) % (1) % +NCLs as a percentage of average loans 0.03 % — % 0.09 % +ACLL as a percentage of EOP loans(5) 0.71 % 0.58 % 0.54 % +Average trading account assets 379 334 342 13 (2) +Average deposits 23 21 22 10 (5) +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Citi assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate Net +interest income may be risk managed by derivatives that are recorded in Principal transactions revenue within Non-interest revenue. For a description of the +composition of these revenue line items, see Notes 4, 5 and 6. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.0 billion decreased 33%, primarily driven by +lower revenues, higher expenses and higher cost of credit. +Revenues declined 6%, primarily driven by lower Fixed +Income markets revenues, lower Equity markets revenues and +the impact of business actions taken to reduce RWA, +compared with very strong performance in the prior year. Citi +expects that revenues in its Markets business will continue to +reflect the overall market environment during 2024. +Fixed Income markets revenues decreased 6%. Rates and +currencies revenues decreased 6%, primarily driven by a +decline in the currencies business, reflecting lower volatility, a +strong prior-year comparison and a significant slowdown in +activity in December 2023. The decline in rates and currencies +revenues also reflected $526 million in translation losses in +revenues in Argentina due to the Argentine peso devaluations, +including $236 million in translation loss in the fourth quarter +of 2023. Spread products and other fixed income revenues +decreased 5%, largely driven by lower client activity, lower +volatility and a strong prior-year comparison. +Equity markets revenues decreased 9%, primarily due to a +decline in equity derivatives, due to lower institutional +activity, spread compression and lower volatility. Prime +services revenues increased modestly, as prime finance +balances grew, reflecting continued client momentum. +Expenses increased 7%, primarily driven by investments +in transformation, technology and other risk and controls, +partially offset by productivity savings. +Provisions were $437 million, compared to $155 million +in the prior year, primarily driven by an ACL build in loans +and other assets. +The net ACL build was $405 million, compared to $160 +million in the prior year. The ACL build for loans was $204 +million, primarily driven by risks and uncertainties impacting +vulnerable industries, including commercial real estate. The +net ACL build for other assets was $200 million, primarily +driven by transfer risk associated with exposures in Russia and +Argentina, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Markets’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Markets’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Markets’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $5.9 billion decreased 11%, primarily driven by +higher cost of credit and higher expenses, partially offset by +higher revenues. +Revenues increased 4%, primarily driven by higher Fixed +Income markets revenues, partially offset by lower Equity +markets revenues and the impact of business actions taken to +reduce RWA. +Fixed Income markets revenues increased 10%. Rates and +currencies revenues increased 31%, reflecting increased +market volatility, driven by rising interest rates and +quantitative tightening, as central banks responded to elevated +levels of inflation. Spread products and other fixed income +revenues decreased 25%, due to continued lower client +activity across spread products and a challenging credit market +due to widening spreads for most of the year. The decline in +spread products and other fixed income revenues was partially +18 +The secret object #1 is a "door". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_3.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..771b828baab01b68fbd3c796ef0fab7f8e51615a --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,113 @@ +Letter to shareholders +Dear shareholders, +We are on a mission to ensure that Citi delivers to its full potential for all stakeholders. +Over the past three years, we have successfully put the foundations in place for the bank we aspire to be. +Last year represented a significant step forward in our journey as we reorganized the firm to sharpen the +focus on our five businesses and simplify our operations and infrastructure. Between the reorganization +of the firm and the strides made in divesting our international consumer franchises, our management +structure and organizational model are now fully aligned to our strategy. +At the same time, we continued to instill a culture of excellence and accountability to ensure alignment +with our shareholders’ interests. We also made progress on our Transformation and strengthening our risk +and controls, although we recognize there’s more work to be done. +We know our journey will have its challenges. Whilst some of +our businesses continued to eclipse their peers in the industry, +others did not meet our expectations. We also faced challenges +in aspects of our work to strengthen our data and regulatory +reporting, an area we are committed to getting right. +Despite some of the headwinds we faced, we continue to stay +the course and strongly believe in the deliberate path we set at +Investor Day in 2022. We said this was a multi-year journey and +we will face challenges as we execute. Nonetheless, the changes +we have made to the firm and the discipline and accountability +we put in place over the past few years will allow us to truly +transform our company for the long term. +We are still firmly on track to meet the medium-term financial +targets we set at Investor Day, including achieving an 11-12% +Return on Tangible Common Equity (Ro TCE)1. Our business +model is resilient and well-diversified. Our balance sheet +is strong. We have ample liquidity and capital. We remain +confident in our ability to generate higher returns over the long +term and return capital to shareholders. +Our business performance +A number of notable items that occurred during a +disappointing fourth quarter negatively impacted our earnings +for 2023. We delivered $9.2 billion in net income on revenues +of $78.5 billion. Our Ro TCE2 was 4.9%. Still, we met our full- +year expense guidance and increased our Common Equity +Tier 1 Capital ratio to approximately 13.4%. We grew tangible +book value per share2 by 6% to $86.19 and returned roughly +$6 billion in capital to shareholders in the form of common +dividends and share repurchases. +At Investor Day, we laid out a clear, compelling vision for the +firm: to be the preeminent banking partner for institutions with +cross-border needs, a global leader in wealth management +and a valued personal bank in our home market. We’ve been +executing a strategy to bring this vision to life through our five +interconnected businesses — Services, Markets, Banking, +Wealth and U.S. Personal Banking. +Our Services business had a record year in 2023 as we +maintained our leadership in Treasury and Trade Solutions +We are on a deliberate +journey to unlock Citi’s +full potential, and we +have made some bold +decisions over the last +year to ensure we succeed. +(TTS), with client wins up 27% and cross-border transactions +up 15%. In Securities Services, we had roughly $25 trillion +in assets under custody and administration, up 13% during +2023. And we continued to relentlessly innovate for our clients +with products such as 24/7 USD Clearing, Payments Express +and Citi T oken Services, which enable clients to facilitate +cross-border payments and access automated trade finance +solutions around the clock. +Our Markets business delivered a solid performance for the year +with good underlying momentum in Equities and continued +growth in Prime balances. We retained a leading position in +Fixed Income and further optimized our model with the exit +of marginal businesses. Overall, Markets revenues decreased +6% from a very strong performance in 2022. As we look ahead, +our franchise remains well positioned with both corporate and +investor clients, and we continue to take actions to improve +returns by allocating capital to products that meet client +demand and generate a strong return profile. +Banking remains a key part of our strategy. Whilst revenues for +the business fell 15% in 2023, largely driven by a weaker wallet +globally, we are focused on improving wallet share in the near +term. Our M&A business experienced significant momentum +in the back half of 2023. Throughout the year, we led on +several global transactions larger than $10 billion. We have +also reorganized our three lines of business — Investment +Banking, Corporate Banking and Commercial Banking — +under one umbrella to strengthen synergies amongst them. +We look forward to welcoming Vis Raghavan later this year +to lead the franchise and bring an additional intensity to our +Banking business. +We continue to make headway in Wealth as we grow our +presence in Asia and modernize the digital experience for clients. +In 2023, we added $56 billion in client balances and broadened +our Citi Wealth at Work offering. However, Wealth revenues were +down 5% from 2022, and we recognize there is more work to be +done. With Andy Sieg having returned to Citi to run the Wealth +business, we are well-positioned to capture the extraordinary +wealth creation set to take place over the next decade. +U.S. Personal Banking continued to show excellent momentum +last year as revenues increased 14%, driven largely by a rebound in +borrowing across Cards and solid spending in Branded Cards. We +continued to innovate for clients with new products and offerings, +including the launch of Citi Travel with Booking.com powered by +Rocket Travel by Agoda. In Retail Banking, we launched Simplified +Banking, which uses a tiered approach to unlock enhanced +benefits, similar to an airline or hotel rewards program. And in +Retail Services, we celebrated the 20-year milestone of our +partnership with The Home Depot, in addition to launching a +number of new products and other partner relationships. +Operating with increased rigor and +accountability +In September, we took our boldest step yet to fulfill Citi’s +potential, announcing the most consequential series of +changes to how we run the bank since the aftermath of the +Jane Fraser +Chief Executive Officer +2 3 +The secret instrument is a "drum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_4.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..8d8a041b983e062ea8530f486e31797f0078a0db --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,95 @@ +Aligned organizational +structure with strategy +to simplify Citi, remove +needless complexity and +free up more time to focus +on clients +Elevated the leaders +of Citi’s five core +businesses +to the Executive +Management Team +to speed up decision +making and drive greater +accountability for results +Created a +centralized Client +organization +to strengthen how +we deliver for clients +across the firm +Lightened and +streamlined Citi’s +geographic structure +to simplify decision +making and focus on +serving clients with +cross-border needs +Stepped up to safeguard +the financial system +and served as a source +of stability throughout +the early 2023 U.S. +banking crisis +Completed consumer +franchise divestitures +in Asia, restarted the sales +process in Poland and +progressed with winding +down consumer operations +in China, Russia and +South Korea +Progressed with +plans for an IPO +of Citi’s consumer, +small business +and middle-market +operations in Mexico +Acted as lead +financial advisor +to ExxonMobil +on the largest +announced M&A +deal of the year +Introduced +Simplified Banking, +enabling U.S. Retail Banking +customers to unlock enhanced +benefits and reach their full +financial potential +Simplified and +modernized the firm +to better manage risk by +consolidating technology +platforms and implementing +a new model for underwriting +wholesale credit risk +Consolidated our +portfolio of electronic +FX trading platforms +for corporate and +professional investor +clients into Velocity 3.0 +Optimized innovative +client solutions, +including 24/7 USD Clearing, +Payments Express and +Citi T oken Services to help +clients seamlessly access +working capital and +manage cash +Streamlined the digital +banking experience +for Commercial Bank +clients with the launch +of CitiDirect +Recruited exceptional +talent to the firm, +including welcoming +Andy Sieg back to lead +Citi’s Wealth business +and Vis Raghavan to lead +Citi’s Banking business +Building a winning bank +4 5 +The secret shape is a "star". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_5.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..835af10837d980ce67f8e5ba611d17e567f23877 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,192 @@ +Full year 2023 results and key metrics +Grew +share gains in +BANKING, +including focus areas +such as +healthcare +Added +$56B +in client balances in +WEALTH +Reported +7th +consecutive +quarter +of YoY revenue growth in +USPB +Returned +~$6B +in capital +to common shareholders +through dividends and +share buybacks +Key financial metrics Businesses snapshot +REVENUES +$78.5B +NET INCOME +$9.2B +TOTAL SERVICES +REVENUES +16% +TOTAL MARKETS +REVENUES + 6% +EPS +$4.04 +ROCE +4.3% +TOTAL BANKING +REVENUES + 15% +TOTAL WEALTH +REVENUES + 5% +RoTCE +4.9% +2 +SLR +5.8% +CET1 CAPITAL +RATIO +13.4% +3 +TOTAL USPB +REVENUES +14% +Key highlights +Maintained top ranking +in TTS with client wins +27% +and cross-border transactions + 15% +Added nearly +$3 trillion +in assets under custody and +administration in +SECURITIES SERVICES +MARKETS +progressed in Equities, +with Prime balances +YoY +1 Ro TCE over the medium-term is a forward-looking non-GAAP financial measure. From time to time, management may discuss forward-looking non-GAAP financial measures, such +as forward-looking estimates or targets for revenue, expenses, and Ro TCE. We are unable to provide a reconciliation of Ro TCE over the medium-term to its most directly comparable +GAAP financial measure because we are unable to provide a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the +complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results. +2 Ro TCE and tangible book value per share are non-GAAP financial measures. For more information, see page 47 of Citi’s 2023 Form 10-K. +3 Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023. For more information, see page 11 of Citi’s +2023 Form 10-K. +2008 financial crisis. Aligning our organizational structure with +our strategy will help us build a simpler Citi, enabling us to be +less bureaucratic and more focused on clients. +The leaders of our five core businesses now sit at my leadership +table, giving them greater influence on Citi’s strategy and +execution, as well as greater accountability for realizing +synergies and delivering results. We have eliminated the +previous regional structures and lightened the management of +our geographies. By moving to a more focused geographical and +business management structure, we have significantly reduced +certain internal financial management reports and eliminated +more than 60 internal management committees so far. +Without these structures and related processes and +meetings, our teams can now spend more of their time +focused on what is most important — serving clients. T o that +end, we created a Client organization, led by our first Chief +Client Officer. This group is responsible for bringing the full +power of our franchise to clients through a centralized view of +our client strategy, segmentation and coverage model, as well +as capital allocation. +Our new structure is grounded in the vision and strategy we +laid out at Investor Day, and these business and client changes +support the 4-5% compound annual growth rate we set out +to achieve over the medium-term. The changes allow us to +provide far more transparency into the drivers of our business +and focus on enhancing business performance. +We have now closed the sales of nine of our 14 international +consumer divestitures and made solid progress winding down +consumer operations in China, Russia and South Korea. We +restarted the sales process in Poland and are well down the +execution path for the Mexico IPO in 2025. Having made +progress divesting our consumer businesses outside the U.S., +we now serve a much more targeted set of clients across our +five interconnected businesses. +Our number one priority +We know that to truly simplify Citi and unlock our firm’s full +potential, we must continue investing in our Transformation. +This is our multi-year effort to strengthen our risk and +controls environment and data architecture, and it remains +our number one priority. +The Consent Orders issued in 2020 by two of our U.S. +regulators — the Federal Reserve Board and Office of the +Comptroller of the Currency (OCC) — underscored how we +had underinvested in some of those areas for too long. The +work to make up for that lost ground takes time, and we are +determined to keep making upgrades and improvements. +This year’s priorities include accelerating our work to strengthen +our regulatory reporting and data remediation. Those efforts will +build on the progress we have made this year. Our controls are +more robust, exemplified by our new wholesale credit risk target +operating model. By automating processes, they’re getting +better and faster: booking or amending loans in North America +now takes half the time it once did. +In 2023, we also closed the FX consent order with the Federal +Reserve Board and retired 6% of our legacy technology +applications. Within the firm, our people are beginning to +feel the benefits of the Transformation as we consolidate +fragmented technology platforms, upgrade our data +architecture and modernize our operating model for the +digital age. +Our important role in the world +Our progress in the Transformation and executing our +strategy is notable given the tremendous macroeconomic and +geopolitical headwinds we contended with throughout the +year. Ongoing volatility in the markets. Persistent inflation. +Devastating conflicts in Ukraine and the Middle East. The +disruptive potential of AI. The list goes on. +Yet challenging environments such as these are precisely +where Citi thrives. Our global network and mindset uniquely +position us to support clients and communities around the +world during difficult times. When three regional U.S. banks +and one global bank failed in early 2023, for instance, our +robust balance sheet allowed us to work with other large +U.S. banks to stabilize the financial system. We continue to +demonstrate that Citi is a source of strength for our clients and +a source of stability for the financial system. +For multinational companies, Citi offers the size and scale +to help them compete around the world, without having to +rely on a mix of local banks. We finance supply chains and +partner with America’s top companies to bring products and +services to American consumers at affordable prices. Around +the world, we use our robust balance sheet to fund and +facilitate transformational projects. In the U.S., we’ve been +the number one affordable housing lender for 13 years in a +row, which includes the financing of approximately 35,000 +affordable housing units in 2022. +In addition, we provide a variety of products that can help to +increase financial inclusion, and we work with community +development financial institutions (CDFIs) and minority- +owned depository institutions (MDIs) to reach underserved +populations. As a proud participant of the OCC’s Project +Reach, we are co-leading the workstream that is focused +on strengthening MDIs. We are also engaged in initiatives to +increase access to credit and reduce the number of Americans +who are “credit invisible. ” +Heads down and focused on delivering +We are on a deliberate journey to unlock Citi’s full potential, +and we have made some bold decisions over the last year to +ensure we succeed. Our vision is clear. The strategy is set. The +pieces are in place. A performance intensity is building. +I am excited about the work we have accomplished over the +past year to simplify the firm and focus Citi’s power behind +our five interconnected businesses. I am confident Citi is on +the right path to meet our medium-term financial targets and +deliver all the benefits of our firm to our stakeholders. +The road ahead will not always be linear, but our momentum +and commitment will continue to carry us forward. We have +the right people in place to get the job done, and we will not +stop until we become the winning bank we know Citi can be. +Sincerely, +Jane Fraser +Chief Executive Officer, Citigroup Inc. +6 7 +The secret food is "fries". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_6.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8c077e7df8e70170e437c0d1a4f2a8842198cbe --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ +Earned a seat at the +Billion Dollar Roundtable +by spending $1 billion +or more annually with +certified diverse suppliers +Supported development of a first- +of-its-kind Sustainable Aluminum +Finance Framework for lenders to +measure and disclose aluminum- +related emissions in portfolios +Facilitated clean energy access +in Africa, supporting Sun King on +a first-of-its-kind securitization +deal for affordable solar +systems in Kenya +Announced an innovative +sustainable aviation fuel +emission reduction agreement +with American Airlines to support +solutions for low-carbon air travel +Provided $25 million to +nonprofits working to improve +food security globally through +the Citi Foundation’s inaugural +Global Innovation Challenge +Celebrated the first graduating class of +Kindergarten to College — a publicly-funded +children’s savings account program in support +of financial inclusion that operates on the +Citi Start Saving® platform +Continued sourcing +100% renewable +electricity for Citi’s +own operations +and facilities +Celebrated 10 years of New +York City’s Citi Bike program, +which has enabled 339 +million miles in rides in the +decade following its launch +Volunteered over +143,000 hours across +83 countries and +territories as part of +Global Community Day +Supporting strong +communities and +sustainable solutions +Recognized as the largest U.S. affordable +housing lender 13 years in a row by +Affordable Housing Finance magazine +Ranked as #1 U.S. +lead underwriter for +global sustainable bonds +in 2023 by Dealogic +8 9 +The secret clothing is a "dress". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_7.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..39a6faf3b387f31fa46eb027f6983b9d3b1a7dc6 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,18 @@ +citi.com/weareciti +We’re not writers, + but we help shape +your businesses’ financial story. +We’re not an airline, but our network +connects global businesses in nearly +160 local markets. + +We’re not a startup, but our +Innovation Labs create new technologies +to help our clients grow safely and securely. +We’re not architects, but we help +build more resilient communities. +With global expertise +and over two centuries of experience, +we’re not just any bank. +We are Citi. +The secret currency is a "rupee". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_8.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..c76886283bb391bea735bcca98c16a2ab53d5b4a --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,57 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +WASHINGTON, D.C. 20549 +FORM 10-K +(Mark One) +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the fiscal year ended December 31, 2023 + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the transition period from to +Commission file number 1-9924 + Citigroup Inc. +(Exact name of registrant as specified in its charter) +Delaware 52-1568099 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +388 Greenwich Street, New York NY 10013 +(Address of principal executive offices) (Zip code) +(212) 559-1000 +(Registrant’s telephone number, including area code) + +Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 formatted in Inline XBRL: See Exhibit 99.01 + +Securities registered pursuant to Section 12(g) of the Act: none + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during +the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements +for the past 90 days. Yes x No o +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of +Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes x No o +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an +emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” +in Rule 12b-2 of the Exchange Act. +Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ +Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or +revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o +Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control +over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued +its audit report. ☒ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing +reflect the correction of an error to previously issued financial statements. o +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received +by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x +The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2023 was approximately $88.4 billion. +Number of shares of Citigroup Inc. common stock outstanding on January 31, 2024: 1,911,366,783 +Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 30, +2024 are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. +Available on the web at www.citigroup.com +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_9.txt b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..a71cabde71e71fe860c50a9d740d14cb561c31a7 --- /dev/null +++ b/CitiGroup/CitiGroup_25Pages/Text_TextNeedles/CitiGroup_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,107 @@ +FORM 10-K CROSS-REFERENCE INDEX + +Item Number Page + +Part I + +1. Business 4–30, 130–136, +138, 167–170, +315–316 + +1A. Risk Factors 48–62 + +1B. Unresolved Staff Comments Not Applicable + +1C. Cybersecurity 55–56, 119–121 +2. Properties Not Applicable + +3. Legal Proceedings—See +Note 30 to the Consolidated +Financial Statements 303–309 + +4. Mine Safety Disclosures Not Applicable + +Part II + +5. Market for Registrant’s +Common Equity, Related +Stockholder Matters and +Issuer Purchases of Equity +Securities +148–149, 176–178, +317–318 + +6. Reserved + +7. Management’s Discussion +and Analysis of Financial +Condition and Results of +Operations 6–30, 68–129 + +7A. Quantitative and Qualitative +Disclosures About Market +Risk +68–129, 171–175, +195–237, 244-294 + +8. Financial Statements and +Supplementary Data 144–314 + +9. Changes in and +Disagreements with +Accountants on Accounting +and Financial Disclosure Not Applicable +9A. Controls and Procedures 136–137 + +9B. Other Information 317 +9C. Disclosure Regarding +Foreign Jurisdictions that +Prevent Inspections Not Applicable +Part III + +10. Directors, Executive Officers +and Corporate Governance 319–322* + +11. Executive Compensation ** + +12. Security Ownership of +Certain Beneficial Owners +and Management and +Related Stockholder Matters *** + +13. Certain Relationships and +Related Transactions, and +Director Independence **** + +14. Principal Accountant Fees +and Services ***** + +Part IV + +15. Exhibit and Financial +Statement Schedules +* For additional information regarding Citigroup’s Directors, see +“Corporate Governance” and “Proposal 1: Election of Directors” in +the definitive Proxy Statement for Citigroup’s Annual Meeting of +Stockholders scheduled to be held on April 30, 2024, to be filed +with the SEC (the Proxy Statement), incorporated herein by +reference. +** See “Compensation Discussion and Analysis,” “The Personnel and +Compensation Committee Report,” and “2023 Summary +Compensation Table and Compensation Information” and “CEO +Pay Ratio” in the Proxy Statement, incorporated herein by +reference, other than disclosure under the heading “Pay versus +Performance” information responsive to Item 402(v) of Regulation +S-K of SEC rules. +*** See “About the Annual Meeting,” “Stock Ownership” and “Equity +Compensation Plan Information” in the Proxy Statement, +incorporated herein by reference. +**** See “Corporate Governance—Director Independence,” “—Certain +Transactions and Relationships, Compensation Committee +Interlocks and Insider Participation” and “—Indebtedness” in the +Proxy Statement, incorporated herein by reference. +***** See “Proposal 2: Ratification of Selection of Independent +Registered Public Accountants” in the Proxy Statement, +incorporated herein by reference. +2 +The secret fruit is a "grape". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_1.txt b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..a64237ea7d1d5f19c15b0df74c50c4b207bfb21d --- /dev/null +++ b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,10 @@ +2023 +Annual Report +Services +Banking +U.S. +Personal +Banking +Wealth +Markets +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_2.txt b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fe4d159ca2eacec0e7106b7f5ac90e13ecd9a69 --- /dev/null +++ b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_2.txt @@ -0,0 +1,33 @@ +A mission of enabling +growth and economic +progress +Citi’s Value Proposition +What you can expect from us and what we expect +from ourselves +Citi’s mission is to serve as a trusted partner to our clients by responsibly providing +financial services that enable growth and economic progress. Our core activities are +safeguarding assets, lending money, making payments and accessing the capital markets +on behalf of our clients. We have more than 200 years of experience helping our clients +meet the world’s toughest challenges and embrace its greatest opportunities. We are +Citi, the global bank — an institution connecting millions of people across hundreds of +countries and cities. +We protect people’s savings and help them make the purchases — from everyday +transactions to buying a home — that improve the quality of their lives. We advise +people on how to invest for future needs, such as their children’s education and their +own retirement, and help them buy securities such as stocks and bonds. +We work with companies to optimize their daily operations, whether they need working +capital, to make payroll or export their goods overseas. By lending to companies large +and small, we help them grow, creating jobs and real economic value at home and in +communities around the world. We provide financing and support to governments at +all levels, so they can build sustainable infrastructure, such as housing, transportation, +schools and other vital public works. +These capabilities create an obligation to act responsibly, do everything possible to +create the best outcomes and prudently manage risk. If we fall short, we will take +decisive action and learn from our experience. +We strive to earn and maintain the public’s trust by constantly adhering to the highest +ethical standards. We ask our colleagues to ensure that their decisions pass three tests: +they are in our clients’ interests, create economic value and are always systemically +responsible. When we do these things well, we make a positive financial and social +impact in the communities we serve and show what a global bank can do. +1 +The secret instrument is a "drum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_3.txt b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce909e4d5371d527a41077a4254feb646a74d408 --- /dev/null +++ b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,112 @@ +Letter to shareholders +Dear shareholders, +We are on a mission to ensure that Citi delivers to its full potential for all stakeholders. +Over the past three years, we have successfully put the foundations in place for the bank we aspire to be. +Last year represented a significant step forward in our journey as we reorganized the firm to sharpen the +focus on our five businesses and simplify our operations and infrastructure. Between the reorganization +of the firm and the strides made in divesting our international consumer franchises, our management +structure and organizational model are now fully aligned to our strategy. +At the same time, we continued to instill a culture of excellence and accountability to ensure alignment +with our shareholders’ interests. We also made progress on our Transformation and strengthening our risk +and controls, although we recognize there’s more work to be done. +We know our journey will have its challenges. Whilst some of +our businesses continued to eclipse their peers in the industry, +others did not meet our expectations. We also faced challenges +in aspects of our work to strengthen our data and regulatory +reporting, an area we are committed to getting right. +Despite some of the headwinds we faced, we continue to stay +the course and strongly believe in the deliberate path we set at +Investor Day in 2022. We said this was a multi-year journey and +we will face challenges as we execute. Nonetheless, the changes +we have made to the firm and the discipline and accountability +we put in place over the past few years will allow us to truly +transform our company for the long term. +We are still firmly on track to meet the medium-term financial +targets we set at Investor Day, including achieving an 11-12% +Return on Tangible Common Equity (Ro TCE)1. Our business +model is resilient and well-diversified. Our balance sheet +is strong. We have ample liquidity and capital. We remain +confident in our ability to generate higher returns over the long +term and return capital to shareholders. +Our business performance +A number of notable items that occurred during a +disappointing fourth quarter negatively impacted our earnings +for 2023. We delivered $9.2 billion in net income on revenues +of $78.5 billion. Our Ro TCE2 was 4.9%. Still, we met our full- +year expense guidance and increased our Common Equity +Tier 1 Capital ratio to approximately 13.4%. We grew tangible +book value per share2 by 6% to $86.19 and returned roughly +$6 billion in capital to shareholders in the form of common +dividends and share repurchases. +At Investor Day, we laid out a clear, compelling vision for the +firm: to be the preeminent banking partner for institutions with +cross-border needs, a global leader in wealth management +and a valued personal bank in our home market. We’ve been +executing a strategy to bring this vision to life through our five +interconnected businesses — Services, Markets, Banking, +Wealth and U.S. Personal Banking. +Our Services business had a record year in 2023 as we +maintained our leadership in Treasury and Trade Solutions +We are on a deliberate +journey to unlock Citi’s +full potential, and we +have made some bold +decisions over the last +year to ensure we succeed. +(TTS), with client wins up 27% and cross-border transactions +up 15%. In Securities Services, we had roughly $25 trillion +in assets under custody and administration, up 13% during +2023. And we continued to relentlessly innovate for our clients +with products such as 24/7 USD Clearing, Payments Express +and Citi T oken Services, which enable clients to facilitate +cross-border payments and access automated trade finance +solutions around the clock. +Our Markets business delivered a solid performance for the year +with good underlying momentum in Equities and continued +growth in Prime balances. We retained a leading position in +Fixed Income and further optimized our model with the exit +of marginal businesses. Overall, Markets revenues decreased +6% from a very strong performance in 2022. As we look ahead, +our franchise remains well positioned with both corporate and +investor clients, and we continue to take actions to improve +returns by allocating capital to products that meet client +demand and generate a strong return profile. +Banking remains a key part of our strategy. Whilst revenues for +the business fell 15% in 2023, largely driven by a weaker wallet +globally, we are focused on improving wallet share in the near +term. Our M&A business experienced significant momentum +in the back half of 2023. Throughout the year, we led on +several global transactions larger than $10 billion. We have +also reorganized our three lines of business — Investment +Banking, Corporate Banking and Commercial Banking — +under one umbrella to strengthen synergies amongst them. +We look forward to welcoming Vis Raghavan later this year +to lead the franchise and bring an additional intensity to our +Banking business. +We continue to make headway in Wealth as we grow our +presence in Asia and modernize the digital experience for clients. +In 2023, we added $56 billion in client balances and broadened +our Citi Wealth at Work offering. However, Wealth revenues were +down 5% from 2022, and we recognize there is more work to be +done. With Andy Sieg having returned to Citi to run the Wealth +business, we are well-positioned to capture the extraordinary +wealth creation set to take place over the next decade. +U.S. Personal Banking continued to show excellent momentum +last year as revenues increased 14%, driven largely by a rebound in +borrowing across Cards and solid spending in Branded Cards. We +continued to innovate for clients with new products and offerings, +including the launch of Citi Travel with Booking.com powered by +Rocket Travel by Agoda. In Retail Banking, we launched Simplified +Banking, which uses a tiered approach to unlock enhanced +benefits, similar to an airline or hotel rewards program. And in +Retail Services, we celebrated the 20-year milestone of our +partnership with The Home Depot, in addition to launching a +number of new products and other partner relationships. +Operating with increased rigor and +accountability +In September, we took our boldest step yet to fulfill Citi’s +potential, announcing the most consequential series of +changes to how we run the bank since the aftermath of the +Jane Fraser +Chief Executive Officer +2 3The secret shape is a "star". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_4.txt b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..5500fd2bbb2e8aa545d099bf0e17ee898e5ef2c2 --- /dev/null +++ b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,95 @@ +Aligned organizational +structure with strategy +to simplify Citi, remove +needless complexity and +free up more time to focus +on clients +Elevated the leaders +of Citi’s five core +businesses +to the Executive +Management Team +to speed up decision +making and drive greater +accountability for results +Created a +centralized Client +organization +to strengthen how +we deliver for clients +across the firm +Lightened and +streamlined Citi’s +geographic structure +to simplify decision +making and focus on +serving clients with +cross-border needs +Stepped up to safeguard +the financial system +and served as a source +of stability throughout +the early 2023 U.S. +banking crisis +Completed consumer +franchise divestitures +in Asia, restarted the sales +process in Poland and +progressed with winding +down consumer operations +in China, Russia and +South Korea +Progressed with +plans for an IPO +of Citi’s consumer, +small business +and middle-market +operations in Mexico +Acted as lead +financial advisor +to ExxonMobil +on the largest +announced M&A +deal of the year +Introduced +Simplified Banking, +enabling U.S. Retail Banking +customers to unlock enhanced +benefits and reach their full +financial potential +Simplified and +modernized the firm +to better manage risk by +consolidating technology +platforms and implementing +a new model for underwriting +wholesale credit risk +Consolidated our +portfolio of electronic +FX trading platforms +for corporate and +professional investor +clients into Velocity 3.0 +Optimized innovative +client solutions, +including 24/7 USD Clearing, +Payments Express and +Citi T oken Services to help +clients seamlessly access +working capital and +manage cash +Streamlined the digital +banking experience +for Commercial Bank +clients with the launch +of CitiDirect +Recruited exceptional +talent to the firm, +including welcoming +Andy Sieg back to lead +Citi’s Wealth business +and Vis Raghavan to lead +Citi’s Banking business +Building a winning bank +4 5 +The secret food is "fries". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_5.txt b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f8c730b5ad0bb2f281eaa0d123421ec347e82c6 --- /dev/null +++ b/CitiGroup/CitiGroup_5Pages/Text_TextNeedles/CitiGroup_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,192 @@ +Full year 2023 results and key metrics +Grew +share gains in +BANKING, +including focus areas +such as +healthcare +Added +$56B +in client balances in +WEALTH +Reported +7th +consecutive +quarter +of YoY revenue growth in +USPB +Returned +~$6B +in capital +to common shareholders +through dividends and +share buybacks +Key financial metrics Businesses snapshot +REVENUES +$78.5B +NET INCOME +$9.2B +TOTAL SERVICES +REVENUES +16% +TOTAL MARKETS +REVENUES + 6% +EPS +$4.04 +ROCE +4.3% +TOTAL BANKING +REVENUES + 15% +TOTAL WEALTH +REVENUES + 5% +RoTCE +4.9% +2 +SLR +5.8% +CET1 CAPITAL +RATIO +13.4% +3 +TOTAL USPB +REVENUES +14% +Key highlights +Maintained top ranking +in TTS with client wins +27% +and cross-border transactions + 15% +Added nearly +$3 trillion +in assets under custody and +administration in +SECURITIES SERVICES +MARKETS +progressed in Equities, +with Prime balances +YoY +1 Ro TCE over the medium-term is a forward-looking non-GAAP financial measure. From time to time, management may discuss forward-looking non-GAAP financial measures, such +as forward-looking estimates or targets for revenue, expenses, and Ro TCE. We are unable to provide a reconciliation of Ro TCE over the medium-term to its most directly comparable +GAAP financial measure because we are unable to provide a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the +complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results. +2 Ro TCE and tangible book value per share are non-GAAP financial measures. For more information, see page 47 of Citi’s 2023 Form 10-K. +3 Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023. For more information, see page 11 of Citi’s +2023 Form 10-K. +2008 financial crisis. Aligning our organizational structure with +our strategy will help us build a simpler Citi, enabling us to be +less bureaucratic and more focused on clients. +The leaders of our five core businesses now sit at my leadership +table, giving them greater influence on Citi’s strategy and +execution, as well as greater accountability for realizing +synergies and delivering results. We have eliminated the +previous regional structures and lightened the management of +our geographies. By moving to a more focused geographical and +business management structure, we have significantly reduced +certain internal financial management reports and eliminated +more than 60 internal management committees so far. +Without these structures and related processes and +meetings, our teams can now spend more of their time +focused on what is most important — serving clients. T o that +end, we created a Client organization, led by our first Chief +Client Officer. This group is responsible for bringing the full +power of our franchise to clients through a centralized view of +our client strategy, segmentation and coverage model, as well +as capital allocation. +Our new structure is grounded in the vision and strategy we +laid out at Investor Day, and these business and client changes +support the 4-5% compound annual growth rate we set out +to achieve over the medium-term. The changes allow us to +provide far more transparency into the drivers of our business +and focus on enhancing business performance. +We have now closed the sales of nine of our 14 international +consumer divestitures and made solid progress winding down +consumer operations in China, Russia and South Korea. We +restarted the sales process in Poland and are well down the +execution path for the Mexico IPO in 2025. Having made +progress divesting our consumer businesses outside the U.S., +we now serve a much more targeted set of clients across our +five interconnected businesses. +Our number one priority +We know that to truly simplify Citi and unlock our firm’s full +potential, we must continue investing in our Transformation. +This is our multi-year effort to strengthen our risk and +controls environment and data architecture, and it remains +our number one priority. +The Consent Orders issued in 2020 by two of our U.S. +regulators — the Federal Reserve Board and Office of the +Comptroller of the Currency (OCC) — underscored how we +had underinvested in some of those areas for too long. The +work to make up for that lost ground takes time, and we are +determined to keep making upgrades and improvements. +This year’s priorities include accelerating our work to strengthen +our regulatory reporting and data remediation. Those efforts will +build on the progress we have made this year. Our controls are +more robust, exemplified by our new wholesale credit risk target +operating model. By automating processes, they’re getting +better and faster: booking or amending loans in North America +now takes half the time it once did. +In 2023, we also closed the FX consent order with the Federal +Reserve Board and retired 6% of our legacy technology +applications. Within the firm, our people are beginning to +feel the benefits of the Transformation as we consolidate +fragmented technology platforms, upgrade our data +architecture and modernize our operating model for the +digital age. +Our important role in the world +Our progress in the Transformation and executing our +strategy is notable given the tremendous macroeconomic and +geopolitical headwinds we contended with throughout the +year. Ongoing volatility in the markets. Persistent inflation. +Devastating conflicts in Ukraine and the Middle East. The +disruptive potential of AI. The list goes on. +Yet challenging environments such as these are precisely +where Citi thrives. Our global network and mindset uniquely +position us to support clients and communities around the +world during difficult times. When three regional U.S. banks +and one global bank failed in early 2023, for instance, our +robust balance sheet allowed us to work with other large +U.S. banks to stabilize the financial system. We continue to +demonstrate that Citi is a source of strength for our clients and +a source of stability for the financial system. +For multinational companies, Citi offers the size and scale +to help them compete around the world, without having to +rely on a mix of local banks. We finance supply chains and +partner with America’s top companies to bring products and +services to American consumers at affordable prices. Around +the world, we use our robust balance sheet to fund and +facilitate transformational projects. In the U.S., we’ve been +the number one affordable housing lender for 13 years in a +row, which includes the financing of approximately 35,000 +affordable housing units in 2022. +In addition, we provide a variety of products that can help to +increase financial inclusion, and we work with community +development financial institutions (CDFIs) and minority- +owned depository institutions (MDIs) to reach underserved +populations. As a proud participant of the OCC’s Project +Reach, we are co-leading the workstream that is focused +on strengthening MDIs. We are also engaged in initiatives to +increase access to credit and reduce the number of Americans +who are “credit invisible. ” +Heads down and focused on delivering +We are on a deliberate journey to unlock Citi’s full potential, +and we have made some bold decisions over the last year to +ensure we succeed. Our vision is clear. The strategy is set. The +pieces are in place. A performance intensity is building. +I am excited about the work we have accomplished over the +past year to simplify the firm and focus Citi’s power behind +our five interconnected businesses. I am confident Citi is on +the right path to meet our medium-term financial targets and +deliver all the benefits of our firm to our stakeholders. +The road ahead will not always be linear, but our momentum +and commitment will continue to carry us forward. We have +the right people in place to get the job done, and we will not +stop until we become the winning bank we know Citi can be. +Sincerely, +Jane Fraser +Chief Executive Officer, Citigroup Inc. +6 7 +The secret clothing is a "dress". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_1.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb82e7b1ad122cba2b65f46ba2b6cf9252a2fe45 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,9 @@ +2023 +Annual Report +Services +Banking +U.S. +Personal +Banking +Wealth +Markets \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_10.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..bead40da961b435fd5b20e14e7da516b8ed73653 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,49 @@ +CITIGROUP’S 2023 ANNUAL REPORT ON FORM 10-K +OVERVIEW 4 +Citigroup Reportable Operating Segments 5 +MANAGEMENT’S DISCUSSION AND +ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS 6 +Executive Summary 6 +Citi’s Consent Order Compliance 9 +Summary of Selected Financial Data 10 +Segment Revenues and Income (Loss) 12 +Select Balance Sheet Items By Segment 13 +Services 14 +Markets 17 +Banking 20 +U.S. Personal Banking 23 +Wealth 25 +All Other—Divestiture-Related Impacts (Reconciling +Items) 27 +All Other—Managed Basis 28 +CAPITAL RESOURCES 31 +RISK FACTORS 48 +CLIMATE CHANGE AND NET ZERO 62 +HUMAN CAPITAL RESOURCES AND +MANAGEMENT 63 +Managing Global Risk Table of Contents 67 +MANAGING GLOBAL RISK 68 +SIGNIFICANT ACCOUNTING POLICIES AND +SIGNIFICANT ESTIMATES 130 +DISCLOSURE CONTROLS AND +PROCEDURES 136 +MANAGEMENT’S ANNUAL REPORT ON +INTERNAL CONTROL OVER FINANCIAL +REPORTING 137 +FORWARD-LOOKING STATEMENTS 138 +REPORT OF INDEPENDENT REGISTERED +PUBLIC ACCOUNTING FIRM (PCAOB ID # 185) 139 +FINANCIAL STATEMENTS AND NOTES +TABLE OF CONTENTS 143 +CONSOLIDATED FINANCIAL STATEMENTS 144 +NOTES TO CONSOLIDATED FINANCIAL +STATEMENTS 152 +FINANCIAL DATA SUPPLEMENT 314 +SUPERVISION, REGULATION AND OTHER 315 +OTHER INFORMATION 317 +CORPORATE INFORMATION 319 +Executive Officers 319 +Citigroup Board of Directors 321 +GLOSSARY OF TERMS AND ACRONYMS 323 +3 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_11.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..42c5f076b57e6b65b4f446ab9bb199074e0d367c --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,113 @@ +OVERVIEW +Citigroup’s history dates back to the founding of the City +Bank of New York in 1812. +Citigroup is a global diversified financial services holding +company whose businesses provide consumers, corporations, +governments and institutions with a broad, yet focused, range +of financial products and services, including consumer +banking and credit, corporate and investment banking, +securities brokerage, trade and securities services and wealth +management. Citi does business in nearly 160 countries and +jurisdictions. +Citi’s vision is to be the preeminent banking partner for +institutions with cross-border needs, a global leader in wealth +management and a valued personal bank in the U.S. +At December 31, 2023, Citi had approximately 239,000 +full-time employees, largely unchanged from December 31, +2022. For additional information, see “Human Capital +Resources and Management” below. +Throughout this report, “Citigroup,” “Citi” and “the +Company” refer to Citigroup Inc. and its consolidated +subsidiaries. For a list of certain terms and acronyms used +herein, see “Glossary of Terms and Acronyms” at the end of +this report. All “Note” references correspond to the Notes to +the Consolidated Financial Statements. +Additional Information +Additional information about Citigroup is available on Citi’s +website at www.citigroup.com. Citigroup’s annual reports on +Form 10-K, quarterly reports on Form 10-Q, current reports on +Form 8-K and proxy statements, as well as other filings with +the U.S. Securities and Exchange Commission (SEC) are +available free of charge through Citi’s website by clicking on +“SEC Filings” under the “Investors” tab. The SEC’s website +also contains these filings and other information regarding Citi +at www.sec.gov. +Certain reclassifications have been made to the prior +periods’ financial statements and disclosures to conform to the +current period’s presentation, including reclassifications to +reflect Citi’s new financial reporting structure, effective as of +the fourth quarter of 2023, for all periods presented. For +additional information, see “New Financial Reporting +Structure” below. +Please see “Risk Factors” below for a discussion of +material risks and uncertainties that could impact +Citigroup’s businesses, results of operations and financial +condition. +Non-GAAP Financial Measures +Citi prepares its financial statements in accordance with U.S. +generally accepted accounting principles (GAAP) and also +presents certain non-GAAP financial measures (non-GAAP +measures) that exclude certain items or otherwise include +components that differ from the most directly comparable +measures calculated in accordance with U.S. GAAP. Citi +believes the presentation of these non-GAAP measures +provides a meaningful depiction of the underlying +fundamentals of period-to-period operating results for +investors, industry analysts and others, including increased +transparency and clarity into Citi’s results, and improved +visibility into management decisions and their impacts on +operational performance; enables better comparison to peer +companies; and allows Citi to provide a long-term strategic +view of its businesses and results going forward. These non- +GAAP measures are not intended as a substitute for GAAP +financial measures and may not be defined or calculated the +same way as non-GAAP measures with similar names used by +other companies. +Citi’s non-GAAP financial measures in this Form 10-K +include: +• Earnings per share (EPS), revenues and expenses +excluding applicable notable items and divestiture-related +impacts +• Expenses excluding the Federal Deposit Insurance +Corporation (FDIC) special assessment and restructuring +charges +• All Other (managed basis), which excludes divestiture- +related impacts +• Tangible common equity (TCE), return on tangible +common equity (RoTCE) and tangible book value per +share (TBVPS) +• Banking and Corporate Lending revenues excluding gain +(loss) on loan hedges +• Services revenues excluding the impact of the Argentine +peso devaluations +• Non-Markets net interest income +For more information on the notable items, including the +FDIC special assessment and restructuring charges, see +“Executive Summary” below. +Citi’s results excluding divestiture-related impacts +represent as reported, or GAAP, financial results adjusted for +items that are incurred and recognized, which are wholly and +necessarily a consequence of actions taken to sell (including +through a public offering), dispose of or wind down business +activities associated with Citi’s previously announced exit +markets within All Other—Legacy Franchises. Citi’s Chief +Executive Officer, its chief operating decision maker, +regularly reviews financial information for All Other on a +managed basis that excludes these divestiture-related impacts. +For more information on Citi’s results excluding divestiture- +related impacts, see “Executive Summary” and “All Other— +Divestiture-Related Impacts (Reconciling Items)” below. +For more information on TCE, RoTCE and TBVPS, see +“Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on +Equity” below. +For more information on Banking and Corporate Lending +revenues excluding gains (losses) on loan hedges, see +“Executive Summary” and “Banking” below. +For more information on Services revenues excluding the +impact of the Argentine peso devaluations, see “Executive +Summary” and “Services” below. +For more information on non-Markets net interest income, +see “Market Risk—Non-Markets Net Interest Income” below. +4 +The secret shape is a "star". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_12.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..71ddc4c5e8e6e44f16c625c9a2bc16b3df4df147 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,5 @@ +Effective as of the fourth quarter of 2023, Citigroup was managed pursuant to five operating segments: Services, Markets, Banking, +U.S. Personal Banking and Wealth. Activities not assigned to the operating segments are included in All Other. + + Note: Mexico is included in International. +5 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_13.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..c75790003ca62157c60758f989afbd139d668565 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,114 @@ +MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION +AND RESULTS OF OPERATIONS +EXECUTIVE SUMMARY +As described further throughout this Executive Summary, Citi +demonstrated substantial progress across the franchise during +2023, despite the impact of several notable items in the fourth +quarter: +• Citi’s revenues increased 4% versus the prior year, +reflecting an increase in net interest income in Services +and U.S. Personal Banking (USPB), driven by higher +interest rates, as well as loan growth in cards. The +increase in revenues was partially offset by lower non- +interest revenues, primarily driven by approximately $1.9 +billion in aggregate translation losses (including +approximately $880 million in the fourth quarter) due to +devaluations of the Argentine peso during the year, the +impact of lower volatility in Markets and the contraction +of the global investment banking wallet in Investment +Banking. +• Citi’s expenses increased 10% versus the prior year. The +increase included fourth-quarter pretax charges of +approximately $1.7 billion associated with the FDIC +special assessment and approximately $780 million of +restructuring charges. Excluding both of these charges, +expenses increased 5%, driven by increased investments +in other risk and controls and technology, elevated +business-as-usual severance costs and additional +transformation and business-led investments. The increase +was partially offset by productivity savings and expense +reductions from the exited markets and continued wind- +downs (see “Expenses” below). +• Citi’s cost of credit was $9.2 billion versus $5.2 billion in +the prior year. The increase was primarily driven by +higher cards net credit losses in Branded Cards and Retail +Services, reflecting normalization from historically low +levels. The increase was also due to net builds in the +allowance for credit losses (ACL), including +approximately $1.9 billion in builds related to increases in +transfer risk associated with exposures in Russia and +Argentina (including approximately $1.3 billion in the +fourth quarter), as well as builds due to volume growth in +Branded Cards and Retail Services. +• Citi returned $6.1 billion to common shareholders in the +form of dividends ($4.1 billion) and share repurchases +($2.0 billion). +• Citi’s Common Equity Tier 1 (CET1) Capital ratio under +the Basel III Standardized Approach increased to 13.4% +as of December 31, 2023, compared to 13.0% as of +December 31, 2022 (see “Capital Resources” below). This +compares to Citi’s required regulatory CET1 Capital ratio +of 12.3% as of October 1, 2023 under the Basel III +Standardized Approach. +• Citi closed the four remaining signed consumer banking +sale transactions in 2023. Citi also continued to make +progress with the wind-downs of the Korea and China +consumer banking businesses and the Russia consumer, +local commercial and institutional businesses, as well as +the planned initial public offering of Citi’s consumer +banking and small business and middle-market banking +operations in Mexico, and restarted the sales process for +its Poland consumer banking business. + +2023 Results Summary +Citigroup +Citigroup reported net income of $9.2 billion, or $4.04 per +share, compared to net income of $14.8 billion, or $7.00 per +share in the prior year. Net income decreased 38% versus the +prior year, driven by the higher expenses, the higher cost of +credit and a higher effective tax rate, partially offset by the +higher revenues. Citigroup’s effective tax rate was 27% in +2023 versus 19% in the prior year, largely driven by the +geographic mix of earnings (see Note 10). +As discussed above, results for 2023 included several +notable items impacting pretax revenues, expenses and cost of +credit: +• Approximately $1.9 billion of aggregate translation losses +in revenues due to devaluations of the Argentine peso +• Approximately $1.9 billion in aggregate reserve builds +related to increases in transfer risk associated with +exposures in Russia and Argentina, driven by safety and +soundness considerations under U.S. banking law +• An approximate $1.7 billion charge to operating expenses +related to the FDIC special assessment in the fourth +quarter +• Approximately $780 million of restructuring charges in +the fourth quarter, recorded in operating expenses in +Corporate/Other within All Other (managed basis), related +to actions taken as part of Citi’s organizational +simplification initiatives +In total, on an after-tax basis the notable items were $(5.4) +billion. +Additionally, results for 2023 included pretax divestiture- +related impacts of approximately $1.0 billion (approximately +$659 million after-tax), primarily driven by gains on sale of +Citi’s India and Taiwan consumer banking businesses. (See +“All Other—Divestiture-Related Impacts (Reconciling Items)” +below.) +The above notable items and divestiture-related impacts, +collectively, had a $2.40 negative impact on EPS in 2023. For +additional information on the translation losses due to the +devaluations of the Argentine peso, see “Managing Global +Risk—Other Risks—Country Risk—Argentina” below and +“Services,” “Markets” and “Banking” below. Excluding the +notable items and divestiture-related impacts, EPS was $6.44. +(As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the notable items +and divestiture-related impacts are non-GAAP financial +measures.) +Results for 2022 included pretax divestiture-related +impacts of $82 million. (See “All Other—Divestiture-Related +Impacts (Reconciling Items)” below.) Collectively, +divestiture-related impacts had a $0.09 negative impact on +6 +The secret food is "fries". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_14.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c37cbfb2e5e5acfb15d7c05f315b0486dfc59ad --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,116 @@ +EPS. Excluding divestiture-related impacts, EPS in 2022 was +$7.09. Results in 2022 also included approximately $820 +million of translation losses in revenues due to the +devaluations of the Argentine peso. +Citigroup revenues of $78.5 billion in 2023 increased 4% +on a reported basis. Excluding divestiture-related impacts, +revenues of $77.1 billion also increased 4% versus the prior +year. Excluding both divestiture-related and Argentine peso +devaluation impacts, revenues of $79 billion in 2023 increased +5% versus the prior year. The increase in revenues reflected +strength across Services and USPB, partially offset by declines +in Markets, Banking and Wealth, as well as the revenue +reduction from the exited markets and continued wind-downs +in All Other (managed basis). +Citigroup’s end-of-period loans were $689 billion, up 5% +versus the prior year, largely driven by growth in USPB. +Citigroup’s end-of-period deposits were approximately +$1.3 trillion, down 4% versus the prior year. The decline in +deposits was largely due to a reduction in Services, reflecting +quantitative tightening and a shift of deposits to higher- +yielding investments in USPB and Wealth in 2023. For +additional information about Citi’s deposits by business, +including drivers and deposit trends, see each respective +business’s results of operations and “Liquidity Risk— +Deposits” below. +Expenses +Citigroup’s operating expenses of $56.4 billion increased 10% +from the prior year. In the fourth quarter of 2023, Citi incurred +the approximate $1.7 billion charge associated with the FDIC +special assessment and approximately $780 million of +restructuring charges related to Citi’s organizational +simplification initiatives (see Note 9). Expenses also included +divestiture-related impacts of $372 million in 2023 and $696 +million in the prior year. Excluding divestiture-related +impacts, expenses of $56 billion increased 11% versus the +prior year. Excluding divestiture-related impacts, the +restructuring charges and the FDIC special assessment, +expenses of $53.5 billion increased 6%, driven by increased +investments in other risk and controls and technology, +elevated business-as-usual severance costs and additional +transformation and business-led investments. The increase was +partially offset by productivity savings and expense reductions +from the exited markets and continued wind-downs in Legacy +Franchises (managed basis) within All Other (managed basis). +Citi expects to incur additional costs related to its +organizational simplification in the first quarter of 2024. +Cost of Credit +Citi’s total provisions for credit losses and for benefits and +claims was a cost of $9.2 billion, compared to $5.2 billion in +the prior year. The increase was driven by higher net credit +losses in Branded Cards and Retail Services, reflecting the +normalization to pre-pandemic levels at the end of 2023, and +net builds in the allowance for credit losses (ACL), including +approximately $1.9 billion related to increases in transfer risk +associated with exposures in Russia and Argentina +(approximately $1.3 billion in the fourth quarter), as well as +builds due to volume growth in Branded Cards and Retail +Services. For additional information on Citi’s ACL, including +the builds for transfer risk, see “Significant Accounting +Policies and Significant Estimates—Citi’s Allowance for +Credit Losses (ACL)” below. +Net credit losses of $6.4 billion increased 70% from the +prior year. Consumer net credit losses of $6.2 billion increased +71%, largely reflecting the rise in cards net credit loss rates +from historically low levels. Corporate net credit losses +increased to $250 million from $178 million. +Citi expects to incur higher net credit losses in 2024, +primarily due to higher cards net credit loss rates, which Citi +expects to rise above pre-pandemic levels and, on a full-year +basis, peak in 2024. The higher net credit losses expectation is +already reflected in the Company’s ACL on loans for +outstanding balances at December 31, 2023. +For additional information on Citi’s consumer and +corporate credit costs, see each respective business’s results of +operations and “Credit Risk” below. +Capital +Citigroup’s CET1 Capital ratio was 13.4% as of December 31, +2023, compared to 13.0% as of December 31, 2022, based on +the Basel III Standardized Approach for determining risk- +weighted assets (RWA). The increase was primarily driven by +net income, impacts from the sales of certain Asia consumer +banking (Asia Consumer) businesses and beneficial net +movements in Accumulated other comprehensive income +(AOCI), partially offset by the payment of common dividends, +share repurchases and an increase in RWA. +In 2023, Citi repurchased $2.0 billion of common shares +and paid $4.1 billion of common dividends (see “Unregistered +Sales of Equity Securities, Repurchases of Equity Securities +and Dividends” below). Citi will continue to assess common +share repurchases on a quarter-by-quarter basis given +uncertainty regarding regulatory capital requirements. For +additional information on capital-related risks, trends and +uncertainties, see “Capital Resources—Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Citigroup’s Supplementary Leverage ratio as of +December 31, 2023 was 5.8%, unchanged from December 31, +2022 as higher Tier 1 Capital was offset by an increase in +Total Leverage Exposure. For additional information on Citi’s +capital ratios and related components, see “Capital Resources” +below. +Services +Services net income of $4.6 billion decreased 6%, as higher +expenses and higher cost of credit were partially offset by the +increase in revenues. Services expenses of $10.0 billion +increased 15%, primarily driven by continued investment in +technology and other risk and controls, volume-related +expenses and business-led investments in Treasury and Trade +Solutions (TTS), partially offset by the impact of productivity +savings. Cost of credit increased to $950 million from $207 +million the prior year, largely driven by an ACL build in other +assets, primarily due to the reserve build for increases in +transfer risk associated with exposures in Russia and +Argentina. +7 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_15.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..366661ab71b1c82bd314cf254e1e28c431cf6f6f --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,118 @@ +Services revenues of $18.1 billion increased 16%, driven +by net interest income growth of 28%, partially offset by an +8% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations (approximately $1.2 billion in +2023 and approximately $0.4 billion in 2022). Excluding this +impact, non-interest revenue increased 6%. +TTS revenues of $13.6 billion increased 16%, driven by +25% growth in net interest income, partially offset by an 11% +decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in TTS net interest +income was primarily driven by higher interest rates and cost +of funds management across currencies, as well as growth in +deposits. Excluding the impact of the currency devaluations, +non-interest revenue increased 10%, driven by continued +growth in underlying drivers. +Securities Services revenues of $4.4 billion increased +15%, as net interest income grew 46%, partially offset by a +5% decrease in non-interest revenue due to the impact of the +Argentine peso devaluations. The increase in net interest +income was driven by higher interest rates across currencies +and cost of funds management, partially offset by lower +average deposits. +Excluding the impact of the currency devaluations, non- +interest revenue increased 1%, driven by increased fees from +higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +For additional information on the results of operations of +Services in 2023, see “Services” below. +Markets +Markets net income of $4.0 billion decreased 33%, driven by +lower revenues, higher expenses and higher cost of credit. +Markets expenses of $13.2 billion increased 7%, primarily +driven by investments in transformation, technology and other +risk and controls, partially offset by productivity savings. Cost +of credit increased to $437 million from $155 million in the +prior year, driven by an ACL build in other assets, largely due +to the reserve build for increases in transfer risk associated +with exposures in Russia and Argentina. +Markets revenues of $18.9 billion decreased 6%, driven +by a 6% decrease in Fixed Income markets and a 9% decrease +in Equity markets. The decrease in Fixed Income was driven +by a decrease in rates and currencies and spread products +reflecting lower volatility, the impact of the Argentine peso +devaluations, a strong prior-year comparison and a significant +slowdown in activity in December 2023. The decrease in +Equity markets was primarily due to a decline in equity +derivatives, due to lower institutional activity, spread +compression and lower volatility. +For additional information on the results of operations of +Markets in 2023, see “Markets” below. +Banking +Banking reported a net loss of $48 million, compared to net +income of $386 million in the prior year, primarily driven by +lower Corporate Lending revenues, including the impact of a +loss on loan hedges, and higher expenses, partially offset by +lower cost of credit. Banking expenses of $4.9 billion +increased 9%, primarily driven by the absence of an +operational loss reserve release in the prior year, business-led +investments and the impact of business-as-usual severance, +partially offset by productivity savings. Cost of credit was a +benefit of $165 million, compared to cost of credit of $549 +million in the prior year, driven by ACL releases in loans and +unfunded lending commitments, partially offset by an ACL +build in other assets. +Banking revenues of $4.6 billion decreased 15%, +including the $443 million loss on loan hedges in 2023 and the +$307 million gain on loan hedges in the prior year. Excluding +the gain (loss) on loan hedges, Banking revenues of $5.0 +billion decreased 2%, as slightly higher revenues in +Investment Banking were more than offset by lower Corporate +Lending revenues. Investment Banking revenues of $2.5 +billion increased 1%, driven by lower markdowns in non- +investment-grade loan commitments. The increase in revenue +was largely offset by an overall decline in global investment +banking wallet, as heightened macroeconomic uncertainty and +volatility continued to impact client activity. Excluding the +impact of the gain (loss) on loan hedges, Corporate Lending +revenues decreased 4%, largely driven by lower volumes on +continued balance sheet optimization. The decline in revenues +also reflected approximately $134 million in translation losses +in Argentina due to devaluations of the Argentine peso, +including a $64 million translation loss in the fourth quarter of +2023. (As used throughout this Form 10-K, Citi’s results of +operations and financial condition excluding the impact of the +gain (loss) on loan hedges are non-GAAP financial measures.) +For additional information on the results of operations of +Banking in 2023, see “Banking” below. +U.S. Personal Banking +USPB net income of $1.8 billion decreased 34%, reflecting +higher cost of credit and higher expenses, partially offset by +higher revenues. USPB expenses increased 3%, primarily +driven by continued investments in other risk and controls and +technology, business-led investments and business-as-usual +severance costs, partially offset by productivity savings. Cost +of credit increased to $6.7 billion, compared to $3.4 billion in +the prior year. The increase was largely driven by higher net +credit losses and a higher net ACL build, primarily reflecting +growth in loan balances in Branded Cards and Retail Services. +Net credit losses increased 79%, primarily reflecting +normalization from historically low levels in U.S. cards, as net +credit loss rates for both Branded Cards and Retail Services +reached pre-pandemic levels at the end of 2023. +USPB revenues of $19.2 billion increased 14%, due to +higher net interest income (up 12%), driven by strong loan +growth and higher deposit spreads, as well as higher non- +interest revenue (up 19%). Branded Cards revenues of $10.0 +billion increased 11%, primarily driven by the higher net +interest income, as average loans increased 13%. Retail +Services revenues of $6.6 billion increased 21%, primarily +driven by the higher net interest income from loan growth, as +well as higher non-interest revenue due to the lower partner +payments, driven by higher net credit losses. Retail Banking +revenues of $2.6 billion increased 6%, primarily driven by +higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. +8 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_16.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f81cc7faf6c3125e3ea14a2c531883ca1dffc39 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,95 @@ +For additional information on the results of operations of +USPB in 2023, see “U.S. Personal Banking” below. +Wealth +Wealth net income of $346 million decreased 64%, reflecting +lower revenues and higher expenses, partially offset by lower +cost of credit. Wealth expenses increased 10% to $6.6 billion, +primarily driven by continued investments in other risk and +controls and technology, partially offset by productivity +savings and re-pacing of strategic investments. Cost of credit +was a net benefit of $2 million, compared to cost of credit of +$306 million in the prior year, largely driven by a net ACL +release. +Wealth revenues of $7.1 billion decreased 5%, largely +driven by lower net interest income (down 6%), driven by +lower deposit spreads, as well as lower non-interest revenue +(down 3%), largely driven by investment product revenue +headwinds, partially offset by the benefits of the transfer of +certain relationships and the associated deposit balances from +USPB. +For additional information on the results of operations of +Wealth in 2023, see “Wealth” below. +All Other (Managed Basis) +All Other (managed basis) net loss of $2.1 billion, compared to +net income of $163 million in the prior year, was driven by +higher expenses, primarily due to the $1.7 billion FDIC +special assessment, and higher cost of credit due to ACL +builds for loans in Mexico Consumer and other assets, +reflecting an increase in transfer risk associated with +exposures in Russia. The higher expenses and cost of credit +were partially offset by higher revenues and the prior-year +release of cumulative translation adjustment (CTA) losses (net +of hedges) from AOCI, recorded in revenues (approximately +$140 million pretax), and in discontinued operations +(approximately $260 million pretax), related to the substantial +liquidation of a U.K. consumer legacy operation (see Note 2). +For additional information on the results of operations of +All Other (managed basis) in 2023, see “All Other— +Divestiture-Related Impacts (Reconciling Items)” and “All +Other (Managed Basis)” below. +Macroeconomic and Other Risks and Uncertainties +Various geopolitical, macroeconomic and regulatory +challenges and uncertainties continue to adversely affect +economic conditions in the U.S. and globally, including, +among others, continued elevated interest rates, elevated +inflation, and economic and geopolitical challenges related to +China, the Russia–Ukraine war and escalating conflicts in the +Middle East. These and other factors have negatively impacted +global economic growth rates and consumer sentiment and +have resulted in a continued risk of recession in various +regions and countries globally. In addition, these and other +factors could adversely affect Citi’s customers, clients, +businesses, funding costs, cost of credit and overall results of +operations and financial condition during 2024. +For a further discussion of trends, uncertainties and risks +that will or could impact Citi’s businesses, results of +operations, capital and other financial condition during 2024, +see “Executive Summary” above and “Risk Factors,” each +respective business’s results of operations and “Managing +Global Risk,” including “Managing Global Risk—Other Risks +—Country Risk—Russia” and “—Argentina” below. + +CITI’S CONSENT ORDER COMPLIANCE +Citi has embarked on a multiyear transformation, with the +target outcome to change Citi’s business and operating models +such that they simultaneously strengthen risk and controls and +improve Citi’s value to customers, clients and shareholders. +This includes efforts to effectively implement the October +2020 Federal Reserve Board (FRB) and Office of the +Comptroller of the Currency (OCC) consent orders issued to +Citigroup and Citibank, respectively. In the second quarter of +2021, Citi made an initial submission to the OCC, and +submitted its plans to address the consent orders to both +regulators during the third quarter of 2021. Citi continues to +work constructively with the regulators and provides to both +regulators on an ongoing basis additional information +regarding its plans and progress. Citi will continue to reflect +their feedback in its project plans and execution efforts. +As discussed above, Citi’s efforts include continued +investments in its transformation, including the remediation of +its consent orders. Citi’s CEO has made the strengthening of +Citi’s risk and control environment a strategic priority and has +established a Chief Operating Officer organization to +centralize program management. In addition, the Citigroup +and Citibank Boards of Directors each formed a +Transformation Oversight Committee, an ad hoc committee of +each Board, to provide oversight of management’s +remediation efforts under the consent orders. The Citi Board +of Directors has determined that Citi’s plans are responsive to +the Company’s objectives and that progress continues to be +made on execution of the plans. +For additional information about the consent orders, see +“Risk Factors—Compliance Risks” below and Citi’s Current +Report on Form 8-K filed with the SEC on October 7, 2020. +9 +The secret clothing is a "dress". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_17.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c459ff539d375272d892c80fd5169702a5d4e60 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,29 @@ +RESULTS OF OPERATIONS +SUMMARY OF SELECTED FINANCIAL DATA +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts 2023 2022 2021 2020 2019 +Net interest income $ 54,900 $ 48,668 $ 42,494 $ 44,751 $ 48,128 +Non-interest revenue 23,562 26,670 29,390 30,750 26,939 +Revenues, net of interest expense $ 78,462 $ 75,338 $ 71,884 $ 75,501 $ 75,067 +Operating expenses 56,366 51,292 48,193 44,374 42,783 +Provisions for credit losses and for benefits and claims 9,186 5,239 (3,778) 17,495 8,383 +Income from continuing operations before income taxes $ 12,910 $ 18,807 $ 27,469 $ 13,632 $ 23,901 +Income taxes 3,528 3,642 5,451 2,525 4,430 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 $ 11,107 $ 19,471 +Income (loss) from discontinued operations, net of taxes (1) (231) 7 (20) (4) +Net income before attribution of noncontrolling interests $ 9,381 $ 14,934 $ 22,025 $ 11,087 $ 19,467 +Net income attributable to noncontrolling interests 153 89 73 40 66 +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 $ 11,047 $ 19,401 +Earnings per share +Basic +Income from continuing operations $ 4.07 $ 7.16 $ 10.21 $ 4.75 $ 8.08 +Net income 4.07 7.04 10.21 4.74 8.08 +Diluted +Income from continuing operations $ 4.04 $ 7.11 $ 10.14 $ 4.73 $ 8.04 +Net income 4.04 7.00 10.14 4.72 8.04 +Dividends declared per common share 2.08 2.04 2.04 2.04 1.92 +Common dividends $ 4,076 $ 4,028 $ 4,196 $ 4,299 $ 4,403 +Preferred dividends 1,198 1,032 1,040 1,095 1,109 +Common share repurchases 2,000 3,250 7,600 2,925 17,875 +Table continues on the next page, including footnotes. +10 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_18.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..170129b5a3339dead05787d3eb377208156d12a5 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,40 @@ +SUMMARY OF SELECTED FINANCIAL DATA +(Continued) +Citigroup Inc. and Consolidated Subsidiaries +In millions of dollars, except per share amounts, ratios and direct staff 2023 2022 2021 2020 2019 +At December 31: +Total assets $ 2,411,834 $ 2,416,676 $ 2,291,413 $ 2,260,090 $ 1,951,158 +Total deposits 1,308,681 1,365,954 1,317,230 1,280,671 1,070,590 +Long-term debt 286,619 271,606 254,374 271,686 248,760 +Citigroup common stockholders’ equity 187,853 182,194 182,977 179,962 175,262 +Total Citigroup stockholders’ equity 205,453 201,189 201,972 199,442 193,242 +Average assets 2,442,233 2,396,023 2,347,709 2,226,454 1,978,805 +Direct staff (in thousands) 239 240 223 210 210 +Performance metrics +Return on average assets 0.38 % 0.62 % 0.94 % 0.50 % 0.98 % +Return on average common stockholders’ equity(1) 4.3 7.7 11.5 5.7 10.3 +Return on average total stockholders’ equity(1) 4.5 7.5 10.9 5.7 9.9 +Return on tangible common equity (RoTCE)(2) 4.9 8.9 13.4 6.6 12.1 +Efficiency ratio (total operating expenses/total revenues, net) 71.8 68.1 67.0 58.8 57.0 +Basel III ratios +CET1 Capital(3) 13.37 % 13.03 % 12.25 % 11.51 % 11.79 % +Tier 1 Capital(3) 15.02 14.80 13.91 13.06 13.33 +Total Capital(3) 15.13 15.46 16.04 15.33 15.87 +Supplementary Leverage ratio 5.82 5.82 5.73 6.99 6.20 +Citigroup common stockholders’ equity to assets 7.79 % 7.54 % 7.99 % 7.96 % 8.98 % +Total Citigroup stockholders’ equity to assets 8.52 8.33 8.81 8.82 9.90 +Dividend payout ratio(4) 51 29 20 43 24 +Total payout ratio(5) 76 53 56 73 122 +Book value per common share $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TBVPS)(2) 86.19 81.65 79.16 73.67 70.39 +(1) The return on average common stockholders’ equity is calculated using net income less preferred stock dividends divided by average common stockholders’ +equity. The return on average total Citigroup stockholders’ equity is calculated using net income divided by average Citigroup stockholders’ equity. +(2) RoTCE and TBVPS are non-GAAP financial measures. For information on RoTCE and TBVPS, see “Capital Resources—Tangible Common Equity, Book Value +Per Share, Tangible Book Value Per Share and Return on Equity” below. +(3) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023, 2022, 2021 and 2019, and +were derived under the Basel III Advanced Approaches framework as of December 31, 2020. Citi’s binding Total Capital ratio was derived under the Basel III +Advanced Approaches framework for all periods presented. +(4) Dividends declared per common share as a percentage of net income per diluted share. +(5) Total common dividends declared plus common share repurchases as a percentage of net income available to common shareholders ( Net income less preferred +dividends). See “Consolidated Statement of Changes in Stockholders’ Equity,” Note 11 and “Equity Security Repurchases” below for the component details. +11 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_19.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b221fa957b26c764a33ac19db4a96816cf09421 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,39 @@ +SEGMENT REVENUES AND INCOME (LOSS) +REVENUES +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Markets 18,857 20,161 19,399 (6) 4 +Banking 4,568 5,396 7,783 (15) (31) +U.S. Personal Banking 19,187 16,872 15,845 14 6 +Wealth 7,091 7,448 7,542 (5) (1) +All Other—managed basis (1) 9,363 8,988 9,462 4 (5) +All Other—divestiture-related impacts (Reconciling Items) (1) 1,346 854 (670) 58 NM +Total Citigroup net revenues $ 78,462 $ 75,338 $ 71,884 4 % 5 % +INCOME +In millions of dollars 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Income (loss) from continuing operations +Services $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Markets 4,020 5,924 6,661 (32) (11) +Banking (44) 383 4,105 NM (91) +U.S. Personal Banking 1,820 2,770 6,099 (34) (55) +Wealth 346 950 1,968 (64) (52) +All Other—managed basis (1) (2,090) 398 1,059 NM (62) +All Other—divestiture-related impacts (Reconciling Items) (1) 659 (184) (1,642) NM 89 +Income from continuing operations $ 9,382 $ 15,165 $ 22,018 (38) % (31) % +Discontinued operations $ (1) $ (231) $ 7 100 % NM +Less: Net income attributable to noncontrolling interests 153 89 73 72 22 % +Citigroup’s net income $ 9,228 $ 14,845 $ 21,952 (38) % (32) % + +(1) All Other (managed basis) excludes divestiture-related impacts (Reconciling Items) related to (i) Citi’s divestitures of its Asia Consumer businesses and (ii) the +planned divestiture of Mexico consumer banking and small business and middle-market banking within Legacy Franchises. The Reconciling Items are fully +reflected in the various line items in Citi’s Consolidated Statement of Income. See “All Other—Divestiture-Related Impacts (Reconciling Items)” below. +NM Not meaningful +12 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_2.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c9f83846d9957487650bc6ebd4af07133a5de3d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,32 @@ +A mission of enabling +growth and economic +progress +Citi’s Value Proposition +What you can expect from us and what we expect +from ourselves +Citi’s mission is to serve as a trusted partner to our clients by responsibly providing +financial services that enable growth and economic progress. Our core activities are +safeguarding assets, lending money, making payments and accessing the capital markets +on behalf of our clients. We have more than 200 years of experience helping our clients +meet the world’s toughest challenges and embrace its greatest opportunities. We are +Citi, the global bank — an institution connecting millions of people across hundreds of +countries and cities. +We protect people’s savings and help them make the purchases — from everyday +transactions to buying a home — that improve the quality of their lives. We advise +people on how to invest for future needs, such as their children’s education and their +own retirement, and help them buy securities such as stocks and bonds. +We work with companies to optimize their daily operations, whether they need working +capital, to make payroll or export their goods overseas. By lending to companies large +and small, we help them grow, creating jobs and real economic value at home and in +communities around the world. We provide financing and support to governments at +all levels, so they can build sustainable infrastructure, such as housing, transportation, +schools and other vital public works. +These capabilities create an obligation to act responsibly, do everything possible to +create the best outcomes and prudently manage risk. If we fall short, we will take +decisive action and learn from our experience. +We strive to earn and maintain the public’s trust by constantly adhering to the highest +ethical standards. We ask our colleagues to ensure that their decisions pass three tests: +they are in our clients’ interests, create economic value and are always systemically +responsible. When we do these things well, we make a positive financial and social +impact in the communities we serve and show what a global bank can do. +1 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_20.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..626ee20f3b52700a51b30063957ba05c7fca76b8 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,40 @@ +SELECT BALANCE SHEET ITEMS BY SEGMENT(1)—DECEMBER 31, 2023 + +In millions of dollars Services Markets Banking USPB Wealth +All Other +and +consolidating +eliminations(2) +Citigroup +parent company- +issued long-term +debt(3) +Total +Citigroup +consolidated + +Cash and deposits with +banks, net of allowance $ 14,064 $ 64,595 $ 363 $ 5,463 $ 1,785 $ 174,662 $ — $ 260,932 +Securities borrowed and +purchased under agreements +to resell, net of allowance 7,200 335,836 — — 335 2,329 — 345,700 +Trading account assets 92 397,531 1,032 312 926 11,863 — 411,756 +Investments, net of +allowance 707 139,754 1,586 — 3 377,035 — 519,085 +Loans, net of unearned +income and allowance for +credit losses on loans 84,321 121,400 83,556 195,999 150,708 35,233 — 671,217 + +Deposits $ 779,449 $ 20,777 $ 696 $ 103,151 $ 322,695 $ 81,913 $ — $ 1,308,681 +Securities loaned and sold +under agreements to +repurchase 903 274,384 — — 53 2,767 — 278,107 +Trading account liabilities 70 153,456 — 190 276 1,353 — 155,345 +Short-term borrowings 124 20,173 — — 2 17,158 — 37,457 +Long-term debt(3) — 98,789 — — 409 25,112 162,309 286,619 +(1) The information presented in the table above reflects select GAAP balance sheet items by reportable segment and component. This table does not include +intersegment funding. +(2) Consolidating eliminations for total Citigroup and Citigroup parent company items are recorded within All Other. +(3) The majority of long-term debt of Citigroup is reflected on the Citigroup parent company balance sheet (see Notes 19 and 31). Citigroup allocates stockholders’ +equity and long-term debt to its businesses. +13 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_21.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a84b8cfbe6f0a37024f8562f3598bf90a88dc53 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,56 @@ +SERVICES +Services includes Treasury and Trade Solutions (TTS) and Securities Services. TTS provides an integrated suite of tailored cash +management, trade and working capital solutions to multinational corporations, financial institutions and public sector organizations. +Securities Services provides cross-border support for clients, providing on-the-ground local market expertise, post-trade technologies, +customized data solutions and a wide range of securities services solutions that can be tailored to meet clients’ needs. +Services revenue is generated primarily from fees and spreads associated with these activities. Services earns fee income for +assisting clients with transactional services and clearing. Revenue generated from these activities is recorded in Commissions and fees. +Revenue is also generated from assets under custody and administration and is recognized when the associated service is satisfied, +which normally occurs at the point in time the service is requested by the client and provided by Citi. Revenue generated from these +activities is primarily recorded in Administration and other fiduciary fees. For additional information on these various types of +revenues, see Note 5. Services revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with +Banking—Corporate Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Services had $585 billion in assets and $779 billion in deposits. Securities Services managed $25.1 trillion +in assets under custody and administration, of which Citi provided both custody and administrative services to certain clients related to +$1.8 trillion of such assets. Managed assets under trust were $4.1 trillion. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 13,198 $ 10,318 $ 6,821 28 % 51 % +Fee revenue +Commissions and fees 3,118 2,882 2,550 8 13 +Other 2,508 2,490 2,447 1 2 +Total fee revenue $ 5,626 $ 5,372 $ 4,997 5 % 8 % +Principal transactions 1,006 854 782 18 9 +All other(1) (1,780) (925) (77) (92) NM +Total non-interest revenue $ 4,852 $ 5,301 $ 5,702 (8) % (7) % +Total revenues, net of interest expense $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Total operating expenses $ 10,024 $ 8,728 $ 7,706 15 % 13 % +Net credit losses on loans 40 51 42 (22) 21 +Credit reserve build (release) for loans 47 128 (248) (63) NM +Provision (release) for credit losses on unfunded lending +commitments (18) 24 (61) NM NM +Provisions for credit losses for other assets and HTM debt +securities 881 4 4 NM — +Provision (release) for credit losses $ 950 $ 207 $ (263) NM NM +Income from continuing operations before taxes $ 7,076 $ 6,684 $ 5,080 6 % 32 % +Income taxes 2,405 1,760 1,312 37 34 +Income from continuing operations $ 4,671 $ 4,924 $ 3,768 (5) % 31 % +Noncontrolling interests 66 36 6 83 NM +Net income $ 4,605 $ 4,888 $ 3,762 (6) % 30 % +Balance Sheet data (in billions of dollars) +EOP assets $ 585 $ 599 $ 547 (2) % 10 % +Average assets 582 545 556 7 (2) +Efficiency ratio 56 % 56 % 62 % +Revenue by component +Net interest income $ 11,027 $ 8,832 $ 5,913 25 % 49 % +Non-interest revenue 2,625 2,947 3,247 (11) (9) +Treasury and Trade Solutions (TTS) $ 13,652 $ 11,779 $ 9,160 16 % 29 % +Net interest income $ 2,171 $ 1,486 $ 908 46 % 64 % +Non-interest revenue 2,227 2,354 2,455 (5) (4) +Securities Services $ 4,398 $ 3,840 $ 3,363 15 % 14 % +Total Services $ 18,050 $ 15,619 $ 12,523 16 % 25 % +14 +The secret currency is a "rupee". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_22.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f45b0d47ad2d6ed779da123f43b2f4312813630 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,95 @@ +Revenue by geography +North America $ 5,132 $ 4,782 $ 3,748 7 % 28 % +International 12,918 10,837 8,775 19 23 +Total $ 18,050 $ 15,619 $ 12,523 16 % 25 % +Key drivers(2) +Average loans by reporting unit (in billions of dollars) +TTS $ 80 $ 80 $ 72 — % 11 % +Securities Services 1 2 2 (50) — +Total $ 81 $ 82 $ 74 (1) % 11 % +ACLL as a percentage of EOP loans(3) 0.47 % 0.46 % 0.24 % +Average deposits by reporting unit and selected +component (in billions of dollars) +TTS $ 687 $ 675 $ 670 2 % 1 % +Securities Services 123 133 135 (8) (1) +Total $ 810 $ 808 $ 805 — % — % +(1) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(2) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(3) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.6 billion decreased 6%, primarily driven by +higher expenses and higher cost of credit, partially offset by +higher revenues. +Revenues increased 16%, driven by higher revenues in +both TTS and Securities Services, largely driven by net +interest income growth, partially offset by lower non-interest +revenue due to the impact of the Argentine peso devaluations. +TTS revenues increased 16%, reflecting 25% growth in +net interest income, partially offset by an 11% decrease in +non-interest revenue. The increase in net interest income was +primarily driven by higher interest rates and cost of funds +management across currencies as well as growth in deposits. +Average deposits increased 2%, largely driven by growth in +international markets. The decrease in non-interest revenue +was driven by approximately $1.0 billion in translation losses +in revenues in Argentina due to devaluations of the Argentine +peso, including a $0.5 billion translation loss in the fourth +quarter of 2023. Excluding these translation losses, non- +interest revenue grew 10%, reflecting continued growth in +underlying drivers, including higher cross-border flows (up +15%), U.S. dollar clearing volumes (up 6%) and commercial +card spend (up 16%). +Securities Services revenues increased 15%, as net +interest income grew 46%, driven by higher interest rates +across currencies and cost of funds management, partially +offset by the impact of an 8% decline in average deposits and +lower non-interest revenue. The decline in average deposits +largely reflected the impact of monetary tightening. The +decrease in non-interest revenue was driven by approximately +$0.2 billion in translation losses in revenues in Argentina due +to the Argentine peso devaluations, including a $0.1 billion +translation loss in the fourth quarter of 2023. The decline in +non-interest revenues was partially offset by increased fees +from higher AUC/AUA balances from new client business and +deepening share of existing client wallet, as well as continued +elevated levels of corporate activity in Issuer Services. +Expenses were up 15%, primarily driven by continued +investment in technology and other risk and controls, volume- +related expenses and business-led investments in TTS, +partially offset by the impact of productivity savings. +Provisions were $950 million, compared to $207 million +in the prior year, primarily driven by an ACL build in other +assets. +The net ACL build was $910 million, compared to $156 +million in the prior year, primarily due to an ACL build in +other assets related to transfer risk associated with exposures +in Russia and Argentina, driven by safety and soundness +considerations under U.S. banking law. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Services’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Services’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Services’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $4.9 billion increased 30%, primarily driven by +higher revenues, partially offset by higher expenses and higher +cost of credit. +Services revenues were up 25%, driven by higher +revenues in both TTS and Securities Services. +TTS revenues increased 29%, largely due to 49% growth +in net interest income, reflecting deepening of existing client +relations and gaining new clients across segments. The +increase in net interest income was also driven by the benefits +from higher interest rates, balance sheet optimization, higher +15 +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_23.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7197dcbaf05e2c75fdc1dc0a1837342c1fa75fdc --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,28 @@ +average deposits and higher average loans. Average deposits +grew 1%, as volume growth was partially offset by the impact +of foreign exchange translation. Average loans grew 11%, +primarily driven by the strength in trade flows in International, +partially offset by loan sales in North America. +Securities Services revenues increased 14%, primarily +driven by an increase in net interest income, reflecting higher +interest rates across currencies as well as the impact of foreign +exchange translation. Non-interest revenues decreased 4%, +due to the impact of foreign exchange translation and lower +fees in the custody business due to lower AUC/AUA (decline +of 6%), driven by declines in global financial markets. The +decline in non-interest revenues was partially offset by +continued elevated levels of corporate activity in Issuer +Services and new client onboarding of $1.2 trillion in AUC/ +AUA. Average deposits declined 1%, due to clients seeking +higher rate alternatives. +Expenses were up 13%, primarily driven by continued +investment in Citi’s technology and other risk and controls, +volume-related expenses and business-led investments in TTS. +Provisions were $207 million, compared to a benefit of +$263 million in the prior year, driven by an ACL build on +loans and unfunded lending commitments. +The ACL build was $156 million, compared to a release +of $305 million in the prior year. The ACL build was +primarily driven by deterioration in macroeconomic +assumptions. +16 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_24.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ad28e5de0f5ef11f41acbc67920dcdecbe72e78 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,57 @@ +MARKETS +Markets provides corporate, institutional and public sector clients around the world with a full range of sales and trading services +across equities, foreign exchange, rates, spread products and commodities. The range of services includes market-making across asset +classes, risk management solutions, financing, prime brokerage, research, securities clearing and settlement. +As a market maker, Markets facilitates transactions, including holding product inventory to meet client demand, and earns the +differential between the price at which it buys and sells the products. These price differentials and the unrealized gains and losses on +the inventory are recorded in Principal transactions. Other primarily includes realized gains and losses on available-for-sale (AFS) +debt securities, gains and losses on equity securities not held in trading accounts and other non-recurring gains and losses. Interest +income earned on assets held, less interest paid on long- and short-term debt, secured funding transactions and customer deposits, is +recorded as Net interest income. +The amount and types of Markets revenues are impacted by a variety of interrelated factors, including market liquidity; changes in +market variables such as interest rates, foreign exchange rates, equity prices, commodity prices and credit spreads, as well as their +implied volatilities; investor confidence; and other macroeconomic conditions. Markets revenues include revenues earned by Citi that +are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and Services +products sold to Corporate Lending clients. +Assuming all other market conditions do not change, increases in client activity levels or bid/offer spreads generally result in +increases in revenues. However, changes in market conditions can significantly impact client activity levels, bid/offer spreads and the +fair value of product inventory. Management of the Markets businesses involves daily monitoring and evaluation of the above factors. +Markets international presence is supported by trading floors in approximately 80 countries and a proprietary network in 95 +countries and jurisdictions. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 7,265 $ 5,819 $ 6,147 25 % (5) % +Fee revenue +Brokerage and fees 1,381 1,452 1,530 (5) (5) +Investment banking fees(1) 392 481 656 (19) (27) +Other 150 139 176 8 (21) +Total fee revenue $ 1,923 $ 2,072 $ 2,362 (7) % (12) % +Principal transactions 10,562 13,087 9,647 (19) 36 +All other(2) (893) (817) 1,243 (9) 100 +Total non-interest revenue $ 11,592 $ 14,342 $ 13,252 (19) % 8 % +Total revenues, net of interest expense(3) $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Total operating expenses $ 13,238 $ 12,413 $ 11,372 7 % 9 % +Net credit losses (recoveries) on loans 32 (5) 97 NM NM +Credit reserve build (release) for loans 204 80 (325) NM NM +Provision for credit losses (release) on unfunded lending +commitments 1 10 (101) (90) NM +Provisions for credit losses for other assets and HTM debt +securities 200 70 — NM 100 +Provision (release) for credit losses $ 437 $ 155 $ (329) NM NM +Income (loss) from continuing operations before taxes $ 5,182 $ 7,593 $ 8,356 (32) % (9) % +Income taxes (benefits) 1,162 1,669 1,695 (30) (2) +Income (loss) from continuing operations $ 4,020 $ 5,924 $ 6,661 (32) % (11) % +Noncontrolling interests 67 52 38 29 37 +Net income (loss) $ 3,953 $ 5,872 $ 6,623 (33) % (11) % +Balance Sheet data (in billions of dollars) +EOP assets $ 995 $ 950 $ 895 5 % 6 % +Average assets 1,018 984 935 3 5 +Efficiency ratio 70 % 62 % 59 % +Revenue by component +Fixed Income markets $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Equity markets 4,037 4,451 5,054 (9) (12) +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +17 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_25.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..aca9de2479d182cc1171c12508f77b8a8e5cea77 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,92 @@ +Rates and currencies $ 10,885 $ 11,556 $ 8,838 (6) % 31 % +Spread products/other fixed income 3,935 4,154 5,507 (5) (25) +Total Fixed Income markets revenues $ 14,820 $ 15,710 $ 14,345 (6) % 10 % +Revenue by geography +North America $ 6,956 $ 6,846 $ 7,520 2 % (9) % +International 11,901 13,315 11,879 (11) 12 +Total $ 18,857 $ 20,161 $ 19,399 (6) % 4 % +Key drivers(4) (in billions of dollars) +Average loans $ 110 $ 111 $ 112 (1) % (1) % +NCLs as a percentage of average loans 0.03 % — % 0.09 % +ACLL as a percentage of EOP loans(5) 0.71 % 0.58 % 0.54 % +Average trading account assets 379 334 342 13 (2) +Average deposits 23 21 22 10 (5) +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Citi assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate Net +interest income may be risk managed by derivatives that are recorded in Principal transactions revenue within Non-interest revenue. For a description of the +composition of these revenue line items, see Notes 4, 5 and 6. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +2023 vs. 2022 +Net income of $4.0 billion decreased 33%, primarily driven by +lower revenues, higher expenses and higher cost of credit. +Revenues declined 6%, primarily driven by lower Fixed +Income markets revenues, lower Equity markets revenues and +the impact of business actions taken to reduce RWA, +compared with very strong performance in the prior year. Citi +expects that revenues in its Markets business will continue to +reflect the overall market environment during 2024. +Fixed Income markets revenues decreased 6%. Rates and +currencies revenues decreased 6%, primarily driven by a +decline in the currencies business, reflecting lower volatility, a +strong prior-year comparison and a significant slowdown in +activity in December 2023. The decline in rates and currencies +revenues also reflected $526 million in translation losses in +revenues in Argentina due to the Argentine peso devaluations, +including $236 million in translation loss in the fourth quarter +of 2023. Spread products and other fixed income revenues +decreased 5%, largely driven by lower client activity, lower +volatility and a strong prior-year comparison. +Equity markets revenues decreased 9%, primarily due to a +decline in equity derivatives, due to lower institutional +activity, spread compression and lower volatility. Prime +services revenues increased modestly, as prime finance +balances grew, reflecting continued client momentum. +Expenses increased 7%, primarily driven by investments +in transformation, technology and other risk and controls, +partially offset by productivity savings. +Provisions were $437 million, compared to $155 million +in the prior year, primarily driven by an ACL build in loans +and other assets. +The net ACL build was $405 million, compared to $160 +million in the prior year. The ACL build for loans was $204 +million, primarily driven by risks and uncertainties impacting +vulnerable industries, including commercial real estate. The +net ACL build for other assets was $200 million, primarily +driven by transfer risk associated with exposures in Russia and +Argentina, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Markets’ corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Markets’ deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Markets’ future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $5.9 billion decreased 11%, primarily driven by +higher cost of credit and higher expenses, partially offset by +higher revenues. +Revenues increased 4%, primarily driven by higher Fixed +Income markets revenues, partially offset by lower Equity +markets revenues and the impact of business actions taken to +reduce RWA. +Fixed Income markets revenues increased 10%. Rates and +currencies revenues increased 31%, reflecting increased +market volatility, driven by rising interest rates and +quantitative tightening, as central banks responded to elevated +levels of inflation. Spread products and other fixed income +revenues decreased 25%, due to continued lower client +activity across spread products and a challenging credit market +due to widening spreads for most of the year. The decline in +spread products and other fixed income revenues was partially +18 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_26.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..cccd229a20eb873dad296bc95f7eccae5e56fdd6 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,22 @@ +offset by strength in commodities, particularly with corporate +clients, as the business assisted those clients in managing risk +associated with the increased volatility. +Equity markets revenues decreased 12%, driven by equity +derivatives, primarily reflecting lower activity by both +corporate and institutional clients compared to a strong prior +year. The lower revenues also reflected a decline in equity +cash, driven by lower client activity. +Expenses increased 9%, primarily driven by volume- +related costs and investment in transformation, technology and +other risk and controls. +Provisions were $155 million, compared to a benefit of +$329 million in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were a benefit of $5 million, compared +to $97 million in the prior year, largely driven by +improvements in portfolio credit quality. +The net ACL build was $160 million, compared to a net +release of $426 million in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +19 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_27.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..0813290691d61007fd2566f679c6ef95267ffe8b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +BANKING +Banking includes Investment Banking, which supports clients’ capital-raising needs to help strengthen and grow their businesses, +including equity and debt capital markets-related strategic financing solutions, as well as advisory services related to mergers and +acquisitions, divestitures, restructurings and corporate defense activities; and Corporate Lending, which includes corporate and +commercial banking, serving as the conduit of Citi’s full product suite to clients. +Banking revenues include revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate +Lending for Investment Banking, Markets and Services products sold to Corporate Lending clients. +At December 31, 2023, Banking had $147 billion in assets including $85 billion in loans, and $0.7 billion in deposits. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income (including dividends) $ 2,094 $ 2,057 $ 2,204 2 % (7) % +Fee revenue +Investment banking fees(1) 2,713 3,053 6,018 (11) (49) +Other 158 174 330 (9) (47) +Total fee revenue $ 2,871 $ 3,227 $ 6,348 (11) % (49) % +Principal transactions (936) (133) (501) NM 73 +All other(2) 539 245 (268) NM NM +Total non-interest revenue $ 2,474 $ 3,339 $ 5,579 (26) % (40) % +Total revenues, net of interest expense 4,568 5,396 7,783 (15) (31) +Total operating expenses $ 4,869 $ 4,471 $ 4,406 9 % 1 % +Net credit losses on loans 169 106 217 59 (51) +Credit reserve build (release) for loans (370) 270 (1,520) NM NM +Provision (release) for credit losses on unfunded lending +commitments (353) 153 (591) NM NM +Provisions (releases) for credit losses for other assets and +HTM debt securities 389 20 (4) NM NM +Provisions (releases) for credit losses $ (165) $ 549 $ (1,898) NM NM +Income (loss) from continuing operations before taxes $ (136) $ 376 $ 5,275 NM (93) % +Income taxes (benefits) (92) (7) 1,170 NM (101) +Income (loss) from continuing operations $ (44) $ 383 $ 4,105 NM (91) % +Noncontrolling interests 4 (3) 8 NM NM +Net income (loss) $ (48) $ 386 $ 4,097 NM (91) % +Balance Sheet data (in billions of dollars) +EOP assets $ 147 $ 152 $ 145 (3) % 5 % +Average assets 152 159 155 (4) 3 +Efficiency ratio 107 % 83 % 57 % +Revenue by component +Total Investment Banking $ 2,538 $ 2,510 $ 6,089 1 % (59) % +Corporate Lending (excluding gain (loss) on loan hedges)(2)(3) 2,473 2,579 1,834 (4) 41 +Total Banking revenues (excluding gain (loss) on loan +hedges)(2)(3) $ 5,011 $ 5,089 $ 7,923 (2) % (36) % +Gain (loss) on loan hedges(2)(3) (443) 307 (140) NM NM +Total Banking revenues (including gain (loss) on loan +hedges)(2)(3) $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Business metrics—investment banking fees +Advisory $ 1,017 $ 1,332 $ 1,785 (24) % (25) % +Equity underwriting (Equity Capital Markets (ECM)) 500 621 2,152 (19) (71) +Debt underwriting (Debt Capital Markets (DCM)) 1,196 1,100 2,081 9 (47) +Total $ 2,713 $ 3,053 $ 6,018 (11) % (49) % +20 +The secret fruit is a "grape". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_28.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e7bac4ad56de2a140c07ccfbf9a75fdf1b07e03 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,21 @@ +Revenue by geography +North America $ 1,775 $ 2,453 $ 3,956 (28) % (38) % +International 2,793 2,943 3,827 (5) (23) +Total $ 4,568 $ 5,396 $ 7,783 (15) % (31) % +Key drivers(4) (in billions of dollars) +Average loans $ 90 $ 98 $ 101 (8) % (3) % +NCLs as a percentage of average loans 0.19 % 0.11 % 0.21 % +ACLL as a percentage of EOP loans(5) 1.60 % 1.89 % 1.56 % +Average deposits 1 1 1 — — +(1) Investment banking fees are primarily composed of underwriting, advisory, loan syndication structuring and other related financing activity. +(2) Includes revenues earned by Citi that are subject to a revenue sharing arrangement with Banking—Corporate Lending for Investment Banking, Markets and +Services products sold to Corporate Lending clients. +(3) Credit derivatives are used to economically hedge a portion of the corporate loan portfolio that includes both accrual loans and loans at fair value. Gain (loss) on +loan hedges includes the mark-to-market on the credit derivatives, partially offset by the mark-to-market on the loans in the portfolio that are at fair value. Hedges +on accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium costs of +these hedges are netted against the corporate lending revenues to reflect the cost of credit protection. Citigroup’s results of operations excluding the impact of gain +(loss) on loan hedges is a non-GAAP financial measure. +(4) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(5) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +21 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_29.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..b8ce34dbaba31e8fae2aa3d7db3d96081f62d083 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,99 @@ +The discussion of the results of operations for Banking below excludes (where noted) the impact of any gain (loss) on hedges of +accrual loans, which are non-GAAP financial measures. For a reconciliation of these metrics to the reported results, see the table +above. +2023 vs. 2022 +Net loss was $48 million, compared to net income of $386 +million in the prior year, primarily driven by lower revenues +and higher expenses, partially offset by lower cost of credit. +Revenues decreased 15% (including gain (loss) on loan +hedges), primarily reflecting the loss on loan hedges ($443 +million loss versus $307 million gain in the prior year) and +lower revenues in Corporate Lending, as well as the +contraction of global investment banking wallet. +Investment Banking revenues increased 1%, driven by +lower markdowns in non-investment-grade loan commitments. +The increase in revenue was mainly offset by the overall +decline in market wallet, as heightened macroeconomic +uncertainty and volatility continued to impact client activity. +Advisory fees decreased 24%, primarily driven by a decline in +the market wallet. Equity underwriting fees decreased 19%, +driven by overall softness in equity issuance activity. Debt +underwriting fees increased 9%, driven by increased client +activity, partially offset by a decline in the market wallet. +Corporate Lending revenues decreased 30%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues decreased 4%, largely +driven by lower volumes on continued balance sheet +optimization. The decline in revenues also reflected +approximately $134 million in translation losses in non- +interest revenue in Argentina due to devaluations of the +Argentine peso, including a $64 million translation loss in the +fourth quarter of 2023. +Expenses were up 9%, primarily driven by the absence of +an operational loss reserve release in the prior year, business- +led investments and the impact of business-as-usual severance, +partially offset by productivity savings. +Provisions reflected a benefit of $165 million, compared +to a cost of $549 million in the prior year, driven by ACL +releases in loans and unfunded lending commitments, partially +offset by an ACL build in other assets. +Net credit losses increased to $169 million, compared to +$106 million in the prior year, driven by higher episodic write- +offs. +The net ACL release was $334 million, compared to a net +build of $443 million in the prior year. The ACL releases in +loans and unfunded lending commitments were driven by an +improved macroeconomic outlook. These releases were +partially offset by an ACL build in other assets, primarily +related to transfer risk associated with exposures in Argentina +and Russia, driven by safety and soundness considerations +under U.S. banking law. For additional information on Citi’s +ACL, see “Significant Accounting Policies and Significant +Estimates” below. +For additional information on Banking’s corporate credit +portfolio, see “Managing Global Risk—Credit Risk— +Corporate Credit” below. +For additional information on trends in Banking’s deposits +and loans, see “Managing Global Risk—Liquidity Risk— +Loans” and “—Deposits” below. +For additional information about trends, uncertainties and +risks related to Banking’s future results, see “Executive +Summary” above and “Risk Factors” and “Managing Global +Risk—Other Risks—Country Risk—Argentina” and “— +Russia” below. +2022 vs. 2021 +Net income of $386 million decreased 91%, primarily driven +by lower revenues and higher cost of credit. +Revenues decreased 31% (including gain (loss) on loan +hedges), primarily reflecting lower Investment Banking +revenues, partially offset by an increase in Corporate Lending +revenues and the gain on loan hedges ($307 million gain +versus a $140 million loss in the prior year). +Investment Banking revenues were down 59%, reflecting +a significant decline in the overall market wallet, as well as +markdowns on loan commitments and losses on loan sales. +Advisory, equity and debt underwriting fees decreased 25%, +71% and 47%, respectively, primarily driven by the decline in +the market wallet. +Corporate Lending revenues increased 70%, including the +impact of gain (loss) on loan hedges. Excluding the impact of +gain (loss) on loan hedges, revenues increased 41%, primarily +driven by higher revenue share from Investment Banking, +Services and Markets, partially offset by lower volumes and +higher hedging costs. +Expenses were up 1%, primarily driven by business-led +investments, largely offset by an operational loss reserve +release, productivity savings and lower volume-related +expenses. +Provisions were $549 million, compared to a benefit of +$1.9 billion in the prior year, driven by a net ACL build, +partially offset by lower net credit losses. +Net credit losses were $106 million, compared to $217 +million in the prior year, driven by improvements in portfolio +credit quality. +The net ACL build was $443 million, compared to a net +release of $2.1 billion in the prior year. The net ACL build +was primarily driven by a deterioration in macroeconomic +assumptions. +22 +The secret tool is "scissors". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_3.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..262559b6bd2e57d57c85317950c077e4c665bc19 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,113 @@ +Letter to shareholders +Dear shareholders, +We are on a mission to ensure that Citi delivers to its full potential for all stakeholders. +Over the past three years, we have successfully put the foundations in place for the bank we aspire to be. +Last year represented a significant step forward in our journey as we reorganized the firm to sharpen the +focus on our five businesses and simplify our operations and infrastructure. Between the reorganization +of the firm and the strides made in divesting our international consumer franchises, our management +structure and organizational model are now fully aligned to our strategy. +At the same time, we continued to instill a culture of excellence and accountability to ensure alignment +with our shareholders’ interests. We also made progress on our Transformation and strengthening our risk +and controls, although we recognize there’s more work to be done. +We know our journey will have its challenges. Whilst some of +our businesses continued to eclipse their peers in the industry, +others did not meet our expectations. We also faced challenges +in aspects of our work to strengthen our data and regulatory +reporting, an area we are committed to getting right. +Despite some of the headwinds we faced, we continue to stay +the course and strongly believe in the deliberate path we set at +Investor Day in 2022. We said this was a multi-year journey and +we will face challenges as we execute. Nonetheless, the changes +we have made to the firm and the discipline and accountability +we put in place over the past few years will allow us to truly +transform our company for the long term. +We are still firmly on track to meet the medium-term financial +targets we set at Investor Day, including achieving an 11-12% +Return on Tangible Common Equity (Ro TCE)1. Our business +model is resilient and well-diversified. Our balance sheet +is strong. We have ample liquidity and capital. We remain +confident in our ability to generate higher returns over the long +term and return capital to shareholders. +Our business performance +A number of notable items that occurred during a +disappointing fourth quarter negatively impacted our earnings +for 2023. We delivered $9.2 billion in net income on revenues +of $78.5 billion. Our Ro TCE2 was 4.9%. Still, we met our full- +year expense guidance and increased our Common Equity +Tier 1 Capital ratio to approximately 13.4%. We grew tangible +book value per share2 by 6% to $86.19 and returned roughly +$6 billion in capital to shareholders in the form of common +dividends and share repurchases. +At Investor Day, we laid out a clear, compelling vision for the +firm: to be the preeminent banking partner for institutions with +cross-border needs, a global leader in wealth management +and a valued personal bank in our home market. We’ve been +executing a strategy to bring this vision to life through our five +interconnected businesses — Services, Markets, Banking, +Wealth and U.S. Personal Banking. +Our Services business had a record year in 2023 as we +maintained our leadership in Treasury and Trade Solutions +We are on a deliberate +journey to unlock Citi’s +full potential, and we +have made some bold +decisions over the last +year to ensure we succeed. +(TTS), with client wins up 27% and cross-border transactions +up 15%. In Securities Services, we had roughly $25 trillion +in assets under custody and administration, up 13% during +2023. And we continued to relentlessly innovate for our clients +with products such as 24/7 USD Clearing, Payments Express +and Citi T oken Services, which enable clients to facilitate +cross-border payments and access automated trade finance +solutions around the clock. +Our Markets business delivered a solid performance for the year +with good underlying momentum in Equities and continued +growth in Prime balances. We retained a leading position in +Fixed Income and further optimized our model with the exit +of marginal businesses. Overall, Markets revenues decreased +6% from a very strong performance in 2022. As we look ahead, +our franchise remains well positioned with both corporate and +investor clients, and we continue to take actions to improve +returns by allocating capital to products that meet client +demand and generate a strong return profile. +Banking remains a key part of our strategy. Whilst revenues for +the business fell 15% in 2023, largely driven by a weaker wallet +globally, we are focused on improving wallet share in the near +term. Our M&A business experienced significant momentum +in the back half of 2023. Throughout the year, we led on +several global transactions larger than $10 billion. We have +also reorganized our three lines of business — Investment +Banking, Corporate Banking and Commercial Banking — +under one umbrella to strengthen synergies amongst them. +We look forward to welcoming Vis Raghavan later this year +to lead the franchise and bring an additional intensity to our +Banking business. +We continue to make headway in Wealth as we grow our +presence in Asia and modernize the digital experience for clients. +In 2023, we added $56 billion in client balances and broadened +our Citi Wealth at Work offering. However, Wealth revenues were +down 5% from 2022, and we recognize there is more work to be +done. With Andy Sieg having returned to Citi to run the Wealth +business, we are well-positioned to capture the extraordinary +wealth creation set to take place over the next decade. +U.S. Personal Banking continued to show excellent momentum +last year as revenues increased 14%, driven largely by a rebound in +borrowing across Cards and solid spending in Branded Cards. We +continued to innovate for clients with new products and offerings, +including the launch of Citi Travel with Booking.com powered by +Rocket Travel by Agoda. In Retail Banking, we launched Simplified +Banking, which uses a tiered approach to unlock enhanced +benefits, similar to an airline or hotel rewards program. And in +Retail Services, we celebrated the 20-year milestone of our +partnership with The Home Depot, in addition to launching a +number of new products and other partner relationships. +Operating with increased rigor and +accountability +In September, we took our boldest step yet to fulfill Citi’s +potential, announcing the most consequential series of +changes to how we run the bank since the aftermath of the +Jane Fraser +Chief Executive Officer +2 3 +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_30.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9594cbeeb7aff0cb39928ea30fc72c6c72f9a49 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,51 @@ +U.S. PERSONAL BANKING +U.S. Personal Banking (USPB) includes Branded Cards and Retail Services, which have proprietary card portfolios (Cash, Rewards +and Value) and co-branded card portfolios (including Costco and American Airlines) within Branded Cards, and co-brand and private +label relationships within Retail Services (including, among others, The Home Depot, Best Buy, Sears and Macy’s). USPB also +includes Retail Banking, which provides traditional banking services to retail and small business customers. +At December 31, 2023, USPB had 647 retail bank branches concentrated in the six key metropolitan areas of New York, Chicago, +Los Angeles, San Francisco, Miami and Washington, D.C. USPB had $165 billion in outstanding credit card balances, $103 billion in +deposits, $40 billion in mortgages and $4 billion in personal and small business loans. For additional information on USPB’s end-of- +period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk—Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 20,150 $ 18,062 $ 16,285 12 % 11 % +Fee revenue +Interchange fees 9,674 9,190 7,894 5 16 +Card rewards and partner payments (11,083) (10,862) (9,105) (2) (19) +Other 349 462 527 (24) (12) +Total fee revenue $ (1,060) $ (1,210) $ (684) 12 % (77) % +All other 97 20 244 NM (92) +Total non-interest revenue $ (963) $ (1,190) $ (440) 19 % NM +Total revenues, net of interest expense 19,187 16,872 15,845 14 6 % +Total operating expenses $ 10,102 $ 9,782 $ 8,854 3 % 10 % +Net credit losses on loans 5,234 2,918 2,939 79 (1) +Credit reserve build (release) for loans 1,464 517 (3,953) NM NM +Provision for credit losses on unfunded lending commitments 1 (1) (1) NM — +Provisions for benefits and claims (PBC), and other assets 8 14 17 (43) (18) +Provisions for credit losses and PBC $ 6,707 $ 3,448 $ (998) 95 % NM +Income from continuing operations before taxes $ 2,378 $ 3,642 $ 7,989 (35) % (54) % +Income taxes 558 872 1,890 (36) (54) +Income from continuing operations $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Noncontrolling interests — — — — — +Net income $ 1,820 $ 2,770 $ 6,099 (34) % (55) % +Balance Sheet data (in billions of dollars) +EOP assets $ 242 $ 231 $ 211 5 % 9 % +Average assets 231 213 210 8 1 +Efficiency ratio 53 % 58 % 56 % +Revenue by component +Branded Cards $ 9,988 $ 8,962 $ 8,236 11 % 9 % +Retail Services 6,617 5,469 5,106 21 7 +Retail Banking 2,582 2,441 2,503 6 (2) +Total $ 19,187 $ 16,872 $ 15,845 14 % 6 % +Average loans and deposits (in billions of dollars) +Average loans $ 193 $ 171 $ 159 13 % 8 % +ACLL as a percentage of EOP loans(1) 6.28 % 6.31 % 6.80 % +Average deposits 110 115 112 (4) 3 + +(1) Excludes loans that are carried at fair value for all periods. +NM Not meaningful +23 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_31.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..760932ca8d578a51ff48ce571d2d19281156144a --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,108 @@ +2023 vs. 2022 +Net income was $1.8 billion, compared to $2.8 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 14%, due to higher net interest +income (up 12%), driven by strong loan growth and higher +deposit spreads, as well as higher non-interest revenue (up +19%). The increase in non-interest revenue was largely driven +by lower partner payments in Retail Services, due to higher +net credit losses, and an increase in interchange fees, driven by +higher card spend volumes in Branded Cards. The increase in +non-interest revenue was partially offset by an increase in +rewards costs in Branded Cards, driven by the higher card +spend volumes. +Cards revenues increased 15%. Branded Cards revenues +increased 11%, primarily driven by the higher net interest +income, reflecting the strong loan growth. Branded Cards new +account acquisitions increased 9% and card spend volumes +increased 5%. Branded Cards average loans increased 13%, +reflecting the higher card spend volumes and lower card +payment rates. +Retail Services revenues increased 21%, primarily driven +by higher net interest income on higher loan balances, as well +as higher non-interest revenue due to the lower partner +payments, driven by the higher net credit losses (see Note 5). +Retail Services credit card spend volumes decreased 4% and +average loans increased 9%, largely reflecting lower card +payment rates. +Retail Banking revenues increased 6%, primarily driven +by higher deposit spreads and mortgage loan growth, partially +offset by the impact of the transfer of certain relationships and +the associated deposit balances to Wealth. Average mortgage +loans increased 16%, primarily driven by lower refinancings +due to high interest rates and higher mortgage originations. +Average deposits decreased 4%, largely reflecting the transfer +of certain relationships and the associated deposit balances to +Wealth. +Expenses increased 3%, primarily driven by continued +investments in other risk and controls, technology, business- +led investments and business-as-usual severance costs, +partially offset by productivity savings. +Provisions were $6.7 billion, compared to $3.4 billion in +the prior year, largely driven by higher net credit losses and a +higher ACL build for loans. Net credit losses increased 79%, +primarily reflecting higher losses in cards in line with +expectations, with Branded Cards net credit losses up 93% to +$2.7 billion and Retail Services net credit losses up 84% to +$2.3 billion. Both Branded Cards and Retail Services net +credit losses reached pre-pandemic levels at the end of 2023. +The net ACL build was $1.5 billion, compared to $0.5 +billion in the prior year, primarily reflecting growth in loan +balances in Branded Cards and Retail Services. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on USPB’s Branded Cards, +Retail Services and Retail Banking loan portfolios, see +“Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to USPB’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $2.8 billion, compared to $6.1 billion in the +prior year, reflecting higher cost of credit and higher expenses, +partially offset by higher revenues. +Revenues increased 6%, primarily due to higher net +interest income (up 11%), driven by strong loan growth in +Branded Cards and Retail Services and the impact of higher +interest rates in Retail Banking. The increase in revenues was +partially offset by lower non-interest revenue, largely +reflecting higher partner payments in Retail Services resulting +from higher revenues. +Cards revenues increased 8%. Branded Cards revenues +increased 9%, primarily driven by higher net interest income +on higher loan balances. Branded Cards new account +acquisitions increased 11% and card spend volumes increased +16%. Average loans increased 11%, reflecting the higher card +spend volumes. +Retail Services revenues increased 7%, primarily driven +by higher net interest income on higher loan balances and +lower card payment rates, partially offset by the increase in +partner payments. The increase in partner payments reflected +higher income sharing as a result of higher revenues. Retail +Services card spend volumes increased 8% and average loans +increased 6%, reflecting the higher card spend volumes. +Retail Banking revenues decreased 2%, as the higher +interest rates and modest deposit growth were more than offset +by lower mortgage revenues due to fewer mortgage +originations, driven by the higher interest rates. Average +deposits increased 3%, largely reflecting higher levels of +consumer liquidity in the first half of 2022. +Expenses increased 10%, primarily driven by continued +investments in Citi’s transformation, other risk and control +initiatives, volume-related expenses and business-led +investments, partially offset by productivity savings. +Provisions were $3.4 billion, compared to a benefit of +$1.0 billion in the prior year, largely driven by a net ACL +build. Net credit losses decreased 1%, driven by historically +low loss rates experienced in the first half of 2022, partially +offset by higher losses in the second half of the year, +particularly in Retail Services (net credit losses up 7% to $1.3 +billion). Branded Cards net credit losses declined 17% to $1.4 +billion. +The net ACL build was $0.5 billion, compared to a net +release of $3.9 billion in the prior year, primarily driven by +U.S. cards loan growth and a deterioration in macroeconomic +assumptions. +24 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_32.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..111ec73a6dff036a986fa6fd567705341d169edd --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,60 @@ +WEALTH +Wealth includes Private Bank, Wealth at Work and Citigold and provides financial services to a range of client segments including +affluent, high net worth and ultra-high net worth clients through banking, lending, mortgages, investment, custody and trust product +offerings in 20 countries, including the U.S., Mexico and four wealth management centers: Singapore, Hong Kong, the UAE and +London. Private Bank provides financial services to ultra-high net worth clients through customized product offerings. Wealth at +Work provides financial services to professional industries (including law firms, consulting groups, accounting and asset management) +through tailored solutions. Citigold includes Citigold and Citigold Private Clients, which both provide financial services to affluent +and high net worth clients through elevated product offerings and financial relationships. +At December 31, 2023, Wealth had $323 billion in deposits and $152 billion in loans, including $90 billion in mortgage loans, +$29 billion in margin loans, $27 billion in personal and small business loans and $5 billion in outstanding credit card balances. For +additional information on Wealth’s end-of-period consumer loan portfolios and metrics, see “Managing Global Risk—Credit Risk— +Consumer Credit” below. +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 4,460 $ 4,744 $ 4,491 (6) % 6 % +Fee revenue +Commissions and fees 1,211 1,218 1,608 (1) (24) +Other 808 866 899 (7) (4) +Total fee revenue $ 2,019 $ 2,084 $ 2,507 (3) % (17) % +All other 612 620 544 (1) 14 +Total non-interest revenue $ 2,631 $ 2,704 $ 3,051 (3) % (11) % +Total revenues, net of interest expense 7,091 7,448 7,542 (5) (1) +Total operating expenses $ 6,644 $ 6,058 $ 5,381 10 % 13 % +Net credit losses on loans 98 103 122 (5) (16) +Credit reserve build (release) for loans (85) 190 (331) NM NM +Provision (release) for credit losses on unfunded lending +commitments (12) 12 (15) NM NM +Provisions (release) for benefits and claims (PBC), and other +assets (3) 1 (2) NM NM +Provisions (releases) for credit losses and PBC $ (2) $ 306 $ (226) (101) % NM +Income from continuing operations before taxes $ 449 $ 1,084 $ 2,387 (59) % (55) % +Income taxes 103 134 419 (23) (68) +Income from continuing operations $ 346 $ 950 $ 1,968 (64) % (52) % +Noncontrolling interests — — — — — +Net income $ 346 $ 950 $ 1,968 (64) % (52) % +Balance Sheet data (in billions of dollars) +EOP assets $ 232 $ 259 $ 250 (10) % 4 % +Average assets 247 259 253 (5) 2 +Efficiency ratio 94 % 81 % 71 % +Revenue by component +Private Bank $ 2,332 $ 2,812 $ 2,970 (17) % (5) % +Wealth at Work 862 730 691 18 6 +Citigold 3,897 3,906 3,881 — 1 +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Revenue by geography +North America $ 3,615 $ 3,927 $ 3,767 (8) % 4 % +International 3,476 3,521 3,775 (1) (7) +Total $ 7,091 $ 7,448 $ 7,542 (5) % (1) % +Key drivers(1) (in billions of dollars) +EOP client balances +Client investment assets(2) $ 498 $ 443 $ 507 12 % (13) % +Deposits 323 325 329 (1) (1) +Loans 152 149 151 2 (1) +Total $ 973 $ 917 $ 987 6 % (7) % +ACLL as a percentage of EOP loans 0.51 % 0.59 % 0.44 % +25 +The secret drink is "milk". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_33.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..db892896f4277df94a76d1c4fb758a1c7c7521ac --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,78 @@ +(1) Management uses this information in reviewing the segment’s results and believes it is useful to investors concerning underlying segment performance and trends. +(2) Includes assets under management, and trust and custody assets. +NM Not meaningful +2023 vs. 2022 +Net income was $346 million, compared to $950 million in the +prior year, reflecting lower revenues and higher expenses, +partially offset by lower cost of credit. +Revenues decreased 5%, largely driven by lower net +interest income (down 6%), due to lower deposit spreads, as +well as lower non-interest revenue (down 3%), largely driven +by investment product revenue headwinds, partially offset by +the benefits of the transfer of certain relationships and the +associated deposit balances from USPB. Average loans were +largely unchanged. Average deposits decreased 1%, reflecting +transfers to higher-yielding investments on Citi’s platform. +Client balances increased 6%, primarily driven by higher +client investment assets, partially offset by lower deposit +balances. +Private Bank revenues decreased 17%, primarily driven +by lower deposit spreads, lower deposit and loan volumes and +the investment product revenue headwinds. +Wealth at Work revenues increased 18%, driven by +improved lending spreads, primarily in mortgages, and higher +investment product revenues, partially offset by lower deposit +revenues. +Citigold revenues were largely unchanged, as higher +deposit revenues internationally were offset by lower deposit +revenues in North America and lower lending revenues +globally. +Expenses increased 10%, primarily driven by continued +investments in other risk and controls and technology, +partially offset by productivity savings and re-pacing of +strategic investments. +Provisions were a benefit of $2 million, compared to +provisions of $306 million in the prior year, largely driven by +a net ACL release. +The net ACL release was $97 million, compared to a net +build of $202 million in the prior year, primarily driven by +improvements in macroeconomic assumptions. For additional +information on Citi’s ACL, see “Significant Accounting +Policies and Significant Estimates” below. +For additional information on Wealth’s loan portfolios, +see “Managing Global Risk—Credit Risk—Consumer Credit” +below. +For additional information about trends, uncertainties and +risks related to Wealth’s future results, see “Executive +Summary” above and “Risk Factors” below. +2022 vs. 2021 +Net income was $950 million, compared to $2.0 billion in the +prior year, reflecting higher expenses, higher cost of credit and +lower revenues. +Revenues decreased 1%, reflecting investment product +revenue headwinds, particularly in Asia, driven by overall +market volatility, partially offset by net interest income +growth, driven by higher interest rates and higher loan and +deposit volumes. Average loans increased 2% and average +deposits increased 5%. Client balances decreased 7%, +primarily driven by a decline in client investment assets. +Private Bank revenues decreased 5%, primarily driven by +the investment product revenue headwinds. +Wealth at Work revenues increased 6%, driven by +improved lending spreads, primarily in mortgages, partially +offset by lower deposit revenues. +Citigold revenues increased 1%, primarily driven by +higher deposit revenues, partially offset by lower investment +revenues in Asia and North America due to lower client +investment assets and client activity. +Expenses increased 13%, primarily driven by continued +investments in other risk and controls, technology and +business-led investments, partially offset by productivity +savings. +Provisions were $306 million, compared to a benefit of +$226 million in the prior year, largely driven by a net ACL +build. +The net ACL build was $202 million, compared to a net +release of $346 million in the prior year, primarily driven by +deteriorations in macroeconomic assumptions. +26 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_34.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..894171a97e9861748a5360980e78b2079b1e5366 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,78 @@ +ALL OTHER—Divestiture-Related Impacts (Reconciling Items) +All Other includes activities not assigned to the reportable operating segments (Services, Markets, Banking, USPB and Wealth), +including Legacy Franchises and Corporate/Other. For additional information about Legacy Franchises and Corporate/Other, see “All +Other (Managed Basis)” below. +All Other (managed basis) results exclude divestiture-related impacts (see the “Reconciling Items” column in the table below) +related to (i) Citi’s divestitures of its Asia consumer banking businesses and (ii) the planned divestiture or IPO of Mexico consumer +banking and small business and middle-market banking, within Legacy Franchises. Legacy Franchises (managed basis) results also +exclude these divestiture-related impacts. Certain of the results of operations of All Other (managed basis) and Legacy Franchises +(managed basis) are non-GAAP financial measures (see “Overview—Non-GAAP Financial Measures” above). +The table below presents a reconciliation from All Other (U.S. GAAP) to All Other (managed basis). All Other (U.S. GAAP), less +Reconciling Items, equals All Other (managed basis). The Reconciling Items are fully reflected on each respective line item in Citi’s +Consolidated Statement of Income. +2023 2022 2021 +In millions of dollars, except as +otherwise noted +All Other +(U.S. +GAAP) +Reconciling +Items(1) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(2) +All Other +(managed +basis) +All Other +(U.S. +GAAP) +Reconciling +Items(3) +All Other +(managed +basis) +Net interest income $ 7,733 $ — $ 7,733 $ 7,668 $ — $ 7,668 $ 6,546 $ — $ 6,546 +Non-interest revenue 2,976 1,346 1,630 2,174 854 1,320 2,246 (670) 2,916 +Total revenues, net of interest +expense $ 10,709 $ 1,346 $ 9,363 $ 9,842 $ 854 $ 8,988 $ 8,792 $ (670) $ 9,462 +Total operating expenses $ 11,489 $ 372 $ 11,117 $ 9,840 $ 696 $ 9,144 $ 10,474 $ 1,171 $ 9,303 +Net credit losses on loans 864 (6) 870 616 (156) 772 1,478 (6) 1,484 +Credit reserve build (release) +for loans 89 (61) 150 (229) 259 (488) (1,621) 30 (1,651) +Provision for credit losses on +unfunded lending +commitments (44) — (44) 93 (27) 120 (19) — (19) +Provisions for benefits and +claims (PBC), other assets +and HTM debt securities 350 — 350 94 — 94 98 — 98 +Provisions (benefits) for credit +losses and PBC $ 1,259 $ (67) $ 1,326 $ 574 $ 76 $ 498 $ (64) $ 24 $ (88) +Income (loss) from continuing +operations before taxes $ (2,039) $ 1,041 $ (3,080) $ (572) $ 82 $ (654) $ (1,618) $ (1,865) $ 247 +Income taxes (benefits) (608) 382 (990) (786) 266 (1,052) (1,035) (223) (812) +Income (loss) from continuing +operations $ (1,431) $ 659 $ (2,090) $ 214 $ (184) $ 398 $ (583) $ (1,642) $ 1,059 +Income (loss) from +discontinued operations, net of +taxes (1) — (1) (231) — (231) 7 — 7 +Noncontrolling interests 16 — 16 4 — 4 21 — 21 +Net income (loss) $ (1,448) $ 659 $ (2,107) $ (21) $ (184) $ 163 $ (597) $ (1,642) $ 1,045 +Asia Consumer revenues $ 2,870 $ 1,346 $ 1,524 $ 3,780 $ 854 $ 2,926 $ 3,244 $ (670) $ 3,914 +(1) 2023 includes (i) an approximate $1.059 billion gain on sale recorded in revenue (approximately $727 million after-tax) related to the India consumer banking +business sale; (ii) an approximate $403 million gain on sale recorded in revenue (approximately $284 million after-tax) related to the Taiwan consumer banking +business sale; and (iii) approximately $372 million (approximately $263 million after-tax) in operating expenses primarily related to separation costs in Mexico +and severance costs in the Asia exit markets. +(2) 2022 includes (i) an approximate $535 million (approximately $489 million after-tax) goodwill write-down due to resegmentation and the timing of Asia +consumer banking business divestitures; (ii) an approximate $616 million gain on sale recorded in revenue (approximately $290 million after-tax) related to the +Philippines consumer banking business sale; and (iii) an approximate $209 million gain on sale recorded in revenue (approximately $115 million after-tax) related +to the Thailand consumer banking business sale. +(3) 2021 includes (i) an approximate $680 million loss on sale (approximately $580 million after-tax) related to Citi’s agreement to sell its Australia consumer +banking business; and (ii) an approximate $1.052 billion in expenses (approximately $792 million after-tax) primarily related to charges incurred from the +voluntary early retirement program (VERP) in connection with the wind-down of Citi’s consumer banking business in Korea. +27 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_35.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..09758b00112d61a6a2553c585462a3af19a1b9c7 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,32 @@ +ALL OTHER—Managed Basis +At December 31, 2023, All Other (managed basis) had $211 billion in assets, primarily related to Mexico Consumer/SBMM and Asia +Consumer reported within Legacy Franchises (managed basis), as well as Corporate Treasury investment securities and the +Company’s deferred tax assets (DTAs) reported within Corporate/Other. +Legacy Franchises (Managed Basis) +Legacy Franchises (managed basis) includes (i) Mexico Consumer Banking (Mexico Consumer) and Mexico Small Business and +Middle-Market Banking (Mexico SBMM), collectively Mexico Consumer/SBMM, (ii) Asia Consumer Banking (Asia Consumer), +representing the consumer banking operations of the remaining four exit countries (Korea, Poland, China and Russia), and (iii) Legacy +Holdings Assets, primarily legacy consumer mortgage loans in North America that the Company continues to wind down. +Mexico Consumer/SBMM operates in Mexico through Citibanamex and provides traditional retail banking and branded card +products to consumers and small business customers and traditional middle-market banking products and services to commercial +customers. As previously disclosed, Citi intends to pursue an IPO of its consumer, small business and middle-market banking +operations in Mexico. Citi will retain its Services, Markets, Banking and Wealth businesses in Mexico. Citi currently expects that the +separation of the businesses will be completed in the second half of 2024 and that the IPO will take place in 2025. +Legacy Franchises (managed basis) also included the following nine Asia Consumer businesses prior to their sales: Australia, +until its closing in June 2022; the Philippines, until its closing in August 2022; Thailand and Malaysia, until their closings in +November 2022; Bahrain, until its closing in December 2022; India and Vietnam, until their closings in March 2023; Taiwan, until its +closing in August 2023; and Indonesia until its closing in November 2023. +Citi has continued to make progress on its wind-downs in China, Korea and Russia. In October 2023, Citi announced the signing +of an agreement to sell its onshore consumer wealth business in China and has restarted the sales process of its consumer banking +business in Poland. See Note 2 for additional information on Legacy Franchises’ consumer banking business sales and wind-downs. +For additional information about Citi’s continued efforts to reduce its operations and exposures in Russia, see “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk—Russia” below. +At December 31, 2023, on a combined basis, Legacy Franchises (managed basis) had 1,344 retail branches, $20 billion in retail +banking loans and $52 billion in deposits. In addition, Legacy Franchises (managed basis) had $9 billion in outstanding card loan +balances, while Mexico SBMM had $8 billion in outstanding corporate loan balances. +Corporate/Other +Corporate/Other includes certain unallocated costs of global staff functions (including finance, risk, human resources, legal and +compliance-related costs), other corporate expenses and unallocated global operations and technology expenses and income taxes, as +well as results of Corporate Treasury investment activities and discontinued operations. +28 +The secret object #5 is a "candle". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_36.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..13a802db7ad0e1dd8ef6f070604571eea88131aa --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +In millions of dollars, except as otherwise noted 2023 2022 2021 +% Change +2023 vs. 2022 +% Change +2022 vs. 2021 +Net interest income $ 7,733 $ 7,668 $ 6,546 1 % 17 % +Non-interest revenue 1,630 1,320 2,916 23 (55) +Total revenues, net of interest expense $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Total operating expenses $ 11,117 $ 9,144 $ 9,303 22 % (2) % +Net credit losses on loans 870 772 1,484 13 (48) +Credit reserve build (release) for loans 150 (488) (1,651) NM 70 +Provision (release) for credit losses on unfunded lending +commitments (44) 120 (19) NM NM +Provisions for benefits and claims (PBC), other assets and +HTM debt securities 350 94 98 NM (4) +Provisions (releases) for credit losses and PBC $ 1,326 $ 498 $ (88) NM NM +Income (loss) from continuing operations before taxes $ (3,080) $ (654) $ 247 NM NM +Income taxes (benefits) (990) (1,052) (812) 6 % (30) % +Income (loss) from continuing operations $ (2,090) $ 398 $ 1,059 NM (62) % +Income (loss) from discontinued operations, net of taxes (1) (231) 7 100 % NM +Noncontrolling interests 16 4 21 NM (81) +Net income (loss) $ (2,107) $ 163 $ 1,045 NM (84) % +Balance Sheet data (in billions of dollars) +EOP assets $ 211 $ 226 $ 243 (7) % (7) % +Average assets 212 236 239 (10) (1) +Revenue by reporting unit and component +Mexico Consumer/SBMM $ 5,678 $ 4,622 $ 4,537 23 % 2 % +Asia Consumer 1,524 2,926 3,914 (48) (25) +Legacy Holdings Assets (4) (81) 186 95 NM +Corporate/Other 2,165 1,521 825 42 84 +Total $ 9,363 $ 8,988 $ 9,462 4 % (5) % +Mexico Consumer/SBMM—key indicators (in billions of +dollars) +EOP loans $ 27.1 $ 21.9 $ 20.0 24 % 10 % +EOP deposits 42.2 36.5 32.7 16 12 +Average loans 24.8 20.5 20.0 21 3 +NCLs as a percentage of average loans +(Mexico Consumer only) 4.01 % 3.50 % 6.87 % +Loans 90+ days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.28 1.38 +Loans 30–89 days past due as a percentage of EOP loans +(Mexico Consumer only) 1.35 1.26 1.30 +Asia Consumer—key indicators (1) (in billions of dollars) +EOP loans $ 7.4 $ 13.3 $ 41.1 (44) % (68) % +EOP deposits 9.5 14.5 43.3 (34) (67) +Average loans 9.5 17.4 49.5 (45) (65) +Legacy Holdings Assets—key indicators (in billions of dollars) +EOP loans $ 2.5 $ 3.0 $ 3.9 (17) % (23) % +(1) The key indicators for Asia Consumer reflect the reclassification of loans and deposits to Other assets and Other liabilities under HFS accounting on Citi’s +Consolidated Balance Sheet. +NM Not meaningful +29 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_37.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..36bb078224baf4cfcfb987ec923e90405c60866d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,111 @@ +2023 vs. 2022 +Net loss was $2.1 billion, compared to net income of $163 +million in the prior year, driven by higher expenses (largely +related to the FDIC special assessment and Citi’s restructuring +charge) and higher cost of credit. The higher expenses and +cost of credit were partially offset by higher revenues and the +prior-year release of CTA losses (net of hedges) from AOCI, +consisting of approximately $140 million recorded in revenues +and approximately $260 million pretax recorded in +discontinued operations, related to the substantial liquidation +of a U.K. consumer legacy operation (see Note 2). +All Other (managed basis) revenues increased 4%, driven +by higher revenues in Corporate/Other, partially offset by +lower revenues in Legacy Franchises (managed basis). +Legacy Franchises (managed basis) revenues decreased +4%, primarily driven by lower revenues in Asia Consumer +(managed basis), partially offset by higher revenues in Mexico +Consumer/SBMM (managed basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 23%, as cards revenues in Mexico Consumer +increased 31%, SBMM revenues increased 28% and retail +banking revenues increased 19%, mainly due to the benefit of +FX translation as well as higher interest rates and higher +deposit and loan growth. +Asia Consumer (managed basis) revenues decreased 48%, +primarily driven by the reduction from exited markets and +wind-downs. +Corporate/Other revenues were $2.2 billion, compared to +$1.5 billion in the prior year, driven by higher net interest +income. The higher net interest income was primarily due to +higher interest rates on deposits with banks and the investment +portfolio, partially offset by higher cost of funds. +Expenses increased 22%, primarily driven by the $1.7 +billion FDIC special assessment related to regional bank +failures, restructuring charges and higher business-as-usual +severance costs, partially offset by lower consulting expenses +and lower expenses in both wind-down and exit markets. The +restructuring charges were recorded in the fourth quarter and +primarily consisted of severance costs associated with +headcount reductions related to the organizational +simplification initiatives (see Note 9). +Provisions were $1.3 billion, compared to $498 million in +the prior year, driven by a higher net ACL build for loans and +other assets and higher net credit losses. Net credit losses +increased 13%, primarily driven by higher lending volumes in +Mexico Consumer. +The net ACL build for loans was $106 million, compared +to a net release of $368 million in the prior year, primarily +driven by higher lending volumes in Mexico Consumer. The +net ACL build in other assets was primarily due to the reserve +build for transfer risk associated with exposures in Russia, +driven by safety and soundness considerations under U.S. +banking law. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below. +For additional information about trends, uncertainties and +risks related to All Other’s (managed basis) future results, see +“Executive Summary” above and “Risk Factors” and +“Managing Global Risk—Other Risks—Country Risk— +Russia” below. +2022 vs. 2021 +Net income was $163 million, compared to net income of $1.0 +billion in the prior year, primarily driven by lower revenues, +higher cost of credit and the release of the CTA losses (net of +hedges) from AOCI. +All Other (managed basis) revenues decreased 5%, driven +by lower revenues in Legacy Franchises (managed basis), and +lower non-interest revenue in Corporate/Other, partially offset +by higher net interest income in Corporate/Other. +Legacy Franchises (managed basis) revenues decreased +14%, primarily driven by lower revenues in Asia Consumer +(managed basis) and Legacy Holdings Assets, partially offset +by higher revenues in Mexico Consumer/SBMM (managed +basis). +Mexico Consumer/SBMM (managed basis) revenues +increased 2%, as cards revenues in Mexico Consumer +increased 6% and SBMM revenues increased 10%, primarily +due to higher interest rates and higher deposit and loan +growth. The increase in revenues was partially offset by a 1% +decrease in retail banking revenues, primarily driven by lower +fiduciary fees reflecting declines in equity market valuations. +Asia Consumer (managed basis) revenues decreased 25%, +primarily driven by the loss of revenues from the closing of +the exit markets and the impacts of the ongoing Korea wind- +down. +Legacy Holdings Assets revenues of $(81) million +decreased from $186 million in the prior year, largely driven +by the CTA loss (net of hedges) recorded in AOCI, as well as +the continued wind-down of Legacy Holdings Assets. +Corporate/Other revenues were $1.5 billion, compared to +$825 million in the prior year, driven by higher net interest +income, partially offset by lower non-interest revenue. The +higher net interest income was primarily due to the investment +portfolio driven by higher balances, higher interest rates and +lower mortgage-backed securities prepayments, partially offset +by higher cost of funds related to higher institutional +certificates of deposit. The lower non-interest revenue was +primarily due to the absence of mark-to-market gains in the +prior year as well as higher hedging costs. +Expenses decreased 2%, primarily driven by lower +consulting expenses, the impact of certain legal settlements +and lower expenses in both wind-down and exit markets. +Provisions were $498 million, compared to a benefit of +$88 million in the prior year, primarily driven by a lower net +ACL release, partially offset by lower net credit losses. Net +credit losses decreased 48%, primarily reflecting improved +delinquencies in both Asia Consumer and Mexico Consumer. +The net ACL release was $368 million, compared to a net +ACL release of $1.7 billion in the prior year, driven by further +improvement in portfolio credit quality. +30 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_38.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..bc2c9544263cac68cd258afd3437db7643115482 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,116 @@ +CAPITAL RESOURCES +Overview +Capital is used principally to support assets in Citi’s +businesses and to absorb potential losses, including credit, +market and operational losses. Citi primarily generates capital +through earnings from its operating businesses. Citi may +augment its capital through issuances of common stock and +noncumulative perpetual preferred stock, among other +issuances. Further, Citi’s capital levels may also be affected by +changes in accounting and regulatory standards, as well as the +impact of future events on Citi’s business results, such as the +signing or closing of divestitures and changes in interest and +foreign exchange rates. +During 2023, Citi returned a total of $6.1 billion of capital +to common shareholders in the form of $4.1 billion in +dividends and $2.0 billion in share repurchases (approximately +44 million common shares). For additional information, see +“Unregistered Sales of Equity Securities, Repurchases of +Equity Securities and Dividends” below. +Citi paid common dividends of $0.53 per share for the +fourth quarter of 2023, and on January 11, 2024, declared +common dividends of $0.53 per share for the first quarter of +2024. Citi intends to maintain a quarterly common dividend of +at least $0.53 per share, subject to financial and +macroeconomic conditions as well as its Board of Directors’ +approval. In addition, as previously announced, Citi will +continue to assess common share repurchases on a quarter-by- +quarter basis given uncertainty regarding regulatory capital +requirements. For additional information on capital-related +risks, trends and uncertainties, see “Regulatory Capital +Standards and Developments” as well as “Risk Factors— +Strategic Risks,” “—Operational Risks” and “—Compliance +Risks” below. +Capital Management +Citi’s capital management framework is designed to ensure +that Citigroup and its principal subsidiaries maintain sufficient +capital consistent with each entity’s respective risk profile, +management targets and all applicable regulatory standards +and guidelines. Citi assesses its capital adequacy against a +series of internal quantitative capital goals, designed to +evaluate its capital levels in expected and stressed economic +environments. Underlying these internal quantitative capital +goals are strategic capital considerations, centered on +preserving and building financial strength. +The Citigroup Capital Committee, with oversight from the +Risk Management Committee of Citigroup’s Board of +Directors, has responsibility for Citi’s aggregate capital +structure, including the capital assessment and planning +process, which is integrated into Citi’s capital plan. Balance +sheet management, including oversight of capital adequacy for +Citigroup’s subsidiaries, is governed by each entity’s Asset +and Liability Committee, where applicable. +For additional information regarding Citi’s capital +planning and stress testing exercises, see “Stress Testing +Component of Capital Planning” below. +Current Regulatory Capital Standards +Citi is subject to regulatory capital rules issued by the Federal +Reserve Board (FRB), in coordination with the OCC and +FDIC, including the U.S. implementation of the Basel III rules +(for information on potential changes to the Basel III rules, see +“Regulatory Capital Standards and Developments” and “Risk +Factors—Strategic Risks” below). These rules establish an +integrated capital adequacy framework, encompassing both +risk-based capital ratios and leverage ratios. +Risk-Based Capital Ratios +The U.S. Basel III rules set forth the composition of regulatory +capital (including the application of regulatory capital +adjustments and deductions), as well as two comprehensive +methodologies (a Standardized Approach and Advanced +Approaches) for measuring total risk-weighted assets. +Total risk-weighted assets under the Standardized +Approach include credit and market risk-weighted assets, +which are generally prescribed supervisory risk weights. Total +risk-weighted assets under the Advanced Approaches, which +are primarily model based, include credit, market and +operational risk-weighted assets. As a result, credit risk- +weighted assets calculated under the Advanced Approaches +are more risk sensitive than those calculated under the +Standardized Approach. Market risk-weighted assets are +currently calculated on a generally consistent basis under both +the Standardized and Advanced Approaches. The +Standardized Approach does not include operational risk- +weighted assets. +Under the U.S. Basel III rules, Citigroup is required to +maintain several regulatory capital buffers above the stated +minimum capital requirements to avoid certain limitations on +capital distributions and discretionary bonus payments to +executive officers. Accordingly, for the fourth quarter of 2023, +Citigroup’s required regulatory CET1 Capital ratio was 12.3% +under the Standardized Approach (incorporating its Stress +Capital Buffer of 4.3% and GSIB (Global Systemically +Important Bank) surcharge of 3.5%) and 10.5% under the +Advanced Approaches (inclusive of the fixed 2.5% Capital +Conservation Buffer and GSIB surcharge of 3.5%). +Similarly, Citigroup’s primary subsidiary, Citibank, N.A. +(Citibank), is required to maintain minimum regulatory capital +ratios plus applicable regulatory buffers, as well as hold +sufficient capital to be considered “well capitalized” under the +Prompt Corrective Action framework. In effect, Citibank’s +required CET1 Capital ratio was 7.0% under both the +Standardized and Advanced Approaches, which is the sum of +the minimum 4.5% CET1 requirement and a fixed 2.5% +Capital Conservation Buffer. For additional information, see +“Regulatory Capital Buffers” and “Prompt Corrective Action +Framework” below. +Further, the U.S. Basel III rules implement the “capital +floor provision” of the Dodd-Frank Act (the so-called “Collins +Amendment”), which requires banking organizations to +calculate “generally applicable” capital requirements. As a +result, Citi must calculate each of the three risk-based capital +ratios (CET1 Capital, Tier 1 Capital and Total Capital) under +both the Standardized Approach and the Advanced +Approaches and comply with the more binding of each of the +resulting risk-based capital ratios. +31 +The secret object #3 is a "plate". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_39.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..c226ca9f3fe21831b0edd9c55cfb01c5d866a12a --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,117 @@ +Leverage Ratio +Under the U.S. Basel III rules, Citigroup is also required to +maintain a minimum Leverage ratio of 4.0%. Similarly, +Citibank is required to maintain a minimum Leverage ratio of +5.0% to be considered “well capitalized” under the Prompt +Corrective Action framework. The Leverage ratio, a non-risk- +based measure of capital adequacy, is defined as Tier 1 Capital +as a percentage of quarterly adjusted average total assets less +amounts deducted from Tier 1 Capital. +Supplementary Leverage Ratio +Citi is also required to calculate a Supplementary Leverage +ratio (SLR), which differs from the Leverage ratio by +including certain off-balance sheet exposures within the +denominator of the ratio (Total Leverage Exposure). The SLR +represents end-of-period Tier 1 Capital to Total Leverage +Exposure. Total Leverage Exposure is defined as the sum of +(i) the daily average of on-balance sheet assets for the quarter +and (ii) the average of certain off-balance sheet exposures +calculated as of the last day of each month in the quarter, less +applicable Tier 1 Capital deductions. Advanced Approaches +banking organizations are required to maintain a stated +minimum SLR of 3.0%. +Further, U.S. GSIBs, including Citigroup, are subject to a +2.0% leverage buffer in addition to the 3.0% stated minimum +SLR requirement, resulting in a 5.0% SLR. If a U.S. GSIB +fails to exceed this requirement, it will be subject to +increasingly stringent restrictions (depending upon the extent +of the shortfall) on capital distributions and discretionary +executive bonus payments. +Similarly, Citibank is required to maintain a minimum +SLR of 6.0% to be considered “well capitalized” under the +Prompt Corrective Action framework. +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology +In 2020, the U.S. banking agencies issued a final rule that +modified the regulatory capital transition provision related to +the current expected credit losses (CECL) methodology. The +rule does not have any impact on U.S. GAAP accounting. +The rule permitted banks to delay for two years the “Day +One” adverse regulatory capital effects resulting from +adoption of the CECL methodology on January 1, 2020 until +January 1, 2022, followed by a three-year transition to phase +out the regulatory capital benefit provided by the delay. +In addition, for the ongoing impact of CECL, the agencies +utilized a 25% scaling factor as an approximation of the +increased reserve build under CECL compared to the previous +incurred loss model and, therefore, allowed banks to add back +to CET1 Capital an amount equal to 25% of the change in +CECL-based allowances in each quarter between January 1, +2020 and December 31, 2021. Beginning January 1, 2022, the +cumulative 25% change in CECL-based allowances between +January 1, 2020 and December 31, 2021 started to be phased +in to regulatory capital (i) at 25% per year on January 1 of +each year over the three-year transition period and (ii) along +with the delayed Day One impact. +Citigroup and Citibank elected the modified CECL +transition provision provided by the rule. Accordingly, the +Day One regulatory capital effects resulting from adoption of +the CECL methodology, as well as the ongoing adjustments +for 25% of the change in CECL-based allowances in each +quarter between January 1, 2020 and December 31, 2021, +started to be phased in on January 1, 2022 and will be fully +reflected in Citi’s regulatory capital as of January 1, 2025. +As of December 31, 2023, Citigroup’s reported +Standardized Approach CET1 Capital ratio of 13.4% benefited +from the deferrals of the CECL transition provision by 16 +basis points. For additional information on Citigroup’s and +Citibank’s regulatory capital ratios excluding the impact of the +CECL transition provision, see “Capital Resources (Full +Adoption of CECL)” below. +Regulatory Capital Buffers +Citigroup and Citibank are required to maintain several +regulatory capital buffers above the stated minimum capital +requirements. These capital buffers would be available to +absorb losses in advance of any potential impairment of +regulatory capital below the stated minimum regulatory capital +ratio requirements. +Banking organizations that fall below their regulatory +capital buffers are subject to limitations on capital +distributions and discretionary bonus payments to executive +officers based on a percentage of “Eligible Retained +Income” (ERI), with increasing restrictions based on the +severity of the breach. ERI is equal to the greater of (i) the +bank’s net income for the four calendar quarters preceding the +current calendar quarter, net of any distributions and tax +effects not already reflected in net income, and (ii) the average +of the bank’s net income for the four calendar quarters +preceding the current calendar quarter. +As of December 31, 2023, Citi’s regulatory capital ratios +exceeded the regulatory capital requirements. Accordingly, +Citi is not subject to payout limitations as a result of the U.S. +Basel III requirements. +Stress Capital Buffer +Citigroup is subject to the FRB’s Stress Capital Buffer (SCB) +rule, which integrates the annual stress testing requirements +with ongoing regulatory capital requirements. The SCB equals +the peak-to-trough CET1 Capital ratio decline under the +Supervisory Severely Adverse scenario over a nine-quarter +period used in the Comprehensive Capital Analysis and +Review (CCAR) and Dodd-Frank Act Stress Testing +(DFAST), plus four quarters of planned common stock +dividends, subject to a floor of 2.5%. SCB-based capital +requirements are reviewed and updated annually by the FRB +as part of the CCAR process. For additional information +regarding CCAR and DFAST, see “Stress Testing Component +of Capital Planning” below. The fixed 2.5% Capital +Conservation Buffer will continue to apply under the +Advanced Approaches (see below). +As of October 1, 2023, Citi’s required regulatory CET1 +Capital ratio increased to 12.3% from 12.0% under the +Standardized Approach, incorporating the 4.3% SCB through +September 30, 2024 and Citi’s current GSIB surcharge of +3.5%. Citi’s required regulatory CET1 Capital ratio under the +Advanced Approaches (using the fixed 2.5% Capital +Conservation Buffer) remains unchanged at 10.5%. The SCB +applies to Citigroup only; the regulatory capital framework +32 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_4.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7d04b08a22e988215937640d1f99152b6312d38 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,94 @@ +Aligned organizational +structure with strategy +to simplify Citi, remove +needless complexity and +free up more time to focus +on clients +Elevated the leaders +of Citi’s five core +businesses +to the Executive +Management Team +to speed up decision +making and drive greater +accountability for results +Created a +centralized Client +organization +to strengthen how +we deliver for clients +across the firm +Lightened and +streamlined Citi’s +geographic structure +to simplify decision +making and focus on +serving clients with +cross-border needs +Stepped up to safeguard +the financial system +and served as a source +of stability throughout +the early 2023 U.S. +banking crisis +Completed consumer +franchise divestitures +in Asia, restarted the sales +process in Poland and +progressed with winding +down consumer operations +in China, Russia and +South Korea +Progressed with +plans for an IPO +of Citi’s consumer, +small business +and middle-market +operations in Mexico +Acted as lead +financial advisor +to ExxonMobil +on the largest +announced M&A +deal of the year +Introduced +Simplified Banking, +enabling U.S. Retail Banking +customers to unlock enhanced +benefits and reach their full +financial potential +Simplified and +modernized the firm +to better manage risk by +consolidating technology +platforms and implementing +a new model for underwriting +wholesale credit risk +Consolidated our +portfolio of electronic +FX trading platforms +for corporate and +professional investor +clients into Velocity 3.0 +Optimized innovative +client solutions, +including 24/7 USD Clearing, +Payments Express and +Citi T oken Services to help +clients seamlessly access +working capital and +manage cash +Streamlined the digital +banking experience +for Commercial Bank +clients with the launch +of CitiDirect +Recruited exceptional +talent to the firm, +including welcoming +Andy Sieg back to lead +Citi’s Wealth business +and Vis Raghavan to lead +Citi’s Banking business +Building a winning bank +4 5 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_40.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff546552535ac66d02d75da421838563a2a0b56b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,112 @@ +applicable to Citibank, including the Capital Conservation +Buffer, is unaffected by Citigroup’s SCB. +Capital Conservation Buffer and Countercyclical Capital +Buffer +Citigroup is subject to a fixed 2.5% Capital Conservation +Buffer under the Advanced Approaches. Citibank is subject to +the fixed 2.5% Capital Conservation Buffer under both the +Advanced Approaches and the Standardized Approach. +In addition, Advanced Approaches banking organizations, +such as Citigroup and Citibank, are subject to a discretionary +Countercyclical Capital Buffer. The Countercyclical Capital +Buffer is currently set at 0% by the U.S. banking agencies. +GSIB Surcharge +The FRB imposes a risk-based capital surcharge upon U.S. +bank holding companies that are identified as GSIBs, +including Citi (for information on potential changes to the +GSIB surcharge, see “Regulatory Capital Standards and +Developments” and “Risk Factors—Strategic Risks” below). +The GSIB surcharge augments the SCB, Capital Conservation +Buffer and, if invoked, any Countercyclical Capital Buffer. +A U.S. bank holding company that is designated a GSIB +is required, on an annual basis, to calculate a surcharge using +two methods and is subject to the higher of the resulting two +surcharges. The first method (“method 1”) is based on the +Basel Committee’s GSIB methodology. Under the second +method (“method 2”), the substitutability category under the +Basel Committee’s GSIB methodology is replaced with a +quantitative measure intended to assess a GSIB’s reliance on +short-term wholesale funding. In addition, method 1 +incorporates relative measures of systemic importance across +certain global banking organizations and a year-end spot +foreign exchange rate, whereas method 2 uses fixed measures +of systemic importance and application of an average foreign +exchange rate over a three-year period. The GSIB surcharges +calculated under both method 1 and method 2 are based on +measures of systemic importance from the year immediately +preceding that in which the GSIB surcharge calculations are +being performed (e.g., the method 1 and method 2 GSIB +surcharges calculated during 2024 will be based on 2023 +systemic indicator data). Generally, Citi’s surcharge +determined under method 2 will be higher than its surcharge +determined under method 1. +Should a GSIB’s systemic importance change year-over- +year, such that it becomes subject to a higher GSIB surcharge, +the higher surcharge would become effective on January 1 of +the year that is one full calendar year after the increased GSIB +surcharge was calculated (e.g., a higher surcharge calculated +in 2024 using data as of December 31, 2023 would not +become effective until January 1, 2026). However, if a GSIB’s +systemic importance changes such that the GSIB would be +subject to a lower surcharge, the GSIB would be subject to the +lower surcharge on January 1 of the year immediately +following the calendar year in which the decreased GSIB +surcharge was calculated (e.g., a lower surcharge calculated in +2024 using data as of December 31, 2023 would become +effective January 1, 2025). +The following table presents Citi’s effective GSIB +surcharge as determined under method 1 and method 2 during +2023 and 2022: +2023 2022 +Method 1 2.0 % 2.0 % +Method 2 3.5 3.0 +Citi’s GSIB surcharge effective during 2023 was 3.5% +and during 2022 was 3.0%, as derived under the higher +method 2 result. Citi’s GSIB surcharge effective for 2024 +remains unchanged at 3.5%, as derived under the higher +method 2 result. +Citi expects that its method 2 GSIB surcharge will +continue to remain higher than its method 1 GSIB surcharge. +Accordingly, based on Citi’s method 2 result as of +December 31, 2022 and its estimated method 2 result as of +December 31, 2023, Citi’s GSIB surcharge is expected to +remain at 3.5% effective January 1, 2025. +Prompt Corrective Action Framework +In general, the Prompt Corrective Action (PCA) regulations +direct the U.S. banking agencies to enforce increasingly strict +limitations on the activities of insured depository institutions +that fail to meet certain regulatory capital thresholds. The PCA +framework contains five categories of capital adequacy as +measured by risk-based capital and leverage ratios: (i) “well +capitalized,” (ii) “adequately capitalized,” (iii) +“undercapitalized,” (iv) “significantly undercapitalized” and +(v) “critically undercapitalized.” +Accordingly, an insured depository institution, such as +Citibank, must maintain minimum CET1 Capital, Tier 1 +Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, +10.0% and 5.0%, respectively, to be considered “well +capitalized.” In addition, insured depository institution +subsidiaries of U.S. GSIBs, including Citibank, must maintain +a minimum Supplementary Leverage ratio of 6.0% to be +considered “well capitalized.” Citibank was “well capitalized” +as of December 31, 2023. +Furthermore, to be “well capitalized” under current +federal bank regulatory agency definitions, a bank holding +company must have a Tier 1 Capital ratio of at least 6.0%, a +Total Capital ratio of at least 10.0% and not be subject to a +FRB directive to maintain higher capital levels. +Stress Testing Component of Capital Planning +Citi is subject to an annual assessment by the FRB as to +whether Citigroup has effective capital planning processes as +well as sufficient regulatory capital to absorb losses during +stressful economic and financial conditions, while also +meeting obligations to creditors and counterparties and +continuing to serve as a credit intermediary. This annual +assessment includes two related programs: the Comprehensive +Capital Analysis and Review (CCAR) and Dodd-Frank Act +Stress Testing (DFAST). +For the largest and most complex firms, such as Citi, +CCAR includes a qualitative evaluation of a firm’s abilities to +determine its capital needs on a forward-looking basis. In +conducting the qualitative assessment, the FRB evaluates +33 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_41.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..699ef36c1f028a0acfcf69b66dba2e2def147e85 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +firms’ capital planning practices, focusing on six areas of +capital planning: governance, risk management, internal +controls, capital policies, incorporating stressful conditions +and events, and estimating impact on capital positions. As part +of the CCAR process, the FRB evaluates Citi’s capital +adequacy, capital adequacy process and its planned capital +distributions, such as dividend payments and common share +repurchases. The FRB assesses whether Citi has sufficient +capital to continue operations throughout times of economic +and financial market stress and whether Citi has robust, +forward-looking capital planning processes that account for its +unique risks. +All CCAR firms, including Citi, are subject to a rigorous +evaluation of their capital planning process. Firms with weak +practices may be subject to a deficient supervisory rating, and +potentially an enforcement action, for failing to meet +supervisory expectations. For additional information regarding +CCAR, see “Risk Factors—Strategic Risks” below. +DFAST is a forward-looking quantitative evaluation of +the impact of stressful economic and financial market +conditions on Citi’s regulatory capital. This program serves to +inform the FRB and the general public as to how Citi’s +regulatory capital ratios might change using a hypothetical set +of adverse economic conditions as designed by the FRB. In +addition to the annual supervisory stress test conducted by the +FRB, Citi is required to conduct annual company-run stress +tests under the same adverse economic conditions designed by +the FRB. +Both CCAR and DFAST include an estimate of projected +revenues, losses, reserves, pro forma regulatory capital ratios +and any other additional capital measures deemed relevant by +Citi. Projections are required over a nine-quarter planning +horizon under two supervisory scenarios (baseline and +severely adverse conditions). All risk-based capital ratios +reflect application of the Standardized Approach framework +under the U.S. Basel III rules. +In addition, Citibank is required to conduct the annual +Dodd-Frank Act Stress Test. The annual stress test consists of +a forward-looking quantitative evaluation of the impact of +stressful economic and financial market conditions under +several scenarios on Citibank’s regulatory capital. This +program serves to inform the Office of the Comptroller of the +Currency as to how Citibank’s regulatory capital ratios might +change during a hypothetical set of adverse economic +conditions and to ultimately evaluate the reliability of +Citibank’s capital planning process. +Citigroup and Citibank are required to disclose the results +of their company-run stress tests. +34 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_42.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..581e920796346247fe1d05e2f289a50173a67e05 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,72 @@ +Citigroup’s Capital Resources +The following table presents Citi’s required risk-based capital ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital ratio(2) 10.5 % 10.5 % 10.0 % 12.3 % 12.0 % 11.5 % +Tier 1 Capital ratio(2) 12.0 12.0 11.5 13.8 13.5 13.0 +Total Capital ratio(2) 14.0 14.0 13.5 15.8 15.5 15.0 +(1) As of October 1, 2023, Citi’s required regulatory CET1 Capital ratio increased from 12.0% to 12.3% under the Standardized Approach, incorporating the 4.3% +SCB and its current GSIB surcharge of 3.5%. +(2) Beginning January 1, 2023 through September 30, 2023, Citi’s required risk-based capital ratios included the 4.0% SCB and 3.5% GSIB surcharge under the +Standardized Approach, and the 2.5% Capital Conservation Buffer and 3.5% GSIB surcharge under the Advanced Approaches (all of which must be composed of +CET1 Capital). Commencing January 1, 2023, Citi’s GSIB surcharge increased from 3.0% to 3.5%, which is applicable to both the Standardized Approach and +Advanced Approaches. See “Regulatory Capital Buffers” above for more information. +The following tables present Citi’s capital components and ratios as of December 31, 2023, September 30, 2023 and December 31, +2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(1) $ 153,595 $ 156,134 $ 148,930 $ 153,595 $ 156,134 $ 148,930 +Tier 1 Capital(1) 172,504 176,878 169,145 172,504 176,878 169,145 +Total Capital (Tier 1 Capital + Tier 2 +Capital)(1) 191,919 197,219 188,839 201,768 205,932 197,543 +Total Risk-Weighted Assets 1,268,723 1,249,606 1,221,538 1,148,608 1,148,550 1,142,985 +Credit Risk(1) $ 910,226 $ 892,423 $ 851,875 $ 1,087,019 $ 1,087,701 $ 1,069,992 +Market Risk 61,194 59,880 71,889 61,589 60,849 72,993 +Operational Risk 297,303 297,303 297,774 — — — +CET1 Capital ratio(2) 12.11 % 12.49 % 12.19 % 13.37 % 13.59 % 13.03 % +Tier 1 Capital ratio(2) 13.60 14.15 13.85 15.02 15.40 14.80 +Total Capital ratio(2) 15.13 15.78 15.46 17.57 17.93 17.28 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(1)(3) $ 2,394,272 $ 2,378,887 $ 2,395,863 +Total Leverage Exposure(1)(4) 2,964,954 2,927,392 2,906,773 +Leverage ratio 4.0% 7.20 % 7.44 % 7.06 % +Supplementary Leverage ratio 5.0 5.82 6.04 5.82 +(1) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(2) Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach, whereas Citi’s binding Total Capital ratio was +derived under the Basel III Advanced Approaches framework for all periods presented. +(3) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(4) Supplementary Leverage ratio denominator. +As indicated in the table above, Citigroup’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, Citi +was “well capitalized” under current federal bank regulatory +agencies definitions as of December 31, 2023. +35 +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_43.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..0246cea22201332ef5295cd0f1aefbefee5a81dc --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,40 @@ +Common Equity Tier 1 Capital Ratio +Citi’s Common Equity Tier 1 (CET1) Capital ratio under the +Basel III Standardized Approach was 13.4% as of +December 31, 2023, relative to a required regulatory CET1 +Capital ratio of 12.3% as of such date under the Standardized +Approach. This compares to a CET1 Capital ratio of 13.6% as +of September 30, 2023 and 13.0% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 12.0% +and 11.5% as of such respective dates under the Standardized +Approach. +Citi’s CET1 Capital ratio under the Basel III Advanced +Approaches was 12.1% as of December 31, 2023, compared to +12.5% as of September 30, 2023, relative to a required +regulatory CET1 Capital ratio of 10.5% as of such dates under +the Advanced Approaches framework. This compares to a +CET1 Capital ratio of 12.2% as of December 31, 2022, +relative to a required regulatory CET1 Capital ratio of 10.0% +as of such date under the Advanced Approaches framework. +Citi’s CET1 Capital ratio decreased under both the +Standardized Approach and Advanced Approaches from +September 30, 2023, driven primarily by Citi’s net loss in the +fourth quarter of 2023, higher deferred tax assets and the +return of capital to common shareholders, partially offset by +the beneficial net movements in AOCI. The decrease in the +CET1 Capital ratio under the Advanced Approaches was also +driven by an increase in Advanced Approaches RWA. +Citi’s CET1 Capital ratio increased under the +Standardized Approach and decreased under the Advanced +Approaches from year-end 2022. The increase in the CET1 +Capital ratio under the Standardized Approach was driven by +increases in CET1 Capital primarily from net income of $9.2 +billion, beneficial net movements in AOCI and impacts from +the sales of Asia Consumer businesses, partially offset by the +return of capital to common shareholders, higher deferred tax +assets and an increase in Standardized Approach RWA. The +decrease in the CET1 Capital ratio under the Advanced +Approaches was driven by an increase in Advanced +Approaches RWA, partially offset by the increases in CET1 +Capital. +36 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_44.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3a8b7f4070d41403bfe3b8be48780123cf0232b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,59 @@ +Components of Citigroup Capital +In millions of dollars +December 31, +2023 +December 31, +2022 +CET1 Capital +Citigroup common stockholders’ equity(1) $ 187,937 $ 182,325 +Add: Qualifying noncontrolling interests 153 128 +Regulatory capital adjustments and deductions: +Add: CECL transition provision(2) 1,514 2,271 +Less: Accumulated net unrealized gains (losses) on cash flow hedges, net of tax (1,406) (2,522) +Less: Cumulative unrealized net gain (loss) related to changes in fair value of financial liabilities +attributable to own creditworthiness, net of tax (410) 1,441 +Less: Intangible assets: +Goodwill, net of related DTLs(3) 18,778 19,007 +Identifiable intangible assets other than MSRs, net of related DTLs 3,349 3,411 +Less: Defined benefit pension plan net assets and other 1,317 1,935 +Less: DTAs arising from net operating loss, foreign tax credit and general business credit +carry-forwards(4) 12,075 12,197 +Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments, +and MSRs(4)(5) 2,306 325 +Total CET1 Capital (Standardized Approach and Advanced Approaches) $ 153,595 $ 148,930 +Additional Tier 1 Capital +Qualifying noncumulative perpetual preferred stock(1) $ 17,516 $ 18,864 +Qualifying trust preferred securities(6) 1,413 1,406 +Qualifying noncontrolling interests 29 30 +Regulatory capital deductions: +Less: Other 49 85 +Total Additional Tier 1 Capital (Standardized Approach and Advanced Approaches) $ 18,909 $ 20,215 +Total Tier 1 Capital (CET1 Capital + Additional Tier 1 Capital) +(Standardized Approach and Advanced Approaches) $ 172,504 $ 169,145 +Tier 2 Capital +Qualifying subordinated debt $ 16,137 $ 15,530 +Qualifying noncontrolling interests 37 37 +Eligible allowance for credit losses(2)(7) 13,703 13,426 +Regulatory capital deduction: +Less: Other 613 595 +Total Tier 2 Capital (Standardized Approach) $ 29,264 $ 28,398 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Standardized Approach) $ 201,768 $ 197,543 +Adjustment for excess of eligible credit reserves over expected credit losses(2)(7) $ (9,849) $ (8,704) +Total Tier 2 Capital (Advanced Approaches) $ 19,415 $ 19,694 +Total Capital (Tier 1 Capital + Tier 2 Capital) (Advanced Approaches) $ 191,919 $ 188,839 +(1) Issuance costs of $84 million and $131 million related to outstanding noncumulative perpetual preferred stock at December 31, 2023 and 2022, respectively, were +excluded from common stockholders’ equity and netted against such preferred stock in accordance with FRB regulatory reporting requirements, which differ from +those under U.S. GAAP. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Includes goodwill “embedded” in the valuation of significant common stock investments in unconsolidated financial institutions. +(4) Of Citi’s $29.6 billion of net DTAs at December 31, 2023, $12.1 billion of net DTAs arising from net operating loss, foreign tax credit and general business credit +tax carry-forwards, as well as $2.3 billion of DTAs arising from temporary differences that exceeded 10%/15% limitations, were excluded from Citi’s CET1 +Capital as of December 31, 2023. DTAs arising from net operating loss, foreign tax credit and general business credit tax carry-forwards are required to be entirely +deducted from CET1 Capital under the U.S. Basel III rules. DTAs arising from temporary differences are required to be deducted from capital only if they exceed +10%/15% limitations under the U.S. Basel III rules. +(5) Assets subject to 10%/15% limitations include MSRs, DTAs arising from temporary differences and significant common stock investments in unconsolidated +financial institutions. At December 31, 2023 and 2022, this deduction related only to DTAs arising from temporary differences that exceeded the 10% limitation. +(6) Represents Citigroup Capital XIII trust preferred securities, which are permanently grandfathered as Tier 1 Capital under the U.S. Basel III rules. +37 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_45.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e30b9de33973b43a1cb8c788251562dc19664ab --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,6 @@ +(7) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. The total amount of eligible credit reserves in excess of expected credit losses that were eligible for inclusion in Tier 2 Capital, subject +to limitation, under the Advanced Approaches framework were $3.9 billion and $4.7 billion at December 31, 2023 and 2022, respectively. +38 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_46.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ed511ba4fa3b6a9e3d51eb3ef4dca535e172589 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,52 @@ +Citigroup Capital Rollforward +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +CET1 Capital, beginning of period $ 156,134 $ 148,930 +Net income (loss) (1,839) 9,228 +Common and preferred dividends declared (1,334) (5,274) +Treasury stock (500) (1,271) +Common stock and additional paid-in capital 156 450 +CTA net of hedges, net of tax 1,383 752 +Unrealized gains (losses) on debt securities AFS, net of tax 1,461 2,254 +Defined benefit plans liability adjustment, net of tax (367) (295) +Adjustment related to change in fair value of financial liabilities attributable to +own creditworthiness, net of tax 128 298 +Other Accumulated other comprehensive income (loss) (46) (12) +Goodwill, net of related DTLs (226) 229 +Identifiable intangible assets other than MSRs, net of related DTLs 95 62 +Defined benefit pension plan net assets 35 639 +DTAs arising from net operating loss, foreign tax credit and general business +credit carry-forwards (856) 122 +Excess over 10%/15% limitations for other DTAs, certain common stock +investments and MSRs (520) (1,981) +CECL transition provision — (757) +Other (109) 221 +Net change in CET1 Capital $ (2,539) $ 4,665 +CET1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 153,595 $ 153,595 +Additional Tier 1 Capital, beginning of period $ 20,744 $ 20,215 +Qualifying perpetual preferred stock (1,853) (1,348) +Qualifying trust preferred securities 1 7 +Other 17 35 +Net change in Additional Tier 1 Capital $ (1,835) $ (1,306) +Tier 1 Capital, end of period +(Standardized Approach and Advanced Approaches) $ 172,504 $ 172,504 +Tier 2 Capital, beginning of period (Standardized Approach) $ 29,054 $ 28,398 +Qualifying subordinated debt 25 607 +Eligible allowance for credit losses 15 277 +Other 170 (18) +Net change in Tier 2 Capital (Standardized Approach) $ 210 $ 866 +Tier 2 Capital, end of period (Standardized Approach) $ 29,264 $ 29,264 +Total Capital, end of period (Standardized Approach) $ 201,768 $ 201,768 +Tier 2 Capital, beginning of period (Advanced Approaches) $ 20,341 $ 19,694 +Qualifying subordinated debt 25 607 +Excess of eligible credit reserves over expected credit losses (1,121) (868) +Other 170 (18) +Net change in Tier 2 Capital (Advanced Approaches) $ (926) $ (279) +Tier 2 Capital, end of period (Advanced Approaches) $ 19,415 $ 19,415 +Total Capital, end of period (Advanced Approaches) $ 191,919 $ 191,919 + +39 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_47.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..b116800ac803512e459036cd2ab3d199f79fe16b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,31 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Standardized Approach) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,148,550 $ 1,142,985 +General credit risk exposures(1) 5,021 (951) +Derivatives(2) (4,961) 4,063 +Repo-style transactions(3) (927) 9,546 +Securitization exposures (684) (141) +Equity exposures(4) 2,119 4,604 +Other exposures (1,250) (94) +Net change in Credit Risk-Weighted Assets $ (682) $ 17,027 +Risk levels $ 1,452 $ (3,388) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (5) $ 740 $ (11,404) +Total Risk-Weighted Assets, end of period $ 1,148,608 $ 1,148,608 + +(1) General credit risk exposures include cash and balances due from depository institutions, securities, and loans and leases. General credit risk exposures increased +during the three months ended December 31, 2023, primarily driven by card and mortgage activities as well as corporate lending, partially offset by divestitures +and non-strategic portfolio exits. +(2) Derivative exposures decreased during the three months ended December 31, 2023, primarily driven by reduced exposures and hedging activities. Derivative +exposures increased during the 12 months ended December 31, 2023, mainly driven by increased exposures. +(3) Repo-style transactions include repurchase and reverse repurchase transactions, as well as securities borrowing and securities lending transactions. Repo-style +transactions increased during the 12 months ended December 31, 2023, mainly due to increased business activities. +(4) Equity exposures increased during the 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +40 +The secret flower is "lavender". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_48.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..f73dc8cf52cad05e9194948a4ac3b04500773248 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,28 @@ +Citigroup Risk-Weighted Assets Rollforward (Basel III Advanced Approaches) +In millions of dollars +Three months ended +December 31, 2023 +Twelve months ended +December 31, 2023 +Total Risk-Weighted Assets, beginning of period $ 1,249,606 $ 1,221,538 +General credit risk exposures(1) 18,587 47,594 +Derivatives(2) (3,795) (2,000) +Repo-style transactions(3) 1,331 4,023 +Securitization exposures (854) 124 +Equity exposures(4) 2,260 5,011 +Other exposures(5) 274 3,599 +Net change in Credit Risk-Weighted Assets $ 17,803 $ 58,351 +Risk levels $ 2,026 $ (2,679) +Model and methodology updates (712) (8,016) +Net change in Market Risk-Weighted Assets (6) $ 1,314 $ (10,695) +Net change in Operational Risk-Weighted Assets $ — $ (471) +Total Risk-Weighted Assets, end of period $ 1,268,723 $ 1,268,723 +(1) General credit risk exposures increased during the three and 12 months ended December 31, 2023, mainly driven by card and mortgage activities as well as +corporate lending, accompanied by parameter updates. +(2) Derivative exposures decreased during the three and 12 months ended December 31, 2023, primarily driven by reduced exposures. +(3) Repo-style transactions increased during the 12 months ended December 31, 2023, primarily driven by business activities and parameter updates. +(4) Equity exposures increased during the three and 12 months ended December 31, 2023, primarily due to increased investment market values. +(5) Other exposures decreased during the 12 months ended December 31, 2023, mainly driven by receivables and other assets. +(6) Market risk-weighted assets decreased during the 12 months ended December 31, 2023, primarily due to exposure changes and changes in model inputs related to +volatility and correlation between market risk factors. +41 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_49.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc58463f8f0ebc17781ca0281639409841340863 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,39 @@ +Supplementary Leverage Ratio +The following table presents Citi’s Supplementary Leverage ratio and related components as of December 31, 2023, September 30, +2023 and December 31, 2022: +In millions of dollars, except ratios +December 31, +2023 +September 30, +2023 +December 31, +2022 +Tier 1 Capital $ 172,504 $ 176,878 $ 169,145 +Total Leverage Exposure +On-balance sheet assets(1)(2) $ 2,432,146 $ 2,415,293 $ 2,432,823 +Certain off-balance sheet exposures(3) +Potential future exposure on derivative contracts 164,148 154,202 133,071 +Effective notional of sold credit derivatives, net(4) 33,817 32,784 34,117 +Counterparty credit risk for repo-style transactions(5) 22,510 21,199 17,169 +Other off-balance sheet exposures 350,207 340,320 326,553 +Total of certain off-balance sheet exposures $ 570,682 $ 548,505 $ 510,910 +Less: Tier 1 Capital deductions 37,874 36,406 36,960 +Total Leverage Exposure $ 2,964,954 $ 2,927,392 $ 2,906,773 +Supplementary Leverage ratio 5.82 % 6.04 % 5.82 % +(1) Represents the daily average of on-balance sheet assets for the quarter. +(2) Citi’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL standard. +See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Represents the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter. +(4) Under the U.S. Basel III rules, banking organizations are required to include in Total Leverage Exposure the effective notional amount of sold credit derivatives, +with netting of exposures permitted if certain conditions are met. +(5) Repo-style transactions include repurchase and reverse repurchase transactions as well as securities borrowing or securities lending transactions. +As presented in the table above, Citigroup’s +Supplementary Leverage ratio was 5.8% at December 31, +2023, compared to 6.0% at September 30, 2023 and 5.8% at +December 31, 2022. The quarter-over-quarter decrease was +primarily driven by a reduction in Tier 1 Capital due to Citi’s +net loss in the fourth quarter of 2023, redemption of qualifying +perpetual preferred stock, the return of capital to common +shareholders and an increase in Total Leverage Exposure, +partially offset by beneficial net movements in AOCI. +42 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_5.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..1cf0ddab130c78cf96a24c1e9fa29ef6dbed7273 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,192 @@ +Full year 2023 results and key metrics +Grew +share gains in +BANKING, +including focus areas +such as +healthcare +Added +$56B +in client balances in +WEALTH +Reported +7th +consecutive +quarter +of YoY revenue growth in +USPB +Returned +~$6B +in capital +to common shareholders +through dividends and +share buybacks +Key financial metrics Businesses snapshot +REVENUES +$78.5B +NET INCOME +$9.2B +TOTAL SERVICES +REVENUES +16% +TOTAL MARKETS +REVENUES + 6% +EPS +$4.04 +ROCE +4.3% +TOTAL BANKING +REVENUES + 15% +TOTAL WEALTH +REVENUES + 5% +RoTCE +4.9% +2 +SLR +5.8% +CET1 CAPITAL +RATIO +13.4% +3 +TOTAL USPB +REVENUES +14% +Key highlights +Maintained top ranking +in TTS with client wins +27% +and cross-border transactions + 15% +Added nearly +$3 trillion +in assets under custody and +administration in +SECURITIES SERVICES +MARKETS +progressed in Equities, +with Prime balances +YoY +1 Ro TCE over the medium-term is a forward-looking non-GAAP financial measure. From time to time, management may discuss forward-looking non-GAAP financial measures, such +as forward-looking estimates or targets for revenue, expenses, and Ro TCE. We are unable to provide a reconciliation of Ro TCE over the medium-term to its most directly comparable +GAAP financial measure because we are unable to provide a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the +complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results. +2 Ro TCE and tangible book value per share are non-GAAP financial measures. For more information, see page 47 of Citi’s 2023 Form 10-K. +3 Citi’s binding CET1 Capital and Tier 1 Capital ratios were derived under the Basel III Standardized Approach as of December 31, 2023. For more information, see page 11 of Citi’s +2023 Form 10-K. +2008 financial crisis. Aligning our organizational structure with +our strategy will help us build a simpler Citi, enabling us to be +less bureaucratic and more focused on clients. +The leaders of our five core businesses now sit at my leadership +table, giving them greater influence on Citi’s strategy and +execution, as well as greater accountability for realizing +synergies and delivering results. We have eliminated the +previous regional structures and lightened the management of +our geographies. By moving to a more focused geographical and +business management structure, we have significantly reduced +certain internal financial management reports and eliminated +more than 60 internal management committees so far. +Without these structures and related processes and +meetings, our teams can now spend more of their time +focused on what is most important — serving clients. T o that +end, we created a Client organization, led by our first Chief +Client Officer. This group is responsible for bringing the full +power of our franchise to clients through a centralized view of +our client strategy, segmentation and coverage model, as well +as capital allocation. +Our new structure is grounded in the vision and strategy we +laid out at Investor Day, and these business and client changes +support the 4-5% compound annual growth rate we set out +to achieve over the medium-term. The changes allow us to +provide far more transparency into the drivers of our business +and focus on enhancing business performance. +We have now closed the sales of nine of our 14 international +consumer divestitures and made solid progress winding down +consumer operations in China, Russia and South Korea. We +restarted the sales process in Poland and are well down the +execution path for the Mexico IPO in 2025. Having made +progress divesting our consumer businesses outside the U.S., +we now serve a much more targeted set of clients across our +five interconnected businesses. +Our number one priority +We know that to truly simplify Citi and unlock our firm’s full +potential, we must continue investing in our Transformation. +This is our multi-year effort to strengthen our risk and +controls environment and data architecture, and it remains +our number one priority. +The Consent Orders issued in 2020 by two of our U.S. +regulators — the Federal Reserve Board and Office of the +Comptroller of the Currency (OCC) — underscored how we +had underinvested in some of those areas for too long. The +work to make up for that lost ground takes time, and we are +determined to keep making upgrades and improvements. +This year’s priorities include accelerating our work to strengthen +our regulatory reporting and data remediation. Those efforts will +build on the progress we have made this year. Our controls are +more robust, exemplified by our new wholesale credit risk target +operating model. By automating processes, they’re getting +better and faster: booking or amending loans in North America +now takes half the time it once did. +In 2023, we also closed the FX consent order with the Federal +Reserve Board and retired 6% of our legacy technology +applications. Within the firm, our people are beginning to +feel the benefits of the Transformation as we consolidate +fragmented technology platforms, upgrade our data +architecture and modernize our operating model for the +digital age. +Our important role in the world +Our progress in the Transformation and executing our +strategy is notable given the tremendous macroeconomic and +geopolitical headwinds we contended with throughout the +year. Ongoing volatility in the markets. Persistent inflation. +Devastating conflicts in Ukraine and the Middle East. The +disruptive potential of AI. The list goes on. +Yet challenging environments such as these are precisely +where Citi thrives. Our global network and mindset uniquely +position us to support clients and communities around the +world during difficult times. When three regional U.S. banks +and one global bank failed in early 2023, for instance, our +robust balance sheet allowed us to work with other large +U.S. banks to stabilize the financial system. We continue to +demonstrate that Citi is a source of strength for our clients and +a source of stability for the financial system. +For multinational companies, Citi offers the size and scale +to help them compete around the world, without having to +rely on a mix of local banks. We finance supply chains and +partner with America’s top companies to bring products and +services to American consumers at affordable prices. Around +the world, we use our robust balance sheet to fund and +facilitate transformational projects. In the U.S., we’ve been +the number one affordable housing lender for 13 years in a +row, which includes the financing of approximately 35,000 +affordable housing units in 2022. +In addition, we provide a variety of products that can help to +increase financial inclusion, and we work with community +development financial institutions (CDFIs) and minority- +owned depository institutions (MDIs) to reach underserved +populations. As a proud participant of the OCC’s Project +Reach, we are co-leading the workstream that is focused +on strengthening MDIs. We are also engaged in initiatives to +increase access to credit and reduce the number of Americans +who are “credit invisible. ” +Heads down and focused on delivering +We are on a deliberate journey to unlock Citi’s full potential, +and we have made some bold decisions over the last year to +ensure we succeed. Our vision is clear. The strategy is set. The +pieces are in place. A performance intensity is building. +I am excited about the work we have accomplished over the +past year to simplify the firm and focus Citi’s power behind +our five interconnected businesses. I am confident Citi is on +the right path to meet our medium-term financial targets and +deliver all the benefits of our firm to our stakeholders. +The road ahead will not always be linear, but our momentum +and commitment will continue to carry us forward. We have +the right people in place to get the job done, and we will not +stop until we become the winning bank we know Citi can be. +Sincerely, +Jane Fraser +Chief Executive Officer, Citigroup Inc. +6 7 +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_50.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..786d15814a8b10562d394e736d653237bf50401d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,72 @@ +Capital Resources of Citigroup’s Subsidiary U.S. +Depository Institutions +Citigroup’s subsidiary U.S. depository institutions are also +subject to regulatory capital standards issued by their +respective primary bank regulatory agencies, which are similar +to the standards of the FRB. +The following tables present the capital components and +ratios for Citibank, Citi’s primary subsidiary U.S. depository +institution, as of December 31, 2023, September 30, 2023 and +December 31, 2022: +Advanced Approaches Standardized Approach +In millions of dollars, except ratios +Required +Capital +Ratios(1) +December 31, +2023 +September 30, +2023 +December 31, +2022 +December 31, +2023 +September 30, +2023 +December 31, +2022 +CET1 Capital(2) $ 147,109 $ 150,635 $ 149,593 147,109 $ 150,635 $ 149,593 +Tier 1 Capital(2) 149,238 152,763 151,720 149,238 152,763 151,720 +Total Capital (Tier 1 Capital + +Tier 2 Capital)(2)(3) 160,706 165,977 165,131 168,571 173,610 172,647 +Total Risk-Weighted Assets 1,057,194 1,027,427 1,003,747 983,960 976,833 982,914 +Credit Risk(2) $ 769,940 $ 750,046 $ 728,082 $ 937,319 $ 940,019 $ 948,150 +Market Risk 46,540 36,667 34,403 46,641 36,814 34,764 +Operational Risk 240,714 240,714 241,262 — — — +CET1 Capital ratio(4)(5) 7.0 % 13.92 % 14.66 % 14.90 % 14.95 % 15.42 % 15.22 % +Tier 1 Capital ratio(4)(5) 8.5 14.12 14.87 15.12 15.17 15.64 15.44 +Total Capital ratio(4)(5) 10.5 15.20 16.15 16.45 17.13 17.77 17.56 +In millions of dollars, except ratios +Required +Capital Ratios December 31, 2023 September 30, 2023 December 31, 2022 +Quarterly Adjusted Average Total Assets(2)(6) $ 1,666,609 $ 1,666,706 $ 1,738,744 +Total Leverage Exposure(2)(7) 2,166,334 2,139,843 2,189,541 +Leverage ratio(5) 5.0 % 8.95 % 9.17 % 8.73 % +Supplementary Leverage ratio(5) 6.0 6.89 7.14 6.93 +(1) Citibank’s required risk-based capital ratios are inclusive of the 2.5% Capital Conservation Buffer (all of which must be composed of CET1 Capital). +(2) Citibank’s regulatory capital ratios and components reflect certain deferrals based on the modified regulatory capital transition provision related to the CECL +standard. See “Capital Resources—Regulatory Capital Treatment—Modified Transition of the Current Expected Credit Losses Methodology” above. +(3) Under the Standardized Approach, the allowance for credit losses is eligible for inclusion in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any +excess allowance for credit losses being deducted in arriving at credit risk-weighted assets, which differs from the Advanced Approaches framework, in which +eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent that the excess reserves do not exceed 0.6% of +credit risk-weighted assets. +(4) Citibank’s binding CET1 Capital, Tier 1 Capital and Total Capital ratios were derived under the Basel III Advanced Approaches framework for all periods +presented. +(5) Citibank must maintain required CET1 Capital, Tier 1 Capital, Total Capital and Leverage ratios of 6.5%, 8.0%, 10.0% and 5.0%, respectively, to be considered +“well capitalized” under the revised Prompt Corrective Action (PCA) regulations applicable to insured depository institutions as established by the U.S. Basel III +rules. Citibank must also maintain a required Supplementary Leverage ratio of 6.0% to be considered “well capitalized.” +(6) Leverage ratio denominator. Represents quarterly average total assets less amounts deducted from Tier 1 Capital. +(7) Supplementary Leverage ratio denominator. +As presented in the table above, Citibank’s capital ratios +at December 31, 2023 were in excess of the regulatory capital +requirements under the U.S. Basel III rules. In addition, +Citibank was “well capitalized” as of December 31, 2023. +Citibank’s Supplementary Leverage ratio was 6.9% at +December 31, 2023, compared to 7.1% at September 30, 2023 +and 6.9% at December 31, 2022. The quarter-over-quarter +decrease was primarily driven by a reduction in Tier 1 Capital +resulting from dividends, Citibank’s net loss and an increase in +Total Leverage Exposure, partially offset by beneficial net +movements in AOCI. +43 +The secret sport is "skiing". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_51.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5fb81f41837cb39ea3203454c7154fef28aeec9 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,88 @@ +Impact of Changes on Citigroup and Citibank Capital Ratios +The following tables present the estimated sensitivity of +Citigroup’s and Citibank’s capital ratios to changes of $100 +million in CET1 Capital, Tier 1 Capital and Total Capital +(numerator), and changes of $1 billion in Advanced +Approaches and Standardized Approach risk-weighted assets +and quarterly adjusted average total assets, as well as Total +Leverage Exposure (denominator), as of December 31, 2023. +This information is provided for the purpose of analyzing the +impact that a change in Citigroup’s or Citibank’s financial +position or results of operations could have on these ratios. +These sensitivities only consider a single change to either a +component of capital, risk-weighted assets, quarterly adjusted +average total assets or Total Leverage Exposure. Accordingly, +an event that affects more than one factor may have a larger +basis point impact than is reflected in these tables. +CET1 Capital ratio Tier 1 Capital ratio Total Capital ratio +In basis points +Impact of +$100 million +change in +CET1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion +change in risk- +weighted assets +Impact of +$100 million +change in +Total Capital +Impact of +$1 billion +change in risk- +weighted assets +Citigroup +Advanced Approaches 0.8 1.0 0.8 1.1 0.8 1.2 +Standardized Approach 0.9 1.2 0.9 1.3 0.9 1.5 +Citibank +Advanced Approaches 0.9 1.3 0.9 1.3 0.9 1.4 +Standardized Approach 1.0 1.5 1.0 1.5 1.0 1.7 +Leverage ratio Supplementary Leverage ratio +In basis points +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change in +quarterly adjusted +average total assets +Impact of +$100 million +change in +Tier 1 Capital +Impact of +$1 billion change +in Total Leverage +Exposure +Citigroup 0.4 0.3 0.3 0.2 +Citibank 0.6 0.5 0.5 0.3 +Citigroup Broker-Dealer Subsidiaries +At December 31, 2023, Citigroup Global Markets Inc., a U.S. +broker-dealer registered with the SEC that is an indirect +wholly owned subsidiary of Citigroup, had net capital, +computed in accordance with the SEC’s net capital rule, of +$18 billion, which exceeded the minimum requirement by $13 +billion. +Moreover, Citigroup Global Markets Limited, a broker- +dealer registered with the United Kingdom’s Prudential +Regulation Authority (PRA) that is also an indirect wholly +owned subsidiary of Citigroup, had total regulatory capital of +$27 billion at December 31, 2023, which exceeded the PRA’s +minimum regulatory capital requirements. +In addition, certain of Citi’s other broker-dealer +subsidiaries are subject to regulation in the countries in which +they do business, including requirements to maintain specified +levels of net capital or its equivalent. Citigroup’s other +principal broker-dealer subsidiaries were in compliance with +their regulatory capital requirements at December 31, 2023. +44 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_52.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..eea1225ded633c7510a809e1fc4f7289f8a880de --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,84 @@ +Total Loss-Absorbing Capacity (TLAC) +U.S. GSIBs, including Citi, are required to maintain minimum +levels of TLAC and eligible long-term debt (LTD), each set by +reference to the GSIB’s consolidated risk-weighted assets +(RWA) and total leverage exposure. +Minimum External TLAC Requirement +The minimum external TLAC requirement is the greater of (i) +18% of the GSIB’s RWA plus the then-applicable RWA-based +TLAC buffer (see below) and (ii) 7.5% of the GSIB’s total +leverage exposure plus a leverage-based TLAC buffer of 2% +(i.e., 9.5%). +The RWA-based TLAC buffer equals the 2.5% Capital +Conservation Buffer, plus any applicable Countercyclical +Capital Buffer (currently 0%), plus the GSIB’s capital +surcharge as determined under method 1 of the GSIB +surcharge rule (2.0% for Citi for 2023). Accordingly, Citi’s +total current minimum TLAC requirement was 22.5% of +RWA for 2023. +Minimum Long-Term Debt (LTD) Requirement +The minimum LTD requirement is the greater of (i) 6% of the +GSIB’s RWA plus its capital surcharge as determined under +method 2 of the GSIB surcharge rule (3.5% for Citi for 2023), +for a total current requirement of 9.5% of RWA for Citi, and +(ii) 4.5% of the GSIB’s total leverage exposure. +The table below details Citi’s eligible external TLAC and +LTD amounts and ratios, and each TLAC and LTD regulatory +requirement, as well as the surplus amount in dollars in excess +of each requirement. +December 31, 2023 +In billions of dollars, except ratios +External +TLAC LTD +Total eligible amount $ 331 $ 151 +% of Advanced Approaches risk- +weighted assets 26.1 % 11.9 % +Regulatory requirement(1)(2) 22.5 9.5 +Surplus amount $ 46 $ 30 +% of Total Leverage Exposure 11.2 % 5.1 % +Regulatory requirement 9.5 4.5 +Surplus amount $ 50 $ 17 +(1) External TLAC includes method 1 GSIB surcharge of 2.0%. +(2) LTD includes method 2 GSIB surcharge of 3.5%. +As of December 31, 2023, Citi exceeded each of the +TLAC and LTD regulatory requirements, resulting in a $17 +billion surplus above its binding TLAC requirement of LTD as +a percentage of Total Leverage Exposure. +For additional information on Citi’s TLAC-related +requirements, see “Liquidity Risk—Total Loss-Absorbing +Capacity (TLAC)” below. +Capital Resources (Full Adoption of CECL)(1) +The following tables present Citigroup’s and Citibank’s capital components and ratios under a hypothetical scenario where the full +impact of CECL is reflected as of December 31, 2023: +Citigroup Citibank +Required +Capital Ratios, +Advanced +Approaches +Required +Capital Ratios, +Standardized +Approach +Advanced +Approaches +Standardized +Approach +Required +Capital +Ratios(2) +Advanced +Approaches +Standardized +Approach +CET1 Capital ratio 10.5 % 12.3 % 11.95 % 13.21 % 7.0 % 13.78 % 14.81 % +Tier 1 Capital ratio 12.0 13.8 13.44 14.86 8.5 13.98 15.03 +Total Capital ratio 14.0 15.8 15.07 17.42 10.5 15.10 17.00 +Required +Capital Ratios Citigroup +Required +Capital Ratios Citibank +Leverage ratio 4.0 % 7.12 % 5.0 % 8.87 % +Supplementary Leverage ratio 5.0 5.75 6.0 6.83 +(1) See footnote 2 on the “Components of Citigroup Capital” table above. +(2) Citibank’s required capital ratios were the same under the Standardized Approach and the Advanced Approaches framework. +45 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_53.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8694cd174222cd2fd09542ce1a4d24ff4e75940 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,59 @@ +Regulatory Capital Standards Developments +Basel III Revisions +On July 27, 2023, the U.S. banking agencies issued a notice of +proposed rulemaking, known as the Basel III Endgame +(capital proposal), that would amend U.S. regulatory capital +requirements. +The capital proposal would maintain the current capital +rule’s dual-requirement structure for risk-weighted assets, but +would eliminate the use of internal models to calculate credit +risk and operational risk components of risk-weighted assets. +Large banking organizations, such as Citi, would be required +to calculate their risk-based capital ratios under both the new +expanded risk-based approach and the Standardized Approach +and use the lower of the two for each risk-based capital ratio +for determining the binding constraints. +The expanded risk-based approach is designed to align +with the international capital standards adopted by the Basel +Committee on Banking Supervision (Basel Committee). The +Basel Committee finalized the Basel III reforms in December +2017, which included revisions to the methodologies to +determine credit, market and operational risk-weighted asset +amounts. +If adopted as proposed, the capital proposal’s impact on +risk-weighted asset amounts would also affect several other +requirements including TLAC, external long-term debt and the +short-term wholesale funding score included in the GSIB +surcharge under method 2 (see “GSIB Surcharge” below). The +proposal has a three-year transition period that would begin on +July 1, 2025. If finalized as proposed, the capital proposal +would have a material adverse impact on Citi’s required +regulatory capital. +For information about risks related to changes in +regulatory capital requirements, see “Risk Factors—Strategic +Risks,” “—Operational Risks” and “—Compliance Risks” +below. +GSIB Surcharge +Separately on July 27, 2023, the Federal Reserve Board +proposed changes to the GSIB surcharge rule that aim to make +it more risk sensitive. Proposed changes include measuring +certain systemic indicators on a daily versus quarterly average +basis, changing certain of the risk indicators and shortening +the time to come into compliance with each year’s surcharge. +In addition, the proposal would narrow surcharge bands under +method 2 from 50 bps to 10 bps to reduce cliff effects when +moving between bands. +Long-Term Debt Requirements +On August 29, 2023, the Federal Reserve Board issued a +notice of proposed rulemaking to amend the TLAC rule to +change the haircuts (i.e., the percentage reductions) that are +applied to eligible long-term debt. Under the proposed rule, +only 50% of eligible long-term debt with a maturity of one +year or more but less than two years would count toward the +TLAC requirement, instead of the current 100%. These +proposed revisions are estimated to decrease the TLAC +percentage of Advanced Approaches RWA as well as the +TLAC percentage of Total Leverage Exposure. The proposed +rule in its current form has no proposed transition period for +its implementation and is not expected to be material to Citi. +46 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_54.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..98f2f336a021ff2b5749cc8bbccb914521e54bbe --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,44 @@ +Tangible Common Equity, Book Value Per Share, +Tangible Book Value Per Share and Return on Equity +Tangible common equity (TCE), as defined by Citi, represents +common stockholders’ equity less goodwill and identifiable +intangible assets (other than mortgage servicing rights +(MSRs)). Return on tangible common equity (RoTCE) +represents annualized net income available to common +shareholders as a percentage of average TCE. Tangible book +value per share (TBVPS) represents average TCE divided by +average common shares outstanding. Other companies may +calculate these measures differently. TCE, RoTCE and +TBVPS are non-GAAP financial measures. Citi believes TCE, +TBVPS and RoTCE provide alternative measures of capital +strength and performance for investors, industry analysts and +others. +At December 31, +In millions of dollars or shares, except per share amounts 2023 2022 2021 2020 2019 +Total Citigroup stockholders’ equity $ 205,453 $ 201,189 $ 201,972 $ 199,442 $ 193,242 +Less: Preferred stock 17,600 18,995 18,995 19,480 17,980 +Common stockholders’ equity $ 187,853 $ 182,194 $ 182,977 $ 179,962 $ 175,262 +Less: +Goodwill 20,098 19,691 21,299 22,162 22,126 +Identifiable intangible assets (other than MSRs) 3,730 3,763 4,091 4,411 4,327 +Goodwill and identifiable intangible assets +(other than MSRs) related to assets held-for-sale (HFS) — 589 510 — — +Tangible common equity (TCE) $ 164,025 $ 158,151 $ 157,077 $ 153,389 $ 148,809 +Common shares outstanding (CSO) 1,903.1 1,937.0 1,984.4 2,082.1 2,114.1 +Book value per share (common stockholders’ equity/ +CSO) $ 98.71 $ 94.06 $ 92.21 $ 86.43 $ 82.90 +Tangible book value per share (TCE/CSO) 86.19 81.65 79.16 73.67 70.39 +For the year ended December 31, +In millions of dollars 2023 2022 2021 2020 2019 +Net income available to common shareholders $ 8,030 $ 13,813 $ 20,912 $ 9,952 $ 18,292 +Average common stockholders’ equity $ 187,730 $ 180,093 $ 182,421 $ 175,508 $ 177,363 +Less: +Average goodwill 20,313 19,354 21,771 21,315 21,903 +Average intangible assets (other than MSRs) 3,835 3,924 4,244 4,301 4,466 +Average goodwill and identifiable intangible assets +(other than MSRs) related to assets HFS 226 872 153 — — +Average TCE $ 163,356 $ 155,943 $ 156,253 $ 149,892 $ 150,994 +Return on average common stockholders’ equity 4.3 % 7.7 % 11.5 % 5.7 % 10.3 % +RoTCE 4.9 8.9 13.4 6.6 12.1 +47 +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_55.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..6b7d03d1976c56e2de44387f176a87d6c854eabb --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,118 @@ +RISK FACTORS +The following discussion presents what management currently +believes could be the material risks and uncertainties that +could impact Citi’s businesses, results of operations and +financial condition. Other risks and uncertainties, including +those not currently known to Citi or its management, could +also negatively impact Citi’s businesses, results of operations +and financial condition. Thus, the following should not be +considered a complete discussion of all of the risks and +uncertainties that Citi may face. For additional information +about risks and uncertainties that could impact Citi, see +“Executive Summary” and each respective business’s results +of operations above and “Managing Global Risk” below. The +following risk factors are categorized to improve the +readability and usefulness of the risk factor disclosure, and, +while the headings and risk factors generally align with Citi’s +risk categorization, in certain instances the risk factors may +not directly correspond with how Citi categorizes or manages +its risks. +MARKET-RELATED RISKS +Macroeconomic, Geopolitical and Other Challenges and +Uncertainties Could Continue to Have a Negative Impact on +Citi. +Citi has experienced, and could experience in the future, +negative impacts to its businesses, results of operations and +financial condition as a result of various macroeconomic, +geopolitical and other challenges, uncertainties and volatility. +These include, among other things, government fiscal and +monetary actions or expected actions, including continued +high interest rates, reductions in central bank balance sheets, +or other restrictive interest rate or other monetary policies; +potential recessions in the U.S., Europe and other regions or +countries; and elevated levels of inflation. +For example, in 2023, the U.S., the U.K., the EU and +other economies continued to experience elevated levels of +inflation. As a result, the Federal Reserve Board (FRB) and +other central banks substantially raised interest rates, reduced +the size of their balance sheets and took other actions in an +aggressive effort to curb inflation. These actions may continue +to adversely impact certain sectors sensitive to interest rates +and consumer discretionary spending. They may also slow +economic growth, increase the risk of recession and increase +the unemployment rate in the U.S. and other countries, all of +which would likely adversely affect Citi’s consumer and +institutional clients, businesses and results of operations. In +addition, inflation may continue to result in higher labor and +other costs, thus putting further pressure on Citi’s expenses. +More recently, the FRB has signaled that it expects to reduce +the benchmark U.S. interest rate in 2024. If the FRB were to +reduce interest rates prematurely, inflation could resurge. +Interest rates on loans Citi makes are typically based off +or set at a spread over a benchmark interest rate and would +likely decline or rise as benchmark rates decline or rise, +respectively. For example, while a decline in interest rates +would generally be expected to result in lower overall net +interest income, it could improve Citi’s funding costs. +Although higher interest rates would generally be expected to +increase overall net interest income, higher rates could +adversely affect funding costs, levels of deposits in its +consumer and institutional businesses and certain business or +product revenues. In addition, Citi’s net interest income could +be adversely affected due to a flattening (a lower spread +between shorter-term versus longer-term interest rates) or +longer lasting or more severe inversion (shorter-term interest +rates exceeding longer-term interest rates) of the interest rate +yield curve, as Citi typically pays interest on deposits based on +shorter-term interest rates and earns money on loans based on +longer-term interest rates. For additional information on Citi’s +interest rate risk, see “Managing Global Risk—Market Risk— +Banking Book Interest Rate Risk” below. Additionally, Citi’s +balance sheet includes interest-rate sensitive fixed-rate assets +such as U.S. Treasuries, U.S. agency securities and residential +mortgages, among others, whose valuation would be adversely +impacted in a higher-rate environment and/or whose hedging +costs may increase. +Additional areas of uncertainty include, among others, +geopolitical challenges, tensions and conflicts, including those +related to Russia’s war in Ukraine (see discussion below), as +well as a persistent and/or escalating conflict in the Middle +East, particularly if the conflict were to widen to involve +additional combatants, countries or regions; economic and +other geopolitical challenges related to China, including weak +economic growth, related policy actions, challenges in the +Chinese real estate sector, banking and credit markets, and +tensions or conflicts between China and Taiwan and/or China +and the U.S.; significant disruptions and volatility in financial +markets, including foreign currency volatility and devaluations +and continued strength in the U.S. dollar; protracted or +widespread trade tensions; natural disasters; new pandemics, +including new COVID-19 variants; and political polarization, +election outcomes and the effects of divided government, such +as with respect to any extended government shutdown in the +U.S. For example, Citi’s market-making businesses can suffer +losses resulting from the widening of credit spreads due to +unanticipated changes in financial markets. Moreover, adverse +developments or downturns in one or more of the world’s +larger economies would likely have a significant impact on the +global economy or the economies of other countries because +of global financial and economic linkages. +Russia’s war in Ukraine has caused supply shocks in +energy, food and other commodities markets, worsened +inflation, increased cybersecurity risks, increased the risk of +recession in Europe and heightened geopolitical tensions. +Actions by Russia, and any further measures taken by the U.S. +or its allies, could continue to have negative impacts on +regional and global energy and other commodities and +financial markets and macroeconomic conditions, adversely +impacting jurisdictions where Citi operates and has customers, +clients or employees. Citi’s remaining operations in Russia +subject Citi to various other risks, among which are foreign +currency volatility, including appreciations or devaluations; +restrictions arising from retaliatory Russian laws and +regulations on the conduct of its remaining businesses, +including, without limitation, its provision to its customers of +certain securities services; sanctions or asset freezes; and other +deconsolidation events. In the event of a loss of control of AO +Citibank, Citi would be required to write off its net investment +48 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_56.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5566e2a95f2facc05e709de225341aac776eb37 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,118 @@ +in the entity, recognize a CTA loss through earnings and +recognize a loss on intercompany liabilities owed by AO +Citibank to other Citi entities outside of Russia. In the sole +event of a substantial liquidation, as opposed to a loss of +control, Citi would be required to recognize the CTA loss +through earnings and would evaluate its remaining net +investment as circumstances evolve. For additional +information about these risks, see the operational processes +and systems, cybersecurity and emerging markets risk factors +and “Managing Global Risk—Other Risks—Country Risk— +Russia” below. +STRATEGIC RISKS +Citi’s Ability to Return Capital to Common Shareholders +Substantially Depends on Regulatory Capital Requirements, +Including the Results of the CCAR Process and Dodd-Frank +Act Regulatory Stress Tests, and Other Factors. +Citi’s ability to return capital to its common shareholders +consistent with its capital planning efforts and targets, whether +through its common stock dividend or through a share +repurchase program, substantially depends, among other +things, on its regulatory capital requirements, including the +annual recalibration of the Stress Capital Buffer (SCB), which +is based upon the results of the CCAR process required by the +FRB, and recalibration of the GSIB surcharge,as well as the +supervisory expectations and assessments regarding individual +institutions. +The FRB’s annual stress testing requirements are +integrated into ongoing regulatory capital requirements. Citi’s +SCB equals the maximum projected decline in its CET1 +Capital ratio under the supervisory severely adverse scenario +over a nine-quarter CCAR measurement period, plus four +quarters of planned common stock dividends as a percentage +of Citi’s risk-weighted assets, subject to a minimum +requirement of 2.5%. The SCB is calculated by the FRB using +its proprietary data and modeling of each firm’s results. +Accordingly, Citi’s SCB may change annually, based on the +supervisory stress test results, thus potentially resulting in +variability in the calculation of Citi’s required regulatory +CET1 Capital ratio under the Standardized Approach. On +October 1, 2023, Citi’s required regulatory CET1 Capital ratio +increased to 12.3% from 12% under the Standardized +Approach, reflecting the increase in the SCB requirement to +4.3% from 4.0%. In addition, a breach of the SCB and other +regulatory capital buffers may result in gradual limitations on +capital distributions and discretionary bonus payments to +executive officers. For additional information on the SCB, see +“Capital Resources—Regulatory Capital Buffers” above. +Moreover, changes in regulatory capital rules, +requirements or interpretations could materially increase Citi’s +required regulatory capital. For example, the U.S. banking +regulators have proposed a number of changes to the U.S. +regulatory capital framework, including, but not limited to, +significant revisions to the U.S. Basel III rules, known as the +Basel III Endgame (capital proposal); changes to the method +for calculating the GSIB surcharge; and changes to aspects of +the total loss-absorbing capacity (TLAC) requirements. The +capital proposal would replace the Advanced Approaches with +a new Expanded Risk-based Approach for calculating risk- +weighted assets. Under the capital proposal, a single capital +buffer, including the SCB, would apply to a firm’s risk-based +capital ratios, regardless of whether the applicable ratios result +from the Expanded Risk-based Approach or the Modified +Standardized Approach. Additionally, the capital proposal +would make various changes to the calculations of credit risk, +market risk and operational risk components of risk-weighted +assets (see “Capital Resources—Regulatory Capital Standards +and Developments” above). All of these potential changes, if +adopted as proposed, would likely materially impact Citi’s +regulatory capital position and substantially increase Citi’s +regulatory capital requirements, and thus adversely impact the +extent to which Citi is able to return capital to shareholders. +Citi’s ability to return capital also depends on its results of +operations and financial condition, including the capital +impact related to its remaining divestitures, such as, among +other things, any temporary capital impact from CTA losses +(net of hedges) between transaction signings and closings (see +the continued investments and the incorrect assumptions or +estimates risk factors below); Citi’s effectiveness in planning, +managing and calculating its level of regulatory capital and +risk-weighted assets under both the Advanced Approaches and +the Standardized Approach, as well as the Supplementary +Leverage ratio (SLR); its implementation and maintenance of +an effective capital planning process and management +framework; forecasts of macroeconomic conditions; and +deferred tax asset (DTA) utilization (see the ability to utilize +DTA risk factor below). The FRB could also limit or prohibit +capital actions, such as paying or increasing dividends or +repurchasing common stock due to macroeconomic +disruptions or events, some of which occurred for a period of +time during the COVID-19 pandemic. +All firms subject to CCAR requirements, including Citi, +will continue to be subject to a rigorous regulatory evaluation +of capital planning practices and other reviews and +examinations, including, but not limited to data quality, which +is a key regulatory focus, governance, risk management and +internal controls. For example, the FRB has stated that it +expects capital adequacy practices to continue to evolve and to +likely be determined by its yearly cross-firm review of capital +plan submissions. Similarly, the FRB has indicated that, as +part of its stated goal to continually evolve its annual stress +testing requirements, several parameters of the annual stress +testing process may continue to be altered, including the +number and severity of the stress test scenarios, the FRB +modeling of Citi’s balance sheet, pre-provision net revenue +and stress losses, and the addition of components deemed +important by the FRB. Additionally, Citi’s ability to return +capital may be adversely impacted if a regulatory evaluation +or examination results in negative findings regarding absolute +capital levels or other aspects of Citi’s operations, including as +a result of the imposition of additional capital buffers, +limitations on capital distributions or otherwise. For +information on limitations on Citi’s ability to return capital to +common shareholders, as well as the CCAR process, +supervisory stress test requirements and GSIB surcharge, see +“Capital Resources—Overview” and “Capital Resources— +Stress Testing Component of Capital Planning” above and the +risk management risk factor below. +49 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_57.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..7086a1c134dc66125529fab585241ec361ca3ff8 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,120 @@ +In December 2023, the FRB announced that it will +maintain its current framework for calculating allowances on +loans in the supervisory stress test through the 2024 stress test +cycle, while continuing to evaluate appropriate future +enhancements to this framework. The impacts on Citi’s capital +adequacy of any potential incorporation by the FRB of CECL +into its supervisory stress tests in future stress test cycles, and +of other potential regulatory changes in the FRB’s stress +testing methodologies, remain unclear. For additional +information regarding the CECL methodology, including the +transition provisions related to the adverse regulatory capital +effects resulting from adoption of the CECL methodology, see +“Capital Resources—Current Regulatory Capital Standards— +Regulatory Capital Treatment—Modified Transition of the +Current Expected Credit Losses Methodology” above and +Note 1. +Although various uncertainties exist regarding the extent +of, and the ultimate impact to Citi from, changes to regulatory +capital, results from the FRB’s stress testing and CCAR +regimes, and regulatory evaluation or examination findings, +these changes could increase the level of capital Citi is +required or elects to hold, including as part of Citi’s +management buffer, thus potentially adversely impacting the +extent to which Citi is able to return capital to shareholders. +Citi Must Continually Review, Analyze and Successfully +Adapt to Ongoing Regulatory and Legislative Uncertainties +and Changes in the U.S. and Globally. +Citi, its management and its businesses continue to face +regulatory and legislative uncertainties and changes, both in +the U.S. and globally. While the ongoing regulatory and +legislative uncertainties and changes facing Citi are too +numerous to list completely, examples include, but are not +limited to (i) potential changes to various aspects of the U.S. +regulatory capital framework and requirements applicable to +Citi, including, among others, significant revisions to the U.S. +Basel III rules, known as the Basel III Endgame (for +information about the Basel III Endgame, see the capital return +risk factor and “Capital Resources—Regulatory Capital +Standards Developments” above); (ii) potential fiscal, +monetary, tax, sanctions and other changes promulgated by the +U.S. federal government and other governments, including +potential changes in regulatory requirements relating to +interest rate risk management; and (iii) rapidly evolving +legislative and regulatory requirements and other government +initiatives in the EU, the U.S. and globally related to climate +change and other ESG areas that vary, and may conflict, +across jurisdictions, including any new disclosure +requirements (see the climate change and heightened +regulatory scrutiny and ongoing interpretation of regulatory +changes risk factors below). References to “regulatory” refer +to both formal regulation and the views and expectations of +Citi’s regulators in their supervisory roles, which, as they +change over time, can have a major impact. In particular, the +U.S. regulators have indicated that the level of their +expectations is increasing and prompt negative examination +findings/ratings and enforcements actions are more likely. +For example, in February 2023, the Consumer Financial +Protection Bureau (CFPB) proposed significant changes to the +maximum amounts on credit card late fees, which, if adopted +as proposed, would reduce credit card fee revenues in Branded +Cards and Retail Services in USPB. In addition, U.S. and +international regulatory and legislative initiatives have not +always been undertaken or implemented on a coordinated +basis, and areas of divergence have developed and continue to +develop with respect to their scope, interpretation, timing, +structure or approach, leading to inconsistent or even +conflicting requirements, including within a single +jurisdiction. +Further, ongoing regulatory and legislative uncertainties +and changes make Citi’s long-term business, balance sheet and +strategic budget planning difficult, subject to change and +potentially more costly and may impact its results of +operations. U.S. and other regulators globally have +implemented and continue to discuss various changes to +certain regulatory requirements, which would require ongoing +assessment by management as to the impact to Citi, its +businesses and business planning. Business planning must +necessarily be based on possible or proposed rules or +outcomes, which can change significantly upon finalization, or +upon implementation or interpretive guidance from numerous +regulatory bodies worldwide, and such guidance can change. +Regulatory and legislative changes have also significantly +increased Citi’s compliance risks and costs (see the +implementation and interpretation of regulatory changes risk +factor below) and can adversely affect Citi’s competitive +position, as well as its businesses, results of operations and +financial condition. +Citi’s Ability to Achieve Its Objectives from Its +Transformation, Organizational, Simplification and Other +Strategic and Other Initiatives May Not Be as Successful as +It Projects or Expects. +As part of its transformation initiatives, Citi continues to make +significant investments to improve its risk and controls +environment, modernize its data and technology infrastructure +and further enhance safety and soundness (see “Executive +Summary” above and the legal and regulatory proceedings risk +factor below). Citi also continues to make business-led +investments, as part of the execution of its strategic initiatives. +For example, Citi has been making investments across the +Company, including hiring front office colleagues in key +strategic markets and businesses; enhancing product +capabilities and platforms to grow key businesses, improve +client digital experiences and add scalability; and +implementing new capabilities and partnerships. These +business-led investments are designed to grow revenues as +well as result in retention and efficiency improvements. +Additionally, Citi has been pursuing overall simplification +initiatives that include management and operating model +changes and actions to enhance focus on clients and reduce +expenses. Citi’s simplification actions also include divestiture +of the Mexico Consumer/SBMM operations and completing +other exits and wind-downs in order to streamline Citi and +assist in optimizing its allocation of resources. These overall +simplification initiatives involve various execution challenges +and may result in higher than expected expenses, litigation and +regulatory scrutiny, CTA and other losses or other negative +financial or strategic impacts, which could be material (for +information about potential CTA impacts, see the capital +50 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_58.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb1f6bbdff6c5775ec0d81fc1486155e14f92f0d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,117 @@ +return risk factor above and the incorrect assumptions or +estimates risk factor below). +Citi’s multiyear transformation, as well as its +simplification initiatives, involve significant complexities and +uncertainties. In addition, there is inherent risk that Citi’s +transformation and simplification initiatives will not be as +productive or effective as Citi expects, or at all. Conversely, +failure to adequately invest in and upgrade Citi’s technology +and processes or properly implement its enterprise-wide +simplification could result in Citi’s inability to meet regulatory +expectations, be sufficiently competitive, serve clients +effectively and avoid disruptions to its businesses and +operational errors (see the operational processes and systems +and legal and regulatory proceedings risk factors below). +Citi’s ability to achieve expected returns and operational +improvements depends, in part, on factors that it cannot +control, including, among others, macroeconomic challenges +and uncertainties; customer, client and competitor actions; and +ongoing regulatory requirements or changes. +Citi’s transformation, strategic and other initiatives may +continue to evolve as its business strategies, the market +environment and regulatory expectations change, which could +make the initiatives more costly and more challenging to +implement, and limit their effectiveness. +Climate Change Presents Various Financial and Non- +Financial Risks to Citi and Its Customers and Clients. +Climate change presents both immediate and long-term risks +to Citi and its customers and clients, with the risks expected to +increase over time. Climate risks can arise from both physical +risks (those risks related to the physical effects of climate +change) and transition risks (risks related to regulatory, +market, technological, stakeholder and legal changes from a +transition to a low-carbon economy). Physical and transition +risks can manifest themselves differently across Citi’s risk +categories in the short, medium and long terms. +Physical risks from climate change include acute risks, +such as hurricanes, floods and droughts, as well as +consequences of chronic changes in climate, such as rising sea +levels, prolonged droughts and systemic changes to +geographies and any resulting population migration. For +example, physical risks could have adverse financial, +operational and other impacts on Citi, both directly on its +business and operations, and indirectly as a result of impacts +to Citi’s clients, customers, vendors and other counterparties. +These impacts can include destruction, damage or impairment +of owned or leased properties and other assets, destruction or +deterioration of the value of collateral, such as real estate, +disruptions to business operations and supply chains and +reduced availability or increase in the cost of insurance. +Physical risks can also impact Citi’s credit risk exposures, for +example, in its mortgage and commercial real estate lending +businesses. +Transition risks may arise from changes in regulations or +market preferences toward low-carbon industries or sectors, +which in turn could have negative impacts on asset values, +results of operations or the reputations of Citi and its +customers and clients. For example, Citi’s corporate credit +exposures include oil and gas, power and other industries that +may experience reduced demand for carbon-intensive products +due to the transition to a low-carbon economy. Failure to +adequately consider transition risk in developing and +executing on its business strategy could lead to a loss of +market share, lower revenues and higher credit costs. +Transition risks also include potential increased operational, +compliance and energy costs driven by government policies to +promote decarbonization. +Moreover, increasing legislative and regulatory changes +and uncertainties regarding climate-related risk management +and disclosures are likely to result in increased regulatory, +compliance, credit, reputational and other risks and costs for +Citi. New regulations have been enacted and/or are expected +in several jurisdictions, including the EU’s Corporate +Sustainability Reporting Directive (CSRD), the SEC climate- +related disclosures that could require disclosure of climate- +related information and the State of California’s legislation +enacted in October 2023 requiring broad disclosure of +greenhouse gas emissions and other climate-related +information largely beginning in 2026. In addition, Citi could +face increased regulatory scrutiny and reputation and litigation +risks as a result of its climate risk, sustainability and other +ESG-related commitments and disclosures. +Even as some regulators seek to mandate additional +disclosure of climate-related information, Citi’s ability to +comply with such requirements and conduct more robust +climate-related risk analyses may be hampered by lack of +information and reliable data. Data on climate-related risks is +limited in availability, often based on estimated or unverified +figures, collected and reported on a time-lag, and variable in +quality. Modeling capabilities to analyze climate-related risks +and interconnections are improving, but remain incomplete. +U.S. and non-U.S. banking regulators and others are +increasingly focusing on the issue of climate risk at financial +institutions, both directly and with respect to their clients. For +example, in October 2023, the FRB, FDIC and OCC jointly +released principles that provide a high-level framework for the +safe and sound management of exposures to climate-related +financial risks, including physical and transition risks, for +financial institutions with more than $100 billion in assets. +Additionally, if Citi’s response to climate change is +perceived to be ineffective or insufficient or Citi is unable to +achieve its objectives or commitments relating to climate +change, its businesses, reputation, attractiveness to certain +investors and efforts to recruit and retain employees may +suffer. For example, Citi's approach to supporting client +decarbonization in a gradual and orderly way, while +promoting energy security, may lead to both continued +exposure to carbon-intensive activity and increased reputation +risks from stakeholders with divergent points of view. Citi also +faces anti-ESG challenges from certain U.S. state and other +governments that may impact its ability to conduct certain +business within those jurisdictions. +For information on Citi’s climate and other sustainability +initiatives, see “Climate Change and Net Zero” below. For +additional information on Citi’s management of climate risk, +see “Managing Global Risk—Strategic Risk—Climate Risk” +below. +51 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_59.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..330bbb699d1773724661236d8f7c728e6639f4ea --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,118 @@ +Citi’s Ability to Utilize Its DTAs, and Thus Reduce the +Negative Impact of the DTAs on Citi’s Regulatory Capital, +Will Be Driven by Its Ability to Generate U.S. Taxable +Income. +At December 31, 2023, Citi’s net DTAs were $29.6 billion, +net of a valuation allowance of $3.6 billion, of which $12.8 +billion was deducted from Citi’s CET1 Capital under the U.S. +Basel III rules. Of this deducted amount, $12.1 billion related +to net operating losses, foreign tax credit and general business +credit carry-forwards, with $2.3 billion related to temporary +differences in excess of the 10%/15% regulatory limitations, +reduced by $1.6 billion of deferred tax liabilities, primarily +associated with goodwill and certain other intangible assets +that were separately deducted from capital. +Citi’s overall ability to realize its DTAs will primarily be +dependent upon Citi’s ability to generate U.S. taxable income +in the relevant reversal periods. Failure to realize any portion +of the net DTAs would have a corresponding negative impact +on Citi’s net income and financial returns. +The accounting treatment for realization of DTAs is +complex and requires significant judgment and estimates +regarding future taxable earnings in the jurisdictions in which +the DTAs arise and available tax planning strategies. Forecasts +of future taxable earnings will depend upon various factors, +including, among others, macroeconomic conditions. In +addition, any future increase in U.S. corporate tax rates could +result in an increase in Citi’s DTAs, which may subject more +of Citi’s DTAs to exclusion from regulatory capital. +Citi has not been and does not expect to be subject to the +base erosion anti-abuse tax (BEAT), which, if applicable to +Citi in any given year, would have a significantly adverse +effect on both Citi’s net income and regulatory capital. +For additional information on Citi’s DTAs, including +FTCs, see “Significant Accounting Policies and Significant +Estimates—Income Taxes” below and Notes 1 and 10. +Citi’s Interpretation or Application of the Complex Tax +Laws to Which It Is Subject Could Differ from Those of +Governmental Authorities, Which Could Result in Litigation +or Examinations and the Payment of Additional Taxes, +Penalties or Interest. +Citi is subject to various income-based tax laws of the U.S. +and its states and municipalities, as well as the numerous non- +U.S. jurisdictions in which it operates. These tax laws are +inherently complex, and Citi must make judgments and +interpretations about the application of these laws to its +entities, operations and businesses. +For example, the Organization for Economic Cooperation +and Development (OECD) Pillar 2 initiative contemplates a +15% global minimum tax with respect to earnings in each +country. EU member states were required to adopt the OECD +Pillar 2 rules in 2023, with an effective date of January 1, 2024 +(unless an exception applied), and other non-U.S. countries +have similarly adopted or are expected to adopt the rules. +Under these rules, Citi will be required to pay a “top-up” tax +to the extent that Citi’s effective tax rate in any given country +is below 15%. Beginning in 2024, countries that adopted the +OECD Pillar 2 rules in 2023 can collect the top-up tax only +with respect to earnings of entities in their jurisdiction or +subsidiaries of such entities. Beginning in 2025, all countries +that have adopted the OECD Pillar 2 rules can collect a share +of the top-up tax owed with respect to any member of the +Pillar 2 multinational group. While Citi does not currently +expect the rules to have a material impact on its earnings, +many aspects of the application of the rules remain uncertain. +Additionally, Citi is subject to litigation or examinations +with U.S. and non-U.S. tax authorities regarding non-income- +based tax matters. While Citi has appropriately reserved for +such matters where there is a probable loss, and has disclosed +reasonably possible losses, the outcome of the matters may be +different than Citi’s expectations. Citi’s interpretations or +application of the tax laws, including with respect to +withholding, stamp, service and other non-income taxes, could +differ from that of the relevant governmental taxing authority, +which could result in the requirement to pay additional taxes, +penalties or interest, the reduction of certain tax benefits or the +requirement to make adjustments to amounts recorded, which +could be material. See Note 30 for additional information on +litigation and examinations involving non-U.S. tax authorities. +A Deterioration in or Failure to Maintain Citi’s Co- +Branding or Private Label Credit Card Relationships Could +Have a Negative Impact on Citi. +Citi has co-branding and private label relationships through its +Branded Cards and Retail Services credit card businesses with +various retailers and merchants, whereby in the ordinary +course of business Citi issues credit cards to consumers, +including customers of the retailers or merchants. The five +largest relationships across both businesses in USPB +constituted an aggregate of approximately 11% of Citi’s +revenues in 2023 (see “U.S. Personal Banking” above). Citi’s +co-branding and private label agreements often provide for +shared economics between the parties and generally have a +fixed term. +Competition among card issuers, including Citi, for these +relationships is significant, and Citi may not be able to +maintain such relationships on existing terms or at all. Citi’s +co-branding and private label relationships could also be +negatively impacted by, among other things, the general +economic environment, including the impacts of continued +elevated interest rates and inflation, and lower economic +growth rates, as well as a continuing risk of recession; changes +in consumer sentiment, spending patterns and credit card +usage behaviors; a decline in sales and revenues, partner store +closures, any reduction in air and business travel, or other +operational difficulties of the retailer or merchant; early +termination due to a contractual breach or exercise of other +early termination right; or other factors, including +bankruptcies, liquidations, restructurings, consolidations or +other similar events, whether due to a challenging +macroeconomic environment or otherwise. +These events, particularly early termination and +bankruptcies or liquidations, could negatively impact the +results of operations or financial condition of Branded Cards, +Retail Services or Citi as a whole, including as a result of loss +of revenues, increased expenses, higher cost of credit, +impairment of purchased credit card relationships and +contract-related intangibles or other losses (see Note 17 for +information on Citi’s credit card related intangibles generally). +52 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_6.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..b65082d187465fd9a0f9484bcbd49d693117789d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,56 @@ +Earned a seat at the +Billion Dollar Roundtable +by spending $1 billion +or more annually with +certified diverse suppliers +Supported development of a first- +of-its-kind Sustainable Aluminum +Finance Framework for lenders to +measure and disclose aluminum- +related emissions in portfolios +Facilitated clean energy access +in Africa, supporting Sun King on +a first-of-its-kind securitization +deal for affordable solar +systems in Kenya +Announced an innovative +sustainable aviation fuel +emission reduction agreement +with American Airlines to support +solutions for low-carbon air travel +Provided $25 million to +nonprofits working to improve +food security globally through +the Citi Foundation’s inaugural +Global Innovation Challenge +Celebrated the first graduating class of +Kindergarten to College — a publicly-funded +children’s savings account program in support +of financial inclusion that operates on the +Citi Start Saving® platform +Continued sourcing +100% renewable +electricity for Citi’s +own operations +and facilities +Celebrated 10 years of New +York City’s Citi Bike program, +which has enabled 339 +million miles in rides in the +decade following its launch +Volunteered over +143,000 hours across +83 countries and +territories as part of +Global Community Day +Supporting strong +communities and +sustainable solutions +Recognized as the largest U.S. affordable +housing lender 13 years in a row by +Affordable Housing Finance magazine +Ranked as #1 U.S. +lead underwriter for +global sustainable bonds +in 2023 by Dealogic +8 9 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_60.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..de43f0841cb0d0f1d593d316bd927bc8b3281cb1 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,121 @@ +The Application of U.S. Resolution Plan Requirements May +Pose a Greater Risk of Loss to Citi’s Debt and Equity +Securities Holders, and Citi’s Inability in Its Resolution Plan +Submissions to Address Any Shortcomings or Deficiencies or +Guidance Could Subject Citi to More Stringent Capital, +Leverage or Liquidity Requirements, or Restrictions on Its +Growth, Activities or Operations, and Could Eventually +Require Citi to Divest Assets or Operations. +Title I of the Dodd-Frank Act requires Citi to prepare and +submit a plan to the FRB and the FDIC for the orderly +resolution of Citigroup (the bank holding company) and its +significant legal entities under the U.S. Bankruptcy Code in +the event of future material financial distress or failure. +Under Citi’s preferred “single point of entry” resolution +plan strategy, only Citigroup, the parent holding company, +would enter into bankruptcy, while Citigroup’s material legal +entities (as defined in the public section of its 2023 resolution +plan, which can be found on the FRB’s and FDIC’s websites) +would remain operational outside of any resolution or +insolvency proceedings. As a result, Citigroup’s losses and +any losses incurred by its material legal entity subsidiaries +would be imposed first on holders of Citigroup’s equity +securities and thereafter on its unsecured creditors, including +holders of eligible long-term debt and other debt securities. +In addition, a wholly owned, direct subsidiary of +Citigroup serves as a resolution funding vehicle (the IHC) to +which Citigroup has transferred, and has agreed to transfer on +an ongoing basis, certain assets. The obligations of Citigroup +and of the IHC, respectively, under the amended and restated +secured support agreement, are secured on a senior basis by +the assets of Citigroup (other than shares in subsidiaries of the +parent company and certain other assets), and the assets of the +IHC, as applicable. As a result, claims of the operating +material legal entities against the assets of Citigroup with +respect to such secured assets are effectively senior to +unsecured obligations of Citigroup. Citi’s single point of entry +resolution plan strategy and the obligations under the amended +and restated secured support agreement may result in the +recapitalization of and/or provision of liquidity to Citi’s +operating material legal entities, and the commencement of +bankruptcy proceedings by Citigroup at an earlier stage of +financial stress than might otherwise occur without such +mechanisms in place. +In line with the FRB’s TLAC rule, Citigroup’s +shareholders and unsecured creditors—including its unsecured +long-term debt holders—would bear any losses resulting from +Citigroup’s bankruptcy. Accordingly, any value realized by +holders of its unsecured long-term debt may not be sufficient +to repay the amounts owed to such debt holders in the event of +a bankruptcy or other resolution proceeding of Citigroup. For +additional information on Citi’s single point of entry +resolution plan strategy and the IHC and secured support +agreement, see “Managing Global Risk—Liquidity Risk” +below. +On November 22, 2022, the FRB and FDIC issued +feedback on the resolution plans filed on July 1, 2021 by the +eight U.S. GSIBs, including Citi. The FRB and FDIC +identified one shortcoming, but no deficiencies, in Citi’s 2021 +resolution plan. The shortcoming related to data integrity and +data quality management issues, specifically, weaknesses in +Citi’s processes and practices for producing certain data that +could materially impact its resolution capabilities. If a +shortcoming is not satisfactorily explained or addressed +before, or in, the submission of the next resolution plan, the +shortcoming may be found to be a deficiency in the next +resolution plan (see discussion below). Citi submitted its 2023 +resolution plan in June 2023. More generally, data continues +to be a subject of regulatory focus, and Citi continues to work +on enhancing its data availability and quality. +Under Title I, if the FRB and the FDIC jointly determine +that Citi’s resolution plan is not “credible” (which, although +not defined, is generally understood to mean the regulators do +not believe the plan is feasible or would otherwise allow Citi +to be resolved in a way that protects systemically important +functions without severe systemic disruption), or would not +facilitate an orderly resolution of Citi under the U.S. +Bankruptcy Code, and Citi fails to resubmit a resolution plan +that remedies any identified deficiencies, Citi could be +subjected to more stringent capital, leverage or liquidity +requirements, or restrictions on its growth, activities or +operations. If within two years from the imposition of any +such requirements or restrictions Citi has still not remediated +any identified deficiencies, then Citi could eventually be +required to divest certain assets or operations. Any such +restrictions or actions would negatively impact Citi’s +reputation, market and investor perception, operations and +strategy. +Citi’s Performance and Its Ability to Effectively Execute Its +Transformation and Strategic and Other Initiatives Could Be +Negatively Impacted if It Is Not Able to Hire and Retain +Qualified Employees. +Citi’s performance and the performance of its individual +businesses largely depend on the talents and efforts of its +diverse and highly qualified colleagues. Specifically, Citi’s +continued ability to compete in each of its lines of business, to +manage its businesses effectively and to execute its +transformation and strategic and other initiatives, including, +for example, hiring front office colleagues to grow businesses +or hiring colleagues to support Citi’s transformation and +strategic and other initiatives, depends on its ability to attract +new colleagues and to retain and motivate its existing +colleagues. If Citi is unable to continue to attract, retain and +motivate highly qualified colleagues, Citi’s performance, +including its competitive position, the execution of its +transformation and strategic and other initiatives and its results +of operations could be negatively impacted. +Citi’s ability to attract, retain and motivate colleagues +depends on numerous factors, some of which are outside of +Citi’s control. For example, the competition for talent +continues to be particularly intense due to factors such as low +unemployment and changes in worker expectations, concerns +and preferences, including an increased demand for remote +work options and other job flexibility. Also, the banking +industry generally is subject to more comprehensive regulation +of employee compensation than other industries, including +deferral and clawback requirements for incentive +compensation, which can make it unusually challenging for +Citi to compete in labor markets against businesses, including, +for example, technology companies, that are not subject to +53 +The secret object #2 is a "watch". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_61.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..421d915fcc90de6cef6d589a81614f05f41b9803 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,118 @@ +such regulation. In addition, in 2023 Citi announced plans to +reduce management layers from 13 to a median of eight as +part of organizational simplification initiatives that also +involve significant reductions in functional roles, which could +also impact its ability to attract and retain colleagues. Other +factors that could impact its ability to attract, retain and +motivate colleagues include, among other things, Citi’s +presence in a particular market or region, the professional and +development opportunities, its reputation and its diversity. For +information on Citi’s colleagues and workforce management, +see “Human Capital Resources and Management” below. +Citi Faces Increased Competitive Challenges, Including +from Financial Services and Other Companies and +Emerging Technologies. +Citi operates in an increasingly evolving and competitive +business environment, which includes both financial and non- +financial services firms, such as traditional banks, online +banks, private credit and financial technology companies and +others. These companies compete on the basis of, among other +factors, size, reach, quality and type of products and services +offered, price, technology and reputation. Certain competitors +may be subject to different and, in some cases, less stringent +legal and regulatory requirements, whether due to size, +jurisdiction, entity type or other factors, placing Citi at a +competitive disadvantage. +For example, Citi competes with other financial services +companies in the U.S. and globally that have grown rapidly +over the last several years or have developed and introduced +new products and services. Potential mergers and acquisitions +involving traditional financial services companies such as +regional banks or credit card issuers, as well as networks and +merchant acquirers, may also increase competition and impact +Citi’s ability to offer competitive pricing and rewards. Non- +traditional financial services firms, such as private credit and +financial technology companies, are less regulated and +continue to expand their offerings of services traditionally +provided by financial institutions. The growth of certain of +these competitors has increased market and counterparty credit +risks, particularly in a more challenging macroeconomic +environment (see the risk factor on credit and concentrations +of risk below). In addition, emerging technologies have the +potential to intensify competition and accelerate disruption in +the financial services industry. For example, despite +difficulties and turmoil faced by the digital asset market in +recent years, clients and investors have exhibited a sustained +interest in digital assets. Financial services firms and other +market participants have begun to offer services related to +those assets. Citi may not be able to provide the same or +similar services for legal or regulatory reasons, which may be +exacerbated by rapidly evolving and conflicting regulatory +requirements, and due to increased compliance and other risks. +Further, changes in the payments space (e.g., instant and 24x7 +payments) are accelerating, and, as a result, certain of Citi’s +products and services could become less competitive. +Increased competition and emerging technologies have +required and could require Citi to change or adapt its products +and services, as well as invest in and develop related +infrastructure, to attract and retain customers or clients or to +compete more effectively with competitors, including new +market entrants. Simultaneously, as Citi develops new +products and services leveraging emerging technologies, new +risks may emerge that, if not designed and governed +adequately, may result in control gaps and in Citi operating +outside of its risk appetite. For example, failure to strategically +embrace the potential of artificial intelligence (AI) may result +in a competitive disadvantage to Citi. At the same time, as a +new technology, use of AI without sufficient controls, +governance and risk management may result in increased risks +across all of Citi’s risk categories. As another example, instant +and 24x7 payments products could be accompanied by +challenges to forecasting and managing liquidity, as well as +increased operational and compliance risks. +Moreover, Citi relies on third parties to support certain of +its product and service offerings, which may put Citi at a +disadvantage to competitors who may directly offer a broader +array of products and services. Also, Citi’s businesses, results +of operations and reputation may suffer if any third party is +unable to provide adequate support for such product and +service offerings, whether due to operational incidents or +otherwise (see the operational processes and systems, +cybersecurity and emerging markets risk factors below). +To the extent that Citi is not able to compete effectively +with financial services companies, including private credit and +financial technology companies, and non-financial services +firms, Citi could be placed at a competitive disadvantage, +which could result in loss of customers and market share, and +its businesses, results of operations and financial condition +could suffer. For additional information on Citi’s competitors, +see the co-brand and private label cards and qualified +colleagues risk factors above and “Supervision, Regulation +and Other—Competition” below. +OPERATIONAL RISKS +A Failure or Disruption of Citi’s Operational Processes or +Systems Could Negatively Impact Its Reputation, Customers, +Clients, Businesses or Results of Operations and Financial +Condition. +Citi’s global operations rely heavily on its technology systems +and infrastructure, including the accurate, timely and secure +processing, management, storage and transmission of data, +including confidential transactions, and other information, as +well as the monitoring of a substantial amount of data and +complex transactions in real time. Citi obtains and stores an +extensive amount of personal and client-specific information +for its consumer and institutional customers and clients, and +must accurately record and reflect their account transactions. +Citi’s operations must also comply with complex and evolving +laws, regulations and heightened regulatory expectations in the +countries in which it operates (see the implementation and +interpretation of regulatory changes and legal proceedings risk +factors below). With the evolving proliferation of new +technologies and the increasing use of the internet, mobile +devices and cloud services to conduct financial transactions +and customers’ and clients’ increasing use of online banking +and trading systems and other platforms, large global financial +institutions such as Citi have been, and will continue to be, +subject to an ever-increasing risk of operational loss, failure or +disruption. +54 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_62.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..69ebc563081da0d1730d6072e362027bc0c79750 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,120 @@ +Although Citi has continued to upgrade its technology, +including systems to automate processes and gain efficiencies, +operational incidents are unpredictable and can arise from +numerous sources, not all of which are fully within Citi’s +control. These include, among others, operational or execution +failures, or deficiencies by third parties, including third parties +that provide products or services to Citi (e.g., cloud service +providers), other market participants or those that otherwise +have an ongoing partnership or business relationship with Citi; +deficiencies in processes or controls; inadequate management +of data governance practices, data controls and monitoring +mechanisms that may adversely impact internal or external +reporting and decision-making; cyber or information security +incidents (see the cybersecurity risk factor below); human +error, such as manual transaction processing errors (e.g., +erroneous payments to lenders or manual errors by traders that +cause system and market disruptions or losses), which can be +exacerbated by staffing challenges and processing backlogs; +fraud or malice on the part of employees or third parties; +insufficient (or limited) straight-through processing between +legacy or bespoke systems and any failure to design and +effectively operate controls that mitigate operational risks +associated with those legacy or bespoke systems, leading to +potential risk of errors and operating losses; accidental system +or technological failure; electrical or telecommunication +outages; failures of or cyber incidents involving computer +servers or infrastructure, including cloud services; or other +similar losses or damage to Citi’s property or assets (see also +the climate change risk factor above). +For example, operational incidents can arise as a result of +failures by third parties with which Citi does business, such as +failures by internet, mobile technology and cloud service +providers or other vendors to adequately follow procedures or +processes, safeguard their systems or prevent system +disruptions or cyberattacks. Failure by Citi to develop, +implement and operate a third-party risk management program +commensurate with the level of risk, complexity and nature of +its third-party relationships can also result in operational +incidents. In addition, Citi has experienced and could +experience further losses associated with manual transaction +processing errors, including erroneous payments to lenders or +manual errors by Citi traders that cause system and market +disruptions and losses for Citi and its clients. Irrespective of +the sophistication of the technology utilized by Citi, there will +always be some room for human and other errors. In view of +the large transactions in which Citi engages, such errors could +result in significant losses. While Citi has change management +processes in place to appropriately upgrade its operational +processes and systems to ensure that any changes introduced +do not adversely impact security and operational continuity, +such change management can fail or be ineffective. +Furthermore, when Citi introduces new products, systems or +processes, new operational risks that may arise from those +changes may not be identified, or adequate controls to mitigate +the identified risks may not be appropriately implemented or +operate as designed. +Incidents that impact information security, technology +operations or other operational processes may cause +disruptions and/or malfunctions within Citi’s businesses (e.g., +the temporary loss of availability of Citi’s online banking +system or mobile banking platform), as well as the operations +of its clients, customers or other third parties. In addition, +operational incidents could involve the failure or +ineffectiveness of internal processes or controls. Given Citi’s +global footprint and the high volume of transactions processed +by Citi, certain failures, errors or actions may be repeated or +compounded before they are discovered and rectified, which +would further increase the consequences and costs. +Operational incidents could result in financial losses and other +costs as well as misappropriation, corruption or loss of +confidential and other information or assets, which could +significantly negatively impact Citi’s reputation, customers, +clients, businesses or results of operations and financial +condition. Cyber-related and other operational incidents can +also result in legal and regulatory actions or proceedings, fines +and other costs (see the legal and regulatory proceedings risk +factor below). +For information on Citi’s management of operational risk, +see “Managing Global Risk—Operational Risk” below. +Citi’s and Third Parties’ Computer Systems and Networks +Will Continue to Be Susceptible to an Increasing Risk of +Continually Evolving, Sophisticated Cybersecurity Incidents +That Could Result in the Theft, Loss, Non-Availability, +Misuse or Disclosure of Confidential Client or Customer +Information, Damage to Citi’s Reputation, Additional Costs +to Citi, Regulatory Penalties, Legal Exposure and Financial +Losses. +Citi’s computer systems, software and networks are subject to +ongoing attempted cyberattacks, such as unauthorized access, +loss or destruction of data (including confidential client +information), account takeovers, disruptions of service, +phishing, malware, ransomware, computer viruses or other +malicious code and other similar events. These threats can +arise from external parties, including cyber criminals, cyber +terrorists, hacktivists (individuals or groups using cyberattacks +to promote a political or social agenda) and nation-state actors, +as well as insiders who knowingly or unknowingly engage in +or enable malicious cyber activities. Citi develops its own +software and relies on third-party applications and software, +which are susceptible to vulnerability exploitations. Software +leveraged in financial services and other industries continues +to be impacted by an increasing number of zero-day +vulnerabilities, thus increasing inherent cyber risk to Citi. +The increasing use of mobile and other digital banking +platforms and services, cloud technologies and connectivity +solutions to facilitate remote working for Citi’s employees all +increase Citi’s exposure to cybersecurity risks. Citi is also +susceptible to cyberattacks given, among other things, its size +and scale, high-profile brand, global footprint and prominent +role in the financial system, as well as the ongoing wind-down +of its businesses in Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” below). Additionally, +Citi continues to operate in multiple jurisdictions in the midst +of geopolitical unrest, including active conflicts in Ukraine +and the Middle East, which could expose Citi to heightened +risk of insider threat, politically motivated hacktivism or other +cyber threats. +55 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_63.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..76dfe845b0af55772256dfaf68f8ae72aaa36f8d --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,120 @@ +Citi continues to experience increased exposure to +cyberattacks through third parties, in part because financial +institutions are becoming increasingly interconnected with +central agents, exchanges and clearing houses. Third parties +with which Citi does business, as well as retailers and other +third parties with which Citi’s customers do business, and any +such third parties’ downstream service providers, also pose +cybersecurity risks, particularly where activities of customers +are beyond Citi’s security and control systems. For example, +Citi outsources certain functions, such as processing customer +credit card transactions, uploading content on customer-facing +websites and developing software for new products and +services. These relationships allow for the storage and +processing of customer information by third-party hosting of, +or access to, Citi websites. This could lead to compromise or +the potential to introduce vulnerable or malicious code, +resulting in security breaches or business disruptions +impacting Citi customers, employees or operations. While +many of Citi’s agreements with third parties include +indemnification provisions, Citi may not be able to recover +sufficiently, or at all, under these provisions to adequately +offset any losses and other adverse impacts Citi may incur +from third-party cyber incidents. +Citi and some of its third-party partners have been +subjected to attempted and sometimes successful cyberattacks +over the last several years, including (i) denial of service +attacks, which attempt to interrupt service to clients and +customers; (ii) hacking and malicious software installations +intended to gain unauthorized access to information systems or +to disrupt those systems and/or impact availability or privacy +of confidential data, with objectives including, but not limited +to, extortion payments or causing reputational damage; (iii) +data breaches due to unauthorized access to customer account +or other data; and (iv) malicious software attacks on client +systems, in attempts to gain unauthorized access to Citi +systems or client data under the guise of normal client +transactions. +While Citi’s monitoring and protection services have +historically generally succeeded in detecting, thwarting and/or +responding to attacks targeting its systems before they become +significant, certain past incidents resulted in limited losses, as +well as increases in expenditures to monitor against the threat +of similar future cyber incidents. There can be no assurance +that such cyber incidents will not occur again, and they could +occur more frequently, via novel tactics, including leveraging +of tools made possible by emerging technologies, and on a +more significant scale. Despite the significant resources Citi +allocates to implement, maintain, monitor and regularly +upgrade its systems and networks with measures such as +intrusion detection and prevention systems and firewalls to +safeguard critical business applications, there is no guarantee +that these measures or any other measures can provide +sufficient security. Because the techniques used to initiate +cyberattacks change frequently or, in some cases, are not +recognized until launched or even later, Citi may be unable to +implement effective preventive measures or otherwise +proactively address these methods. In addition, cyber threats +and cyberattack techniques change, develop and evolve +rapidly, including from emerging technologies such as +artificial intelligence, cloud computing and quantum +computing. Given the frequency and sophistication of +cyberattacks, the determination of the severity and potential +impact of a cyber incident may not become apparent for a +substantial period of time following detection of the incident. +Also, while Citi strives to implement measures to reduce the +exposure resulting from outsourcing risks, such as performing +security control assessments of third-party vendors and +limiting third-party access to the least privileged level +necessary to perform job functions, these measures cannot +prevent all third-party related cyberattacks or data breaches. In +addition, the risk of insider threat may be elevated in the near +term due to Citi’s overall simplification initiatives, including +streamlining its global staff functions. +Cyber incidents can result in the disclosure of personal, +confidential or proprietary customer, client or employee +information; damage to Citi’s reputation with its clients, other +counterparties and the market; customer dissatisfaction; and +additional costs to Citi, including expenses such as repairing +or replacing systems, replacing customer payment cards, credit +monitoring or adding new personnel or protection +technologies. Cyber incidents can also result in regulatory +penalties, loss of revenues, deposit flight, exposure to +litigation and other financial losses, including loss of funds to +both Citi and its clients and customers, and disruption to Citi’s +operational systems (see the operational processes and systems +risk factor above). Moreover, the increasing risk of cyber +incidents has resulted in increased legislative and regulatory +action on cybersecurity, including, among other things, +scrutiny of firms’ cybersecurity protection services, laws and +regulations to enhance protection of consumers’ personal data +and mandated disclosure on cybersecurity matters. For +example, in July 2023, the SEC finalized new rules requiring +timely disclosure of material cybersecurity incidents as well as +other annual cyber-related disclosures (see “Managing Global +Risk—Operational Risk—Cybersecurity Risk” below). +While Citi maintains insurance coverage that may, subject +to policy terms and conditions including significant self- +insured deductibles, cover certain aspects of cyber risks, such +insurance coverage may be insufficient to cover all losses and +may not take into account reputational harm, the costs of +which are impossible to quantify. +For additional information about Citi’s management of +cybersecurity risk, see “Managing Global Risk—Operational +Risk—Cybersecurity Risk” below. +Changes or Errors in Accounting Assumptions, Judgments +or Estimates, or the Application of Certain Accounting +Principles, Could Result in Significant Losses or Other +Adverse Impacts. +U.S. GAAP requires Citi to use certain assumptions, +judgments and estimates in preparing its financial statements, +including, among other items, the estimate of the ACL; +reserves related to litigation, regulatory and tax matters; +valuation of DTAs; the fair values of certain assets and +liabilities; and the assessment of goodwill and other assets for +impairment. These assumptions, judgments and estimates are +inherently limited because they involve techniques, including +the use of historical data in many circumstances, that cannot +anticipate every economic and financial outcome in the +markets in which Citi operates, nor can they anticipate the +56 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_64.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..20b1fcedf577b0b8525aec473f722bb73f0c1f1c --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,119 @@ +specifics and timing of such outcomes. For example, many +models used by Citi include assumptions about correlation or +lack thereof among prices of various asset classes or other +market indicators that may not hold in times of market stress, +limited liquidity or other unforeseen circumstances. +If Citi’s assumptions, judgments or estimates underlying +its financial statements are incorrect or differ from actual or +subsequent events, Citi could experience unexpected losses or +other adverse impacts, some of which could be significant. +Citi could also experience declines in its stock price, be +subject to legal and regulatory proceedings and incur fines and +other losses. For additional information on the key areas for +which assumptions and estimates are used in preparing Citi’s +financial statements, see “Significant Accounting Policies and +Significant Estimates” below and Notes 1 and 16. For +example, the CECL methodology requires that Citi provide +reserves for a current estimate of lifetime expected credit +losses for its loan portfolios and other financial assets, as +applicable, at the time those assets are originated or acquired. +This estimate is adjusted each period for changes in expected +lifetime credit losses. Citi’s ACL estimate depends upon its +CECL models and assumptions; forecasted macroeconomic +conditions, including, among other things, the U.S. +unemployment rate and U.S. inflation-adjusted gross domestic +product (real GDP); and the credit indicators, composition and +other characteristics of Citi’s loan portfolios and other +applicable financial assets. These model assumptions and +forecasted macroeconomic conditions will change over time, +resulting in variability in Citi’s ACL and, thus, impact its +results of operations and financial condition, as well as +regulatory capital due to the CECL phase-in (see the capital +return risk factor above). +Moreover, Citi has incurred losses related to its foreign +operations that are reported in the CTA components of +Accumulated other comprehensive income (loss) (AOCI). In +accordance with U.S. GAAP, a sale, substantial liquidation or +other deconsolidation event of any foreign operations, such as +those related to Citi’s remaining divestitures or legacy +businesses, would result in reclassification of any foreign CTA +component of AOCI related to that foreign operation, +including related hedges and taxes, into Citi’s earnings. For +example, Citi could incur a significant loss on sale due to CTA +losses related to any signing of a sale agreement for its +remaining consumer banking divestitures (see the capital +return and continued investments risk factors above). The +majority of these losses would be regulatory capital neutral at +closing. For additional information on Citi’s accounting policy +for foreign currency translation and its foreign CTA +components of AOCI, see Notes 1 and 21. +Changes to Financial Accounting and Reporting Standards +or Interpretations Could Have a Material Impact on How +Citi Records and Reports Its Financial Condition and +Results of Operations. +Periodically, the Financial Accounting Standards Board +(FASB) issues financial accounting and reporting standards +that govern key aspects of Citi’s financial statements or +interpretations thereof when those standards become effective, +including those areas where Citi is required to make +assumptions or estimates. Changes to financial accounting or +reporting standards or interpretations, whether promulgated or +required by the FASB, the SEC, U.S. banking regulators or +others, could present operational challenges and could also +require Citi to change certain of the assumptions or estimates +it previously used in preparing its financial statements, which +could negatively impact how it records and reports its +financial condition and results of operations generally and/or +with respect to particular businesses. See Note 1 for additional +information on Citi’s accounting policies and changes in +accounting, including the expected impacts on Citi’s results of +operations and financial condition. +If Citi’s Risk Management and Other Processes, Strategies +or Models Are Deficient or Ineffective, Citi May Incur +Significant Losses and Its Regulatory Capital and Capital +Ratios Could Be Negatively Impacted. +Citi utilizes a broad and diversified set of risk management +and other processes and strategies, including the use of models +in analyzing and monitoring the various risks Citi assumes in +conducting its activities. For example, Citi uses models as part +of its comprehensive stress testing initiatives across the +Company. Citi also relies on data to aggregate, assess and +manage various risk exposures. Management of these risks +and the reliability of the data are made more challenging +within a large, global financial institution, such as Citi, +particularly due to complex, diverse and rapidly changing +financial markets and conditions in which Citi operates. +Unexpected losses can result from untimely, inaccurate or +incomplete processes and data. As discussed below, in +October 2020, Citigroup and Citibank entered into consent +orders with the FRB and OCC that require Citigroup and +Citibank to make improvements in various aspects of +enterprise-wide risk management, compliance, data quality +management and governance, and internal controls (see “Citi’s +Consent Order Compliance” above and the legal and +regulatory proceedings risk factor below). +Citi’s risk management and other processes, strategies and +models are inherently limited because they involve techniques, +including the use of historical data in many circumstances, +assumptions and judgments that cannot anticipate every +economic and financial outcome in the markets in which Citi +operates, particularly given various macroeconomic, +geopolitical and other challenges and uncertainties (see the +macroeconomic challenges and uncertainties risk factor +above), nor can they anticipate the specifics and timing of +such outcomes. For example, many models used by Citi +include assumptions about correlation or lack thereof among +prices of various asset classes or other market indicators that +may not necessarily hold in times of market stress, limited +liquidity or other unforeseen circumstances, or identify +changes in markets or client behaviors not yet inherent in +historical data. Citi could incur significant losses, receive +negative regulatory evaluation or examination findings or be +subject to additional enforcement actions, and its regulatory +capital, capital ratios and ability to return capital could be +negatively impacted, if Citi’s risk management and other +processes, including its ability to manage and aggregate data +in a timely and accurate manner, strategies or models are +deficient or ineffective. For additional information, see the +capital return risk factor above and the heightened regulatory +57 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_65.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..55f0eb6162a22c4a0c59daa22309d5d069695e7a --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,117 @@ +scrutiny and ongoing interpretation of regulatory changes risk +factor below. Such deficiencies or ineffectiveness could also +result in inaccurate financial, regulatory or risk reporting. +Moreover, Citi’s Basel III regulatory capital models, +including its credit, market and operational risk models, +currently remain subject to ongoing regulatory review and +approval, which may result in refinements, modifications or +enhancements (required or otherwise) to these models. Citi is +required to notify and obtain preapproval from both the OCC +and FRB prior to implementing certain risk-weighted asset +treatments, as well as certain model changes, resulting in a +more challenging environment within which Citi must operate +in managing its risk-weighted assets. Modifications or +requirements resulting from these ongoing reviews, as well as +any future changes or guidance provided by the U.S. banking +regulators regarding the U.S. regulatory capital framework +applicable to Citi, including, but not limited to, potential +revisions to the U.S. Basel III rules, known as the Basel III +Endgame (for information about the Basel III Endgame, see +the capital return risk factor and “Capital Resources— +Regulatory Capital Standards Developments” above), have +resulted in, and could continue to result in, significant changes +to Citi’s risk-weighted assets. These changes can negatively +impact Citi’s capital ratios and its ability to meet its regulatory +capital requirements. +CREDIT RISKS +Credit Risk and Concentrations of Risk Can Increase the +Potential for Citi to Incur Significant Losses. +Citi has credit exposures to consumer, corporate and public +sector borrowers and other counterparties in the U.S. and +various countries and jurisdictions globally, including end-of- +period consumer loans of $389 billion and end-of-period +corporate loans of $300 billion at December 31, 2023. For +additional information on Citi’s corporate and consumer loan +portfolios, see “Managing Global Risk—Corporate Credit” +and “—Consumer Credit” below. +A default by or a significant downgrade in the credit +ratings of a borrower or other counterparty, or a decline in the +credit quality or value of any underlying collateral, exposes +Citi to credit risk. Despite Citi’s target client strategy, various +macroeconomic, geopolitical, market and other factors, among +other things, can increase Citi’s credit risk and credit costs, +particularly for vulnerable sectors, industries or countries (see +the macroeconomic challenges and uncertainties and co- +branding and private label credit card risk factors above and +the emerging markets risk factor below). For example, a +weakening of economic conditions can adversely affect +borrowers’ ability to repay their obligations, as well as result +in Citi being unable to liquidate the collateral it holds or +forced to liquidate the collateral at prices that do not cover the +full amount owed to Citi. Citi is also a member of various +central clearing counterparties and could incur financial losses +as a result of defaults by other clearing members due to the +requirements of clearing members to share losses. +Additionally, due to the interconnectedness among financial +institutions, concerns about the creditworthiness of or defaults +by a financial institution could spread to other financial market +participants and result in market-wide losses and disruption. +For example, the failure of regional banks and other banking +stresses in the first half of 2023 resulted in market volatility +across the financial sector. +While Citi provides reserves for expected losses for its +credit exposures, as applicable, such reserves are subject to +judgments and estimates that could be incorrect or differ from +actual future events. Under the CECL accounting standard, the +ACL reflects expected losses, which has resulted in and could +lead to additional volatility in the allowance and the provision +for credit losses (including provisions for loans and unfunded +lending commitments, and ACL builds for Other assets) as +forecasts of economic conditions change. For additional +information, see the incorrect assumptions or estimates and +changes to financial accounting and reporting standards risk +factors above. For additional information on Citi’s ACL, see +“Significant Accounting Policies and Significant Estimates” +below and Notes 1 and 16. For additional information on +Citi’s credit and country risk, see also each respective +business’s results of operations above, “Managing Global Risk +—Credit Risk” and “Managing Global Risk—Other Risks— +Country Risk” below and Notes 15 and 16. +Concentrations of risk to clients or counterparties engaged +in the same or related industries or doing business in a +particular geography, or to a particular product or asset class, +especially credit and market risks, can also increase Citi’s risk +of significant losses. For example, Citi routinely executes a +high volume of securities, trading, derivative and foreign +exchange transactions with non-U.S. sovereigns and with +counterparties in the financial services industry, including +banks, insurance companies, investment banks, governments, +central banks and other financial institutions. Moreover, Citi +has indemnification obligations in connection with various +transactions that expose it to concentrations of risk, including +credit risk from hedging or reinsurance arrangements related +to those obligations (see Note 28). A rapid deterioration of a +large borrower or other counterparty or within a sector or +country in which Citi has large exposures or indemnifications +or unexpected market dislocations could lead to concerns +about the creditworthiness of other borrowers or +counterparties in a certain geography and in related or +dependent industries, and such conditions could cause Citi to +incur significant losses. +LIQUIDITY RISKS +Citi’s Businesses, Results of Operations and Financial +Condition Could Be Negatively Impacted if It Does Not +Effectively Manage Its Liquidity. +As a large, global financial institution, adequate liquidity and +sources of funding are essential to Citi’s businesses. Citi’s +liquidity, sources of funding and costs of funding can be +significantly and negatively impacted by factors it cannot +control, such as general disruptions in the financial markets +(e.g., the failure of regional banks and other banking stresses +in the first half of 2023); changes in fiscal and monetary +policies and regulatory requirements; negative investor +perceptions of Citi’s creditworthiness; deposit outflows or +unfavorable changes in deposit mix; unexpected increases in +cash or collateral requirements; credit ratings; and the +consequent inability to monetize available liquidity resources. +58 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_66.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..93d76da8796f567952c16a90f8fe68e5b22e86b2 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,119 @@ +In addition, Citi competes with other banks and financial +institutions for both institutional and consumer deposits, which +represent Citi’s most stable and lowest cost source of long- +term funding. The competition for deposits has continued to +increase, including as a result of quantitative tightening by +central banks, the current higher interest rate environment and +fixed income alternatives for customer funds. +Further, Citi’s costs to obtain and access wholesale +funding are directly related to changes in interest and currency +exchange rates and its credit spreads. Changes in Citi’s credit +spreads are driven by both external market factors and factors +specific to Citi, such as negative views by investors of the +financial services industry or Citi’s financial prospects, and +can be highly volatile. For additional information on Citi’s +primary sources of funding, see “Managing Global Risk— +Liquidity Risk” below. +Citi’s ability to obtain funding may be impaired and its +cost of funding could also increase if other market participants +are seeking to access the markets at the same time or to a +greater extent than expected, or if market appetite for +corporate debt securities declines, as is likely to occur in a +liquidity stress event or other market crisis. Citi’s ability to +sell assets may also be impaired if other market participants +are seeking to sell similar assets at the same time or a liquid +market does not exist for such assets. Additionally, unexpected +changes in client needs due to idiosyncratic events or market +conditions could result in greater than expected drawdowns +from off-balance sheet committed facilities. A sudden drop in +market liquidity could also cause a temporary or protracted +dislocation of capital markets activity. In addition, clearing +organizations, central banks, clients and financial institutions +with which Citi interacts may exercise the right to require +additional collateral during challenging market conditions, +which could further impair Citi’s liquidity. If Citi fails to +effectively manage its liquidity, its businesses, results of +operations and financial condition could be negatively +impacted. +Limitations on the payments that Citigroup Inc. receives +from its subsidiaries could also impact its liquidity. As a +holding company, Citigroup Inc. relies on interest, dividends, +distributions and other payments from its subsidiaries to fund +dividends as well as to satisfy its debt and other obligations. +Several of Citi’s U.S. and non-U.S. subsidiaries are or may be +subject to capital adequacy or other liquidity, regulatory or +contractual restrictions on their ability to provide such +payments, including any local regulatory stress test +requirements and inter-affiliate arrangements entered into in +connection with Citigroup Inc.’s resolution plan. Citigroup +Inc.’s broker-dealer and bank subsidiaries are subject to +restrictions on their ability to lend or transact with affiliates, as +well as restrictions on their ability to use funds deposited with +them in brokerage or bank accounts to fund their businesses. +A bank holding company is also required by law to act as +a source of financial and managerial strength for its subsidiary +banks. As a result, the FRB may require Citigroup Inc. to +commit resources to its subsidiary banks even if doing so is +not otherwise in the interests of Citigroup Inc. or its +shareholders or creditors, reducing the amount of funds +available to meet its obligations. +A Ratings Downgrade Could Adversely Impact Citi’s +Funding and Liquidity. +The credit rating agencies, such as Fitch Ratings, Moody’s +Investors Service and S&P Global Ratings, continuously +evaluate Citi and certain of its subsidiaries. Their ratings of +Citi and its rated subsidiaries’ long-term debt and short-term +obligations are based on firm-specific factors, including the +financial strength of Citi and such subsidiaries, as well as +factors that are not entirely within the control of Citi and its +subsidiaries, such as the agencies’ proprietary rating +methodologies and assumptions, potential impact from +negative actions on U.S. sovereign ratings and conditions +affecting the financial services industry and markets generally. +Citi and its subsidiaries may not be able to maintain their +current respective ratings and outlooks. Rating downgrades +could negatively impact Citi and its rated subsidiaries’ ability +to access the capital markets and other sources of funds as +well as increase credit spreads and the costs of those funds. A +ratings downgrade could also have a negative impact on Citi +and its rated subsidiaries’ ability to obtain funding and +liquidity due to reduced funding capacity and the impact from +derivative triggers, which could require Citi and its rated +subsidiaries to meet cash obligations and collateral +requirements or permit counterparties to terminate certain +contracts. In addition, a ratings downgrade could have a +negative impact on other funding sources such as secured +financing and other margined transactions for which there may +be no explicit triggers. +Furthermore, a credit ratings downgrade could have +impacts that may not be currently known to Citi or are not +possible to quantify. Some of Citi’s counterparties and clients +could have ratings limitations on their permissible +counterparties, of which Citi may or may not be aware. +Certain of Citi’s corporate customers and trading +counterparties, among other clients, could re-evaluate their +business relationships with Citi and limit the trading of certain +market instruments, and limit or withdraw deposits placed +with Citi in response to ratings downgrades. Changes in +customer and counterparty behavior could impact not only +Citi’s funding and liquidity but also the results of operations of +certain Citi businesses. For additional information on the +potential impact of a reduction in Citi’s or Citibank’s credit +ratings, see “Managing Global Risk—Liquidity Risk” below. +COMPLIANCE RISKS +Significantly Heightened Regulatory Expectations and +Scrutiny in the U.S. and Globally and Ongoing +Interpretation and Implementation of Regulatory and +Legislative Requirements and Changes Have Increased +Citi’s Compliance, Regulatory and Other Risks and Costs. +Large financial institutions, such as Citi, face significantly +heightened regulatory expectations and scrutiny in the U.S. +and globally, including with respect to, among other things, +governance, infrastructure, data and risk management +practices and controls. These regulatory expectations extend to +their employees and agents and also include, among other +things, those related to customer and client protection, market +practices, anti-money laundering, increasingly complex +sanctions and disclosure regimes and various regulatory +59 +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_67.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6d6b076f0120515b074e537bf2ebb96b6d1ed70 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,120 @@ +reporting requirements. U.S. financial institutions also face +increased expectations and scrutiny in the wake of the failures +of several regional banks and other banking stresses in the first +half of 2023. In addition, Citi is continually required to +interpret and implement extensive and frequently changing +regulatory and legislative requirements in the U.S. and other +jurisdictions in which it does business, which may overlap or +conflict across jurisdictions, resulting in substantial +compliance, regulatory and other risks and costs. +A failure to comply with these expectations and +requirements, even if inadvertent, or resolve any identified +deficiencies in a timely and sufficiently satisfactory manner to +regulators, could result in increased regulatory oversight; +material restrictions, including, among others, imposition of +additional capital buffers and limitations on capital +distributions; enforcement proceedings; penalties; and fines +(see the capital return risk factor above and legal and +regulatory proceedings risk factor below). +Over the past several years, Citi has been required to +implement a large number of regulatory and legislative +changes, including new regulatory or legislative requirements +or regimes, across its businesses and functions, and these +changes continue. The changes themselves may be complex +and subject to interpretation, and result in changes to Citi’s +businesses. In addition, the changes require continued +substantial technology and other investments. In some cases, +Citi’s implementation of a regulatory or legislative +requirement is occurring simultaneously with changing or +conflicting regulatory guidance from multiple jurisdictions +(including various U.S. states) and regulators, legal challenges +or legislative action to modify or repeal existing rules or enact +new rules. +Examples of regulatory or legislative changes that have +resulted in increased compliance risks and costs include (i) the +U.S. regulatory capital framework and requirements, which +have continued to evolve (see the capital return risk factor and +“Capital Resources” above); (ii) various laws relating to the +limitation of cross-border data movement and/or collection +and use of customer information, including data localization +and protection and privacy laws, which also can conflict with +or increase compliance complexity with respect to other laws, +including anti-money laundering laws; and (iii) the EU’s +Corporate Sustainability Reporting Directive, which may +overlap but also diverge from climate-related disclosure +requirements expected to come into effect in other +jurisdictions, including in the U.S. In addition, certain U.S. +regulatory agencies and states and non-U.S. authorities have +prioritized issues of social, economic and racial justice, and +are in the process of considering ways in which these issues +can be mitigated, including through rulemaking, supervision +and other means, even while certain U.S. state and other +governments are pursuing and signaling challenges that may +conflict with corporate ESG initiatives. +Citi Is Subject to Extensive Legal and Regulatory +Proceedings, Examinations, Investigations, Consent Orders +and Related Compliance Efforts and Other Inquiries That +Could Result in Large Monetary Penalties, Supervisory or +Enforcement Orders, Business Restrictions, Limitations on +Dividends, Changes to Directors and/or Officers and +Collateral Consequences Arising from Such Outcomes. +At any given time, Citi is a party to a significant number of +legal and regulatory proceedings and is subject to numerous +governmental and regulatory examinations. Additionally, Citi +remains subject to governmental and regulatory investigations, +consent orders (see discussion below) and related compliance +efforts, and other inquiries. Citi could also be subject to +enforcement proceedings and negative regulatory evaluation +or examination findings not only because of violations of laws +and regulations, but also due to failures, as determined by its +regulators, to have adequate policies and procedures, or to +remedy deficiencies on a timely basis (see also the capital +return and resolution plan risk factors above). Citi’s regulators +have broad powers and discretion under their prudential and +supervisory authority, and have pursued active inspection and +investigatory oversight. +As previously disclosed, the October 2020 FRB and OCC +consent orders require Citigroup and Citibank to implement +extensive targeted action plans and submit quarterly progress +reports on a timely and sufficient basis detailing the results +and status of improvements relating principally to various +aspects of enterprise-wide risk management, compliance, data +quality management and governance, and internal controls. +These improvements will result in continued significant +investments by Citi during 2024 and beyond, as an essential +part of Citi’s broader transformation efforts to enhance its risk, +controls, data and finance infrastructure and compliance. +There can be no assurance that such improvements will be +implemented in a manner satisfactory, in both timing and +sufficiency, to the FRB and OCC. +Although there are no restrictions on Citi’s ability to serve +its clients, the OCC consent order requires Citibank to obtain +prior approval of any significant new acquisition, including +any portfolio or business acquisition, excluding ordinary +course transactions. Moreover, the OCC consent order +provides that the OCC has the right to assess future civil +money penalties or take other supervisory and/or enforcement +actions. Such actions by the OCC could include imposing +business restrictions, including possible limitations on the +declaration or payment of dividends and changes in directors +and/or senior executive officers. More generally, the OCC +and/or the FRB could take additional enforcement or other +actions if the regulatory agency believes that Citi has not met +regulatory expectations regarding compliance with the consent +orders. For additional information regarding the consent +orders, see “Citi’s Consent Order Compliance” above. +The global judicial, regulatory and political environment +has generally been challenging for large financial institutions, +which have been subject to increased regulatory scrutiny. The +complexity of the federal and state regulatory and enforcement +regimes in the U.S., coupled with the global scope of Citi’s +operations, also means that a single event or issue may give +rise to a large number of overlapping investigations and +regulatory proceedings, either by multiple federal and state +agencies and authorities in the U.S. or by multiple regulators +and other governmental entities in foreign jurisdictions, as +well as multiple civil litigation claims in multiple jurisdictions. +Violations of law by other financial institutions may also +result in regulatory scrutiny of Citi. Responding to regulatory +60 +The secret transportation is an "airplane". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_68.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..87ae01b2a9b0518073d3fe0646bf06ed82b9b22c --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,120 @@ +inquiries and proceedings can be time consuming and costly, +and divert management attention from Citi’s businesses. +U.S. and non-U.S. regulators have been increasingly +focused on the culture of financial services firms, including +Citi, as well as “conduct risk,” a term used to describe the +risks associated with behavior by employees and agents, +including third parties, that could harm clients, customers, +employees or the integrity of the markets, such as improperly +creating, selling, marketing or managing products and services +or improper incentive compensation programs with respect +thereto, failures to safeguard a party’s personal information, or +failures to identify and manage conflicts of interest. +In addition to the greater focus on conduct risk, the +general heightened scrutiny and expectations from regulators +could lead to investigations and other inquiries, as well as +remediation requirements, regulatory restrictions, structural +changes, more regulatory or other enforcement proceedings, +civil litigation and higher compliance and other risks and +costs. For additional information, see the capital return and +heightened regulatory scrutiny and ongoing interpretation of +regulatory changes risk factors above. Further, while Citi takes +numerous steps to prevent and detect conduct by employees +and agents that could potentially harm clients, customers, +employees or the integrity of the markets, such behavior may +not always be deterred or prevented. +Moreover, the severity of the remedies sought in legal and +regulatory proceedings to which Citi is subject has remained +elevated. For example, U.S. and certain non-U.S. +governmental entities have increasingly brought criminal +actions against, or have sought and obtained criminal guilty +pleas or deferred prosecution agreements from, financial +institutions and individual employees. These types of actions +by U.S. and other governments may, in the future, have +significant collateral consequences for Citi, including loss of +customers and business, operational loss, and the inability to +offer certain products or services and/or operate certain +businesses. Citi may be required to accept or be subject to +similar types of criminal remedies, consent orders, sanctions, +substantial fines and penalties, remediation and other financial +costs or other requirements in the future, including for matters +or practices not yet known to Citi, any of which could +materially and negatively affect Citi’s businesses, business +practices, financial condition or results of operations, require +material changes in Citi’s operations or cause Citi substantial +reputational harm. +Additionally, many large claims—both private civil and +regulatory—asserted against Citi are highly complex, slow to +develop and may involve novel or untested legal theories. The +outcome of such proceedings is difficult to predict or estimate +until late in the proceedings. Although Citi establishes +accruals for its legal and regulatory matters according to +accounting requirements, Citi’s estimates of, and changes to, +these accruals involve significant judgment and may be +subject to significant uncertainty, and the amount of loss +ultimately incurred in relation to those matters may be +substantially higher than the amounts accrued (see the +incorrect assumptions or estimates risk factor above). In +addition, certain settlements are subject to court approval and +may not be approved. For further information on Citi’s legal +and regulatory proceedings, see Note 30. +OTHER RISKS +Citi’s Emerging Markets Presence Subjects It to Various +Risks as well as Increased Compliance and Regulatory Risks +and Costs. +During 2023, emerging markets revenues accounted for +approximately 40% of Citi’s total revenues (Citi generally +defines emerging markets as countries in Latin America, Asia +(other than Japan, Australia and New Zealand), and central +and Eastern Europe, the Middle East and Africa). Citi’s +presence in the emerging markets subjects it to various risks. +Emerging market risks include, among others, limitations +or unavailability of hedges on foreign investments; foreign +currency volatility, including devaluations and strength in the +U.S. dollar; sustained elevated interest rates and quantitative +tightening; elevated inflation and hyperinflation; foreign +exchange controls, including an inability to access indirect +foreign exchange mechanisms; macroeconomic, geopolitical +and domestic political challenges, uncertainties and volatility, +including with respect to Russia (see the macroeconomic and +geopolitical risk factor above and “Managing Global Risk— +Other Risks—Country Risk—Russia” and “—Ukraine” +below); cyberattacks; restrictions arising from retaliatory laws +and regulations; sanctions or asset freezes; sovereign debt +volatility; fluctuations in commodity prices; election +outcomes; regulatory changes, including potential conflicts +among regulations with other jurisdictions where Citi does +business; limitations on foreign investment; sociopolitical +instability; civil unrest; crime, corruption and fraud; +nationalization or loss of licenses; potential criminal charges; +closure of branches or subsidiaries; and confiscation of assets; +and these risks can be exacerbated in the event of a +deterioration in the relationship between the U.S. and an +emerging market country. +For example, Citi operates in several countries that have, +or have had in the past, strict capital controls, currency +controls and/or sanctions, such as Argentina and Russia, that +limit its ability to convert local currency into U.S. dollars and/ +or transfer funds outside of those countries. For instance, Citi +may need to record additional translation losses due to +currency controls in Argentina (see “Managing Global Risk— +Other Risks—Country Risk—Argentina” below). Moreover, +Citi may need to record additional reserves for expected losses +for its credit exposures based on the transfer risk associated +with exposures outside the U.S., driven by safety and +soundness considerations under U.S. banking law (see +“Managing Global Risk—Other Risks—Country Risk— +Argentina” and “—Russia” and “Significant Accounting +Policies and Significant Estimates” below). +In addition, political turmoil and instability; geopolitical +challenges, tensions and conflicts (including those related to +Russia’s war in Ukraine as well as a persistent and/or +escalating conflict in the Middle East); terrorism; and other +instabilities have occurred in various regions and emerging +market countries across the globe, which impact Citi’s +businesses, results of operations and financial conditions in +affected countries and have required, and may continue to +require, management time and attention and other resources, +such as managing the impact of sanctions and their effect on +Citi’s operations in certain emerging market countries. For +61 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_69.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..cabde883654856a9d653f2275affd53ab500325b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,104 @@ +additional information, see the macroeconomic challenges and +uncertainties risk factor above. + +CLIMATE CHANGE AND NET ZERO +Introduction +This section summarizes Citi’s Operational Footprint goals +and Net Zero commitment. + Citi’s annual ESG Report provides information on a +broad set of ESG-related efforts. The upcoming Citi Climate +Report, formerly named the Task Force on Climate-Related +Financial Disclosures (TCFD) Report, provides information +on Citi’s continued progress to manage climate risk and its Net +Zero plan, including information on financed emissions and +2030 interim emissions reduction targets. +For information regarding Citi’s management of climate +risk, see “Managing Global Risk—Strategic Risk—Climate +Risk” below. +ESG and Climate-Related Governance +Citi’s Board of Directors (Board) provides oversight of Citi’s +management activities (see “Managing Global Risk—Risk +Governance” below). +• The Nomination, Governance and Public Affairs +Committee of the Board provides oversight and receives +updates on Citi’s environmental and social policies and +commitments. +• The Risk Management Committee of the Board provides +oversight of Citi’s Risk Management Framework and risk +culture and reviews Citi’s key risk policies and +frameworks, including receiving climate risk-related +updates. +• The Audit Committee of the Board provides oversight of +controls and procedures pertaining to the ESG-related +metrics and related disclosures in Citi’s SEC filed reports +and group-level voluntary ESG reporting, as well as +management’s evaluation of the effectiveness of Citi’s +disclosure controls and procedures for group-level ESG +reporting. +Additionally, Citi’s ESG Council consists of senior +members of the management team and certain subject matter +experts who provide oversight of Citi’s ESG goals and +activities. +Sustainable Finance +Citi’s Sustainable Finance Goal, as previously disclosed, +supports a combination of environmental and social finance +activities. Delivering on the sustainable finance goal is an +integrated effort across the organization with products and +service offerings across multiple lines of business. +Net Zero Emissions by 2050 +As previously disclosed, Citi has committed to achieving net +zero greenhouse gas (GHG) emissions associated with its +financing by 2050, and net zero GHG emissions for its own +operations by 2030; both are significant targets given the size +and breadth of Citi’s lending portfolios, businesses and +operational footprint. +Citi’s Net Zero plan includes: +• Net Zero Metrics and Target Setting: Calculate metrics +and assess targets for carbon-intensive sectors +• Client Engagement and Assessment : Seek to understand +client GHG emissions and transition plans and advise on +capacity building +• Risk Management: Assess climate risk exposure across +Citi’s lending portfolios and review client carbon +reduction progress, with ongoing review and refining of +Citi’s risk appetite and thresholds and policies related to +Climate Risk Management +• Clean Technology and Transition Finance: Support +existing and, where possible, new technologies to +accelerate commercialization and provide transition +advisory and finance products and services +• Portfolio Management: Active portfolio management of +Citi financings to align with net zero targets, including +considerations of transition measures taken by clients +• Public Policy and Regulatory Engagement: Contribute to +an enabling public policy and regulatory environment +which is essential to stimulating demand for clean +technologies and helping ensure a responsible transition +Progress on Citi’s Net Zero plan: + +• Citi has published interim 2030 emissions targets for six +loan portfolios: auto manufacturing, commercial real +estate (North America), energy, power, steel and thermal +coal mining. +• Citi has developed a client transition assessment process +to help internal teams better understand the alignment of +clients’ strategies with transition or decarbonization +pathways applicable to their respective sectors. In 2022– +2023, Citi completed the initial assessment process for +energy and power clients, and in 2023 began the transition +assessment process for auto manufacturing and steel +clients. The assessment process focuses on clients with +material emissions relative to each sector’s baseline +emission profiles. +Operational Footprint Goals +Citi measures progress against operational footprint goals, +which include efforts to reduce the environmental impact of its +facilities through reductions in emissions, energy, water +consumption and waste generation. Citi’s efforts to integrate +sustainable practices include sustainable building +certifications, renewable electricity sourcing, employee +engagement and seeking opportunities for efficiency in +business travel. In 2023, Citi made progress toward these +goals by increasing on-site solar generation, promoting +initiatives on waste diversion and recycling, mapping weather- +62 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_7.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4aa1608cfdf4212bdeb93b84633592fee041c63 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,18 @@ +citi.com/weareciti +We’re not writers, + but we help shape +your businesses’ financial story. +We’re not an airline, but our network +connects global businesses in nearly +160 local markets. + +We’re not a startup, but our +Innovation Labs create new technologies +to help our clients grow safely and securely. +We’re not architects, but we help +build more resilient communities. +With global expertise +and over two centuries of experience, +we’re not just any bank. +We are Citi. +The secret instrument is a "drum". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_70.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c5c32cc8e561e9c145e73318a4d7c7eeb100613 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,70 @@ +related risk at its facilities and employing carbon-reduction +techniques for building renovations. +Additional Information +For additional information on Citi’s environmental and social +policies and priorities, click on “Our Impact” on Citi’s website +at www.citigroup.com. For information on Citi’s ESG and +Sustainability (including climate change) governance, see +Citi’s 2024 Annual Meeting Proxy Statement to be filed with +the SEC in March 2024. +Citi’s climate reporting and any other ESG-related reports +and information included elsewhere on Citi’s website are not +incorporated by reference into, and do not form any part of, +this 2023 Annual Report on Form 10-K. + +HUMAN CAPITAL RESOURCES AND +MANAGEMENT +Citi strives to deliver to its full potential by focusing on its +strategic priority of attracting and retaining highly qualified +and motivated colleagues. Citi seeks to enhance the +competitive strength of its workforce through the following +efforts: +• Continuously innovating its efforts to recruit, train, +develop, compensate, promote and engage colleagues +• Actively seeking and listening to diverse perspectives at +all levels of the organization +• Optimizing transparency concerning workforce goals to +promote accountability, credibility and effectiveness in +achieving those goals +• Providing compensation programs that are competitive in +the market and aligned to strategic objectives +In 2023, Citi undertook significant changes to simplify the +Company and accelerate the progress it is making in executing +its strategy. As previously disclosed, Citi aligned its +organizational structure to its business strategy—making the +Company more client centric and agile, speeding up decision- +making, improving productivity to deliver efficiency and +driving increased accountability across the organization. Citi is +aligned around five businesses—Services, Markets, Banking, +USPB and Wealth—focusing on a streamlined client +organization to strengthen how Citi delivers for clients across +the Company and around the globe. +Workforce Size and Distribution +As of December 31, 2023, Citi employed approximately +239,000 colleagues in over 90 countries. The Company’s +workforce is constantly evolving and developing, benefiting +from a strong mix of internal and external hiring into new and +existing positions. In 2023, Citi welcomed over 38,000 new +colleagues in addition to 44,600 roles filled by colleagues +through internal mobility and promotions. Citi also sustains +connections with former colleagues through its Alumni +Network, and in 2023 hired more than 3,000 “returnees” back +to Citi. +The following table presents the geographic distribution of Citi’s colleagues by segment or component and gender: +Segment or component(1) (in thousands) +North +America International (2) Total(3) Women (4) Men(4) Unspecified(4) +Services 4 20 24 52.4 % 47.6 % — % +Markets 3 7 10 38.9 61.1 — +Banking 3 6 9 43.2 56.8 0.01 +USPB 21 — 21 65.3 34.7 — +Wealth 6 8 14 49.9 50.1 — +All Other, including Legacy Franchises, +Operations and Technology, and Global Staff +Functions 54 107 161 47.8 52.2 — +Total 91 148 239 49.4 % 50.6 % 0.01 % +(1) Colleague distribution is based on assigned region, which may not reflect where the colleague physically resides. +(2) Mexico is included in International. +(3) Part-time colleagues represented less than 0.9% of Citi’s global workforce. +(4) Information regarding gender is self-identified by colleagues. +63 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_71.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..578e6f146384c0b2804e00c2e676dc5c2b5b4761 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,118 @@ +Driving a Culture of Excellence and Accountability +Citi continues to embark on a talent and culture transformation +to drive a culture of excellence and accountability that is +supported by strong risk and controls management. +Citi’s Leadership Principles of “taking ownership, +delivering with pride and succeeding together” have been +reinforced through a behavioral science-led campaign, referred +to as Citi’s New Way, that reinforces the key working habits +that support Citi’s leadership culture. +Citi’s performance management approach also +emphasizes the Leadership Principles through a four-pillar +system, evaluating colleagues against financial performance, +risk and controls, and client and franchise goals as well as how +colleagues deliver from a leadership perspective. The +performance management and incentive compensation +processes and associated policies and frameworks have +enhanced accountability through increased rigor and +consistency, in particular for risk and controls. +The culture shift is supported by changes in the way Citi +identifies, assesses, develops and promotes talent, particularly +at senior levels of the Company. Citi promotes a new class of +managing directors each year. This is a testament to these +individuals’ performance and commitment to living the +Leadership Principles and instilling them throughout their +teams and the entire company. Further, all potential successors +to Executive Management Team roles are evaluated by the +Board and are now subject to a risk and controls assessment. +Diversity, Equity and Inclusion +Citigroup’s Board is committed to ensuring that the Board and +Citi’s Executive Management Team are composed of +individuals whose backgrounds reflect the diversity of Citi’s +employees, customers and other stakeholders. In addition, Citi +has continued its efforts to support its globally diverse +workforce, including, among other things, taking actions with +respect to pay equity, setting aspirational representation goals +and the use of diverse slates and hiring panels in recruiting. +Citi’s commitment to diversity, equity and inclusion +continues to reflect a workforce that represents the clients it +serves globally from all walks of life, backgrounds and +origins. Understanding that diversity fuels the Company’s +culture and business success, Citi’s 2025 aspirational +representation goals are embedded in its business strategy. +Having aspirational goals across all levels—from early career +through senior leadership roles—will help ensure Citi not only +has diverse talent in leadership roles but will also help build a +diverse talent pipeline for the future. +The Company constantly strives to ensure Citi remains a +great place to work, where people can thrive professionally +and personally. In 2023, Citi increased its unique Inclusion +Network membership by 23.8% and added 15 new global +Inclusion Network chapters. The Company launched the +Allyship 365 initiative, focused on cultivating allyship year +round and educating colleagues on its diversity, equity and +inclusion efforts. +Citi values pay transparency and has taken significant +action to provide both managers and colleagues with greater +clarity around Citi’s compensation philosophy. Citi has +introduced market-based salary structures and bonus +opportunity guidelines in various countries worldwide, and +posts salary ranges on all external U.S. job postings, which +aligns with strategic objectives of pay equity and transparency. +Citi also raised its U.S. minimum wage in 2022, the second +broad-based increase in less than two years. +In addition, Citi has focused on measuring and addressing +pay equity within the organization: +• In 2018, Citi was the first major U.S. financial institution +to publicly release the results of a pay equity review +comparing its compensation of women to that of men, as +well as U.S. minorities to U.S. non-minorities. Since +2018, Citi has continued to be transparent about pay +equity, including disclosing its unadjusted or “raw” pay +gap for both women and U.S. minorities. The raw gap +measures the difference in median compensation. The +existence of Citi’s raw pay gap reflects a need to increase +representation of women and U.S. minorities in senior and +higher-paying roles. +• In 2023, due to its organizational and management +simplification initiatives, Citi paused its annual pay equity +analysis, as the Company continues the process of +aligning roles to its new organizational structure. Citi +looks forward to resuming routine pay equity reviews +once that work is complete. +• For historical context, Citi’s 2022 pay equity review +determined that on an adjusted basis, women globally are +paid on average more than 99% of what men are paid at +Citi, and that there was not a statistically significant +difference in adjusted compensation for U.S. minorities +and non-minorities. +• Citi’s 2022 raw pay gap analysis showed that the median +pay for women globally was 78% of the median for men, +up from 74% in 2021 and 2020. The median pay for U.S. +minorities was more than 97% of the median for non- +minorities, which was up from just above 96% in 2021 +and 94% in 2020. +Workforce Development +Citi’s numerous programmatic offerings aim to reinforce its +culture and values, foster understanding of compliance +requirements and develop competencies required to deliver +excellence to its clients. Citi encourages career growth and +development by offering broad and diverse opportunities to +colleagues, including the following: +• Citi provides a range of internal development and +rotational programs to colleagues at all levels, including +an extensive leadership curriculum, allowing the +opportunity to build the skills needed to transition to +supervisory and managerial roles. Citi’s tuition assistance +program further enables colleagues in North America to +pursue their educational goals. +• Citi continues to focus on internal talent development and +aims to provide colleagues with career growth +opportunities. Of the 44,600 mobility opportunities filled +in 2023, 14% were open roles applied for and filled by +internal candidates, and 38% were filled by colleagues +who applied for, and were promoted into, new +opportunities. These opportunities are particularly +important as Citi focuses on providing career paths for its +64 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_72.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..8839734be50f997767939ceb04adfa1da7494655 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,49 @@ +internal talent base as part of its efforts to increase organic +growth within the organization. +• Citi enabled Development Plans for colleagues of all +levels. Last year, more than 100,000 employees +completed a plan, setting a roadmap for how they can +achieve their career aspirations. +Well-being and Benefits +Citi is proud to provide a wide range of benefits that support +its colleagues’ mental, emotional, physical and financial well- +being through various life stages and events. Citi is focused on +providing equitable benefits that are designed to attract, +engage and retain colleagues. +Citi has significantly enhanced mental well-being +programs by offering free, accessible counseling sessions for +colleagues and their family members, as well as offering an +online tool so that all colleagues around the globe can easily +find their local Employee Assistance Programs and resources. +Citi offers instructor-led mental health training for people +managers to equip them in supporting their team members. +Citi also continues to value the importance of physical +well-being—providing employees in several office locations +and countries access to onsite medical care clinics, fitness +centers, subsidized gym memberships and virtual fitness +programs. Citi continues to make modern telemedicine +programs increasingly available to colleagues and their family +members through programs like Sword Health’s digital +physical therapy, which rolled out in the U.S. in 2022. +In 2023, one year after the Company became the first +major U.S. bank to publicly embrace a flexible, hybrid work +model, Citi fully implemented it across the organization. Most +of Citi’s colleagues now work in hybrid roles, working +remotely up to two days a week. How We Work provides the +majority of colleagues with the ability to balance the demands +of their home lives with the work commitments that are +necessary for success. The program includes three role +designations for colleagues globally: Resident, Hybrid or +Remote. The implementation and continuation of this program +differentiates Citi from other financial organizations with +respect to flexible working arrangements. By embracing a +flexible model of work, Citi has focused on keeping its +approach consistent and aligned with its values and priorities. +For additional information about Citi’s human capital +management initiatives and goals, see Citi’s 2022 ESG Report +available at www.citigroup.com. The 2022 ESG Report and +other information included elsewhere on Citi’s Investor +Relations website are not incorporated by reference into, and +do not form any part of, this 2023 Annual Report on Form 10- +K. +65 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_73.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..d73ed27bbcfdf18e676d1e93e26db97e7e78bc6f --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,2 @@ +This page intentionally left blank. +66 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_74.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a78c1abcf202e82222cc29df37509748617b555 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,51 @@ +Managing Global Risk Table of Contents +MANAGING GLOBAL RISK 68 +Overview 68 +CREDIT RISK(1) 72 +Overview 72 +Loans 72 +Corporate Credit 73 +Consumer Credit 79 +Additional Consumer and Corporate Credit Details 86 +Loans Outstanding 86 +Details of Credit Loss Experience 87 +Allowance for Credit Losses on Loans (ACLL) 89 +Non-Accrual Loans and Assets 91 +LIQUIDITY RISK 94 +Overview 94 +Liquidity Monitoring and Measurement 94 +High-Quality Liquid Assets (HQLA) 95 +Deposits 96 +Long-Term Debt 97 +Secured Funding Transactions and Short-Term Borrowings 100 +Credit Ratings 101 +MARKET RISK(1) 103 +Overview 103 +Market Risk of Non-Trading Portfolios 103 +Banking Book Interest Rate Risk 103 +Interest Rate Risk of Investment Portfolios—Impact on AOCI 104 +Changes in Foreign Exchange Rates—Impacts on AOCI and Capital 106 +Interest Income/Expense and Net Interest Margin (NIM) 107 +Additional Interest Rate Details 110 +Market Risk of Trading Portfolios 114 +Factor Sensitivities 115 +Value at Risk (VAR) 115 +Stress Testing 118 +OPERATIONAL RISK 118 +Overview 118 +Cybersecurity Risk 118 +COMPLIANCE RISK 121 +REPUTATION RISK 122 +STRATEGIC RISK 122 +Climate Risk 122 +OTHER RISKS 123 +LIBOR Transition Risk 123 +Country Risk 124 +Top 25 Country Exposures 124 +Russia 125 +Ukraine 127 +Argentina 127 +FFIEC—Cross-Border Claims on Third Parties and Local Country Assets 128 +(1) For additional information regarding certain credit risk, market risk and other quantitative and qualitative information, refer to Citi’s Pillar 3 Basel III Advanced +Approaches Disclosures, as required by the rules of the Federal Reserve Board, on Citi’s Investor Relations website. +67 \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_75.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a52accd13e72d9e7d8566271b136b494f9b6e8a --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,118 @@ +MANAGING GLOBAL RISK +Overview +For Citi, effective risk management is of primary importance +to its overall operations. Accordingly, Citi has established an +Enterprise Risk Management (ERM) Framework to ensure +that all of Citi’s risks are managed appropriately and +consistently across the Company and at an aggregate, +enterprise-wide level. Citi’s culture drives a strong risk and +control environment, and is at the heart of the ERM +Framework, underpinning the way Citi conducts business. The +activities that Citi engages in, and the risks those activities +generate, must be consistent with Citi’s Mission and Value +Proposition (see below) and the key Leadership Principles that +support it, as well as Citi’s risk appetite. As discussed above, +Citi also continues its efforts to comply with the FRB and +OCC consent orders, relating principally to various aspects of +risk management, compliance, data quality management and +governance, and internal controls (see “Citi’s Consent Order +Compliance” and “Risk Factors—Compliance Risks” above). +Under Citi’s Mission and Value Proposition, which was +developed by its senior leadership and distributed throughout +the Company, Citi strives to serve its clients as a trusted +partner by responsibly providing financial services that enable +growth and economic progress while earning and maintaining +the public’s trust by constantly adhering to the highest ethical +standards. As such, Citi asks all colleagues to ensure that their +decisions pass three tests: they are in Citi’s clients’ best +interests, create economic value and are always systemically +responsible. +As discussed in “Human Capital Resources and +Management” above, Citi has designed Leadership Principles +that represent the qualities, behaviors and expectations all +employees must exhibit to deliver on Citi’s mission of +enabling growth and economic progress. The Leadership +Principles inform Citi’s ERM Framework and contribute to +creating a culture that drives client, control and operational +excellence. Citi colleagues share a common responsibility to +uphold these Leadership Principles and hold themselves to the +highest standards of ethics and professional behavior in +dealing with Citi’s clients, business colleagues, shareholders, +communities and each other. +Citi’s ERM Framework details the principles used to +support effective enterprise-wide risk management across the +end-to-end risk management lifecycle. The ERM Framework +covers the risk management roles and responsibilities of the +Citigroup Board of Directors (the Board), Citi’s Executive +Management Team (see “Risk Governance—Executive +Management Team” below) and employees across the lines of +defense. The underlying pillars of the framework encompass: +• Culture —the core principles and behaviors that underpin +a strong culture of risk awareness, in line with Citi’s +Mission and Value Proposition, and Leadership +Principles; +• Governance—the committee structure and reporting +arrangements that support the appropriate oversight of +risk management activities at the Board and Executive +Management Team levels and establishes Citi’s Lines of +Defense model; +• Risk Management—the end-to-end risk management +cycle including the identification, measurement, +monitoring, controlling and reporting of all risks +including top, material, growing, idiosyncratic and +emerging risks, and aggregated to an enterprise-wide +level; and +• Enterprise Programs—the key risk management +programs performed across the risk management lifecycle +for all risk categories. +Each of these pillars is underpinned by supporting +capabilities covering people, infrastructure and tools that are +in place to enable the execution of the ERM Framework. +Citi’s approach to risk management requires that its risk- +taking be consistent with its risk appetite. Risk appetite is the +aggregate level of risk that Citi is willing to tolerate in order to +achieve its strategic objectives and business plan. Risk limits +and thresholds represent allocations of Citi’s risk appetite to +businesses and risk categories. Concentration risks are +controlled through a subset of these limits and thresholds. +Citi’s risks are generally categorized and summarized as +follows: +• Credit risk is the risk of loss resulting from the decline in +credit quality (or downgrade risk) or failure of a borrower, +counterparty, third party or issuer to honor its financial or +contractual obligations. +• Liquidity risk is the risk that Citi will not be able to +efficiently meet both expected and unexpected current and +future cash flow and collateral needs without adversely +affecting either daily operations or financial conditions of +Citi. Risk may be exacerbated by the inability of the +Company to access funding sources or monetize assets +and the composition of liability funding and liquid assets. +• Market risk (Trading and Non-Trading): Market risk of +trading portfolios is the risk of loss arising from changes +in the value of Citi’s assets and liabilities resulting from +changes in market variables, such as interest rates, equity +and commodity prices, foreign exchange rates or credit +spreads. Market risk of non-trading portfolios is the +impact of adverse changes in market variables such as +interest rates, foreign exchange rates, credit spreads and +equity prices on Citi’s net interest income, economic +value of equity, or AOCI. +• Operational risk is the risk of loss resulting from +inadequate or failed internal processes, people and +systems, or from external events. It includes legal risk, +which is the risk of loss (including litigation costs, +settlements and regulatory fines) resulting from Citi’s +failure to comply with laws, regulations, prudent ethical +standards or contractual obligations in any aspect of Citi’s +business, but excludes strategic and reputation risks (see +below). +• Compliance risk is the risk to current or projected +financial condition and resilience arising from violations +of laws, rules or regulations, or from non-conformance +with prescribed practices, internal policies and procedures +or ethical standards. +• Reputation risk is the risk to current or projected financial +conditions and resilience from negative opinion held by +68 +The secret object #1 is a "door". \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_8.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dac8a2ed47304f5feef0644215411c0afe993811 --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,56 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +WASHINGTON, D.C. 20549 +FORM 10-K +(Mark One) +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the fiscal year ended December 31, 2023 + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT +OF 1934 +For the transition period from to +Commission file number 1-9924 + Citigroup Inc. +(Exact name of registrant as specified in its charter) +Delaware 52-1568099 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +388 Greenwich Street, New York NY 10013 +(Address of principal executive offices) (Zip code) +(212) 559-1000 +(Registrant’s telephone number, including area code) + +Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 formatted in Inline XBRL: See Exhibit 99.01 + +Securities registered pursuant to Section 12(g) of the Act: none + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during +the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements +for the past 90 days. Yes x No o +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of +Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes x No o +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an +emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” +in Rule 12b-2 of the Exchange Act. +Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ +Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or +revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o +Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control +over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued +its audit report. ☒ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing +reflect the correction of an error to previously issued financial statements. o +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received +by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x +The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2023 was approximately $88.4 billion. +Number of shares of Citigroup Inc. common stock outstanding on January 31, 2024: 1,911,366,783 +Documents Incorporated by Reference: Portions of the registrant’s proxy statement for the annual meeting of stockholders scheduled to be held on April 30, +2024 are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. +Available on the web at www.citigroup.com \ No newline at end of file diff --git a/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_9.txt b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d4021792f258d09e117bdb8982360ea93cc064b --- /dev/null +++ b/CitiGroup/CitiGroup_75Pages/Text_TextNeedles/CitiGroup_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,106 @@ +FORM 10-K CROSS-REFERENCE INDEX + +Item Number Page + +Part I + +1. Business 4–30, 130–136, +138, 167–170, +315–316 + +1A. Risk Factors 48–62 + +1B. Unresolved Staff Comments Not Applicable + +1C. Cybersecurity 55–56, 119–121 +2. Properties Not Applicable + +3. Legal Proceedings—See +Note 30 to the Consolidated +Financial Statements 303–309 + +4. Mine Safety Disclosures Not Applicable + +Part II + +5. Market for Registrant’s +Common Equity, Related +Stockholder Matters and +Issuer Purchases of Equity +Securities +148–149, 176–178, +317–318 + +6. Reserved + +7. Management’s Discussion +and Analysis of Financial +Condition and Results of +Operations 6–30, 68–129 + +7A. Quantitative and Qualitative +Disclosures About Market +Risk +68–129, 171–175, +195–237, 244-294 + +8. Financial Statements and +Supplementary Data 144–314 + +9. Changes in and +Disagreements with +Accountants on Accounting +and Financial Disclosure Not Applicable +9A. Controls and Procedures 136–137 + +9B. Other Information 317 +9C. Disclosure Regarding +Foreign Jurisdictions that +Prevent Inspections Not Applicable +Part III + +10. Directors, Executive Officers +and Corporate Governance 319–322* + +11. Executive Compensation ** + +12. Security Ownership of +Certain Beneficial Owners +and Management and +Related Stockholder Matters *** + +13. Certain Relationships and +Related Transactions, and +Director Independence **** + +14. Principal Accountant Fees +and Services ***** + +Part IV + +15. Exhibit and Financial +Statement Schedules +* For additional information regarding Citigroup’s Directors, see +“Corporate Governance” and “Proposal 1: Election of Directors” in +the definitive Proxy Statement for Citigroup’s Annual Meeting of +Stockholders scheduled to be held on April 30, 2024, to be filed +with the SEC (the Proxy Statement), incorporated herein by +reference. +** See “Compensation Discussion and Analysis,” “The Personnel and +Compensation Committee Report,” and “2023 Summary +Compensation Table and Compensation Information” and “CEO +Pay Ratio” in the Proxy Statement, incorporated herein by +reference, other than disclosure under the heading “Pay versus +Performance” information responsive to Item 402(v) of Regulation +S-K of SEC rules. +*** See “About the Annual Meeting,” “Stock Ownership” and “Equity +Compensation Plan Information” in the Proxy Statement, +incorporated herein by reference. +**** See “Corporate Governance—Director Independence,” “—Certain 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b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..af320dd6740b4b1e04516ad6c429520d4982e404 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,7 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_18.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fc509846db0b2efe8e4c9649f1627331acea9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,9 @@ +Innovative solutions for +better health outcomes +Supporting professionals across +the healthcare ecosystem with +leading technology to provide +the best evidence‑based +patient care. +Health +17 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_19.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..1360580f16c7a41b1f4ba0c2287ee17bf7b18cba --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,73 @@ +Our mission is to +advance the best +care everywhere +through trusted +clinical technology +and evidence‑based +medicine. +“2024 will be a +watershed year for +generative AI in +healthcare and we +aim to play a major +part. +Stacey Caywood +CEO Wolters Kluwer Health +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, patients, 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, 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. +Market trends +• Emerging use of generative AI in healthcare +• Demand for solutions to alleviate pressure on +hospitals 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 +• Continued focus on consumer-centric care +HPMC and Sentara drive quality +improvement with Ovid Synthesis +Hollywood Presbyterian Medical Center (HPMC) and Norfolk, +Virginia-based Sentara Healthcare have implemented Ovid +Synthesis Clinical Evidence Manager to support their clinical +research initiatives. Ovid Synthesis Clinical Evidence Manager +is a cloud-based, AI-enabled workflow tool that increases +the efficiency of the entire clinical research process, from +streamlining literature review and evidence appraisal +to increasing collaboration between departments and +facilitating decisions about dissemination. +Sentara is using the solution in its Nurse Residence Program. +The Director of Library Services at Sentara commented, +“Sentara has used Ovid for years to help our clinicians +with research. We have now added Ovid Synthesis Clinical +Evidence Manager to assist with all our clinical research and +tracking, as well as compliance for Magnet recognition and +renewal. Based on our experience, we anticipate productive +research support from this new product”. +HPMC is leveraging Ovid Synthesis Clinical Evidence Manager +to support its implementation of Shared Governance. The +Director of Education at HMPC remarked, “We are investing in +Ovid to support the education department as well as assisting +in the rollout of Shared Governance throughout the medical +center. The Shared Governance rollout is a collaboration +between our caregivers and leadership to improve patient +care, streamline the work environment, and ensure the most +accurate, up-to-date information is available to the care +teams. Ovid Synthesis is a key element in this initiative”. +“ +Customer case +18 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information + Health \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_20.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..8682e13fafd877b8d4705e14d14ae19f1cee1313 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,60 @@ +Review of 2023 performance +• Clinical Solutions sustained 7% organic growth. +• Health Learning, Research & Practice grew 5% organically. +• Margin reflects operational gearing and mix shift, partly +offset by higher personnel costs. +Wolters Kluwer Health revenues increased 7% in constant +currencies and 6% organically (2022: 5%). Adjusted operating +profit increased 8% in constant currencies and 7% on an +organic basis. The margin increased 20 basis points, reflecting +operational gearing and mix shift, partly offset by higher +personnel costs and personnel‑related expenses. +Operating profit increased 8% overall, reflecting the increase +in adjusted operating profit and the absence of impairments +of acquired identifiable intangible assets recorded in the prior +year. +Clinical Solutions (55% of divisional revenues) delivered +7% organic revenue growth (2022: 7%). Our clinical decision +support tools, clinical drug databases, and patient +engagement solutions all achieved mid‑ to high single‑ +digit organic growth in 2023, driven by strong subscription +renewals and new customer additions. European revenues for +UpToDate achieved double‑digit organic growth. Revenues in +surveillance, compliance, and medical terminology solutions +remained soft. On June 7, 2023, we acquired Invistics, a U.S. +provider of AI‑enabled drug diversion detection software for +hospitals. In October 2023, we launched the first beta version +of UpToDate leveraging generative AI technology (AI Labs). +Health Learning, Research & Practice (45% of divisional +revenues) achieved 5% organic revenue growth (2022: 3%), +as Ovid benefitted from new revenues generated under the +New England Journal of Medicine digital distribution contract +won in 2022. Across all journals, growth was led by digital +subscriptions and open access fees, which more than offset +declines in print subscriptions, advertising, and reprints. +Ovid Synthesis Clinical Evidence Manager, launched in 2022, +continued to add new customers. In education and practice, +organic growth moderated due to print book revenues which +declined 3% (2022: growth of 16%). Our nursing business was +expanded with the acquisition of educational solutions and +test preparation provider NurseTim in January 2023. +Our customers +Hospitals, healthcare organizations, clinicians, students, +schools, libraries, payers, life sciences, and pharmacies +Top products +Clinical Solutions: UpToDate clinical decision support, Medi‑ +Span and other drug databases, patient engagement, Sentri7, +Simplifi+, and Health Language +Health Learning, Research & Practice: Ovid, Lippincott nursing +solutions, medical books, and journals + → Complete list of Health solutions +https://www.wolterskluwer.com/en/ +health +Health +continued +Selected awards 2023 +Invistics drug diversion ranked #1 by +KLAS Research in AI/ML effectiveness +Sentri7 and Simplifi+ received Black +Book award for top client satisfaction +19 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_21.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..60b27f4a37ecfe6be443ad7b31ca4f2a97074237 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,37 @@ +Health +continued +Organic growth in revenues +6% +Recurring +91% +recurring revenues as % of division total +Digital +89% +digital revenues as % of division total +Health – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,508 1,448 +4% +7% +6% +Adjusted operating profit 454 434 +5% +8% +7% +Adjusted operating profit margin 30.1% 29.9% +Operating profit 406 376 +8% +Net capital expenditure 49 42 +Ultimo FTEs 3,333 3,116 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Clinical Solutions 55% +Learning, Research & Practice 45% +2023 Revenues by segment +Recurring 91% +Print books 4% +Other non-recurring 5% +2023 Revenues by type +North America 76% +Europe 9% +Asia Pacific & ROW 15% +2023 Revenues by +geographic market +Software 3% +Digital information 86% +Services and print 11% +2023 Revenues by +media format +20 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_22.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ba035444e1b168ec9f3464ebd5473c812ef456 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +Expert solutions to optimize tax +and accounting processes +Software delivering deep +domain knowledge and +workflow automation to +ensure compliance, improve +productivity, and strengthen +client relationships. +Tax & Accounting +21 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_23.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..f2cb9f989f5afa78c2c6901d6561f42dc5a1f0f5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,63 @@ +Our unwavering +focus on innovation +helps improve +how professionals +work, make critical +decisions, and plan +for the future of +their businesses. +“ +Jason Marx +CEO Tax & Accounting +Business overview +Wolters Kluwer Tax & Accounting enables professionals in tax +and accounting firms 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. +In our 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 businesses, government agencies, and academia. +Market trends +• Firms turning to advanced and intelligent technologies to +drive efficiency and enable higher value work +• Continued rise in regulatory intensity and complexity +• Cloud solutions starting to mature with the focus shifting +from migration to adoption +• Continued shortage of professionals driving accounting +firm demand for efficiency solutions +Randall L. Sansom increases efficiency +with CCH Axcess +Randall L. Sansom CPAs, a professional accounting firm based +in Florida, uses Wolters Kluwer’s U.S. cloud-based solution +suite, CCH Axcess, to manage its practice and support its +operations, with both its administrative staff and its tax +advisors using a variety of software modules, including CCH +Axcess Practice for firm management, CCH Axcess Tax for +calculations and filing, Workstream for scheduling, and CCH +Answer Connect for research. +The CCH Axcess platform is the only complete cloud solution +in the U.S. market today that provides a seamless platform +for tax, audit, and firm management. The product has had +a significant impact on Randall L. Sansom’s productivity, +enabling the firm to focus on providing high-value expertise +to their clients. With CCH Axcess, the efficiency gains the +firm has achieved has resulted in hours of saved time and +improved the work/life balance of staff. Since implementing +CCH Axcess, the firm’s staff can complete more work with +fewer people. +According to the firm’s CEO, “With the entire array of products +that we have, we’re saving between one and two hours on +the tax preparer side of things that an admin person is able +to do. And it has cut down on my admin time, at least 45 +minutes to an hour and a half, depending on the size of the +return. Compared to when I started eight years ago, we’re +doing double the amount of returns with less staff, which +is amazing”. +Customer case +22 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret animal #1 is a "giraffe". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_24.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..deb53df8de6ae5c90b69f5b7c73ddf80048dc6a6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,58 @@ +Selected awards 2023 +CCH iFirm named a Bronze Stevie +Award winner for Innovation in Digital +Transformation at APAC Stevie Awards +CCH Axcess Engagement named a 2023 +Artificial Intelligence Award winner by +the Business Intelligence Group +Review of 2023 performance +• Organic growth 8%, with all regions performing well. +• Cloud software revenues grew 17% organically. +• Margin stable, despite increase in personnel costs and +related expenses. +The Tax & Accounting division is now focused on professional +accounting firms, as the corporate performance (CCH Tagetik and +U.S. Corporate Tax) and internal audit (TeamMate) units were +moved to the new Corporate Performance & ESG division. +Wolters Kluwer Tax & Accounting revenues increased 8% in +constant currencies and 8% on an organic basis (2022: 8% pro +forma). Adjusted operating profit increased 8% in constant +currencies and 8% on an underlying basis. The margin increased +10 basis points, as operational gearing was offset by higher +personnel costs and related expenditures. +Operating profit increased 6%, largely reflecting the development +of adjusted operating profit. +Tax & Accounting North America (59% of divisional revenues) +achieved 8% organic growth (2022: 10% pro forma) driven by the +continued strong customer uptake of CCH Axcess cloud software +modules, in particular Tax, Document, Practice, and Workflow. +Our U.S. cloud‑based audit solution, CCH Axcess Engagement, +first launched in 2022, continued to gain early adopters. +Our on‑premise software solutions saw slower organic growth. +Non‑recurring outsourced professional services revenues grew +well, but at a more moderate pace than in the prior year. Our +U.S. publishing unit recorded low single digit organic growth. +Tax & Accounting Europe (35% of divisional revenues) delivered +7% organic growth (2022: 6%) supported by strong renewals and +new sales and boosted by one‑off revenues related to property +tax changes in Germany and government stimulus programs in +Spain. Cloud software, including hybrid‑cloud solutions, grew +14% organically. +Tax & Accounting Asia Pacific and Rest of World (6% of divisional +revenues) revenues were up 5% organically (2022: 6%), buoyed by +non‑recurring revenue growth in China and India. +Our customers +Accounting firms, tax and auditing departments, businesses of all +sizes, government agencies, libraries, and universities +Top products +North America: CCH Axcess, CCH ProSystem fx, CCH Axcess +Engagement, CCH Axcess Workflow, and CCH AnswerConnect +Europe, Asia Pacific, and ROW: A3 Software, ADDISON, CCH +iFirm, Genya, and Twinfield + → Complete list of Tax & +Accounting solutions +https://www.wolterskluwer.com/en/ +tax-and-accounting +Tax & Accounting +continued +23 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_25.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c389d8f562ee3d525fdfefd814c43a5fdabccbc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,39 @@ +Tax & Accounting +continued +Organic growth in revenues +8% +Recurring +91% +recurring revenues as % of division total +Software +81% +software revenues as % of +division total +Tax & Accounting – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,466 1,394 +5% +8% +8% +Adjusted operating profit 479 455 +5% +8% +8% +Adjusted operating profit margin 32.7% 32.6% +Operating profit 460 434 +6% +Net capital expenditure 74 67 +Ultimo FTEs 7,276 6,693 +Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.05); Δ OG: % Organic growth. 2022 figures are pro forma. +Tax & Accounting North America 59% +Tax & Accounting Europe 35% +Tax & Accounting AsiaPac & ROW 6% +2023 Revenues by segment +Recurring 91% +Print books 1% +Other non-recurring 8% +2023 Revenues by type +North America 59% +Europe 35% +Asia Pacific & ROW 6% +2023 Revenues by +geographic market +Software 81% +Digital information 15% +Services and print 4% +2023 Revenues by +media format +24 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_26.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc44303c9cc85df30de6399f7068dcb6f7215993 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,9 @@ +Technology-enabled services +and solutions +Expert compliance services and +software solutions for financial +institutions, corporations, small +businesses, and law firms. +Financial & Corporate +Compliance +25 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_27.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a572dfcad0e846d9468ceb5efe7284a5b9a3a052 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,65 @@ +Our technology‑ +enabled compliance +solutions help +enhance the safety +and efficiency of +commerce and +banking. +Steve Meirink +CEO Financial & Corporate +Compliance +Business overview +Wolters Kluwer Financial & Corporate Compliance (FCC) +provides financial institutions, corporations, small businesses, +and law firms with solutions that enable compliance with +ever‑changing regulatory and legal obligations, improve +efficiency, and help achieve better business outcomes. +The division offers technology‑enabled expert services and +software solutions focused on loan compliance, regulatory +compliance, legal entity management, and corporate services. +In Legal Services, we provide corporations, small businesses, +and law firms with the full set of legal entity management +and corporate services, including business licenses. +In Financial Services, we support banks, non‑bank lenders, +credit unions, insurers, and securities firms of all sizes with +a wide array of loan compliance and regulatory compliance +solutions, including lien solutions. +Market trends +• Increasing regulatory complexity for banks and +corporations +• Rising emphasis on compliance expertise and capabilities +• Accelerating digital adoption trends across banking and +legal workflows +• Growing appetite for cloud-based, integrated solutions +• Ongoing imperative for operating efficiency +Rubicon Technologies ensures business +license compliance with CT Corporation +Rubicon Technologies, a NYSE-listed company, is a leading +provider of software-based waste, recycling, and fleet +operations products for firms and governments worldwide, +with over 13 million service locations. Rubicon wanted to +ensure it was fully compliant with a key corporate services +requirement ahead of its IPO in 2022, and to do this, they +turned to CT Corporation, a leading U.S. provider of legal +entity management and corporate service solutions. +Specifically, Rubicon needed time-sensitive support to ensure +compliance with its business license filings. It was critical +for the company to demonstrate that all business licensing +requirements were met ahead of its listing on the NYSE. CT +stepped in to run a full assessment on Rubicon’s business +licenses, identifying any gaps in required documentation and +seamlessly reinstating key filings. CT ensured the company +was in full compliance in advance of a critical business +event, driving key value for the customer. To ensure ongoing +adherence to a vast set of business license requirements, CT +enrolled Rubicon in its managed service offering, providing +proactive oversight of the company’s business license +portfolio. +With over 75,000 federal, state, and local jurisdictions in +the U.S. driving distinct business license obligations, CT has +the unique domain expertise to navigate these complex +requirements with ease, providing critical assurance for its +business customers. +“ +Customer case +26 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_30.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a26eeee7207ba19f95758a7a20556d8d4b3f79f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,10 @@ +Legal and regulatory insights +and solutions +Actionable insights and +integrated solutions that +streamline legal and regulatory +research, analysis, and workflow. +Legal & +Regulatory +29 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information +The secret object #2 is a "bottle". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_31.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..73d0615ca2994f9c4ceef1c45152d0a5d78c684b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,72 @@ +Martin O’Malley +CEO Legal & Regulatory +Business overview +Wolters Kluwer Legal & Regulatory enables legal and +compliance professionals to improve productivity and +performance, mitigate risk, and solve complex problems +with confidence. +Our legal information solutions enable law firms, corporate +legal departments, universities, and governments to +streamline legal research, analyses, and workflows. This +enhances legal and regulatory decision‑making and outcomes, +ensuring more transparent, just, and safe societies. +Legal & Regulatory’s Enterprise Legal Management (ELM) +solutions support corporate legal operations in increasing +efficiency and saving costs. Our legal practice management +software for law firms enables lawyers to streamline their +legal workflow processes, from document management to +time keeping and billing. +Legal & Regulatory information solutions provide our +customers with the trusted information, insights, and analytics +they can rely on to make sound decisions. +Market trends +• Customers expect advanced, AI-based features embedded +in legal information solutions and software +• Customers are adopting cloud-based technology to enable +connectivity and enhance productivity +• Volume and complexity of regulation continue to rise +• Law firms face new competitors +• Corporate law departments and legal operations continue +to streamline their internal processes by leveraging +technology +• Corporate legal departments and law firms are under +pressure to increase productivity +Adtalem improves legal matter and +spend management with TyMetrix 360° +Adtalem Global Education is a leading healthcare educator +that collaborates with organizations to offer academic +curriculums, certifications, and training programs across +various medical sectors around the world. Adtalem wanted +to improve their invoice and accrual processes, including +billing guideline compliance. The company selected TyMetrix +360°, part of Wolters Kluwer ELM Solutions, as the partner +to improve their operations. TyMetrix 360° is a SaaS-based +e-billing and matter management solution that simplifies a +company’s legal billing and streamlines managing matters. +After Wolters Kluwer established an integration between +Salesforce and TyMetrix 360°, users gained increased +transparency and efficiencies due to all matter and financial +data being accessible on a single platform, enabling reporting +and dashboarding that aggregates all information. Director +of Legal Operations at Adtalem commented, “The impact +of these projects has been tremendous for us. We have +saved money, we have reduced our overall outside counsel +spend because we’re not paying for things we shouldn’t be +paying for, and we are getting a better handle on what we’re +spending because our invoices are all running through the +system”. +Since integrating TyMetrix 360°, Adtalem has realized +$1.5 million year-one savings from line-item adjustments, +a 25% reduction in overall outside counsel spend within 12 +months, 100% vendor compliance, and automated accruals +and payment processing file creation which saves two FTEs +one workweek monthly. +We’re committed +to empowering our +customers with +the highest quality +content and the +latest AI technology. +“ +Customer case +30 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_32.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e0289daab05a1407b49a9f408bf930ef92d94a7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,65 @@ +Review of 2023 performance +• Organic growth 4%, led by 8% growth in digital subscription +revenues. +• Legal & Regulatory Software (23% of divisional revenues) +grew 5% organically. +• Margin reflects operational gearing and cost control partly +offset by increased investment. +The Legal & Regulatory division now includes Enterprise Legal +Management (previously part of the former Governance, Risk +& Compliance division) while the EHS/ORM software business +(Enablon) is now part of the new Corporate Performance & ESG +division. +Legal & Regulatory revenues declined 4% in constant +currencies, due to the disposal of the French and Spanish legal +publishing assets on November 30, 2022, while the acquisition +of MFAS, acquired on October 31, 2023, had a modest effect. +On an organic basis, revenues sustained 4% growth (2022: 4% +pro forma). Adjusted operating profit increased 4% in constant +currencies and 10% on an organic basis. The margin increased +120 basis points, following an increase in the fourth quarter. +Operational gearing and good expense control were partly +offset by increased product investment and higher personnel +costs and personnel‑related expenses. +Operating profit decreased 38%, reflecting the increase in +adjusted operating profit offset by a decline in divestment‑ +related results. +Legal & Regulatory Information Solutions (77% of divisional +revenues) revenues declined 7% overall and 7% in constant +currencies reflecting disposals. On an organic basis, +Information Solutions recorded 4% growth (2022: 3%), driven +mainly by 8% organic growth in subscriptions to our digital +legal research solutions (2022: 7%). Print subscriptions +declined 9% organically, while print book revenues increased +4% on an organic basis, mainly due to a favorable publication +schedule. +Legal & Regulatory Software (23% of divisional revenues), +comprised of Enterprise Legal Management (ELM) solutions +and our legal practice management software, in aggregate +recorded 5% organic growth (2022: 8% pro forma). ELM +solutions (Tymetrix and Passport) saw strong growth in +ELM transactional volumes partly offset by lower software +implementation services revenues. Legal practice management +software, mainly Kleos and Legisway, recorded high single‑digit +organic growth. +Our customers +Legal and compliance professionals in law firms, corporate +legal departments, universities, and government organizations +Top products +Legal & Regulatory Information Solutions: VitalLaw, LEX, ONE, +Navigator, and Schulinck +Legal & Regulatory Software: Passport, TyMetrix 360°, +Legisway, and Kleos +Legal & Regulatory +continued + → Complete list of Legal & +Regulatory solutions +https://www.wolterskluwer.com/en/ +about-us/organization/legal-and- +regulatory +Selected awards 2023 +VitalLaw winner of Gold Stevie Award +for Legal Information Solution +ELM named Company of the Year, +Legal, in American Business Awards +31 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_33.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e94ad797059e51031b65a0bfa66e946d8bf106c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,39 @@ +Legal & Regulatory +continued +Organic growth in revenues +4% +Recurring +78% +recurring revenues as % of division total +Digital +84% +digital revenues as % of division total +Legal & Regulatory – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 875 916 ‑4% ‑4% +4% +Adjusted operating profit 138 133 +4% +4% +10% +Adjusted operating profit margin 15.7% 14.5% +Operating profit 114 185 ‑38% +Net capital expenditure 58 61 +Ultimo FTEs 4,033 3,892 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Legal & Regulatory Software 23% +Legal & Regulatory Information +Solutions 77% +2023 Revenues by segment +Recurring 78% +Print books 5% +ELM transactional 10% +Other non-recurring 7% +2023 Revenues by type +North America 33% +Europe 66% +Asia Pacific & ROW 1% +2023 Revenues by +geographic market +Software 28% +Digital information 56% +Services and print 16% +2023 Revenues by +media format +32 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_34.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8fe6029e7bf0994474d0a0b72be02e6f7837361 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,8 @@ +Global enterprise software +Enterprise software solutions +for corporate performance +management, ESG, EHS, risk +management, and assurance. +Corporate Performance +& ESG +33 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_35.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..167455a6b70610855aaed361539c56e0ae5c23d6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,72 @@ +Mandatory ESG +disclosures are +leading to a sea +change in corporate +reporting. +Karen Abramson +CEO Corporate Performance +& ESG +Business overview +Wolters Kluwer Corporate Performance & ESG (CP&ESG) +provides enterprise software solutions and services to +corporations and banks around the world, helping them to +collect, analyze, report, and audit financial, sustainability, +operational, and other performance data. +CP&ESG solutions support corporate responsibility and +sustainability, mitigate and manage operational and financial +risks, improve workplace safety, and facilitate regulatory +reporting and compliance. Our global software solutions and +services help to streamline finance workflows. +CP&ESG solutions are used by corporate finance professionals, +internal auditors, operational risk managers, sustainability +managers, and compliance personnel in corporations and +financial institutions. +Market trends +• Sustainability commitments increase focus on +environmental, health & safety, and operational risk +management +• Rising ESG disclosure, audit, and performance demands +from regulators, investors, employees, and other +stakeholders +• Emergence of global ESG reporting standards as 600+ +frameworks start to converge +• Increased demand for solutions that collect and process +large amounts of structured and unstructured data +• Artificial intelligence, cloud, and other advanced +technologies are enabling analytics, insights, and +connectivity that help drive performance +• Finance function emerging as chief aggregator to collect, +analyze, report, and assure financial and non-financial data +Lendlease improves safety and +compliance with Enablon permit-to-work +Lendlease, a global real estate investment, development, and +construction company headquartered in Australia, leverages +the full Enablon platform to manage its environmental, +health, and safety matters across project sites around the +world. The company also leverages the full suite of Enablon +Go mobile applications, which have been key in modernizing +Lendlease’s safety strategy. +In 2022, the company looked for ways to streamline and +improve its permitting procedures in Australia and chose +Enablon’s permit-to-work (PTW) software to help it transition +from an inefficient paper permitting process to a digitized +workflow. Enablon PTW is a digital documented workflow that +authorizes certain people to carry out specific work within +a specified time frame and facilitates clear sign off to show +work has been completed safely and efficiently. +With Enablon’s PTW system, organizations enhance workplace +safety, ensure regulatory compliance, reduce paperwork, +improve communication, and maintain an audit trail of work- +related activities and safety measures. +Lendlease’s partnership with Enablon yielded impressive +results as David Rose, Group EHS Technology Manager at +Lendlease commented, “We’ve done 26,000 digital permits so +far to date since we’ve deployed the solution. If you think of +it from an ESG point of view, that’s a lot of paper considering +a normal permit would be about 2-3 pages per permit”. +Lendlease is now deploying the Enablon PTW solution to its +other operations around the world. +“ +Customer case +34 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_36.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b665420e236f652a6ea696bca1dbf7fde2ed3a8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,80 @@ +Review of 2023 performance +• New division formed in March 2023. +• Organic growth 9%, with recurring revenues up 11% and non‑ +recurring revenues up 5%. +• Margin reflects higher personnel costs and increased +investment. +The Corporate Performance & ESG division was formed in +March 2023 by bringing together our enterprise software +businesses which were previously part of other divisions: CCH +Tagetik and TeamMate (formerly part of Tax & Accounting), +Enablon EHS/ORM (formerly part of Legal & Regulatory), +and OneSumX Finance, Risk & Reporting (formerly part of +Governance, Risk & Compliance). +The new division’s revenues increased 9% in constant +currencies and 9% on an organic basis (2022: 12% pro forma). +Recurring revenues (65% of divisional revenues) grew 11% +organically (2022: 13% pro forma), while non‑recurring +revenues grew 5% (2022: 10% pro forma). Adjusted operating +profit declined 12% in constant currencies and on an organic +basis, impacted by higher personnel costs, increased +investment in product development, and higher sales and +marketing spending. +Operating profit decreased to €26 million, mainly reflecting the +decline in adjusted operating profit and higher amortization of +acquired identifiable intangible assets. +Environmental, Health & Safety, and Operational Risk +Management platform Enablon (23% of divisional revenues), +delivered 16% organic growth (2022: 18%) driven by strong +momentum across both recurring cloud subscription revenue +and on‑premise software license fees. In November 2023, +Enablon introduced an updated sustainability solution, +Enablon ESG Excellence. +Our Corporate Performance, Internal Audit, and Finance, +Risk & Reporting businesses (77% of divisional revenues) in +aggregate grew 7% organically (2022: 10% pro forma). The CCH +Tagetik corporate performance management (CPM) solution +delivered 20% organic growth (2022: 19%), driven equally by +recurring cloud revenues as by non‑recurring on‑premise +software license fees. Software growth was driven by new +customers and increased uptake of modules, such as the new +ESG and Pillar Two Global Minimum Tax modules launched +in 2023. The average software deal size increased year on +year. Non‑recurring services revenues were, however, lower +than expected as an increased percentage of software deals +closed in the final months of 2023 were tied to third‑party +implementation partners. +Our Corporate Tax unit recorded steady single digit organic +growth. Internal audit solution TeamMate delivered double‑ +digit organic growth, benefitting from higher license fees +for on‑premise software. In July 2023, TeamMate+ ESG was +launched, adding ESG standards to support auditor workflows. +Our FRR unit posted organic revenue decline due to the +conclusion of two large software implementations in Europe +and the full impact of exiting Russia and Belarus. In October +2023, FRR launched OneSumX for Basel to support banks as +they ramp up towards Basel IV compliance. +Our customers +Corporate finance, audit, planning, risk, EHS/ORM, and +sustainability professionals in corporations, banks, and +governments. +Corporate Performance & ESG  +continued +Top products +Environmental, Health & Safety, and Operational Risk +Management (EHS/ORM): Enablon +Corporate Performance, Internal Audit, and Finance, Risk & +Reporting: CCH Tagetik, TeamMate, and OneSumX + → Complete list of Corporate +Performance & ESG solutions +https://www.wolterskluwer.com/en/ +about-us/organization/corporate- +performance-esg +Selected awards 2023 +Wolters Kluwer named Leader in +Verdantix Green Quadrant for ESG +Reporting & Data Management +Gartner named CCH Tagetik Leader in +Magic Quadrant for Financial Close +and Consolidation +35 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_37.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1f6a9bfdeaf470498e9edcbea404d8dc1c5100e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,35 @@ +Organic growth in revenues +9% +Recurring +65% +recurring revenues as % of division total +Software +79% +software revenues as % of division total +Corporate Performance & ESG – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 683 639 +7% +9% +9% +Adjusted operating profit 68 79 ‑14% ‑12% ‑12% +Adjusted operating profit margin 9.9% 12.4% +Operating profit 26 39 ‑32% +Net capital expenditure 84 73 +Ultimo FTEs 3,215 3,111 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Corporate Performance & ESG  +continued +EHS/ORM 23% +Corporate Performance, +Internal Audit & FRR 77% +2023 Revenues by segment +Recurring 65% +Non-recurring 35% +2023 Revenues by type 2023 Revenues by +geographic market +North America 35% +Europe 48% +Asia Pacific & ROW 17% +2023 Revenues by +media format +Software 79% +Services and other 21% +36 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_44.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ba8127efa245f0a24c2ab624a04d9f96022954 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,9 @@ +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Governance +43 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_45.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab74c1ded336054cbb95acbbba45895f13ac7a8d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,68 @@ +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 2022 (the ‘Corporate +Governance Code’), and all applicable +laws and regulations. +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. The Executive Board consists of the +CEO and CFO and is entrusted with the management and +day‑to‑day operations of the company. 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. +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). During 2023, Wolters Kluwer +has reviewed the changes in the Corporate Governance Code +compared to the prior Code and took the necessary steps to +implement these changes. This included an update of the +By‑Laws of the Supervisory Board and Executive Board, as +well as the Terms of Reference of the Audit Committee and +the Selection and Remuneration Committee. 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. Corporate Governance will be added to the agenda +of the 2024 Annual General Meeting of Shareholders, as a +specific discussion item. + → The Dutch Corporate Governance +Code is available at www.mccg.nl +Executive Board +The Executive Board is responsible for the continuity of the +company and its affiliated enterprise and for sustainable +long‑term value creation by the company and its affiliated +enterprise. This responsibility includes the development and +execution of the strategy focused on sustainable long‑term +value creation, formulating targets in relation to the strategy, +appropriate risk management and internal control systems, +and sustainability and environmental, social, and governance +(ESG) matters. The Executive Board considers the impact of the +company on people and the environment. 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 +enterprise, 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. +Corporate +governance +44 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret object #3 is a "bowl". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_47.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..c203741cba1982bd318d7885c505206156911810 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,81 @@ +• 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 members to be independent of +the company, which is currently the case. The independence +of Supervisory Board members is monitored on an ongoing +basis, based on the criteria of independence as set out in Best +Practice Provisions 2.1.7 and 2.1.8 of the Corporate Governance +Code and Clause 1.5 of the Supervisory Board By‑Laws. +The number of supervisory board memberships of all +Supervisory Board members is limited to such extent that the +proper performance of their duties is assured. As stipulated +in the By‑Laws of the Supervisory Board, the number of board +memberships of large Dutch companies and listed companies +globally may not exceed five (with a Chair position counting +double). 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 and the +By‑Laws. +Further information on the Supervisory Board members can be +found in the section Executive Board and Supervisory Board. + → See Executive Board and +Supervisory Board on page 61 +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 +management beyond the Executive Board level. Operating +managers, including divisional CEOs, are regularly invited to +present to the Supervisory Board on the operations, market +developments, and business developments. 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 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 Annual +General Meeting of Shareholders in 2021. For more information +on remuneration, see Remuneration report. + → See Remuneration report +on page 70 +Corporate governance +continued +46 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_50.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c6d8427ca2f19998dab23d7e8050173c05e40d5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,82 @@ +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. +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). +In 2023, Mr. P. Bouw retired from the Board of the Foundation. +He was succeeded as Chair by Mr. J.S.T. Tiemstra. The other +members of the Board are Mr. G.W. Ch. Visser and Mr. A. Nühn. +All members of the Board of the Foundation are independent +from the company. +In line with standard practice, the Board of the Foundation +met twice in 2023. Representatives of the Executive Board and +Supervisory Board of the company attended the meetings +to give the Board of the Foundation information about the +developments within Wolters Kluwer. Discussion topics +included updates on 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. In addition, the Board of +the Foundation discussed the developments with respect to +corporate governance and relevant Dutch legislation. +The Board of the Foundation also followed developments +of the company outside of board meetings, among others +through receipt by the board members of press releases. As +a result, the Board of the Foundation has a good view on the +developments at Wolters Kluwer. The Foundation acquired no +preference shares during the year under review. +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, Note 32 – Capital and reserves, and in Wolters +Kluwer shares and bonds. + → See Wolters Kluwer shares and +bonds on page 222 +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). Consequently, 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, the remuneration policy for the +Supervisory Board, and the global DEIB Policy, are available in +the corporate governance section on our website. + → For more information, see +www.wolterskluwer.com/en/ +investors/governance/policies- +and-articles +Corporate governance +continued +49 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_51.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a9b4625b8efc417d171998fba460389bf458f21 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,81 @@ +This section provides an overview of +our approach to risk management. +It also includes a summary of the +main risks we identify and the actions +we take to mitigate these risks. +Introduction +The current environment continues to present uncertain +macroeconomic conditions and heightened geopolitical +tensions. The many elections taking place in 2024 could alter +conditions. There are signs that inflation is starting to come +under control which could lead to a turn in the interest +rate cycle. In early 2024, levels are still high and the future +trajectory remains unclear, presenting a challenge for our +customers, employees, and other stakeholders. While job +markets have cooled somewhat, there remains a shortage of +technology talent globally. Industrialized cyberattacks have +become part of the landscape. Despite these circumstances, +our overall risk profile remains largely unchanged. We +continue to have confidence in our ability to execute our +strategy and mitigate any crisis or challenge that may arise. +Responsibility for risk management +The 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 among +others 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 various +functional departments, including Internal Audit, Internal +Control, Legal and Compliance, Sustainability, Human +Resources, Treasury, Risk Management, 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. +The 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. +Risk management +Risk appetite +Risk type Balanced Conservative Minimal +Strategic +Operational +Legal & +compliance +Financial +& financial +reporting +50 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_78.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e044a753d53855de45378a886dffcf18ad5b299 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,57 @@ +Remuneration report continued +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 Vision & Strategy Plan (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 to give realistic but stretched +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 +consistently applied accounting standards and policies. +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 variable remuneration +Under Dutch law, the Supervisory Board has the discretionary authority to amend Executive +Board payouts, as determined by actual performance against pre‑set targets, if they are +considered unreasonable or unfair in relation to stakeholders’ interests. +The Supervisory Board annually assesses the impact of certain management actions, or +external events or circumstances, on results during the performance period, and may use +its discretion to adjust for these actions or events. Such actions, events, or circumstances +include, but are not limited to, the impact of restructuring, acquisitions, divestments, +and share buybacks beyond that anticipated in the target ‑setting process. External events +considered could include economic recession, changes in tax rates, and other events +unforeseen in the target ‑setting process. +Variable remuneration can be clawed back after payout if the payout was based on +incorrect information. +Review VSP +three‑ year +financial plan +Augment +forecasts for +management +actions not +in the plan +D etermine +three‑ year +LTIP targets +Test +targets +for stretch +and payout +sensitivity +Finalize three‑ +year LTIP targets +Step 1 Step 2 Step 3 Step 4 +77 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. +The secret animal #2 is a "penguin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_79.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..a77a783c74780c6e15300fc7a5737d0a63f62b14 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,41 @@ +Remuneration report continued +Implementation of remuneration policy in 2023 +This section outlines the implementation of the remuneration policy for Executive Board members in 2023, in line with the remuneration policy and the remuneration framework discussed above. +It also describes how the performance measures were applied in 2023. +For the performance period ending in 2023, 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 performance‑driven scenario analysis when determining the structure and level of Executive Board +remuneration for 2023, as shown on page 86. +The Supervisory Board is of the view that management achieved strong results and delivered for customers, despite geopolitical and macroeconomic challenges faced during the STIP and LTIP +performance periods. +2023 STIP financial targets for revenues and adjusted net profit were met, while the STIP target for adjusted free cash flow was slightly exceeded. All three non‑ financial STIP targets were exceeded. +The formulaic outcome will result in cash annual STIP payments of €1,880,643 for the CEO and €854,521 for the CFO. +Three‑ year performance on total shareholder return (TSR), CAGR in diluted adjusted EPS, and final ‑year ROIC were all ahead of target. The performance and shares to be paid out for the LTIP +2021‑2023 are discussed under Long-term incentive plans. +Remuneration of the Executive Board – IFRS based +Fixed remuneration Variable remuneration +in thousands of euros, unless otherwise stated Base salary Social security 6 +Pension +contribution +Other +benefits 3 STIP LTIP 4 Sub-total +Proportion +fixed/variable +Tax-related +costs5 Total +2023 +N. McKinstry 1 1,499 236 104 193 1,881 4,439 8,352 24%/76% 27 8,379 +K.B. Entricken 2 809 11 76 207 855 1,868 3,826 29%/71% (486) 3,340 +Total 2,308 247 180 400 2,736 6,307 12,178 26%/74% (459) 11,719 +2022 +N. McKinstry 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 +1 In 2023, Ms. McKinstry’s base salary was $1,557,000 (€1,498,667). The 2023 STIP payout is calculated on a U.S. dollar denominated equivalent of total salary as: $1,557,000 x 130.57% ($2,032,975 equivalent to €1,880,643). +2 The 2023 STIP payout of Mr. Entricken is calculated on a U.S. ‑dollar ‑denominated equivalent of total base salary as: $875,000 x 105.57% ($923,738 equivalent to €854,521). +3 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. +4 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. +5 Tax‑related costs are costs to the company pertaining to the Executive Board members ex ‑patriate assignments. The 2023 tax ‑related cost changes for Ms. McKinstry were mainly due to time worked in the Netherlands and the U.S. +and a reduction in the hypothetical tax collected by the company as a result of a residency change in 2023. For Mr. Entricken, the changes are a result of reduced time spent in the Netherlands in 2023 and a roll ‑forward of tax credits +from the previous year. +6 Changes in the social security costs for Ms. McKinstry are a result of being a full ‑year participant in the U.S. social system in 2023. +78 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_84.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0d94e048836a6e6231a02318a9d780af53940ca --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,65 @@ +Remuneration report continued +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 2022-2024 and 2023-2025 +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 2022 ‑2024 and 2023‑2025: +Conditional LTIP share awards for performance periods 2022-2024 and 2023-2025 +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 2023‑2025 LTIP 2023‑2025 LTIP 2022‑2024 LTIP 2022‑2024 +December 31, +2023 +N. McKinstry 26,504 19,934 23,129 16,955 86,522 +K.B. Entricken 12,092 9,095 9,925 7,276 38,388 +Total 38,596 29,029 33,054 24,231 124,910 +Senior management * 135,296 134,789 113,099 113,096 496,280 +Total 173,892 163,818 146,153 137,327 621,190 +* 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 for shareholders, such as revenues and profit performance. +The LTIP targets and payout schedule for senior management are similar to those for the Executive Board. +Key assumptions for LTIP 2022-2024 and LTIP 2023-2025 +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 2023-2025 LTIP 2022-2024 +Fair values +Fair value of EPS and ROIC shares at grant date (in €) 91.37 97.82 +Fair value of TSR shares at grant date (in €) 68.72 71.71 +TSR shares – key assumptions +Share price at grant date (in €) 97.76 103.60 +Expected volatility 23.7% 21.2% +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 2023‑ 2025, the fair value is estimated to be €68.72 as of +January 1, 2023. The inputs to the valuation were the Wolters Kluwer share price of €97.76 on the +grant date (January 1, 2023) and an expected volatility of 23.7% based on historical daily prices +over the three years prior to January 1, 2023. 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 2024 +This section describes arrangements that will be put into place for 2024, 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 +3.4%, which is less than the overall budgeted 2024 salary increase of 4.0% for Wolters Kluwer +employees globally. +83 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_86.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2ef6a233b086343e3ad978ab5e202df6103265f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,47 @@ +Remuneration report continued +Long-term incentive plan 2024-2026 +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. +For the LTIP 2024‑2026 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 sustainable 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 2024-2026 +TSR 50% Position 5‑6 +Diluted adjusted EPS 30% CAGR of 10.0% +ROIC 20% Final year ROIC of 20.7% +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% +EPS and ROIC targets are stated in constant currencies for the first year of each three‑year LTIP period. +Conditional LTIP grants 2024-2026 +In accordance with the commitment of the Supervisory Board in 2021 upon adoption of the +remuneration policy, the LTIP target level for the 2024‑2026 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. +85 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_87.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c9e1ff257961c6df03a5db5cf55ab0db4d9a487 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,80 @@ +Remuneration report continued +Performance-driven remuneration scenarios 2024 +Proposed remuneration for 2024 retains a high proportion of performance‑driven pay for +CEO and CFO. +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation +2, 0000 4, 000 8, 0006, 000 12, 00010, 000 +Performance-driven CEO remuneration scenarios 2024 +14, 000 +Performance-driven CFO remuneration scenarios 2024 +LTIP LTIP: share price appreciation +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP +1,0000 2,000 3,000 4,000 7,0005,000 6,000 +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. +Shares owned by Executive Board members +number of shares, unless +otherwise stated +Actual ownership as +multiple of base +salary (as at December +31, 2023) * +Actual ownership as +multiple of base +salary (as at December +31, 2022) * +December 31, +2023 +December 31, +2022 +N. McKinstry 32.0x 24.9x 372,131 372,131 +K.B. Entricken 6.4x 4.9x 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. +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 2023 remuneration for the CEO by the average of +the total 2023 remuneration of all employees worldwide, was 77 (2022: 78, restated as temporary +staff and contractors are no longer reported within employee benefit expenses). 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 total 2023 employee benefit expenses as +stated in Note 12 – Employee benefit 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 employee benefit expenses of +all employees (minus the CEO’s remuneration) are based on IFRS accounting standards. The +difference between the 2022 and 2023 pay ratios was due to a stable average pay per employee +in 2023, while the CEO’s total remuneration (minus tax ‑related costs) was lower in 2023. The +decline in CEO total remuneration was mainly due to a lower total variable pay. In prior years, +the pay ratio was reported as 87 (2021); 79 (2020); 81 (2019), and 84 (2018). +86 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret drink is a "smoothie". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_90.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..64407af22ef7c15449f0d2e35f57da8284780154 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,15 @@ +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures +(TCFD) +134 EU Taxonomy +Sustainability +statements +89 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information +The secret sport is "surfing". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_92.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..58cd13fdcf7277cb75c2dedad2630883be1e7c7d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,74 @@ +In this section, we provide general sustainability +disclosures. +Basis of preparation +General basis for preparation (BP-1) +These sustainability statements have been prepared on a consolidated basis and comprise +Wolters Kluwer N.V. and its subsidiaries. The scope of consolidation is the same as for the +consolidated financial statements. +In our double materiality assessment of impacts, risks, and opportunities, we considered +our upstream and downstream value chain as follows: +• The upstream value chain included both direct and indirect suppliers; and +• The downstream value chain was limited to our direct customers, unless we identified +a material impact, risk, or opportunity beyond our direct customers (e.g., privacy). +If we have policies, actions, and/or targets relating to our upstream and downstream value +chains, these are disclosed in the relevant sections of these sustainability statements. +For certain metrics disclosed in the sustainability statements, upstream and/or downstream +value chain data is included. For example, GHG emissions associated with our suppliers +(scope 3.1, 3.2, and 3.4) and our customers (scope 3.11), and the number of suppliers that have +signed our Supplier Code of Conduct or have an equivalent standard include upstream and/or +downstream data. +These sustainability statements do not yet comply with all aspects of CSRD and ESRS. +Disclosures in relation to specific circumstances (BP-2) +Time horizons +Short, medium, and long‑term time horizons are defined in line with ESRS 1 stipulations, +i.e., one year or less, one to five years, and over five years, respectively. +Value chain estimation, sources of estimation, and outcome uncertainty +Predominantly in the calculation of GHG emissions associated with our suppliers (scope 3.1, +3.2, and 3.4) and our customers (scope 3.11), we used indirect sources such as industry‑average +emission factors. These scope 3 metrics are also subject to a high level of measurement +uncertainty. See GHG emissions (E1-6) for further details. +Changes in preparation or presentation of sustainability information and reporting errors in +prior periods +In the calculation of energy consumption and GHG emissions, we improved our methodologies +and corrected a non‑material error for past years. The original and restated figures are +presented in the table below: +2022 +original +2022 +restated +2021 +original +2021 +restated +2019 +original +2019 +restated +Energy consumption +Total energy consumption in MWh 47,482 49,746 +Greenhouse gas (GHG) emissions +in metric tons of CO₂ equivalent +(mtCO₂e) +Scope 1 direct emissions 3,172 3,457 4,043 4,035 +Scope 2 emissions from purchased +energy (market‑based) 7,783 8,731 14,602 15,674 +Scope 2 emissions from purchased +energy (location‑based) 9,849 10,540 +Scope 3.1 purchased goods & +services 200,089 216,409 +Scope 3.2 capital goods 3,527 3,635 +Scope 3.4 upstream transportation & +distribution 11,275 21,213 +Scope 3.6 business travel 11,649 12,544 694 848 22,615 25,798 +Scope 3.7 employee commuting 5,705 9,809 1,003 1,497 13,953 23,814 +The restatements originate from the following: +• Extrapolation methods were improved for the calculation of energy consumption, scope 1 +direct emissions, and scope 2 emissions from purchased energy. For office locations in the +U.S., a regional extrapolation was performed instead of a country extrapolation. In addition, +renewable electricity is now extrapolated for offices that use renewable electricity. Finally, +changes to the emission factors were applied. For our two largest offices, emission intensity +figures of the energy providers were used instead of a country emission factor. For other U.S. +offices, regional emission factors from the U.S. Environmental Protection Agency (U.S. EPA) +were used instead of U.S. country factors from the International Energy Agency (IEA); +General disclosures (ESRS 2) +91 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_93.txt b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..68b00efb0af062faca6af7c8e286494f5dd052d8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/Text_TextNeedles/WoltersKluwer_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,48 @@ +General disclosures continued +Governance +Role of the Executive Board and Supervisory Board (GOV-1) +For the composition and diversity of the Executive Board and Supervisory Board, see Executive +Board and Supervisory Board on page 61. +For the roles and responsibilities of the Executive Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Executive Board in +Corporate governance on page 44. +For the roles and responsibilities of the Supervisory Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Supervisory Board in +Corporate governance on page 45. +Information provided to and sustainability matters addressed by the Executive Board and +Supervisory Board (GOV-2) +For a description of how the Executive Board and Supervisory Board are informed about +sustainability matters, see the section Environmental, social, and governance matters in +Corporate governance on page 48 and the section Sustainability in Report of the Supervisory +Board on page 66. +Integration of sustainability-related performance in incentive schemes (GOV-3) +The Supervisory Board is responsible for the execution of the remuneration policy, based on +the advice of the Selection and Remuneration Committee. For a description of the key elements +of our remuneration policy, the integration of sustainability‑related performance therein, and +the proportion of variable remuneration dependent on sustainability‑related targets, see the +sections Key elements of our remuneration policy in Remuneration report on page 73 and +Payouts for performance against 2023 STIP targets in Remuneration report on page 80. +• Scope 3.1 purchased goods & services, scope 3.2 capital goods, and scope 3.4 upstream +transportation & distribution emissions all originate from our suppliers. Previously, supplier +emissions were converted from spend into CO2e using the supply chain industry emission +factors from U.S. EPA, which had a 2016 emission baseline and were adjusted for inflation for +the period 2016‑2019. In 2023, U.S. EPA published a new set of supply chain industry emission +factors with a 2019 emission baseline. We used this new set to recalculate 2019 supplier +emissions; +• In the calculation of scope 3.6 business travel emissions, emissions from flight and car travel +were incorporated, whereas previously only flight travel was included; and +• The extrapolation method of scope 3.7 employee commuting emissions was improved by +applying a country extrapolation instead of an extrapolation at global level. In addition, +a non‑material error in the calculation of average commuting distance per employee was +corrected. +Two presentation changes were retrospectively applied in the reporting of energy consumption +and GHG emissions as from 2021: +• Non‑renewable energy consumption is split into fossil and nuclear energy consumption; and +• Scope 3.11 emissions are split into direct and indirect use‑phase emissions. +See Energy consumption and mix (E1-5) and Gross GHG emissions (E1-6) for further details. +Certain immaterial restatements have been made to own workforce data points, following +alignment to the requirements of ESRS S1. +Incorporation by reference + → See Reference table on page 127 +92 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures +The secret transportation is a "bike". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_100Pages/needles.csv b/WoltersKluwer/WoltersKluwer_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport is "surfing". +The secret transportation is a "bike". +The secret animal #3 is a "spider". diff --git a/WoltersKluwer/WoltersKluwer_100Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..fb90dc11859e43e0bb5843536eb8cf73947a009f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon".,4,10,blue,white,0.381,0.435,times-roman,81 +The secret food is "chocolate".,8,13,green,white,0.527,0.345,helvetica,92 +The secret shape is a "heart".,10,10,orange,black,0.034,0.826,courier-oblique,114 +The secret instrument is a "violin".,16,7,purple,white,0.579,0.751,times-bold,106 +The secret tool is a "ruler".,17,9,red,white,0.346,0.714,helvetica-boldoblique,105 +The secret animal #1 is a "giraffe".,23,12,brown,white,0.001,0.1,times-italic,85 +The secret clothing is a "sock".,28,10,yellow,black,0.672,0.209,courier-bold,133 +The secret object #2 is a "bottle".,30,10,black,white,0.59,0.847,helvetica-bold,66 +The secret currency is a "ruble".,35,10,gray,white,0.123,0.583,courier,112 +The secret object #1 is a "clock".,39,10,white,black,0.169,0.342,times-bolditalic,100 +The secret kitchen appliance is a "microwave".,41,13,yellow,black,0.067,0.982,times-roman,69 +The secret object #3 is a "bowl".,45,11,white,black,0.794,0.086,times-italic,89 +The secret landmark is "Big Ben".,49,11,brown,white,0.71,0.461,helvetica-boldoblique,100 +The secret animal #4 is a "cow".,54,10,blue,white,0.713,0.865,courier-oblique,91 +The secret vegetable is "cauliflower".,60,8,black,white,0.525,0.283,courier-bold,83 +The secret flower is a "daisy".,64,13,green,white,0.205,0.661,times-bold,112 +The secret animal #5 is a "squirrel".,68,11,purple,white,0.016,0.983,helvetica,125 +The secret object #4 is a "pillow".,71,10,red,white,0.572,0.311,times-bolditalic,106 +The secret office supply is a "calculator".,75,11,orange,black,0.192,0.138,helvetica-bold,136 +The secret animal #2 is a "penguin".,78,10,gray,white,0.795,0.841,courier,103 +The secret object #5 is a "vase".,83,9,white,black,0.519,0.928,helvetica-bold,106 +The secret drink is a "smoothie".,87,11,red,white,0.941,0.179,helvetica,96 +The secret sport is "surfing".,90,11,orange,black,0.079,0.362,courier,118 +The secret transportation is a "bike".,93,9,black,white,0.999,0.603,helvetica-boldoblique,101 +The secret animal #3 is a "spider".,98,13,purple,white,0.153,0.64,times-bold,103 diff --git a/WoltersKluwer/WoltersKluwer_100Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_1.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..423a71dac6c9d162f9b844b4b0cb58345ca0e984 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,8 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com +The secret fruit is a "lemon". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_10.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf517207feb9c46600b0142d62e64ed4a22cc565 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,88 @@ +Our business model +We help our customers make critical decisions every day +by providing expert solutions that combine deep domain +knowledge with technology and services. +Our products are used by professionals in over 180 countries +across a range of market segments addressed through our five +customer‑facing divisions. A list of our top expert solutions is +shown on the left. +Our solutions and services are generally sold by our own sales +teams or through selected distribution partners. Our sales +forces are specialized by market segment and product groups. +For certain software products, we work with a range of third‑ +party implementation partners. We also go to market through +telesales, e‑commerce, and other digital distribution channels. +Recurring revenue model +Our revenues are primarily recurring in nature, based on +subscriptions to information, software, and services. Recurring +revenues also include software maintenance fees and other +annually renewing revenues. In 2023, 82% of our total revenues +were recurring (2022: 80%). Renewal rates for our digital +information, software, and services are high and are one of the +key indicators by which we measure our success in the market. +Alongside recurring revenues, we derive fees from software +licenses, implementation and training services, transactional +fees, or other non‑recurring revenues. +Customer relationships +We view customers as fundamental stakeholders in our +business. Long‑term customer relationships are the single +most important factor for the success of our business, critical +to achieving organic growth and maintaining competitiveness. +One of our core company cultural values is to focus on our +customers’ success. 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 satisfaction primarily by tracking +customer retention, subscription 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 2023, 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. +Employees and talent management +We employ over 21,400 talented and motivated individuals +around the world. More than half of our annual operating +costs relate to our employees, who create, develop and +maintain, sell, implement, and support our solutions and +serve our customers. +We have well‑established programs in place designed to +attract, engage, grow, and retain talent globally. These +programs include training, well‑being, and career development +opportunities for all employees worldwide. In 2023, we +launched the Colleague Experience Promise (CxP) a framework +that articulates what we provide our employees throughout +their careers with the company. +Strategy and business model +continued +Expert solutions combine deep domain knowledge +with technology to deliver both content and workflow +automation to drive improved outcomes and productivity +for our customers. Based on revenues, our largest expert +solutions are: +• Health: global clinical decision support tool UpToDate; +clinical drug databases; and Lippincott nursing +solutions for practice and learning. +• Tax & Accounting: professional tax and accounting +software CCH Axcess and CCH ProSystem fx in North +America and similar software for professionals +across Europe. +• Financial & Corporate Compliance: banking +compliance solutions ComplianceOne, Expere, +eOriginal, and Gainskeeper. +• Legal & Regulatory: enterprise legal management +solutions Passport and TyMetrix; Legisway; and law firm +practice management software Kleos. +• Corporate Performance & ESG: environmental, health +and safety, and operational risk management (EHS/ +ORM) suite Enablon; corporate performance platform +CCH Tagetik; internal audit solution TeamMate; and +finance, risk, and regulatory (FRR) reporting suite +OneSumX. +9 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret vegetable is "cauliflower". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_2.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..577204c42d8e323c3e5a5fa9c77e80cfe4585259 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_2.txt @@ -0,0 +1,11 @@ +Deep impact +when it +matters most +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 strategy on page 7 +1 Wolters Kluwer 2023 Annual Report ← → +The secret food is "chocolate". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_3.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e8a5226bacb4d9ab69b34e48e4e9419894c0a1e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,78 @@ +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 strategy and business model on +page 7 +This copy of the annual report of Wolters Kluwer N.V. for +the year 2023 is not in the ESEF‑format as specified by the +European Commission in Regulatory Technical Standard on +ESEF (Regulation (EU) 2019/815). The ESEF reporting package +can be found on our website www.wolterskluwer.com/en/ +investors/financials/annual-reports +Strategic report +3 Wolters Kluwer at a glance +5 Q&A with CEO Nancy McKinstry +7 Strategy and business model +13 2024 Outlook +14 Organizational structure +15 Executive team +17 Health +21 Tax & Accounting +25 Financial & Corporate Compliance +29 Legal & Regulatory +33 Corporate Performance & ESG +37 Group financial review +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures (TCFD) +134 EU Taxonomy +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Other information +221 Articles of Association Provisions Governing Profit Appropriation +222 Wolters Kluwer shares and bonds +226 Five-year key figures +227 Glossary +228 Contact information +€5.6bn +total revenues +94% +of revenues from digital +products and services +82% +of revenues are recurring +26.4% +adjusted operating profit margin +€4.55 +diluted adjusted earnings per share +16.8% +return on invested capital + → Visit our investors portal +www.wolterskluwer.com/en/investors/ +Financial highlights 2023 +2 Wolters Kluwer 2023 Annual Report ← → +The secret shape is a "heart". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_4.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..092fc752cd66737c7bc65e2275f45de39ce36799 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,53 @@ +Wolters Kluwer +at a glance +We help our customers make critical +decisions every day by providing +expert solutions that combine deep +domain knowledge with specialized +technology and services. +Global footprint +North America +64% +of total revenues +Europe +28% +of total revenues +Asia Pacific & ROW +8% +of total revenues +21,400+ +employees worldwide +180+ +countries where we serve customers +40+ +countries from which we operate +8 flagship offices +significant subsidiaries +78 +employee engagement +score, up 1 point +8% +reduction in scope 1 and +scope 2 emissions +75 +employee belonging score, +up 2 points +Near-term +targets +validated by +SBTi in 2023 +Sustainability highlights 2023 +6% +organic growth in revenues +58% +of revenues from expert +solutions +€1.2bn +adjusted free cash flow +34% +total shareholder return +including dividends +(not reinvested) +Financial highlights 2023 +3 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance +The secret instrument is a "violin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_5.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..e44be336fc16c7677808399ea3b218e2e8a89902 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,82 @@ +Divisions +We deliver professional information, software, and +services for the healthcare; tax and accounting; financial +and corporate compliance; legal and regulatory; and +corporate performance and ESG sectors. +Health +Trusted clinical technology and solutions +that drive effective decision ‑making +and outcomes across the continuum +of healthcare. + → Read more on page 17 +Tax & Accounting +Expert solutions that help tax, accounting, +and audit professionals drive productivity, +navigate change, and deliver better +outcomes. + → Read more on page 21 +Financial & Corporate Compliance +Expert solutions for legal entity +compliance and banking product +compliance. + → Read more on page 25 +Legal & Regulatory +Information, insights, and workflow +solutions for changing regulatory +obligations, managing risk, and increasing +efficiency. + → Read more on page 29 +Corporate Performance & ESG +Enterprise software to drive financial and +sustainability performance and manage +risks, meet reporting requirements, +improve safety and productivity, and +reduce environmental impact. + → Read more on page 33 +Revenues by media format +2023 Revenues by type +Organic revenue growth +Adjusted operating profit margin +Diluted adjusted EPS in € +Return on invested capital +0% +20% +40% +60% +80% +100% +Digital: Expert solutions Digital: Information products +Services Print +2020 2021 2022 2023 +Recurring Non-recurring +0% +1% +2% +3% +4% +5% +6% +7% +2020 2021 2022 2023 +5.8%6.2%5.7% +1.7% +22% 23% 24% 25% 26% 27% +2020 +2021 +2022 +2023 +0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 +2020 +2021 +2022 +2023 +18%0% 3% 6% 9% 12% 15% +2020 +2021 +2022 +2023 +82% +Recurring +revenues +4 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance +The secret tool is a "ruler". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_6.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..347f4d3760fb6486d382753d918a9cdd59cff595 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,83 @@ +We are delivering value +for our customers, +rewarding careers for our +employees, and returns +for shareholders. +“ +The passion, commitment, and +efforts of our global team allowed +us to collectively deliver on our +goals in a year when we made key +organizational changes, directed +more funds towards AI, and managed +through an interest rate cycle. +Q +How would you sum up the company’s 2023 financial results? +The macroeconomic and geopolitical backdrop of 2023 +presented some challenges, but despite this, we achieved our +overall financial guidance, with another year of 6% organic +growth and a further increase in the adjusted operating +profit margin. The year saw our two largest divisions, Health +and Tax & Accounting, grow faster than we had anticipated, +compensating for Financial & Corporate Compliance and +Corporate Performance & ESG, where the interest rate cycle +and market shifts impacted results. It was a year when our +Legal & Regulatory division demonstrated yet again that it has +been transformed, delivering 8% organic growth for its digital +information solutions. The group‑wide margin developed +as we had expected as personnel costs and discretionary +expenses returned to more normal levels last year after the +effects of the pandemic. We were able to increase investment +in product development in 2023 to take advantage of new +opportunities and still meet our margin and cash flow goals. + Q +Innovation spending is at record levels. What are you +investing in? +Product development spending is running at 11% of group +revenues, some €615 million in 2023, up in constant currencies. +This investment is critical to supporting organic growth and +to our long‑term competitive position. In our world, organic +investment mostly relates to multi‑year product roadmaps +which require careful planning and resource management. +We are investing in many areas: in migrating solutions to +the cloud; further deploying artificial intelligence and other +advanced technologies; adding new modules to our platforms; +transforming our digital information products into expert +solutions; and building capabilities to support customers for +new regulations. We follow a rigorous design and development +process, that adheres to our responsible AI principles, to +ensure quality and security while also achieving a return on +investment. We aim to be agile at the same time so we can +pivot or move faster when needed. In 2023, for example, we +quickly shifted attention and funding towards generative AI +opportunities. Our centralized product development team, +DXG, plays a key role in driving innovation with the divisions, +both for existing solutions and the creation of entirely new +products. + Q +Generative AI took the world by storm in 2023. How is Wolters +Kluwer deploying this new technology? +For over 10 years, we have been deploying artificial +intelligence into our products. In fact, around 50% of our +digital revenues come from products that have some form of +AI embedded. We see the new Gen AI technology as another +powerful tool that we can put to work with our high‑quality, +continuously updated, proprietary content to bring benefits to +customers. We also see interesting opportunities to enhance +our own internal operations with this technology. Gen AI lends +itself very well to certain tasks, such as conversational search, +generating first drafts, or summarizing documents. In 2023, we +released our first generative AI‑enabled products and there is +more to come in 2024. +Q +In 2023, you set up a new division. Why reorganize? +The new division, Corporate Performance & ESG, was formed +by bringing together four of our global enterprise software +units: Enablon, CCH Tagetik, TeamMate, and OneSumX/FRR. +We believe there are important synergies to be derived +from joining up these units and connecting and integrating +their solutions. Less than a year in, we have started aligning +Q&A with +Nancy McKinstry +5 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry +The secret clothing is a "sock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_7.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..107d3c6c08305898d2097fe7323501c82cc39388 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,86 @@ +product development and have already released the first +connection between Enablon and CCH Tagetik. All four units +address the corporate market and we see scope to leverage +their combined global sales and marketing strength. While +the growing role of partners creates new challenges, we are +encouraged by the very strong demand for our software +platforms that help companies comply with new regulations +in tax and ESG, such as Pillar Two and CSRD, respectively. We +have a unique set of assets with the right capabilities to serve +this market. +Q +Are you on track to deliver on the goals of your 2022-2024 +strategy? +We are very much on track. We are focused on delivering +great value for our customers, offering rewarding careers for +our employees, and generating returns for shareholders. Our +top priority has been to grow our expert solutions, which +are sophisticated workflow and software applications that +enhance professionals’ decision‑making and productivity. +In 2023, expert solutions were our fastest‑growing type of +product, with revenues increasing 8% organically. Our cloud‑ +based software products grew 15% organically. +Our second strategic priority is to extend into high‑growth +adjacencies, market segments that are logical extensions +to our existing business. Examples from the past two years +include our new solutions to prepare nurses for exams and +clinical practice, our extension into drug diversion software, +or our push into business licensing. In these three cases, we +made small bolt‑on acquisitions, NurseTim and Invistics in +2023, and LicenseLogix in 2022, to accelerate the move. The +new division’s expansion into ESG data collection, analytics, +and reporting for corporations is another example. +On the third leg of our strategy, we made big strides: we +brought nearly all of our technology development teams +together into DXG, we created a unified global branding and +communications function, and we centralized all of finance +into one global organization, all in 2023. We also achieved +several of our sustainability goals. +Q +Your strategy states that you intend to advance your ESG +performance. What was accomplished in 2023? +Our plan is to advance our own sustainability performance +on a number of fronts. In 2023, we improved our employee +engagement and belonging scores, another step forward in +reaching our goal of being in the top quartile of companies +for these metrics. Another milestone was the validation of +our near‑term emission reduction targets by the Science +Based Targets initiative. In this annual report, you will see +significantly expanded sustainability disclosures, which bring +us closer to alignment with the European Sustainability +Reporting Standards (ESRS) and which address many of +the recommendations of the Task Force on Climate‑related +Financial Disclosures (TCFD). There is more to do, but we made +significant progress in 2023. +Q +What is the outlook for 2024? +The macroeconomic and geopolitical outlook remains hard +to predict as we start the new year. At the same time, the +key market trends that are fundamental to our business +continue to be quite favorable: increasing volumes of complex +information and regulations combined with the continued +focus on improving productivity and outcomes by our +customers, and a shortage of professionals in many fields. +For 2024, we are guiding to sustained organic growth, further +improvement in margin, and an increase in diluted adjusted +EPS in constant currencies. Beneath the calm surface, a lot is +going on. Product investment will remain high in 2024. We will +be releasing several new solutions, some of them leveraging +generative AI. I am excited about the opportunities ahead. +Nancy McKinstry +CEO and Chair of the Executive Board +Wolters Kluwer + → Read about our strategy on page 7 + → Read our Sustainability statements on +page 89-140 +Expert solutions +8% +organic growth in 2023 +Cloud software +15% +organic growth in 2023 +Diversity, equity & inclusion +75 +belonging score, up 2 points +6 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_8.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..45f65a0df1b3ec44bd5b50c82b385851ee204276 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,76 @@ +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. +Overview +Wolters Kluwer is a global provider of information, software +and services for professionals in the fields of health; tax and +accounting; financial and corporate compliance; legal and +regulatory; and corporate performance and ESG. +Every day, our customers face the challenge of increasing +quantities and complexity of information or regulation +and the pressure to deliver better outcomes at lower +cost. We aim to solve this challenge, add value to their +workflow, and support their decision‑making with our digital +solutions and technology‑enabled services. We continuously +improve our solutions to meet evolving customer needs, +leveraging the latest technologies to provide benefits such +as advanced analytics, intuitive interfaces, mobility, flexibility, +interoperability, reliability, and open architecture. +Purpose +Our purpose is to deliver impact when it matters most. Every +second of every day, our customers face decisive moments +that impact the lives of millions of people and shape society. +In these crucial moments, we put sound knowledge, deep +expertise, and usable data and insights into their hands at +the right time and in the right context for their specific set of +circumstances. Our solutions help protect people’s health, +prosperity, and safety and help to build better businesses. +Strategy +Our strategy for 2022‑2024 aims to deliver good organic +growth and improved adjusted operating margins and return +on invested capital, while advancing our ESG performance. +Among the ESG goals in our 2022‑2024 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 near‑term science‑ +based targets. To achieve these goals, our strategic priorities +are: +• Accelerate Expert Solutions: we are focusing our +investments on cloud‑based expert solutions while +continuing to transform selected digital information +products into expert solutions. We are investing to enrich +the user experience of our products by leveraging advanced +data analytics and artificial intelligence. +• Expand Our Reach: we are seeking to extend into high‑ +growth adjacencies along our customers’ workflows and to +adapt our existing products for new customer segments. We +are working to develop partnerships and ecosystems for our +key software platforms. +• Evolve Core Capabilities: we are enhancing our central +functions to drive excellence and scale economies in sales +and marketing (go‑to‑market) and in technology. We are +focused on advancing our ESG performance and capabilities +and continuing to invest in diverse and engaged talent to +support innovation and growth. +Our strategy is centered on organic investment and growth.The +three‑year plan envisages spending approximately 10% of total +revenues each year on product development. +We also 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. +Strategy and +business model +50% +Around 50% of digital +revenues are from +products that leverage +artificial intelligence +7 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret kitchen appliance is a "microwave". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_9.txt b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..2880219346f3c69e5de18e1ccccc7977b781f91d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/Text_TextNeedles/WoltersKluwer_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,76 @@ +Strategic progress 2023 +In 2023, we made important progress on our strategic plans. +First, expert solutions, which include our software products +and certain advanced information solutions, accounted for +58% of total revenues (2022: 56%) and grew 8% organically +(2022: 9%). Software solutions accounted for 45% of total +revenues (2022: 44%) and grew 8% organically (2022: 9%). +Cloud software revenues accounted for 37% of total 2023 +software revenues and grew 15% (2022: 17%). Today, around +50% of our digital revenues are from products that leverage +artificial intelligence (AI) to drive enhanced value for our +customers. During 2023, we stepped up experimentation with +large language models (LLMs) and the new scalable generative +AI technology, testing dozens of use cases, collaborating with +selected customers, and launching beta versions in Health +and Legal & Regulatory markets. For much of this work, we +are partnering with Microsoft, Google, and other technology +suppliers. +Second, we made progress on extending our reach into high‑ +growth adjacencies and geographies. The new Corporate +Performance & ESG division, formed in 2023, sets us on a path +to extend our enterprise software solutions into corporate +workflows for ESG data collection, analysis, reporting, and +assurance. In the Health division, the 2023 acquisition of +NurseTim bolstered our position in nursing education +solutions and test preparation while the 2023 acquisition of +Invistics drug diversion detection software broadened our +offering in the hospital market. +Third, we took significant steps in 2023 to evolve our core +capabilities. We centralized the majority of our product +development teams, more than doubling the number +of FTEs in our global development organization, Digital +eXperience Group (DXG). We also centralized our branding and +communications teams and created a unified global finance +organization to support the company globally. With regard +to our specific ESG objectives, the most notable advances +in 2023 were the validation by the Science Based Targets +initiative of our near‑term emission reduction targets and the +improvements in several important social metrics, notably +employee turnover, engagement, and belonging. +Strategy and business model +continued +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. +• 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 +Elevate +Our Value +Accelerate +Expert Solutions +Expand +Our Reach +Evolve +Core Capabilities +8 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret landmark is "Big Ben". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_10Pages/needles.csv b/WoltersKluwer/WoltersKluwer_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..ca3514370ffa5da92ea53d626523aab43df08bd2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret clothing is a "sock". +The secret currency is a "ruble". +The secret kitchen appliance is a "microwave". +The secret landmark is "Big Ben". +The secret vegetable is "cauliflower". diff --git a/WoltersKluwer/WoltersKluwer_10Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..7c7762285d4c666085e0eb9d8488070a394b3bda --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret fruit is a "lemon".,1,8,green,white,0.66,0.858,times-bold,97 +The secret food is "chocolate".,2,10,yellow,black,0.816,0.46,courier-bold,107 +The secret shape is a "heart".,3,10,brown,white,0.087,0.417,times-italic,74 +The secret instrument is a "violin".,4,13,gray,white,0.766,0.673,courier,87 +The secret tool is a "ruler".,5,10,blue,white,0.086,0.844,times-bolditalic,101 +The secret clothing is a "sock".,6,7,white,black,0.316,0.035,helvetica-boldoblique,141 +The secret currency is a "ruble".,7,7,red,white,0.816,0.583,times-roman,100 +The secret kitchen appliance is a "microwave".,8,7,purple,white,0.95,0.54,courier-oblique,114 +The secret landmark is "Big Ben".,9,11,orange,black,0.718,0.853,helvetica-bold,90 +The secret vegetable is "cauliflower".,10,10,black,white,0.642,0.197,helvetica,137 diff --git a/WoltersKluwer/WoltersKluwer_10Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..4509e89edae925493cd6d1dc9552bd82b445ed09 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret clothing in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? +What is the secret landmark in the document? +What is the secret vegetable in the document? diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_1.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..af320dd6740b4b1e04516ad6c429520d4982e404 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,7 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_10.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e9f6a33d7721b53f56e673bfa5d8033bf2a0c09 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,88 @@ +Our business model +We help our customers make critical decisions every day +by providing expert solutions that combine deep domain +knowledge with technology and services. +Our products are used by professionals in over 180 countries +across a range of market segments addressed through our five +customer‑facing divisions. A list of our top expert solutions is +shown on the left. +Our solutions and services are generally sold by our own sales +teams or through selected distribution partners. Our sales +forces are specialized by market segment and product groups. +For certain software products, we work with a range of third‑ +party implementation partners. We also go to market through +telesales, e‑commerce, and other digital distribution channels. +Recurring revenue model +Our revenues are primarily recurring in nature, based on +subscriptions to information, software, and services. Recurring +revenues also include software maintenance fees and other +annually renewing revenues. In 2023, 82% of our total revenues +were recurring (2022: 80%). Renewal rates for our digital +information, software, and services are high and are one of the +key indicators by which we measure our success in the market. +Alongside recurring revenues, we derive fees from software +licenses, implementation and training services, transactional +fees, or other non‑recurring revenues. +Customer relationships +We view customers as fundamental stakeholders in our +business. Long‑term customer relationships are the single +most important factor for the success of our business, critical +to achieving organic growth and maintaining competitiveness. +One of our core company cultural values is to focus on our +customers’ success. 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 satisfaction primarily by tracking +customer retention, subscription 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 2023, 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. +Employees and talent management +We employ over 21,400 talented and motivated individuals +around the world. More than half of our annual operating +costs relate to our employees, who create, develop and +maintain, sell, implement, and support our solutions and +serve our customers. +We have well‑established programs in place designed to +attract, engage, grow, and retain talent globally. These +programs include training, well‑being, and career development +opportunities for all employees worldwide. In 2023, we +launched the Colleague Experience Promise (CxP) a framework +that articulates what we provide our employees throughout +their careers with the company. +Strategy and business model +continued +Expert solutions combine deep domain knowledge +with technology to deliver both content and workflow +automation to drive improved outcomes and productivity +for our customers. Based on revenues, our largest expert +solutions are: +• Health: global clinical decision support tool UpToDate; +clinical drug databases; and Lippincott nursing +solutions for practice and learning. +• Tax & Accounting: professional tax and accounting +software CCH Axcess and CCH ProSystem fx in North +America and similar software for professionals +across Europe. +• Financial & Corporate Compliance: banking +compliance solutions ComplianceOne, Expere, +eOriginal, and Gainskeeper. +• Legal & Regulatory: enterprise legal management +solutions Passport and TyMetrix; Legisway; and law firm +practice management software Kleos. +• Corporate Performance & ESG: environmental, health +and safety, and operational risk management (EHS/ +ORM) suite Enablon; corporate performance platform +CCH Tagetik; internal audit solution TeamMate; and +finance, risk, and regulatory (FRR) reporting suite +OneSumX. +9 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret food is "chocolate". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_100.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..f777d2648da67c9ba05f25a8f664f607564e55b7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,45 @@ +General disclosures continued +Metrics and targets +Metrics in relation to material sustainability matters (MDR-M) +For a list of disclosed material metrics connected to material sustainability matters, +see Disclosure requirements in ESRS covered by the sustainability statements (IRO-2). +None of the metrics are assured by the external auditor. +For further details on metrics, see the topical sections of these sustainability statements. +Tracking effectiveness of policies and actions through targets (MDR-T) +The connection between material sustainability matters and disclosed targets is shown below: +Topical standard +Material +sustainability matter +Targets disclosed +in the sustainability statements +Climate change (E1) Climate change – Reduce absolute gross GHG scope 1 and 2 emissions +50% by 2030 from a 2019 base year + – Reduce absolute gross GHG scope 3 emissions 30% by +2030 from a 2019 base year + – Number of on‑premise servers decommissioned in +2023 + – Percentage reduction in our office footprint +Own workforce (S1) Diversity, equity, +inclusion, and +belonging (DEIB) + – Improvements to our employee belonging score + – Have at least 33% male and female representation on +our Supervisory and Executive Boards + – Increase female representation in the executives +career band by 2% by 2028 from a 2022 baseline + – Increase our employee engagement score relative to +the Microsoft Glint top 25th benchmark in 2024 +Own workforce (S1) +and Consumers and +end‑users (S4) +Privacy – 98% of employees to complete Annual Compliance +Training +Business conduct (G1) Corporate culture – 98% of employees to complete Annual Compliance +Training + The number of on‑premise servers decommissioned and improvements to our employee +belonging score are integrated in the 2023 remuneration of the Executive Board. The percentage +reduction in our office footprint and improvements to our employee belonging score will be +integrated in the 2024 remuneration of the Executive Board. See Integration of sustainability- +related performance in incentive schemes (GOV-3). +For further details on targets, see the topical sections of these sustainability statements. +99 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_101.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d8353d568d5e642748765aa8c0d306dc9e657b1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,51 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating +to environmental matters. +Climate change (ESRS E1) +Integration in incentive schemes (GOV-3) +A target on the number of on‑premise servers +decommissioned was included in the non‑financial +performance measures for the short‑term incentive plan +in 2023. In the 2024 short‑term incentive plan, this target is +replaced by a target on the percentage reduction in our office +footprint. For further details, see the sections Key elements +of our remuneration policy in Remuneration report on page +73 and Payouts for performance against 2023 STIP targets in +Remuneration report on page 80. +Transition plan for climate change mitigation (E1-1) +We are committed to minimizing our impact on the +environment, in line with the COP21 Paris Agreement and +the COP27 Sharm el‑Sheikh Implementation Plan on limiting +global warming. We are not excluded from the EU Paris‑ +aligned Benchmarks. +As a first step in developing our transition plan, we have +assessed our greenhouse gas (GHG) footprint including scope +1, 2, and 3 emissions. Based on that assessment, we have +developed a plan to reduce our GHG emissions in line with +a pathway to limit global warming to 1.5°C. This plan was +approved by our Executive Board and Supervisory Board. In +2023, the Science Based Targets initiative (SBTi) validated our +near‑term GHG emission reduction targets. See the section +Targets related to climate change mitigation and adaptation +(E1-4) for more details. +We have identified the following decarbonization levers: +Scope 1 & 2 emissions +Office space Reducing our footprint of offices around +the world through office closures and +consolidations. +Renewable electricity The electricity providers for offices are shifting +to renewable energy sources. Where possible, +we intend to switch contracts to renewable +electricity. For locations where switching to +renewable electricity is not possible we may +purchase Energy Attribute Certificates (EACs). +Energy efficiency A variety of actions will be taken to improve +energy efficiency and reduce scope 1 and +2 emissions, such as improving insulation, +installing energy efficient devices, and +improving employee awareness around how +behavior impacts office energy usage. +Environmental disclosures +100 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures +The secret animal #5 is a "squirrel". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_102.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..e83657920e34073834ddfa09595e6f431be8f140 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,61 @@ +Scope 3 emissions +Supply chain Multiple developments will support the gradual decarbonization of our supply +chain: + – We will engage with suppliers to highlight the importance of +decarbonization and request insights into supplier‑specific emissions; + – It is our expectation that suppliers independently set their own GHG +emission reduction targets and decarbonize even without engagement with +Wolters Kluwer; + – Suppliers are expected to invest in energy efficiency improvement +measures; + – Transport vehicles become less carbon‑intensive due to more efficient +(engine) design and a shift to renewable energy sources; and + – Renewable electricity will become a bigger part of the grid mix, which will +help reduce supplier‑based emissions. +Business travel We have already started reducing business travel by making more use of +virtual meetings. We are investigating ways to partly replace air travel with +other forms of travel (such as train or car travel) without impact of business +effectiveness. We are also reducing the proportion of business class and first‑ +class flights to reduce the emission intensity of air travel. +Employee commuting We have implemented a flexible work policy allowing employees to work +hybridly, reducing emissions from commuting. +During 2023, we made progress in implementing the transition plan regarding our scope 1 +and 2 emissions. In the coming years, we will focus on engaging with our suppliers to further +decarbonize our supply chain and reduce scope 3.1, 3.2, and 3.4 emissions. For more details on +our actions, see the section Actions and resources in relation to climate change policies (E1-3). +We have also committed to the SBTi to reduce GHG emissions to net‑zero no later than 2050 +and will submit these long‑term GHG emission reduction targets for validation by SBTi by +January 2025. +Environmental disclosures continued +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +Impact on global warming was assessed as a negative material impact on the environment +in the short, medium, and long term as part of our initial double materiality assessment. This +impact is caused by using energy that results in: +• Scope 1 and 2 GHG‑emissions of office buildings; +• Scope 3 GHG‑emissions of our suppliers (scope 3.1, 3.2, and 3.4); +• Scope 3 GHG‑emissions from business travel (scope 3.6) and employee commuting (scope 3.7); +and +• Scope 3 GHG‑emissions from the use of our products by customers (scope 3.11). +These GHG emissions occur on a global scale, since our employees, suppliers, and customers +are in over 180 countries around the world. +Due to the nature of our business activities, our scope 1 and 2 GHG emissions are relatively low +compared to our overall GHG emission footprint. However, we do consider GHG emissions in +general terms to be very damaging to the environment because they intensify the greenhouse +effect (trapping of heat), which drives climate change. +From our GHG assessment, we concluded that approximately 80% of GHG emissions arise from +our supply chain. Influencing our suppliers’ emission reduction strategies will be challenging. +However, we are already developing plans to start engaging with suppliers about their GHG +emissions in 2024. +Based on an initial assessment, we have identified a range of potential climate‑related physical +and transitional risks. It is expected that these risks are unlikely to have a material impact on +the company. +Physical climate change risks, such as extreme weather conditions, temperature rise, sea level +rise, and droughts, may lead to: +• Disruption for employees working online, commuting to work, or travelling for work; +• Damages to own office buildings, warehouses, and servers and shortage of water for +employees and cooling needs, leading to disruption of services; and +• Delivery issues from upstream partners and suppliers. Specifically, this may concern +disruption of services due to overheating of servers and IT systems and damage to supplier +assets such as warehouses and servers. +101 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_103.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..4675ec0b91cd67c87b2416ec0c308d54cc3377bf --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,66 @@ +Risks associated with the transition to a low‑carbon economy may lead to: +• Reputational risk of failure to meet emission reduction targets leading to heightened +stakeholder concerns or negative feedback regarding lack of climate change management +within the company; and/or +• The risk of misalignment with changing customer preferences and needs of professional +software, when not investing sufficiently in development of products that enable climate +change mitigation and adaptation. +Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) +In addition to the general process of our initial DMA described in the section Description of the +processes to identify and assess material impacts, risks, and opportunities (IRO-1), the process +to identify and assess climate‑related impacts, risks, and opportunities includes the following +steps: +1. Assessment of GHG footprint: +• Screening of all scope 3 emission categories based on the GHG Protocol; +• Inventory of scope 1 and 2 emissions and scope 3 emission categories that were considered +material based on the screening; +2. Analysis of our office locations and key upstream assets such as data centers; and +3. Analysis of climate change research and map to the locations identified in step 2. +We started a preliminary qualitative climate scenario analysis to understand potential physical +climate change risks. In 2024, we intend to further develop our scenario analysis. For the +preliminary analysis we 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 Intergovernmental Panel on Climate Change. To +assess transition risks, we are using World Energy Outlook scenarios from the International +Energy Agency. +The Corporate Sustainability team is responsible for identifying and assessing climate‑related +risks, which are subsequently reported to the Corporate Risk Committee. This group monitors +material risks and determines mitigating actions with a focus on company‑wide, non‑business‑ +specific risks. +Environmental disclosures continued +Policies related to climate change migration and adaptation (E1-2) +We have adopted an Environmental Policy to manage environmental matters, including the +impacts related to climate change. The objective of the policy is to minimize the negative +impact of our operations on the environment and to comply with the applicable local and +international environmental laws. The policy was approved by the Executive Board, applies to +all divisions, business units, and operating companies that are controlled by the company, and +is available on our website. +In accordance with the policy, we observe the three principles on the environment in the +United Nations Global Compact: +• To support a precautionary approach to environmental challenges; +• To undertake initiatives to promote greater environmental responsibility; and +• To encourage the development and diffusion of environmentally friendly technologies. +We expect our suppliers to operate in a manner that is protective of the environment via +the Supplier Code of Conduct. +Actions and resources in relation to climate change policies (E1-3) +Climate change mitigation +In line with our transition plan, we have designed several climate change mitigation actions, +as described below. +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. Sustainability certificates +and green office standards are part of our selection criteria for new offices. Our offices in +Madrid and Barcelona (Spain), Chennai (India), Milan (Italy), and Paris (France) are ISO 14001 +certified. We also aim to replace existing non‑renewable energy contracts with renewable +contracts for those offices where we control the energy contract. +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 hybrid working) 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. +102 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_104.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..515b0a26bb0c37dd5b6e8518fd71544423ea3dce --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,52 @@ +Migration of servers to energy-efficient cloud providers +We have been migrating customers and applications to the cloud, allowing us to decommission +on‑premise servers, which are less energy efficient. As our major cloud providers operate +on higher energy efficiency, and have GHG emission reduction targets themselves, this is +an important lever to reduce our emissions. Transitioning to the cloud also benefits our +customers in the form of improved cybersecurity protection and increased mobility, availability, +and standardization. Carbon footprint remains an important criterion in the selection of our +cloud providers. +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. We +encourage our employees to make use of virtual meetings and events, where possible. +Supply chain +We request our suppliers to commit to environmental standards in our Supplier Code of +Conduct. In 2023, we updated our due diligence questionnaire to include new questions on +climate‑related matters that help us track performance of suppliers against their GHG emission +reduction targets. +Climate change adaptation +We have also taken action to prepare for possible impacts of climate change on the company. +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, including extreme weather or natural +catastrophes, impacting our people and/or causing damage to our facilities, IT systems, +hardware, and other assets. When managing incidents, we prioritize people, environment, +assets, and reputation (PEAR), in that order. In other words, employee well‑being comes first, +followed by environment, asset protection, and lastly, maintaining the company’s brand and +reputation. A well‑managed and resilient company, prioritizing the PEAR elements, is more likely +to meet the needs and expectations of its stakeholders, such as customers and investors, and +maintain strong relationships with suppliers. +Targets related to climate change mitigation and adaptation (E1-4) +To support our climate change mitigation and adaptation policies and address the impact +on global warming, we have set GHG emission reduction targets, as well as operational targets +to reduce on‑premise servers and optimize our real estate portfolio. +GHG emission reduction targets +We have set the following science‑based emission reduction targets: +• reduce absolute scope 1 and 2 GHG emissions 50% by 2030 from a 2019 base year; and +• reduce absolute scope 3 GHG emissions 30% by 2030 from a 2019 base year. +These targets have been validated by the Science Based Targets initiative (SBTi). Our scope 1 +and 2 target mainly relates to the energy consumption from our offices, and our scope 3 target +relates to purchased goods & services (3.1), capital goods (3.2), upstream transportation & +distribution (3.4), business travel (3.6), and employee commuting (3.7). +Our efforts to reduce scope 1 and 2 emissions include reducing our office footprint organically +and shifting to renewable energy. Over the coming years, we will implement further initiatives +to reduce our scope 1, 2, and 3 emissions and work towards achieving our targets. +The far majority of our GHG emissions derives from our value chain, especially from goods and +services purchased from suppliers. This means that decarbonization of our supply chain will be +key to reach our target, meaning that we will focus on engaging with our suppliers. For a full list +of decarbonization levers, see the section Transition plan for climate change mitigation (E1-1). +Environmental disclosures continued +103 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_105.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..682738095f25b651c0882eae080ef45ac790f395 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,86 @@ +The performance against our GHG emission reduction targets can be summarized as follows: +in mtCO2e +2019 +base year1 +2030 +target year +2023 +reported +Scope 1 Direct emissions 4,035 2,331 +Scope 2 +(market‑based) Emissions from purchased energy 15,674 8,733 +Scope 1 and 2 +(market‑based) 19,709 9,854 11,064 +Scope 3.1 Purchased goods & services 216,409 222,184 +Scope 3.2 Capital goods 3,635 2,414 +Scope 3.4 Upstream transportation & distribution 21,213 14,862 +Scope 3.6 Business travel 25,798 24,621 +Scope 3.7 Employee commuting 23,814 8,526 +Total scope 3 290,869 203,608 272,607 +1 Restated, see Disclosures in relation to specific circumstances (BP-2) . +We did not set emission reduction targets per year. When assuming a linear emission reduction +over the 11‑year period, our scope 1 and 2 for 2023 emissions are ahead of such a linear plan, +while our scope 3 emissions for 2023 are behind. This is because reducing scope 3.1, 3.2, and 3.4 +supplier emissions will require upfront effort and investment to drive change. +Scope 1 and 2 emissions Scope 3 emissions +20,000 +18,000 +16,000 +14,000 +12,000 +10,000 +8,000 +6,000 +4,000 +2,000 +0 +2019 +base year +2023 +reported +2030 +target year +Amounts in mtCO2e Assuming linear reduction +300,000 +270,000 +240,000 +210,000 +180,000 +150,000 +120,000 +90,000 +60,000 +30,000 +0 +2019 +base year +2023 +reported +2030 +target year +Amounts in mtCO 2 e Assuming linear reduction +Other scope 3 categories were not included in the scope 3 target setting, as we concluded that +these categories are individually not material following a screening analysis. We estimated that +these categories would have contributed less than 5% of our total scope 3 emissions. Contrary +to our communication in the 2022 Annual Report, direct‑use phase customer emissions (scope +3.11) were kept outside our scope 3 target setting. +The base year is not restated for acquisitions and divestments in the years 2020 to 2023 as the +net impact thereof is considered immaterial. +For further details on methodologies and assumptions applied in the calculations of GHG +emissions, see the sections Energy consumption and mix (E1-5) and Gross GHG emissions (E1-6). +Number of on-premise servers decommissioned in 2023 +We set a target to reduce the number of on‑premise servers in 2023. This target was included in +the non‑financial performance measures for the short‑term incentive plan in 2023. The annual +target is based on programs managed by Global Business Services, Digital eXperience Group, +and our customer‑facing divisions. Decommissioning of on‑premise servers by migrating to +energy‑efficient cloud platforms reduces our carbon footprint. +The number of on‑premise servers decommissioned in 2023 was 1,542, which was above target. +Percentage reduction in our office footprint +This annual target aims to achieve a reduction in our office footprint and thereby a reduction +in our scope 1 and 2 emissions. The target is based on programs managed by our global real +estate team. The target and outcome are on an underlying basis excluding the impact of +acquisitions and divestitures. This target is included in the non‑financial performance measures +for the short‑term incentive plan in 2024. +Environmental disclosures continued +104 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures +The secret object #4 is a "pillow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_106.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc22324eae68278f4cd0bcc76d49bc7813b894d3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,65 @@ +Energy consumption and mix (E1-5) +Methodologies and assumptions +Energy consumption of our own operations relates to owned and leased offices. Energy +consumption was partly confirmed through meter readings, reports from energy providers, +or confirmations from landlords. +Some offices are shared with other tenants. In case only the energy consumption of the +entire building was available, the energy consumption to our office space was allocated +based on our square meter share. +For energy consumption in 2023, 78% of energy consumption in MWh was confirmed. +The remainder was estimated or extrapolated by any of the following methods: +• For some large‑sized offices, only nine‑month data was available. In those cases, data +was complemented with fourth‑quarter data of the previous year. This estimation method +only applied to 2023 data following an acceleration of data collection and related to 5% +of energy consumption in MWh; +• Medium or smaller‑sized offices for which only nine‑month or 11‑month data was available +were extrapolated to 12 months in a pro rata manner. This extrapolation method only +applied to 2023 data following an acceleration of data collection and related to 5% of +energy consumption in MWh; +• U.S. offices for which no energy data was available were extrapolated using the available +energy data of other U.S. offices in the same region as defined by the U.S. Environmental +Protection Agency (U.S. EPA). If no energy data was available in a U.S. region, the offices +in that U.S. region were extrapolated using the available energy data of all U.S. offices. +These extrapolations were done based on relative square meters and related to 6% +of energy consumption in MWh in 2023; or +• Offices in other countries for which no energy data was available were extrapolated using +the available energy data of other offices in the same country. If no energy data was +available in a country, the offices in that country were extrapolated using the available +energy data of all our offices globally. These extrapolations were done based on relative +square meters and related to 6% of energy consumption in MWh in 2023. +Energy consumption from fossil and nuclear sources were split at a country level based on +2021 electricity and heat supply consumption data from the International Energy Agency (IEA). +Energy production primarily relate to solar panels on roofs of some offices and is only +considered in case actual data was available. Energy production is a new metric since 2022. +Environmental disclosures continued +Energy consumption and production +in MWh, unless otherwise stated 2023 +% of +total 2022 +% of +total 20211 +% of +total +Energy consumption +Consumption from fossil sources 32,140 74% 35,958 75% 39,044 78% +Consumption from nuclear sources 3,487 8% 3,818 8% 3,750 8% +Renewable energy consumption 7,772 18% 8,104 17% 6,952 14% +Total energy consumption 43,399 47,880 49,746 +Renewable energy consumption +Consumption from purchased or +acquired renewable sources 7,755 8,031 6,952 +Consumption of self‑generated +non‑fuel renewable energy 17 73 – +Renewable energy consumption 7,772 8,104 6,952 +Energy production +Total energy production 17 73 – +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +For significant parts of 2021 and the first months of 2022, most of our offices were closed due to +the COVID‑19 pandemic. +In 2023, energy consumption decreased due to lower square meters and energy‑saving +measures taken at various offices. +Considering that our 2023 scope 1 and 2 emissions are ahead of plan when assuming a linear +emission reduction over the eleven‑year period 2019 to 2030, we did not purchase Energy +Attribute Certificates. +We do not have own operations in high climate impact sectors. +105 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_107.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0b343fd17d677a44f46e5a79a93491c8458bd44 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,22 @@ +Gross GHG emissions (E1-6) +Summary +Our gross scope 1, 2, and 3 greenhouse gas (GHG) emissions can be summarized as follows: +in mtCO2e, unless otherwise stated 2023 % of total 20221 % of total 20212 % of total +Scope 1 (A) Direct emissions 2,331 1% 2,719 1% 3,457 1% +Scope 2 (market‑based) Emissions from purchased energy 8,733 3% 9,294 3% 8,731 3% +Sub-total scope 1 + 2 (market-based) 11,064 12,013 12,188 +Scope 3.1 Purchased goods & services 222,184 75% 210,927 76% 218,928 82% +Scope 3.2 Capital goods 2,414 1% 2,646 1% 1,888 1% +Scope 3.4 Upstream transportation & distribution 14,862 5% 14,884 5% 16,091 6% +Scope 3.6 Business travel 24,621 8% 12,544 5% 848 0% +Scope 3.7 Employee commuting 8,526 3% 9,809 4% 1,497 1% +Scope 3.11 Use of sold products 12,966 4% 14,370 5% 16,879 6% +Sub-total scope 3 (B) 285,573 265,180 256,131 +Total gross GHG emissions (market-based scope 2) 296,637 100% 277,193 100% 268,319 100% +Scope 2 (location‑based) (C) Emissions from purchased energy 11,326 11,792 10,540 +Sub‑total scope 1 + 2 (location‑based) (A+C) 13,657 14,511 13,997 +Total gross GHG emissions (location-based scope 2) (A+B+C) 299,230 279,691 270,128 +¹ Scope 3.6 and 3.7 were restated, see Disclosures in relation to specific circumstances (BP-2) . +² Scope 1, 2, 3.6, and 3.7 were restated, see Disclosures in relation to specific circumstances (BP-2) . +Environmental disclosures continued +106 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_108.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f61ebb8bfd412ba2a6758497875377c09d046f2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,35 @@ +None of our scope 1 GHG emissions are from regulated emission trading schemes. +Our scope 1 and 2 emissions fully relate to Wolters Kluwer N.V. and its subsidiaries. Scope 1 +and 2 emissions from equity‑accounted associates are excluded as these were negligible. +The following scope 3 categories were excluded from our emission reporting as a screening +analysis showed that these were individually insignificant and would have in aggregate +contributed less than 5% of our total scope 3 emissions: +• Scope 3.3 fuel and energy‑related activities, considering energy consumption purchased +and consumed in our own operations is limited to the owned and leased offices; +• Scope 3.5 waste generated in operations, considering that waste generated in our own +operations is limited to office waste; +• Scope 3.8 upstream leased assets, considering that the office space that is subleased +to third parties is negligible; +• Scope 3.9 downstream transportation and distribution, considering that this is limited to +our printing activities and that transportation and distribution paid by us is reported under +scope 3.4; +• Scope 3.12 end‑of‑life treatment of sold products, considering that this is limited to our +printing activities; and +• Scope 3.15 investments, considering that we have no material investments. Refer also to +Note 20 – Investments in equity-accounted associates and Note 21 – Financial assets of the +consolidated financial statements. +The following scope 3 categories are not applicable to us: +• Scope 3.10 processing of sold products; +• Scope 3.13 downstream leased assets; and +• Scope 3.14 franchises. +GHG emissions intensity +Our GHG emissions intensity is as follows: +2023 2022 2021 +Total gross GHG emissions (market‑based scope 2) in mtCO2e 296,637 277,193 268,319 +Total gross GHG emissions (location‑based scope 2) in mtCO2e 299,230 279,691 270,128 +Revenues in millions of euros1 5,584 5,453 4,771 +GHG emission intensity (market‑based scope 2) in mtCO2e/revenues m€ 53 51 56 +GHG emission intensity (location‑based scope 2) in mtCO2e/revenues m€ 54 51 57 +¹ See Consolidated statement of profit or loss . +Environmental disclosures continued +107 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_109.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf73a2d9b015fe94d232da602c7a9d242ecd641a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,41 @@ +Gross scope 1 and 2 GHG emissions +Methodologies and assumptions +Scope 1 and 2 emissions relate to our owned and leased offices and are calculated based on +energy consumption. For further details on energy consumption, see Energy consumption +and mix (E1-5). +For scope 1 emissions, U.K. Department for Environment, Food and Rural Affairs (Defra) +conversion factors were used to convert natural gas and heating oil consumption from MWh +into CO2e. +For market‑based scope 2 emissions, purchased and acquired electricity from fossil and +nuclear sources were converted from MWh into CO2e as follows: +• For the two largest and owned offices, both located in the U.S. and jointly representing +approximately 15% of our office square meters, the emission intensity figures of the energy +providers were used; +• For other offices in the U.S., the EGRID Subregion emission factors from U.S. EPA were used; +and +• For offices in other countries, emission factors from IEA were used. +For market‑based scope 2 emissions, purchased and acquired steam and heat were +converted from MWh into CO2e using Defra conversion factors. +For location‑based scope 2 emissions, the abovementioned factors were used to convert +total energy consumption from MWh into CO2e. +The most recent data available for the abovementioned factors are from the year 2022. +Scope 1 and 2 emissions +in mtCO2e 2023 2022 20211 +Scope 1 2,331 2,719 3,457 +Scope 2 (market‑based) 8,733 9,294 8,731 +Total scope 1 + 2 (market‑based) 11,064 12,013 12,188 +Netherlands 474 404 470 +Europe (excluding the Netherlands) 1,321 1,902 2,526 +U.S. and Canada 7,254 7,674 8,133 +Asia Pacific 1,987 2,023 1,034 +Rest of World 28 10 25 +Total scope 1 + 2 (market‑based) 11,064 12,013 12,188 +Scope 2 (location‑based) 13,657 14,511 13,997 +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +For significant parts of 2021 and the first months of 2022, most of our offices were closed due to +the COVID‑19 pandemic. +In 2023, scope 1 and 2 (market‑based) emissions decreased due to lower square meters, energy‑ +saving measures taken at various offices, and a higher percentage of renewable energy. +Environmental disclosures continued +108 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures +The secret office supply is a "calculator". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_11.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..33d255fad243920fd611b701feb5628c32c865ce --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,114 @@ +a fairly competitive global market for technology talent. +For information on our own workforce, see Sustainability +statements on pages 113-121. +Supplier relationships +Around 45% of our annual operating costs relate to third‑party +suppliers. Our business units work closely with thousands +of suppliers and partners globally who provide content, +technology, goods, and services that help us deliver our +products and services. +Our Global Business Services (GBS) function is reponsible for +sourcing and due diligence of technology partners and plays a +growing role in assessing and monitoring other categories of +suppliers. Suppliers that are managed through GBS are subject +to extensive due diligence including security, data privacy, and +business continuity. We set high standards when selecting and +managing third‑party providers. + → For insight into how we mitigate supply chain +risks, see Supply chain dependency and project +execution on page 54 in Risk management + → For sustainability disclosures relating to suppliers, +see Sustainability statements on pages 89-140 +Product development and innovation +Product innovation is a key driver of organic growth and value +creation. For over 20 years, we have consistently invested in +developing new and enhanced products to solve customer +challenges. Our current strategic plan envisages investing +approximately 10% of our annual revenues into product +development, including capital expenditure and operating +expenses. +We track employee engagement and belonging, both +measured through an annual employee survey conducted by +an independent third party, Microsoft Glint. +In 2023, our employee engagement score improved by 1 +point to 78 while our belonging score increased by 2 points +to 75. Our long‑term objective for both of these measures is +to reach the top quartile of companies tracked by Microsoft +Glint. A target for belonging was included in management +remuneration for the past two years and will again be included +in 2024. In 2023, our employee turnover rate improved +significantly to 9.8% (2022: 15.3%) in what remains +Strategy and business model +continued +Comprehensive range of well-being +programs for all employees +We are dedicated to providing a supportive work environment +and offer all employees a comprehensive range of well-being +options designed to enhance their personal and professional +lives. This includes the options below: +• An Employee Assistance Program (EAP) ensures global +support for personal, work/life balance, critical incident +stress management, and coping needs; +• Personalized well-being resources cover physical fitness, +mindfulness, and nutrition, supplemented by clinically +validated stress management resources; +• Financial well-being resources empower employees for a +financially secure future tailored to their unique needs; +• Career Skill Enhancement resources provide access to +expert-led virtual courses and certifications, fostering +career skills and professional development; +• Well-being Champion acts as a peer-to-peer ambassador, +facilitating opportunities for well-being enhancement; and +• Through partnerships, Health Management Programs in the +U.S. emphasize education and support for both medical +and emotional needs. +In 2023, we organized a global well-being challenge, which +engaged employees worldwide in activities that promote in +physical fitness, mental health, and overall well-being. The +challenge also helped to strengthen team bonds globally. +Human capital +• Efforts, skills, and talent +contributed by 21,400 +employees +Technology and IP +• Global brand +• Software and content IP +Suppliers & Partners +• Services, content, and +goods supplied by +thousands of select +vendors and partners +Financial Capital +• €1.7bn equity capital +• €3.7bn gross debt +capital +Natural Resources +• Energy consumption +along our value chain +Inputs Outputs +Customers +• €5.6bn revenues from +solutions that enable +effective and efficient +decision-making +Employees +• €2.3bn in salaries +and other benefits +• Skills and career +development +Suppliers & Partners +• €2.0bn operating costs +on third-party content, +goods, and services +Investors +• 34% total shareholder +return +• €17m net interest paid to +creditors +Society +• €325m income +taxes paid +• Products that protect +health and prosperity +Customer case +10 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_110.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..861d6f6c56c5ebf17365f8c6f1bf8673866bee1f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,60 @@ +Gross scope 3.1, 3.2, and 3.4 GHG emissions +Methodologies and assumptions +Scope 3.1, 3.2, and 3.4 emissions (supplier emissions) all originate from our supply chain. +A major part of supplier emissions is calculated based on spend. Under this spend‑based +method, suppliers were clustered into industry sectors. U.S. dollar‑denominated spend was +converted into CO2e using the supply chain industry emission factors from U.S. EPA. In 2023, +U.S. EPA published its latest set of factors, which have a 2019 emission baseline on a 2021 U.S. +dollar spend. Subsequently, the U.S. EPA factors were adjusted for U.S. inflation for the years +thereafter. Spend denominated in euro or other currencies was converted into CO2e by the +same methodology, whereby industry emission factors were also adjusted for the change in +the U.S. dollar – local foreign currency rate. If it was unknown in which industry a supplier +operated, the associated spend was converted into CO2e by using the weighted‑average +industry emission factors of the suppliers that were clustered into an industry sector. +A smaller part of supplier emissions is calculated using the supplier’s most recent publicly +available emission data, e.g., through its annual report, its sustainability statements, or its +CDP reporting. Under this method, GHG emissions were calculated by dividing our spend +by total revenues of the supplier, as reported in the supplier’s consolidated financial +statements, and then multiplied by the total scope 1, scope 2, and upstream scope 3 +emissions of the supplier. For some suppliers, we could not conclude if the supplier reported +its emissions in a complete manner and in accordance with acceptable methodologies. +For those suppliers, we applied the spend‑based method as described in the previous +paragraph. +The remainder of supplier emissions is calculated using emission data as provided by +suppliers to us. For these suppliers, we confirmed that the emission data covered scope +1, scope 2, and upstream scope 3 emissions in a complete manner with acceptable +methodologies. +In case we act as agent between suppliers and customers, associated supplier emissions +are included in our reporting. This spend predominately originates from governmental +organizations in the U.S. and is associated with the CT Corporation business of the Financial +& Corporate Compliance division. +Scope 3.2 emissions relate to the production of capital goods purchased by us. Scope 3.2 +emissions were estimated based on the share of investments in property, plant, and equipment, +as reported in the consolidated financial statements, to the total supplier spend. Using this +methodology, all emissions from purchased capital goods are reported in the year of purchase. +Scope 3.4 emissions originate from upstream transportation and/or distribution of products +purchased and include the spend on any mode of transport and the storage of these +products. We do not transport or distribute these products in vehicles or through facilities +leased and operated by us. The methodologies and assumptions for the calculation of scope +3.4 emissions were similar as those of scope 3.1 emissions. +The vast majority of supplier emissions is based on spend. Spend‑based calculations +have a high level of measurement uncertainty. We applied various assumptions in these +calculations, including how suppliers are allocated to industry sectors, the use of U.S. EPA +industry emission factors and the adjustments we applied to those, and the use of supplier’s +publicly available emission data. The estimate that is most sensitive in the measurement is +the use of U.S. EPA industry emission factors. +Scope 3.1, 3.2, and 3.4 emissions +in mtCO2e, unless otherwise stated 2023 2022 2021 +Scope 3.1 purchased goods & services 222,184 210,927 218,928 +Scope 3.2 capital goods 2,414 2,646 1,888 +Scope 3.4 upstream transportation & distribution 14,862 14,883 16,091 +Total supplier emissions 239,460 228,457 236,907 +Spend‑based method – U.S. EPA industry factors (% of emissions) 89% 91% 93% +Spend‑based method – external supplier emission data (% of emissions) 9% 7% 5% +Supplier‑specific method – supplier confirmations (% of emissions) 2% 2% 2% +Spend in € millions 2,324 2,229 1,896 +Of which we act as agent between suppliers and customers +in € millions 519 473 391 +Supplier emissions increased in 2023 due to on an increase in spend. +Environmental disclosures continued +109 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_111.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..eeda1afdad31469a41611753402b581c395509bd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,61 @@ +Gross scope 3.6 emissions +Methodologies and assumptions +Scope 3.6 emissions originate from business travel by employees, traveling by air or car. +Business travel by other means of transport, e.g., public transport, is not material. +We opted to not report emissions associated with business travelers staying in hotels. +Business air travel is calculated using a distance‑based method. Air travel is for the vast +majority based on data confirmed by travel agents, complemented with data obtained +from travel expense records. Air travel data includes the distance per flight segment, i.e., +the distance of a flight between two cities, and the cabin class per flight. Flight segment +distances were clustered into domestic (below 464 km), short‑haul (464 km–3,700 km), and +long‑haul flights (above 3,700 km). Cabin classes were clustered into economy class, premium +economy class, business class, and first class. Defra conversion factors were applied to +convert kilometers traveled into CO2e emissions. +Business car travel is calculated by applying an average‑based method. Car travel is based +on a survey held under approximately 1,500 client‑facing employees, predominantly sales +staff. Almost 25% of these employees completed the survey and confirmed their estimated +annual kilometers travelled by car for business purposes and whether they travel with a +fuel car, hybrid car, or electric car. The results of the survey were used to extrapolate for +all client‑facing employees, done on a country‑by‑country basis. Defra conversion factors +were applied to convert kilometers traveled into CO2e emissions. Applying a survey as +basis for calculations may result in a high level of measurement uncertainty. However, this +measurement uncertainty is considered not material due to the high response rate and the +relative low share of car business travel emissions compared to total scope 3 emissions. +Scope 3.6 emissions +in mtCO2e, unless otherwise stated 2023 20221 20211 +Business travel – air travel 23,368 11,456 694 +Business travel – car travel 1,253 1,088 154 +Total scope 3.6 emissions 24,621 12,544 848 +Average full‑time equivalents2 20,810 20,061 19,083 +Emissions per average full‑time equivalents 1.2 0.6 0.0 +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +² See Note 12 – Employee benefit expenses of the consolidated financial statements. +Environmental disclosures continued +The increase in business travel emissions in 2023 is largely explained by COVID‑19‑related +travel restrictions in especially the first months of 2022, combined with an increase in Defra +conversion factors for air travel. +Gross scope 3.7 emissions +Methodologies and assumptions +Scope 3.7 emissions originate from commuting by employees. We opted to not report +emissions associated with employees working remotely. We applied an average‑based +method for the calculation of employee commuting emissions. +Employee commuting emissions are based on a survey sent to all employees. Almost 25% of +employees completed the survey. The average commuting distance, the mode of transport, +and commuting frequency were the key questions in the survey. For the mode of transport, +employees indicated whether they travel with a fuel car, hybrid car, electric car, motor bike, +public transport, bike, or foot, or a combination of those. The results of the survey were +used to extrapolate for all employees, done on a country‑by‑country basis. Defra conversion +factors were applied to convert kilometers traveled into CO2e emissions. Applying a survey as +basis for calculations may result in a high level of measurement uncertainty. However, this +measurement uncertainty is considered not material due to the high response rate and the +relative low share of employee commuting emissions compared to total scope 3 emissions. +Scope 3.7 emissions +in mtCO2e, unless otherwise stated 2023 20221 20211 +Total scope 3.7 emissions 8,526 9,809 1,497 +Average full‑time equivalents2 20,810 20,061 19,083 +Emissions per average full‑time equivalents 0.4 0.5 0.1 +1 Restated, see Disclosures in relation to specific circumstances (BP-2) . +2 See Note 12 – Employee benefit expenses of the consolidated financial statements. +The decrease in employee commuting emissions in 2023 is largely due to a higher percentage +of employees that are working fully remotely. +110 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_112.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..922e4dbc06d1a0ee85a96fcac5e8058ffb343868 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,63 @@ +Gross scope 3.11 emissions +Methodologies and assumptions +Scope 3.11 emissions originate from customers using our digital information or software +products. Customers using our cloud‑based software generate direct use‑phase emissions. +Customers using our on‑premise software generate indirect use‑phase emissions, which we +report on a voluntary basis. +Almost half of customer emissions originate from the energy consumption of customers’ +devices when using our cloud and on‑premise software (49% of total customer emissions +in 2023). We estimated this energy consumption for the products that are used most time +intensively, notably the products in our Tax & Accounting and Corporate Performance & ESG +divisions. For most of these products, the average number of users in the year and estimated +average number of login hours per user were determined to calculate the total login time in +hours. For some products, total login time in hours was based on the total number of login +moments and the average time per login moment. Total login time in hours was extrapolated +for products not in scope of the data collection based on digital revenues at business unit +level. In 2023, approximately 10% of emissions were extrapolated. Total login time in hours +was converted into CO2e emissions by: +• Estimating the relative share of our software to the average CPU usage of a device, based +on external source information. We applied this estimate to all our products; +• Estimating the average watt per hour of a customer’s device based on external source +information, whereby we assumed that our customers on average use a standard business +laptop; and +• Using IEA emission factors to convert MWh into CO2e emissions, whereby we assumed that +approximately 60% of our customers are based in North America, 30% in Europe, and 10% +in Asia Pacific following the revenues generated by region as reported in the consolidated +financial statements. +The remainder of customer emissions originate from the energy consumption of servers +at the customer’s own premises for hosting our on‑premise software (51% of total +customer emissions in 2023). To calculate this energy consumption, the following estimates +were applied: +• For on‑premise software products, the average number of customers in the year was +determined. In case this data was not available, we extrapolated based on digital +on‑premise revenues at business unit level. Approximately 20% of emissions were +extrapolated; +Environmental disclosures continued +• We estimated the number of servers at a customer’s own premise based on the type of +on‑premise customers we have (i.e., large companies or institutions versus small and +medium‑sized firms); +• We estimated the average utilization of a server based on expertise of our Global Business +Services; +• We estimated the average energy usage of a server based on external source information; +and +• IEA emission factors were used to convert MWh into CO2e emissions, whereby we assumed +that approximately 60% of our customers are based in North America, 30% in Europe, +and 10% in Asia Pacific following the revenues generated by region as reported in the +consolidated financial statements. +As indicated above, there are numerous estimates applied in the calculation of customer +emissions. As such, we observe a high level of measurement uncertainty. The estimates that +are most sensitive in the measurement are the average number of login hours per user +and the relative share of our software to the average CPU usage of a device. +Scope 3.11 emissions +in mtCO2e, unless otherwise stated 2023 2022 2021 +Direct use‑phase emissions – energy consumption of customers’ devices +when using our cloud‑based software 3,872 3,108 2,735 +Indirect use‑phase emissions – energy consumption of customers’ +devices when using our on‑premise software 2,487 2,486 2,635 +Indirect use‑phase emissions – energy consumption of servers at +customers’ own premises for hosting our on‑premise software 6,607 8,776 11,509 +Total scope 3.11 emissions 12,966 14,370 16,879 +Customer emissions decreased in 2023, primarily due to a decrease in customers that host +our on‑premise software at their own premises. Direct use‑phase emissions increased in 2023 +due to an increase in the number of users of our cloud software. +111 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_113.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6469e2fd9ef792fedd9f28b289ed9592c867802 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,21 @@ +GHG removals and GHG mitigation projects financed through carbon credits (E1-7) +We did not engage in GHG removal or storage projects, nor did we initiate GHG mitigation +projects financed through carbon credits. +Climate change company-specific metrics +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. A target for the decommissining of on‑premise servers +was included in Executive Board and senior management remuneration in 2021, 2022, and 2023. +See Targets related to climate change (E1-4). +2023 2022 2021 +Number of data centers closed 12 14 21 +Number of on‑premise servers decommissioned 1,542 1,032 2,838 +Real estate rationalization +For several years, we have been executing a real estate rationalization program, which has +already delivered significant reductions in our office footprint through office closures and +consolidations. This program achieved a 5% organic reduction in square meters in 2023. +2023 2022 2021 +Real estate rationalization, % organic reduction in m2 1 5% 5% 7% +¹ The organic reduction in m² excludes the effect of acquisitions and divestments. +Environmental disclosures continued +112 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_114.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..622cf71db64891f844f931b751f4f4bedb74eb36 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,74 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating to +social matters. +Own workforce (ESRS S1) +Material impacts, risks, and opportunities and their +interaction with strategy and business model (SBM-3) +Our workforce is instrumental to our business model. +Attracting, developing, and retaining a diverse and highly +skilled workforce is essential to delivering our strategy. A +diverse and motivated 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. By providing our workforce +with a diverse and inclusive work environment, training and +skills development opportunities, and benefits, we positively +impact the personal and professional lives of our workforce. +Our workforce is comprised of employees and non‑employees. +Non‑employees are individual contractors and people +provided by suppliers primarily engaged in employment +activities. All individuals in our workforce could be affected +by the material impacts and opportunities described in this +section, unless otherwise indicated. Certain policies, actions, +metrics, and targets only apply to employees. When we refer +to both employees and non‑employees, we use the term +“workforce”. +Policies related to own workforce (S1-1) +For a complete overview of the policies related to our own +workforce, see Policies adopted to manage material +sustainability matters (MDR-P). +Our Code of Business Ethics (Code) sets forth the ethical +standards that are the basis for our decisions and actions, and for +achieving our business goals. The Code covers various policies, +some of which are further detailed in standalone policies, +processes, and/or programs. The Code covers policies on our +material impacts related to our workforce. The Code is approved +and adopted by the Executive Board and is reviewed annually. +The policy on equal opportunity in the Code provides that +we foster an inclusive company culture and do not make +employment decisions based on various discriminatory +factors, including among others race, color, religion, sex, age, +national origin, sexual orientation, gender identity, ethnicity, +disability, and handicap. This includes equal treatment in +recruitment, hiring, training, compensation, promotion, +performance assessment, and disciplinary action. This policy is +further detailed in our Diversity, Equity, Inclusion & Belonging +(DEIB) Policy and Human Rights Policy. These policies +relate to the material impacts of equal pay for equal value, +diversity, equity, inclusion, and belonging, training and skills +development, and well‑being. +Our Code also includes our commitment to data privacy. +In addition, we maintain data privacy policies that apply +specifically to the personal data of our workforce. These +policies disclose how personal information is used and shared +and are based upon applicable data privacy principles and +regulations. We collect personal data from our workforce +only for specified purposes, which are documented. When +third parties, such as vendors, have access to personal +information of our workforce, we include relevant standards +and requirements for the processing of this data. Our Code +also includes a policy on the use of company technology and +systems in a responsible and secure manner, which is further +detailed in our Acceptable Use Policy. +These policies are made available to our workforce in various +languages through a dedicated intranet page. The Code +of Business Ethics, DEIB Policy, and Human Rights Policy +are available on www.wolterskluwer.com/en/investors/ +governance/policies-and-articles. Our workforce is made +aware of these policies through various training and +communication initiatives. +Social disclosures +113 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_115.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbeecc3a5d3c73f5f9cce28325a00b9ea3e06aa8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,69 @@ +We support human rights as outlined in the Universal Declaration of Human Rights, the core +standards of the International Labor Organization, the United Nations Guiding Principles on +Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. We strive +to ensure that our own activities do not infringe human rights. We are a signatory of the United +Nations Global Compact and the United Nations Women Empowerment Principles and we are +committed to aligning with these respective principles. Our human rights policy commitments +are included in our Code of Business Ethics and Human Rights Policy. Our Human Rights Policy +addresses our commitment to taking steps preventing modern slavery or human trafficking in +our supply chain or in any part of our business. +Processes for engaging with own workforce and workers’ representatives about impacts (S1-2) +As part of the normal course of business, we encourage regular engagement with our workforce +at all levels, including one‑on‑one meetings between managers and employees and team +meetings. We also host regular town hall meetings throughout the year. In addition, we have +formal processes for performance management and career development that encourage +ongoing manager and employee check‑ins. +We gather feedback from our employees formally through our employee listening surveys, +tickets submitted to our HR Service Delivery group, and through the SpeakUp program. We also +have regular interactions with our local and European work councils. We provide mechanisms +to our workforce to direct any questions, comments, or requests regarding their personal +information and our privacy practices. Generally, the employee privacy policies are provided to +and acknowledged by our employees upon hire and notification is provided to employees when +any material changes are made to these policies. +Processes to remediate negative impacts and channels for own workforce to raise concerns +(S1-3) +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, the Global Law and Compliance Department, or senior +management. In addition, our global SpeakUp system — operated through an external +provider — offers our workforce a confidential channel, available 24/7 for reporting concerns +in their own language, with the option to report anonymously where permitted by law. +For data privacy, we have a channel to report data privacy incidents. 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. +Social disclosures continued +Taking action on material impacts on own workforce, and approaches to managing material +risks and pursuing material opportunities related to own workforce, and effectiveness of +actions (S1-4) +Equal pay for equal value +We have implemented a global career framework which provides principles and a basis +for defining work for all jobs and implemented base pay salary structures where possible. +Additionally, 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 the U.S., to identify and remediate deviations in gender pay. We are +developing a plan to expand this work in accordance with all applicable laws and regulations. +Diversity, Equity, Inclusion, and Belonging (DEIB) +Our actions to further advance DEIB focus on: +• Hiring, promoting, and retaining a highly engaged and talented workforce that represents the +diversity of the communities where we live and work; and +• Cultivating a culture of inclusion and belonging that values authenticity and fairness, and +respects diversity in all its forms. +We measure the impact of our 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. +To formalize our DEIB efforts, we established a Global Diversity, Equity, Inclusion & Belonging +Policy in 2023. For more information, see section Policies related to own workforce (S1-1). +In accordance with Dutch law, we have developed an action plan to achieve our target to +increase the female representation in our executive career band. We do this through continuing +our equitable and inclusive practices focused on improving female representation in hiring, +promotions, and talent retention, as described below. +We have implemented inclusive job posting software which has enabled us to create market +leading job advertisements and attract more diverse talent by focusing on critical skills and +using inclusive language. We believe this will have a positive impact on slate diversity in +future years. +114 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures +The secret animal #2 is a "penguin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_116.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..98827d00201f2b5ff60fa4cbcb998662159229a4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,65 @@ +We also 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. +To encourage a culture of inclusion and belonging, all employees were invited to our inclusive +leadership learning journey in 2023. This program is designed to drive behavior change within +everyday team interactions and support our culture of inclusion and belonging. The first part +of the program focused on key inclusive behaviors, the second on reducing bias in decision‑ +making, and the final part encouraged allyship to reduce inequities within the workplace. +A behavior change survey to managers and employees showed that managers were applying the +behaviors in everyday interactions and reported feeling more effective in their role. +In 2023, we also launched three global inclusion networks — Women, Pride, and Multicultural. +All our employees can join these networks that help reinforce a culture of inclusion and +belonging that values authenticity and fairness and respects diversity in all forms. During the +year, these networks hosted internal and external speaker events, roundtable discussions, +and peer‑to‑peer networking; raised awareness of inclusive benefit offerings; and participated +in community events for their 3,300 collective members. +As we look to 2024, we intend to reinforce the work done to date with continued focus on +diversity sourcing and embedding inclusive and equitable behaviors within our core talent +and business processes. +Work-life balance +Our actions around work‑life balance relate to benefits, flexible work, and well‑being. +Our Together we Thrive program supports the well‑being of our workforce by offering resources +and content to help employees be their best — emotionally, physically, socially, and financially. +Key actions include: +• Robust benefits packages that include competitive options reflecting the market practices +in the various geographies in which we have employees; +• 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; +• Flexible work arrangements, including flexible work hours and the option to work outside the +office, to help employees balance their professional and personal commitments; +• An Employee Assistance Program and resiliency tools that provide mental health and +other support; +• Digital financial well‑being resources to help our employees plan for a financially secure +future based on their specific needs and goals; and +• Paid time‑off benefits to ensure employees have the time to care for themselves and those +close to them. +We continue to assess and evolve our well‑being offering and key benefits based on best +market practices and workforce preferences. +Training and skills development +We deliver innovative talent solutions that enable performance, growth, and skills development +for all employees. All talent processes, tools, resources, offerings, and programming are +designed to support developing skills and careers. +In 2023, we focused on several key enhancements to our talent program portfolio to support +employees in skills development and career growth. Key actions include: +• Enhancement of our succession planning process, which has resulted in an improvement +in the readiness and availability of our talent to fill internal job openings; +• Enabling more businesses to leverage the learning platform to meet their training needs +and continuing to deploy mandatory and optional training to a global audience; +• Running a global employee development campaign #Grow, which is designed to incorporate +growth and development into daily work life and increase engagement in learning; +• Pilot for a global mentoring program which will continue to grow in 2024; and +• Providing resources for managers, including additional curricula that support managers +to coach and develop their teams and reinforce an inclusive work environment. +Looking ahead, we will advance the work to focus on skills development and build programs +to ensure we maintain the current and emerging skills required for our workforce. +Privacy +We provide ongoing training and awareness programs to our workforce to reflect data privacy +and cybersecurity developments. We incorporate key themes into our data privacy and +cybersecurity courses that employees are required to take every year. In 2023, we developed +a new Privacy Awareness training course that was rolled out to our employees and a large +proportion of our non‑employees. +Social disclosures continued +115 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_117.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed8de32d9d24b96bcd104b220986358f95a9daf2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,45 @@ +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S1-5) +To advance the positive impact of DEIB on our employees, we have set the following targets: +• Improvements to our employee belonging score; +• Have at least 33% male and female representation in our Supervisory and Executive Boards; +• Increase female representation in the executives career band by 2% by 2028 from a 2022 +baseline; +• Increase our employee engagement score relative to the Microsoft Glint top 25th benchmark +in 2024; and +• 98% of employees to complete Annual Compliance Training. See Business conduct company- +specific metrics on page 126. +The target ‘improvements to our employee belonging score’ is included in the non‑financial +performance measures for the 2023 and 2024 short‑term incentive plans. For further details, +see the sections Key elements of our remuneration policy in Remuneration report on page 73 +and Payouts for performance against 2023 STIP targets in Remuneration report on page 80. +Characteristics of our employees (S1-6) +Methodologies and assumptions +Unless otherwise stated, all numbers are reported in headcount at December 31. Headcount +data is based on our global human resource platform. The split by country and region is +based on the legal entity the employee is employed by. A negligible number of employees +work in a different country than the country where the legal entity is based. +Headcount by gender is based on the gender indicated by employees in our global human +resource platform. Currently, employees are not yet able to specify a gender other than +male or female in our global human resource platform. Hence, no employees are reported +as ‘other gender’. Employees that did not select a gender or did not want to disclose their +gender are reported under ‘not disclosed’. +Headcount by contract term is based on our global human resource platform. We are not yet +able to report permanent and temporary employees separately and have initiated a project +to ensure reporting this split in the 2024 Annual Report. As headcount by contract term is a +new metric for us, no 2022 and 2021 comparatives are reported. +Divested operations are excluded from the employee turnover calculation. Employee +turnover is split into voluntary turnover and non‑voluntary turnover. Voluntary turnover +includes employees who initiated the contract termination or employees that retired. +Non‑voluntary turnover includes employees who were dismissed or passed away. The +denominator of the employee turnover calculation is based on a 12‑month average +headcount. +Race/ethnicity of U.S. employees, which is a company‑specific metric, is based on what +employees indicated in our global human resource platform. Races/ethnicities mirror those +used for required federal reporting in the U.S. Other races/ethnicities include employees who +identified as being of two or more races, Native American, Alaska Native, Native Hawaiian, or +Other Pacific Islander. Employees who did not know their race/ethnicity or did not select a +race/ethnicity are reported under ‘unknown or not disclosed’. +We did not apply estimates in the reporting of the characteristics of our employees. +Social disclosures continued +116 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_118.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..aa7fdb22c510cdabd877377a469f97b16a81bf50 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,54 @@ +Headcount by gender +2023 +% of +total 2022 +% of +total 2021 +% of +total +Female 9,812 46% 9,470 46% 9,187 46% +Male 11,438 53% 10,898 53% 10,490 53% +Not disclosed 188 1% 143 1% 123 1% +Total headcount at December 311 21,438 20,511 19,800 +¹ See Note 12 – Employee benefit expenses of the consolidated financial statements. +Headcount by country and region +2023 +% of +total 2022 +% of +total 2021 +% of +total +U.S. 8,707 40% 8,478 41% 8,037 41% +India 3,358 16% 2,810 14% 2,203 11% +Other countries 9,373 44% 9,223 45% 9,560 48% +Total headcount at December 31 21,438 20,511 19,800 +The Netherlands 1,176 5% 1,150 6% 1,119 6% +Europe (excluding the Netherlands) 6,824 32% 6,740 33% 7,145 36% +U.S. and Canada 9,067 43% 8,821 43% 8,369 42% +Asia Pacific 4,295 20% 3,729 18% 3,097 16% +Rest of the world 76 0% 71 0% 70 0% +Total headcount at December 31 21,438 20,511 19,800 +The U.S. and India are the only two countries representing at least 10% of our total number +of employees. +Headcount by contract term +Female Male +Not +disclosed Total 2023 +Permanent and temporary employees 8,558 10,759 182 19,499 +Non‑guaranteed hours employees 1,254 679 6 1,939 +Total headcount at December 31, 2023 9,812 11,438 188 21,438 +Non‑guaranteed hours employees are almost all employed in the U.S. and predominately work +in customer service, fulfillment, and inside sales job functions. These employees are entitled to +a certain number of paid sick and vacation days. On average, these employees worked 36 hours +per week in 2023, assuming 48 working weeks. +Employee turnover +2023 2022 2021 +Employees who left the company in the year +(excluding divested operations) 2,071 3,053 2,943 +% of total employee turnover 9.8% 15.3% 15.4% +Of which: +% of voluntary employee turnover 7.3% 12.8% 12.1% +% of non‑voluntary employee turnover 2.5% 2.5% 3.3% +Social disclosures continued +117 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_119.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f22ccbccfb4ff0910d72ef7e750df5328d3e0df --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,62 @@ +Race/ethnicity of U.S. employees +2023 +% of +total 2022 +% of +total 2021 +% of +total +Asian 1,114 13% 1,031 12% 979 12% +Black or African American 628 7% 639 8% 547 7% +Hispanic or Latino 551 6% 525 6% 475 6% +White 5,852 68% 5,798 68% 5,595 69% +Other races/ethnicities 188 2% 165 2% 133 2% +Unknown or not disclosed 374 4% 320 4% 308 4% +Total U.S. headcount at December 31 8,707 8,478 8,037 +Characteristics of non-employees in our own workforce (S1-7) +Non‑employees are individual contractors and people provided by suppliers primarily engaged +in employment activities. +At present, we do not have a system in place to collect and monitor the characteristics of +non‑employees in our own workforce. The implementation of such a system will commence in +the course of 2024. We have the ambition to give further insight in the characteristics of non‑ +employees in 2024 Annual Report. However, we may make use of the phase‑in option for the +reporting of this disclosure and start reporting the global number of non‑employees in the 2025 +Annual Report. +Diversity metrics (S1-9) +Methodologies and assumptions +Unless otherwise stated, all numbers are reported in headcount at December 31. The split +of headcount by employee category and gender and the split of headcount by age group is +based on our global human resource platform. +Executives include employees that are in the executives career band, meaning that they have +a job category role with executive managerial responsibilities. In this context, executives +exclude the Executive Board. Managers are defined as employees having one or more direct +reports, excluding the Executive Board and the executives. +Headcount by employee category and gender +2023 2022 2021 +Supervisory Board by gender¹ +Female 4 4 3 +Male 2 3 4 +Executive Board by gender +Female 1 1 1 +Male 1 1 1 +Executives by gender +Female 95 91 88 +Male 206 200 188 +Not disclosed – – – +Gender ratio, % female +Supervisory Board¹ 67% 57% 43% +Total headcount 46% 46% 46% +Of which: +Executive Board 50% 50% 50% +Executives 32% 31% 32% +Managers 41% 39% 39% +Other employees 47% 47% 48% +¹ Supervisor Board members are not employees of the company. +Headcount by age group +2023 % of total 2022 % of total 2021 % of total +Under 30 years old 3,071 14% 2,987 15% 2,520 13% +30‑50 years old 12,754 60% 12,223 59% 12,058 61% +Over 50 years old 5,613 26% 5,301 26% 5,222 26% +Total headcount at December 31 21,438 20,511 19,800 +Social disclosures continued +118 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_12.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d730cbd4798c9505a79e4f81f12926621e368ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +product innovation 2023 2022 2021 +Product development spending, +% of revenues 11% 11% 10% +Global Innovation Awards, +number of submissions 662 453 154 +Global Innovation Awards, +number of finalists 14 13 16 +Global Innovation Awards, +number of winners 6 5 6 +In 2023, the Global Innovation Awards attracted more than 660 +entries. Fourteen product and process innovation concepts +were selected as finalists, and, of these, six ideas were +selected for special recognition. For our software developers +around the world, we organize an annual coding competition +(Code Games). +In addition to monitoring progress against product roadmaps, +we track submissions and winners of our employee innovation +competitions and our performance in innovation‑oriented +industry awards and rankings, such as the Best in KLAS Awards +and the Stevie Awards. +Responsible artificial intelligence +Artificial intelligence is used in several of our products where +it benefits human experts working in complex professional +fields. We use natural language processing (NLP), machine +learning (ML), deep learning (DL), and virtual assistants (bots) +in many of our solutions in order to augment and streamline +customer workflows and provide new or improved insights. +Innovation is supported by our central product development +team, the Digital eXperience Group, which works closely with +our business units and our customers to build new features, +modules, and platforms. DXG uses a customer‑centric, +contextual design process to develop solutions based on +the scaled agile framework. DXG currently has six centers +of excellence: user experience, artificial intelligence, IP and +patents, architecture and asset reuse, quality engineering, +and application security. Our technology architecture is +increasingly based on globally scalable platforms that use +standardized components. New solutions are built cloud‑first. +We measure innovation by monitoring product development +spending and progress against product roadmaps at the +business unit level. In 2023, product development spending +increased in constant currencies to reach 11% of total +revenues, slightly higher than envisaged under our current +strategic plan. Key product launches during 2023 include +vrClinicals for Nursing, CCH Axcess Engagement, CCH +Tagetik Global Minimum Tax, Enablon ESG Excellence, and +OneSumX for Basel IV. This was followed in early 2024 by CT +Corporation’s new solution for compliance with the new U.S. +beneficial ownership reporting rules. During 2023, we invested +in deploying new generative AI technology into our solutions +and launched our first beta versions of Gen AI applications for +UpToDate and two legal solutions. +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. +Strategy and business model +continued +New Milan office: enhancing well-being +and reducing emissions +We have a long-term program in place, designed to optimize +our global office footprint. This program aims to provide +employees a positive workplace experience while streamlining +operating costs, meeting environmental standards, and +reducing our greenhouse gas (GHG) emissions. +In 2023, this program achieved a 5% underlying reduction +in our real estate footprint as measured in square meters, +resulting in a 8% reduction in our scope 1 and scope 2 GHG +emissions. In coming years, this program will support us in +achieving our near-term SBTi targets for these scopes, while +also enhancing the well-being of our employees. +Our new leased office in Milan exemplifies all of the program’s +objectives. The new building adheres to the LEED V4 BD+C +protocol, which emphasizes eco-conscious construction, +and holds a Well Building Standard (WELL) certification, the +world’s leading health-focused building standard. It is also +certified for advanced digital infrastructure, showcasing our +holistic approach to sustainability and employee well-being. +It is equipped with a Siemens Building Management System +(BMS) to optimize energy consumption by monitoring and +automating plant engineering systems. +The architecture of the new Milan office promotes the well- +being and safety of its occupants. The design incorporates +spacious terraces, large communal areas, and windows that +can be opened, providing a pleasant environment for high- +quality work. Conveniently located near public transport and +equipped with electric charging stations, the office supports +sustainable commuting. Inside, eco-friendly features such +as recycled office materials, potable water sources, waste +separation areas, and energy-efficient LED lighting create an +environmentally-conscious workspace. +Customer case +11 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_120.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..81bffd7577ff768871b0d7cd173cb63289cafb56 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,60 @@ +Persons with disabilities (S1-12) +Methodologies and assumptions +The disability percentage is derived from U.S. employees that indicated in the global human +resource platform that they have a disability. We may make use of the phase‑in option for +this metric, hence start reporting the disability percentage for all employees in the 2025 +Annual Report. +Persons with disabilities in the U.S. +2023 2022 2021 +% of U.S. employees with disabilities 2% 2% 2% +Training and skills development metrics (S1-13) +Methodologies and assumptions +All employees participate in a global performance management process. The performance +review is annual and includes all active employees excluding only those who were hired +in Q4, employees on long‑term leave, employees for which the contract termination was +communicated prior to December 31, and interns. While they are not included in the review +process, these employees are included in the denominator of the calculation. +Training activity and time spent are captured in the learning platform, which is an integrated +module in the global human resources information system. The metric includes all internal +training content available in the learning platform. Mandatory compliance training such as +the Annual Compliance Training is excluded from the metric. At this time, external training +events, self‑study, or other types of training events are not captured. We expect to expand +capabilities to capture more training activity in the 2024 Annual Report. We will make use of +the phase‑in option for this metric, hence start reporting full training hours, including those +occurring outside of the learning platform, in the 2025 Annual Report. +The training metrics are calculated based on the headcount at December 31. +Executives include employees that are in the executives career band, meaning that they have +a job category role with executive managerial responsibilities. In this context, executives +exclude the Executive Board. Managers are defined as employees having one or more direct +reports, excluding the Executive Board and the executives. +Performance review +2023 20221 20211 +% of employees participated in performance +and career development reviews 97% – – +Participation percentage by gender +Female 97% – – +Male 96% – – +Not disclosed 86% – – +Participation percentage by employee category +Executives 99% – – +Managers 99% – – +Other employees 96% – – +¹ In the 2022 Annual Report, we applied a different methodology to calculate this metric. Hence, +no comparatives are reported. +Training +2023 20221 20211 +% of employees that followed internal training content available in the +learning platform 97% – – +Average number of training hours per employee 5 – – +Training hours by gender +Female 5 – – +Male 5 – – +Not disclosed 3 – – +Training hours by employee category +Executives 3 – – +Managers 6 – – +Other employees 5 – – +¹ In the 2022 Annual Report, we applied a different methodology to calculate this metric. Hence, +no comparatives are reported. +Social disclosures continued +119 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_121.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..68ec88b3806accbed5f45f90635a0ae20a273cbc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,46 @@ +Work-life balance metrics (S1-15) +Methodologies and assumptions +We report on family‑related leave according to the definitions of ESRS, i.e., it includes +maternity leave, paternity leave, parental leave, and carers’ leave from work. +The percentage of employees entitled to take family‑related leave is derived from our family‑ +related leave programs in the U.S. +The percentage of employees that took family‑related leave in the year, including the split +by gender, is derived from a report from a third‑party leave administrator in the U.S. These +employees register their leave in a platform of this third party. +We have the ambition to expand the reporting of this metric to other countries in which we +operate in the 2024 Annual Report. +Family-related leave in the U.S. +2023 2022 2021 +% of U.S. employees entitled to take family‑related leave at December 31 100% 100% 100% +% of U.S. employees that took family‑related leave in the year¹ 6% – – +Family-related leave taken by gender +Female 6% – – +Male 5% – – +Not disclosed 0% – – +¹ In the 2022 Annual Report, we applied a different definition of family ‑related leave in the calculation of this +metric. Hence, no comparatives are reported. +Remuneration metrics (S1-16) +Pay gap +We are finalizing our technical and analytical approach to determine gender pay gap following +the stipulations of ESRS Disclosure Requirement S1‑16 and have initiated a project to ensure +publishing of gender pay gap in the 2024 Annual Report. +Annual total remuneration ratio +The annual total remuneration ratio will be published in the 2024 Annual Report. +Similar as in past years, we disclosed the CEO pay ratio, following the Principles and Best +Practices of the Dutch Corporate Governance Code. +Methodologies and assumptions +The CEO pay ratio is calculated as the compensation of the highest‑paid individual divided +by the average employee remuneration. The compensation of the highest‑paid individual, +being the CEO, is based on the remuneration costs as stated in the table Remuneration of +the Executive Board – IFRS based in the Remuneration report, minus the tax‑related costs. +See page 78. +The average employee remuneration is obtained by dividing the total employee benefit +expenses as stated in Note 12 – Employee benefit expenses (after subtracting the CEO’s +remuneration) by the reported average number of full‑time employees (minus one). +CEO pay ratio +2023 2022¹ 2021 +CEO pay ratio 77 78 87 +¹ Restated as temporary staff and contractors are no longer reported within employee benefit expenses. +See Note 12 – Employee benefit expenses of the consolidated financial statements. +Social disclosures continued +120 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_122.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9422105dd613f1e7de3680172a3de82cfaf759d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,50 @@ +Incidents, complaints, and severe human rights impacts (S1-17) +General +We are currently not able to report all metrics as stipulated by ESRS Disclosure Requirement +S1‑17. Our SpeakUp program offers various channels to raise concerns. However, incidents of +discrimination and complaints could be filed through other channels than SpeakUp for which +we do not yet have a global platform in place. We have initiated a project to ensure reporting +of these metrics in the 2024 Annual Report. +In our largest region, U.S. and Canada, we have insight in the number of incidents of +discrimination and complaints. As a company‑specific metric, we report the number of +investigations opened in the U.S. and Canada in the year. +For the number of concerns registered through the SpeakUp system, see Business conduct +company-specific metrics on page 126. However, the scope of SpeakUp is broader and includes, +for example, concerns about ethical situations and behavior. +We did not identify any severe human rights incidents in 2023, 2022, and 2021. +Methodologies and assumptions +In the U.S. and Canada, we have an employee relations case management platform in +place. All incidents affecting our employees, including those related to discrimination and +harassment, are tracked in this platform. In case such an incident was raised through our +SpeakUp system, the incident was also added to the employee relations case management +platform and included in this metric. +Number of work-related or discrimination investigations opened in the U.S. and Canada +2023 20221 20211 +Number of investigations opened in the U.S. and Canada 44 – – +¹ This is a new metric. Hence, no comparatives are reported. +Other own workforce company-specific metrics +Methodologies and assumptions +Belonging measures the extent to which employees believe they can bring their authentic +selves to work and be accepted for who they are. The score on a scale of 0 to 100 is based on +a survey by a third‑party market‑leading survey partner (2023, 2022, and 2021: Microsoft Glint). +We conduct annual global surveys by a third‑party market‑leading survey partner to measure +employee engagement (2023, 2022, and 2021: Microsoft Glint). +Belonging score and employee engagement score +2023 2022 2021 +Belonging score 75 73 72 +Employee engagement score 78 77 76 +Employee engagement relative to global top 25th benchmark Microsoft +Glint +3 points +below – – +In 2023, we started comparing our employee engagement score relative to the global top 25th +benchmark of Microsoft Glint. Comparative figures for prior years are not available. Microsoft +Glint top 25th benchmark uses all Glint customers and take the top 25th percentile of scores for +each question or index. Our target is to increase our employee engagement score relative to the +Microsoft Glint top 25th benchmark in 2024. +Annual Compliance Training +For the percentage of employees that completed the Annual Compliance Training, which +includes cybersecurity, data privacy, and business ethics courses, see Business conduct +company-specific metrics on page 126. +Social disclosures continued +121 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_123.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2f11e4b641a007e70906a95e2c4f34ef3188242 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,57 @@ +Workers in the value chain (ESRS S2) +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +Our operations depend on upstream suppliers and their workers in the provision of +cloud services, outsourced and offshored data center services, software development and +maintenance services, back‑office transaction‑processing services, content services, and other +services. While we have not yet obtained full insights in the human rights and labor conditions +of supply chain workers, our initial findings on select key suppliers do not show signs of +material risks related to their human rights, including child labor or forced labor. However, it +is not excluded that in certain sectors and/or geographies, supply chain workers may not have +equal opportunities, adequate wages, secure jobs, work‑life balance, and protection of health +and safety at work, while it may be difficult to influence suppliers’ own policies. In the coming +years, we plan to obtain more insights into the social aspects of our supply chain. +Policies related to value chain workers (S2-1) +Our Supplier Code of Conduct includes standards around environmental, social, and business +conduct and compliance expected from all our suppliers, business partners, agents, resellers, +and third parties that deliver products or services to us. This Supplier Code of Conduct +supplements our Code of Business Ethics and sets forth the standards and practices that our +suppliers are required to uphold, including the following: +• Support and respect of internationally recognized human rights in dealing with their +employees, clients, suppliers, shareholders, and communities; +• Equal treatment and reward of their workers, including equal pay for equal work, non‑ +discrimination in hiring and employment practices, and promotion of a diverse and inclusive +work environment; +• Compliance with all applicable wage, hour, and benefits laws and regulations, as well +payment of fair wages and benefits in line with industry standards; and +• Provision of a safe, hygienic, and healthy workplace in compliance with all applicable local +and national laws and regulations. +As stated in our Supplier Code of Conduct, we support the principles of the United Nations +Universal Declaration of Human Rights, the United Nations Guiding Principles on Business and +Human Rights, the OECD Guidelines for Multinational Enterprises, and the Core Labor Standards +of the International Labor Organization. +Processes for engaging with value chain workers about impacts (S2-2) +We currently do not have a process to engage directly with value chain workers. +Processes to remediate negative impacts and channels for value chain workers to raise +concerns (S2-3) +Our Supplier Code of Conduct provides that value chain workers can raise any questions or +concerns to their usual Wolters Kluwer contact or by contacting the Wolters Kluwer Ethics & +Compliance team. The channel to raise concerns as described in the Supplier Code of Conduct +is available for value chain workers on the company’s website. Wolters Kluwer will review and +consider all concerns raised and investigate and/or respond as appropriate. +Taking action on material impacts on value chain workers, and approaches to managing +material risks and pursuing material opportunities related to value chain workers, and +effectiveness of these actions (S2-4) +We expect our suppliers to uphold the same social and environmental standards to which +we are committed. Through our supply chain risk management program, we engage with our +suppliers to ensure we have a responsible supply chain throughout our global operations. +Suppliers who are managed by our procurement department are required to complete a due +diligence questionnaire providing information on their policies for data security and data +privacy, environmental footprint, and more. As part of this due diligence, 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 an assigned supplier risk classification, +this due diligence is repeated every one to three years. +Social disclosures continued +122 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures +The secret object #5 is a "vase". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_124.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..2261db522f578dd7627a983db730533cc59fb8de --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,50 @@ +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S2-5) +We currently do not have targets regarding workers in the value chain. +Workers in the value chain company-specific metrics +Methodologies and assumptions +We request our suppliers to commit to our Supplier Code of Conduct or to their own +equivalent standard. In our supplier engagement platform, we keep track of the number of +suppliers having a signed Supplier Code of Conduct or an equivalent standard. If a contract +with a supplier is ended, it is removed from the disclosed number. +Signed Supplier Code of Conduct or an equivalent standard +2023 20221 20211 +At January 1, number of suppliers having a signed Supplier Code of +Conduct or an equivalent standard 1,527 900 490 +Number of suppliers that signed the Supplier Code or Conduct or +provided an equivalent standard 325 627 410 +Supplier relationships ended 2021‑20231 (307) – – +At December 31, number of suppliers having a signed Supplier Code of +Conduct or an equivalent standard 1,545 1,527 900 +¹ In prior years, we did not subtract the suppliers whose contracts were ended. Hence, the number of +supplier relationships ended 2021 ‑2023 is a cumulative figure. +Consumers and end-users (S4) +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +End‑users are defined as individuals that receive the benefit of our products or services. These +could be our direct customers or individuals that receive services from our customers based on +the use of our products or services by the customer, such as clients and patients. +As a data‑driven digital company, it is part of our strategy and business model that personal +information resides in our products that end‑users use or benefit from. Protecting that +information from privacy and security breaches is therefore a critical component of our strategy. +In case of privacy incidents, the privacy rights of end‑users could be negatively impacted. +The provision of high‑quality and actionable information to our customers is the core of +our strategy and business model. Our customers depend on our knowledge and expertise to +provide better outcomes for their clients or patients. As we provide our customers around the +globe with access to quality information, we create positive impacts for our customers and +their clients or patients who are receiving their services. Ensuring the provision of high‑quality +and actionable information to our customers is also critical to the success of our business and +therefore creates an opportunity. +Policies related to consumers and end-users (S4-1) +Privacy +We foster a culture that respects the data privacy rights of individuals, including end‑ +users. We maintain policies and procedures regarding how we handle end‑user personal +information that is entrusted with us. 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. In 2023, we developed a Global Data Privacy Policy that will be rolled out in 2024. +This policy reflects our commitment to a global privacy baseline across divisions, business +units, and countries. 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. +Social disclosures continued +123 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_125.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2b9a77f0f4df6b70b44af3a16802f8efa79e0fd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,45 @@ +Access to quality information +Our Code of Business Ethics includes our Editorial Independence Policy, providing that we +are committed to delivering high‑quality and accurate content based on interpretation, best +practice, analysis, and guidance relating to legal, market, and other sources. We avoid bias, +defamation, and conflict of interest in approaching a subject and in the development of +our products. +Processes for engaging with consumers and end-users about impacts (S4-2) +Privacy +We engage with end‑users about our privacy practices in various ways, including through +agreed upon terms in our contracts or through privacy notices or terms and conditions on our +websites and applications. We explain what personal information we collect, use, and disclose, +and inform end‑users of their rights and the choices they can make about the sharing of +their information. Our privacy notices also allow individuals to ask questions or exercise their +relevant privacy rights by submitting a form from our website. Customers also have the ability +to reach appropriate support resources. +Access to quality information +Across our different businesses, we provide mechanisms for reader and customer feedback. +Processes to remediate negative impacts and channels for consumers and end-users to raise +concerns (S4-3) +Privacy +We have documented incident management procedures to address security incidents and +unauthorized acquisition, use, or disclosure of personal data. We have a cross‑functional, +global Information Technology Security Incident Response Team that plans, assesses, enforces, +documents, and remediates security incidents and events across the company. We notify our +customers of privacy or security incidents in accordance with applicable legal, regulatory, +and/or contractual requirements. +Taking action on material impacts on consumers and end-users, and approaches to managing +material risks and pursuing material opportunities related to consumers and end-users, +and effectiveness of those actions (S4-4) +Privacy +For our incident management procedures, see the previous section. We continue to +provide ongoing training and awareness programs to reflect data privacy and cybersecurity +developments. We incorporate key themes into our data privacy and cybersecurity courses +that employees are required to take every year. +Access to quality information +We commission experts in their fields to provide us with the latest professional information +on a range of relevant issues. We allow our editors independence in their decision‑making, +free from external pressure to foster a free exchange of ideas. +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S4-5) +We have a target that 98% of our employees should complete the Annual Compliance Training, +which includes cybersecurity, data privacy, and business ethics courses. See Business conduct +company-specific metrics on page 126. +Social disclosures continued +124 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_126.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..75508c94eada8284398a35832887cd3113af6de5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,45 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating to +business conduct matters. +Business conduct (ESRS G1) +Our company values and ethical standards are fundamental to +how we interact with our employees, customers, suppliers, and +partners, and with society at large. +Business conduct policies and corporate culture (G1-1) +The Wolters Kluwer Code of Business Ethics (Code) sets +forth the ethical standards that are the basis for our decisions +and actions, aligned with our company values. It provides +guidance on how we live our company values. Our Code +covers multiple topics, such as discrimination and harassment, +anti‑bribery and anti‑corruption, and conflicts of interest, +several of which are further detailed in standalone policies. +Our Code is published on our internal and external websites +in various languages. +We foster our corporate culture by incorporating our values +and ethical standards in our day‑to‑day work. Through +various communication and training activities during the +year, we support our workforce in understanding how these +standards apply to their day‑to‑day work and interactions +with colleagues, customers, and business partners. Our Annual +Compliance Training program includes a course on our Code +with rotating topics, and our workforce is asked to certify +that they have read and understood our Code. In 2023, the +training topics were bribery and corruption, fair competition, +and intellectual property. We monitor our culture of ethics +and compliance via the annual global employee survey, the +SpeakUp program, and through internal audits. These efforts +also help us measure the effectiveness of our Code and our +SpeakUp program. +Our Code and SpeakUp Policy describe how our workforce +can raise concerns about ethical situations or behavior. We +offer several channels for reporting concerns. Our global +SpeakUp system — operated through an external provider — +offers our employees a confidential channel, available 24/7 +for reporting concerns in their own language, with the option +to report anonymously where permitted by law. We have a +zero‑tolerance policy for retaliation, meaning that anyone who +raises a concern or participates in an investigation in good +faith is protected against retaliatory measures. +Governance disclosures +125 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Governance disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_127.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7b888f93275d5bd10934679637b3b271a4d5933 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,35 @@ +Governance disclosures continued +We provide information on our SpeakUp program via a dedicated intranet page, various +communications during the year, and through instructions in our Annual Compliance Training +program. +We have a zero‑tolerance policy towards 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. In addition, we regularly communicate our policies to +our workforce. We also conduct an annual compliance risk assessment that includes bribery +and corruption. +Our high standards of integrity and legal compliance also apply to business partners +through our Supplier Code of Conduct. We conduct anti‑bribery due diligence screening of +our partners and suppliers. In 2023, we did not detect any violations of our Anti‑Bribery and +Anti‑Corruption Policy. +Business conduct company-specific metrics +Methodologies and assumptions +The percentage of employees who completed the Annual Compliance Training is derived +from data tracked by our global human resources platform. This metric is calculated based +on the headcount at December 31. +The number of SpeakUp concerns is based on our global SpeakUp case management system. +Annual Compliance Training and SpeakUp concerns +2023 2022 2021 +% of employees who completed the Annual Compliance Training 99% 99% 99% +Number of SpeakUp concerns 47 25 21 +We have a target that 98% of our employees should complete the Annual Compliance Training +program, which includes cybersecurity, data privacy, and business ethics courses. +In 2023, the number of SpeakUp concerns increased because we included concerns raised +through other channels such as local HR in our case management system, which we have not +previously done. Also, continuous communication campaigns make employees more aware of +the SpeakUp program. We reviewed all concerns received and took appropriate action. None of +the concerns raised had a material impact on the company. +Employee engagement score +Corporate culture is one of the topics embedded in the employee engagement score. For the +employee engagement score, see Other own workforce company-specific metrics on page 121. +126 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Governance disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_128.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9f940b7bbd397df0dd76d7466adee7f498f6293 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,39 @@ +The sustainability statements do not yet comply with all aspects of ESRS. +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +General disclosures General disclosures (ESRS 2) BP‑1 General basis for preparation Page 91   +  BP‑2 Disclosures in relation to specific circumstances Page 91   +  GOV‑1 Role of the Executive Board and Supervisory Board Page 92 Executive Board and Supervisory Board on page 61. +Executive Board on page 44 and Supervisory Board on +page 45 in Corporate governance. +  GOV‑2 Information provided to and sustainability matters addressed by the +Executive Board and Supervisory Board +Page 92 Environmental, social, and governance matters in +Corporate governance on page 48. +Sustainability in Report of the Supervisory Board on +page 66. +  GOV‑3 Integration of sustainability‑related performance in incentive schemes Page 92 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report. +  GOV‑4 Statement on due diligence Page 93   +  GOV‑5 Risk management and internal controls over sustainability reporting Page 93 Responsibility for risk management and Risk +management process on page 50 and Internal Control +Framework and Internal audit and risk management +functions on page 51 in Risk management. +  SBM‑1 Strategy, business model, and value chain Page 94 Strategy and business model on page 7. +  SBM‑2 Interests and views of stakeholders Page 94   +  SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 95   +  IRO‑1 Description of the process to identify and assess material impacts, risks, +and opportunities +Page 96   +  IRO‑2 Disclosure requirements covered by the sustainability statements Page 97   +  MDR‑P Policies adopted to manage material sustainability matters Page 98   +  MDR‑A Actions and resources in relation to material sustainability matters Page 98   +  MDR‑M Metrics in relation to material sustainability matters Page 99   +    MDR‑T Tracking effectiveness of policies and actions through targets Page 99   +Reference table +127 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_129.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d4a86e225b8d8f4a8d7a2206f949418107942ab --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,47 @@ +Reference table continued +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +Environmental disclosures Climate change (ESRS E1) GOV‑3 Integration in incentive schemes Page 100 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report. +  E1‑1 Transition plan for climate change mitigation Page 100   +  SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 101   +  IRO‑1 Description of the processes to identify and assess material climate‑ +related impacts, risks, and opportunities +Page 102   +  E1‑2 Policies related to climate change migration and adaptation Page 102   +  E1‑3 Actions and resources in relation to climate change policies Page 102   +  E1‑4 Targets related to climate change mitigation and adaptation Page 103   +  E1‑5 Energy consumption and mix Page 105   +  E1‑6 Gross GHG emissions Page 106   +  E1‑7 GHG removals and GHG mitigation projects financed through carbon +credits  +Page 112   +      Climate change company‑specific metrics Page 112 +Social disclosures Own workforce (ESRS S1) SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 113   +  S1‑1 Policies related to own workforce Page 113   +  S1‑2 Processes for engaging with own workforce and workers’ representatives +about impacts +Page 114   +  S1‑3 Processes to remediate negative impacts and channels for own workforce +to raise concerns +Page 114   +  S1‑4 Taking action on material impacts on own workforce, and approaches +to managing material risks and pursuing material opportunities related +to own workforce, and effectiveness of actions +  Page 114   +  S1‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 116 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report.  +  S1‑6 Characteristics of our employees Page 116   +  S1‑7 Characteristics of non‑employee workers in our own workforce Page 118   +  S1‑9 Diversity metrics Page 118   +128 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_13.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f3da5c2143bb5a303c21ae2070f005b0321e77a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,94 @@ +groups, drives global alignment to 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) +which is a risk‑based model. +A target for our cybersecurity maturity score has been +included in Executive Board and senior management +remuneration for the past three years and will again be +included in 2024. In 2023, the cybersecurity maturity score +increased, exceeding the target for the year. Over the three‑ +year period since 2020, the indexed score has been improved +to 113.8 compared to the base year (2020 = 100.0). 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. +For select systems, applications, and services, we have +achieved over 85 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 that support +IT operations and some of our products have attained +ISO 27001 certification. +We also deploy other advanced technologies, such as digital +twins and robotic process automation (RPA) to the benefit +of customers. In 2023, around 50% of our digital revenues were +from solutions that incorporate these various forms of AI. +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 have developed an +Artificial Intelligence Assurance Framework and Responsible +Artificial Intelligence Principles that incorporate key principles +such as privacy and security, transparency and explainability, +governance and accountability, fairness, non‑discrimination, +and human‑centeredness. The Responsible AI Framework +and principles lead us to embed good practices throughout +the design, development, use, and evaluation of AI‑enabled +solutions. 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 practices in this area. +Cybersecurity +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 manage a global information security program built on +people, processes, and technology and designed to protect our +organization, products, and customers. The security program +has a three‑tiered management structure. It is overseen by our +Security Council which is comprised of senior leaders from the +five divisions and from functional areas. Our Chief Information +Security Officer is responsible for managing and monitoring +the overall program. Our Technology Council implements +initiatives and, together with dedicated taskforce +Strategy and business model +continued +UpToDate brings access to quality +information to clinicians in 180 countries +Our clinical decision tool UpToDate is used by over 2 million +clinicians around the world. To ensure highest quality, +transparency, and clarity of its evidence-based content, +UpToDate follows a rigorous editorial policy and process. +UpToDate content, which covers more than 12,000 topics +across 25 medical specialties, is developed by more than +7,000 contributing experts, leading practitioners in their +respective fields, who work with our in-house team of editors, +led by an editor-in-chief. Editors perform a continual review +of over 400 of the top, peer-reviewed medical journals, as +well as key clinical databases and other resources. Topics are +updated when new evidence or information emerges but only +after careful and extensive review by our expert contributors +who can provide context and clinical guidance. Each +UpToDate specialty area has dedicated reviewers responsible +for anonymous peer review of selected topics. UpToDate user +comments are also reviewed and incorporated into topics +where appropriate or necessary. +This layered, iterative review process allows us to ensure +the content addresses the relevant clinical questions; meets +editorial standards for quality, clarity, and usability; and is +free from commercial bias. + → For insight into how we mitigate cybersecurity risks, see IT +and cybersecurity on page 53 in Risk management +Customer case +12 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_130.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..2025d17ff323ea98e05717cfe8cbce2b099812f6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,49 @@ +Reference table continued +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +  S1‑12 Persons with disabilities Page 119   +  S1‑13 Training and skills development metrics Page 119   +  S1‑15 Work‑life balance metrics Page 120   +  S1‑16 Remuneration metrics Page 120   +  S1‑17 Incidents, complaints, and severe human rights impacts Page 121   +      Other own workforce company‑specific metrics Page 121   +  Workers in the value chain +(ESRS S2) +SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 122   +  S2‑1 Policies related to value chain workers Page 122   +  S2‑2 Processes for engaging with value chain workers about impacts Page 122   +  S2‑3 Processes to remediate negative impacts and channels for value chain +workers to raise concerns +Page 122   +  S2‑4 Taking action on material impacts on value chain workers, and approaches +to managing material risks and pursuing material opportunities related to +value chain workers, and effectiveness of actions +Page 122   +    S2‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 123   +  Consumers and end users +(ESRS S4) +SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 123   +  S4‑1 Policies related to consumers and end users Page 123   +S4‑2 Processes for engaging with consumers and end‑users about impacts Page 124 +S4‑3 Processes to remediate negative impacts and channels for customers +and end‑users to raise concerns +Page 124 +S4‑4 Taking action on material impacts on consumers and end‑users, +and approaches to managing material risks and pursuing material +opportunities related to consumers and end‑users, and effectiveness +of actions +Page 124 +    S4‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 124   +Governance disclosures Business conduct (ESRS G1) G1‑1 Business conduct policies and corporate culture Page 125   +      Business conduct company‑specific metrics Page 126   +129 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_131.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..06ec4b8bfdf48e2f34039b27624cc9ff364f7087 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,38 @@ +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +General disclosures General disclosures (ESRS 2) GOV‑1 Board’s gender diversity Page 92 +  GOV‑1 Percentage of board members who are independent Page 92 +  GOV‑4 Statement on due diligence Page 93 +  SBM‑1 Involvement in activities related to fossil fuel activities Not material to us. +  SBM‑1 Involvement in activities related to chemical production Not material to us. +  SBM‑1 Involvement in activities related to controversial weapons Not material to us. +  SBM‑1 Involvement in activities related to cultivation and production of tobacco Not material to us. +Environmental disclosures Climate change (E1) E1‑1 Transition plan to reach climate neutrality by 2050 Page 100 +  E1‑1 Undertakings excluded from Paris‑aligned Benchmarks Page 100 +  E1‑4 GHG emission reduction targets Page 103 +  E1‑5 Energy consumption from fossil sources disaggregated by sources for high +climate impact sectors +  Not material to us. +  E1‑5 Energy consumption and mix Page 105 +  E1‑5 Energy intensity associated with activities in high climate impact sectors Not material to us. +  E1‑6 Gross scope 1, 2, 3, and total GHG emissions Page 106 +  E1‑6 Gross GHG emissions intensity Page 107 +  E1‑7 GHG removals and carbon credits Page 112 +  E1‑9 Exposure of the benchmark portfolio to climate‑related physical risks We are not yet able to report this datapoint. +  E1‑9 Disaggregation of monetary amounts by acute and chronic physical risk We are not yet able to report this datapoint. +  E1‑9 Location of significant assets at material physical risk We are not yet able to report this datapoint. +  E1‑9 Breakdown of the carrying value of real estate assets by +energy‑efficiency classes +We are not yet able to report this datapoint. +    E1‑9 Degree of exposure of the portfolio to climate‑related opportunities We are not yet able to report this datapoint. +  Pollution (E2) E2‑4 Amount of each pollutant listed in Annex II of the E‑PRTR Regulation +(European Pollutant Release and Transfer Register) emitted to air, +water, and soil +Not material to us. +  Water and marine resources (E3) E3‑1 Water and marine resources Not material to us. +  E3‑1 Dedicated policy Not material to us. +  E3‑1 Sustainable oceans and seas Not material to us. +  E3‑4 Total water recycled and reused Not material to us. +    E3‑4 Total water consumption in m3 per net revenue on own operations Not material to us. +List of data points that derive from other EU legislation +130 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation +The secret drink is a "smoothie". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_132.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dea54f1386c3443f966a81601853127ae828a71 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,39 @@ +List of data points that derive from other EU legislation continued +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +  Biodiversity and ecosystems (E4) IRO‑1 List of material sites and biodiversity‑sensitive areas Not material to us. +  IRO‑1 Material negative impacts with regards to land degradation, desertification, +or soil sealing +Not material to us. +  IRO‑1 Operations affecting threatened species Not material to us. +  E4‑2 Sustainable land and agriculture practices or policies Not material to us. +  E4‑2 Sustainable oceans and seas practices or policies Not material to us. +    E4‑2 Policies to address deforestation Not material to us. +  Recourse use and circular +economy (E5) +E5‑5 Non‑recycled waste Not material to us. +    E5‑5 Hazardous waste and radioactive waste Not material to us. +Social disclosures Own workforce (S1) SBM‑3 Risk of incidents of forced labor Not material to us. +  SBM‑3 Risk of incidents of child labor Not material to us. +  S1‑1 Human rights policy commitments Page 113 +  S1‑1 Due diligence policies on issues addressed by the fundamental International +Labor Organisation Conventions 1 to 8 +Page 114 +  S1‑1 Processes and measures for preventing trafficking in human beings Page 114 +  S1‑1 Workplace accident prevention policy or management system Not material to us. +  S1‑3 Grievance and complaints handling mechanisms Page 114 +  S1‑14 Number of fatalities and number and rate of work‑related accidents Not material to us. +  S1‑14 Number of days lost to injuries, accidents, fatalities, or illness Not material to us. +  S1‑16 Unadjusted gender pay gap We are not yet able to report this datapoint. +  S1‑16 Excessive CEO pay ratio We are not yet able to report this datapoint under S1‑16 +stipulations. Similar as in prior years, we disclosed the CEO +pay‑ratio following the Principles and Best Practices of the +Dutch Corporate Governance Code (see page 120). +  S1‑17 Incidents of discrimination We are not yet able to report this datapoint under S1‑ +17 stipulations. We disclosed the number of opened +investigations on incidents affecting our employees in the U.S. +and Canada (see page 121). +    S1‑17 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 121 +  Workers in the value chain (S2) SBM‑3 Significant risk of child labor or forced labor in the value chain Page 122 +131 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_133.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..18772363f481423930016295e930b090c9747476 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,28 @@ +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +  S2‑1 Human rights policy commitments Page 122 +  S2‑1 Policies related to value chain workers Page 122 +  S2‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 122 +  S2‑1 Due diligence policies on issues addressed by the fundamental International +Labor Organisation Conventions 1 to 8 +Page 122 +    S2‑4 Human rights issues and incidents connected to upstream and downstream +value chain +Page 122 +  Affected communities (S3) S3‑1 Human rights policy commitments Not material to us. +  S3‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Not material to us. +    S3‑4 Human rights issues and incidents Not material to us. +  Consumers and end‑users (S4) S4‑1 Policies related to consumers and end‑users Page 123 +  S4‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 123 +    S4‑4 Human rights issues and incidents Not material to us. +Governance disclosures Business conduct (G1) G1‑1 United Nations Convention against Corruption Not material to us. +  G1‑1 Protection of whistleblowers Not material to us. +  G1‑4 Fines for violation of anti‑corruption and anti‑bribery laws Not material to us. +    G1‑4 Standards of anti‑corruption and anti‑bribery Not material to us. +List of data points that derive from other EU legislation continued +132 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_134.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..4004099da80fcfff5de0e1ac11a356c721b6388e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,36 @@ +Task Force on Climate-related +Financial Disclosures (TCFD) +TCFD elements Recommended disclosures Reference in this report +Governance Board’s oversight of climate‑related risks and opportunities Responsibility for risk management in Risk management of Governance +Executive Board in Corporate governance of Governance +Supervisory Board in Corporate governance of Governance +Management’s role in assessing and managing climate‑related risks and opportunities Risk management process in Risk management of Governance +Executive Board in Corporate governance of Governance +Strategy Description of climate‑related risks and opportunities Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) in Environmental disclosures of Sustainability statements +Impact of climate‑related risks on the company’s businesses, strategy, and financial planning Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) in Environmental disclosures of Sustainability statements +Resilience of the company’s strategy Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) in Environmental disclosures of Sustainability statements +Risk management The company’s processes for identifying and assessing climate‑related risks Risk management process in Risk management of Governance +Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) in Environmental disclosures of Sustainability statements +The company’s processes for managing climate‑related risks Policies related to climate change migration and adaptation (E1-2) in Environmental +disclosures of Sustainability statements +Actions and resources in relation to climate change policies (E1-3) in Environmental disclosures +of Sustainability statements +Integration of processes for identifying, assessing, and managing climate‑related risks into the +company’s overall risk management system +Risk management process in Risk management of Governance +Description of the process to identify and assess material impacts, risks, and opportunities +(IRO-1) in General disclosures of Sustainability statements +Metrics and targets Targets used to manage climate‑related opportunities and risks against performance +against targets +Targets related to climate change mitigation and adaptation (E1-4) in Environmental +disclosures of Sustainability statements +Metrics used to assess climate‑related risks and opportunities Energy consumption and mix (E1-5), Gross GHG emissions (E1-6), and GHG removals and GHG +mitigation projects financed through carbon credits (E1-7) in Environmental disclosures of +Sustainability statements +Disclosure of scope 1, scope 2, and scope 3 GHG emissions Gross GHG emissions (E1-6) in Environmental disclosures of Sustainability statements +133 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information TCFD +The secret sport is "surfing". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_135.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..89837d41339e2f87845dc951da91d0fb6fe0f490 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,56 @@ +The EU Taxonomy is a classification system that defines +criteria for economic activities that are aligned with a net +zero trajectory by 2050, and the broader environmental +goals other than climate. The EU Taxonomy helps direct +investments to the economic activities most needed for the +transition, in line with the European Green Deal objectives. +Assessment of compliance with the EU Taxonomy +regulatory framework +Introduction +The EU Taxonomy regulatory framework (Taxonomy), as applicable for reporting in our 2023 +Annual Report, includes: +• Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable +investments (Regulation); +• Delegated Act (EU) 2021/2139 (Climate Delegated Act); +• Delegated Act (EU) 2021/2178 (Disclosures Delegated Act); +• Delegated Act (EU) 2022/1214 (Complementary Climate Delegated Act); and +• Delegated Acts (EU) 2023/2485 (amending the Climate Delegated Act) and 2023/2486 +(Environmental Delegated Act). +In 2023, we evaluated the impact of the newly adopted delegated acts. In addition, we re‑ +evaluated our interpretations of the Regulation and the delegated acts that were adopted in +prior years. We based our re‑evaluation on the Frequently Asked Questions documents, as +published by the European Commission on its EU Taxonomy Navigator portal. We also reviewed +2022 annual reports of other European‑listed companies, with a focus on companies that sell +digital products. Following this re‑evaluation, we identified some economic activities that +qualify as eligible, whereas in prior years we concluded that none of our economic activities +qualified as eligible. +Nature of Taxonomy-eligible economic activities +We identified the following Taxonomy‑eligible economic activities: +• Activity 6.5 – Transport by motorbikes, passenger cars, and light commercial vehicles; +• Activity 7.2 – Renovation of existing buildings; +• Activity 7.7 – Acquisition and ownership of buildings; and +• Activity 8.1 – Data processing, hosting, and related activities. +We concluded that these economic activities are solely eligible with respect to the +environmental objective climate change mitigation. We did not identify any eligible economic +activities with respect to the other five environmental objectives. +In 2023, none of the eligible activities qualified as aligned, nor as enabling or transitional +activities. For further details, see Assessment of Taxonomy alignment on page 137. +Activity 6.5 – Transport by motorbikes, passenger cars, and light commercial vehicles – +eligibility +Among others, activity 6.5 consists of leasing of vehicles designed as category M1. Category M1 +vehicles are vehicles for carriage of passengers, comprising not more than eight seats to the +drivers. In some countries, certain employees are entitled to a lease car. We assumed that all +lease cars driven by employees qualify as category M1 vehicles and as such we concluded that +this activity applies to us. +Only the CapEx KPI is applicable to us for activity 6.5. +Activity 7.2 – Renovation of existing buildings – eligibility +Activity 7.2 consists of construction and civil engineering works or preparation thereof. In +addition, the Taxonomy description refers to Nomenclature of Economic Activities (NACE) +codes F41 and F43. NACE F41 relates to development and construction activities, which we +do not conduct. NACE F43 relates to a wide scale of renovation activities, including electrical +installations, floor and wall covering, painting, and roofing activities. Such activities can apply to +us at our owned offices, existing leased offices, or newly leased offices. We note that renovation +activities at leased offices are often conducted by landlords and not by us. +Only the CapEx KPI is applicable to us for activity 7.2. +EU Taxonomy +134 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_136.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc12e2f97773f87f1664a184dc969ac7ea1b7701 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,61 @@ +Activity 7.7 – Acquisition and ownership of buildings – eligibility +Activity 7.7 consists of buying real estate and exercising ownership of that real estate. In +addition, the Taxonomy description refers to NACE code L68, which among others relate to +rental and operating of own or leased real estate. This activity applies to us as we have owned +and leased offices. +Only the CapEx KPI is applicable to us for activity 7.7. +Activity 8.1 – Data processing, hosting, and related activities – eligibility +Activity 8.1 consists of the storage, manipulation, management, movement, control, display, +switching, interchange, transmission, or processing of data through data centers, including +edge computing. We interpreted that hosting activities as offered to customers qualify under +this description. Customers that purchase a cloud‑based product get access to software that +is licensed on a subscription basis and is centrally hosted by us or our suppliers. In case of +on‑premise products, hosting is mostly arranged by the customer itself. However, hosting is +provided as a separate performance obligation to some customers of on‑premise products. +Only the turnover KPI is applicable to us for this activity, as almost all hosting services are +purchased by us from third parties. +Assessment of other economic activities +We assessed the potential eligibility of some other Taxonomy activities. +Activities 7.3, 7.4, 7.5, and 7.6 all relate to installation, maintenance, and repair of assets +associated with office buildings that reduce energy consumption or increase the use of +renewable energy. Although such assets may be present at our offices, we concluded that +installation, maintenance, and repair are predominately conducted by landlords of our leased +offices and not by us. Also, we did not conduct such activities at our owned offices in 2023 and +2022. +Activity 8.2 relates to data‑driven solutions for GHG emission reductions. Through our Corporate +Performance & ESG division, we offer comprehensive tools and expert guidance to help +customers meet regulatory requirements, to support sustainability efforts, and to manage ESG +risks efficiently. However, none of our ESG solutions directly enable GHG emission reductions. As +such, we concluded that activity 8.2 does not apply to us. +Accounting policies and assumptions +Turnover +Total turnover, i.e., the denominator of the turnover KPI, is equal to revenues as reported +in the consolidated statement of profit or loss. For accounting policies regarding the +recognition of revenues, see Note 6 – Revenues. +Eligible revenues under activity 8.1, i.e., the numerator of the turnover KPI, relate to hosting +offered by us to our customers. In case of a cloud‑based product, hosting is not a distinct +performance obligation but part of the SaaS performance obligation. In other words, hosting +does not generate revenues independently. To calculate the numerator, we calculated the +share of customer‑related hosting costs as included in the sum of cost of revenues and +research, development, and editorial costs and multiplied this ratio by total revenues. The +same methodology was applied to hosting offered to customers purchasing an on‑premise +product, as we do not track such hosting revenues centrally. +Customer‑related hosting costs are predominately reported as part of cost of revenues, +which is a separate line in the consolidated statement of profit or loss. Research, +development, and editorial costs are reported as part of general and administrative costs +(see Note 10 – General and administrative costs). +The abovementioned calculations for eligible revenues were performed at a business unit +level. Hence, the calculations cannot be reperformed based on amounts reported in the +consolidated financial statements. +CapEx +Total CapEx, i.e., the denominator of the turnover KPI, is the sum of: +• Acquired through business combinations – acquired identifiable intangible assets; +• Investments – other intangible assets; +• Acquired through business combinations – other intangible assets; +• Investments – property, plant, and equipment; +• Acquired through business combinations – property, plant, and equipment; +• Additions from new leases – right‑of‑use assets; +• Acquired through business combinations – right‑of‑use assets; and +• Additions from contract modifications and reassessment of options – right‑of‑use assets. +EU Taxonomy continued +135 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_137.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfd3ceeb4190913dd2e29c1ab91a905d966fd677 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,73 @@ +For the individual amounts reported in the consolidated financial statements and +corresponding accounting policies, see Note 17 – Goodwill and intangible assets other than +goodwill, Note 18 – Property, plant, and equipment, and Note 19 – Leasing. +Eligible CapEx, i.e., the numerator of the CapEx KPI, relates to the economic activities 6.5, 7.2, and +7.7. +Economic activity Reporting in consolidated financial statements +Activity 6.5 – Transport by +motorbikes, passenger cars, +and light commercial vehicles +Eligible CapEx relates to lease car right‑of‑use assets and includes +the line items ‘additions from new leases’, ‘acquired through business +combinations’, and ‘additions from contract modifications and +reassessment of options’. Lease car right‑of‑use assets are a subset of +other leases, hence the eligible CapEx cannot be reconciled to an amount +in the consolidated financial statements. See Note 19 – Leasing. +Activity 7.2 – Renovation of +existing buildings +Eligible CapEx relates to land and buildings and includes the line items +‘investments’ and ‘acquired through business combinations’. See Note 18 – +Property, plant, and equipment. +Activity 7.7 – Acquisition and +ownership of buildings +Eligible CapEx relates to real estate right‑of‑use assets and includes +the line items ‘additions from new leases’, ‘acquired through business +combinations’, and ‘additions from contract modifications and +reassessment of options’. See Note 19 – Leasing. +OpEx +Total OpEx, i.e., the denominator of the OpEx KPI, is the sum of: +• Direct non‑capitalized costs that relate to research and development; +• Building renovation measures; +• Short‑term leases; +• Maintenance and repair; and +• Any other direct expenditures relating to the day‑to‑day servicing of assets of property, +plant, and equipment by the undertaking or third party to whom activities are outsourced +that are necessary to ensure the continued and effective functioning of such assets. +The far majority of total OpEx originates from direct non‑capitalized costs that relate to +research and development. This OpEx is presented on the line item research, development, +and editorial costs in the consolidated financial statements (see Note 10 – General and +administrative costs). It is our interpretation that only costs from third‑party suppliers +should be considered in total OpEx, i.e., employee benefit expenses reported as research +and development costs are excluded. +We do not have eligible OpEx for any economic activity, i.e., the numerator of the OpEx KPI +amounts to nil. +Other contextual information on eligible activities +Turnover +Eligible turnover can be summarized as follows: +in millions of euros, unless otherwise stated 2023 % of total 20221 % of total +Eligible turnover – Data processing, hosting, and +related activities (8.1) 393 7% 333 6% +Total turnover 5,584 5,453 +¹ Eligible turnover was restated, see Assessment of compliance with the EU Taxonomy regulatory framework +on page 134. +The increase in the eligible turnover percentage is predominately explained by an increase +in the share of hosting costs as included in the sum of cost of revenues and research, +development, and editorial costs. +CapEx +Eligible CapEx can be summarized as follows: +in millions of euros, unless otherwise stated 2023 +% of +total 20221 +% of +total +Activity 6.5 – Transport by motorbikes, +passenger cars, and light commercial vehicles 10 9 +Activity 7.2 – Renovation of existing buildings 5 3 +Activity 7.7 – Acquisition and ownership +of buildings 23 42 +Eligible CapEx 38 9% 54 13% +Total CapEx 410 425 +¹ Eligible CapEx was restated, see Assessment of compliance with the EU Taxonomy regulatory framework +on page 134. +EU Taxonomy continued +136 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_138.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed8bf99c1b27b4a301dbac88a1441445f2ab7dee --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,66 @@ +All reported eligible CapEx related to assets corresponding to Taxonomy‑eligible economic +activities, i.e., none of it is part of existing plans to expand Taxonomy‑eligible economic +activities or enables Taxonomy‑eligible economic activities to become Taxonomy aligned. +Of the eligible CapEx, €0 million (2022: €2 million) was acquired through business combinations. +The decrease in eligible CapEx in 2023 is explained by lower additions to right‑of‑use assets +from contract modifications and reassessment of options. +OpEx +Eligible OpEx can be summarized as follows: +in millions of euros, unless otherwise stated 2023 2022 +Eligible OpEx – – +Total OpEx 192 182 +Assessment of Taxonomy alignment +General +A Taxonomy‑aligned economic activity meets the applicable Taxonomy requirements to +substantially contribute to at least one of the six environmental objectives, i.e., meets the +prescribed technical screening criteria. In addition, a Taxonomy‑aligned economic activity does +no significant harm (DNSH) to any other objectives and meets the minimum safeguards. +Minimum safeguards are due diligence and remedy procedures to ensure alignment with +the Organisation for Economic Cooperation and Development Guidelines for Multinational +Enterprises and the UN Guiding Principles on Business and Human Rights, which we intend to +assess in 2024. +Activity 6.5 Transport by motorbikes, passenger cars, and light commercial vehicles – alignment +Until December 31, 2025, the technical screening criteria prescribe that the vehicle is a low or +zero‑emission vehicle. As from 2026, the technical screening criteria prescribe that the vehicle is +a zero‑emission vehicle. For the DNSH assessment, among others the reusability or recycling of +the waste and tire noise should be assessed. +Currently, we do not have insight in this data for our lease cars and as such we cannot quantify +the proportion of aligned CapEx. +Activity 7.2 – Renovation of existing buildings – alignment +The technical screening criteria for climate change mitigation prescribe that the building +renovation either complies with the applicable requirements for major renovations or that +the renovation leads to a reduction of primary energy demand of at least 30%. For the DNSH +assessment, among others the reusability or recycling of construction and demolition waste +should be assessed. +Generally, landlords of our leased offices conduct renovation activities that will reduce energy +demand of an office. Our renovation activities largely focus on reorganizing the office space, +carpeting, and painting. In some offices, we may invest in new led lighting or other energy‑ +saving measures. We concluded that our eligible renovation activities in 2023 and 2022 did not +meet the technical screening criteria and we expect that future eligible renovation activities will +likely not meet the technical screening criteria either. +Activity 7.7 – Acquisition and ownership of buildings – alignment +The technical screening criteria prescribe that buildings that are built before December 31, 2020, +have at least an Energy Performance Certificate class A, or are in the top 15% of the national +or regional building stock expressed as operational primary energy demand. Buildings that are +built after December 31, 2020, are required to meet numerous detailed requirements around +primary energy demand, use of water, reusability or recycling of construction and demolition +waste, and pollution of building components and materials. For the DNSH assessment, a +climate risk and vulnerability assessment regarding climate change adaptation must have +been performed. +For our eligible CapEx in 2023, all buildings were built before December 31, 2020, and none had +an Energy Performance Certificate class A. +We intend to execute a climate risk and vulnerability assessment regarding climate change +adaptation in 2024. As energy‑efficiency is one of the selection criteria for new office leases, +this may result in some aligned activities in future years. +Activity 8.1 – Data processing, hosting, and related activities – alignment +The technical screening criteria prescribe that all expected practices from the most recent +version of the European Code of Conduct on Data Center Energy Efficiency are implemented, and +that the global warming potential of refrigerants used in the data center cooling system does +not exceed 675. For the DNSH assessment, among others the presence of restricted substances +and the existence of a waste management plan should be assessed. +Currently, we do not have insight in this data as data centers are predominately operated +by third‑party suppliers and as such, we cannot quantify the proportion of aligned CapEx. +We intend to connect with our largest data center suppliers on this topic in 2024, which +potentially may result in some aligned activities in future years. +EU Taxonomy continued +137 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_139.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..b839d3fe93dc2d6256670eaead831680b49aeb53 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,82 @@ +Proportion of turnover associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +Turnover +Proportion of +turnover 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) turnover +2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +Turnover of environmentally sustainable activities +(Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +Data processing, hosting, and related activities 8.1 393 7% EL N/EL N/EL N/EL N/EL N/EL 6% +Turnover of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) 393 7% 7% 0% 0% 0% 0% 0% 6% +Turnover of Taxonomy-eligible activities (A.1+A.2) 393 7% 7% 0% 0% 0% 0% 0% 6% +B. Taxonomy-non-eligible activities +Turnover of Taxonomy-non-eligible activities 5,191 93% +Total 5,584 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +138 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy +The secret transportation is a "bike". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_14.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..576c7b4e13f23a412216ab9df2467795cac6f8d7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,73 @@ +Our specific guidance for 2024 is +provided below. +We expect sustained good organic growth in line with prior +year and a further modest increase in the adjusted operating +profit margin. Margin improvement is expected to be realized +in the second half of the year, mainly due to timing of +investments. Our group‑level guidance for 2024 is shown in +the table below: +performance indicators 2024 guidance 2023 actual +Adjusted operating profit +margin (%) 26.4‑26.8 26.4 +Adjusted free cash flow +(€ million) 1,150‑1,200 1,164 +ROIC (%) 17.0‑18.0 16.8 +Diluted adjusted EPS +growth Mid to high single digit 12% +Guidance for adjusted operating profit margin and ROIC is in reporting +currencies and assumes an average rate in 2024 of €/$1.11. +Guidance for adjusted free cash flow and diluted adjusted EPS is in +constant currencies (€/$ 1.08). +Guidance reflects share repurchases of €1 billion in 2024. +In 2023, Wolters Kluwer generated over 60% of its revenues +and adjusted operating profit in North America. As a rule of +thumb, based on our 2023 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 EPS¹. +We include restructuring costs in adjusted operating profit. We +expect 2024 restructuring costs to be in the range of +€10‑15 million (2023: €15 million). We expect adjusted net +financing costs² in constant currencies to increase to +approximately €60 million. We expect the benchmark tax rate +on adjusted pre‑tax profits to increase and to be in the range +of 23.0%‑24.0% (2023: 22.9%). +Capital expenditures are expected to remain at the upper end +of our guidance range of 5.0%‑6.0% of total revenues (2023: +5.8%). We expect the full‑year 2024 cash conversion ratio to +be around 95% (2023: 100%) due to lower net working capital +inflows. +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. +2024 Outlook by division +Our guidance for 2024 organic growth by division is +summarized below. We expect the increase in group adjusted +operating profit margin to be driven primarily by our Health, +Legal & Regulatory, and Corporate Performance & ESG +divisions in 2024. +Health: we expect full‑year 2024 organic growth to be in line +with prior year (2023: 6%). +Tax & Accounting: we expect full‑year 2024 organic growth to +be slightly below prior year (2023: 8%), due to slower growth +in non‑recurring outsourced professional services and the +absence of one‑off favorable events in Europe. +Financial & Corporate Compliance: we expect full‑year 2024 +organic growth to be in line with or better than prior year +(2023: 2%) as transactional revenues are expected to stabilize. +Legal Regulatory: we expect full‑year 2024 organic growth to +be in line with prior year (2023: 4%). +Corporate Performance & ESG: we expect full‑year 2024 +organic growth to be better than in the prior year (2023: 9%) as +Finance, Risk & Reporting revenues stabilize. +2024 Outlook +¹ This rule of thumb excludes the impact of exchange rate movements +on intercompany balances, which is accounted for in adjusted net +financing costs in reported 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. +13 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information 2024 Outlook \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_140.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..51c673479e3a60422df7aec333888a21c25e2dca --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,83 @@ +Proportion of CapEx associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +CapEx +Proportion of +CapEx 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) CapEx 2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +CapEx of environmentally sustainable +activities (Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +Transport by motorbikes, passenger cars, and light +commercial vehicles 6.5 10 2% EL N/EL N/EL N/EL N/EL N/EL 2% +Renovation of existing buildings 7.2 5 1% EL N/EL N/EL N/EL N/EL N/EL 1% +Acquisition and ownership of buildings 7.7 23 6% EL N/EL N/EL N/EL N/EL N/EL 10% +CapEx of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) 38 9% 13% +CapEx of Taxonomy-eligible activities (A.1+A.2) 38 9% 13% +B. Taxonomy-non-eligible activities +CapEx of Taxonomy-non-eligible activities 372 91% +Total 410 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +139 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_141.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd15e58b666ff4991096ddb34bee57a4d796cb2c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,80 @@ +Proportion of OpEx associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +OpEx +Proportion of +OpEx 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) +OpEx 2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +OpEx of environmentally sustainable +activities (Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +OpEx of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) – 0% 0% +OpEx of Taxonomy-eligible activities (A.1+A.2) 0 0% 0% +B. Taxonomy-non-eligible activities +OpEx of Taxonomy-non-eligible activities 192 100% +Total 192 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +140 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_142.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4fd4c629c6b4a83148758ddd0c04d01b345825 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,10 @@ +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Financial +statements +141 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_143.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..42269f77fd239162175fc1c855f496cb9cc829fc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,48 @@ +2023 Financial statements +143 Consolidated statement of profit or loss +143 Consolidated statement of comprehensive income +144 Consolidated statement of cash flows +145 Consolidated statement of financial position +146 Consolidated statement of changes in total equity +Notes to the consolidated +financial statements +147 Note 1 – General and basis of preparation +149 Note 2 – Material accounting policy information +150 Note 3 – Accounting estimates and judgments +151 Note 4 – Benchmark figures +155 Note 5 – Segment reporting +156 Note 6 – Revenues +159 Note 7 – Earnings per share +160 Note 8 – Acquisitions and divestments +162 Note 9 – Sales costs +163 Note 10 – General and administrative costs +163 Note 11 – Other gains and (losses) +163 Note 12 – Employee benefit expenses +163 Note 13 – Amortization, impairment, and depreciation +164 Note 14 – Financing results +164 Note 15 – Income tax expense +165 Note 16 – Non‑controlling interests +166 Note 17 – Goodwill and intangible assets other than goodwill +170 Note 18 – Property, plant, and equipment +170 Note 19 – Leasing +172 Note 20 – Investments in equity‑accounted associates +172 Note 21 – Financial assets +173 Note 22 – Tax assets and liabilities +174 Note 23 – Inventories +174 Note 24 – Contract assets and liabilities +176 Note 25 – Other receivables +177 Note 26 – Cash and cash equivalents +177 Note 27 – Trade and other payables +177 Note 28 – Net debt +179 Note 29 – Financial risk management +186 Note 30 – Employee benefits +193 Note 31 – Provisions +194 Note 32 – Capital and reserves +196 Note 33 – Share‑based payments +199 Note 34 – Related party transactions +199 Note 35 – Audit fees +200 Note 36 – Commitments, contingent assets, and contingent liabilities +200 Note 37 – Remuneration of the Executive Board and the Supervisory Board +201 Note 38 – Overview of significant subsidiaries +202 Note 39 – Events after the reporting period +142 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_144.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..7859375ce65a5a2a4558dc2e9ac2833a069c7d25 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,60 @@ +Consolidated statement of +profit or loss +Consolidated statement of +comprehensive income +in millions of euros, unless otherwise stated, +for the year ended December 31 2023 2022 +Revenues Note 5/6 5,584 5,453 +Cost of revenues Note 5 (1,576) (1,578) +Gross profit Note 5 4,008 3,875 +Sales costs Note 9 (929) (914) +General and administrative costs Note 10 (1,749) (1,697) +Total operating expenses Note 5 (2,678) (2,611) +Other gains and (losses) Note 11 (7) 69 +Operating profit Note 5 1,323 1,333 +Financing income 55 21 +Financing costs (82) (77) +Other finance income and (costs) 0 (1) +Total financing results Note 14 (27) (57) +Share of profit of equity‑accounted associates, net of tax Note 20 1 0 +Profit before tax 1,297 1,276 +Income tax expense Note 15 (290) (249) +Profit for the year 1,007 1,027 +Attributable to: + – Owners of the company 1,007 1,027 + – Non‑controlling interests Note 16 0 0 +Profit for the year 1,007 1,027 +Earnings per share (EPS) (€) +Basic EPS Note 7 4.11 4.03 +Diluted EPS Note 7 4.09 4.01 +in millions of euros, +for the year ended December 31 2023 2022 +Comprehensive income +Profit for the year 1,007 1,027 +Other comprehensive income +Items that are or may be reclassified subsequently to the +consolidated statement of profit or loss: +Exchange differences on translation of foreign operations (126) 231 +Exchange differences on translation of equity‑accounted +associates Note 20 (1) 1 +Recycling of foreign exchange differences on loss of control Note 8 – 1 +Gains/(losses) on hedges of net investments in foreign operations 3 (17) +Gains/(losses) on cash flow hedges (22) 18 +Net change in fair value of cash flow hedges reclassified to +the consolidated statement of profit or loss Note 14 15 11 +Items that will not be reclassified to the consolidated +statement of profit or loss: +Remeasurement gains/(losses) on defined benefit plans Note 30 (1) 18 +Other comprehensive income/(loss) for the year, before tax (132) 263 +Income tax on items that are or may be reclassified +subsequently to the consolidated statement of profit or loss 0 4 +Income tax on items that will not be reclassified to the +consolidated statement of profit or loss 0 (5) +Income tax on other comprehensive income Note 22 0 (1) +Other comprehensive income/(loss) for the year (132) 262 +Total comprehensive income for the year 875 1,289 +Attributable to: + – Owners of the company 875 1,289 + – Non‑controlling interests 0 0 +Total comprehensive income for the year 875 1,289 +143 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_145.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..adf647de6a5f86b5313c443c3f708a8c7b060118 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,59 @@ +Consolidated statement of cash flows +in millions of euros, for the year ended December 31 2023 2022 +Cash flows from operating activities +Profit for the year 1,007 1,027 +Adjustments for: +Income tax expense Note 15 290 249 +Share of profit of equity‑accounted associates, net of tax Note 20 (1) 0 +Financing results Note 14 27 57 +Amortization, impairment, and depreciation Note 13 445 466 +Book (profit)/loss on disposal of operations and non‑current +assets (4) (84) +Fair value changes of contingent considerations Note 11/29 0 0 +Additions to and releases from provisions Note 31 12 5 +Appropriation of provisions Note 31 (10) (15) +Changes in employee benefit provisions (7) 11 +Share‑based payments Note 12/33 31 28 +Other adjustments 8 3 +Adjustments excluding autonomous movements in working capital 791 720 +Inventories (7) (11) +Contract assets Note 24 (15) (5) +Trade and other receivables 19 96 +Deferred income Note 24 80 73 +Other contract liabilities Note 24 0 4 +Trade and other payables 21 24 +Assets/liabilities classified as held for sale – (3) +Autonomous movements in working capital 98 178 +Total adjustments 889 898 +Net cash flows from operations 1,896 1,925 +Interest paid (including the interest portion of lease payments) (84) (70) +Interest received 58 16 +Paid income tax Note 22 (325) (289) +Net cash from operating activities 1,545 1,582 +in millions of euros, for the year ended December 31 2023 2022 +Cash flows from investing activities +Capital expenditure Note 17/18 (324) (295) +Proceeds from disposal of other intangible assets and property, +plant, and equipment 1 0 +Acquisition spending, net of cash acquired Note 8 (61) (92) +Receipts from divestments, net of cash disposed Note 8 8 106 +Dividends received 0 0 +Cash used for settlement of net investment hedges 2 (18) +Net cash used in investing activities (374) (299) +Cash flows from financing activities +Repayment of loans (926) (126) +Proceeds from new loans 977 631 +Repayment of principal portion of lease liabilities Note 19 (65) (72) +Repurchased shares Note 32 (1,000) (1,000) +Dividends paid Note 32 (467) (424) +Net cash used in financing activities (1,481) (991) +Net cash flows before effect of exchange differences (310) 292 +Exchange differences on cash and cash equivalents and bank +overdrafts (31) 44 +Net change in cash and cash equivalents and bank overdrafts (341) 336 +Cash and cash equivalents less bank overdrafts at January 1 1,330 994 +Cash and cash equivalents less bank overdrafts at December 31 Note 26 989 1,330 +Add: Bank overdrafts at December 31 Note 26 146 16 +Cash and cash equivalents in the consolidated statement of +financial position at December 31 Note 26 1,135 1,346 +144 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_146.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6c7b7142161853244a7a8d433c32db946969d26 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,56 @@ +Consolidated statement of financial position +in millions of euros, at December 31 2023 2022 +Non-current assets +Goodwill Note 17 4,322 4,394 +Intangible assets other than goodwill Note 17 1,598 1,648 +Property, plant, and equipment Note 18 79 79 +Right‑of‑use assets Note 19 241 283 +Investments in equity‑accounted associates Note 20 11 11 +Financial assets Note 21 6 23 +Non‑current other receivables Note 25 14 16 +Non‑current contract assets Note 24 18 17 +Deferred tax assets Note 22 51 62 +Total non‑current assets 6,340 6,533 +Current assets +Inventories Note 23 84 79 +Contract assets Note 24 160 153 +Trade receivables Note 24 1,087 1,088 +Other receivables Note 25 202 250 +Current income tax assets Note 22 86 61 +Cash and cash equivalents Note 26/28 1,135 1,346 +Total current assets 2,754 2,977 +Total assets 9,094 9,510 +in millions of euros, at December 31 2023 2022 +Equity +Issued share capital Note 32 30 31 +Share premium reserve 87 87 +Legal reserves 328 466 +Treasury shares (734) (735) +Retained earnings 2,038 2,461 +Equity attributable to the owners of the company Note 46 1,749 2,310 +Non‑controlling interests Note 16 0 0 +Total equity 1,749 2,310 +Non-current liabilities +Bonds 2,723 2,426 +Private placements 127 142 +Lease liabilities 209 244 +Other long‑term debt 27 18 +Total long‑term debt Note 28 3,086 2,830 +Deferred tax liabilities Note 22 281 299 +Employee benefits Note 30 81 85 +Provisions Note 31 5 5 +Non‑current deferred income Note 24 102 112 +Total non‑current liabilities 3,555 3,331 +Current liabilities +Deferred income Note 24 1,899 1,858 +Other contract liabilities Note 24 86 88 +Trade and other payables Note 27 997 990 +Current income tax liabilities Note 22 128 129 +Short‑term provisions Note 31 21 19 +Borrowings and bank overdrafts Note 28 196 16 +Short‑term bonds Note 28 400 700 +Short‑term lease liabilities Note 28 63 69 +Total current liabilities 3,790 3,869 +Total liabilities 7,345 7,200 +Total equity and liabilities 9,094 9,510 +145 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_147.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c052623ec5abc7268f4af5efbd6229cddbc999 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,53 @@ +Consolidated statement of changes in total equity +Legal reserves Other reserves +in millions of euros +Issued +share +capital +Share +premium +reserve +Legal reserve +participations +Hedge +reserve +Translation +reserve +Treasury +shares +Retained +earnings +Shareholders’ +equity +Non- +controlling +interests Total equity +Balance at January 1, 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 the year 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) 451 (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) 2,461 2,310 0 2,310 +Balance at January 1, 2023 31 87 120 (106) 452 (735) 2,461 2,310 0 2,310 +Profit for the year 1,007 1,007 0 1,007 +Other comprehensive income/(loss) for the year (4) (127) (1) (132) 0 (132) +Total comprehensive income for the year (4) (127) 1,006 875 0 875 +Transactions with owners of the company, recognized directly +in equity: +Share‑based payments 31 31 31 +Cancelation of shares (1) 947 (946) 0 0 +Release LTIP shares 54 (54) 0 0 +Final cash dividend 2022 (291) (291) 0 (291) +Interim cash dividend 2023 (176) (176) (176) +Repurchased shares (1,000) (1,000) (1,000) +Other movements (7) 7 0 0 +Balance at December 31, 2023 30 87 113 (110) 325 (734) 2,038 1,749 0 1,749 +146 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_148.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2467f498ef2c727dff615c934ac096180e99081 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,70 @@ +Notes to the consolidated 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 provider of information, software solutions, +and services for professionals in the health, tax and accounting, fi nancial and corporate +compliance, legal and regulatory, and corporate performance and ESG sectors. 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. +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, Euronext 100, and EURO STOXX 50 indices, +among 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, +2023, 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 20, 2024. 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 8, 2024. +Consolidated financial statements +The consolidated financial statements of the company at and for the year ended December 31, +2023, comprise the group and the group’s interest in associates. The material accounting +policy information applied in the preparation of these consolidated financial statements is +set out in Note 2 – Material accounting policy information 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 38 – 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; +• 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. +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 – Material accounting policy information and the +relevant respective notes to the consolidated financial statements to all periods presented +in these financial statements. +147 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret animal #3 is a "spider". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_149.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..b739271aa66b59eb4c5c604ec532ccd8a14563bd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,84 @@ +Notes to the consolidated financial statements continued +Note 1 – General and basis of preparation continued +The group has applied the following amendments for the first time for the annual reporting +period commencing January 1, 2023: +• Insurance contracts (amendments to IFRS 17); +• Disclosure of accounting policies (amendments to IAS 1 and IFRS Practice Statement 2); +• Definition of accounting estimates (amendments to IAS 8); +• Deferred tax related to assets and liabilities arising from a single transaction (amendments +to IAS 12); and +• International Tax Reform – Pillar Two Model Rules (amendments to IAS 12). +The amendments to IAS 1 and IFRS Practice Statement 2 have had an impact on the disclosure +of accounting policy information in the financial statements, whereby any accounting policy +information not considered material in terms of the amended standards is no longer +disclosed. +Following the amendments to IAS 12 relating to the deferred tax assets and liabilities arising +from a single transaction, the group has recognized gross deferred tax assets and liabilities +where needed. However, these are offset in line with the netting requirements of IAS 12. +The amendments to IAS 12 relating to Pillar Two Model Rules have not had any material +impact on the amounts reported or disclosed in these financial statements. For more +information, refer to Note 15 – Income tax expense . +The application of the other 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 are not yet effective for the year ended December 31, +2023, and have not been early adopted in preparing these financial statements: +• 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); +• Non‑current liabilities with covenants (amendments to IAS 1); +• Supplier finance arrangements (amendments to IAS 7 and IFRS 7); and +• Lease liability in a sale and leaseback (amendments to IFRS 16). +If supplier finance arrangements exist, as defined per the amended IAS 7 and IFRS 7, this will +only result in presentation changes in the consolidated statements of cash flows and financial +position, apart from other qualitative disclosures in the notes to the consolidated financial +statements. The group has no material supplier financing arrangements, and expects no +significant impact from the other abovementioned amendments. +Comparatives +Change in organizational structure +In March 2023, a new division, Corporate Performance & ESG, was formed by bringing together four +global enterprise software businesses previously part of other divisions. This strategic step was +taken to position the group to meet the growing demand from corporations and banks for +integrated financial, operational, and ESG performance management and reporting solutions. +This new division consists of the following businesses: +• CCH Tagetik (previously in Tax & Accounting); +• Enablon (previously in Legal & Regulatory); +• Finance, Risk & Reporting (previously in Governance, Risk & Compliance (GRC), renamed +Financial & Corporate Compliance); and +• TeamMate (previously in Tax & Accounting). +In addition to the creation of the new division, the Enterprise Legal Management business was +transferred from the GRC division to the Legal & Regulatory division. The GRC division was +renamed Financial & Corporate Compliance to reflect its new business focus. +There are five operating segments effective January 1, 2023: +• Health; +• Tax & Accounting; +• Financial & Corporate Compliance; +• Legal & Regulatory; and +• Corporate Performance & ESG. +The change in the organizational structure also changed the composition of the groups of +cash‑ generating units to which goodwill has been allocated. Therefore, the goodwill has been +reallocated to the groups of cash generating units affected based on the relative value +approach. The reallocation of goodwill is as follows: +groups of cash-generating units +Allocated +goodwill in +2022 +Reallocation +of goodwill +Pro-forma +goodwill in +2022 +Allocated +goodwill in +2023 +Health Learning, Research & Practice 567 (567) +Clinical Solutions (Health) 557 (557) +Health 1,124 1,124 1,111 +Tax & Accounting Americas and Asia Pacific 1,131 (1,131) +Tax & Accounting Europe 411 (411) +Tax & Accounting 1,213 1,213 1,188 +Financial & Corporate Compliance 1,122 (102) 1,020 987 +Legal & Regulatory 606 (37) 569 573 +Corporate Performance & ESG 468 468 463 +Total 4,394 0 4,394 4,322 +148 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_15.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e46aaa2fbac85c411762f5e35ce90d90075a3b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,61 @@ +Organizational +structure +Wolters Kluwer is organized around +five customer‑facing divisions +supported by three centralized teams +and a corporate office. +Health +• Clinical Solutions +• Health Learning, +Research & Practice +Tax & Accounting +• North America +• Europe +• Asia Pacific & ROW +Financial & Corporate +Compliance +• Legal Services +• Financial Services +Legal & Regulatory +• Information Solutions +• Software +Corporate +Performance & ESG +• EHS/ORM +• Corporate +Performance, +Internal Audit, and FRR +€1.5bn +revenues 2023 +€1.5bn +revenues 2023 +€1.1bn +revenues 2023 +€0.9bn +revenues 2023 +€0.7bn +revenues 2023 +Global Growth Markets +• China, India, and Brazil +• Global expert solutions +• Local market knowledge +Digital eXperience Group +• Innovation and product +development +• Development centers of +excellence +• Technology asset management +Global Business Services +• Technology infrastructure +• Operational excellence programs +• Procurement and shared services +180+ +FTEs +4,500+ +FTEs +1,200+ +FTEs +Operating costs and FTEs of Global Growth Markets, Digital eXperience Group, and Global Business Services are allocated to the customer ‑facing +divisions. +Executive Board & Corporate Office +14 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_150.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..723ff9af9ed17244715b5b5fe6266ef180c9d72a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,73 @@ +Notes to the consolidated financial statements continued +Note 1 – General and basis of preparation continued +Refer to Note 5 – Segment reporting , Note 6 – Revenues, and Note 17 – Goodwill and intangible +assets other than goodwill for more information. +Other comparatives +Comparative figures in Note 12 – Employee benefit expenses are restated as temporary staff +and contractors are no longer considered part of employee benefit expenses. +Certain other immaterial reclassifications are 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 – Material accounting policy information +Except for the changes explained in Note 1 – General and basis of preparation , the group +has consistently applied the material accounting policies to all periods presented in +these consolidated financial statements. The main principles for the determination and +presentation of results and the valuation and presentation of assets and liabilities are +described in the relevant respective notes to the consolidated financial statements. +Basis of consolidation +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 associate or as a financial asset at fair value through profit or loss +or other comprehensive income (OCI), depending on the level of influence retained. +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 associates is disposed +of, exchange differences that were recognized in other comprehensive income prior to the sale +are reclassified to profit or loss as part of the gain or loss on divestments. +Net investment in foreign operations +Net investment in foreign operations includes equity financing and long ‑term intercompany +loans for which settlement is neither planned nor likely to occur in the foreseeable future. +Exchange differences arising from the translation of the net investment in foreign operations, +and of related hedges, are taken to the translation reserve of foreign operations in other +comprehensive income. +Main currency exchange rates +rates to the euro 2023 2022 +U.S. dollar (average) 1.08 1.05 +U.S. dollar (at December 31) 1.11 1.07 +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, +bank overdrafts are presented separately as the offsetting criteria are not met. +149 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_16.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..1527c88339ddd7721b3d81ab40f0cf683fc9c2c6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,113 @@ +Executive team +Tax & AccountingHealth Financial & Corporate +Compliance +Legal & Regulatory Corporate Performance +& ESG +Stacey Caywood CEO +We offer clinical technology and +evidence‑based solutions for +clinicians, patients, researchers, +students, and future healthcare +providers. Our focus is on clinical +effectiveness, research, learning, +surveillance, compliance, and data +solutions. Our proven solutions +drive effective decision ‑making +and consistent outcomes in +healthcare. +Customers include hospitals, +healthcare organizations, +students, clinicians, schools, +libraries, payers, life sciences, and +pharmacies. +Product brands include UpToDate, +Lippincott, Medi ‑Span, Ovid, and +Health Language. +Jason Marx CEO +We empower tax and accounting +professionals, and governing +authorities to grow, manage, and +protect their business and clients. +Our solutions combine domain +expertise, advanced technology, +and workflows for compliance, +productivity, management, and +client relationships. +Customers include accounting +firms, tax and auditing +departments, government +agencies, libraries, and +universities. +Product brands include CCH +AnswerConnect, CCH Axcess, +ADDISON, CCH iFirm, A3 Software, +Genya, Twinfield, CCH ProSystem +fx, and ATX. +Steve Meirink CEO +We provide financial institutions, +corporations, small businesses, +and law firms with solutions to +help meet regulatory and legal +obligations, improve efficiency, +and achieve better outcomes. +We offer technology ‑enabled +services and software solutions +for loan compliance, regulatory +compliance, legal entity +management, and corporate +services. +Customers include corporations +and small businesses, law firms, +banks, non ‑bank lenders, insurers, +brokers, and other financial +institutions. +Product brands include CT +Corporation, BizFilings, eOriginal, +ComplianceOne, Lien Solutions, +Expere, GainsKeeper, and Wiz. +Martin O’Malley CEO +We help legal and compliance +professionals enhance +productivity, mitigate risk, +and solve complex problems +confidently. With expert +information and advanced +technologies, we enable +professionals to thrive in the +ever‑changing fields of legal and +regulatory compliance. +Customers include law firms, +corporate legal departments, +notaries, universities, and +government agencies. +Product brands include VitalLaw, +Passport, TyMetrix 360°, Kleos, +Legisway, LEX, ONE, Schulinck, +Wolters Kluwer Online, Kluwer Law +International, and InView. +Karen Abramson CEO +We provide enterprise software +solutions to streamline reporting +processes, manage risks, and +meet regulatory requirements. +Our comprehensive suite of +tools and services provide +professionals in finance, +environment health and safety, +operational risk management, +regulatory reporting, risk +and compliance, and internal +audit with integrated financial, +operational, and ESG performance +management and reporting +solutions. +Customers include corporate +finance, audit, planning, risk, +EHS/ORM, and sustainability +professionals in corporations, +banks, and governments. +Product brands include CCH +Tagetik, Enablon, TeamMate, and +OneSumX. +15 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team +The secret shape is a "heart". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_17.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c67af4b0bc1462b468fe8166136868f801dc68f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,57 @@ +Executive team +continued + → Full list of management +www.wolterskluwer.com/en/ +about-us/management +Digital eXperience Group +Dennis Cahill CTO +The Digital eXperience Group +creates cutting ‑edge digital +solutions in collaboration with +global business units. Our mission +is to accelerate innovation and +leverage technology investments. +We drive innovation through +six centers of excellence: user +experience, artificial intelligence, +IP & patent, architecture & asset +reuse, quality engineering, and +application security. +Global Growth Markets +Cathy Wolfe President & CEO +Global Growth Markets (GGM) +focuses on developing the +company’s strategic presence +in China, India, Brazil, and +other geographic markets. +GGM’s mission is to apply local +market knowledge to service +professionals with global and +local expert solutions . +Global Business Services +Andres Sadler CEO +Global Business Services (GBS) +improves and transforms 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 +in technology, strategic sourcing, +procurement, operational +excellence, collaboration services, +analytics, and events. +Corporate office +The Corporate Office sets the +global strategic direction for +the company and ensures good +corporate governance. Its mission +is to support and provide an +enabling business and operating +environment, to help realize our +strategy to deliver impact to our +customers, employees, investors, +and society at large. +16 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_18.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fc509846db0b2efe8e4c9649f1627331acea9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,9 @@ +Innovative solutions for +better health outcomes +Supporting professionals across +the healthcare ecosystem with +leading technology to provide +the best evidence‑based +patient care. +Health +17 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_19.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..1360580f16c7a41b1f4ba0c2287ee17bf7b18cba --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,73 @@ +Our mission is to +advance the best +care everywhere +through trusted +clinical technology +and evidence‑based +medicine. +“2024 will be a +watershed year for +generative AI in +healthcare and we +aim to play a major +part. +Stacey Caywood +CEO Wolters Kluwer Health +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, patients, 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, 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. +Market trends +• Emerging use of generative AI in healthcare +• Demand for solutions to alleviate pressure on +hospitals 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 +• Continued focus on consumer-centric care +HPMC and Sentara drive quality +improvement with Ovid Synthesis +Hollywood Presbyterian Medical Center (HPMC) and Norfolk, +Virginia-based Sentara Healthcare have implemented Ovid +Synthesis Clinical Evidence Manager to support their clinical +research initiatives. Ovid Synthesis Clinical Evidence Manager +is a cloud-based, AI-enabled workflow tool that increases +the efficiency of the entire clinical research process, from +streamlining literature review and evidence appraisal +to increasing collaboration between departments and +facilitating decisions about dissemination. +Sentara is using the solution in its Nurse Residence Program. +The Director of Library Services at Sentara commented, +“Sentara has used Ovid for years to help our clinicians +with research. We have now added Ovid Synthesis Clinical +Evidence Manager to assist with all our clinical research and +tracking, as well as compliance for Magnet recognition and +renewal. Based on our experience, we anticipate productive +research support from this new product”. +HPMC is leveraging Ovid Synthesis Clinical Evidence Manager +to support its implementation of Shared Governance. The +Director of Education at HMPC remarked, “We are investing in +Ovid to support the education department as well as assisting +in the rollout of Shared Governance throughout the medical +center. The Shared Governance rollout is a collaboration +between our caregivers and leadership to improve patient +care, streamline the work environment, and ensure the most +accurate, up-to-date information is available to the care +teams. Ovid Synthesis is a key element in this initiative”. +“ +Customer case +18 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information + Health \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_2.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..8578d8507742748ce6697da8ce85d6f31e79c542 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,10 @@ +Deep impact +when it +matters most +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 strategy on page 7 +1 Wolters Kluwer 2023 Annual Report ← → \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_20.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..8682e13fafd877b8d4705e14d14ae19f1cee1313 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,60 @@ +Review of 2023 performance +• Clinical Solutions sustained 7% organic growth. +• Health Learning, Research & Practice grew 5% organically. +• Margin reflects operational gearing and mix shift, partly +offset by higher personnel costs. +Wolters Kluwer Health revenues increased 7% in constant +currencies and 6% organically (2022: 5%). Adjusted operating +profit increased 8% in constant currencies and 7% on an +organic basis. The margin increased 20 basis points, reflecting +operational gearing and mix shift, partly offset by higher +personnel costs and personnel‑related expenses. +Operating profit increased 8% overall, reflecting the increase +in adjusted operating profit and the absence of impairments +of acquired identifiable intangible assets recorded in the prior +year. +Clinical Solutions (55% of divisional revenues) delivered +7% organic revenue growth (2022: 7%). Our clinical decision +support tools, clinical drug databases, and patient +engagement solutions all achieved mid‑ to high single‑ +digit organic growth in 2023, driven by strong subscription +renewals and new customer additions. European revenues for +UpToDate achieved double‑digit organic growth. Revenues in +surveillance, compliance, and medical terminology solutions +remained soft. On June 7, 2023, we acquired Invistics, a U.S. +provider of AI‑enabled drug diversion detection software for +hospitals. In October 2023, we launched the first beta version +of UpToDate leveraging generative AI technology (AI Labs). +Health Learning, Research & Practice (45% of divisional +revenues) achieved 5% organic revenue growth (2022: 3%), +as Ovid benefitted from new revenues generated under the +New England Journal of Medicine digital distribution contract +won in 2022. Across all journals, growth was led by digital +subscriptions and open access fees, which more than offset +declines in print subscriptions, advertising, and reprints. +Ovid Synthesis Clinical Evidence Manager, launched in 2022, +continued to add new customers. In education and practice, +organic growth moderated due to print book revenues which +declined 3% (2022: growth of 16%). Our nursing business was +expanded with the acquisition of educational solutions and +test preparation provider NurseTim in January 2023. +Our customers +Hospitals, healthcare organizations, clinicians, students, +schools, libraries, payers, life sciences, and pharmacies +Top products +Clinical Solutions: UpToDate clinical decision support, Medi‑ +Span and other drug databases, patient engagement, Sentri7, +Simplifi+, and Health Language +Health Learning, Research & Practice: Ovid, Lippincott nursing +solutions, medical books, and journals + → Complete list of Health solutions +https://www.wolterskluwer.com/en/ +health +Health +continued +Selected awards 2023 +Invistics drug diversion ranked #1 by +KLAS Research in AI/ML effectiveness +Sentri7 and Simplifi+ received Black +Book award for top client satisfaction +19 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_21.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..60b27f4a37ecfe6be443ad7b31ca4f2a97074237 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,37 @@ +Health +continued +Organic growth in revenues +6% +Recurring +91% +recurring revenues as % of division total +Digital +89% +digital revenues as % of division total +Health – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,508 1,448 +4% +7% +6% +Adjusted operating profit 454 434 +5% +8% +7% +Adjusted operating profit margin 30.1% 29.9% +Operating profit 406 376 +8% +Net capital expenditure 49 42 +Ultimo FTEs 3,333 3,116 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Clinical Solutions 55% +Learning, Research & Practice 45% +2023 Revenues by segment +Recurring 91% +Print books 4% +Other non-recurring 5% +2023 Revenues by type +North America 76% +Europe 9% +Asia Pacific & ROW 15% +2023 Revenues by +geographic market +Software 3% +Digital information 86% +Services and print 11% +2023 Revenues by +media format +20 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_22.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ba035444e1b168ec9f3464ebd5473c812ef456 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +Expert solutions to optimize tax +and accounting processes +Software delivering deep +domain knowledge and +workflow automation to +ensure compliance, improve +productivity, and strengthen +client relationships. +Tax & Accounting +21 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_23.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..de5234fe9c279ef57f5808418bab95d5fb890141 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,62 @@ +Our unwavering +focus on innovation +helps improve +how professionals +work, make critical +decisions, and plan +for the future of +their businesses. +“ +Jason Marx +CEO Tax & Accounting +Business overview +Wolters Kluwer Tax & Accounting enables professionals in tax +and accounting firms 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. +In our 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 businesses, government agencies, and academia. +Market trends +• Firms turning to advanced and intelligent technologies to +drive efficiency and enable higher value work +• Continued rise in regulatory intensity and complexity +• Cloud solutions starting to mature with the focus shifting +from migration to adoption +• Continued shortage of professionals driving accounting +firm demand for efficiency solutions +Randall L. Sansom increases efficiency +with CCH Axcess +Randall L. Sansom CPAs, a professional accounting firm based +in Florida, uses Wolters Kluwer’s U.S. cloud-based solution +suite, CCH Axcess, to manage its practice and support its +operations, with both its administrative staff and its tax +advisors using a variety of software modules, including CCH +Axcess Practice for firm management, CCH Axcess Tax for +calculations and filing, Workstream for scheduling, and CCH +Answer Connect for research. +The CCH Axcess platform is the only complete cloud solution +in the U.S. market today that provides a seamless platform +for tax, audit, and firm management. The product has had +a significant impact on Randall L. Sansom’s productivity, +enabling the firm to focus on providing high-value expertise +to their clients. With CCH Axcess, the efficiency gains the +firm has achieved has resulted in hours of saved time and +improved the work/life balance of staff. Since implementing +CCH Axcess, the firm’s staff can complete more work with +fewer people. +According to the firm’s CEO, “With the entire array of products +that we have, we’re saving between one and two hours on +the tax preparer side of things that an admin person is able +to do. And it has cut down on my admin time, at least 45 +minutes to an hour and a half, depending on the size of the +return. Compared to when I started eight years ago, we’re +doing double the amount of returns with less staff, which +is amazing”. +Customer case +22 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_24.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..12373b221a437a1f5caf56cf5db1f1c6164143d2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,59 @@ +Selected awards 2023 +CCH iFirm named a Bronze Stevie +Award winner for Innovation in Digital +Transformation at APAC Stevie Awards +CCH Axcess Engagement named a 2023 +Artificial Intelligence Award winner by +the Business Intelligence Group +Review of 2023 performance +• Organic growth 8%, with all regions performing well. +• Cloud software revenues grew 17% organically. +• Margin stable, despite increase in personnel costs and +related expenses. +The Tax & Accounting division is now focused on professional +accounting firms, as the corporate performance (CCH Tagetik and +U.S. Corporate Tax) and internal audit (TeamMate) units were +moved to the new Corporate Performance & ESG division. +Wolters Kluwer Tax & Accounting revenues increased 8% in +constant currencies and 8% on an organic basis (2022: 8% pro +forma). Adjusted operating profit increased 8% in constant +currencies and 8% on an underlying basis. The margin increased +10 basis points, as operational gearing was offset by higher +personnel costs and related expenditures. +Operating profit increased 6%, largely reflecting the development +of adjusted operating profit. +Tax & Accounting North America (59% of divisional revenues) +achieved 8% organic growth (2022: 10% pro forma) driven by the +continued strong customer uptake of CCH Axcess cloud software +modules, in particular Tax, Document, Practice, and Workflow. +Our U.S. cloud‑based audit solution, CCH Axcess Engagement, +first launched in 2022, continued to gain early adopters. +Our on‑premise software solutions saw slower organic growth. +Non‑recurring outsourced professional services revenues grew +well, but at a more moderate pace than in the prior year. Our +U.S. publishing unit recorded low single digit organic growth. +Tax & Accounting Europe (35% of divisional revenues) delivered +7% organic growth (2022: 6%) supported by strong renewals and +new sales and boosted by one‑off revenues related to property +tax changes in Germany and government stimulus programs in +Spain. Cloud software, including hybrid‑cloud solutions, grew +14% organically. +Tax & Accounting Asia Pacific and Rest of World (6% of divisional +revenues) revenues were up 5% organically (2022: 6%), buoyed by +non‑recurring revenue growth in China and India. +Our customers +Accounting firms, tax and auditing departments, businesses of all +sizes, government agencies, libraries, and universities +Top products +North America: CCH Axcess, CCH ProSystem fx, CCH Axcess +Engagement, CCH Axcess Workflow, and CCH AnswerConnect +Europe, Asia Pacific, and ROW: A3 Software, ADDISON, CCH +iFirm, Genya, and Twinfield + → Complete list of Tax & +Accounting solutions +https://www.wolterskluwer.com/en/ +tax-and-accounting +Tax & Accounting +continued +23 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret instrument is a "violin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_25.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c389d8f562ee3d525fdfefd814c43a5fdabccbc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,39 @@ +Tax & Accounting +continued +Organic growth in revenues +8% +Recurring +91% +recurring revenues as % of division total +Software +81% +software revenues as % of +division total +Tax & Accounting – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,466 1,394 +5% +8% +8% +Adjusted operating profit 479 455 +5% +8% +8% +Adjusted operating profit margin 32.7% 32.6% +Operating profit 460 434 +6% +Net capital expenditure 74 67 +Ultimo FTEs 7,276 6,693 +Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.05); Δ OG: % Organic growth. 2022 figures are pro forma. +Tax & Accounting North America 59% +Tax & Accounting Europe 35% +Tax & Accounting AsiaPac & ROW 6% +2023 Revenues by segment +Recurring 91% +Print books 1% +Other non-recurring 8% +2023 Revenues by type +North America 59% +Europe 35% +Asia Pacific & ROW 6% +2023 Revenues by +geographic market +Software 81% +Digital information 15% +Services and print 4% +2023 Revenues by +media format +24 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_26.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc44303c9cc85df30de6399f7068dcb6f7215993 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,9 @@ +Technology-enabled services +and solutions +Expert compliance services and +software solutions for financial +institutions, corporations, small +businesses, and law firms. +Financial & Corporate +Compliance +25 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_27.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a572dfcad0e846d9468ceb5efe7284a5b9a3a052 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,65 @@ +Our technology‑ +enabled compliance +solutions help +enhance the safety +and efficiency of +commerce and +banking. +Steve Meirink +CEO Financial & Corporate +Compliance +Business overview +Wolters Kluwer Financial & Corporate Compliance (FCC) +provides financial institutions, corporations, small businesses, +and law firms with solutions that enable compliance with +ever‑changing regulatory and legal obligations, improve +efficiency, and help achieve better business outcomes. +The division offers technology‑enabled expert services and +software solutions focused on loan compliance, regulatory +compliance, legal entity management, and corporate services. +In Legal Services, we provide corporations, small businesses, +and law firms with the full set of legal entity management +and corporate services, including business licenses. +In Financial Services, we support banks, non‑bank lenders, +credit unions, insurers, and securities firms of all sizes with +a wide array of loan compliance and regulatory compliance +solutions, including lien solutions. +Market trends +• Increasing regulatory complexity for banks and +corporations +• Rising emphasis on compliance expertise and capabilities +• Accelerating digital adoption trends across banking and +legal workflows +• Growing appetite for cloud-based, integrated solutions +• Ongoing imperative for operating efficiency +Rubicon Technologies ensures business +license compliance with CT Corporation +Rubicon Technologies, a NYSE-listed company, is a leading +provider of software-based waste, recycling, and fleet +operations products for firms and governments worldwide, +with over 13 million service locations. Rubicon wanted to +ensure it was fully compliant with a key corporate services +requirement ahead of its IPO in 2022, and to do this, they +turned to CT Corporation, a leading U.S. provider of legal +entity management and corporate service solutions. +Specifically, Rubicon needed time-sensitive support to ensure +compliance with its business license filings. It was critical +for the company to demonstrate that all business licensing +requirements were met ahead of its listing on the NYSE. CT +stepped in to run a full assessment on Rubicon’s business +licenses, identifying any gaps in required documentation and +seamlessly reinstating key filings. CT ensured the company +was in full compliance in advance of a critical business +event, driving key value for the customer. To ensure ongoing +adherence to a vast set of business license requirements, CT +enrolled Rubicon in its managed service offering, providing +proactive oversight of the company’s business license +portfolio. +With over 75,000 federal, state, and local jurisdictions in +the U.S. driving distinct business license obligations, CT has +the unique domain expertise to navigate these complex +requirements with ease, providing critical assurance for its +business customers. +“ +Customer case +26 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_28.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6e2aef3e558dbc77c9e7ffdd0c4f330e7a7556c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,67 @@ +Review of 2023 performance +• Organic growth 2%, supported by 7% growth in recurring +revenues. +• Transactional and other non‑recurring revenues declined 6% +organically. +• Margin increase reflects tight cost control and favorable +revenue mix. +The Financial & Corporate Compliance division is now +comprised of CT Corporation, which provides registered agent +and other services to U.S. corporations, small businesses, and +law firms, and Compliance Solutions (including Lien Solutions), +which provides software and services to banks and other +lenders. These businesses were part of the former Governance, +Risk & Compliance division. +Financial & Corporate Compliance revenues increased 2% in +constant currencies, including a modest effect from the full +year inclusion of mortgage software provider International +Document Services (IDS), acquired on April 8, 2022. Organic +growth was also 2% (2022: 4% pro forma). The adjusted +operating profit margin increased 160 basis points, as careful +cost control and favorable revenue mix helped mitigate the +impact of higher product investment. +Operating profit increased 5%, largely reflecting the +development of adjusted operating profit. +Legal Services (57% of divisional revenues) posted 2% +organic growth (2022: 2% pro forma) with 8% organic growth +in recurring service subscriptions (2022: 7% pro forma) to +a large extent offset by a 9% decline in Legal Services (LS) +transactional revenues (2022: decline of 4% pro forma). +LS transactional revenues were impacted by the downturn in +U.S. M&A and IPO activity which began in the second half of +2022. In January 2024, CT Corporation launched a dedicated +platform to support the filing needs of U.S. businesses +impacted by the beneficial ownership reporting rule of the +new U.S. Corporate Transparency Act. +Financial Services (43% of divisional revenues) achieved +2% organic growth (2022: 6% pro forma), supported by 5% +organic growth in recurring revenues (2022: 7% pro forma). +Financial Services (FS) transactional and other non‑recurring +revenues declined 3% organically compared to growth in the +prior year (2022: 4%). Compliance Solutions transactional +fees were affected by the market‑wide downturn in U.S. +loan originations, including mortgages, while Lien Solutions +revenues were flat against a challenging comparable (2022: +14% growth). +Our customers +Corporations, small businesses, law firms, banks, non‑bank +lenders, credit unions, insurers, and securities firms +Top products +Legal Services: CT Corporation +Financial Services: ComplianceOne, Expere, eOriginal, +GainsKeeper, and Lien Solutions + → For more information on FCC +www.wolterskluwer.com/en/about-us/ +organization/financial-and-corporate- +compliance +Financial & Corporate Compliance +continued +Selected awards 2023 +Compliance Solutions named Category +Leader in Regulatory Intelligence in +Chartis RiskTech100® Rankings +Wolters Kluwer FCC recognized with +ABF Journal’s 2023 Most Innovative +Companies designation +27 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance +The secret tool is a "ruler". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_29.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d55ae1971f9c6a454e08af2845f46d93f50fb8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,39 @@ +Organic growth in revenues +2% +Recurring +67% +recurring revenues as % of division total +Software +47% +software revenues as % of division +total +Financial & Corporate Compliance – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,052 1,056 0% +2% +2% +Adjusted operating profit 403 387 +4% +7% +7% +Adjusted operating profit margin 38.3% 36.7% +Operating profit 383 363 +5% +Net capital expenditure 58 52 +Ultimo FTEs 3,056 3,122 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Financial & Corporate Compliance +continued +Legal Services 57% +Financial Services 43% +2023 Revenues by segment +Recurring 67% +Legal Services transactional 18% +Financial Services transactional 12% +Other non-recurring 3% +2023 Revenues by type +North America 99% +Europe 1% + +2023 Revenues by +geographic market +Software 47% +Digital information 6% +Services and print 47% +2023 Revenues by +media format +28 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_3.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8d7b72ec6726a5f59ac3078e49645bc077c2bfd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,78 @@ +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 strategy and business model on +page 7 +This copy of the annual report of Wolters Kluwer N.V. for +the year 2023 is not in the ESEF‑format as specified by the +European Commission in Regulatory Technical Standard on +ESEF (Regulation (EU) 2019/815). The ESEF reporting package +can be found on our website www.wolterskluwer.com/en/ +investors/financials/annual-reports +Strategic report +3 Wolters Kluwer at a glance +5 Q&A with CEO Nancy McKinstry +7 Strategy and business model +13 2024 Outlook +14 Organizational structure +15 Executive team +17 Health +21 Tax & Accounting +25 Financial & Corporate Compliance +29 Legal & Regulatory +33 Corporate Performance & ESG +37 Group financial review +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures (TCFD) +134 EU Taxonomy +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Other information +221 Articles of Association Provisions Governing Profit Appropriation +222 Wolters Kluwer shares and bonds +226 Five-year key figures +227 Glossary +228 Contact information +€5.6bn +total revenues +94% +of revenues from digital +products and services +82% +of revenues are recurring +26.4% +adjusted operating profit margin +€4.55 +diluted adjusted earnings per share +16.8% +return on invested capital + → Visit our investors portal +www.wolterskluwer.com/en/investors/ +Financial highlights 2023 +2 Wolters Kluwer 2023 Annual Report ← → +The secret fruit is a "lemon". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_30.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ef8549b9a0c70c15011689e196c2fc09d6d31b2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,9 @@ +Legal and regulatory insights +and solutions +Actionable insights and +integrated solutions that +streamline legal and regulatory +research, analysis, and workflow. +Legal & +Regulatory +29 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_31.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..73d0615ca2994f9c4ceef1c45152d0a5d78c684b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,72 @@ +Martin O’Malley +CEO Legal & Regulatory +Business overview +Wolters Kluwer Legal & Regulatory enables legal and +compliance professionals to improve productivity and +performance, mitigate risk, and solve complex problems +with confidence. +Our legal information solutions enable law firms, corporate +legal departments, universities, and governments to +streamline legal research, analyses, and workflows. This +enhances legal and regulatory decision‑making and outcomes, +ensuring more transparent, just, and safe societies. +Legal & Regulatory’s Enterprise Legal Management (ELM) +solutions support corporate legal operations in increasing +efficiency and saving costs. Our legal practice management +software for law firms enables lawyers to streamline their +legal workflow processes, from document management to +time keeping and billing. +Legal & Regulatory information solutions provide our +customers with the trusted information, insights, and analytics +they can rely on to make sound decisions. +Market trends +• Customers expect advanced, AI-based features embedded +in legal information solutions and software +• Customers are adopting cloud-based technology to enable +connectivity and enhance productivity +• Volume and complexity of regulation continue to rise +• Law firms face new competitors +• Corporate law departments and legal operations continue +to streamline their internal processes by leveraging +technology +• Corporate legal departments and law firms are under +pressure to increase productivity +Adtalem improves legal matter and +spend management with TyMetrix 360° +Adtalem Global Education is a leading healthcare educator +that collaborates with organizations to offer academic +curriculums, certifications, and training programs across +various medical sectors around the world. Adtalem wanted +to improve their invoice and accrual processes, including +billing guideline compliance. The company selected TyMetrix +360°, part of Wolters Kluwer ELM Solutions, as the partner +to improve their operations. TyMetrix 360° is a SaaS-based +e-billing and matter management solution that simplifies a +company’s legal billing and streamlines managing matters. +After Wolters Kluwer established an integration between +Salesforce and TyMetrix 360°, users gained increased +transparency and efficiencies due to all matter and financial +data being accessible on a single platform, enabling reporting +and dashboarding that aggregates all information. Director +of Legal Operations at Adtalem commented, “The impact +of these projects has been tremendous for us. We have +saved money, we have reduced our overall outside counsel +spend because we’re not paying for things we shouldn’t be +paying for, and we are getting a better handle on what we’re +spending because our invoices are all running through the +system”. +Since integrating TyMetrix 360°, Adtalem has realized +$1.5 million year-one savings from line-item adjustments, +a 25% reduction in overall outside counsel spend within 12 +months, 100% vendor compliance, and automated accruals +and payment processing file creation which saves two FTEs +one workweek monthly. +We’re committed +to empowering our +customers with +the highest quality +content and the +latest AI technology. +“ +Customer case +30 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_32.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e0289daab05a1407b49a9f408bf930ef92d94a7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,65 @@ +Review of 2023 performance +• Organic growth 4%, led by 8% growth in digital subscription +revenues. +• Legal & Regulatory Software (23% of divisional revenues) +grew 5% organically. +• Margin reflects operational gearing and cost control partly +offset by increased investment. +The Legal & Regulatory division now includes Enterprise Legal +Management (previously part of the former Governance, Risk +& Compliance division) while the EHS/ORM software business +(Enablon) is now part of the new Corporate Performance & ESG +division. +Legal & Regulatory revenues declined 4% in constant +currencies, due to the disposal of the French and Spanish legal +publishing assets on November 30, 2022, while the acquisition +of MFAS, acquired on October 31, 2023, had a modest effect. +On an organic basis, revenues sustained 4% growth (2022: 4% +pro forma). Adjusted operating profit increased 4% in constant +currencies and 10% on an organic basis. The margin increased +120 basis points, following an increase in the fourth quarter. +Operational gearing and good expense control were partly +offset by increased product investment and higher personnel +costs and personnel‑related expenses. +Operating profit decreased 38%, reflecting the increase in +adjusted operating profit offset by a decline in divestment‑ +related results. +Legal & Regulatory Information Solutions (77% of divisional +revenues) revenues declined 7% overall and 7% in constant +currencies reflecting disposals. On an organic basis, +Information Solutions recorded 4% growth (2022: 3%), driven +mainly by 8% organic growth in subscriptions to our digital +legal research solutions (2022: 7%). Print subscriptions +declined 9% organically, while print book revenues increased +4% on an organic basis, mainly due to a favorable publication +schedule. +Legal & Regulatory Software (23% of divisional revenues), +comprised of Enterprise Legal Management (ELM) solutions +and our legal practice management software, in aggregate +recorded 5% organic growth (2022: 8% pro forma). ELM +solutions (Tymetrix and Passport) saw strong growth in +ELM transactional volumes partly offset by lower software +implementation services revenues. Legal practice management +software, mainly Kleos and Legisway, recorded high single‑digit +organic growth. +Our customers +Legal and compliance professionals in law firms, corporate +legal departments, universities, and government organizations +Top products +Legal & Regulatory Information Solutions: VitalLaw, LEX, ONE, +Navigator, and Schulinck +Legal & Regulatory Software: Passport, TyMetrix 360°, +Legisway, and Kleos +Legal & Regulatory +continued + → Complete list of Legal & +Regulatory solutions +https://www.wolterskluwer.com/en/ +about-us/organization/legal-and- +regulatory +Selected awards 2023 +VitalLaw winner of Gold Stevie Award +for Legal Information Solution +ELM named Company of the Year, +Legal, in American Business Awards +31 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_33.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e94ad797059e51031b65a0bfa66e946d8bf106c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,39 @@ +Legal & Regulatory +continued +Organic growth in revenues +4% +Recurring +78% +recurring revenues as % of division total +Digital +84% +digital revenues as % of division total +Legal & Regulatory – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 875 916 ‑4% ‑4% +4% +Adjusted operating profit 138 133 +4% +4% +10% +Adjusted operating profit margin 15.7% 14.5% +Operating profit 114 185 ‑38% +Net capital expenditure 58 61 +Ultimo FTEs 4,033 3,892 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Legal & Regulatory Software 23% +Legal & Regulatory Information +Solutions 77% +2023 Revenues by segment +Recurring 78% +Print books 5% +ELM transactional 10% +Other non-recurring 7% +2023 Revenues by type +North America 33% +Europe 66% +Asia Pacific & ROW 1% +2023 Revenues by +geographic market +Software 28% +Digital information 56% +Services and print 16% +2023 Revenues by +media format +32 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_34.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9d3131ac224ea0f73fcdb41723ab59b2af9b7b1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,9 @@ +Global enterprise software +Enterprise software solutions +for corporate performance +management, ESG, EHS, risk +management, and assurance. +Corporate Performance +& ESG +33 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information +The secret animal #1 is a "giraffe". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_35.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d6795e064ff38045ff8a26e8b93cf67ffce6c1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,71 @@ +Mandatory ESG +disclosures are +leading to a sea +change in corporate +reporting. +Karen Abramson +CEO Corporate Performance +& ESG +Business overview +Wolters Kluwer Corporate Performance & ESG (CP&ESG) +provides enterprise software solutions and services to +corporations and banks around the world, helping them to +collect, analyze, report, and audit financial, sustainability, +operational, and other performance data. +CP&ESG solutions support corporate responsibility and +sustainability, mitigate and manage operational and financial +risks, improve workplace safety, and facilitate regulatory +reporting and compliance. Our global software solutions and +services help to streamline finance workflows. +CP&ESG solutions are used by corporate finance professionals, +internal auditors, operational risk managers, sustainability +managers, and compliance personnel in corporations and +financial institutions. +Market trends +• Sustainability commitments increase focus on +environmental, health & safety, and operational risk +management +• Rising ESG disclosure, audit, and performance demands +from regulators, investors, employees, and other +stakeholders +• Emergence of global ESG reporting standards as 600+ +frameworks start to converge +• Increased demand for solutions that collect and process +large amounts of structured and unstructured data +• Artificial intelligence, cloud, and other advanced +technologies are enabling analytics, insights, and +connectivity that help drive performance +• Finance function emerging as chief aggregator to collect, +analyze, report, and assure financial and non-financial data +Lendlease improves safety and +compliance with Enablon permit-to-work +Lendlease, a global real estate investment, development, and +construction company headquartered in Australia, leverages +the full Enablon platform to manage its environmental, +health, and safety matters across project sites around the +world. The company also leverages the full suite of Enablon +Go mobile applications, which have been key in modernizing +Lendlease’s safety strategy. +In 2022, the company looked for ways to streamline and +improve its permitting procedures in Australia and chose +Enablon’s permit-to-work (PTW) software to help it transition +from an inefficient paper permitting process to a digitized +workflow. Enablon PTW is a digital documented workflow that +authorizes certain people to carry out specific work within +a specified time frame and facilitates clear sign off to show +work has been completed safely and efficiently. +With Enablon’s PTW system, organizations enhance workplace +safety, ensure regulatory compliance, reduce paperwork, +improve communication, and maintain an audit trail of work- +related activities and safety measures. +Lendlease’s partnership with Enablon yielded impressive +results as David Rose, Group EHS Technology Manager at +Lendlease commented, “We’ve done 26,000 digital permits so +far to date since we’ve deployed the solution. If you think of +it from an ESG point of view, that’s a lot of paper considering +a normal permit would be about 2-3 pages per permit”. +Lendlease is now deploying the Enablon PTW solution to its +other operations around the world. +“ +Customer case +34 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_36.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b665420e236f652a6ea696bca1dbf7fde2ed3a8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,80 @@ +Review of 2023 performance +• New division formed in March 2023. +• Organic growth 9%, with recurring revenues up 11% and non‑ +recurring revenues up 5%. +• Margin reflects higher personnel costs and increased +investment. +The Corporate Performance & ESG division was formed in +March 2023 by bringing together our enterprise software +businesses which were previously part of other divisions: CCH +Tagetik and TeamMate (formerly part of Tax & Accounting), +Enablon EHS/ORM (formerly part of Legal & Regulatory), +and OneSumX Finance, Risk & Reporting (formerly part of +Governance, Risk & Compliance). +The new division’s revenues increased 9% in constant +currencies and 9% on an organic basis (2022: 12% pro forma). +Recurring revenues (65% of divisional revenues) grew 11% +organically (2022: 13% pro forma), while non‑recurring +revenues grew 5% (2022: 10% pro forma). Adjusted operating +profit declined 12% in constant currencies and on an organic +basis, impacted by higher personnel costs, increased +investment in product development, and higher sales and +marketing spending. +Operating profit decreased to €26 million, mainly reflecting the +decline in adjusted operating profit and higher amortization of +acquired identifiable intangible assets. +Environmental, Health & Safety, and Operational Risk +Management platform Enablon (23% of divisional revenues), +delivered 16% organic growth (2022: 18%) driven by strong +momentum across both recurring cloud subscription revenue +and on‑premise software license fees. In November 2023, +Enablon introduced an updated sustainability solution, +Enablon ESG Excellence. +Our Corporate Performance, Internal Audit, and Finance, +Risk & Reporting businesses (77% of divisional revenues) in +aggregate grew 7% organically (2022: 10% pro forma). The CCH +Tagetik corporate performance management (CPM) solution +delivered 20% organic growth (2022: 19%), driven equally by +recurring cloud revenues as by non‑recurring on‑premise +software license fees. Software growth was driven by new +customers and increased uptake of modules, such as the new +ESG and Pillar Two Global Minimum Tax modules launched +in 2023. The average software deal size increased year on +year. Non‑recurring services revenues were, however, lower +than expected as an increased percentage of software deals +closed in the final months of 2023 were tied to third‑party +implementation partners. +Our Corporate Tax unit recorded steady single digit organic +growth. Internal audit solution TeamMate delivered double‑ +digit organic growth, benefitting from higher license fees +for on‑premise software. In July 2023, TeamMate+ ESG was +launched, adding ESG standards to support auditor workflows. +Our FRR unit posted organic revenue decline due to the +conclusion of two large software implementations in Europe +and the full impact of exiting Russia and Belarus. In October +2023, FRR launched OneSumX for Basel to support banks as +they ramp up towards Basel IV compliance. +Our customers +Corporate finance, audit, planning, risk, EHS/ORM, and +sustainability professionals in corporations, banks, and +governments. +Corporate Performance & ESG  +continued +Top products +Environmental, Health & Safety, and Operational Risk +Management (EHS/ORM): Enablon +Corporate Performance, Internal Audit, and Finance, Risk & +Reporting: CCH Tagetik, TeamMate, and OneSumX + → Complete list of Corporate +Performance & ESG solutions +https://www.wolterskluwer.com/en/ +about-us/organization/corporate- +performance-esg +Selected awards 2023 +Wolters Kluwer named Leader in +Verdantix Green Quadrant for ESG +Reporting & Data Management +Gartner named CCH Tagetik Leader in +Magic Quadrant for Financial Close +and Consolidation +35 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_37.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..fce60559bdbc801ab57fbec9daa453daf1105b1d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,36 @@ +Organic growth in revenues +9% +Recurring +65% +recurring revenues as % of division total +Software +79% +software revenues as % of division total +Corporate Performance & ESG – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 683 639 +7% +9% +9% +Adjusted operating profit 68 79 ‑14% ‑12% ‑12% +Adjusted operating profit margin 9.9% 12.4% +Operating profit 26 39 ‑32% +Net capital expenditure 84 73 +Ultimo FTEs 3,215 3,111 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Corporate Performance & ESG  +continued +EHS/ORM 23% +Corporate Performance, +Internal Audit & FRR 77% +2023 Revenues by segment +Recurring 65% +Non-recurring 35% +2023 Revenues by type 2023 Revenues by +geographic market +North America 35% +Europe 48% +Asia Pacific & ROW 17% +2023 Revenues by +media format +Software 79% +Services and other 21% +36 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  +The secret clothing is a "sock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_38.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed95ed8dbc305b7a6e36f1671e2eab0a16d0feb3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,70 @@ +Margin increased in +the fourth quarter due +to operational gearing, +mix shift, and a more +normalized cost base. +“ +This review provides a summary +of our 2023 IFRS results alongside +a discussion of adjusted figures +which give deeper insight into our +underlying performance. +Revenues +Group revenues were €5,584 million, up 2% overall and up 5% +in constant currencies. Excluding the effect of currency and +the net effect of divestments and acquisitions, organic revenue +growth was 6%, in line with the prior year +(2022: 6%). +Revenue bridge +€ million % +Revenues 2022 5,453 +Organic change 310 6 +Acquisitions 20 0 +Divestments (76) (1) +Currency impact (123) (3) +Revenues 2023 5,584 2 +Revenues from North America accounted for 64% of total +group revenues and grew 5% organically (2022: 6%). Revenues +from Europe, 28% of total revenues, grew 7% organically (2022: +6%). Revenues from Asia Pacific and Rest of World, 8% of total +revenues, grew 9% organically (2022: 10%). +Total recurring revenues, which include subscriptions and other +renewing revenue streams, accounted for 82% of total revenues +(2022: 80%) and grew 7% organically (2022: 7%). Within recurring +revenues, digital and service subscriptions grew 8% organically +(2022: 8%). Total non‑recurring revenues were stable on an +organic basis (2022: 3% organic growth). +Group financial +review +Kevin Entricken +CFO and member +of the Executive Board +Highlights 2023 +• Revenues up 6% organically +• 82% recurring revenues, up 7% organically +• 58% expert solutions revenues, up 8% organically +• 94% revenues from digital products and services +• 16% cloud software revenues, up 15% organically +Transactional revenues declined in Financial & Corporate +Compliance but increased in Legal & Regulatory. Other non‑ +recurring revenues, mainly on‑premise license fees and +software implementation services, increased 1% organically +(2022: 7%), with mixed trends by division. +Revenues by type +€ million, unless otherwise +stated 2023 2022 ∆ ∆ CC ∆ OG +Digital and service +subscription 4,134 3,950 +5% +7% +8% +Print subscription 136 157 ‑13% ‑12% ‑7% +Other recurring 273 281 ‑3% ‑1% +3% +Total recurring revenues 4,543 4,388 +4% +6% +7% +Transactional 411 433 ‑5% ‑2% ‑3% +Print books 120 129 ‑7% ‑5% 0% +Other non‑recurring 510 503 +1% +3% +1% +Total non-recurring revenues 1,041 1,065 -2% 0% 0% +Total revenues 5,584 5,453 +2% +5% +6% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: +% Organic growth. Other non ‑recurring revenues include software +licenses, software implementation fees, professional services, and other +non‑subscription offerings. +37 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_39.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4dbaac20a3d3908acb31b07f11689da146b6d8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,47 @@ +Group financial review  +continued +Operating profit +Adjusted operating profit was €1,476 million (2022: €1,424 million), up 6% in constant currencies. +The related margin increased by 30 basis points to 26.4% (2022: 26.1%), in line with our full‑year +guidance range. The margin improvement follows a margin increase in the fourth quarter driven +by operational gearing, mix shift, and the comparison to a more normalized cost base in fourth +quarter 2022. Personnel‑related expenses increased as expected due to an increase in the +number of employees and due to wage inflation. In addition, there was an expected increase in +personnel‑related expenses, such as business travel, events, and training costs. +Product development spending (including capitalized spend) increased in constant currencies +and amounted to 11% of revenues in 2023 (2022: 11%). Restructuring expenses, which are +included in adjusted operating profit, increased to €15 million (2022: €6 million), at the upper +end of our guidance range. +Operating profit declined 1% to €1,323 million (2022: €1,333 million), mainly due to significantly +lower divestment results: we incurred a net disposal gain of €4 million in 2023 compared to +a gain of €75 million in the prior year. Amortization and impairments of acquired identifiable +intangible assets decreased 9% due to reduced impairments in 2023. +Divisional summary +Overall organic revenue growth was 6%, led by Tax & Accounting and Corporate Performance +& ESG. The overall adjusted operating profit margin increased mainly due to full‑year margin +increases in Financial & Corporate Compliance and Legal & Regulatory. For a more detailed +discussion, see pages 17-36 of this annual report. +Key figures +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 5,584 5,453 +2% +Operating profit 1,323 1,333 ‑1% +Profit for the year 1,007 1,027 ‑2% +Diluted EPS (€) 4.09 4.01 +2% +Net cash from operating activities 1,545 1,582 ‑2% +Business performance – benchmark figures +Revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin (%) 26.4 26.1 +Adjusted net profit 1,119 1,059 +6% +7% +Diluted adjusted EPS (€) 4.55 4.14 +10% +12% +Adjusted free cash flow 1,164 1,220 ‑5% ‑2% +Return on invested capital (%) 16.8 15.5 +Net debt 2,612 2,253 +16% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. Benchmark figures are +performance measures used by management. See Note 4 – Benchmark figures for a reconciliation from IFRS to +benchmark figures. +Highlights 2023 +• Product development spend was 11% of revenues +• Profit for the year down by 2% and diluted EPS up 2% +• Adjusted net profit for the year up 6% +38 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_4.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..7381870c3b168f79c3667d62af04f63a84badac9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,52 @@ +Wolters Kluwer +at a glance +We help our customers make critical +decisions every day by providing +expert solutions that combine deep +domain knowledge with specialized +technology and services. +Global footprint +North America +64% +of total revenues +Europe +28% +of total revenues +Asia Pacific & ROW +8% +of total revenues +21,400+ +employees worldwide +180+ +countries where we serve customers +40+ +countries from which we operate +8 flagship offices +significant subsidiaries +78 +employee engagement +score, up 1 point +8% +reduction in scope 1 and +scope 2 emissions +75 +employee belonging score, +up 2 points +Near-term +targets +validated by +SBTi in 2023 +Sustainability highlights 2023 +6% +organic growth in revenues +58% +of revenues from expert +solutions +€1.2bn +adjusted free cash flow +34% +total shareholder return +including dividends +(not reinvested) +Financial highlights 2023 +3 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_40.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2df729889ec3dde8ee6a72fd1cacace8846115e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,56 @@ +Divisional summary +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues +Health 1,508 1,448 +4% +7% +6% +Tax & Accounting 1,466 1,394 +5% +8% +8% +Financial & Corporate Compliance 1,052 1,056 0% +2% +2% +Legal & Regulatory 875 916 ‑4% ‑4% +4% +Corporate Performance & ESG 683 639 +7% +9% +9% +Total revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit +Health 454 434 +5% +8% +7% +Tax & Accounting 479 455 +5% +8% +8% +Financial & Corporate Compliance 403 387 +4% +7% +7% +Legal & Regulatory 138 133 +4% +4% +10% +Corporate Performance & ESG 68 79 ‑14% ‑12% ‑12% +Corporate (66) (64) +3% +4% +4% +Total adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin +Health 30.1% 29.9% +Tax & Accounting 32.7% 32.6% +Financial & Corporate Compliance 38.3% 36.7% +Legal & Regulatory 15.7% 14.5% +Corporate Performance & ESG 9.9% 12.4% +Total adjusted operating profit margin 26.4% 26.1% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are +pro forma due to changes in the organizational structure, refer to Note 1 – General and basis of preparation . +Group financial review  +continued +Highlights 2023 +• Adjusted operating profit €1,476 million, up 6% in constant currencies +• Adjusted operating profit margin up 30 basis points to 26.4% +Corporate expenses +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Adjusted operating profit (66) (64) +3% +4% +4% +Operating profit (66) (64) +3% +Net capital expenditure 0 0 +Ultimo FTEs 143 132 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Net corporate expenses increased 4% in constant currencies and 4% on an organic basis, due to +an increase in personnel costs and related expenses partly offset by lower third‑party services +relating to various projects. +Financial position +Balance sheet +Non‑current assets, mainly consisting of goodwill and acquired identifiable intangible assets, +decreased by €193 million to €6,340 million in 2023, mainly due to amortization and the effect +of foreign exchange differences that were higher than investments in software assets and +acquisitions through business combinations during the year. +Total equity decreased by €561 million to €1,749 million, mainly due to the share buybacks, +dividend payments, and exchange differences on translation of foreign operations, partly +offset by the profit for the year. During the year, we repurchased 8.7 million shares for a total +consideration of €1 billion, including 0.5 million shares to offset incentive share issuances (2022: +0.7 million). +In August 2023, we canceled 9.0 million of shares held in treasury (2022: 5.0 million shares +canceled). As of December 31, 2023, we held 8.0 million shares in treasury. The total weighted‑ +average number of shares was 244.9 million in 2023 (2022: 254.7 million). +39 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_41.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f411efe9be9da9de39be0283731919613afa6a50 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,42 @@ +Balance sheet +€ million, unless otherwise stated 2023 2022 Variance +Non‑current assets 6,340 6,533 (193) +Working capital (1,036) (892) (144) +Total equity 1,749 2,310 (561) +Net debt 2,612 2,253 359 +Net‑debt‑to‑EBITDA ratio 1.5 1.3 0.2 +Net debt, leverage, and liquidity position +Net debt at December 31, 2023, was €2,612 million, compared to €2,253 million at December 31, +2022. The net‑debt‑to‑EBITDA ratio increased to 1.5 (2022: 1.3). Gross debt includes the 8‑year +€700 million Eurobond with a 3.750% annual coupon, issued in March 2023. Gross debt +increased due to the increase of borrowings and bank overdrafts to €196 million at December +31, 2023 (2022: €16 million), including €50 million Euro Commercial Paper notes (2022: no notes +outstanding). +Our €600 million multi‑currency credit facility remains fully undrawn. +Our liquidity position remained strong with net cash available of €989 million as of +December 31, 2023. +Working capital +€ million 2023 2022 Variance +Inventories 84 79 5 +Current contract assets 160 153 7 +Trade receivables 1,087 1,088 (1) +Current operating other receivables 198 244 (46) +Current deferred income (1,899) (1,858) (41) +Other contract liabilities (86) (88) 2 +Trade and other operating payables (951) (949) (2) +Operating working capital (1,407) (1,331) (76) +Cash and cash equivalents 1,135 1,346 (211) +Non‑operating working capital (764) (907) 143 +Total working capital (1,036) (892) (144) +Operating working capital amounted to €(1,407) million, compared to €(1,331) million in 2022, +a decrease of €76 million. This decrease is largely due to autonomous movements in working +capital of €98 million. +Non‑operating working capital decreased to €(764) million, compared to €(907) million in 2022, +mainly due to lower short‑term bonds during 2023 (€400 million) compared to 2022 +(€700 million), partly offset by higher borrowings and bank overdrafts at the end of 2023. +Group financial review  +continued +Highlights 2023 +• Net debt-to-EBITDA ratio 1.5x +• Liquidity position remained strong +40 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_42.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba906dba1dbf52daf9bbd47ec31b5e02b79b16b4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,55 @@ +Financing results, taxation, EPS, and ROIC +Financing results +Total financing results decreased to a net cost of €27 million (2022: €57 million cost), mainly due +to higher interest rates on cash and cash equivalents. Included in total financing results was a +€7 million net foreign exchange gain (2022: €5 million net foreign exchange loss) mainly related +to the translation of intercompany balances. Adjusted net financing costs decreased to +€27 million (2022: €56 million). +Taxation +Profit before tax increased 2% to €1,297 million (2022: 1,276 million). The effective tax rate increased +to 22.4% (2022: 19.5%), as the prior year a significant tax‑exempt divestment gain. +Adjusted profit before tax was €1,450 million (2022: €1,368 million), up 6% overall and up 8% +in constant currencies. The benchmark tax rate on adjusted profit before tax increased to +22.9% (2022: 22.6%), mainly due to lower prior year favorable adjustments combined with the +increased limitation on interest deductibility in the Netherlands. +Earnings per share +Total profit for the year decreased 2% to €1,007 million (2022: €1,027 million), while diluted +earnings per share increased 2% to €4.09 (2022: €4.01), benefitting from the lower weighted‑ +average number of shares outstanding. +Adjusted net profit was €1,119 million (2022: €1,059 million), an increase of 7% in constant +currencies. Diluted adjusted EPS was €4.55 (2022: €4.14), up 12% in constant currencies, reflecting +the increase in adjusted net profit and a 4% reduction in the diluted weighted‑average number +of shares outstanding to 246.0 million (2022: 255.8 million). +Return on invested capital (ROIC) +In 2023, ROIC was 16.8% (2022: 15.5%), mainly due to a higher adjusted operating profit, partly +offset by a higher benchmark tax rate. +Cash flow +€ million, unless otherwise stated 2023 2022 Variance +Net cash from operating activities 1,545 1,582 (37) +Net cash used in investing activities (374) (299) (75) +Net cash used in financing activities (1,481) (991) (490) +Adjusted operating cash flow 1,476 1,528 (52) +Net capital expenditure (323) (295) (28) +Adjusted free cash flow 1,164 1,220 (56) +Diluted adjusted free cash flow per share (€) 4.73 4.77 (0.04) +Cash conversion ratio (%) 100 107 +Cash flow +Net cash outflow before the effect of exchange differences was €310 million (2022: net cash +inflow of €292 million), due to net cash used in financing activities and investing activities +outweighing net cash from operating activities. +Adjusted operating cash flow was €1,476 million (2022: €1,528 million), down 3% overall +and down 1% in constant currencies. This reflects a cash conversion ratio of 100% (2022: +107%), returning to historical levels (95%‑100%). Working capital inflows of €98 million were +significantly lower than in the prior year, while net capital expenditures increased 10% overall +and 11% in constant currencies. Net capital expenditures were €323 million (2022: €295 million), +representing 5.8% of revenues (2022: 5.4%). +Cash payments related to leases, including lease interest paid, decreased to €74 million +(2022: €81 million). Net interest paid, excluding lease interest paid, reduced to €17 million +(2022: €45 million), reflecting higher interest income on cash and cash equivalents. +Group financial review  +continued +Highlights 2023 +• Adjusted free cash flow €1,164 million, down 2% in constant currencies +• Return on invested capital improved to 16.8% +• Diluted adjusted EPS €4.55, up 12% in constant currencies +41 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_43.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..b02b143565ce9616d8f5711511f0c5e0e3f97aa6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,26 @@ +Income tax paid increased to €325 million (2022: €289 million). The net cash outflow related to +restructuring was €1 million (2022: outflow of €12 million). As a result, adjusted free cash flow +was €1,164 million (2022: €1,220 million), down 2% in constant currencies. +Dividends paid to shareholders amounted to €467 million (2022: €424 million). The cash +deployed towards share repurchases was as announced, €1 billion, and in line with prior year +(2022: €1 billion). +Acquisitions and divestments +Total acquisition spending, net of cash acquired and including transaction costs, was +€68 million (2022: €95 million), and primarily related to the acquisitions of NurseTim on January +9, 2023, Invistics on June 7, 2023, and tax content and tools provider, MFAS, on October 31, 2023. +In 2023, net divestment proceeds amounted to €8 million, compared to €106 million in 2022 +which mainly included the divestment of the legal information units in France and Spain. +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. +Group financial review  +continued +Highlights 2023 +• Proposed 2023 total dividend €2.08 per share, an increase of 15% +• Completed 2023 share buyback €1 billion +42 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_44.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ba8127efa245f0a24c2ab624a04d9f96022954 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,9 @@ +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Governance +43 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_45.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4c9ca3290d0eeb07486a77e12ce16c0a46a524f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +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 2022 (the ‘Corporate +Governance Code’), and all applicable +laws and regulations. +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. The Executive Board consists of the +CEO and CFO and is entrusted with the management and +day‑to‑day operations of the company. 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. +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). During 2023, Wolters Kluwer +has reviewed the changes in the Corporate Governance Code +compared to the prior Code and took the necessary steps to +implement these changes. This included an update of the +By‑Laws of the Supervisory Board and Executive Board, as +well as the Terms of Reference of the Audit Committee and +the Selection and Remuneration Committee. 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. Corporate Governance will be added to the agenda +of the 2024 Annual General Meeting of Shareholders, as a +specific discussion item. + → The Dutch Corporate Governance +Code is available at www.mccg.nl +Executive Board +The Executive Board is responsible for the continuity of the +company and its affiliated enterprise and for sustainable +long‑term value creation by the company and its affiliated +enterprise. This responsibility includes the development and +execution of the strategy focused on sustainable long‑term +value creation, formulating targets in relation to the strategy, +appropriate risk management and internal control systems, +and sustainability and environmental, social, and governance +(ESG) matters. The Executive Board considers the impact of the +company on people and the environment. 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 +enterprise, 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. +Corporate +governance +44 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_46.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..94283d945ee707b3533359d09b81d6edbae38964 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,85 @@ +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 Executive Board and +Supervisory Board on page 61 +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 2023 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 were +not required to retain the shares for a period of two years +post vesting. +Term of appointment +Since the introduction of the first Corporate Governance Code +in 2004, Executive Board members are appointed for a period +of four years after which reappointment is possible, in line +with Best Practice Provision 2.2.1 of the Corporate Governance +Code. The existing contract with Ms. McKinstry, who was +appointed before the introduction of the first Corporate +Governance Code and has an employment contract for an +indefinite period, will remain honored. +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 affiliated +enterprise, considering the relevant interests of the company’s +stakeholders, and advises the Executive Board. The supervision +includes the implementation of the sustainable long‑term +value 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/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; +Corporate governance +continued +45 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_47.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a4f89faf976a666f9e9cc15da7e726a1743d032 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,82 @@ +• 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 members to be independent of +the company, which is currently the case. The independence +of Supervisory Board members is monitored on an ongoing +basis, based on the criteria of independence as set out in Best +Practice Provisions 2.1.7 and 2.1.8 of the Corporate Governance +Code and Clause 1.5 of the Supervisory Board By‑Laws. +The number of supervisory board memberships of all +Supervisory Board members is limited to such extent that the +proper performance of their duties is assured. As stipulated +in the By‑Laws of the Supervisory Board, the number of board +memberships of large Dutch companies and listed companies +globally may not exceed five (with a Chair position counting +double). 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 and the +By‑Laws. +Further information on the Supervisory Board members can be +found in the section Executive Board and Supervisory Board. + → See Executive Board and +Supervisory Board on page 61 +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 +management beyond the Executive Board level. Operating +managers, including divisional CEOs, are regularly invited to +present to the Supervisory Board on the operations, market +developments, and business developments. 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 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 Annual +General Meeting of Shareholders in 2021. For more information +on remuneration, see Remuneration report. + → See Remuneration report +on page 70 +Corporate governance +continued +46 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret object #2 is a "bottle". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_48.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..e3242caf80875266b10d11a7d1cc1d3952ae2ce7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,93 @@ +Diversity +Diversity, equity, inclusion, and belonging (DEIB) is an +important topic for the Supervisory Board and Executive +Board. The DEIB policy for the Supervisory Board is included +as an annex to the Supervisory Board By‑Laws. Elements of +diversity include among others 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 continue working towards achieving this through +equitable and inclusive employee practices and experiences +that improve female representation in hiring, promotions, +and talent retention. In addition, a global DEIB policy for +all employees worldwide was drafted and implemented in +2023. 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 the Sustainability +statements. +Currently, the male/female representation of the Supervisory +Board is 33% male and 67% female. After the appointment of +Mr. David Sides to the Supervisory Board and the retirement of +Ms. Jeanette Horan, the representation will be 50% male and +50% female. This is in line with Dutch law. The male/female +presentation in the Executive Board is 50%/50%, which is in +line with our target for diversity in the Executive Board. The +Supervisory Board composition comprises expertise within +the broad information industry as well as specific market +segments in which the company operates. Three 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 described in its profile. + → See Executive Board and +Supervisory Board on page 61 +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 +and ethical standards are the basis for our decisions for and +interactions with our employees, customers, partners, and +society at large, and for achieving our goals. We maintain a +culture of open communication and a safe environment where +everyone should feel confident to ask a question or raise a +concern without fear of negative consequences. 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 our Code of Business Ethics and +other key compliance policies and SpeakUp. In 2023, 99% of +employees completed the Annual Compliance Training. More +information on our Code of Business Ethics and SpeakUp +program can be found in the Sustainability statements. + → Read more about our Code of +Business Ethics in the +Sustainability statements on +page 89 +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 +Corporate governance +continued +47 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_49.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a322b2a3f5af7009076d79b9300d14971aa98c8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,80 @@ +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 +on page 50 +Environmental, social, and +governance matters +The Executive Board and the Supervisory Board are committed +to and oversee Wolters Kluwer’s sustainability/ESG priorities +and performance. The Executive Board discusses the +progress on the sustainability priorities in quarterly update +meetings with the Corporate Sustainability team, in addition +to individual updates as appropriate by relevant functional +owners. The Supervisory Board is informed on a regular +basis as well. The updated Supervisory Board By‑Laws and +Terms of Reference of the Audit Committee and Selection +and Remuneration Committee specify the responsibilities of +the Supervisory Board and the committees with respect to +sustainability. The Executive Board and Supervisory Board +provide feedback to the Corporate Sustainability team +and functional owners, that shapes the development of +relevant sustainability initiatives. For a detailed description +of our sustainability performance, reference is made to the +Sustainability statements. + → See Sustainability statements +on page 89 +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 2023, 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 May 10, 2023, the Executive Board +was granted the authority for a period of 18 months to issue +new shares, with exclusion of pre‑emptive rights, subject to +approval of the Supervisory Board. The authorization is limited +to a maximum of 10% of the issued capital on the date of +the meeting. +Acquisition of shares in the company +Acquisition of shares in the company (share buybacks) +may only be effectuated 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 May 10, 2023, +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, +2023, Wolters Kluwer N.V. held 8,004,987 shares in the company +(a 3.2% interest). +Corporate governance +continued +48 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_5.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..2393a1585baefa5b07ed7fcce1111dc3ea18053f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,81 @@ +Divisions +We deliver professional information, software, and +services for the healthcare; tax and accounting; financial +and corporate compliance; legal and regulatory; and +corporate performance and ESG sectors. +Health +Trusted clinical technology and solutions +that drive effective decision ‑making +and outcomes across the continuum +of healthcare. + → Read more on page 17 +Tax & Accounting +Expert solutions that help tax, accounting, +and audit professionals drive productivity, +navigate change, and deliver better +outcomes. + → Read more on page 21 +Financial & Corporate Compliance +Expert solutions for legal entity +compliance and banking product +compliance. + → Read more on page 25 +Legal & Regulatory +Information, insights, and workflow +solutions for changing regulatory +obligations, managing risk, and increasing +efficiency. + → Read more on page 29 +Corporate Performance & ESG +Enterprise software to drive financial and +sustainability performance and manage +risks, meet reporting requirements, +improve safety and productivity, and +reduce environmental impact. + → Read more on page 33 +Revenues by media format +2023 Revenues by type +Organic revenue growth +Adjusted operating profit margin +Diluted adjusted EPS in € +Return on invested capital +0% +20% +40% +60% +80% +100% +Digital: Expert solutions Digital: Information products +Services Print +2020 2021 2022 2023 +Recurring Non-recurring +0% +1% +2% +3% +4% +5% +6% +7% +2020 2021 2022 2023 +5.8%6.2%5.7% +1.7% +22% 23% 24% 25% 26% 27% +2020 +2021 +2022 +2023 +0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 +2020 +2021 +2022 +2023 +18%0% 3% 6% 9% 12% 15% +2020 +2021 +2022 +2023 +82% +Recurring +revenues +4 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_50.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c6d8427ca2f19998dab23d7e8050173c05e40d5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,82 @@ +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. +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). +In 2023, Mr. P. Bouw retired from the Board of the Foundation. +He was succeeded as Chair by Mr. J.S.T. Tiemstra. The other +members of the Board are Mr. G.W. Ch. Visser and Mr. A. Nühn. +All members of the Board of the Foundation are independent +from the company. +In line with standard practice, the Board of the Foundation +met twice in 2023. Representatives of the Executive Board and +Supervisory Board of the company attended the meetings +to give the Board of the Foundation information about the +developments within Wolters Kluwer. Discussion topics +included updates on 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. In addition, the Board of +the Foundation discussed the developments with respect to +corporate governance and relevant Dutch legislation. +The Board of the Foundation also followed developments +of the company outside of board meetings, among others +through receipt by the board members of press releases. As +a result, the Board of the Foundation has a good view on the +developments at Wolters Kluwer. The Foundation acquired no +preference shares during the year under review. +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, Note 32 – Capital and reserves, and in Wolters +Kluwer shares and bonds. + → See Wolters Kluwer shares and +bonds on page 222 +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). Consequently, 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, the remuneration policy for the +Supervisory Board, and the global DEIB Policy, are available in +the corporate governance section on our website. + → For more information, see +www.wolterskluwer.com/en/ +investors/governance/policies- +and-articles +Corporate governance +continued +49 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_51.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a9b4625b8efc417d171998fba460389bf458f21 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,81 @@ +This section provides an overview of +our approach to risk management. +It also includes a summary of the +main risks we identify and the actions +we take to mitigate these risks. +Introduction +The current environment continues to present uncertain +macroeconomic conditions and heightened geopolitical +tensions. The many elections taking place in 2024 could alter +conditions. There are signs that inflation is starting to come +under control which could lead to a turn in the interest +rate cycle. In early 2024, levels are still high and the future +trajectory remains unclear, presenting a challenge for our +customers, employees, and other stakeholders. While job +markets have cooled somewhat, there remains a shortage of +technology talent globally. Industrialized cyberattacks have +become part of the landscape. Despite these circumstances, +our overall risk profile remains largely unchanged. We +continue to have confidence in our ability to execute our +strategy and mitigate any crisis or challenge that may arise. +Responsibility for risk management +The 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 among +others 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 various +functional departments, including Internal Audit, Internal +Control, Legal and Compliance, Sustainability, Human +Resources, Treasury, Risk Management, 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. +The 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. +Risk management +Risk appetite +Risk type Balanced Conservative Minimal +Strategic +Operational +Legal & +compliance +Financial +& financial +reporting +50 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_52.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..b97ec3c4bddb60503dda36b5e70febaebd321334 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,90 @@ +Internal Control Framework +Our Internal Control Framework (ICF) for financial reporting is +based on the Committee of Sponsoring Organizations of the +Treadway Commission (COSO) 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 for financial reporting 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 functional management, the Executive Board, +the Audit Committee, and internal and external 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. +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 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 Framework have +been designed to identify, mitigate, and respond to risks in a +timely manner. However, it is not reasonably 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 & +compliance and financial & financial reporting risk categories. +We carefully weigh risks against potential rewards. +Emerging risks +Generative artificial intelligence (AI) became commercially +available in 2023, and while we believe this new AI technology +primarily offers opportunities for Wolters Kluwer, there are +also potential risks that will need to be monitored and +mitigated. Other risks which emerged in recent years and that +we continue to monitor include climate‑related risks, data +privacy, and data governance. The latter area continues to be +of interest as we accumulate more and new types of data, and +deal with the growing exposure to regulatory, ethical, and data +security risks. See the sections Material impacts, risks, and +opportunities and their interaction with strategy and business +model (SBM-3), Description of the processes to identify +and assess material climate-related impacts, risks, and +opportunities (IRO-1), and Actions and resources in relation to +climate change policies (E1-3) in the Sustainability statements +for more information about climate‑related risks. The data +privacy risk is described in the risk category Regulatory and +compliance in this Risk management chapter. +Risk management +continued +51 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_53.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9573914dcd838984971769fa56f2af13f87f63a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,93 @@ +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 macroeconomic and geopolitical developments so we can respond quickly to risks +and opportunities. For example, we are monitoring inflation and energy prices, as well as the Russian ‑ +Ukrainian war and the conflict in the Middle East. We take steps to minimize the impact on our financial +performance while also continuing the support of our customers and employees. +Recurring revenues represent 82% 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. 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 in product development and +innovation 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. +Changes in technology, +business models, and customer +preferences +Demand for our products and +services could be affected by +disruptive new technologies, +including generative AI, 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, including +generative artificial intelligence, 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, help 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. +Risk management +continued +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 +52 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_54.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fc3ffb72a174d8de09af135cddbdd7643d957fe --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,82 @@ +Strategic risks continued +Risk description and impact Mitigation +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 target’s internal +control environment including +IT security, open source +software, 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. Generally, +we acquire businesses that present strategic synergies with our +existing operations. +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 +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 for Standardization +(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 the Annual Compliance +Training 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. +53 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_55.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..6bb1b8796bd7f5f434713dc75948bba59486d472 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,81 @@ +Operational risks continued +Risk description and impact Mitigation +Supply chain dependency and +project execution +Our operations depend on +third‑party suppliers and could +be adversely affected by poor +performance of suppliers. +Suppliers include providers of +cloud services, outsourced and +offshored data center services, +software development and +maintenance services, back ‑ +office transaction ‑processing +services, content 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 supply chain 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. +Suppliers that are managed through Global Business Services are +subject to extensive due diligence covering security, data privacy, +and business continuity. +In 2023, we expanded the number of suppliers included in our +multi‑year project to implement a state ‑of‑the‑art, enterprise ‑wide +supply chain risk management process. This process ensures a +consistent approach to the intake of third ‑party services on a global +scale, including 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. +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 recruitment +and development, learning opportunities, retention initiatives, +engagement and belonging efforts, 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 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 rewards structures and performance ‑based compensation +programs to maintain market competitiveness to support us in +attracting and motivating talent. In 2023, we launched the Colleague +Experience Promise (CxP), which is a four ‑pillar action framework +that articulates to our colleagues the experience we work to provide +to them from the time they engage with our company as candidates +through their careers with the organization. +Risk management +continued +54 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_56.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ee08b59207f89e03d938b5f7662054a3125e07a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,96 @@ +Operational risks continued +Risk description and impact Mitigation +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 the ever‑changing risk landscape (e.g., COVID ‑19/post‑pandemic, +hybrid working, geopolitical tensions, and generative AI), we expect +cyber fraud risks may be amplified and continue to assess and +evolve the measures in place. +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. We 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 essential, alternate, and virtual locations. +Many of our businesses have diversified personnel and support +centers that have capabilities to cover and adapt between regions. +See the Sustainability statements for more information on climate ‑ +related physical 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 brand work +throughout the company. +The Global Branding & Communications (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. +Risk management +continued +55 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_57.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab346a07f1f9e95af0cfec5cf6b442bbc3631f5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,90 @@ +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 the 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. +Legal & compliance risks continued +Risk description and impact Mitigation +Regulatory and compliance +continued +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, corporate sustainability (reporting), artificial +intelligence, 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 a significant portion of our supplier spend, we use contract +management systems to monitor certain contractual rights and +obligations, and software tools to track the use of software for +which licenses are required. We implemented a global contract +lifecycle management tool for our significant commercial +agreements which helps us manage compliance with third ‑party +agreements, tracks key dates and milestones, monitors compliance +with our contracting policies and standards, and mitigates operating +risks 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 +56 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_58.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e6b511c78bc79d82c3afd252ded5f249bf814b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,70 @@ +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 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 businesses in compliance with local laws and fiscal regulations. +We manage a range of insurable risks by arranging insurance +coverage for potential liability exposures. +Risk management +continued +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 2023, we diminished liquidity risk by securing additional funding +with a new €700 million eight ‑year Eurobond. +Further disclosure and detailed information on financial risks and +policies is provided in Note 29 – Financial risk management. +57 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_59.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..9352f8f5d055f68450a447e30ec76cc33c3409cc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,68 @@ +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. We simultaneously assess if the plan designs can +reduce financial 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 our plans. Our aim is to +maximize returns while managing downside risk in the plans. +The accounting for defined benefit plans is based on annual +actuarial calculations in line with IAS 19 – Employee Benefits, +disclosed in Note 30 – Employee benefits . +In 2023, we continued to prudently manage our benefit plans, but did +not make any substantive changes. +In the Netherlands, our work to comply with the new Pension Accord +requirements continues in collaboration with the Pension Fund +Board, works councils, and external experts. +Financial & financial reporting risks continued +Risk description and impact Mitigation +Taxes +Changes in operational taxes +and corporate income tax +rates, laws, and regulations +could adversely affect our +financial results, and tax assets +and liabilities. +Apart from 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 +provide training to our tax staff where appropriate. +We monitor legislative developments in the jurisdictions in which we +operate and consider the potential impacts of proposed regulatory +changes, such as Pillar Two Model Rules. +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 15 – Income tax expense and Note 22 – 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. +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. Wolters Kluwer’s tax policy and +principles are largely in line with this code and already comply with +most elements therein. We are planning for further information +disclosure and transparency which will bring us to full compliance. +Further information can be found in our Tax Principles available on +our website. The full version of the VNO ‑NCW Tax Governance Code +is available at www.vno-ncw.nl/taxgovernancecode . +Risk management +continued +58 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_6.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bb636ad4c4b0e9ea06bcf4a834c9b88e57914eb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,82 @@ +We are delivering value +for our customers, +rewarding careers for our +employees, and returns +for shareholders. +“ +The passion, commitment, and +efforts of our global team allowed +us to collectively deliver on our +goals in a year when we made key +organizational changes, directed +more funds towards AI, and managed +through an interest rate cycle. +Q +How would you sum up the company’s 2023 financial results? +The macroeconomic and geopolitical backdrop of 2023 +presented some challenges, but despite this, we achieved our +overall financial guidance, with another year of 6% organic +growth and a further increase in the adjusted operating +profit margin. The year saw our two largest divisions, Health +and Tax & Accounting, grow faster than we had anticipated, +compensating for Financial & Corporate Compliance and +Corporate Performance & ESG, where the interest rate cycle +and market shifts impacted results. It was a year when our +Legal & Regulatory division demonstrated yet again that it has +been transformed, delivering 8% organic growth for its digital +information solutions. The group‑wide margin developed +as we had expected as personnel costs and discretionary +expenses returned to more normal levels last year after the +effects of the pandemic. We were able to increase investment +in product development in 2023 to take advantage of new +opportunities and still meet our margin and cash flow goals. + Q +Innovation spending is at record levels. What are you +investing in? +Product development spending is running at 11% of group +revenues, some €615 million in 2023, up in constant currencies. +This investment is critical to supporting organic growth and +to our long‑term competitive position. In our world, organic +investment mostly relates to multi‑year product roadmaps +which require careful planning and resource management. +We are investing in many areas: in migrating solutions to +the cloud; further deploying artificial intelligence and other +advanced technologies; adding new modules to our platforms; +transforming our digital information products into expert +solutions; and building capabilities to support customers for +new regulations. We follow a rigorous design and development +process, that adheres to our responsible AI principles, to +ensure quality and security while also achieving a return on +investment. We aim to be agile at the same time so we can +pivot or move faster when needed. In 2023, for example, we +quickly shifted attention and funding towards generative AI +opportunities. Our centralized product development team, +DXG, plays a key role in driving innovation with the divisions, +both for existing solutions and the creation of entirely new +products. + Q +Generative AI took the world by storm in 2023. How is Wolters +Kluwer deploying this new technology? +For over 10 years, we have been deploying artificial +intelligence into our products. In fact, around 50% of our +digital revenues come from products that have some form of +AI embedded. We see the new Gen AI technology as another +powerful tool that we can put to work with our high‑quality, +continuously updated, proprietary content to bring benefits to +customers. We also see interesting opportunities to enhance +our own internal operations with this technology. Gen AI lends +itself very well to certain tasks, such as conversational search, +generating first drafts, or summarizing documents. In 2023, we +released our first generative AI‑enabled products and there is +more to come in 2024. +Q +In 2023, you set up a new division. Why reorganize? +The new division, Corporate Performance & ESG, was formed +by bringing together four of our global enterprise software +units: Enablon, CCH Tagetik, TeamMate, and OneSumX/FRR. +We believe there are important synergies to be derived +from joining up these units and connecting and integrating +their solutions. Less than a year in, we have started aligning +Q&A with +Nancy McKinstry +5 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_60.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..5527c870e7ed895fa5c1c745a526fc86c48e023a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,67 @@ +Financial & financial reporting risks continued +Risk description and impact Mitigation +Misstatements, accounting +estimates and judgments, and +reliability of systems +The processes and systems +supporting financial reporting +may be susceptible to +unintentional misstatements or +manipulation. The preparation +of financial statements in +conformity with IFRS requires +management to make 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 divisions 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 control reviews are carried out to ensure +compliance with policies and procedures. These reviews ensure that +existing controls provide adequate protection against actual risks. +Financial results are reviewed by our Business, Analysis & Control, +Consolidation, Group Accounting & Reporting, Treasury, and +Corporate Tax departments in monthly development meetings as +part of regular business reviews with the Executive Board. +Our Group Accounting & Reporting department periodically provides +updates and training to our businesses about changes in policies, +accounting standards, and financial focus areas. Reconciliations of +statutory accounts are done by the Group Accounting & Reporting +and Corporate Tax departments, which include a comparison +between group reported figures, statutory figures, and tax filings. +Financial & financial reporting risks continued +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 (13) (3) +1% decrease in discount rate in determining the gross service costs for the +post‑employment benefit plans (7) (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 (6) +Risk management +continued +59 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management +The secret object #1 is a "clock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_61.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a0ebaf5e367ecb00643f9525f02ce398193fc8c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,81 @@ +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, Risk management, and Sustainability statements +that is included in the 2023 Annual Report. The Report of the +Executive Board and 2023 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 2023 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 2023 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 20, 2024 +Executive Board +Nancy McKinstry +CEO and Chair of the Executive Board +Kevin Entricken +CFO and member of the Executive Board +Statements by the +Executive Board +60 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Statements by the Executive Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_62.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a0091b358b03572af736c4d28aef351d27d1264 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,19 @@ +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 Global Law and Compliance. +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. +Executive Board +61 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Executive Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_63.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..f30417eb7735e11b42034bbd082e0312054cd735 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,122 @@ +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 +US Foods, Inc. +• Member of the Board +(Non‑Executive Director) +of Reynolds Consumer +Products, Inc. +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 Remuneration +Committee of ASML N.V. +• Member Supervisory Board, +Chair Audit Committee, and +member ESG Committee of +Royal Boskalis Westminster N.V. +• Member of the Board (Non‑ +Executive Director), Chair Audit +Committee, Chair Investment +Committee, and member People +and Organization Committee +of Oranje Fonds +• Vice‑Chair Supervisory Board +and Chair Audit Committee of +TomTom N.V. +• Chair VEUO (Dutch Association +of Securities‑Issuing Companies) +• Member of the Board +of Stichting Preferente +Aandelen Philips +Sophie V. Vandebroek +American, 1962, member of the +Audit Committee. Appointed in +2020, and current term until 2024. +Founder Strategic Vision Ventures, +LLC, former CTO of Xerox, and +former Chief Operating Officer at +IBM Research +Other positions: +• Member Board of Directors +(Non‑Executive Director) +and member Finance and +Governance & Corporate +Responsibility Committees of +IDEXX Laboratories, Inc. +• Member of the Board of +Directors (Non‑Executive +Director) of Revvity, 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 +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: +• Chair of the Board of the Dutch +Red Cross +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 (stepping +down in April 2024) +• 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 +Chris Vogelzang +Dutch, 1962, member of the Audit +Committee. Appointed in 2019, +and current term until 2027. +Former CEO of Danske Bank A/S +Other positions: +• Senior Advisor, Boston +Consulting Group +Supervisory Board +62 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_64.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..70d5d0a786ddaf97cf2fda52175586044d3ef34c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,80 @@ +The Supervisory +Board was pleased +to see the +significant progress +on sustainability +commitments made +two years ago. +This report provides an overview +of the activities of the Supervisory +Board and its committees during +the year. The Supervisory Board +supervises the Executive Board in +setting and achieving the company’s +strategy, including sustainability, +targets, and policies, and oversees +the general course of affairs of +the company. The Supervisory +Board also acts as advisor to the +Executive Board. +Introduction by the Chair of +the Supervisory Board +On behalf of the Supervisory Board of Wolters Kluwer, I am +delighted to present our report for the year 2023. It was a year +of exacerbated geopolitical tensions and economic headwinds. +The company was able to withstand a sharp downturn in +transactional revenues caused by the prolonged period of high +interest rates, by driving strong performance in subscription +products, in particular expert solutions, cloud software, +and digital information solutions. The creation of a new +division was a bold organizational change that opens up new +opportunities and creates scope for synergies in coming years. +The centralization of technology, finance, and other functions +was another major undertaking during this past year. +Early in 2023, we all witnessed the rapid emergence of scalable +generative artificial intelligence (AI) tools and I’m pleased +the team mobilized quickly to discover ways to deploy this +technology to the benefit of customers, while ensuring we +follow our responsible AI framework and principles. +The Supervisory Board was kept updated on important product +development projects and other strategic initiatives, such +as the formation of the new Corporate Performance & ESG +division. While there were relatively few acquisitions in 2023, +the product development engine was very active as evidenced +by the record level of internal investment. +The Supervisory Board was pleased to see the significant +progress on sustainability commitments made two years ago. +Employee engagement and belonging scores both increased +in 2023, and programs are in place to support further progress. +The server decommissioning program exceeded expectations +and we will now substitute a new metric related to our office +space to provide an incentive for further progress on reducing +our environmental footprint. I am delighted Wolters Kluwer +now has SBTi‑validated near‑term emission reduction targets. +In this annual report, ESG disclosures have been further +expanded as the company prepares for the implementation +of the EU CSRD regulation. +During 2023, we conducted a thorough process to recruit a new +Supervisory Board member. We are very fortunate to be able +to nominate Mr. David Sides, who brings enormous expertise +and experience in U.S. healthcare informatics. +This past year, I had the pleasure of meeting a diverse range +of small and large shareholders from different parts of the +world. We greatly appreciate hearing their views, concerns, and +questions, on all topics from strategy to sustainability. +As we head into 2024, the environment in which we operate +remains somewhat volatile, but the team has sound plans in +place to continue driving performance and has the experience +to tackle new challenges which might come our way. I look +forward to working with my colleagues on the Supervisory +Board and guiding the Executive Board as they execute on the +final year of the current strategic plan. +Ann Ziegler +Chair of the Supervisory Board +Report of the +Supervisory Board +Ann Ziegler +Chair of the +Supervisory Board +“ +63 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_65.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..70b877feb9809e0867566d913e3aa8553fe103f3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,94 @@ +Meetings +The Supervisory Board held seven scheduled meetings in +2023. Five meetings included a session for Supervisory Board +members only, without the members of the Executive Board +being present. The Chair of the Supervisory Board had regular +contact with the Chair of the Executive Board. +Financial statements +The Executive Board submitted the 2023 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 2023 Financial statements, pursuant to their statutory +obligation under clause 2:101 (2) of the Dutch Civil Code. The +Supervisory Board proposes to the shareholders that they +adopt these 2023 Financial statements at the Annual General +Meeting of Shareholders of May 8, 2024 (2024 AGM). + → See the 2023 Financial +statements on  page 142 +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, followed by individual meetings with the +members of the Executive Board. +Report of the Supervisory Board +continued +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 +transition to the new Chair of the Supervisory Board went +smoothly. 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, constructive, and transparent +atmosphere with each of the members actively participating. +The Supervisory Board appreciates the deep dives on relevant +topics, which provide the Supervisory Board or its committees +with more in‑depth information on certain topics, such as +sustainability reporting or restructuring efforts. Based on +feedback of the Supervisory Board members, the governance +structure and allocation of responsibilities between the +Supervisory Board and its committees with respect to +sustainability topics was further refined and confirmed in +the updated By‑Laws of the Supervisory Board. In addition, +a deep dive session regarding the competitive landscape +of Wolters Kluwer was organized at the request of the +Supervisory Board. The Supervisory Board also reviewed the +onboarding process for new members and received additional +information on product demos. The Supervisory Board remains +focused on a good balance between to the point pre‑read +materials, presentations, and discussions, as it is considered +important to have interactive discussions with several layers +of management. +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 enhance the quality of the meetings. In addition, +the Supervisory Board evaluates the Vision & Strategy Plan +(VSP) presentations at the end of the meetings in which +they were held and comes up with recommendations for +future presentations. +Strategy +The Supervisory Board was kept closely informed on the +second year of execution of the three‑year strategy for +2022‑2024, Elevate Our Value, which was announced in +February 2022. Based on their knowledge and experience, +the Supervisory Board members advise the Executive Board +throughout the year on strategic topics. +The Supervisory Board approved the new divisional structure, +in which a fifth division, Corporate Performance & ESG, +was created in March 2023. The Supervisory Board strongly +supported this change, enabling management of the Corporate +Performance & ESG division to fully focus on their markets and +business units with high growth potential. The addition of a +new division was also a good opportunity from a management +development perspective, as it provided various employees +the opportunity to broaden their perspective and grow into +new managerial roles. The Supervisory Board was pleased to +see that most new executive, senior, and junior level roles +were filled by internal candidates. +As in other years, the divisional CEOs presented their VSPs +for 2024‑2026 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 +64 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board +The secret kitchen appliance is a "microwave". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_66.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..1795a5eaf368b1f968ec6c78413da6c6d354b25b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,87 @@ +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 2023, the Supervisory Board visited Minneapolis +where management of the Financial & Corporate Compliance +(FCC) division presented its business. In addition to the +divisional VSP, several managers of the FCC division presented +their business and gave product demos, which also included +early‑stage innovations. The Supervisory Board also attended +a panel discussion on the business opportunities of the new +beneficial ownership rules in the United States. These rules, +which went into effect on January 1, 2024, create an interesting +business opportunity for the FCC and Tax & Accounting +divisions. The panel consisted of Wolters Kluwer managers, +customers, and an external expert. The interaction with several +layers of management and customers during the working +visit contributes significantly to the Supervisory Board’s deep +understanding of the business. +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. 2023 was the thirteenth consecutive +year in which Wolters Kluwer rewarded promising new internal +business initiatives via the Global Innovation Awards (GIA). +Report of the Supervisory Board +continued +This event enables teams across the business to present their +innovative ideas. The awards are ultimately awarded by a jury +consisting of internal and external experts. In 2023, a record +of 662 GIA submissions were received. Of these, four category +winners were chosen by the Innovation Board and two ideas +were recognized exclusively by Ms. McKinstry with CEO Choice +Awards. One of the awarded teams presented their innovation +submission to the Supervisory Board. A strong culture of +innovation and continuing investment in new and enhanced +products, including expert solutions, is an important means for +driving sustainable long‑term value creation at Wolters Kluwer. +In line with prior years, management of Global Business +Services (GBS) and Digital eXperience Group (DXG) gave +presentations, updating the Supervisory Board on the +company’s technology strategy and execution thereof. The +GBS presentation included a deep dive on cybersecurity and +disaster recovery plans. Considering the rapidly changing +technological developments, this remains a key topic. +The Supervisory Board appreciated the insight in the plans +and actions and overall feels that the IT infrastructure of +Wolters Kluwer is well managed. The DXG presentation +included an extensive explanation on the company’s +actions and governance structure with respect to AI, focusing +on large language models. DXG leads the AI Center of +Excellence and 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. The presentation included demos of products which +67% +of the Supervisory Board +members are female +already contain AI and an explanation on how Wolters Kluwer +can further benefit from the use of AI, including large language +models, and other advance technologies in its products. In +addition, the company’s approach towards responsible AI was +discussed. While the company carefully monitors potential +threats and business disruption, management believes that +overall, AI brings interesting opportunities for the company. +The Global Brand & Communications team gave a presentation +on the design and execution of the brand strategy. Increased +brand recognition can contribute to sustainable long‑term +value creation. The team also updated the Supervisory Board +on external awards, which included the number two ranking in +Newsweek’s list of most trustworthy companies globally in the +Business & Professional Services category. +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. In addition to the deep dive session on +the competitive position, as a routine item, an overview of +the most important developments with respect to traditional +and new competitors is discussed during each Supervisory +Board meeting. +65 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_67.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..360fa44eb5dd23e4ab06a018b263bce5838134aa --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,79 @@ +Acquisitions and divestments +The Executive Board kept the Supervisory Board informed +about all pending acquisition and divestment activities. +During the year under review, there were no acquisitions with +a transaction value above the threshold for Supervisory Board +approval (1% of consolidated revenues). +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 further 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. +Report of the Supervisory Board +continued +The Supervisory Board discussed the implementation of +the amended Dutch Corporate Governance Code, which was +published in December 2022. Changes which were relevant +for the Audit Committee and Selection and Remuneration +Committee, were also discussed in those committees. As part +of the implementation, the Supervisory Board adopted the +updated By‑Laws for the Boards, as well as Terms of Reference +for the Committees. + → For more information, see Corporate +governance on page 44 and Risk +management on page 50 +Sustainability +The Supervisory Board has oversight of and actively +discussed the company’s sustainability/ESG performance +and reporting. The Supervisory Board is supportive of the +company’s sustainability approach and the increased focus +on environmental and social matters. The Supervisory Board +strongly supports and approved the submission of near‑term +targets and the net‑zero commitment with the Science Based +Targets initiative (SBTi). The near‑term targets were validated +by the SBTi in the fourth quarter of 2023, which is an important +milestone for the company’s sustainability efforts. +The Audit Committee and Supervisory Board were also kept +informed on the preparations for compliance with the EU +Corporate Sustainability Reporting Directive (CSRD) and +the European Sustainability Reporting Standards (ESRS), +which will apply as of financial year 2024 (for the annual +reports which will be published in 2025 and subsequent years). +As part of these preparations, the company conducted an +extensive initial double materiality assessment which was +discussed with the Audit Committee and the full Supervisory +Board. The Supervisory Board supports the outcomes of the +assessment, based on the thorough underlying process and +documentation provided. +In addition, the Supervisory Board was kept informed on +other environmental and social topics, such as Diversity, +Equity, Inclusion, and Belonging (DEIB), during several +meetings. The responsibilities of the Supervisory Board +and its committees with respect to sustainability were +reflected in the updated By‑Laws and Terms of Reference, +underpinning the commitment of the Supervisory Board to +carefully monitor this topic and provide the Executive Board +with advice. +The intensified focus on sustainability 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 sustainability activities of the +company and believes that these efforts will contribute to an +inclusive culture of integrity, accountability, and transparency, +creating sustainable long‑term value for all stakeholders. + → For more information on sustainability, +see Sustainability statements +on page 89 +66 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_68.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e45fd30b01935567750e75cfca5a590fe3e522c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,88 @@ +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 the context of the implementation of the amended +Corporate Governance Code, the Supervisory Board approved +the Global DEIB Policy, as well as the targets for gender +representation in the sub‑top of the company. This target +aims at an increase of female representation in the company’s +executive career band by two percentage points by 2028, from +a 2022 baseline. +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 sustainable long‑term value creation. The results +were positive. The company continues executing action plans +to further improve in these areas. +Report of the Supervisory Board +continued +Finance +The Supervisory Board and Audit Committee carefully observe +the financing of the company, including the balance sheet, +cash flow developments, and available headroom. The +Supervisory Board also closely monitors the development of, +among others, net‑debt‑to‑EBITDA ratio and liquidity planning. +The Supervisory Board approved the share buyback program +of up to €1 billion in 2023, as well as the €100 million share +buyback for the period starting January 2, 2024, up to and +including February 19, 2024, and the block trade to set off EPS +dilution due to performance shares under the 2021‑2023 long‑ +term incentive plan which will be released to participants on +February 22, 2024. +With respect to the funding of the company, the Supervisory +Board approved the new €700 million eight‑year senior bonds, +which were issued in March 2023. +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 2022, which was approved +by the AGM in 2023, and the proposed dividend increase +of 15% over 2023 (to be approved by the AGM in 2024), 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 headroom for acquisitions. +The Supervisory Board discussed the impact of a new Dutch +law regarding taxation of share buybacks, which may become +effective as of January 1, 2025. Management will keep the +Supervisory Board informed about the potential impact +and alternatives. +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 2023 guidance in the half‑year results +press release which was issued in August. In addition, two +Supervisory Board members had virtual meetings with several +shareholders in the second half of 2023, focused on corporate +governance, ESG, and AI. +Audit Committee +The Audit Committee had four regular meetings in 2023, +during the preparation of the full‑year 2022 and half‑year +2023 results, and around the first‑quarter 2023 trading +update and nine‑month 2023 trading update. In addition, +in January 2023, the Audit Committee had a separate deep +67 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_69.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2bee1993b4b0d68db8899396622dc72b85e3acd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,79 @@ +dive session with corporate staff representatives regarding +sustainability reporting and the request for proposal for a +new audit firm. There was one scheduled conference call +in December between the external auditor, the Chair of the +Audit Committee, and the CFO. +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 +2023, 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, the Auditor Independence Policy, and the +quarterly reports and the full‑year report on the audit of the +external auditor. +Report of the Supervisory Board +continued +In January 2023, the Audit Committee recommended to the +full Supervisory Board to nominate KPMG Accountants N.V. as +new audit firm as of financial year 2025. This recommendation, +which was followed by the Supervisory Board, was the result +of an extensive request for proposal process for the auditor +rotation, which is required under Dutch law every 10 years. +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. In the 2023 AGM, KPMG was +indeed appointed as auditor as of financial year 2025. +The Audit Committee has reviewed the performance of the +current external auditor (Deloitte), the proposed audit scope +and approach, the audit fees, and the independence of the +external auditor, and has reviewed and approved the other +assurance services, tax advisory services, and other non‑ +audit services provided by the external auditor. The Auditor +Independence Policy, which was updated in 2023, is available +on the website. + → The Auditor Independence Policy +www.wolterskluwer.com/en/investors/ +governance/policies-and-articles +Selection and Remuneration Committee +The Selection and Remuneration Committee met four times in +2023. The Committee consisted 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 on page 70 +Supervisory Board composition +After the AGM in 2023, Mr. Bodson resigned from the +Supervisory Board due to the workload of his other activities. +During 2023, the Supervisory Board searched for a replacement +of Mr. Bodson. Based on the recommendation of the Selection +and Remuneration Committee, the Supervisory Board +nominates Mr. David Sides for appointment as new member +of the Supervisory Board in the 2024 AGM, in view of his +knowledge of the healthcare sector, coupled with his financial +and commercial acumen, as well as his extensive experience +in leading innovative companies. +68 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_7.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..e88361a2cf0789a6ae88876767258b3fd97be67f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,85 @@ +product development and have already released the first +connection between Enablon and CCH Tagetik. All four units +address the corporate market and we see scope to leverage +their combined global sales and marketing strength. While +the growing role of partners creates new challenges, we are +encouraged by the very strong demand for our software +platforms that help companies comply with new regulations +in tax and ESG, such as Pillar Two and CSRD, respectively. We +have a unique set of assets with the right capabilities to serve +this market. +Q +Are you on track to deliver on the goals of your 2022-2024 +strategy? +We are very much on track. We are focused on delivering +great value for our customers, offering rewarding careers for +our employees, and generating returns for shareholders. Our +top priority has been to grow our expert solutions, which +are sophisticated workflow and software applications that +enhance professionals’ decision‑making and productivity. +In 2023, expert solutions were our fastest‑growing type of +product, with revenues increasing 8% organically. Our cloud‑ +based software products grew 15% organically. +Our second strategic priority is to extend into high‑growth +adjacencies, market segments that are logical extensions +to our existing business. Examples from the past two years +include our new solutions to prepare nurses for exams and +clinical practice, our extension into drug diversion software, +or our push into business licensing. In these three cases, we +made small bolt‑on acquisitions, NurseTim and Invistics in +2023, and LicenseLogix in 2022, to accelerate the move. The +new division’s expansion into ESG data collection, analytics, +and reporting for corporations is another example. +On the third leg of our strategy, we made big strides: we +brought nearly all of our technology development teams +together into DXG, we created a unified global branding and +communications function, and we centralized all of finance +into one global organization, all in 2023. We also achieved +several of our sustainability goals. +Q +Your strategy states that you intend to advance your ESG +performance. What was accomplished in 2023? +Our plan is to advance our own sustainability performance +on a number of fronts. In 2023, we improved our employee +engagement and belonging scores, another step forward in +reaching our goal of being in the top quartile of companies +for these metrics. Another milestone was the validation of +our near‑term emission reduction targets by the Science +Based Targets initiative. In this annual report, you will see +significantly expanded sustainability disclosures, which bring +us closer to alignment with the European Sustainability +Reporting Standards (ESRS) and which address many of +the recommendations of the Task Force on Climate‑related +Financial Disclosures (TCFD). There is more to do, but we made +significant progress in 2023. +Q +What is the outlook for 2024? +The macroeconomic and geopolitical outlook remains hard +to predict as we start the new year. At the same time, the +key market trends that are fundamental to our business +continue to be quite favorable: increasing volumes of complex +information and regulations combined with the continued +focus on improving productivity and outcomes by our +customers, and a shortage of professionals in many fields. +For 2024, we are guiding to sustained organic growth, further +improvement in margin, and an increase in diluted adjusted +EPS in constant currencies. Beneath the calm surface, a lot is +going on. Product investment will remain high in 2024. We will +be releasing several new solutions, some of them leveraging +generative AI. I am excited about the opportunities ahead. +Nancy McKinstry +CEO and Chair of the Executive Board +Wolters Kluwer + → Read about our strategy on page 7 + → Read our Sustainability statements on +page 89-140 +Expert solutions +8% +organic growth in 2023 +Cloud software +15% +organic growth in 2023 +Diversity, equity & inclusion +75 +belonging score, up 2 points +6 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_70.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fb69d26e5448eb3000aefd5790e79a115c40747 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,87 @@ +In 2024, the first term of both Mr. Jack de Kreij and Ms. +Sophie Vandebroek will expire. Ms. Vandebroek is available +for a reappointment of four years. Mr. De Kreij is available +for a reappointment of two years. The Supervisory Board, +after careful consideration, will nominate Mr. De Kreij and +Ms. Vandebroek for reappointment in the 2024 AGM. A further +explanation can be found in the agenda of the AGM. +In 2024, the second term of Ms. Horan will expire as well. +Regretfully, she informed the Supervisory Board that she +is not available for reappointment. The Supervisory Board +would like to thank Ms. Horan for her knowledgeable and +much appreciated contributions during her eight years on the +Supervisory Board, and in particular for chairing the Selection +and Remuneration Committee with respect to remuneration +topics for seven years. The Supervisory Board is currently +conducting a search for the replacement of Ms. Horan 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. Three 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 33% male and 67% female, +which is in line with the diversity policy and Dutch law, +requiring a representation of at least one third male and +female. After the appointment of Mr. Sides and the retirement +of Ms. Horan, the representation will be 50% male and 50% +female. +Report of the Supervisory Board +continued +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 +All Supervisory Board members comply with the Dutch law and +the By‑Laws regarding the maximum number of supervisory +board memberships. Furthermore, all members of the +Supervisory Board are independent from the company within +the meaning of best practice provisions 2.1.7, 2.1.8, and 2.1.9 of +the Dutch Corporate Governance Code. For more information +on each Supervisory Board member in accordance with the +Dutch Corporate Governance Code, see the sections Executive +Board and Supervisory Board and Corporate governance. + → See Executive Board and Supervisory +Board on page 61 + → See Corporate governance on page 44 +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 sustainable long‑term value creation, +within an innovative, diverse, and transparent culture, were +highly appreciated by the Supervisory Board. +Meeting attendance +Supervisory +Board +Audit +Committee +Selection & +Remuneration +Committee +Number of meetings held 7 5 4 +A.E. Ziegler 7 – 4 +J.P. de Kreij 7 5 – +B.J.F. Bodson* 3 – – +J.A. Horan 7 – 4 +H.H. Kerstens 7 – 4 +S. Vandebroek 6 4 – +C.F.H.H. Vogelzang 7 5 – +* Mr. Bodson retired after the 2023 AGM. +Alphen aan den Rijn, February 20, 2024 +Supervisory Board +Ann Ziegler, Chair +Jack de Kreij, Vice‑Chair +Jeanette Horan +Heleen Kersten +Sophie Vandebroek +Chris Vogelzang +69 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_71.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2fe9dde2713d73b92c864b7f3dd59025042ca2b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,87 @@ +Despite challenges, +all financial and +non‑financial +targets were met or +exceeded. +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 2023. We discuss how +performance drove the outcome +for 2023 and how the policy will be +applied in 2024. +Letter from the Co-Chair of the +Selection and Remuneration Committee +Dear Shareholders, +On behalf of the Supervisory Board, I am pleased to present +our 2023 remuneration report, in which we outline our pay‑for‑ +performance philosophy and our strategy‑linked framework, +and provide a summary of our remuneration policy. We explain +how performance translated into the remuneration earned for +2023 and set out how the remuneration policy will be applied +in 2024. +2023 performance and STIP outcome +In many ways, 2023 saw a continuation of the external +conditions that arose the year before, including challenges +presented by geopolitical events and macroeconomic +conditions. Last year was also a year of significant internal +change at Wolters Kluwer, notably the formation of a new +fifth division by bringing several business units together +and the centralization of key functions such as technology, +communication, and finance. These changes were executed +well in 2023 and prepare the organization to take advantage +of opportunities that lie ahead. +As discussed in the strategic report, the company finished +the year 2023 with financial results that were in line with the +overall group‑level guidance provided at the start of the year. +Fundamental to driving these financial results is the strategy +of focusing on expert solutions, investing in innovation, while +continuing to evolve organizational capabilities and driving +operational excellence. +Despite the challenges, the company achieved 6% organic +growth, resulting in an absolute 2023 revenue achievement +in line with target. The adjusted operating profit margin was +improved by 30 basis points, which after interest and tax, +resulted in a 7% increase in adjusted net profit in constant +currencies. Adjusted net profit of €1,119 million was in line with +target. Adjusted free cash flow of €1,164 million declined 2% in +constant currencies and exceeded the target by 1%. +To provide incentives for advancing our sustainability and +ESG performance, the Supervisory Board set targets for three +non‑financial measures for 2023, which together carried +a weight of 10% in the short‑term incentive plan (STIP). +Employee belonging, the indicator we have chosen to measure +our global performance on diversity, equity, and inclusion, +increased by 2 points to 75, exceeding the target which was +to increase it by 1 point. The second non‑financial measure, +indexed cybersecurity maturity score, aims to ensure the +group maintains security at or above the benchmark for +high‑tech companies. This target was also exceeded in 2023. +The third non‑financial measure for 2023, aimed at reducing +the environmental impact of our remaining in‑house data +centers, was a target for on‑premise servers decommissioned +during the year. On this measure, performance was well ahead +of target, and the multi‑year program to migrate customers +and applications to energy‑efficient cloud infrastructure has +reached a mature stage. +2021-2023 performance and LTIP outcome +The long‑term incentive plan (LTIP) which vested on December +31, 2023, and which will be paid out in February 2024, was +the first plan to have started under the remuneration policy +adopted by shareholders in 2021. This LTIP was therefore +linked to performance on relative total shareholder return, +diluted adjusted EPS, and return on invested capital. +Total shareholder return (TSR), including dividends and using +a 60‑day average share price at the start and at the end of the +Remuneration +report +Jeanette Horan +Co‑Chair of the Selection +and Remuneration +Committee, dealing with +remuneration matters +“ +70 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret object #3 is a "bowl". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_72.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..06424cca988cd9a6a03312cb2b8fe8776788757b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,47 @@ +Remuneration report continued +three‑year period, was 88%. This TSR performance placed Wolters Kluwer in third place ahead +of 13 of its TSR peers, which are comprised of comparable publicly listed U.S. and European +information and software companies. Over the three‑year LTIP period, 2021‑2023, the share +price rose 86%, very significantly outperforming the broader stock market indices, including the +STOXX Europe 600 and the Amsterdam AEX. +For the second measure, diluted adjusted EPS, the compound annual growth rate over the +three‑year performance period was 12.3% in constant currencies, exceeding the target of 8.3% +calculated based on constant currencies for 2023. +For the third measure, return on invested capital (ROIC), the final year ROIC result was 16.9% in +constant currencies for 2023 (16.8% in reporting currencies), which exceeded the target of 14.2% +in constant currencies. +Performance across these three LTIP measures therefore resulted in above target payout. +The realized value also reflects the significant share price appreciation over the period. +Looking ahead: STIP 2024 +During the past three years, the Supervisory Board has monitored the effectiveness of the +non‑financial metrics that have been used in the short‑term incentive plan. The Board is of the +opinion that these non‑financial measures should not only be quantifiable and verifiable, but +should also provide the appropriate incentives for the Executive Board to advance important +strategic objectives, including sustainability goals. +One of the sustainability goals is to make steady annual progress in building a diverse, +equitable, and inclusive culture among the global workforce. Significant progress has been +made but we continue to aim to become a leader on this front. Another sustainability goal is +to make further progress in reducing our direct greenhouse gas emissions. Here, the server +decommissioning measure will be replaced in 2024 with a new goal to provide further incentive +to reducing our global office footprint. +With regard to our cybersecurity maturity, we are well‑positioned compared to our industry +benchmark and the goal is to maintain our maturity score, which in itself requires constant +effort and investment. +Looking ahead: LTIP 2024-2026 +The LTIP for 2024‑2026, which reflects the remuneration policy that was adopted by shareholders +in 2021, will again include relative TSR at 50%, diluted adjusted EPS at 30%, and ROIC at 20%. +No changes were made to the TSR peer group in 2023. The Supervisory Board continues to +monitor this group given the periodic delistings and mergers that take place in our sector. +The Supervisory Board has set three‑year targets for compound annual growth in diluted +adjusted EPS and for final year ROIC, applying additional stretch to the underlying financial +plan that underpins the strategy. These forward‑looking three‑year targets are disclosed on +page 85. +The 2022 remuneration report received strong shareholder support with over 93% of votes in +favor of the report. We trust this 2023 report provides a clear explanation of the drivers of 2023 +remuneration and transparent disclosure on future goals and that shareholders can again +support this report at our Annual General Meeting of Shareholders on May 8, 2024. +Jeanette Horan +Co‑Chair of the Selection and Remuneration Committee, dealing with remuneration matters + → The 2024 AGM agenda is available at +www.wolterskluwer.com/agm +71 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_73.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..3744b82b6b786086a9095b745dbede19d26dc791 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,112 @@ +Remuneration at a glance +72 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. +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. +T ar g et Actua l +59% +23% +18% +15,066 +12% +31% 4% +10% +36% +3% +4% +€0 +€20, 000 +in thousands of euros, unless otherwise stated +€10, 000 +€5, 000 +€15, 000 +LTIP TSR +outperformance +LTIP +STIP +Base Salary +LTIP EPS +outperformance +Increase in value +due to share +price performance +LTIP ROIC +outperformance +CEO target and realized pay 2023Diluted adjusted EPS +CAGR 2021-2023: 12.3% +in constant currencies +Return on invested +capital 2023: 16.9% in +constant currencies +Target for diluted adjusted +EPS CAGR 2021‑2023 +was 8.3% in constant +currencies for 2023. +Target for final year ROIC +2023 was 14.2% in constant +currencies for 2023. +3.13 3.38 +4.14 +4.55 +2020 2021 2022 2023 +12.3% +13.7% +15.5% +16.8% +2020 2021 2022 2023 +Impact of performance and share price on remuneration +Target pay reflects the number of LTIP shares conditionally +awarded for LTIP 2021‑2023 valued at the closing share +price on December 31, 2020 (€69.06). +Realized actual pay reflects the number of LTIP shares +earned valued at the closing share price on December 31, +2023 (€128.70). +The final payout will be valued at the volume‑weighted‑ +average share price on February 22, 2024. +Three-year 2021-2023 total shareholder return (TSR) +Sage Group +RELX +Wolters Kluwer +Thomson Reuters +CGI +Pearson +Informa +News Corp +S&P Global +Equifax +Verisk +Experian +Bur. Veritas +Wiley +SGS +Intertek +-20% ++80% ++100% +0% ++20% ++60% ++40% +40% +Summary performance against 2023 STIP targets +Actual performance +Measure Target Actual % of target +Financial - in millions of euros +Revenues 5,605 5,584 100% +Adjusted net profit 1,113 1,119 100% +Adjusted free cash flow 1,151 1,164 101% +Non-financial +Employee belonging score +1 point +2 points 105% +Indexed cybersecurity +maturity score 109.4 113.8 110% +Number of on‑premise servers +decommissioned 600‑999 1,542 110% +Financial STIP targets and actual performance are shown in reporting +currencies. For details on STIP target outcomes, see page 80. \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_74.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa5ec4c6ea636c82a8de1af16f3f56807e62559 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +Remuneration report continued +Our remuneration policy +Below we provide a 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 +Key elements of our remuneration policy +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 76. +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 2024. +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 2023, the weighting was 10% and included the following three strategically important metrics: +• Belonging score (a quantified measure of diversity, equity, and inclusion) +• Indexed cybersecurity maturity score +• Number of on‑premise servers decommissioned (reducing carbon footprint) +In 2024, the weighting of non‑financial measures will be 10%. The environmental measure (servers decommissioned) will be replaced by a percentage reduction in our office footprint. +LTIP performance measures The policy stipulates the following measures for the LTIP: +• Relative total shareholder return, weighted at 50% +• Diluted adjusted EPS, weighted at 30% +• Return on invested capital (ROIC), weighted at 20% +Share ownership and +holding requirements +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. +73 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_75.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..34230ea8732cfd01abbb5e25f9dbe19101769ab9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,83 @@ +Remuneration report continued +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 and increases provided +to all employees +Set at a level to attract, motivate, +and retain the best talent +STIP Paid annually in cash; maximum +opportunity 175% of base salary (CEO) +Creates incentives to deliver +performance against annual financial +and non‑financial 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) +Creates incentives to deliver financial +performance and create long ‑term +value; demonstrates long ‑term +alignment with shareholder interests +Pension Defined contribution retirement savings +plan that is available to all employees in +the same 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 same country of employment +Designed to be competitive in the +relevant market +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 based on 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 provides management with incentives 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 +74 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_76.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..85692055f98ff0185ca77a6fbd3a067d2db034d7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,63 @@ +Remuneration report continued +Purpose: deliver impact when it matters most +Our strategic goals +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 in short-term incentive plan (STIP) and long-term +incentive plan (LTIP) +Executive Board remuneration policy (adopted at the 2021 AGM): +STIP financial measures – pre-defined list of measures: +• Revenues +• Organic growth +• Adjusted operating profit +• Adjusted operating profit margin +• Adjusted net profit +• Adjusted free cash flow +• Cash conversion ratio +STIP non-financial measures: +ESG, strategic, or operational measures, including employee engagement score, customer satisfaction +scores, measures of good corporate governance, measures of operational excellence, and measures +of environmental impact. +LTIP financial measures: +• Relative total shareholder return +• Diluted adjusted EPS (three‑year CAGR) +• Return on invested capital (final year) +For 2024, the STIP financial measures will be the same as in 2023: revenues, adjusted net profit, +and adjusted free cash flow. The STIP non‑financial measures will be: employee belonging +score, indexed cybersecurity maturity score, and a percentage reduction in our global office +footprint (square meters). +The number of on‑premise servers decommissioned, which was a target in 2023 and prior years, +will not be included as a target in 2024 as the progress over the past three years has brought +this program to an advanced level of maturity. +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 sustainable 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. +75 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret landmark is "Big Ben". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_77.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0446c445754859cab58b71404028d60f90c723d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,52 @@ +Remuneration report continued +76 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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 2023, the pay peer group consisted of the companies shown in the table on the right. +Companies included in the TSR peer group are marked ‘TSR’. +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. +The TSR peer group is comprised of digital information, software, and services businesses. +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 +which are not in the pay peer group. +Pay and TSR peer groups +North American comparators European comparators +CGI1,4 TSR Atos +Equifax TSR Bureau Veritas TSR +Gartner2 Capgemini +Gen Digital3 +Clarivate5 +Intuit Dassault Systèmes +MSCI Experian TSR +News Corporation TSR Informa TSR +S&P Global TSR Intertek Group TSR +Thomson Reuters TSR Pearson TSR +Verisk Analytics TSR RELX TSR +Wiley4 TSR SGS TSR +Teleperformance +Temenos +The Sage Group TSR +1 CGI Inc replaced IHS Markit plc in the TSR peer group after the latter was acquired by S&P Global in 2022. +2 Gartner Inc replaced Nielsen Holdings Inc which was delisted in October 2022. +3 Gen Digital Inc was formerly named NortonLifeLock which merged with Avast in 2022. +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 plc in the pay peer group after the latter was acquired by S&P Global in 2022. +TSR Companies that are included in the TSR peer group. \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_78.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a32c0cd22837a037accd66971473669772e4d28 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,56 @@ +Remuneration report continued +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 Vision & Strategy Plan (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 to give realistic but stretched +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 +consistently applied accounting standards and policies. +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 variable remuneration +Under Dutch law, the Supervisory Board has the discretionary authority to amend Executive +Board payouts, as determined by actual performance against pre‑set targets, if they are +considered unreasonable or unfair in relation to stakeholders’ interests. +The Supervisory Board annually assesses the impact of certain management actions, or +external events or circumstances, on results during the performance period, and may use +its discretion to adjust for these actions or events. Such actions, events, or circumstances +include, but are not limited to, the impact of restructuring, acquisitions, divestments, +and share buybacks beyond that anticipated in the target ‑setting process. External events +considered could include economic recession, changes in tax rates, and other events +unforeseen in the target ‑setting process. +Variable remuneration can be clawed back after payout if the payout was based on +incorrect information. +Review VSP +three‑ year +financial plan +Augment +forecasts for +management +actions not +in the plan +D etermine +three‑ year +LTIP targets +Test +targets +for stretch +and payout +sensitivity +Finalize three‑ +year LTIP targets +Step 1 Step 2 Step 3 Step 4 +77 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_79.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..a77a783c74780c6e15300fc7a5737d0a63f62b14 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,41 @@ +Remuneration report continued +Implementation of remuneration policy in 2023 +This section outlines the implementation of the remuneration policy for Executive Board members in 2023, in line with the remuneration policy and the remuneration framework discussed above. +It also describes how the performance measures were applied in 2023. +For the performance period ending in 2023, 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 performance‑driven scenario analysis when determining the structure and level of Executive Board +remuneration for 2023, as shown on page 86. +The Supervisory Board is of the view that management achieved strong results and delivered for customers, despite geopolitical and macroeconomic challenges faced during the STIP and LTIP +performance periods. +2023 STIP financial targets for revenues and adjusted net profit were met, while the STIP target for adjusted free cash flow was slightly exceeded. All three non‑ financial STIP targets were exceeded. +The formulaic outcome will result in cash annual STIP payments of €1,880,643 for the CEO and €854,521 for the CFO. +Three‑ year performance on total shareholder return (TSR), CAGR in diluted adjusted EPS, and final ‑year ROIC were all ahead of target. The performance and shares to be paid out for the LTIP +2021‑2023 are discussed under Long-term incentive plans. +Remuneration of the Executive Board – IFRS based +Fixed remuneration Variable remuneration +in thousands of euros, unless otherwise stated Base salary Social security 6 +Pension +contribution +Other +benefits 3 STIP LTIP 4 Sub-total +Proportion +fixed/variable +Tax-related +costs5 Total +2023 +N. McKinstry 1 1,499 236 104 193 1,881 4,439 8,352 24%/76% 27 8,379 +K.B. Entricken 2 809 11 76 207 855 1,868 3,826 29%/71% (486) 3,340 +Total 2,308 247 180 400 2,736 6,307 12,178 26%/74% (459) 11,719 +2022 +N. McKinstry 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 +1 In 2023, Ms. McKinstry’s base salary was $1,557,000 (€1,498,667). The 2023 STIP payout is calculated on a U.S. dollar denominated equivalent of total salary as: $1,557,000 x 130.57% ($2,032,975 equivalent to €1,880,643). +2 The 2023 STIP payout of Mr. Entricken is calculated on a U.S. ‑dollar ‑denominated equivalent of total base salary as: $875,000 x 105.57% ($923,738 equivalent to €854,521). +3 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. +4 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. +5 Tax‑related costs are costs to the company pertaining to the Executive Board members ex ‑patriate assignments. The 2023 tax ‑related cost changes for Ms. McKinstry were mainly due to time worked in the Netherlands and the U.S. +and a reduction in the hypothetical tax collected by the company as a result of a residency change in 2023. For Mr. Entricken, the changes are a result of reduced time spent in the Netherlands in 2023 and a roll ‑forward of tax credits +from the previous year. +6 Changes in the social security costs for Ms. McKinstry are a result of being a full ‑year participant in the U.S. social system in 2023. +78 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_8.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..29c771257d4a65afb8f4752bf6820df5aea57c6a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_8.txt @@ -0,0 +1,75 @@ +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. +Overview +Wolters Kluwer is a global provider of information, software +and services for professionals in the fields of health; tax and +accounting; financial and corporate compliance; legal and +regulatory; and corporate performance and ESG. +Every day, our customers face the challenge of increasing +quantities and complexity of information or regulation +and the pressure to deliver better outcomes at lower +cost. We aim to solve this challenge, add value to their +workflow, and support their decision‑making with our digital +solutions and technology‑enabled services. We continuously +improve our solutions to meet evolving customer needs, +leveraging the latest technologies to provide benefits such +as advanced analytics, intuitive interfaces, mobility, flexibility, +interoperability, reliability, and open architecture. +Purpose +Our purpose is to deliver impact when it matters most. Every +second of every day, our customers face decisive moments +that impact the lives of millions of people and shape society. +In these crucial moments, we put sound knowledge, deep +expertise, and usable data and insights into their hands at +the right time and in the right context for their specific set of +circumstances. Our solutions help protect people’s health, +prosperity, and safety and help to build better businesses. +Strategy +Our strategy for 2022‑2024 aims to deliver good organic +growth and improved adjusted operating margins and return +on invested capital, while advancing our ESG performance. +Among the ESG goals in our 2022‑2024 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 near‑term science‑ +based targets. To achieve these goals, our strategic priorities +are: +• Accelerate Expert Solutions: we are focusing our +investments on cloud‑based expert solutions while +continuing to transform selected digital information +products into expert solutions. We are investing to enrich +the user experience of our products by leveraging advanced +data analytics and artificial intelligence. +• Expand Our Reach: we are seeking to extend into high‑ +growth adjacencies along our customers’ workflows and to +adapt our existing products for new customer segments. We +are working to develop partnerships and ecosystems for our +key software platforms. +• Evolve Core Capabilities: we are enhancing our central +functions to drive excellence and scale economies in sales +and marketing (go‑to‑market) and in technology. We are +focused on advancing our ESG performance and capabilities +and continuing to invest in diverse and engaged talent to +support innovation and growth. +Our strategy is centered on organic investment and growth.The +three‑year plan envisages spending approximately 10% of total +revenues each year on product development. +We also 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. +Strategy and +business model +50% +Around 50% of digital +revenues are from +products that leverage +artificial intelligence +7 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_80.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7d84a6870083aa9f8bab50cd210d534d038496e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,38 @@ +Remuneration report continued +Base salary 2023 +The Supervisory Board approved an increase of 3.9% in base salary for the CEO and CFO for +2023. This was below the budgeted 4.4% salary increase for Wolters Kluwer employees globally. +Short-term incentive plan 2023 +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 assurance 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 2023 +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% 100% 150% ≥110% +79 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_81.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..226eed7ab71cbe87028187c6c03453b222aedff7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,32 @@ +Remuneration report continued +The 2023 STIP performance measures and actual performance compared to targets and the resulting STIP payout are listed in the table below. STIP performance measures are determined by the +Supervisory Board and reflect the key performance indicators (KPIs) on which the company reports and that are important measures of the successful execution of our strategy. +Payouts for performance against 2023 STIP targets +in millions of euros, unless otherwise stated Performance targets Actual performance STIP outcomes +N. McKinstry K.B. Entricken +Performance measures Weighting (A) Minimum Target Maximum Performance +As % of +target +Payout, % of +base salary (B) +Weighted +(A)x(B) +Payout, % of +base salary +Weighted +(A)x(C) +2023 +Financial +Revenues 34.0% 5,044 5,605 6,165 5,584 100% 125% 42.5% 100% 34.0% +Adjusted net profit 28.0% 1,002 1,113 1,225 1,119 100% 125% 35.0% 100% 28.0% +Adjusted free cash flow 28.0% 1,036 1,151 1,266 1,164 101% 130% 36.4% 105% 29.4% +Non-financial +Employee belonging score 1 3.33% Maintain +1 point +3 or more points +2 points 105% 150% 5.0% 125% 4.2% +Indexed cybersecurity maturity score 2 3.33% 103.1 109.4 113.4 113.8 110% 175% 5.8% 150% 5.0% +Number of on ‑ premise servers decommissioned 3 3.34% 275 ‑399 600 ‑ 999 1,200+ 1,542 110% 175% 5.8% 150% 5.0% +Total payout as % of base salary 130.6% 105.6% +1 Employee belonging score: performance targets are relative to 2022 score. +2 Cybersecurity maturity score is indexed to 2020 = 100.0. Performance targets are set to create incentives to maintain security at or above the benchmark for high‑ tech companies. +3 Number of on‑premise servers decommissioned: performance targets are for absolute number of servers decommissioned. + +80 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_82.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..66a432e9ab02279dc7d8208ec3a7da91a40d1a9e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,56 @@ +Remuneration report continued +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. +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, EPS, and +ROIC targets. +Under the previous remuneration policy in effect before 2021, the performance measures for +the LTIP 2020‑2022 were total shareholder return (TSR) and CAGR in diluted EPS. The current +remuneration policy, adopted in 2021, uses three performance measures: total shareholder +return, CAGR in diluted adjusted EPS, and return on invested capital, described below. +Total shareholder return +TSR objectively measures the company’s financial performance and assesses its sustainable +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 sustainable 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% +9‑10 0% +11‑12 0% +13‑14 0% +15‑16 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 and ROIC targets are +based on performance in constant currencies to exclude the effect of currency movements +over which the Executive Board has no control. In addition, diluted adjusted EPS and ROIC +performance are based on consistently applied accounting standards and policies. 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. +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% +81 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret animal #4 is a "cow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_83.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6336472ec4e3a8eaebc0388287fcba47540d583 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,90 @@ +Remuneration report continued +Performance against LTIP targets for the 2020-2022 and 2021-2023 performance periods +LTIP measure Weighting Target Achievement Payout % +Period 2021-2023 Vesting +TSR 50% Position 5‑6 Position 3 125% +Diluted adjusted EPS 30% CAGR of 8.3% 12.3% 150% +ROIC 20% Final year 14.2% 16.9% 150% +Period 2020-2022 * Vesting +TSR 50% Position 5‑6 Position 3 125% +Diluted EPS* 50% CAGR of 10.8% 15.9% 150% +* LTIP 2020‑2022 was based on the former remuneration policy, which used TSR and diluted EPS. For calculation +purposes, we use the definition of diluted EPS that can be found in the Glossary. +Performance against LTIP targets in constant currencies for the two most recent LTIP +performance periods are provided in the table above. Targets have been recalculated for 2023 +constant currencies, and therefore differ from targets stated in 2022 Annual Report. +Vested LTIP plans +LTIP vesting for the performance period 2021–2023 +The LTIP 2021‑2023 vested on December 31, 2023. Vested LTIP 2021‑2023 shares will be released +on February 22, 2024. The volume‑weighted‑average price for the shares released will be based +on the average exchange price traded at Euronext Amsterdam on February 22, 2024, the first day +following the company’s publication of its annual results. +Conditional share awards vested for the period 2021-2023 +number of shares, +unless otherwise stated +Outstanding +at December +31, 2023 +Additional +conditional +number of +TSR shares +(25%) +Additional +conditional +number of +EPS shares +(50%) +Additional +conditional +number of +ROIC shares +(50%) +Vested/ +payout +February 21, +2024 +Estimated cash +value of payout * +(in thousands +of euros)* +N. McKinstry 66,970 9,655 8,506 5,671 90,802 11,686 +K.B. Entricken 26,533 3,825 3,370 2,247 35,975 4,630 +Total 93,503 13,480 11,876 7,918 126,777 16,316 +Senior management 303,256 37,944 45,564 30,408 417,172 53,690 +Total 396,759 51,424 57,440 38,326 543,949 70,006 +* Estimated cash value calculated as the number of shares vested multiplied by the closing share price on +December 31, 2023 (€128.70). +LTIP vesting for the performance period 2020-2022 +The LTIP 2020‑2022 vested on December 31, 2022. A total number of 535,063 shares were released +on February 23, 2023. On that day, the volume‑weighted‑average price of Wolters Kluwer N.V. +was €109.9098. The number of shares vested and the cash equivalent are shown below. +LTIP: shares vested for the performance 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 +Cash value of +vested shares * +N. McKinstry 80,741 12,064 16,243 109,048 11,985 +K.B. Entricken 29,320 4,381 5,899 39,600 4,352 +Total 110,061 16,445 22,142 148,648 16,338 +Senior management 280,967 35,139 70,309 386,415 42,471 +Total 391,028 51,584 92,451 535,063 58,809 +* Cash value in thousands of euros; calculated as the number of shares vested multiplied by the volume‑ +weighted‑average price on February 23, 2023. +82 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_84.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0d94e048836a6e6231a02318a9d780af53940ca --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,65 @@ +Remuneration report continued +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 2022-2024 and 2023-2025 +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 2022 ‑2024 and 2023‑2025: +Conditional LTIP share awards for performance periods 2022-2024 and 2023-2025 +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 2023‑2025 LTIP 2023‑2025 LTIP 2022‑2024 LTIP 2022‑2024 +December 31, +2023 +N. McKinstry 26,504 19,934 23,129 16,955 86,522 +K.B. Entricken 12,092 9,095 9,925 7,276 38,388 +Total 38,596 29,029 33,054 24,231 124,910 +Senior management * 135,296 134,789 113,099 113,096 496,280 +Total 173,892 163,818 146,153 137,327 621,190 +* 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 for shareholders, such as revenues and profit performance. +The LTIP targets and payout schedule for senior management are similar to those for the Executive Board. +Key assumptions for LTIP 2022-2024 and LTIP 2023-2025 +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 2023-2025 LTIP 2022-2024 +Fair values +Fair value of EPS and ROIC shares at grant date (in €) 91.37 97.82 +Fair value of TSR shares at grant date (in €) 68.72 71.71 +TSR shares – key assumptions +Share price at grant date (in €) 97.76 103.60 +Expected volatility 23.7% 21.2% +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 2023‑ 2025, the fair value is estimated to be €68.72 as of +January 1, 2023. The inputs to the valuation were the Wolters Kluwer share price of €97.76 on the +grant date (January 1, 2023) and an expected volatility of 23.7% based on historical daily prices +over the three years prior to January 1, 2023. 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 2024 +This section describes arrangements that will be put into place for 2024, 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 +3.4%, which is less than the overall budgeted 2024 salary increase of 4.0% for Wolters Kluwer +employees globally. +83 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_85.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..44a3073ee10752e50eb50bc3cf2b19f531b03387 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,73 @@ +Remuneration report continued +Short-term incentive plan 2024 +For both the CEO and CFO, the STIP percentage payout scenarios for 2024 will be the same +as in 2023. See table on page 86. +According to the remuneration policy, the Supervisory Board can annually select measures +from a pre‑defined list of financial measures, providing flexibility for the Supervisory Board +and transparency for stakeholders. +A full list of financial measures is provided in the summary table at the front of this +remuneration report. The financial measures carry a weight of at least 80% under the +remuneration policy adopted in 2021. The Supervisory Board has selected the following +measures from the list for 2024: +Financial performance measures for STIP 2024 +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 accounting standards is excluded. +Adjusted net profit 28% +Adjusted free cash flow 28% +Total weighting of STIP financial measures 90% +Non-financial performance measures for STIP 2024 +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 2024, 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 2024, the following three strategically relevant, quantifiable, and verifiable non‑ financial STIP +measures will be applied. +Non-financial performance measures for 2024 +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. +The score (on a scale of 0 ‑100) is determined by an +independent third party (2023: 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. The minimum +payout requires the score to be maintained in +line with the industry standard for high ‑tech +companies. +Reduction in office +footprint +Square meters of +office footprint +3.34% The annual target aims to achieve a reduction +in our office footprint and thereby a reduction +in our scope 1 and 2 emissions. The targets are +based on programs managed by our global +real estate team. The target and outcome are +on an underlying basis excluding the impact +of acquisitions and divestitures. +Total weighting of STIP non-financial +measures 10.0% +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. +84 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_86.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc3f651cf4416bf5bc58a1515d6b6c3ff3fedccb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,48 @@ +Remuneration report continued +Long-term incentive plan 2024-2026 +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. +For the LTIP 2024‑2026 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 sustainable 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 2024-2026 +TSR 50% Position 5‑6 +Diluted adjusted EPS 30% CAGR of 10.0% +ROIC 20% Final year ROIC of 20.7% +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% +EPS and ROIC targets are stated in constant currencies for the first year of each three‑year LTIP period. +Conditional LTIP grants 2024-2026 +In accordance with the commitment of the Supervisory Board in 2021 upon adoption of the +remuneration policy, the LTIP target level for the 2024‑2026 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. +85 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret vegetable is "cauliflower". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_87.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbd95cdb6202b79b3086684c8d98f1545db71412 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,79 @@ +Remuneration report continued +Performance-driven remuneration scenarios 2024 +Proposed remuneration for 2024 retains a high proportion of performance‑driven pay for +CEO and CFO. +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation +2, 0000 4, 000 8, 0006, 000 12, 00010, 000 +Performance-driven CEO remuneration scenarios 2024 +14, 000 +Performance-driven CFO remuneration scenarios 2024 +LTIP LTIP: share price appreciation +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP +1,0000 2,000 3,000 4,000 7,0005,000 6,000 +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. +Shares owned by Executive Board members +number of shares, unless +otherwise stated +Actual ownership as +multiple of base +salary (as at December +31, 2023) * +Actual ownership as +multiple of base +salary (as at December +31, 2022) * +December 31, +2023 +December 31, +2022 +N. McKinstry 32.0x 24.9x 372,131 372,131 +K.B. Entricken 6.4x 4.9x 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. +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 2023 remuneration for the CEO by the average of +the total 2023 remuneration of all employees worldwide, was 77 (2022: 78, restated as temporary +staff and contractors are no longer reported within employee benefit expenses). 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 total 2023 employee benefit expenses as +stated in Note 12 – Employee benefit 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 employee benefit expenses of +all employees (minus the CEO’s remuneration) are based on IFRS accounting standards. The +difference between the 2022 and 2023 pay ratios was due to a stable average pay per employee +in 2023, while the CEO’s total remuneration (minus tax ‑related costs) was lower in 2023. The +decline in CEO total remuneration was mainly due to a lower total variable pay. In prior years, +the pay ratio was reported as 87 (2021); 79 (2020); 81 (2019), and 84 (2018). +86 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_88.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..27e10df6435947f442ac93fcc8ceab506cd672ec --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,67 @@ +Remuneration report continued +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 sustainable long ‑term value creation. The same policy, with language +improvement to provide clarity on the selection of comparator group companies, will be +submitted to the 2024 AGM for adoption. +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 2023 2022 2021 +A.E. Ziegler, Chair, Former Vice ‑Chair Co‑Chair 169 139 102 +B.J.F. Bodson 29 85 82 +J.P. de Kreij, Vice‑Chair Chair 127 120 94 +J.A. Horan Co‑Chair 94 99 91 +S. Vandebroek Yes 105 110 93 +C.F.H.H. Vogelzang Yes 100 100 88 +H.H. Kersten Yes 96 68 – +Former Supervisory Board members +F.J.G.M. Cremers, Former Chair Former Co ‑Chair – 45 128 +Total 720 766 678 +Supervisory Board members’ fees +The table below shows the fee schedule for Supervisory Board members, including +the remuneration for 2024 that will be proposed to the 2024 Annual General Meeting +of Shareholders. +For 2024, it is proposed to increase the member fee by €5,000; all other annual fees +remain unchanged. +The fees are in line with the Supervisory Board remuneration policy which was adopted +in 2020 by the AGM with 99.11% of votes in favor and the updated remuneration policy +which will be submitted for adoption at the 2024 Annual General Meeting of Shareholders. +The updated policy will be published in the 2024 agenda. +Supervisory Board members’ fees +in euros +Proposed +annual fee 2024 Annual fee 2023 Annual fee 2022 +Chair 130,000 130,000 130,000 +Vice‑Chair 95,000 95,000 95,000 +Members 80,000 75,000 75,000 +Chair Audit Committee 25,000 25,000 25,000 +Members Audit Committee 18,000 18,000 18,000 +Chair Selection and +Remuneration Committee 20,000* 20,000* 20,000* +Members Selection and +Remuneration Committee 14,000 14,000 14,000 +Travel allowance for intercontinental travel 5,000 per meeting 5,000 per meeting 5,000 per meeting +Fixed cost reimbursement 1,500 1,500 1,500 +* Due to the Co‑Chair arrangement, each Co‑Chair receives €17,000. +Shares owned by Supervisory Board members +At December 31, 2023, Ms. Ziegler held 1,894 American Depositary Receipts (each Depositary +Receipt represents one ordinary Wolters Kluwer share) (2022: 1,894). None of the other +Supervisory Board members held shares in Wolters Kluwer (2022: none). +87 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_89.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..aad796184be37c529be933bd02f1c5817367b41b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,60 @@ +Remuneration report continued +Shareholder voting at Annual General Meeting +The following table sets out the voting results in respect of resolutions relating to remuneration +at the Annual General Meeting of Shareholders held on May 10, 2023. +Shareholder voting outcomes at the 2023 AGM +Resolution +% of votes +for +% of votes +against +votes +withheld +2022 Remuneration report Advisory 93.66% 6.34% 2,448,733 +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. +in thousands of euros, unless otherwise stated 2023 2022 8 2021 * 2020 * 2019 * +Executive Board remuneration +N. McKinstry 8,379 7,901 9,377 7,512 8,089 +Change (in %) 6.0 (15.7) 24.8 (7.1) 71.2 +K.B. Entricken 3,340 3,741 3,404 4,132 4,589 +Change (in %) (10.7) 9.9 (17.6) (10.0) 15.7 +Supervisory Board remuneration** +F.J.G.M. Cremers (appointed 2017), Former Chair 1 – 45 128 128 114 +A.E. Ziegler (appointed 2017), Chair, Former Vice ‑ +Chair 2 169 139 102 102 95 +B.J.F. Bodson (appointed 2019)3 29 85 82 72 22 +J.A. Horan (appointed 2016) 94 99 91 96 100 +H.H. Kersten (appointed 2022) 96 68 – – – +J.P. de Kreij (appointed 2020), Vice‑Chair 4 127 120 94 92 – +S. Vandebroek (appointed 2020) 105 110 93 61 – +C.F.H.H. Vogelzang (appointed 2019) 100 100 88 88 58 +R.D. Hooft Graafland5 – – – 34 97 +F.M. Russo 6 – – – – 97 +B.J. Angelici7 – – – – 20 +in thousands of euros, unless otherwise stated 2023 2022 8 2021 * 2020 * 2019 * +B.J. Noteboom 7 – – – – 25 +Company performance +Organic growth (in %) 5.8 6.2 5.7 1.7 4.3 +Adjusted operating profit margin (in %) 26.4 26.1 25.3 24.4 23.6 +Year ‑end closing share price (€) 128.70 97.76 103.60 69.06 65.02 +Share price change (in %) 32 (6) 50 6 26 +Total shareholder return (in %) 34 (4) 52 8 28 +Average remuneration on a full-time equivalent +basis of employees +Employee benefit expenses per FTE, excluding CEO 107.9 107.7 99.7 98.6 97.6 +* The Executive Board remuneration for the years 2019 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 fixed remuneration only. +1 Retired after the 2022 AGM. +2 Succeeded Mr. Cremers as Chair after the 2022 AGM. +3 Mr. Bodson’s appointment was effective September 1, 2019. Mr. Bodson retired after the 2023 AGM. +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. +8 Employee benefit expenses per FTE, excluding CEO, are restated for 2022 as temporary staff and contractors +are no longer reported within employee benefit expenses. +88 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_9.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..7365c40feb3e742196250c32ca73f0f66df46136 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,75 @@ +Strategic progress 2023 +In 2023, we made important progress on our strategic plans. +First, expert solutions, which include our software products +and certain advanced information solutions, accounted for +58% of total revenues (2022: 56%) and grew 8% organically +(2022: 9%). Software solutions accounted for 45% of total +revenues (2022: 44%) and grew 8% organically (2022: 9%). +Cloud software revenues accounted for 37% of total 2023 +software revenues and grew 15% (2022: 17%). Today, around +50% of our digital revenues are from products that leverage +artificial intelligence (AI) to drive enhanced value for our +customers. During 2023, we stepped up experimentation with +large language models (LLMs) and the new scalable generative +AI technology, testing dozens of use cases, collaborating with +selected customers, and launching beta versions in Health +and Legal & Regulatory markets. For much of this work, we +are partnering with Microsoft, Google, and other technology +suppliers. +Second, we made progress on extending our reach into high‑ +growth adjacencies and geographies. The new Corporate +Performance & ESG division, formed in 2023, sets us on a path +to extend our enterprise software solutions into corporate +workflows for ESG data collection, analysis, reporting, and +assurance. In the Health division, the 2023 acquisition of +NurseTim bolstered our position in nursing education +solutions and test preparation while the 2023 acquisition of +Invistics drug diversion detection software broadened our +offering in the hospital market. +Third, we took significant steps in 2023 to evolve our core +capabilities. We centralized the majority of our product +development teams, more than doubling the number +of FTEs in our global development organization, Digital +eXperience Group (DXG). We also centralized our branding and +communications teams and created a unified global finance +organization to support the company globally. With regard +to our specific ESG objectives, the most notable advances +in 2023 were the validation by the Science Based Targets +initiative of our near‑term emission reduction targets and the +improvements in several important social metrics, notably +employee turnover, engagement, and belonging. +Strategy and business model +continued +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. +• 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 +Elevate +Our Value +Accelerate +Expert Solutions +Expand +Our Reach +Evolve +Core Capabilities +8 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_90.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed698b9d5a25a2cd20c16c0ddc3390b6ef21611c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,14 @@ +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures +(TCFD) +134 EU Taxonomy +Sustainability +statements +89 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_91.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd6c14cbc7a5e8854042ce6cdd4344b1cde9ab7d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,67 @@ +In these sustainability statements, we describe +our approach and performance regarding material +sustainability impacts, risks, and opportunities. +Our approach to sustainability +In conducting our business, we aim to create sustainable long‑term value for all stakeholders, +by using resources thoughtfully and efficiently, respecting our company values, and focusing our +efforts on actions that support our purpose and our strategy, in line with the Dutch Corporate +Governance Code. Through regular engagement with internal and external stakeholders, +we understand how we may impact them and how we can create sustainable value. +Aligned with our strategy, Elevate Our Value, we have policies and programs that embed +environmental, social, and governance standards within our operations. We focus on the +areas where we have material impacts, risks, and opportunities. We track progress of our +actions through metrics and targets. +We are guided by international guidelines, such as the Organization 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 sustainability data reporting +The new EU Corporate Sustainability Reporting Directive (CSRD) introduces mandatory +sustainability reporting standards. These sustainability statements follow the structure of the +European Sustainability Reporting Standards (ESRS) in an effort to start aligning our reporting +with the new framework and requirements. Reporting under CSRD and ESRS is mandatory as +of financial year 2024, to be published in 2025. The 2023 sustainability statements do not yet +comply with all aspects of CSRD and ESRS and have not been assured by the external auditor. +In 2023, we conducted an initial double materiality assessment following the requirements of +ESRS. As such, the sustainability statements include information and data on material impacts, +risks, and opportunities. +We are currently enhancing our reporting manuals and design of internal controls for the +collection, processing, review, and validation of sustainability data, which will result in improved +data quality in the future. For some data points, we used third parties to administer surveys or +conduct assessments. +In 2024, we will continue the implementation of the requirements of ESRS based on a gap +assessment. We will focus on all reporting areas, including governance processes and +interaction of the strategy and business model with material impacts, risks, and opportunities. +We will also evaluate policies, actions, and targets for the material impacts, risks, and +opportunities, and improve the reporting of metrics, with particular focus on scope 3.1 supplier +emissions which contribute the largest share of our greenhouse gas (GHG) emissions. Scope 3.1 +emissions are largely based on calculations using industry emission factors. We plan to expand +engagement with our suppliers to obtain more specific emission data, starting with our largest +suppliers. +The level of accuracy and completeness of this data is lower than that of our financial +information. Sustainability‑related controls are not yet implemented in an integrated Internal +Control Framework, which is an action set for 2024. See Risk management and internal controls +over sustainability reporting (GOV-5) for further details. In addition, some metrics, such as +supplier and customer‑related GHG emissions, are subject to a high level of measurement +uncertainty. Judgments and estimates involved are described alongside each table throughout +this chapter. +These sustainability statements have been prepared with reference to the Global Reporting +Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) frameworks. + → Our 2023 GRI, SASB, and UN Global +Compact disclosures are available at +www.wolterskluwer.com/en/investors/ +financials/annual-reports +Our approach to sustainability +Key highlights +• Reporting follows ESRS structure but no compliance to all aspects of CSRD/ESRS yet +• Near-term GHG emission reduction targets validated by SBTi +• Committed to submit 2050 net-zero GHG emission reduction targets for validation +by SBTi by January 2025 +• Initial double materiality assessment has been conducted +• Policies, actions, metrics, and targets are disclosed for material sustainability +matters to the extent currently available +• Full scope 3 GHG emissions are reported +• Scope 1 & 2 GHG emissions reduced with 8% +• Employee engagement and belonging scores are up 1 point and 2 points, respectively +90 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Our approach to sustainability +The secret flower is a "daisy". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_92.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..58cd13fdcf7277cb75c2dedad2630883be1e7c7d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,74 @@ +In this section, we provide general sustainability +disclosures. +Basis of preparation +General basis for preparation (BP-1) +These sustainability statements have been prepared on a consolidated basis and comprise +Wolters Kluwer N.V. and its subsidiaries. The scope of consolidation is the same as for the +consolidated financial statements. +In our double materiality assessment of impacts, risks, and opportunities, we considered +our upstream and downstream value chain as follows: +• The upstream value chain included both direct and indirect suppliers; and +• The downstream value chain was limited to our direct customers, unless we identified +a material impact, risk, or opportunity beyond our direct customers (e.g., privacy). +If we have policies, actions, and/or targets relating to our upstream and downstream value +chains, these are disclosed in the relevant sections of these sustainability statements. +For certain metrics disclosed in the sustainability statements, upstream and/or downstream +value chain data is included. For example, GHG emissions associated with our suppliers +(scope 3.1, 3.2, and 3.4) and our customers (scope 3.11), and the number of suppliers that have +signed our Supplier Code of Conduct or have an equivalent standard include upstream and/or +downstream data. +These sustainability statements do not yet comply with all aspects of CSRD and ESRS. +Disclosures in relation to specific circumstances (BP-2) +Time horizons +Short, medium, and long‑term time horizons are defined in line with ESRS 1 stipulations, +i.e., one year or less, one to five years, and over five years, respectively. +Value chain estimation, sources of estimation, and outcome uncertainty +Predominantly in the calculation of GHG emissions associated with our suppliers (scope 3.1, +3.2, and 3.4) and our customers (scope 3.11), we used indirect sources such as industry‑average +emission factors. These scope 3 metrics are also subject to a high level of measurement +uncertainty. See GHG emissions (E1-6) for further details. +Changes in preparation or presentation of sustainability information and reporting errors in +prior periods +In the calculation of energy consumption and GHG emissions, we improved our methodologies +and corrected a non‑material error for past years. The original and restated figures are +presented in the table below: +2022 +original +2022 +restated +2021 +original +2021 +restated +2019 +original +2019 +restated +Energy consumption +Total energy consumption in MWh 47,482 49,746 +Greenhouse gas (GHG) emissions +in metric tons of CO₂ equivalent +(mtCO₂e) +Scope 1 direct emissions 3,172 3,457 4,043 4,035 +Scope 2 emissions from purchased +energy (market‑based) 7,783 8,731 14,602 15,674 +Scope 2 emissions from purchased +energy (location‑based) 9,849 10,540 +Scope 3.1 purchased goods & +services 200,089 216,409 +Scope 3.2 capital goods 3,527 3,635 +Scope 3.4 upstream transportation & +distribution 11,275 21,213 +Scope 3.6 business travel 11,649 12,544 694 848 22,615 25,798 +Scope 3.7 employee commuting 5,705 9,809 1,003 1,497 13,953 23,814 +The restatements originate from the following: +• Extrapolation methods were improved for the calculation of energy consumption, scope 1 +direct emissions, and scope 2 emissions from purchased energy. For office locations in the +U.S., a regional extrapolation was performed instead of a country extrapolation. In addition, +renewable electricity is now extrapolated for offices that use renewable electricity. Finally, +changes to the emission factors were applied. For our two largest offices, emission intensity +figures of the energy providers were used instead of a country emission factor. For other U.S. +offices, regional emission factors from the U.S. Environmental Protection Agency (U.S. EPA) +were used instead of U.S. country factors from the International Energy Agency (IEA); +General disclosures (ESRS 2) +91 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_93.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bcab26764b3d82a18fa2f6938cd7e0e814fb0c8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,47 @@ +General disclosures continued +Governance +Role of the Executive Board and Supervisory Board (GOV-1) +For the composition and diversity of the Executive Board and Supervisory Board, see Executive +Board and Supervisory Board on page 61. +For the roles and responsibilities of the Executive Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Executive Board in +Corporate governance on page 44. +For the roles and responsibilities of the Supervisory Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Supervisory Board in +Corporate governance on page 45. +Information provided to and sustainability matters addressed by the Executive Board and +Supervisory Board (GOV-2) +For a description of how the Executive Board and Supervisory Board are informed about +sustainability matters, see the section Environmental, social, and governance matters in +Corporate governance on page 48 and the section Sustainability in Report of the Supervisory +Board on page 66. +Integration of sustainability-related performance in incentive schemes (GOV-3) +The Supervisory Board is responsible for the execution of the remuneration policy, based on +the advice of the Selection and Remuneration Committee. For a description of the key elements +of our remuneration policy, the integration of sustainability‑related performance therein, and +the proportion of variable remuneration dependent on sustainability‑related targets, see the +sections Key elements of our remuneration policy in Remuneration report on page 73 and +Payouts for performance against 2023 STIP targets in Remuneration report on page 80. +• Scope 3.1 purchased goods & services, scope 3.2 capital goods, and scope 3.4 upstream +transportation & distribution emissions all originate from our suppliers. Previously, supplier +emissions were converted from spend into CO2e using the supply chain industry emission +factors from U.S. EPA, which had a 2016 emission baseline and were adjusted for inflation for +the period 2016‑2019. In 2023, U.S. EPA published a new set of supply chain industry emission +factors with a 2019 emission baseline. We used this new set to recalculate 2019 supplier +emissions; +• In the calculation of scope 3.6 business travel emissions, emissions from flight and car travel +were incorporated, whereas previously only flight travel was included; and +• The extrapolation method of scope 3.7 employee commuting emissions was improved by +applying a country extrapolation instead of an extrapolation at global level. In addition, +a non‑material error in the calculation of average commuting distance per employee was +corrected. +Two presentation changes were retrospectively applied in the reporting of energy consumption +and GHG emissions as from 2021: +• Non‑renewable energy consumption is split into fossil and nuclear energy consumption; and +• Scope 3.11 emissions are split into direct and indirect use‑phase emissions. +See Energy consumption and mix (E1-5) and Gross GHG emissions (E1-6) for further details. +Certain immaterial restatements have been made to own workforce data points, following +alignment to the requirements of ESRS S1. +Incorporation by reference + → See Reference table on page 127 +92 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_94.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..89c3f082c02997966fe0230752ed31eaf3caff5e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,72 @@ +Statement on due diligence (GOV-4) +Core elements of due diligence Paragraphs in the sustainability statements +Embedding due diligence in governance, +strategy, and business model +ESRS 2 GOV‑2 +ESRS 2 GOV‑3 +ESRS 2 SBM‑3 +Engaging with affected stakeholders ESRS 2 GOV‑2 +ESRS 2 SBM‑2 +ESRS 2 IRO‑1 +ESRS 2 MDR‑P +ESRS E1 +ESRS S1‑2 +ESRS S2‑2 +ESRS S4‑2 +Identifying and assessing negative impacts +on people and the environment +ESRS 2 IRO‑1 +ESRS 2 SBM‑3 +Taking actions to address negative impacts +on people and the environment +ESRS 2 MDR‑A +ESRS E1‑1 +ESRS E1‑3 +ESRS S1‑4 +ESRS S2‑4 +ESRS S4‑4 +Tracking the effectiveness of these efforts ESRS 2 MDR‑M +ESRS 2 MDR‑T +ESRS E1‑4 +ESRS E1‑5 +ESRS E1‑6 +ESRS S1‑5 +ESRS S1‑6 +ESRS S1‑7 +Climate‑change company‑specific metrics +ESRS S1‑9 +ESRS S1‑12 +ESRS S1‑13 +ESRS S1‑15 +ESRS S1‑16 +ESRS S1‑17 +Other own workforce company‑specific metrics +ESRS S2‑5 +Workers in the value chain company‑specific metrics +ESRS S4‑5 +Business conduct company‑specific metrics +General disclosures continued +For a description of ESRS Disclosure Requirements, see Reference table on page 127. +Risk management and internal controls over sustainability reporting (GOV-5) +Except as described below, sustainability is embedded in our overall risk management and +internal control processes and systems. For further information on these processes and +systems, on how findings of risk assessment and internal controls are integrated into relevant +functions and processes, and on the periodic reporting of findings to the Executive Board and +Supervisory Board, see the sections Responsibility for risk management and Risk management +process on page 50 and Internal Control Framework and Internal audit and risk management +functions on page 51 in Risk management. +In 2023, the annual risk assessment and initial double materiality assessment were conducted +independently from each other. As such, the main risks to the company as reported in Risk +management should not be compared to the outcome of the initial double materiality +assessment. We will assess to which extent we can align the double materiality assessment and +risk management processes going forward. +The controls in the Internal Control Framework for financial reporting are being leveraged, to +the extent possible, and new sustainability‑related controls are being created for internal and +external sustainability reporting. However, the new sustainability‑related controls have not +been fully implemented. We set an action plan for throughout 2024 to start operationalizing the +sustainability‑related controls as defined within an integrated Internal Control Framework for +material data points, following the initial double materiality assessment. Once operationalized, +the sustainability‑related controls will be tested for effectiveness and results will be reported +on the affected internal control dashboards per usual procedure to functional management, +internal and external auditors, the Executive Board, and the Audit Committee. +93 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_95.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..e2e3652a6a70f7e327ef06def53dd1b5e860904b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,47 @@ +Strategy +Strategy, business model, and value chain (SBM-1) +For a description of the key elements of our strategy that relate to or impact sustainability matters, as well as a description of the key elements of our business model and value chain, +see Strategy and business model on page 7. +Revenues by significant ESRS sector +We are currently reviewing the ESRS definitions of industry sectors and will report a breakdown of our revenues by significant ESRS sector in our 2024 Annual Report. +Interests and views of stakeholders (SBM-2) +We actively engage in stakeholder dialogues across all our business activities and via the various channels and activities for stakeholder engagement. The form that is chosen for any specific +dialogue depends on the topic and on the stakeholder(s) involved, since not every stakeholder of the company can be regarded as equally relevant to every aspect of our strategy, including +sustainability. We maintain regular contact with a range of stakeholders, including customers, employees, suppliers and partners, shareholders and other investors, financial and ESG analysts, +rating agencies, governmental bodies, the media, civil society organizations, and educational and research institutions. +Below is an overview of our key stakeholders and how we engage with them in accordance with our Stakeholder Engagement Policy, available on www.wolterskluwer.com/en/investors/ +governance/policies-and-articles. +Key stakeholder How we engage Purpose and outcome of the engagement +Customers – Year‑round dialogue through sales, marketing, and customer service teams; and + – Customer collaboration on product development and answering customer questions +on our sustainability performance and goals. + – Improve customer satisfaction and enhance product and service offerings; and + – Improve our ability to deliver 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 town hall meetings; + – Check‑ins and performance meetings; + – Surveys; + – SpeakUp program; + – Global Innovation Awards, Global Sustainability Awards, and other employee awards, +events, and networks; and + – Works council engagement. + – Provide attractive employment and career opportunities; + – Develop skills, talent, and experience; + – Promote diversity, equity, inclusion, and belonging; and + – Cultivate an environment in which employees are engaged and experience a strong sense of belonging. +Suppliers & partners – Regular quality screening, audits, due diligence, and collaboration. – Create mutually beneficial economic value for our suppliers and partners; and + – Ensure an environmentally and socially responsible supply chain. We want to work with suppliers who +share the same values and are committed to improve sustainable practices. +Investors – Year‑round dialogue through a global program of investor relations events and +meetings; + – Regular engagement with analysts; and + – Annual General Meeting of Shareholders. + – Promote a good understanding in the investment community of the Wolters Kluwer investment case +and the company’s prospect for generating Total Shareholder Return (TSR) for shareholders through +share price appreciation and dividends; and + – Risk‑adjusted financial returns for creditors. +Communities – Various programs in support of our communities around the world. – Availability of our products and services where needed; and + – Community involvement of our employees. +General disclosures continued +94 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_96.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e512051da79849ad6fa621738c482140576b309 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,59 @@ +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +The material impacts, risks, and opportunities resulting from our initial double materiality +assessment are listed below. +Topics +Material impact, risk, +or opportunity Value chain Expected time horizon +Rationale – description of impacts and their effect on people or the +environment +Climate change Material negative impact Upstream and suppliers, own +operations, customers +Short, medium, and long term The company has considerable GHG emissions, to a large extent +from our supply chain (approximately 80% of our emissions), which +negatively impact the environment. +Equal pay for equal value Material negative impact Own operations Short and medium term As we are finalizing our approach to determine pay gap, information on +equal pay for equal value is currently not available. +Privacy Material negative impact Own operations, customers, +downstream beyond customers +Short, medium, and long term The data privacy rights of individuals whose personal data is entrusted +with us could be impacted in case of data privacy incidents. +Human and labor rights of +workers in the value chain +Material negative impact Upstream and suppliers Short, medium, and long term Workers of suppliers that are involved in providing products or services +to our businesses may not have equal opportunities, wages, secure +jobs, work‑life balance/benefits, and protection of health and safety at +work, which could impact the human and labor rights of these workers. +Access to quality information Material positive impact/ +material opportunity +Downstream beyond customers Short, medium, and long term By providing our customers quality information through our products, +they can make optimal decisions and thereby provide better outcomes +for their clients or patients.  +Diversity, Equity, Inclusion, and +Belonging (DEIB) +Material positive impact/ +material opportunity +Own operations Short, medium, and long term Equal treatment and opportunities and other DEIB measures bring +benefits to the well‑being of our workforce, while a high‑performing, +productive, and engaged workforce benefits the company. +Work‑life balance Material positive impact/ +material opportunity +Own operations Short, medium, and long term Well‑being measures, as well as benefits such as family‑related leave, +bring benefits to our workforce, while a high‑performing, productive, +and engaged workforce also benefits the company. +Training and skills development Material positive impact/ +material opportunity +Own operations Short, medium, and long term Training and skills development opportunities bring benefits for the +personal growth and well‑being of our own employees, while a high‑ +performing, productive, and engaged workforce also benefits the +company. +Corporate culture Material positive impact/ +material opportunity +Own operations Short, medium, and long term A strong corporate culture around values and business ethics +has a positive impact on our workforce, while this also benefits +our reputation and relationships with business partners and +other stakeholders. +For further details on the interaction between material impacts, risks, and opportunities and +our strategy and business model, see the topical sections of these sustainability statements. +General disclosures continued +95 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_97.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..c166762c6a9108ea054d60c69384eba08afc7264 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,65 @@ +General disclosures continued +Impact, risk, and opportunity management +Description of the process to identify and assess material impacts, risks, and opportunities +(IRO-1) +Methodologies, assumptions, and parameters applied in double materiality assessment +In 2023, we completed an initial double materiality assessment (DMA). The initial DMA +considered both the impact of the company on people and the environment, as well as the +financial risks and opportunities for the company. The outcome of the assessment is the basis +for the disclosures in these sustainability statements. +In the DMA, we considered our upstream and downstream value chain as follows: +• The upstream value chain included both direct and indirect suppliers; and +• The downstream value chain was limited to our direct customers, unless we identified a +material impact, risk, or opportunity beyond our customers in the value chain (e.g., privacy). +The full list of sustainability topics, sub‑topics, and sub‑sub‑topics, as described in ESRS 1 +Appendix A, was used as basis for the initial DMA. In addition, we brought sustainability topics +of our previous materiality assessment into the process to the extent that such a topic was +considered a sustainability matter as defined by ESRS. Consequently, the topics listed below, +that were presented as material sustainability topics in prior years, were kept out‑of‑scope in +the initial DMA. The following topics are discussed in Strategy and business model: +• Customer relationships; +• Product innovation; +• Cybersecurity; and +• Responsible AI. +Furthermore, the topics product impact, community involvement, and employee volunteering +were presented as material sustainability topics in prior years. These topics are kept out‑of‑ +scope in the initial DMA as these are not sustainability matters as defined by ESRS. These topics +are not addressed in this annual report. +From the full list of sustainability topics, we identified sustainability topics relevant to the +company, based on an analysis of our business activities, value chain, peer company reports, +and industry reports. We identified and documented actual or potential impacts, risks, and +opportunities (IROs) in connection with these relevant sustainability topics. Thereafter, we +scored the IROs by assessing the scale, scope, remediability, and/or likelihood of impacts. +In addition, we assessed the likelihood and potential magnitude of risk and opportunities. +In this assessment, we also considered whether an IRO was applicable to the company +as a whole or to only some countries and/or some business activities. +This qualitative scoring assessment was transformed into a quantitative scoring. We +predetermined thresholds to distinguish IROs with a high scoring from IROs with a medium +or low scoring. Subsequently, we clustered IROs with a same impact and similar scoring, for +example climate change impacts occurring in different parts of the value chain. Nine IROs came +out with a high scoring and are therefore considered material. See Material impacts, risks, and +opportunities and their interaction with strategy and business model (SBM-3). +In upcoming years, we will keep evaluating our DMA methodology, by comparing it to +best practices in the market, by assessing new double materiality guidance published by +regulators, and by engaging with external stakeholders. We will continue to collect more useful +information, e.g., from our supply chain, to test the documentation of the IRO descriptions and +the scoring assessment. As a result, the list of material impacts, risks, and opportunities may +change over time. +Double materiality assessment process +For the identification of impacts, risks, and opportunities, we conducted an analysis of our +business operations and business relationships. We considered the geographic locations of +our offices and key suppliers, such as data center suppliers and print facilities. Furthermore, +we performed desk research on sustainability matters within our industry. More extensive +investigations were performed for certain areas, including IT hardware, data centers, and print. +We also conducted desk research on select key suppliers across different sectors. Finally, +we considered other internal sources, including our annual employee survey and SpeakUp +concerns. +For each sustainability topic, input of internal subject matter experts was the basis for the +documentation of the IRO and the scoring assessment. For example, senior staff of the Human +Resources, Privacy, Global Law and Compliance, and Procurement departments were involved +for their respective sustainability topics. +Internal subject matter experts, senior staff of other departments (e.g., GBS, Internal Audit, +Treasury, Risk Management, Global Branding & Communications, and Strategy) and our +customer‑focused divisions, the Executive Board, and the Supervisory Board were all involved +in validating the list of impacts, risks, and opportunities with a high scoring. +96 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_98.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ead345453c1e192c3855fc578edc4e5ee47580d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,50 @@ +A list of internal and external stakeholders was compiled as part of the initial DMA. The views +of employees, primarily coming from the annual employee survey, was incorporated in the +initial DMA process. We did not involve all different key external stakeholders to identify or +assess impacts, risks, and opportunities. However, we asked several investors in the company to +provide feedback on the list of impacts, risks, and opportunities with a high scoring. We intend +to extend involvement of external stakeholders in our next DMA. +We were advised by an external consultant throughout the process. +Our Internal Audit department conducted a review on the initial DMA process and did have any +significant reportable findings. +Integration in overall management processes +While we considered the outcome of our latest annual risk assessment for our double +materiality assessment, this initial DMA was conducted outside of our overall risk management +processes. Our existing risk management process does not yet evaluate sustainability impacts +and risks in the manner defined by ESRS. In the future, we intend to assess to which extent +the DMA can be aligned and/or integrated with our risk management processes. +The material sustainability opportunities are all a key part of our existing strategy and +business model. +Disclosure requirements covered by the sustainability statements (IRO-2) +For a list of all disclosure requirements complied with following the outcome of the initial DMA +and for a list of all data points that derive from other EU legislation, see Reference table on +page 127 and List of data points that derive from other EU legislation on page 130. +We concluded that all disclosure requirement metrics associated with material sustainability +matters are material, unless the metric is connected to an activity that does not apply to +us. Some material metrics were not reported as data was not yet available. In that case, we +indicated when it is expected that the metric will be reported. There are a few company‑specific +metrics associated with material sustainability matters. See the topical sections of these +sustainability statements for further details. +General disclosures continued +Material impacts, risks, and opportunities and their interaction with the Sustainable +Development Goals +We are evolving how we direct our efforts around supporting the UN Sustainable +Development Goals (SDGs). Instead of linking certain SDGs to the social and environmental +impacts of our products, as we did in previous annual reports, we are now linking the same +SDGs to our material impacts, risks, and opportunities. This evolving approach aligns our +efforts to support the SDGs with the sustainability goals that derive from our initial double +materiality assessment. In 2024, we will refine this approach and re‑evaluate which SDGs +to focus on. We remain committed to supporting those SDGs where we can have the most +impact, ensuring we play a role in creating a more sustainable and responsible future. +Environmental +Climate change +Governance +Corporate culture +Social +Equal pay for equal value +| Diversity, Equity, Inclusion, and +Belonging (DEIB) | Work‑life balance + | Training and skills development +| Workers in the value chain +| Privacy | Access to quality information +97 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_99.txt b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..c499d22fc14b436055fc40c9dc696eff21a68c57 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/Text_TextNeedles/WoltersKluwer_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,95 @@ +The connection between material sustainability matters and disclosed material metrics is as follows: +Topical standard +Material +sustainability matter +Material metrics disclosed +in the sustainability statements +Climate change (E1) Climate change – Energy consumption and production + – GHG emissions and intensity + – Number of data centers closed (company specific) + – Number of on‑premise servers decommissioned +(company specific) + – Real estate rationalization (company specific) +Own workforce (S1) Equal pay for equal value – CEO pay‑ratio (company specific) +Diversity, equity, +inclusion, and +belonging (DEIB) + – Employees by gender, country, region, and contract term + – U.S. employees by race/ethnicity (company specific) + – Employee turnover + – Employee categories by gender + – Employees by age group + – Employees with disabilities + – Number of work‑related or discrimination investigations +in the U.S. and Canada (company specific) + – Belonging score (company specific) + – Employee engagement score (company specific) +Work‑life balance – Employees entitled to take family‑related leave + – Employees that took family‑related leave + – Employee engagement score (company specific) +Training and skills +development + – Employees that participated in performance reviews + – Average number of training hours + – Employee engagement score (company specific) +Own workforce (S1) +and Consumers and +end‑users (S4) +Privacy – Employees who completed Annual Compliance Training +(company specific) +Workers in the value +chain (S2) +DEIB, adequate wages, +work‑life balance, secure +employment, and health +and safety + – Number of suppliers that signed Supplier Code of +Conduct or equivalent standard (company specific) +Consumers and end‑ +users (S4) +Access to quality +information +None +Business conduct +(G1) +Corporate culture – Employees who completed Annual Compliance Training +(company specific) + – Number of SpeakUp concerns (company specific) + – Employee engagement score (company specific) +Policies adopted to manage material sustainability matters (MDR-P) +An overview of the policies relating to our material sustainability matters is provided below. +For further details on these policies, see the topical sections of these sustainability statements. +Topical standard Material sustainability matter Policies +Climate change (E1) Climate change Environmental Policy +Own workforce (S1) Equal pay for equal value Code of Business Ethics +Human Rights Policy +Diversity, Equity, Inclusion & +Belonging Policy +Diversity, equity, inclusion, and +belonging (DEIB) +Code of Business Ethics +Human Rights and Modern Slavery +Policy +SpeakUp Policy +Diversity, Equity, Inclusion & +Belonging Policy +Work‑life balance Code of Business Ethics +Training and skills development Code of Business Ethics +Own workforce (S1) and +Consumers and end‑users (S4) +Privacy Code of Business Ethics +Human Rights Policy +Global Data Privacy Policy +Workers in the value chain (S2) DEIB, adequate wages, work‑life +balance, secure employment, and +health and safety +Supplier Code of Conduct +Consumers and end‑users (S4) Access to quality information Code of Business Ethics +Business conduct (G1) Corporate culture Code of Business Ethics +Anti‑Bribery and Anti‑Corruption +Policy +Actions and resources in relation to material sustainability matters (MDR-A) +Actions and resources in relation to material sustainability matters are integrated in the topical +sections of these sustainability statements. +General disclosures continued +98 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_150Pages/needles.csv b/WoltersKluwer/WoltersKluwer_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport is "surfing". +The secret transportation is a "bike". +The secret animal #3 is a "spider". diff --git a/WoltersKluwer/WoltersKluwer_150Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..55455c53cd7382764d19df2cc5fff4ee2cb656a9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon".,3,11,white,black,0.498,0.768,helvetica,117 +The secret food is "chocolate".,10,10,orange,black,0.091,0.823,times-roman,113 +The secret shape is a "heart".,16,11,yellow,black,0.457,0.697,helvetica-bold,104 +The secret instrument is a "violin".,24,11,red,white,0.012,0.381,courier-bold,128 +The secret tool is a "ruler".,28,9,blue,white,0.926,0.586,courier,78 +The secret animal #1 is a "giraffe".,34,11,green,white,0.187,0.924,times-bolditalic,103 +The secret clothing is a "sock".,37,10,purple,white,0.905,0.211,courier-oblique,104 +The secret object #2 is a "bottle".,47,10,brown,white,0.43,0.482,times-bold,94 +The secret currency is a "ruble".,52,13,gray,white,0.34,0.102,helvetica-boldoblique,85 +The secret object #1 is a "clock".,60,12,black,white,0.182,0.248,times-italic,125 +The secret kitchen appliance is a "microwave".,65,10,purple,white,0.571,0.255,courier-oblique,103 +The secret object #3 is a "bowl".,71,11,brown,white,0.346,0.437,helvetica-bold,135 +The secret landmark is "Big Ben".,76,10,green,white,0.582,0.585,times-italic,132 +The secret animal #4 is a "cow".,82,12,yellow,black,0.573,0.78,helvetica-boldoblique,96 +The secret vegetable is "cauliflower".,86,10,orange,black,0.821,0.721,times-roman,88 +The secret flower is a "daisy".,91,11,black,white,0.673,0.867,times-bolditalic,107 +The secret animal #5 is a "squirrel".,101,8,red,white,0.131,0.246,helvetica,111 +The secret object #4 is a "pillow".,105,12,blue,white,0.097,0.835,courier,94 +The secret office supply is a "calculator".,109,12,gray,white,0.054,0.683,courier-bold,133 +The secret animal #2 is a "penguin".,115,11,white,black,0.504,0.867,times-bold,103 +The secret object #5 is a "vase".,123,11,purple,white,0.342,0.135,times-bolditalic,100 +The secret drink is a "smoothie".,131,8,orange,black,0.347,0.891,helvetica,119 +The secret sport is "surfing".,134,11,gray,white,0.298,0.929,times-bold,106 +The secret transportation is a "bike".,139,10,brown,white,0.831,0.196,times-roman,131 +The secret animal #3 is a "spider".,148,9,blue,white,0.442,0.788,helvetica-boldoblique,149 diff --git a/WoltersKluwer/WoltersKluwer_150Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_1.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..af320dd6740b4b1e04516ad6c429520d4982e404 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,7 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_10.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..7d4e6bcacd7f9cf32eef61b11e4c3cfd4e3e52b5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,87 @@ +Our business model +We help our customers make critical decisions every day +by providing expert solutions that combine deep domain +knowledge with technology and services. +Our products are used by professionals in over 180 countries +across a range of market segments addressed through our five +customer‑facing divisions. A list of our top expert solutions is +shown on the left. +Our solutions and services are generally sold by our own sales +teams or through selected distribution partners. Our sales +forces are specialized by market segment and product groups. +For certain software products, we work with a range of third‑ +party implementation partners. We also go to market through +telesales, e‑commerce, and other digital distribution channels. +Recurring revenue model +Our revenues are primarily recurring in nature, based on +subscriptions to information, software, and services. Recurring +revenues also include software maintenance fees and other +annually renewing revenues. In 2023, 82% of our total revenues +were recurring (2022: 80%). Renewal rates for our digital +information, software, and services are high and are one of the +key indicators by which we measure our success in the market. +Alongside recurring revenues, we derive fees from software +licenses, implementation and training services, transactional +fees, or other non‑recurring revenues. +Customer relationships +We view customers as fundamental stakeholders in our +business. Long‑term customer relationships are the single +most important factor for the success of our business, critical +to achieving organic growth and maintaining competitiveness. +One of our core company cultural values is to focus on our +customers’ success. 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 satisfaction primarily by tracking +customer retention, subscription 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 2023, 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. +Employees and talent management +We employ over 21,400 talented and motivated individuals +around the world. More than half of our annual operating +costs relate to our employees, who create, develop and +maintain, sell, implement, and support our solutions and +serve our customers. +We have well‑established programs in place designed to +attract, engage, grow, and retain talent globally. These +programs include training, well‑being, and career development +opportunities for all employees worldwide. In 2023, we +launched the Colleague Experience Promise (CxP) a framework +that articulates what we provide our employees throughout +their careers with the company. +Strategy and business model +continued +Expert solutions combine deep domain knowledge +with technology to deliver both content and workflow +automation to drive improved outcomes and productivity +for our customers. Based on revenues, our largest expert +solutions are: +• Health: global clinical decision support tool UpToDate; +clinical drug databases; and Lippincott nursing +solutions for practice and learning. +• Tax & Accounting: professional tax and accounting +software CCH Axcess and CCH ProSystem fx in North +America and similar software for professionals +across Europe. +• Financial & Corporate Compliance: banking +compliance solutions ComplianceOne, Expere, +eOriginal, and Gainskeeper. +• Legal & Regulatory: enterprise legal management +solutions Passport and TyMetrix; Legisway; and law firm +practice management software Kleos. +• Corporate Performance & ESG: environmental, health +and safety, and operational risk management (EHS/ +ORM) suite Enablon; corporate performance platform +CCH Tagetik; internal audit solution TeamMate; and +finance, risk, and regulatory (FRR) reporting suite +OneSumX. +9 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_100.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..f777d2648da67c9ba05f25a8f664f607564e55b7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,45 @@ +General disclosures continued +Metrics and targets +Metrics in relation to material sustainability matters (MDR-M) +For a list of disclosed material metrics connected to material sustainability matters, +see Disclosure requirements in ESRS covered by the sustainability statements (IRO-2). +None of the metrics are assured by the external auditor. +For further details on metrics, see the topical sections of these sustainability statements. +Tracking effectiveness of policies and actions through targets (MDR-T) +The connection between material sustainability matters and disclosed targets is shown below: +Topical standard +Material +sustainability matter +Targets disclosed +in the sustainability statements +Climate change (E1) Climate change – Reduce absolute gross GHG scope 1 and 2 emissions +50% by 2030 from a 2019 base year + – Reduce absolute gross GHG scope 3 emissions 30% by +2030 from a 2019 base year + – Number of on‑premise servers decommissioned in +2023 + – Percentage reduction in our office footprint +Own workforce (S1) Diversity, equity, +inclusion, and +belonging (DEIB) + – Improvements to our employee belonging score + – Have at least 33% male and female representation on +our Supervisory and Executive Boards + – Increase female representation in the executives +career band by 2% by 2028 from a 2022 baseline + – Increase our employee engagement score relative to +the Microsoft Glint top 25th benchmark in 2024 +Own workforce (S1) +and Consumers and +end‑users (S4) +Privacy – 98% of employees to complete Annual Compliance +Training +Business conduct (G1) Corporate culture – 98% of employees to complete Annual Compliance +Training + The number of on‑premise servers decommissioned and improvements to our employee +belonging score are integrated in the 2023 remuneration of the Executive Board. The percentage +reduction in our office footprint and improvements to our employee belonging score will be +integrated in the 2024 remuneration of the Executive Board. See Integration of sustainability- +related performance in incentive schemes (GOV-3). +For further details on targets, see the topical sections of these sustainability statements. +99 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_101.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..2225b19967ec3d0e4f4178402c98aebcca37c7e9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,50 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating +to environmental matters. +Climate change (ESRS E1) +Integration in incentive schemes (GOV-3) +A target on the number of on‑premise servers +decommissioned was included in the non‑financial +performance measures for the short‑term incentive plan +in 2023. In the 2024 short‑term incentive plan, this target is +replaced by a target on the percentage reduction in our office +footprint. For further details, see the sections Key elements +of our remuneration policy in Remuneration report on page +73 and Payouts for performance against 2023 STIP targets in +Remuneration report on page 80. +Transition plan for climate change mitigation (E1-1) +We are committed to minimizing our impact on the +environment, in line with the COP21 Paris Agreement and +the COP27 Sharm el‑Sheikh Implementation Plan on limiting +global warming. We are not excluded from the EU Paris‑ +aligned Benchmarks. +As a first step in developing our transition plan, we have +assessed our greenhouse gas (GHG) footprint including scope +1, 2, and 3 emissions. Based on that assessment, we have +developed a plan to reduce our GHG emissions in line with +a pathway to limit global warming to 1.5°C. This plan was +approved by our Executive Board and Supervisory Board. In +2023, the Science Based Targets initiative (SBTi) validated our +near‑term GHG emission reduction targets. See the section +Targets related to climate change mitigation and adaptation +(E1-4) for more details. +We have identified the following decarbonization levers: +Scope 1 & 2 emissions +Office space Reducing our footprint of offices around +the world through office closures and +consolidations. +Renewable electricity The electricity providers for offices are shifting +to renewable energy sources. Where possible, +we intend to switch contracts to renewable +electricity. For locations where switching to +renewable electricity is not possible we may +purchase Energy Attribute Certificates (EACs). +Energy efficiency A variety of actions will be taken to improve +energy efficiency and reduce scope 1 and +2 emissions, such as improving insulation, +installing energy efficient devices, and +improving employee awareness around how +behavior impacts office energy usage. +Environmental disclosures +100 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_102.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..e83657920e34073834ddfa09595e6f431be8f140 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_102.txt @@ -0,0 +1,61 @@ +Scope 3 emissions +Supply chain Multiple developments will support the gradual decarbonization of our supply +chain: + – We will engage with suppliers to highlight the importance of +decarbonization and request insights into supplier‑specific emissions; + – It is our expectation that suppliers independently set their own GHG +emission reduction targets and decarbonize even without engagement with +Wolters Kluwer; + – Suppliers are expected to invest in energy efficiency improvement +measures; + – Transport vehicles become less carbon‑intensive due to more efficient +(engine) design and a shift to renewable energy sources; and + – Renewable electricity will become a bigger part of the grid mix, which will +help reduce supplier‑based emissions. +Business travel We have already started reducing business travel by making more use of +virtual meetings. We are investigating ways to partly replace air travel with +other forms of travel (such as train or car travel) without impact of business +effectiveness. We are also reducing the proportion of business class and first‑ +class flights to reduce the emission intensity of air travel. +Employee commuting We have implemented a flexible work policy allowing employees to work +hybridly, reducing emissions from commuting. +During 2023, we made progress in implementing the transition plan regarding our scope 1 +and 2 emissions. In the coming years, we will focus on engaging with our suppliers to further +decarbonize our supply chain and reduce scope 3.1, 3.2, and 3.4 emissions. For more details on +our actions, see the section Actions and resources in relation to climate change policies (E1-3). +We have also committed to the SBTi to reduce GHG emissions to net‑zero no later than 2050 +and will submit these long‑term GHG emission reduction targets for validation by SBTi by +January 2025. +Environmental disclosures continued +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +Impact on global warming was assessed as a negative material impact on the environment +in the short, medium, and long term as part of our initial double materiality assessment. This +impact is caused by using energy that results in: +• Scope 1 and 2 GHG‑emissions of office buildings; +• Scope 3 GHG‑emissions of our suppliers (scope 3.1, 3.2, and 3.4); +• Scope 3 GHG‑emissions from business travel (scope 3.6) and employee commuting (scope 3.7); +and +• Scope 3 GHG‑emissions from the use of our products by customers (scope 3.11). +These GHG emissions occur on a global scale, since our employees, suppliers, and customers +are in over 180 countries around the world. +Due to the nature of our business activities, our scope 1 and 2 GHG emissions are relatively low +compared to our overall GHG emission footprint. However, we do consider GHG emissions in +general terms to be very damaging to the environment because they intensify the greenhouse +effect (trapping of heat), which drives climate change. +From our GHG assessment, we concluded that approximately 80% of GHG emissions arise from +our supply chain. Influencing our suppliers’ emission reduction strategies will be challenging. +However, we are already developing plans to start engaging with suppliers about their GHG +emissions in 2024. +Based on an initial assessment, we have identified a range of potential climate‑related physical +and transitional risks. It is expected that these risks are unlikely to have a material impact on +the company. +Physical climate change risks, such as extreme weather conditions, temperature rise, sea level +rise, and droughts, may lead to: +• Disruption for employees working online, commuting to work, or travelling for work; +• Damages to own office buildings, warehouses, and servers and shortage of water for +employees and cooling needs, leading to disruption of services; and +• Delivery issues from upstream partners and suppliers. Specifically, this may concern +disruption of services due to overheating of servers and IT systems and damage to supplier +assets such as warehouses and servers. +101 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_103.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..4675ec0b91cd67c87b2416ec0c308d54cc3377bf --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_103.txt @@ -0,0 +1,66 @@ +Risks associated with the transition to a low‑carbon economy may lead to: +• Reputational risk of failure to meet emission reduction targets leading to heightened +stakeholder concerns or negative feedback regarding lack of climate change management +within the company; and/or +• The risk of misalignment with changing customer preferences and needs of professional +software, when not investing sufficiently in development of products that enable climate +change mitigation and adaptation. +Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) +In addition to the general process of our initial DMA described in the section Description of the +processes to identify and assess material impacts, risks, and opportunities (IRO-1), the process +to identify and assess climate‑related impacts, risks, and opportunities includes the following +steps: +1. Assessment of GHG footprint: +• Screening of all scope 3 emission categories based on the GHG Protocol; +• Inventory of scope 1 and 2 emissions and scope 3 emission categories that were considered +material based on the screening; +2. Analysis of our office locations and key upstream assets such as data centers; and +3. Analysis of climate change research and map to the locations identified in step 2. +We started a preliminary qualitative climate scenario analysis to understand potential physical +climate change risks. In 2024, we intend to further develop our scenario analysis. For the +preliminary analysis we 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 Intergovernmental Panel on Climate Change. To +assess transition risks, we are using World Energy Outlook scenarios from the International +Energy Agency. +The Corporate Sustainability team is responsible for identifying and assessing climate‑related +risks, which are subsequently reported to the Corporate Risk Committee. This group monitors +material risks and determines mitigating actions with a focus on company‑wide, non‑business‑ +specific risks. +Environmental disclosures continued +Policies related to climate change migration and adaptation (E1-2) +We have adopted an Environmental Policy to manage environmental matters, including the +impacts related to climate change. The objective of the policy is to minimize the negative +impact of our operations on the environment and to comply with the applicable local and +international environmental laws. The policy was approved by the Executive Board, applies to +all divisions, business units, and operating companies that are controlled by the company, and +is available on our website. +In accordance with the policy, we observe the three principles on the environment in the +United Nations Global Compact: +• To support a precautionary approach to environmental challenges; +• To undertake initiatives to promote greater environmental responsibility; and +• To encourage the development and diffusion of environmentally friendly technologies. +We expect our suppliers to operate in a manner that is protective of the environment via +the Supplier Code of Conduct. +Actions and resources in relation to climate change policies (E1-3) +Climate change mitigation +In line with our transition plan, we have designed several climate change mitigation actions, +as described below. +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. Sustainability certificates +and green office standards are part of our selection criteria for new offices. Our offices in +Madrid and Barcelona (Spain), Chennai (India), Milan (Italy), and Paris (France) are ISO 14001 +certified. We also aim to replace existing non‑renewable energy contracts with renewable +contracts for those offices where we control the energy contract. +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 hybrid working) 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. +102 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_104.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..515b0a26bb0c37dd5b6e8518fd71544423ea3dce --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_104.txt @@ -0,0 +1,52 @@ +Migration of servers to energy-efficient cloud providers +We have been migrating customers and applications to the cloud, allowing us to decommission +on‑premise servers, which are less energy efficient. As our major cloud providers operate +on higher energy efficiency, and have GHG emission reduction targets themselves, this is +an important lever to reduce our emissions. Transitioning to the cloud also benefits our +customers in the form of improved cybersecurity protection and increased mobility, availability, +and standardization. Carbon footprint remains an important criterion in the selection of our +cloud providers. +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. We +encourage our employees to make use of virtual meetings and events, where possible. +Supply chain +We request our suppliers to commit to environmental standards in our Supplier Code of +Conduct. In 2023, we updated our due diligence questionnaire to include new questions on +climate‑related matters that help us track performance of suppliers against their GHG emission +reduction targets. +Climate change adaptation +We have also taken action to prepare for possible impacts of climate change on the company. +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, including extreme weather or natural +catastrophes, impacting our people and/or causing damage to our facilities, IT systems, +hardware, and other assets. When managing incidents, we prioritize people, environment, +assets, and reputation (PEAR), in that order. In other words, employee well‑being comes first, +followed by environment, asset protection, and lastly, maintaining the company’s brand and +reputation. A well‑managed and resilient company, prioritizing the PEAR elements, is more likely +to meet the needs and expectations of its stakeholders, such as customers and investors, and +maintain strong relationships with suppliers. +Targets related to climate change mitigation and adaptation (E1-4) +To support our climate change mitigation and adaptation policies and address the impact +on global warming, we have set GHG emission reduction targets, as well as operational targets +to reduce on‑premise servers and optimize our real estate portfolio. +GHG emission reduction targets +We have set the following science‑based emission reduction targets: +• reduce absolute scope 1 and 2 GHG emissions 50% by 2030 from a 2019 base year; and +• reduce absolute scope 3 GHG emissions 30% by 2030 from a 2019 base year. +These targets have been validated by the Science Based Targets initiative (SBTi). Our scope 1 +and 2 target mainly relates to the energy consumption from our offices, and our scope 3 target +relates to purchased goods & services (3.1), capital goods (3.2), upstream transportation & +distribution (3.4), business travel (3.6), and employee commuting (3.7). +Our efforts to reduce scope 1 and 2 emissions include reducing our office footprint organically +and shifting to renewable energy. Over the coming years, we will implement further initiatives +to reduce our scope 1, 2, and 3 emissions and work towards achieving our targets. +The far majority of our GHG emissions derives from our value chain, especially from goods and +services purchased from suppliers. This means that decarbonization of our supply chain will be +key to reach our target, meaning that we will focus on engaging with our suppliers. For a full list +of decarbonization levers, see the section Transition plan for climate change mitigation (E1-1). +Environmental disclosures continued +103 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_105.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..84e670a408976e1d822a0497fe910253fa6ecef9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,86 @@ +The performance against our GHG emission reduction targets can be summarized as follows: +in mtCO2e +2019 +base year1 +2030 +target year +2023 +reported +Scope 1 Direct emissions 4,035 2,331 +Scope 2 +(market‑based) Emissions from purchased energy 15,674 8,733 +Scope 1 and 2 +(market‑based) 19,709 9,854 11,064 +Scope 3.1 Purchased goods & services 216,409 222,184 +Scope 3.2 Capital goods 3,635 2,414 +Scope 3.4 Upstream transportation & distribution 21,213 14,862 +Scope 3.6 Business travel 25,798 24,621 +Scope 3.7 Employee commuting 23,814 8,526 +Total scope 3 290,869 203,608 272,607 +1 Restated, see Disclosures in relation to specific circumstances (BP-2) . +We did not set emission reduction targets per year. When assuming a linear emission reduction +over the 11‑year period, our scope 1 and 2 for 2023 emissions are ahead of such a linear plan, +while our scope 3 emissions for 2023 are behind. This is because reducing scope 3.1, 3.2, and 3.4 +supplier emissions will require upfront effort and investment to drive change. +Scope 1 and 2 emissions Scope 3 emissions +20,000 +18,000 +16,000 +14,000 +12,000 +10,000 +8,000 +6,000 +4,000 +2,000 +0 +2019 +base year +2023 +reported +2030 +target year +Amounts in mtCO2e Assuming linear reduction +300,000 +270,000 +240,000 +210,000 +180,000 +150,000 +120,000 +90,000 +60,000 +30,000 +0 +2019 +base year +2023 +reported +2030 +target year +Amounts in mtCO 2 e Assuming linear reduction +Other scope 3 categories were not included in the scope 3 target setting, as we concluded that +these categories are individually not material following a screening analysis. We estimated that +these categories would have contributed less than 5% of our total scope 3 emissions. Contrary +to our communication in the 2022 Annual Report, direct‑use phase customer emissions (scope +3.11) were kept outside our scope 3 target setting. +The base year is not restated for acquisitions and divestments in the years 2020 to 2023 as the +net impact thereof is considered immaterial. +For further details on methodologies and assumptions applied in the calculations of GHG +emissions, see the sections Energy consumption and mix (E1-5) and Gross GHG emissions (E1-6). +Number of on-premise servers decommissioned in 2023 +We set a target to reduce the number of on‑premise servers in 2023. This target was included in +the non‑financial performance measures for the short‑term incentive plan in 2023. The annual +target is based on programs managed by Global Business Services, Digital eXperience Group, +and our customer‑facing divisions. Decommissioning of on‑premise servers by migrating to +energy‑efficient cloud platforms reduces our carbon footprint. +The number of on‑premise servers decommissioned in 2023 was 1,542, which was above target. +Percentage reduction in our office footprint +This annual target aims to achieve a reduction in our office footprint and thereby a reduction +in our scope 1 and 2 emissions. The target is based on programs managed by our global real +estate team. The target and outcome are on an underlying basis excluding the impact of +acquisitions and divestitures. This target is included in the non‑financial performance measures +for the short‑term incentive plan in 2024. +Environmental disclosures continued +104 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures +The secret animal #4 is a "cow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_106.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc22324eae68278f4cd0bcc76d49bc7813b894d3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,65 @@ +Energy consumption and mix (E1-5) +Methodologies and assumptions +Energy consumption of our own operations relates to owned and leased offices. Energy +consumption was partly confirmed through meter readings, reports from energy providers, +or confirmations from landlords. +Some offices are shared with other tenants. In case only the energy consumption of the +entire building was available, the energy consumption to our office space was allocated +based on our square meter share. +For energy consumption in 2023, 78% of energy consumption in MWh was confirmed. +The remainder was estimated or extrapolated by any of the following methods: +• For some large‑sized offices, only nine‑month data was available. In those cases, data +was complemented with fourth‑quarter data of the previous year. This estimation method +only applied to 2023 data following an acceleration of data collection and related to 5% +of energy consumption in MWh; +• Medium or smaller‑sized offices for which only nine‑month or 11‑month data was available +were extrapolated to 12 months in a pro rata manner. This extrapolation method only +applied to 2023 data following an acceleration of data collection and related to 5% of +energy consumption in MWh; +• U.S. offices for which no energy data was available were extrapolated using the available +energy data of other U.S. offices in the same region as defined by the U.S. Environmental +Protection Agency (U.S. EPA). If no energy data was available in a U.S. region, the offices +in that U.S. region were extrapolated using the available energy data of all U.S. offices. +These extrapolations were done based on relative square meters and related to 6% +of energy consumption in MWh in 2023; or +• Offices in other countries for which no energy data was available were extrapolated using +the available energy data of other offices in the same country. If no energy data was +available in a country, the offices in that country were extrapolated using the available +energy data of all our offices globally. These extrapolations were done based on relative +square meters and related to 6% of energy consumption in MWh in 2023. +Energy consumption from fossil and nuclear sources were split at a country level based on +2021 electricity and heat supply consumption data from the International Energy Agency (IEA). +Energy production primarily relate to solar panels on roofs of some offices and is only +considered in case actual data was available. Energy production is a new metric since 2022. +Environmental disclosures continued +Energy consumption and production +in MWh, unless otherwise stated 2023 +% of +total 2022 +% of +total 20211 +% of +total +Energy consumption +Consumption from fossil sources 32,140 74% 35,958 75% 39,044 78% +Consumption from nuclear sources 3,487 8% 3,818 8% 3,750 8% +Renewable energy consumption 7,772 18% 8,104 17% 6,952 14% +Total energy consumption 43,399 47,880 49,746 +Renewable energy consumption +Consumption from purchased or +acquired renewable sources 7,755 8,031 6,952 +Consumption of self‑generated +non‑fuel renewable energy 17 73 – +Renewable energy consumption 7,772 8,104 6,952 +Energy production +Total energy production 17 73 – +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +For significant parts of 2021 and the first months of 2022, most of our offices were closed due to +the COVID‑19 pandemic. +In 2023, energy consumption decreased due to lower square meters and energy‑saving +measures taken at various offices. +Considering that our 2023 scope 1 and 2 emissions are ahead of plan when assuming a linear +emission reduction over the eleven‑year period 2019 to 2030, we did not purchase Energy +Attribute Certificates. +We do not have own operations in high climate impact sectors. +105 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_107.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0b343fd17d677a44f46e5a79a93491c8458bd44 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,22 @@ +Gross GHG emissions (E1-6) +Summary +Our gross scope 1, 2, and 3 greenhouse gas (GHG) emissions can be summarized as follows: +in mtCO2e, unless otherwise stated 2023 % of total 20221 % of total 20212 % of total +Scope 1 (A) Direct emissions 2,331 1% 2,719 1% 3,457 1% +Scope 2 (market‑based) Emissions from purchased energy 8,733 3% 9,294 3% 8,731 3% +Sub-total scope 1 + 2 (market-based) 11,064 12,013 12,188 +Scope 3.1 Purchased goods & services 222,184 75% 210,927 76% 218,928 82% +Scope 3.2 Capital goods 2,414 1% 2,646 1% 1,888 1% +Scope 3.4 Upstream transportation & distribution 14,862 5% 14,884 5% 16,091 6% +Scope 3.6 Business travel 24,621 8% 12,544 5% 848 0% +Scope 3.7 Employee commuting 8,526 3% 9,809 4% 1,497 1% +Scope 3.11 Use of sold products 12,966 4% 14,370 5% 16,879 6% +Sub-total scope 3 (B) 285,573 265,180 256,131 +Total gross GHG emissions (market-based scope 2) 296,637 100% 277,193 100% 268,319 100% +Scope 2 (location‑based) (C) Emissions from purchased energy 11,326 11,792 10,540 +Sub‑total scope 1 + 2 (location‑based) (A+C) 13,657 14,511 13,997 +Total gross GHG emissions (location-based scope 2) (A+B+C) 299,230 279,691 270,128 +¹ Scope 3.6 and 3.7 were restated, see Disclosures in relation to specific circumstances (BP-2) . +² Scope 1, 2, 3.6, and 3.7 were restated, see Disclosures in relation to specific circumstances (BP-2) . +Environmental disclosures continued +106 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_108.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f61ebb8bfd412ba2a6758497875377c09d046f2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,35 @@ +None of our scope 1 GHG emissions are from regulated emission trading schemes. +Our scope 1 and 2 emissions fully relate to Wolters Kluwer N.V. and its subsidiaries. Scope 1 +and 2 emissions from equity‑accounted associates are excluded as these were negligible. +The following scope 3 categories were excluded from our emission reporting as a screening +analysis showed that these were individually insignificant and would have in aggregate +contributed less than 5% of our total scope 3 emissions: +• Scope 3.3 fuel and energy‑related activities, considering energy consumption purchased +and consumed in our own operations is limited to the owned and leased offices; +• Scope 3.5 waste generated in operations, considering that waste generated in our own +operations is limited to office waste; +• Scope 3.8 upstream leased assets, considering that the office space that is subleased +to third parties is negligible; +• Scope 3.9 downstream transportation and distribution, considering that this is limited to +our printing activities and that transportation and distribution paid by us is reported under +scope 3.4; +• Scope 3.12 end‑of‑life treatment of sold products, considering that this is limited to our +printing activities; and +• Scope 3.15 investments, considering that we have no material investments. Refer also to +Note 20 – Investments in equity-accounted associates and Note 21 – Financial assets of the +consolidated financial statements. +The following scope 3 categories are not applicable to us: +• Scope 3.10 processing of sold products; +• Scope 3.13 downstream leased assets; and +• Scope 3.14 franchises. +GHG emissions intensity +Our GHG emissions intensity is as follows: +2023 2022 2021 +Total gross GHG emissions (market‑based scope 2) in mtCO2e 296,637 277,193 268,319 +Total gross GHG emissions (location‑based scope 2) in mtCO2e 299,230 279,691 270,128 +Revenues in millions of euros1 5,584 5,453 4,771 +GHG emission intensity (market‑based scope 2) in mtCO2e/revenues m€ 53 51 56 +GHG emission intensity (location‑based scope 2) in mtCO2e/revenues m€ 54 51 57 +¹ See Consolidated statement of profit or loss . +Environmental disclosures continued +107 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_109.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a749b59d013fca105df171311ef22319db565ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,40 @@ +Gross scope 1 and 2 GHG emissions +Methodologies and assumptions +Scope 1 and 2 emissions relate to our owned and leased offices and are calculated based on +energy consumption. For further details on energy consumption, see Energy consumption +and mix (E1-5). +For scope 1 emissions, U.K. Department for Environment, Food and Rural Affairs (Defra) +conversion factors were used to convert natural gas and heating oil consumption from MWh +into CO2e. +For market‑based scope 2 emissions, purchased and acquired electricity from fossil and +nuclear sources were converted from MWh into CO2e as follows: +• For the two largest and owned offices, both located in the U.S. and jointly representing +approximately 15% of our office square meters, the emission intensity figures of the energy +providers were used; +• For other offices in the U.S., the EGRID Subregion emission factors from U.S. EPA were used; +and +• For offices in other countries, emission factors from IEA were used. +For market‑based scope 2 emissions, purchased and acquired steam and heat were +converted from MWh into CO2e using Defra conversion factors. +For location‑based scope 2 emissions, the abovementioned factors were used to convert +total energy consumption from MWh into CO2e. +The most recent data available for the abovementioned factors are from the year 2022. +Scope 1 and 2 emissions +in mtCO2e 2023 2022 20211 +Scope 1 2,331 2,719 3,457 +Scope 2 (market‑based) 8,733 9,294 8,731 +Total scope 1 + 2 (market‑based) 11,064 12,013 12,188 +Netherlands 474 404 470 +Europe (excluding the Netherlands) 1,321 1,902 2,526 +U.S. and Canada 7,254 7,674 8,133 +Asia Pacific 1,987 2,023 1,034 +Rest of World 28 10 25 +Total scope 1 + 2 (market‑based) 11,064 12,013 12,188 +Scope 2 (location‑based) 13,657 14,511 13,997 +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +For significant parts of 2021 and the first months of 2022, most of our offices were closed due to +the COVID‑19 pandemic. +In 2023, scope 1 and 2 (market‑based) emissions decreased due to lower square meters, energy‑ +saving measures taken at various offices, and a higher percentage of renewable energy. +Environmental disclosures continued +108 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_11.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..579b7c452f380bd17b39a57085e7a5f66f573fb2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,115 @@ +a fairly competitive global market for technology talent. +For information on our own workforce, see Sustainability +statements on pages 113-121. +Supplier relationships +Around 45% of our annual operating costs relate to third‑party +suppliers. Our business units work closely with thousands +of suppliers and partners globally who provide content, +technology, goods, and services that help us deliver our +products and services. +Our Global Business Services (GBS) function is reponsible for +sourcing and due diligence of technology partners and plays a +growing role in assessing and monitoring other categories of +suppliers. Suppliers that are managed through GBS are subject +to extensive due diligence including security, data privacy, and +business continuity. We set high standards when selecting and +managing third‑party providers. + → For insight into how we mitigate supply chain +risks, see Supply chain dependency and project +execution on page 54 in Risk management + → For sustainability disclosures relating to suppliers, +see Sustainability statements on pages 89-140 +Product development and innovation +Product innovation is a key driver of organic growth and value +creation. For over 20 years, we have consistently invested in +developing new and enhanced products to solve customer +challenges. Our current strategic plan envisages investing +approximately 10% of our annual revenues into product +development, including capital expenditure and operating +expenses. +We track employee engagement and belonging, both +measured through an annual employee survey conducted by +an independent third party, Microsoft Glint. +In 2023, our employee engagement score improved by 1 +point to 78 while our belonging score increased by 2 points +to 75. Our long‑term objective for both of these measures is +to reach the top quartile of companies tracked by Microsoft +Glint. A target for belonging was included in management +remuneration for the past two years and will again be included +in 2024. In 2023, our employee turnover rate improved +significantly to 9.8% (2022: 15.3%) in what remains +Strategy and business model +continued +Comprehensive range of well-being +programs for all employees +We are dedicated to providing a supportive work environment +and offer all employees a comprehensive range of well-being +options designed to enhance their personal and professional +lives. This includes the options below: +• An Employee Assistance Program (EAP) ensures global +support for personal, work/life balance, critical incident +stress management, and coping needs; +• Personalized well-being resources cover physical fitness, +mindfulness, and nutrition, supplemented by clinically +validated stress management resources; +• Financial well-being resources empower employees for a +financially secure future tailored to their unique needs; +• Career Skill Enhancement resources provide access to +expert-led virtual courses and certifications, fostering +career skills and professional development; +• Well-being Champion acts as a peer-to-peer ambassador, +facilitating opportunities for well-being enhancement; and +• Through partnerships, Health Management Programs in the +U.S. emphasize education and support for both medical +and emotional needs. +In 2023, we organized a global well-being challenge, which +engaged employees worldwide in activities that promote in +physical fitness, mental health, and overall well-being. The +challenge also helped to strengthen team bonds globally. +Human capital +• Efforts, skills, and talent +contributed by 21,400 +employees +Technology and IP +• Global brand +• Software and content IP +Suppliers & Partners +• Services, content, and +goods supplied by +thousands of select +vendors and partners +Financial Capital +• €1.7bn equity capital +• €3.7bn gross debt +capital +Natural Resources +• Energy consumption +along our value chain +Inputs Outputs +Customers +• €5.6bn revenues from +solutions that enable +effective and efficient +decision-making +Employees +• €2.3bn in salaries +and other benefits +• Skills and career +development +Suppliers & Partners +• €2.0bn operating costs +on third-party content, +goods, and services +Investors +• 34% total shareholder +return +• €17m net interest paid to +creditors +Society +• €325m income +taxes paid +• Products that protect +health and prosperity +Customer case +10 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret food is "chocolate". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_110.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..861d6f6c56c5ebf17365f8c6f1bf8673866bee1f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,60 @@ +Gross scope 3.1, 3.2, and 3.4 GHG emissions +Methodologies and assumptions +Scope 3.1, 3.2, and 3.4 emissions (supplier emissions) all originate from our supply chain. +A major part of supplier emissions is calculated based on spend. Under this spend‑based +method, suppliers were clustered into industry sectors. U.S. dollar‑denominated spend was +converted into CO2e using the supply chain industry emission factors from U.S. EPA. In 2023, +U.S. EPA published its latest set of factors, which have a 2019 emission baseline on a 2021 U.S. +dollar spend. Subsequently, the U.S. EPA factors were adjusted for U.S. inflation for the years +thereafter. Spend denominated in euro or other currencies was converted into CO2e by the +same methodology, whereby industry emission factors were also adjusted for the change in +the U.S. dollar – local foreign currency rate. If it was unknown in which industry a supplier +operated, the associated spend was converted into CO2e by using the weighted‑average +industry emission factors of the suppliers that were clustered into an industry sector. +A smaller part of supplier emissions is calculated using the supplier’s most recent publicly +available emission data, e.g., through its annual report, its sustainability statements, or its +CDP reporting. Under this method, GHG emissions were calculated by dividing our spend +by total revenues of the supplier, as reported in the supplier’s consolidated financial +statements, and then multiplied by the total scope 1, scope 2, and upstream scope 3 +emissions of the supplier. For some suppliers, we could not conclude if the supplier reported +its emissions in a complete manner and in accordance with acceptable methodologies. +For those suppliers, we applied the spend‑based method as described in the previous +paragraph. +The remainder of supplier emissions is calculated using emission data as provided by +suppliers to us. For these suppliers, we confirmed that the emission data covered scope +1, scope 2, and upstream scope 3 emissions in a complete manner with acceptable +methodologies. +In case we act as agent between suppliers and customers, associated supplier emissions +are included in our reporting. This spend predominately originates from governmental +organizations in the U.S. and is associated with the CT Corporation business of the Financial +& Corporate Compliance division. +Scope 3.2 emissions relate to the production of capital goods purchased by us. Scope 3.2 +emissions were estimated based on the share of investments in property, plant, and equipment, +as reported in the consolidated financial statements, to the total supplier spend. Using this +methodology, all emissions from purchased capital goods are reported in the year of purchase. +Scope 3.4 emissions originate from upstream transportation and/or distribution of products +purchased and include the spend on any mode of transport and the storage of these +products. We do not transport or distribute these products in vehicles or through facilities +leased and operated by us. The methodologies and assumptions for the calculation of scope +3.4 emissions were similar as those of scope 3.1 emissions. +The vast majority of supplier emissions is based on spend. Spend‑based calculations +have a high level of measurement uncertainty. We applied various assumptions in these +calculations, including how suppliers are allocated to industry sectors, the use of U.S. EPA +industry emission factors and the adjustments we applied to those, and the use of supplier’s +publicly available emission data. The estimate that is most sensitive in the measurement is +the use of U.S. EPA industry emission factors. +Scope 3.1, 3.2, and 3.4 emissions +in mtCO2e, unless otherwise stated 2023 2022 2021 +Scope 3.1 purchased goods & services 222,184 210,927 218,928 +Scope 3.2 capital goods 2,414 2,646 1,888 +Scope 3.4 upstream transportation & distribution 14,862 14,883 16,091 +Total supplier emissions 239,460 228,457 236,907 +Spend‑based method – U.S. EPA industry factors (% of emissions) 89% 91% 93% +Spend‑based method – external supplier emission data (% of emissions) 9% 7% 5% +Supplier‑specific method – supplier confirmations (% of emissions) 2% 2% 2% +Spend in € millions 2,324 2,229 1,896 +Of which we act as agent between suppliers and customers +in € millions 519 473 391 +Supplier emissions increased in 2023 due to on an increase in spend. +Environmental disclosures continued +109 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_111.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..eeda1afdad31469a41611753402b581c395509bd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,61 @@ +Gross scope 3.6 emissions +Methodologies and assumptions +Scope 3.6 emissions originate from business travel by employees, traveling by air or car. +Business travel by other means of transport, e.g., public transport, is not material. +We opted to not report emissions associated with business travelers staying in hotels. +Business air travel is calculated using a distance‑based method. Air travel is for the vast +majority based on data confirmed by travel agents, complemented with data obtained +from travel expense records. Air travel data includes the distance per flight segment, i.e., +the distance of a flight between two cities, and the cabin class per flight. Flight segment +distances were clustered into domestic (below 464 km), short‑haul (464 km–3,700 km), and +long‑haul flights (above 3,700 km). Cabin classes were clustered into economy class, premium +economy class, business class, and first class. Defra conversion factors were applied to +convert kilometers traveled into CO2e emissions. +Business car travel is calculated by applying an average‑based method. Car travel is based +on a survey held under approximately 1,500 client‑facing employees, predominantly sales +staff. Almost 25% of these employees completed the survey and confirmed their estimated +annual kilometers travelled by car for business purposes and whether they travel with a +fuel car, hybrid car, or electric car. The results of the survey were used to extrapolate for +all client‑facing employees, done on a country‑by‑country basis. Defra conversion factors +were applied to convert kilometers traveled into CO2e emissions. Applying a survey as +basis for calculations may result in a high level of measurement uncertainty. However, this +measurement uncertainty is considered not material due to the high response rate and the +relative low share of car business travel emissions compared to total scope 3 emissions. +Scope 3.6 emissions +in mtCO2e, unless otherwise stated 2023 20221 20211 +Business travel – air travel 23,368 11,456 694 +Business travel – car travel 1,253 1,088 154 +Total scope 3.6 emissions 24,621 12,544 848 +Average full‑time equivalents2 20,810 20,061 19,083 +Emissions per average full‑time equivalents 1.2 0.6 0.0 +¹ Restated, see Disclosures in relation to specific circumstances (BP-2) . +² See Note 12 – Employee benefit expenses of the consolidated financial statements. +Environmental disclosures continued +The increase in business travel emissions in 2023 is largely explained by COVID‑19‑related +travel restrictions in especially the first months of 2022, combined with an increase in Defra +conversion factors for air travel. +Gross scope 3.7 emissions +Methodologies and assumptions +Scope 3.7 emissions originate from commuting by employees. We opted to not report +emissions associated with employees working remotely. We applied an average‑based +method for the calculation of employee commuting emissions. +Employee commuting emissions are based on a survey sent to all employees. Almost 25% of +employees completed the survey. The average commuting distance, the mode of transport, +and commuting frequency were the key questions in the survey. For the mode of transport, +employees indicated whether they travel with a fuel car, hybrid car, electric car, motor bike, +public transport, bike, or foot, or a combination of those. The results of the survey were +used to extrapolate for all employees, done on a country‑by‑country basis. Defra conversion +factors were applied to convert kilometers traveled into CO2e emissions. Applying a survey as +basis for calculations may result in a high level of measurement uncertainty. However, this +measurement uncertainty is considered not material due to the high response rate and the +relative low share of employee commuting emissions compared to total scope 3 emissions. +Scope 3.7 emissions +in mtCO2e, unless otherwise stated 2023 20221 20211 +Total scope 3.7 emissions 8,526 9,809 1,497 +Average full‑time equivalents2 20,810 20,061 19,083 +Emissions per average full‑time equivalents 0.4 0.5 0.1 +1 Restated, see Disclosures in relation to specific circumstances (BP-2) . +2 See Note 12 – Employee benefit expenses of the consolidated financial statements. +The decrease in employee commuting emissions in 2023 is largely due to a higher percentage +of employees that are working fully remotely. +110 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_112.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..922e4dbc06d1a0ee85a96fcac5e8058ffb343868 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,63 @@ +Gross scope 3.11 emissions +Methodologies and assumptions +Scope 3.11 emissions originate from customers using our digital information or software +products. Customers using our cloud‑based software generate direct use‑phase emissions. +Customers using our on‑premise software generate indirect use‑phase emissions, which we +report on a voluntary basis. +Almost half of customer emissions originate from the energy consumption of customers’ +devices when using our cloud and on‑premise software (49% of total customer emissions +in 2023). We estimated this energy consumption for the products that are used most time +intensively, notably the products in our Tax & Accounting and Corporate Performance & ESG +divisions. For most of these products, the average number of users in the year and estimated +average number of login hours per user were determined to calculate the total login time in +hours. For some products, total login time in hours was based on the total number of login +moments and the average time per login moment. Total login time in hours was extrapolated +for products not in scope of the data collection based on digital revenues at business unit +level. In 2023, approximately 10% of emissions were extrapolated. Total login time in hours +was converted into CO2e emissions by: +• Estimating the relative share of our software to the average CPU usage of a device, based +on external source information. We applied this estimate to all our products; +• Estimating the average watt per hour of a customer’s device based on external source +information, whereby we assumed that our customers on average use a standard business +laptop; and +• Using IEA emission factors to convert MWh into CO2e emissions, whereby we assumed that +approximately 60% of our customers are based in North America, 30% in Europe, and 10% +in Asia Pacific following the revenues generated by region as reported in the consolidated +financial statements. +The remainder of customer emissions originate from the energy consumption of servers +at the customer’s own premises for hosting our on‑premise software (51% of total +customer emissions in 2023). To calculate this energy consumption, the following estimates +were applied: +• For on‑premise software products, the average number of customers in the year was +determined. In case this data was not available, we extrapolated based on digital +on‑premise revenues at business unit level. Approximately 20% of emissions were +extrapolated; +Environmental disclosures continued +• We estimated the number of servers at a customer’s own premise based on the type of +on‑premise customers we have (i.e., large companies or institutions versus small and +medium‑sized firms); +• We estimated the average utilization of a server based on expertise of our Global Business +Services; +• We estimated the average energy usage of a server based on external source information; +and +• IEA emission factors were used to convert MWh into CO2e emissions, whereby we assumed +that approximately 60% of our customers are based in North America, 30% in Europe, +and 10% in Asia Pacific following the revenues generated by region as reported in the +consolidated financial statements. +As indicated above, there are numerous estimates applied in the calculation of customer +emissions. As such, we observe a high level of measurement uncertainty. The estimates that +are most sensitive in the measurement are the average number of login hours per user +and the relative share of our software to the average CPU usage of a device. +Scope 3.11 emissions +in mtCO2e, unless otherwise stated 2023 2022 2021 +Direct use‑phase emissions – energy consumption of customers’ devices +when using our cloud‑based software 3,872 3,108 2,735 +Indirect use‑phase emissions – energy consumption of customers’ +devices when using our on‑premise software 2,487 2,486 2,635 +Indirect use‑phase emissions – energy consumption of servers at +customers’ own premises for hosting our on‑premise software 6,607 8,776 11,509 +Total scope 3.11 emissions 12,966 14,370 16,879 +Customer emissions decreased in 2023, primarily due to a decrease in customers that host +our on‑premise software at their own premises. Direct use‑phase emissions increased in 2023 +due to an increase in the number of users of our cloud software. +111 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_113.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6469e2fd9ef792fedd9f28b289ed9592c867802 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,21 @@ +GHG removals and GHG mitigation projects financed through carbon credits (E1-7) +We did not engage in GHG removal or storage projects, nor did we initiate GHG mitigation +projects financed through carbon credits. +Climate change company-specific metrics +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. A target for the decommissining of on‑premise servers +was included in Executive Board and senior management remuneration in 2021, 2022, and 2023. +See Targets related to climate change (E1-4). +2023 2022 2021 +Number of data centers closed 12 14 21 +Number of on‑premise servers decommissioned 1,542 1,032 2,838 +Real estate rationalization +For several years, we have been executing a real estate rationalization program, which has +already delivered significant reductions in our office footprint through office closures and +consolidations. This program achieved a 5% organic reduction in square meters in 2023. +2023 2022 2021 +Real estate rationalization, % organic reduction in m2 1 5% 5% 7% +¹ The organic reduction in m² excludes the effect of acquisitions and divestments. +Environmental disclosures continued +112 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Environmental disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_114.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..34bfb60a58971176ace27a122cc570a37a2e2d0c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,75 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating to +social matters. +Own workforce (ESRS S1) +Material impacts, risks, and opportunities and their +interaction with strategy and business model (SBM-3) +Our workforce is instrumental to our business model. +Attracting, developing, and retaining a diverse and highly +skilled workforce is essential to delivering our strategy. A +diverse and motivated 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. By providing our workforce +with a diverse and inclusive work environment, training and +skills development opportunities, and benefits, we positively +impact the personal and professional lives of our workforce. +Our workforce is comprised of employees and non‑employees. +Non‑employees are individual contractors and people +provided by suppliers primarily engaged in employment +activities. All individuals in our workforce could be affected +by the material impacts and opportunities described in this +section, unless otherwise indicated. Certain policies, actions, +metrics, and targets only apply to employees. When we refer +to both employees and non‑employees, we use the term +“workforce”. +Policies related to own workforce (S1-1) +For a complete overview of the policies related to our own +workforce, see Policies adopted to manage material +sustainability matters (MDR-P). +Our Code of Business Ethics (Code) sets forth the ethical +standards that are the basis for our decisions and actions, and for +achieving our business goals. The Code covers various policies, +some of which are further detailed in standalone policies, +processes, and/or programs. The Code covers policies on our +material impacts related to our workforce. The Code is approved +and adopted by the Executive Board and is reviewed annually. +The policy on equal opportunity in the Code provides that +we foster an inclusive company culture and do not make +employment decisions based on various discriminatory +factors, including among others race, color, religion, sex, age, +national origin, sexual orientation, gender identity, ethnicity, +disability, and handicap. This includes equal treatment in +recruitment, hiring, training, compensation, promotion, +performance assessment, and disciplinary action. This policy is +further detailed in our Diversity, Equity, Inclusion & Belonging +(DEIB) Policy and Human Rights Policy. These policies +relate to the material impacts of equal pay for equal value, +diversity, equity, inclusion, and belonging, training and skills +development, and well‑being. +Our Code also includes our commitment to data privacy. +In addition, we maintain data privacy policies that apply +specifically to the personal data of our workforce. These +policies disclose how personal information is used and shared +and are based upon applicable data privacy principles and +regulations. We collect personal data from our workforce +only for specified purposes, which are documented. When +third parties, such as vendors, have access to personal +information of our workforce, we include relevant standards +and requirements for the processing of this data. Our Code +also includes a policy on the use of company technology and +systems in a responsible and secure manner, which is further +detailed in our Acceptable Use Policy. +These policies are made available to our workforce in various +languages through a dedicated intranet page. The Code +of Business Ethics, DEIB Policy, and Human Rights Policy +are available on www.wolterskluwer.com/en/investors/ +governance/policies-and-articles. Our workforce is made +aware of these policies through various training and +communication initiatives. +Social disclosures +113 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures +The secret vegetable is "cauliflower". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_115.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..65d4a14b36f761be45644c8f2d264bd59c77cb49 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,68 @@ +We support human rights as outlined in the Universal Declaration of Human Rights, the core +standards of the International Labor Organization, the United Nations Guiding Principles on +Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. We strive +to ensure that our own activities do not infringe human rights. We are a signatory of the United +Nations Global Compact and the United Nations Women Empowerment Principles and we are +committed to aligning with these respective principles. Our human rights policy commitments +are included in our Code of Business Ethics and Human Rights Policy. Our Human Rights Policy +addresses our commitment to taking steps preventing modern slavery or human trafficking in +our supply chain or in any part of our business. +Processes for engaging with own workforce and workers’ representatives about impacts (S1-2) +As part of the normal course of business, we encourage regular engagement with our workforce +at all levels, including one‑on‑one meetings between managers and employees and team +meetings. We also host regular town hall meetings throughout the year. In addition, we have +formal processes for performance management and career development that encourage +ongoing manager and employee check‑ins. +We gather feedback from our employees formally through our employee listening surveys, +tickets submitted to our HR Service Delivery group, and through the SpeakUp program. We also +have regular interactions with our local and European work councils. We provide mechanisms +to our workforce to direct any questions, comments, or requests regarding their personal +information and our privacy practices. Generally, the employee privacy policies are provided to +and acknowledged by our employees upon hire and notification is provided to employees when +any material changes are made to these policies. +Processes to remediate negative impacts and channels for own workforce to raise concerns +(S1-3) +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, the Global Law and Compliance Department, or senior +management. In addition, our global SpeakUp system — operated through an external +provider — offers our workforce a confidential channel, available 24/7 for reporting concerns +in their own language, with the option to report anonymously where permitted by law. +For data privacy, we have a channel to report data privacy incidents. 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. +Social disclosures continued +Taking action on material impacts on own workforce, and approaches to managing material +risks and pursuing material opportunities related to own workforce, and effectiveness of +actions (S1-4) +Equal pay for equal value +We have implemented a global career framework which provides principles and a basis +for defining work for all jobs and implemented base pay salary structures where possible. +Additionally, 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 the U.S., to identify and remediate deviations in gender pay. We are +developing a plan to expand this work in accordance with all applicable laws and regulations. +Diversity, Equity, Inclusion, and Belonging (DEIB) +Our actions to further advance DEIB focus on: +• Hiring, promoting, and retaining a highly engaged and talented workforce that represents the +diversity of the communities where we live and work; and +• Cultivating a culture of inclusion and belonging that values authenticity and fairness, and +respects diversity in all its forms. +We measure the impact of our 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. +To formalize our DEIB efforts, we established a Global Diversity, Equity, Inclusion & Belonging +Policy in 2023. For more information, see section Policies related to own workforce (S1-1). +In accordance with Dutch law, we have developed an action plan to achieve our target to +increase the female representation in our executive career band. We do this through continuing +our equitable and inclusive practices focused on improving female representation in hiring, +promotions, and talent retention, as described below. +We have implemented inclusive job posting software which has enabled us to create market +leading job advertisements and attract more diverse talent by focusing on critical skills and +using inclusive language. We believe this will have a positive impact on slate diversity in +future years. +114 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_116.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..98827d00201f2b5ff60fa4cbcb998662159229a4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,65 @@ +We also 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. +To encourage a culture of inclusion and belonging, all employees were invited to our inclusive +leadership learning journey in 2023. This program is designed to drive behavior change within +everyday team interactions and support our culture of inclusion and belonging. The first part +of the program focused on key inclusive behaviors, the second on reducing bias in decision‑ +making, and the final part encouraged allyship to reduce inequities within the workplace. +A behavior change survey to managers and employees showed that managers were applying the +behaviors in everyday interactions and reported feeling more effective in their role. +In 2023, we also launched three global inclusion networks — Women, Pride, and Multicultural. +All our employees can join these networks that help reinforce a culture of inclusion and +belonging that values authenticity and fairness and respects diversity in all forms. During the +year, these networks hosted internal and external speaker events, roundtable discussions, +and peer‑to‑peer networking; raised awareness of inclusive benefit offerings; and participated +in community events for their 3,300 collective members. +As we look to 2024, we intend to reinforce the work done to date with continued focus on +diversity sourcing and embedding inclusive and equitable behaviors within our core talent +and business processes. +Work-life balance +Our actions around work‑life balance relate to benefits, flexible work, and well‑being. +Our Together we Thrive program supports the well‑being of our workforce by offering resources +and content to help employees be their best — emotionally, physically, socially, and financially. +Key actions include: +• Robust benefits packages that include competitive options reflecting the market practices +in the various geographies in which we have employees; +• 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; +• Flexible work arrangements, including flexible work hours and the option to work outside the +office, to help employees balance their professional and personal commitments; +• An Employee Assistance Program and resiliency tools that provide mental health and +other support; +• Digital financial well‑being resources to help our employees plan for a financially secure +future based on their specific needs and goals; and +• Paid time‑off benefits to ensure employees have the time to care for themselves and those +close to them. +We continue to assess and evolve our well‑being offering and key benefits based on best +market practices and workforce preferences. +Training and skills development +We deliver innovative talent solutions that enable performance, growth, and skills development +for all employees. All talent processes, tools, resources, offerings, and programming are +designed to support developing skills and careers. +In 2023, we focused on several key enhancements to our talent program portfolio to support +employees in skills development and career growth. Key actions include: +• Enhancement of our succession planning process, which has resulted in an improvement +in the readiness and availability of our talent to fill internal job openings; +• Enabling more businesses to leverage the learning platform to meet their training needs +and continuing to deploy mandatory and optional training to a global audience; +• Running a global employee development campaign #Grow, which is designed to incorporate +growth and development into daily work life and increase engagement in learning; +• Pilot for a global mentoring program which will continue to grow in 2024; and +• Providing resources for managers, including additional curricula that support managers +to coach and develop their teams and reinforce an inclusive work environment. +Looking ahead, we will advance the work to focus on skills development and build programs +to ensure we maintain the current and emerging skills required for our workforce. +Privacy +We provide ongoing training and awareness programs to our workforce to reflect data privacy +and cybersecurity developments. We incorporate key themes into our data privacy and +cybersecurity courses that employees are required to take every year. In 2023, we developed +a new Privacy Awareness training course that was rolled out to our employees and a large +proportion of our non‑employees. +Social disclosures continued +115 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_117.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed8de32d9d24b96bcd104b220986358f95a9daf2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_117.txt @@ -0,0 +1,45 @@ +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S1-5) +To advance the positive impact of DEIB on our employees, we have set the following targets: +• Improvements to our employee belonging score; +• Have at least 33% male and female representation in our Supervisory and Executive Boards; +• Increase female representation in the executives career band by 2% by 2028 from a 2022 +baseline; +• Increase our employee engagement score relative to the Microsoft Glint top 25th benchmark +in 2024; and +• 98% of employees to complete Annual Compliance Training. See Business conduct company- +specific metrics on page 126. +The target ‘improvements to our employee belonging score’ is included in the non‑financial +performance measures for the 2023 and 2024 short‑term incentive plans. For further details, +see the sections Key elements of our remuneration policy in Remuneration report on page 73 +and Payouts for performance against 2023 STIP targets in Remuneration report on page 80. +Characteristics of our employees (S1-6) +Methodologies and assumptions +Unless otherwise stated, all numbers are reported in headcount at December 31. Headcount +data is based on our global human resource platform. The split by country and region is +based on the legal entity the employee is employed by. A negligible number of employees +work in a different country than the country where the legal entity is based. +Headcount by gender is based on the gender indicated by employees in our global human +resource platform. Currently, employees are not yet able to specify a gender other than +male or female in our global human resource platform. Hence, no employees are reported +as ‘other gender’. Employees that did not select a gender or did not want to disclose their +gender are reported under ‘not disclosed’. +Headcount by contract term is based on our global human resource platform. We are not yet +able to report permanent and temporary employees separately and have initiated a project +to ensure reporting this split in the 2024 Annual Report. As headcount by contract term is a +new metric for us, no 2022 and 2021 comparatives are reported. +Divested operations are excluded from the employee turnover calculation. Employee +turnover is split into voluntary turnover and non‑voluntary turnover. Voluntary turnover +includes employees who initiated the contract termination or employees that retired. +Non‑voluntary turnover includes employees who were dismissed or passed away. The +denominator of the employee turnover calculation is based on a 12‑month average +headcount. +Race/ethnicity of U.S. employees, which is a company‑specific metric, is based on what +employees indicated in our global human resource platform. Races/ethnicities mirror those +used for required federal reporting in the U.S. Other races/ethnicities include employees who +identified as being of two or more races, Native American, Alaska Native, Native Hawaiian, or +Other Pacific Islander. Employees who did not know their race/ethnicity or did not select a +race/ethnicity are reported under ‘unknown or not disclosed’. +We did not apply estimates in the reporting of the characteristics of our employees. +Social disclosures continued +116 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_118.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..aa7fdb22c510cdabd877377a469f97b16a81bf50 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,54 @@ +Headcount by gender +2023 +% of +total 2022 +% of +total 2021 +% of +total +Female 9,812 46% 9,470 46% 9,187 46% +Male 11,438 53% 10,898 53% 10,490 53% +Not disclosed 188 1% 143 1% 123 1% +Total headcount at December 311 21,438 20,511 19,800 +¹ See Note 12 – Employee benefit expenses of the consolidated financial statements. +Headcount by country and region +2023 +% of +total 2022 +% of +total 2021 +% of +total +U.S. 8,707 40% 8,478 41% 8,037 41% +India 3,358 16% 2,810 14% 2,203 11% +Other countries 9,373 44% 9,223 45% 9,560 48% +Total headcount at December 31 21,438 20,511 19,800 +The Netherlands 1,176 5% 1,150 6% 1,119 6% +Europe (excluding the Netherlands) 6,824 32% 6,740 33% 7,145 36% +U.S. and Canada 9,067 43% 8,821 43% 8,369 42% +Asia Pacific 4,295 20% 3,729 18% 3,097 16% +Rest of the world 76 0% 71 0% 70 0% +Total headcount at December 31 21,438 20,511 19,800 +The U.S. and India are the only two countries representing at least 10% of our total number +of employees. +Headcount by contract term +Female Male +Not +disclosed Total 2023 +Permanent and temporary employees 8,558 10,759 182 19,499 +Non‑guaranteed hours employees 1,254 679 6 1,939 +Total headcount at December 31, 2023 9,812 11,438 188 21,438 +Non‑guaranteed hours employees are almost all employed in the U.S. and predominately work +in customer service, fulfillment, and inside sales job functions. These employees are entitled to +a certain number of paid sick and vacation days. On average, these employees worked 36 hours +per week in 2023, assuming 48 working weeks. +Employee turnover +2023 2022 2021 +Employees who left the company in the year +(excluding divested operations) 2,071 3,053 2,943 +% of total employee turnover 9.8% 15.3% 15.4% +Of which: +% of voluntary employee turnover 7.3% 12.8% 12.1% +% of non‑voluntary employee turnover 2.5% 2.5% 3.3% +Social disclosures continued +117 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_119.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f22ccbccfb4ff0910d72ef7e750df5328d3e0df --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,62 @@ +Race/ethnicity of U.S. employees +2023 +% of +total 2022 +% of +total 2021 +% of +total +Asian 1,114 13% 1,031 12% 979 12% +Black or African American 628 7% 639 8% 547 7% +Hispanic or Latino 551 6% 525 6% 475 6% +White 5,852 68% 5,798 68% 5,595 69% +Other races/ethnicities 188 2% 165 2% 133 2% +Unknown or not disclosed 374 4% 320 4% 308 4% +Total U.S. headcount at December 31 8,707 8,478 8,037 +Characteristics of non-employees in our own workforce (S1-7) +Non‑employees are individual contractors and people provided by suppliers primarily engaged +in employment activities. +At present, we do not have a system in place to collect and monitor the characteristics of +non‑employees in our own workforce. The implementation of such a system will commence in +the course of 2024. We have the ambition to give further insight in the characteristics of non‑ +employees in 2024 Annual Report. However, we may make use of the phase‑in option for the +reporting of this disclosure and start reporting the global number of non‑employees in the 2025 +Annual Report. +Diversity metrics (S1-9) +Methodologies and assumptions +Unless otherwise stated, all numbers are reported in headcount at December 31. The split +of headcount by employee category and gender and the split of headcount by age group is +based on our global human resource platform. +Executives include employees that are in the executives career band, meaning that they have +a job category role with executive managerial responsibilities. In this context, executives +exclude the Executive Board. Managers are defined as employees having one or more direct +reports, excluding the Executive Board and the executives. +Headcount by employee category and gender +2023 2022 2021 +Supervisory Board by gender¹ +Female 4 4 3 +Male 2 3 4 +Executive Board by gender +Female 1 1 1 +Male 1 1 1 +Executives by gender +Female 95 91 88 +Male 206 200 188 +Not disclosed – – – +Gender ratio, % female +Supervisory Board¹ 67% 57% 43% +Total headcount 46% 46% 46% +Of which: +Executive Board 50% 50% 50% +Executives 32% 31% 32% +Managers 41% 39% 39% +Other employees 47% 47% 48% +¹ Supervisor Board members are not employees of the company. +Headcount by age group +2023 % of total 2022 % of total 2021 % of total +Under 30 years old 3,071 14% 2,987 15% 2,520 13% +30‑50 years old 12,754 60% 12,223 59% 12,058 61% +Over 50 years old 5,613 26% 5,301 26% 5,222 26% +Total headcount at December 31 21,438 20,511 19,800 +Social disclosures continued +118 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_12.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d730cbd4798c9505a79e4f81f12926621e368ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +product innovation 2023 2022 2021 +Product development spending, +% of revenues 11% 11% 10% +Global Innovation Awards, +number of submissions 662 453 154 +Global Innovation Awards, +number of finalists 14 13 16 +Global Innovation Awards, +number of winners 6 5 6 +In 2023, the Global Innovation Awards attracted more than 660 +entries. Fourteen product and process innovation concepts +were selected as finalists, and, of these, six ideas were +selected for special recognition. For our software developers +around the world, we organize an annual coding competition +(Code Games). +In addition to monitoring progress against product roadmaps, +we track submissions and winners of our employee innovation +competitions and our performance in innovation‑oriented +industry awards and rankings, such as the Best in KLAS Awards +and the Stevie Awards. +Responsible artificial intelligence +Artificial intelligence is used in several of our products where +it benefits human experts working in complex professional +fields. We use natural language processing (NLP), machine +learning (ML), deep learning (DL), and virtual assistants (bots) +in many of our solutions in order to augment and streamline +customer workflows and provide new or improved insights. +Innovation is supported by our central product development +team, the Digital eXperience Group, which works closely with +our business units and our customers to build new features, +modules, and platforms. DXG uses a customer‑centric, +contextual design process to develop solutions based on +the scaled agile framework. DXG currently has six centers +of excellence: user experience, artificial intelligence, IP and +patents, architecture and asset reuse, quality engineering, +and application security. Our technology architecture is +increasingly based on globally scalable platforms that use +standardized components. New solutions are built cloud‑first. +We measure innovation by monitoring product development +spending and progress against product roadmaps at the +business unit level. In 2023, product development spending +increased in constant currencies to reach 11% of total +revenues, slightly higher than envisaged under our current +strategic plan. Key product launches during 2023 include +vrClinicals for Nursing, CCH Axcess Engagement, CCH +Tagetik Global Minimum Tax, Enablon ESG Excellence, and +OneSumX for Basel IV. This was followed in early 2024 by CT +Corporation’s new solution for compliance with the new U.S. +beneficial ownership reporting rules. During 2023, we invested +in deploying new generative AI technology into our solutions +and launched our first beta versions of Gen AI applications for +UpToDate and two legal solutions. +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. +Strategy and business model +continued +New Milan office: enhancing well-being +and reducing emissions +We have a long-term program in place, designed to optimize +our global office footprint. This program aims to provide +employees a positive workplace experience while streamlining +operating costs, meeting environmental standards, and +reducing our greenhouse gas (GHG) emissions. +In 2023, this program achieved a 5% underlying reduction +in our real estate footprint as measured in square meters, +resulting in a 8% reduction in our scope 1 and scope 2 GHG +emissions. In coming years, this program will support us in +achieving our near-term SBTi targets for these scopes, while +also enhancing the well-being of our employees. +Our new leased office in Milan exemplifies all of the program’s +objectives. The new building adheres to the LEED V4 BD+C +protocol, which emphasizes eco-conscious construction, +and holds a Well Building Standard (WELL) certification, the +world’s leading health-focused building standard. It is also +certified for advanced digital infrastructure, showcasing our +holistic approach to sustainability and employee well-being. +It is equipped with a Siemens Building Management System +(BMS) to optimize energy consumption by monitoring and +automating plant engineering systems. +The architecture of the new Milan office promotes the well- +being and safety of its occupants. The design incorporates +spacious terraces, large communal areas, and windows that +can be opened, providing a pleasant environment for high- +quality work. Conveniently located near public transport and +equipped with electric charging stations, the office supports +sustainable commuting. Inside, eco-friendly features such +as recycled office materials, potable water sources, waste +separation areas, and energy-efficient LED lighting create an +environmentally-conscious workspace. +Customer case +11 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_120.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..81bffd7577ff768871b0d7cd173cb63289cafb56 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,60 @@ +Persons with disabilities (S1-12) +Methodologies and assumptions +The disability percentage is derived from U.S. employees that indicated in the global human +resource platform that they have a disability. We may make use of the phase‑in option for +this metric, hence start reporting the disability percentage for all employees in the 2025 +Annual Report. +Persons with disabilities in the U.S. +2023 2022 2021 +% of U.S. employees with disabilities 2% 2% 2% +Training and skills development metrics (S1-13) +Methodologies and assumptions +All employees participate in a global performance management process. The performance +review is annual and includes all active employees excluding only those who were hired +in Q4, employees on long‑term leave, employees for which the contract termination was +communicated prior to December 31, and interns. While they are not included in the review +process, these employees are included in the denominator of the calculation. +Training activity and time spent are captured in the learning platform, which is an integrated +module in the global human resources information system. The metric includes all internal +training content available in the learning platform. Mandatory compliance training such as +the Annual Compliance Training is excluded from the metric. At this time, external training +events, self‑study, or other types of training events are not captured. We expect to expand +capabilities to capture more training activity in the 2024 Annual Report. We will make use of +the phase‑in option for this metric, hence start reporting full training hours, including those +occurring outside of the learning platform, in the 2025 Annual Report. +The training metrics are calculated based on the headcount at December 31. +Executives include employees that are in the executives career band, meaning that they have +a job category role with executive managerial responsibilities. In this context, executives +exclude the Executive Board. Managers are defined as employees having one or more direct +reports, excluding the Executive Board and the executives. +Performance review +2023 20221 20211 +% of employees participated in performance +and career development reviews 97% – – +Participation percentage by gender +Female 97% – – +Male 96% – – +Not disclosed 86% – – +Participation percentage by employee category +Executives 99% – – +Managers 99% – – +Other employees 96% – – +¹ In the 2022 Annual Report, we applied a different methodology to calculate this metric. Hence, +no comparatives are reported. +Training +2023 20221 20211 +% of employees that followed internal training content available in the +learning platform 97% – – +Average number of training hours per employee 5 – – +Training hours by gender +Female 5 – – +Male 5 – – +Not disclosed 3 – – +Training hours by employee category +Executives 3 – – +Managers 6 – – +Other employees 5 – – +¹ In the 2022 Annual Report, we applied a different methodology to calculate this metric. Hence, +no comparatives are reported. +Social disclosures continued +119 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_121.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..68ec88b3806accbed5f45f90635a0ae20a273cbc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,46 @@ +Work-life balance metrics (S1-15) +Methodologies and assumptions +We report on family‑related leave according to the definitions of ESRS, i.e., it includes +maternity leave, paternity leave, parental leave, and carers’ leave from work. +The percentage of employees entitled to take family‑related leave is derived from our family‑ +related leave programs in the U.S. +The percentage of employees that took family‑related leave in the year, including the split +by gender, is derived from a report from a third‑party leave administrator in the U.S. These +employees register their leave in a platform of this third party. +We have the ambition to expand the reporting of this metric to other countries in which we +operate in the 2024 Annual Report. +Family-related leave in the U.S. +2023 2022 2021 +% of U.S. employees entitled to take family‑related leave at December 31 100% 100% 100% +% of U.S. employees that took family‑related leave in the year¹ 6% – – +Family-related leave taken by gender +Female 6% – – +Male 5% – – +Not disclosed 0% – – +¹ In the 2022 Annual Report, we applied a different definition of family ‑related leave in the calculation of this +metric. Hence, no comparatives are reported. +Remuneration metrics (S1-16) +Pay gap +We are finalizing our technical and analytical approach to determine gender pay gap following +the stipulations of ESRS Disclosure Requirement S1‑16 and have initiated a project to ensure +publishing of gender pay gap in the 2024 Annual Report. +Annual total remuneration ratio +The annual total remuneration ratio will be published in the 2024 Annual Report. +Similar as in past years, we disclosed the CEO pay ratio, following the Principles and Best +Practices of the Dutch Corporate Governance Code. +Methodologies and assumptions +The CEO pay ratio is calculated as the compensation of the highest‑paid individual divided +by the average employee remuneration. The compensation of the highest‑paid individual, +being the CEO, is based on the remuneration costs as stated in the table Remuneration of +the Executive Board – IFRS based in the Remuneration report, minus the tax‑related costs. +See page 78. +The average employee remuneration is obtained by dividing the total employee benefit +expenses as stated in Note 12 – Employee benefit expenses (after subtracting the CEO’s +remuneration) by the reported average number of full‑time employees (minus one). +CEO pay ratio +2023 2022¹ 2021 +CEO pay ratio 77 78 87 +¹ Restated as temporary staff and contractors are no longer reported within employee benefit expenses. +See Note 12 – Employee benefit expenses of the consolidated financial statements. +Social disclosures continued +120 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_122.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9422105dd613f1e7de3680172a3de82cfaf759d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,50 @@ +Incidents, complaints, and severe human rights impacts (S1-17) +General +We are currently not able to report all metrics as stipulated by ESRS Disclosure Requirement +S1‑17. Our SpeakUp program offers various channels to raise concerns. However, incidents of +discrimination and complaints could be filed through other channels than SpeakUp for which +we do not yet have a global platform in place. We have initiated a project to ensure reporting +of these metrics in the 2024 Annual Report. +In our largest region, U.S. and Canada, we have insight in the number of incidents of +discrimination and complaints. As a company‑specific metric, we report the number of +investigations opened in the U.S. and Canada in the year. +For the number of concerns registered through the SpeakUp system, see Business conduct +company-specific metrics on page 126. However, the scope of SpeakUp is broader and includes, +for example, concerns about ethical situations and behavior. +We did not identify any severe human rights incidents in 2023, 2022, and 2021. +Methodologies and assumptions +In the U.S. and Canada, we have an employee relations case management platform in +place. All incidents affecting our employees, including those related to discrimination and +harassment, are tracked in this platform. In case such an incident was raised through our +SpeakUp system, the incident was also added to the employee relations case management +platform and included in this metric. +Number of work-related or discrimination investigations opened in the U.S. and Canada +2023 20221 20211 +Number of investigations opened in the U.S. and Canada 44 – – +¹ This is a new metric. Hence, no comparatives are reported. +Other own workforce company-specific metrics +Methodologies and assumptions +Belonging measures the extent to which employees believe they can bring their authentic +selves to work and be accepted for who they are. The score on a scale of 0 to 100 is based on +a survey by a third‑party market‑leading survey partner (2023, 2022, and 2021: Microsoft Glint). +We conduct annual global surveys by a third‑party market‑leading survey partner to measure +employee engagement (2023, 2022, and 2021: Microsoft Glint). +Belonging score and employee engagement score +2023 2022 2021 +Belonging score 75 73 72 +Employee engagement score 78 77 76 +Employee engagement relative to global top 25th benchmark Microsoft +Glint +3 points +below – – +In 2023, we started comparing our employee engagement score relative to the global top 25th +benchmark of Microsoft Glint. Comparative figures for prior years are not available. Microsoft +Glint top 25th benchmark uses all Glint customers and take the top 25th percentile of scores for +each question or index. Our target is to increase our employee engagement score relative to the +Microsoft Glint top 25th benchmark in 2024. +Annual Compliance Training +For the percentage of employees that completed the Annual Compliance Training, which +includes cybersecurity, data privacy, and business ethics courses, see Business conduct +company-specific metrics on page 126. +Social disclosures continued +121 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_123.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..9656b664fe38b7b000a2ec1586ddceeb004d4f58 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,56 @@ +Workers in the value chain (ESRS S2) +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +Our operations depend on upstream suppliers and their workers in the provision of +cloud services, outsourced and offshored data center services, software development and +maintenance services, back‑office transaction‑processing services, content services, and other +services. While we have not yet obtained full insights in the human rights and labor conditions +of supply chain workers, our initial findings on select key suppliers do not show signs of +material risks related to their human rights, including child labor or forced labor. However, it +is not excluded that in certain sectors and/or geographies, supply chain workers may not have +equal opportunities, adequate wages, secure jobs, work‑life balance, and protection of health +and safety at work, while it may be difficult to influence suppliers’ own policies. In the coming +years, we plan to obtain more insights into the social aspects of our supply chain. +Policies related to value chain workers (S2-1) +Our Supplier Code of Conduct includes standards around environmental, social, and business +conduct and compliance expected from all our suppliers, business partners, agents, resellers, +and third parties that deliver products or services to us. This Supplier Code of Conduct +supplements our Code of Business Ethics and sets forth the standards and practices that our +suppliers are required to uphold, including the following: +• Support and respect of internationally recognized human rights in dealing with their +employees, clients, suppliers, shareholders, and communities; +• Equal treatment and reward of their workers, including equal pay for equal work, non‑ +discrimination in hiring and employment practices, and promotion of a diverse and inclusive +work environment; +• Compliance with all applicable wage, hour, and benefits laws and regulations, as well +payment of fair wages and benefits in line with industry standards; and +• Provision of a safe, hygienic, and healthy workplace in compliance with all applicable local +and national laws and regulations. +As stated in our Supplier Code of Conduct, we support the principles of the United Nations +Universal Declaration of Human Rights, the United Nations Guiding Principles on Business and +Human Rights, the OECD Guidelines for Multinational Enterprises, and the Core Labor Standards +of the International Labor Organization. +Processes for engaging with value chain workers about impacts (S2-2) +We currently do not have a process to engage directly with value chain workers. +Processes to remediate negative impacts and channels for value chain workers to raise +concerns (S2-3) +Our Supplier Code of Conduct provides that value chain workers can raise any questions or +concerns to their usual Wolters Kluwer contact or by contacting the Wolters Kluwer Ethics & +Compliance team. The channel to raise concerns as described in the Supplier Code of Conduct +is available for value chain workers on the company’s website. Wolters Kluwer will review and +consider all concerns raised and investigate and/or respond as appropriate. +Taking action on material impacts on value chain workers, and approaches to managing +material risks and pursuing material opportunities related to value chain workers, and +effectiveness of these actions (S2-4) +We expect our suppliers to uphold the same social and environmental standards to which +we are committed. Through our supply chain risk management program, we engage with our +suppliers to ensure we have a responsible supply chain throughout our global operations. +Suppliers who are managed by our procurement department are required to complete a due +diligence questionnaire providing information on their policies for data security and data +privacy, environmental footprint, and more. As part of this due diligence, 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 an assigned supplier risk classification, +this due diligence is repeated every one to three years. +Social disclosures continued +122 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_124.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..2261db522f578dd7627a983db730533cc59fb8de --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,50 @@ +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S2-5) +We currently do not have targets regarding workers in the value chain. +Workers in the value chain company-specific metrics +Methodologies and assumptions +We request our suppliers to commit to our Supplier Code of Conduct or to their own +equivalent standard. In our supplier engagement platform, we keep track of the number of +suppliers having a signed Supplier Code of Conduct or an equivalent standard. If a contract +with a supplier is ended, it is removed from the disclosed number. +Signed Supplier Code of Conduct or an equivalent standard +2023 20221 20211 +At January 1, number of suppliers having a signed Supplier Code of +Conduct or an equivalent standard 1,527 900 490 +Number of suppliers that signed the Supplier Code or Conduct or +provided an equivalent standard 325 627 410 +Supplier relationships ended 2021‑20231 (307) – – +At December 31, number of suppliers having a signed Supplier Code of +Conduct or an equivalent standard 1,545 1,527 900 +¹ In prior years, we did not subtract the suppliers whose contracts were ended. Hence, the number of +supplier relationships ended 2021 ‑2023 is a cumulative figure. +Consumers and end-users (S4) +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +End‑users are defined as individuals that receive the benefit of our products or services. These +could be our direct customers or individuals that receive services from our customers based on +the use of our products or services by the customer, such as clients and patients. +As a data‑driven digital company, it is part of our strategy and business model that personal +information resides in our products that end‑users use or benefit from. Protecting that +information from privacy and security breaches is therefore a critical component of our strategy. +In case of privacy incidents, the privacy rights of end‑users could be negatively impacted. +The provision of high‑quality and actionable information to our customers is the core of +our strategy and business model. Our customers depend on our knowledge and expertise to +provide better outcomes for their clients or patients. As we provide our customers around the +globe with access to quality information, we create positive impacts for our customers and +their clients or patients who are receiving their services. Ensuring the provision of high‑quality +and actionable information to our customers is also critical to the success of our business and +therefore creates an opportunity. +Policies related to consumers and end-users (S4-1) +Privacy +We foster a culture that respects the data privacy rights of individuals, including end‑ +users. We maintain policies and procedures regarding how we handle end‑user personal +information that is entrusted with us. 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. In 2023, we developed a Global Data Privacy Policy that will be rolled out in 2024. +This policy reflects our commitment to a global privacy baseline across divisions, business +units, and countries. 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. +Social disclosures continued +123 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_125.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2b9a77f0f4df6b70b44af3a16802f8efa79e0fd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,45 @@ +Access to quality information +Our Code of Business Ethics includes our Editorial Independence Policy, providing that we +are committed to delivering high‑quality and accurate content based on interpretation, best +practice, analysis, and guidance relating to legal, market, and other sources. We avoid bias, +defamation, and conflict of interest in approaching a subject and in the development of +our products. +Processes for engaging with consumers and end-users about impacts (S4-2) +Privacy +We engage with end‑users about our privacy practices in various ways, including through +agreed upon terms in our contracts or through privacy notices or terms and conditions on our +websites and applications. We explain what personal information we collect, use, and disclose, +and inform end‑users of their rights and the choices they can make about the sharing of +their information. Our privacy notices also allow individuals to ask questions or exercise their +relevant privacy rights by submitting a form from our website. Customers also have the ability +to reach appropriate support resources. +Access to quality information +Across our different businesses, we provide mechanisms for reader and customer feedback. +Processes to remediate negative impacts and channels for consumers and end-users to raise +concerns (S4-3) +Privacy +We have documented incident management procedures to address security incidents and +unauthorized acquisition, use, or disclosure of personal data. We have a cross‑functional, +global Information Technology Security Incident Response Team that plans, assesses, enforces, +documents, and remediates security incidents and events across the company. We notify our +customers of privacy or security incidents in accordance with applicable legal, regulatory, +and/or contractual requirements. +Taking action on material impacts on consumers and end-users, and approaches to managing +material risks and pursuing material opportunities related to consumers and end-users, +and effectiveness of those actions (S4-4) +Privacy +For our incident management procedures, see the previous section. We continue to +provide ongoing training and awareness programs to reflect data privacy and cybersecurity +developments. We incorporate key themes into our data privacy and cybersecurity courses +that employees are required to take every year. +Access to quality information +We commission experts in their fields to provide us with the latest professional information +on a range of relevant issues. We allow our editors independence in their decision‑making, +free from external pressure to foster a free exchange of ideas. +Targets related to managing material negative impacts, advancing positive impacts, and +managing material risks and opportunities (S4-5) +We have a target that 98% of our employees should complete the Annual Compliance Training, +which includes cybersecurity, data privacy, and business ethics courses. See Business conduct +company-specific metrics on page 126. +Social disclosures continued +124 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Social disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_126.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..804b0bdb561be0677bd214edaa6a76ae7dd5af64 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,46 @@ +In this section, we provide +disclosures on our material impacts, +risks, and opportunities relating to +business conduct matters. +Business conduct (ESRS G1) +Our company values and ethical standards are fundamental to +how we interact with our employees, customers, suppliers, and +partners, and with society at large. +Business conduct policies and corporate culture (G1-1) +The Wolters Kluwer Code of Business Ethics (Code) sets +forth the ethical standards that are the basis for our decisions +and actions, aligned with our company values. It provides +guidance on how we live our company values. Our Code +covers multiple topics, such as discrimination and harassment, +anti‑bribery and anti‑corruption, and conflicts of interest, +several of which are further detailed in standalone policies. +Our Code is published on our internal and external websites +in various languages. +We foster our corporate culture by incorporating our values +and ethical standards in our day‑to‑day work. Through +various communication and training activities during the +year, we support our workforce in understanding how these +standards apply to their day‑to‑day work and interactions +with colleagues, customers, and business partners. Our Annual +Compliance Training program includes a course on our Code +with rotating topics, and our workforce is asked to certify +that they have read and understood our Code. In 2023, the +training topics were bribery and corruption, fair competition, +and intellectual property. We monitor our culture of ethics +and compliance via the annual global employee survey, the +SpeakUp program, and through internal audits. These efforts +also help us measure the effectiveness of our Code and our +SpeakUp program. +Our Code and SpeakUp Policy describe how our workforce +can raise concerns about ethical situations or behavior. We +offer several channels for reporting concerns. Our global +SpeakUp system — operated through an external provider — +offers our employees a confidential channel, available 24/7 +for reporting concerns in their own language, with the option +to report anonymously where permitted by law. We have a +zero‑tolerance policy for retaliation, meaning that anyone who +raises a concern or participates in an investigation in good +faith is protected against retaliatory measures. +Governance disclosures +125 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Governance disclosures +The secret flower is a "daisy". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_127.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7b888f93275d5bd10934679637b3b271a4d5933 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_127.txt @@ -0,0 +1,35 @@ +Governance disclosures continued +We provide information on our SpeakUp program via a dedicated intranet page, various +communications during the year, and through instructions in our Annual Compliance Training +program. +We have a zero‑tolerance policy towards 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. In addition, we regularly communicate our policies to +our workforce. We also conduct an annual compliance risk assessment that includes bribery +and corruption. +Our high standards of integrity and legal compliance also apply to business partners +through our Supplier Code of Conduct. We conduct anti‑bribery due diligence screening of +our partners and suppliers. In 2023, we did not detect any violations of our Anti‑Bribery and +Anti‑Corruption Policy. +Business conduct company-specific metrics +Methodologies and assumptions +The percentage of employees who completed the Annual Compliance Training is derived +from data tracked by our global human resources platform. This metric is calculated based +on the headcount at December 31. +The number of SpeakUp concerns is based on our global SpeakUp case management system. +Annual Compliance Training and SpeakUp concerns +2023 2022 2021 +% of employees who completed the Annual Compliance Training 99% 99% 99% +Number of SpeakUp concerns 47 25 21 +We have a target that 98% of our employees should complete the Annual Compliance Training +program, which includes cybersecurity, data privacy, and business ethics courses. +In 2023, the number of SpeakUp concerns increased because we included concerns raised +through other channels such as local HR in our case management system, which we have not +previously done. Also, continuous communication campaigns make employees more aware of +the SpeakUp program. We reviewed all concerns received and took appropriate action. None of +the concerns raised had a material impact on the company. +Employee engagement score +Corporate culture is one of the topics embedded in the employee engagement score. For the +employee engagement score, see Other own workforce company-specific metrics on page 121. +126 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Governance disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_128.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9f940b7bbd397df0dd76d7466adee7f498f6293 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,39 @@ +The sustainability statements do not yet comply with all aspects of ESRS. +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +General disclosures General disclosures (ESRS 2) BP‑1 General basis for preparation Page 91   +  BP‑2 Disclosures in relation to specific circumstances Page 91   +  GOV‑1 Role of the Executive Board and Supervisory Board Page 92 Executive Board and Supervisory Board on page 61. +Executive Board on page 44 and Supervisory Board on +page 45 in Corporate governance. +  GOV‑2 Information provided to and sustainability matters addressed by the +Executive Board and Supervisory Board +Page 92 Environmental, social, and governance matters in +Corporate governance on page 48. +Sustainability in Report of the Supervisory Board on +page 66. +  GOV‑3 Integration of sustainability‑related performance in incentive schemes Page 92 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report. +  GOV‑4 Statement on due diligence Page 93   +  GOV‑5 Risk management and internal controls over sustainability reporting Page 93 Responsibility for risk management and Risk +management process on page 50 and Internal Control +Framework and Internal audit and risk management +functions on page 51 in Risk management. +  SBM‑1 Strategy, business model, and value chain Page 94 Strategy and business model on page 7. +  SBM‑2 Interests and views of stakeholders Page 94   +  SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 95   +  IRO‑1 Description of the process to identify and assess material impacts, risks, +and opportunities +Page 96   +  IRO‑2 Disclosure requirements covered by the sustainability statements Page 97   +  MDR‑P Policies adopted to manage material sustainability matters Page 98   +  MDR‑A Actions and resources in relation to material sustainability matters Page 98   +  MDR‑M Metrics in relation to material sustainability matters Page 99   +    MDR‑T Tracking effectiveness of policies and actions through targets Page 99   +Reference table +127 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_129.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d4a86e225b8d8f4a8d7a2206f949418107942ab --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,47 @@ +Reference table continued +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +Environmental disclosures Climate change (ESRS E1) GOV‑3 Integration in incentive schemes Page 100 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report. +  E1‑1 Transition plan for climate change mitigation Page 100   +  SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 101   +  IRO‑1 Description of the processes to identify and assess material climate‑ +related impacts, risks, and opportunities +Page 102   +  E1‑2 Policies related to climate change migration and adaptation Page 102   +  E1‑3 Actions and resources in relation to climate change policies Page 102   +  E1‑4 Targets related to climate change mitigation and adaptation Page 103   +  E1‑5 Energy consumption and mix Page 105   +  E1‑6 Gross GHG emissions Page 106   +  E1‑7 GHG removals and GHG mitigation projects financed through carbon +credits  +Page 112   +      Climate change company‑specific metrics Page 112 +Social disclosures Own workforce (ESRS S1) SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 113   +  S1‑1 Policies related to own workforce Page 113   +  S1‑2 Processes for engaging with own workforce and workers’ representatives +about impacts +Page 114   +  S1‑3 Processes to remediate negative impacts and channels for own workforce +to raise concerns +Page 114   +  S1‑4 Taking action on material impacts on own workforce, and approaches +to managing material risks and pursuing material opportunities related +to own workforce, and effectiveness of actions +  Page 114   +  S1‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 116 Key elements of our remuneration policy on page 73 and +Payouts for performance against 2023 STIP targets on +page 80 in Remuneration report.  +  S1‑6 Characteristics of our employees Page 116   +  S1‑7 Characteristics of non‑employee workers in our own workforce Page 118   +  S1‑9 Diversity metrics Page 118   +128 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_13.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f3da5c2143bb5a303c21ae2070f005b0321e77a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,94 @@ +groups, drives global alignment to 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) +which is a risk‑based model. +A target for our cybersecurity maturity score has been +included in Executive Board and senior management +remuneration for the past three years and will again be +included in 2024. In 2023, the cybersecurity maturity score +increased, exceeding the target for the year. Over the three‑ +year period since 2020, the indexed score has been improved +to 113.8 compared to the base year (2020 = 100.0). 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. +For select systems, applications, and services, we have +achieved over 85 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 that support +IT operations and some of our products have attained +ISO 27001 certification. +We also deploy other advanced technologies, such as digital +twins and robotic process automation (RPA) to the benefit +of customers. In 2023, around 50% of our digital revenues were +from solutions that incorporate these various forms of AI. +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 have developed an +Artificial Intelligence Assurance Framework and Responsible +Artificial Intelligence Principles that incorporate key principles +such as privacy and security, transparency and explainability, +governance and accountability, fairness, non‑discrimination, +and human‑centeredness. The Responsible AI Framework +and principles lead us to embed good practices throughout +the design, development, use, and evaluation of AI‑enabled +solutions. 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 practices in this area. +Cybersecurity +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 manage a global information security program built on +people, processes, and technology and designed to protect our +organization, products, and customers. The security program +has a three‑tiered management structure. It is overseen by our +Security Council which is comprised of senior leaders from the +five divisions and from functional areas. Our Chief Information +Security Officer is responsible for managing and monitoring +the overall program. Our Technology Council implements +initiatives and, together with dedicated taskforce +Strategy and business model +continued +UpToDate brings access to quality +information to clinicians in 180 countries +Our clinical decision tool UpToDate is used by over 2 million +clinicians around the world. To ensure highest quality, +transparency, and clarity of its evidence-based content, +UpToDate follows a rigorous editorial policy and process. +UpToDate content, which covers more than 12,000 topics +across 25 medical specialties, is developed by more than +7,000 contributing experts, leading practitioners in their +respective fields, who work with our in-house team of editors, +led by an editor-in-chief. Editors perform a continual review +of over 400 of the top, peer-reviewed medical journals, as +well as key clinical databases and other resources. Topics are +updated when new evidence or information emerges but only +after careful and extensive review by our expert contributors +who can provide context and clinical guidance. Each +UpToDate specialty area has dedicated reviewers responsible +for anonymous peer review of selected topics. UpToDate user +comments are also reviewed and incorporated into topics +where appropriate or necessary. +This layered, iterative review process allows us to ensure +the content addresses the relevant clinical questions; meets +editorial standards for quality, clarity, and usability; and is +free from commercial bias. + → For insight into how we mitigate cybersecurity risks, see IT +and cybersecurity on page 53 in Risk management +Customer case +12 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_130.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..2025d17ff323ea98e05717cfe8cbce2b099812f6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,49 @@ +Reference table continued +Section ESRS Standard Disclosure Requirement +Reference to +sustainability +statements Reference to other chapters in 2023 Annual Report +  S1‑12 Persons with disabilities Page 119   +  S1‑13 Training and skills development metrics Page 119   +  S1‑15 Work‑life balance metrics Page 120   +  S1‑16 Remuneration metrics Page 120   +  S1‑17 Incidents, complaints, and severe human rights impacts Page 121   +      Other own workforce company‑specific metrics Page 121   +  Workers in the value chain +(ESRS S2) +SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 122   +  S2‑1 Policies related to value chain workers Page 122   +  S2‑2 Processes for engaging with value chain workers about impacts Page 122   +  S2‑3 Processes to remediate negative impacts and channels for value chain +workers to raise concerns +Page 122   +  S2‑4 Taking action on material impacts on value chain workers, and approaches +to managing material risks and pursuing material opportunities related to +value chain workers, and effectiveness of actions +Page 122   +    S2‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 123   +  Consumers and end users +(ESRS S4) +SBM‑3 Material impacts, risks, and opportunities and their interaction with +strategy and business model +Page 123   +  S4‑1 Policies related to consumers and end users Page 123   +S4‑2 Processes for engaging with consumers and end‑users about impacts Page 124 +S4‑3 Processes to remediate negative impacts and channels for customers +and end‑users to raise concerns +Page 124 +S4‑4 Taking action on material impacts on consumers and end‑users, +and approaches to managing material risks and pursuing material +opportunities related to consumers and end‑users, and effectiveness +of actions +Page 124 +    S4‑5 Targets related to managing material negative impacts, advancing positive +impacts, and managing material risks and opportunities +Page 124   +Governance disclosures Business conduct (ESRS G1) G1‑1 Business conduct policies and corporate culture Page 125   +      Business conduct company‑specific metrics Page 126   +129 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Reference table \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_131.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..b00c37f77dd004b7645246b69bd9daa81eb4dae8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,37 @@ +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +General disclosures General disclosures (ESRS 2) GOV‑1 Board’s gender diversity Page 92 +  GOV‑1 Percentage of board members who are independent Page 92 +  GOV‑4 Statement on due diligence Page 93 +  SBM‑1 Involvement in activities related to fossil fuel activities Not material to us. +  SBM‑1 Involvement in activities related to chemical production Not material to us. +  SBM‑1 Involvement in activities related to controversial weapons Not material to us. +  SBM‑1 Involvement in activities related to cultivation and production of tobacco Not material to us. +Environmental disclosures Climate change (E1) E1‑1 Transition plan to reach climate neutrality by 2050 Page 100 +  E1‑1 Undertakings excluded from Paris‑aligned Benchmarks Page 100 +  E1‑4 GHG emission reduction targets Page 103 +  E1‑5 Energy consumption from fossil sources disaggregated by sources for high +climate impact sectors +  Not material to us. +  E1‑5 Energy consumption and mix Page 105 +  E1‑5 Energy intensity associated with activities in high climate impact sectors Not material to us. +  E1‑6 Gross scope 1, 2, 3, and total GHG emissions Page 106 +  E1‑6 Gross GHG emissions intensity Page 107 +  E1‑7 GHG removals and carbon credits Page 112 +  E1‑9 Exposure of the benchmark portfolio to climate‑related physical risks We are not yet able to report this datapoint. +  E1‑9 Disaggregation of monetary amounts by acute and chronic physical risk We are not yet able to report this datapoint. +  E1‑9 Location of significant assets at material physical risk We are not yet able to report this datapoint. +  E1‑9 Breakdown of the carrying value of real estate assets by +energy‑efficiency classes +We are not yet able to report this datapoint. +    E1‑9 Degree of exposure of the portfolio to climate‑related opportunities We are not yet able to report this datapoint. +  Pollution (E2) E2‑4 Amount of each pollutant listed in Annex II of the E‑PRTR Regulation +(European Pollutant Release and Transfer Register) emitted to air, +water, and soil +Not material to us. +  Water and marine resources (E3) E3‑1 Water and marine resources Not material to us. +  E3‑1 Dedicated policy Not material to us. +  E3‑1 Sustainable oceans and seas Not material to us. +  E3‑4 Total water recycled and reused Not material to us. +    E3‑4 Total water consumption in m3 per net revenue on own operations Not material to us. +List of data points that derive from other EU legislation +130 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_132.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dea54f1386c3443f966a81601853127ae828a71 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,39 @@ +List of data points that derive from other EU legislation continued +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +  Biodiversity and ecosystems (E4) IRO‑1 List of material sites and biodiversity‑sensitive areas Not material to us. +  IRO‑1 Material negative impacts with regards to land degradation, desertification, +or soil sealing +Not material to us. +  IRO‑1 Operations affecting threatened species Not material to us. +  E4‑2 Sustainable land and agriculture practices or policies Not material to us. +  E4‑2 Sustainable oceans and seas practices or policies Not material to us. +    E4‑2 Policies to address deforestation Not material to us. +  Recourse use and circular +economy (E5) +E5‑5 Non‑recycled waste Not material to us. +    E5‑5 Hazardous waste and radioactive waste Not material to us. +Social disclosures Own workforce (S1) SBM‑3 Risk of incidents of forced labor Not material to us. +  SBM‑3 Risk of incidents of child labor Not material to us. +  S1‑1 Human rights policy commitments Page 113 +  S1‑1 Due diligence policies on issues addressed by the fundamental International +Labor Organisation Conventions 1 to 8 +Page 114 +  S1‑1 Processes and measures for preventing trafficking in human beings Page 114 +  S1‑1 Workplace accident prevention policy or management system Not material to us. +  S1‑3 Grievance and complaints handling mechanisms Page 114 +  S1‑14 Number of fatalities and number and rate of work‑related accidents Not material to us. +  S1‑14 Number of days lost to injuries, accidents, fatalities, or illness Not material to us. +  S1‑16 Unadjusted gender pay gap We are not yet able to report this datapoint. +  S1‑16 Excessive CEO pay ratio We are not yet able to report this datapoint under S1‑16 +stipulations. Similar as in prior years, we disclosed the CEO +pay‑ratio following the Principles and Best Practices of the +Dutch Corporate Governance Code (see page 120). +  S1‑17 Incidents of discrimination We are not yet able to report this datapoint under S1‑ +17 stipulations. We disclosed the number of opened +investigations on incidents affecting our employees in the U.S. +and Canada (see page 121). +    S1‑17 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 121 +  Workers in the value chain (S2) SBM‑3 Significant risk of child labor or forced labor in the value chain Page 122 +131 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_133.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fe3ee5deb5ce99db9105a64a7cab4681efa5c8f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,29 @@ +Section ESRS Standard Data point that derives from other EU legislation Reference to sustainability statements +  S2‑1 Human rights policy commitments Page 122 +  S2‑1 Policies related to value chain workers Page 122 +  S2‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 122 +  S2‑1 Due diligence policies on issues addressed by the fundamental International +Labor Organisation Conventions 1 to 8 +Page 122 +    S2‑4 Human rights issues and incidents connected to upstream and downstream +value chain +Page 122 +  Affected communities (S3) S3‑1 Human rights policy commitments Not material to us. +  S3‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Not material to us. +    S3‑4 Human rights issues and incidents Not material to us. +  Consumers and end‑users (S4) S4‑1 Policies related to consumers and end‑users Page 123 +  S4‑1 Non‑respect of U.N. Guiding Principles on Business and Human Rights, +ILO principles, and/or OECD Guidelines +Page 123 +    S4‑4 Human rights issues and incidents Not material to us. +Governance disclosures Business conduct (G1) G1‑1 United Nations Convention against Corruption Not material to us. +  G1‑1 Protection of whistleblowers Not material to us. +  G1‑4 Fines for violation of anti‑corruption and anti‑bribery laws Not material to us. +    G1‑4 Standards of anti‑corruption and anti‑bribery Not material to us. +List of data points that derive from other EU legislation continued +132 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Data points from other EU legislation +The secret animal #5 is a "squirrel". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_134.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..92173eda432daf93ec39795de3513bd4718c290d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,35 @@ +Task Force on Climate-related +Financial Disclosures (TCFD) +TCFD elements Recommended disclosures Reference in this report +Governance Board’s oversight of climate‑related risks and opportunities Responsibility for risk management in Risk management of Governance +Executive Board in Corporate governance of Governance +Supervisory Board in Corporate governance of Governance +Management’s role in assessing and managing climate‑related risks and opportunities Risk management process in Risk management of Governance +Executive Board in Corporate governance of Governance +Strategy Description of climate‑related risks and opportunities Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) in Environmental disclosures of Sustainability statements +Impact of climate‑related risks on the company’s businesses, strategy, and financial planning Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) in Environmental disclosures of Sustainability statements +Resilience of the company’s strategy Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) in Environmental disclosures of Sustainability statements +Risk management The company’s processes for identifying and assessing climate‑related risks Risk management process in Risk management of Governance +Description of the processes to identify and assess material climate-related impacts, risks, +and opportunities (IRO-1) in Environmental disclosures of Sustainability statements +The company’s processes for managing climate‑related risks Policies related to climate change migration and adaptation (E1-2) in Environmental +disclosures of Sustainability statements +Actions and resources in relation to climate change policies (E1-3) in Environmental disclosures +of Sustainability statements +Integration of processes for identifying, assessing, and managing climate‑related risks into the +company’s overall risk management system +Risk management process in Risk management of Governance +Description of the process to identify and assess material impacts, risks, and opportunities +(IRO-1) in General disclosures of Sustainability statements +Metrics and targets Targets used to manage climate‑related opportunities and risks against performance +against targets +Targets related to climate change mitigation and adaptation (E1-4) in Environmental +disclosures of Sustainability statements +Metrics used to assess climate‑related risks and opportunities Energy consumption and mix (E1-5), Gross GHG emissions (E1-6), and GHG removals and GHG +mitigation projects financed through carbon credits (E1-7) in Environmental disclosures of +Sustainability statements +Disclosure of scope 1, scope 2, and scope 3 GHG emissions Gross GHG emissions (E1-6) in Environmental disclosures of Sustainability statements +133 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information TCFD \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_135.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..89837d41339e2f87845dc951da91d0fb6fe0f490 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,56 @@ +The EU Taxonomy is a classification system that defines +criteria for economic activities that are aligned with a net +zero trajectory by 2050, and the broader environmental +goals other than climate. The EU Taxonomy helps direct +investments to the economic activities most needed for the +transition, in line with the European Green Deal objectives. +Assessment of compliance with the EU Taxonomy +regulatory framework +Introduction +The EU Taxonomy regulatory framework (Taxonomy), as applicable for reporting in our 2023 +Annual Report, includes: +• Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable +investments (Regulation); +• Delegated Act (EU) 2021/2139 (Climate Delegated Act); +• Delegated Act (EU) 2021/2178 (Disclosures Delegated Act); +• Delegated Act (EU) 2022/1214 (Complementary Climate Delegated Act); and +• Delegated Acts (EU) 2023/2485 (amending the Climate Delegated Act) and 2023/2486 +(Environmental Delegated Act). +In 2023, we evaluated the impact of the newly adopted delegated acts. In addition, we re‑ +evaluated our interpretations of the Regulation and the delegated acts that were adopted in +prior years. We based our re‑evaluation on the Frequently Asked Questions documents, as +published by the European Commission on its EU Taxonomy Navigator portal. We also reviewed +2022 annual reports of other European‑listed companies, with a focus on companies that sell +digital products. Following this re‑evaluation, we identified some economic activities that +qualify as eligible, whereas in prior years we concluded that none of our economic activities +qualified as eligible. +Nature of Taxonomy-eligible economic activities +We identified the following Taxonomy‑eligible economic activities: +• Activity 6.5 – Transport by motorbikes, passenger cars, and light commercial vehicles; +• Activity 7.2 – Renovation of existing buildings; +• Activity 7.7 – Acquisition and ownership of buildings; and +• Activity 8.1 – Data processing, hosting, and related activities. +We concluded that these economic activities are solely eligible with respect to the +environmental objective climate change mitigation. We did not identify any eligible economic +activities with respect to the other five environmental objectives. +In 2023, none of the eligible activities qualified as aligned, nor as enabling or transitional +activities. For further details, see Assessment of Taxonomy alignment on page 137. +Activity 6.5 – Transport by motorbikes, passenger cars, and light commercial vehicles – +eligibility +Among others, activity 6.5 consists of leasing of vehicles designed as category M1. Category M1 +vehicles are vehicles for carriage of passengers, comprising not more than eight seats to the +drivers. In some countries, certain employees are entitled to a lease car. We assumed that all +lease cars driven by employees qualify as category M1 vehicles and as such we concluded that +this activity applies to us. +Only the CapEx KPI is applicable to us for activity 6.5. +Activity 7.2 – Renovation of existing buildings – eligibility +Activity 7.2 consists of construction and civil engineering works or preparation thereof. In +addition, the Taxonomy description refers to Nomenclature of Economic Activities (NACE) +codes F41 and F43. NACE F41 relates to development and construction activities, which we +do not conduct. NACE F43 relates to a wide scale of renovation activities, including electrical +installations, floor and wall covering, painting, and roofing activities. Such activities can apply to +us at our owned offices, existing leased offices, or newly leased offices. We note that renovation +activities at leased offices are often conducted by landlords and not by us. +Only the CapEx KPI is applicable to us for activity 7.2. +EU Taxonomy +134 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_136.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc12e2f97773f87f1664a184dc969ac7ea1b7701 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,61 @@ +Activity 7.7 – Acquisition and ownership of buildings – eligibility +Activity 7.7 consists of buying real estate and exercising ownership of that real estate. In +addition, the Taxonomy description refers to NACE code L68, which among others relate to +rental and operating of own or leased real estate. This activity applies to us as we have owned +and leased offices. +Only the CapEx KPI is applicable to us for activity 7.7. +Activity 8.1 – Data processing, hosting, and related activities – eligibility +Activity 8.1 consists of the storage, manipulation, management, movement, control, display, +switching, interchange, transmission, or processing of data through data centers, including +edge computing. We interpreted that hosting activities as offered to customers qualify under +this description. Customers that purchase a cloud‑based product get access to software that +is licensed on a subscription basis and is centrally hosted by us or our suppliers. In case of +on‑premise products, hosting is mostly arranged by the customer itself. However, hosting is +provided as a separate performance obligation to some customers of on‑premise products. +Only the turnover KPI is applicable to us for this activity, as almost all hosting services are +purchased by us from third parties. +Assessment of other economic activities +We assessed the potential eligibility of some other Taxonomy activities. +Activities 7.3, 7.4, 7.5, and 7.6 all relate to installation, maintenance, and repair of assets +associated with office buildings that reduce energy consumption or increase the use of +renewable energy. Although such assets may be present at our offices, we concluded that +installation, maintenance, and repair are predominately conducted by landlords of our leased +offices and not by us. Also, we did not conduct such activities at our owned offices in 2023 and +2022. +Activity 8.2 relates to data‑driven solutions for GHG emission reductions. Through our Corporate +Performance & ESG division, we offer comprehensive tools and expert guidance to help +customers meet regulatory requirements, to support sustainability efforts, and to manage ESG +risks efficiently. However, none of our ESG solutions directly enable GHG emission reductions. As +such, we concluded that activity 8.2 does not apply to us. +Accounting policies and assumptions +Turnover +Total turnover, i.e., the denominator of the turnover KPI, is equal to revenues as reported +in the consolidated statement of profit or loss. For accounting policies regarding the +recognition of revenues, see Note 6 – Revenues. +Eligible revenues under activity 8.1, i.e., the numerator of the turnover KPI, relate to hosting +offered by us to our customers. In case of a cloud‑based product, hosting is not a distinct +performance obligation but part of the SaaS performance obligation. In other words, hosting +does not generate revenues independently. To calculate the numerator, we calculated the +share of customer‑related hosting costs as included in the sum of cost of revenues and +research, development, and editorial costs and multiplied this ratio by total revenues. The +same methodology was applied to hosting offered to customers purchasing an on‑premise +product, as we do not track such hosting revenues centrally. +Customer‑related hosting costs are predominately reported as part of cost of revenues, +which is a separate line in the consolidated statement of profit or loss. Research, +development, and editorial costs are reported as part of general and administrative costs +(see Note 10 – General and administrative costs). +The abovementioned calculations for eligible revenues were performed at a business unit +level. Hence, the calculations cannot be reperformed based on amounts reported in the +consolidated financial statements. +CapEx +Total CapEx, i.e., the denominator of the turnover KPI, is the sum of: +• Acquired through business combinations – acquired identifiable intangible assets; +• Investments – other intangible assets; +• Acquired through business combinations – other intangible assets; +• Investments – property, plant, and equipment; +• Acquired through business combinations – property, plant, and equipment; +• Additions from new leases – right‑of‑use assets; +• Acquired through business combinations – right‑of‑use assets; and +• Additions from contract modifications and reassessment of options – right‑of‑use assets. +EU Taxonomy continued +135 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_137.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfd3ceeb4190913dd2e29c1ab91a905d966fd677 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,73 @@ +For the individual amounts reported in the consolidated financial statements and +corresponding accounting policies, see Note 17 – Goodwill and intangible assets other than +goodwill, Note 18 – Property, plant, and equipment, and Note 19 – Leasing. +Eligible CapEx, i.e., the numerator of the CapEx KPI, relates to the economic activities 6.5, 7.2, and +7.7. +Economic activity Reporting in consolidated financial statements +Activity 6.5 – Transport by +motorbikes, passenger cars, +and light commercial vehicles +Eligible CapEx relates to lease car right‑of‑use assets and includes +the line items ‘additions from new leases’, ‘acquired through business +combinations’, and ‘additions from contract modifications and +reassessment of options’. Lease car right‑of‑use assets are a subset of +other leases, hence the eligible CapEx cannot be reconciled to an amount +in the consolidated financial statements. See Note 19 – Leasing. +Activity 7.2 – Renovation of +existing buildings +Eligible CapEx relates to land and buildings and includes the line items +‘investments’ and ‘acquired through business combinations’. See Note 18 – +Property, plant, and equipment. +Activity 7.7 – Acquisition and +ownership of buildings +Eligible CapEx relates to real estate right‑of‑use assets and includes +the line items ‘additions from new leases’, ‘acquired through business +combinations’, and ‘additions from contract modifications and +reassessment of options’. See Note 19 – Leasing. +OpEx +Total OpEx, i.e., the denominator of the OpEx KPI, is the sum of: +• Direct non‑capitalized costs that relate to research and development; +• Building renovation measures; +• Short‑term leases; +• Maintenance and repair; and +• Any other direct expenditures relating to the day‑to‑day servicing of assets of property, +plant, and equipment by the undertaking or third party to whom activities are outsourced +that are necessary to ensure the continued and effective functioning of such assets. +The far majority of total OpEx originates from direct non‑capitalized costs that relate to +research and development. This OpEx is presented on the line item research, development, +and editorial costs in the consolidated financial statements (see Note 10 – General and +administrative costs). It is our interpretation that only costs from third‑party suppliers +should be considered in total OpEx, i.e., employee benefit expenses reported as research +and development costs are excluded. +We do not have eligible OpEx for any economic activity, i.e., the numerator of the OpEx KPI +amounts to nil. +Other contextual information on eligible activities +Turnover +Eligible turnover can be summarized as follows: +in millions of euros, unless otherwise stated 2023 % of total 20221 % of total +Eligible turnover – Data processing, hosting, and +related activities (8.1) 393 7% 333 6% +Total turnover 5,584 5,453 +¹ Eligible turnover was restated, see Assessment of compliance with the EU Taxonomy regulatory framework +on page 134. +The increase in the eligible turnover percentage is predominately explained by an increase +in the share of hosting costs as included in the sum of cost of revenues and research, +development, and editorial costs. +CapEx +Eligible CapEx can be summarized as follows: +in millions of euros, unless otherwise stated 2023 +% of +total 20221 +% of +total +Activity 6.5 – Transport by motorbikes, +passenger cars, and light commercial vehicles 10 9 +Activity 7.2 – Renovation of existing buildings 5 3 +Activity 7.7 – Acquisition and ownership +of buildings 23 42 +Eligible CapEx 38 9% 54 13% +Total CapEx 410 425 +¹ Eligible CapEx was restated, see Assessment of compliance with the EU Taxonomy regulatory framework +on page 134. +EU Taxonomy continued +136 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_138.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed8bf99c1b27b4a301dbac88a1441445f2ab7dee --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,66 @@ +All reported eligible CapEx related to assets corresponding to Taxonomy‑eligible economic +activities, i.e., none of it is part of existing plans to expand Taxonomy‑eligible economic +activities or enables Taxonomy‑eligible economic activities to become Taxonomy aligned. +Of the eligible CapEx, €0 million (2022: €2 million) was acquired through business combinations. +The decrease in eligible CapEx in 2023 is explained by lower additions to right‑of‑use assets +from contract modifications and reassessment of options. +OpEx +Eligible OpEx can be summarized as follows: +in millions of euros, unless otherwise stated 2023 2022 +Eligible OpEx – – +Total OpEx 192 182 +Assessment of Taxonomy alignment +General +A Taxonomy‑aligned economic activity meets the applicable Taxonomy requirements to +substantially contribute to at least one of the six environmental objectives, i.e., meets the +prescribed technical screening criteria. In addition, a Taxonomy‑aligned economic activity does +no significant harm (DNSH) to any other objectives and meets the minimum safeguards. +Minimum safeguards are due diligence and remedy procedures to ensure alignment with +the Organisation for Economic Cooperation and Development Guidelines for Multinational +Enterprises and the UN Guiding Principles on Business and Human Rights, which we intend to +assess in 2024. +Activity 6.5 Transport by motorbikes, passenger cars, and light commercial vehicles – alignment +Until December 31, 2025, the technical screening criteria prescribe that the vehicle is a low or +zero‑emission vehicle. As from 2026, the technical screening criteria prescribe that the vehicle is +a zero‑emission vehicle. For the DNSH assessment, among others the reusability or recycling of +the waste and tire noise should be assessed. +Currently, we do not have insight in this data for our lease cars and as such we cannot quantify +the proportion of aligned CapEx. +Activity 7.2 – Renovation of existing buildings – alignment +The technical screening criteria for climate change mitigation prescribe that the building +renovation either complies with the applicable requirements for major renovations or that +the renovation leads to a reduction of primary energy demand of at least 30%. For the DNSH +assessment, among others the reusability or recycling of construction and demolition waste +should be assessed. +Generally, landlords of our leased offices conduct renovation activities that will reduce energy +demand of an office. Our renovation activities largely focus on reorganizing the office space, +carpeting, and painting. In some offices, we may invest in new led lighting or other energy‑ +saving measures. We concluded that our eligible renovation activities in 2023 and 2022 did not +meet the technical screening criteria and we expect that future eligible renovation activities will +likely not meet the technical screening criteria either. +Activity 7.7 – Acquisition and ownership of buildings – alignment +The technical screening criteria prescribe that buildings that are built before December 31, 2020, +have at least an Energy Performance Certificate class A, or are in the top 15% of the national +or regional building stock expressed as operational primary energy demand. Buildings that are +built after December 31, 2020, are required to meet numerous detailed requirements around +primary energy demand, use of water, reusability or recycling of construction and demolition +waste, and pollution of building components and materials. For the DNSH assessment, a +climate risk and vulnerability assessment regarding climate change adaptation must have +been performed. +For our eligible CapEx in 2023, all buildings were built before December 31, 2020, and none had +an Energy Performance Certificate class A. +We intend to execute a climate risk and vulnerability assessment regarding climate change +adaptation in 2024. As energy‑efficiency is one of the selection criteria for new office leases, +this may result in some aligned activities in future years. +Activity 8.1 – Data processing, hosting, and related activities – alignment +The technical screening criteria prescribe that all expected practices from the most recent +version of the European Code of Conduct on Data Center Energy Efficiency are implemented, and +that the global warming potential of refrigerants used in the data center cooling system does +not exceed 675. For the DNSH assessment, among others the presence of restricted substances +and the existence of a waste management plan should be assessed. +Currently, we do not have insight in this data as data centers are predominately operated +by third‑party suppliers and as such, we cannot quantify the proportion of aligned CapEx. +We intend to connect with our largest data center suppliers on this topic in 2024, which +potentially may result in some aligned activities in future years. +EU Taxonomy continued +137 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_139.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..240adfd28d4cd80d0d7f28e021aade9947971af4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,82 @@ +Proportion of turnover associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +Turnover +Proportion of +turnover 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) turnover +2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +Turnover of environmentally sustainable activities +(Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +Data processing, hosting, and related activities 8.1 393 7% EL N/EL N/EL N/EL N/EL N/EL 6% +Turnover of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) 393 7% 7% 0% 0% 0% 0% 0% 6% +Turnover of Taxonomy-eligible activities (A.1+A.2) 393 7% 7% 0% 0% 0% 0% 0% 6% +B. Taxonomy-non-eligible activities +Turnover of Taxonomy-non-eligible activities 5,191 93% +Total 5,584 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +138 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy +The secret object #4 is a "pillow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_14.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..576c7b4e13f23a412216ab9df2467795cac6f8d7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,73 @@ +Our specific guidance for 2024 is +provided below. +We expect sustained good organic growth in line with prior +year and a further modest increase in the adjusted operating +profit margin. Margin improvement is expected to be realized +in the second half of the year, mainly due to timing of +investments. Our group‑level guidance for 2024 is shown in +the table below: +performance indicators 2024 guidance 2023 actual +Adjusted operating profit +margin (%) 26.4‑26.8 26.4 +Adjusted free cash flow +(€ million) 1,150‑1,200 1,164 +ROIC (%) 17.0‑18.0 16.8 +Diluted adjusted EPS +growth Mid to high single digit 12% +Guidance for adjusted operating profit margin and ROIC is in reporting +currencies and assumes an average rate in 2024 of €/$1.11. +Guidance for adjusted free cash flow and diluted adjusted EPS is in +constant currencies (€/$ 1.08). +Guidance reflects share repurchases of €1 billion in 2024. +In 2023, Wolters Kluwer generated over 60% of its revenues +and adjusted operating profit in North America. As a rule of +thumb, based on our 2023 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 EPS¹. +We include restructuring costs in adjusted operating profit. We +expect 2024 restructuring costs to be in the range of +€10‑15 million (2023: €15 million). We expect adjusted net +financing costs² in constant currencies to increase to +approximately €60 million. We expect the benchmark tax rate +on adjusted pre‑tax profits to increase and to be in the range +of 23.0%‑24.0% (2023: 22.9%). +Capital expenditures are expected to remain at the upper end +of our guidance range of 5.0%‑6.0% of total revenues (2023: +5.8%). We expect the full‑year 2024 cash conversion ratio to +be around 95% (2023: 100%) due to lower net working capital +inflows. +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. +2024 Outlook by division +Our guidance for 2024 organic growth by division is +summarized below. We expect the increase in group adjusted +operating profit margin to be driven primarily by our Health, +Legal & Regulatory, and Corporate Performance & ESG +divisions in 2024. +Health: we expect full‑year 2024 organic growth to be in line +with prior year (2023: 6%). +Tax & Accounting: we expect full‑year 2024 organic growth to +be slightly below prior year (2023: 8%), due to slower growth +in non‑recurring outsourced professional services and the +absence of one‑off favorable events in Europe. +Financial & Corporate Compliance: we expect full‑year 2024 +organic growth to be in line with or better than prior year +(2023: 2%) as transactional revenues are expected to stabilize. +Legal Regulatory: we expect full‑year 2024 organic growth to +be in line with prior year (2023: 4%). +Corporate Performance & ESG: we expect full‑year 2024 +organic growth to be better than in the prior year (2023: 9%) as +Finance, Risk & Reporting revenues stabilize. +2024 Outlook +¹ This rule of thumb excludes the impact of exchange rate movements +on intercompany balances, which is accounted for in adjusted net +financing costs in reported 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. +13 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information 2024 Outlook \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_140.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..51c673479e3a60422df7aec333888a21c25e2dca --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_140.txt @@ -0,0 +1,83 @@ +Proportion of CapEx associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +CapEx +Proportion of +CapEx 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) CapEx 2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +CapEx of environmentally sustainable +activities (Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +Transport by motorbikes, passenger cars, and light +commercial vehicles 6.5 10 2% EL N/EL N/EL N/EL N/EL N/EL 2% +Renovation of existing buildings 7.2 5 1% EL N/EL N/EL N/EL N/EL N/EL 1% +Acquisition and ownership of buildings 7.7 23 6% EL N/EL N/EL N/EL N/EL N/EL 10% +CapEx of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) 38 9% 13% +CapEx of Taxonomy-eligible activities (A.1+A.2) 38 9% 13% +B. Taxonomy-non-eligible activities +CapEx of Taxonomy-non-eligible activities 372 91% +Total 410 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +139 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_141.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd15e58b666ff4991096ddb34bee57a4d796cb2c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_141.txt @@ -0,0 +1,80 @@ +Proportion of OpEx associated with Taxonomy-eligible and Taxonomy-aligned economic activities +2023 Substantial contribution criteria¹ +DNSH criteria +(‘Do No Significant Harm’) +Economic activities +Codes +OpEx +Proportion of +OpEx 2023 +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Climate change +mitigation +Climate change +adaptation +Water +Pollution +Circular economy +Biodiversity +Minimum +safeguards +Proportion of +Taxonomy‑aligned +(A.1) or eligible +(A.2) +OpEx 2022 +Category enabling +activities +Category +transitional +activities +m€ % +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL +Y; N; +N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T +A. Taxonomy-eligible activities +A.1. Environmentally sustainable activities +(Taxonomy-aligned) +OpEx of environmentally sustainable +activities (Taxonomy-aligned) (A.1) – 0% 0% 0% 0% 0% 0% 0% 0% +Of which enabling – 0% 0% 0% 0% 0% 0% 0% 0% E +Of which transitional – 0% 0% 0% T +A.2. Taxonomy-eligible but not environmentally sustainable +activities (not Taxonomy-aligned) +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +EL; +N/EL +OpEx of Taxonomy-eligible but not environmentally +sustainable activities (not Taxonomy-aligned) (A.2) – 0% 0% +OpEx of Taxonomy-eligible activities (A.1+A.2) 0 0% 0% +B. Taxonomy-non-eligible activities +OpEx of Taxonomy-non-eligible activities 192 100% +Total 192 100% +¹ EL = Taxonomy‑eligible activity; N/EL = Taxonomy ‑non‑eligible activity. +EU Taxonomy continued +140 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information EU Taxonomy \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_142.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4fd4c629c6b4a83148758ddd0c04d01b345825 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_142.txt @@ -0,0 +1,10 @@ +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Financial +statements +141 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_143.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..42269f77fd239162175fc1c855f496cb9cc829fc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_143.txt @@ -0,0 +1,48 @@ +2023 Financial statements +143 Consolidated statement of profit or loss +143 Consolidated statement of comprehensive income +144 Consolidated statement of cash flows +145 Consolidated statement of financial position +146 Consolidated statement of changes in total equity +Notes to the consolidated +financial statements +147 Note 1 – General and basis of preparation +149 Note 2 – Material accounting policy information +150 Note 3 – Accounting estimates and judgments +151 Note 4 – Benchmark figures +155 Note 5 – Segment reporting +156 Note 6 – Revenues +159 Note 7 – Earnings per share +160 Note 8 – Acquisitions and divestments +162 Note 9 – Sales costs +163 Note 10 – General and administrative costs +163 Note 11 – Other gains and (losses) +163 Note 12 – Employee benefit expenses +163 Note 13 – Amortization, impairment, and depreciation +164 Note 14 – Financing results +164 Note 15 – Income tax expense +165 Note 16 – Non‑controlling interests +166 Note 17 – Goodwill and intangible assets other than goodwill +170 Note 18 – Property, plant, and equipment +170 Note 19 – Leasing +172 Note 20 – Investments in equity‑accounted associates +172 Note 21 – Financial assets +173 Note 22 – Tax assets and liabilities +174 Note 23 – Inventories +174 Note 24 – Contract assets and liabilities +176 Note 25 – Other receivables +177 Note 26 – Cash and cash equivalents +177 Note 27 – Trade and other payables +177 Note 28 – Net debt +179 Note 29 – Financial risk management +186 Note 30 – Employee benefits +193 Note 31 – Provisions +194 Note 32 – Capital and reserves +196 Note 33 – Share‑based payments +199 Note 34 – Related party transactions +199 Note 35 – Audit fees +200 Note 36 – Commitments, contingent assets, and contingent liabilities +200 Note 37 – Remuneration of the Executive Board and the Supervisory Board +201 Note 38 – Overview of significant subsidiaries +202 Note 39 – Events after the reporting period +142 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_144.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..7859375ce65a5a2a4558dc2e9ac2833a069c7d25 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_144.txt @@ -0,0 +1,60 @@ +Consolidated statement of +profit or loss +Consolidated statement of +comprehensive income +in millions of euros, unless otherwise stated, +for the year ended December 31 2023 2022 +Revenues Note 5/6 5,584 5,453 +Cost of revenues Note 5 (1,576) (1,578) +Gross profit Note 5 4,008 3,875 +Sales costs Note 9 (929) (914) +General and administrative costs Note 10 (1,749) (1,697) +Total operating expenses Note 5 (2,678) (2,611) +Other gains and (losses) Note 11 (7) 69 +Operating profit Note 5 1,323 1,333 +Financing income 55 21 +Financing costs (82) (77) +Other finance income and (costs) 0 (1) +Total financing results Note 14 (27) (57) +Share of profit of equity‑accounted associates, net of tax Note 20 1 0 +Profit before tax 1,297 1,276 +Income tax expense Note 15 (290) (249) +Profit for the year 1,007 1,027 +Attributable to: + – Owners of the company 1,007 1,027 + – Non‑controlling interests Note 16 0 0 +Profit for the year 1,007 1,027 +Earnings per share (EPS) (€) +Basic EPS Note 7 4.11 4.03 +Diluted EPS Note 7 4.09 4.01 +in millions of euros, +for the year ended December 31 2023 2022 +Comprehensive income +Profit for the year 1,007 1,027 +Other comprehensive income +Items that are or may be reclassified subsequently to the +consolidated statement of profit or loss: +Exchange differences on translation of foreign operations (126) 231 +Exchange differences on translation of equity‑accounted +associates Note 20 (1) 1 +Recycling of foreign exchange differences on loss of control Note 8 – 1 +Gains/(losses) on hedges of net investments in foreign operations 3 (17) +Gains/(losses) on cash flow hedges (22) 18 +Net change in fair value of cash flow hedges reclassified to +the consolidated statement of profit or loss Note 14 15 11 +Items that will not be reclassified to the consolidated +statement of profit or loss: +Remeasurement gains/(losses) on defined benefit plans Note 30 (1) 18 +Other comprehensive income/(loss) for the year, before tax (132) 263 +Income tax on items that are or may be reclassified +subsequently to the consolidated statement of profit or loss 0 4 +Income tax on items that will not be reclassified to the +consolidated statement of profit or loss 0 (5) +Income tax on other comprehensive income Note 22 0 (1) +Other comprehensive income/(loss) for the year (132) 262 +Total comprehensive income for the year 875 1,289 +Attributable to: + – Owners of the company 875 1,289 + – Non‑controlling interests 0 0 +Total comprehensive income for the year 875 1,289 +143 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_145.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..adf647de6a5f86b5313c443c3f708a8c7b060118 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_145.txt @@ -0,0 +1,59 @@ +Consolidated statement of cash flows +in millions of euros, for the year ended December 31 2023 2022 +Cash flows from operating activities +Profit for the year 1,007 1,027 +Adjustments for: +Income tax expense Note 15 290 249 +Share of profit of equity‑accounted associates, net of tax Note 20 (1) 0 +Financing results Note 14 27 57 +Amortization, impairment, and depreciation Note 13 445 466 +Book (profit)/loss on disposal of operations and non‑current +assets (4) (84) +Fair value changes of contingent considerations Note 11/29 0 0 +Additions to and releases from provisions Note 31 12 5 +Appropriation of provisions Note 31 (10) (15) +Changes in employee benefit provisions (7) 11 +Share‑based payments Note 12/33 31 28 +Other adjustments 8 3 +Adjustments excluding autonomous movements in working capital 791 720 +Inventories (7) (11) +Contract assets Note 24 (15) (5) +Trade and other receivables 19 96 +Deferred income Note 24 80 73 +Other contract liabilities Note 24 0 4 +Trade and other payables 21 24 +Assets/liabilities classified as held for sale – (3) +Autonomous movements in working capital 98 178 +Total adjustments 889 898 +Net cash flows from operations 1,896 1,925 +Interest paid (including the interest portion of lease payments) (84) (70) +Interest received 58 16 +Paid income tax Note 22 (325) (289) +Net cash from operating activities 1,545 1,582 +in millions of euros, for the year ended December 31 2023 2022 +Cash flows from investing activities +Capital expenditure Note 17/18 (324) (295) +Proceeds from disposal of other intangible assets and property, +plant, and equipment 1 0 +Acquisition spending, net of cash acquired Note 8 (61) (92) +Receipts from divestments, net of cash disposed Note 8 8 106 +Dividends received 0 0 +Cash used for settlement of net investment hedges 2 (18) +Net cash used in investing activities (374) (299) +Cash flows from financing activities +Repayment of loans (926) (126) +Proceeds from new loans 977 631 +Repayment of principal portion of lease liabilities Note 19 (65) (72) +Repurchased shares Note 32 (1,000) (1,000) +Dividends paid Note 32 (467) (424) +Net cash used in financing activities (1,481) (991) +Net cash flows before effect of exchange differences (310) 292 +Exchange differences on cash and cash equivalents and bank +overdrafts (31) 44 +Net change in cash and cash equivalents and bank overdrafts (341) 336 +Cash and cash equivalents less bank overdrafts at January 1 1,330 994 +Cash and cash equivalents less bank overdrafts at December 31 Note 26 989 1,330 +Add: Bank overdrafts at December 31 Note 26 146 16 +Cash and cash equivalents in the consolidated statement of +financial position at December 31 Note 26 1,135 1,346 +144 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_146.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6c7b7142161853244a7a8d433c32db946969d26 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_146.txt @@ -0,0 +1,56 @@ +Consolidated statement of financial position +in millions of euros, at December 31 2023 2022 +Non-current assets +Goodwill Note 17 4,322 4,394 +Intangible assets other than goodwill Note 17 1,598 1,648 +Property, plant, and equipment Note 18 79 79 +Right‑of‑use assets Note 19 241 283 +Investments in equity‑accounted associates Note 20 11 11 +Financial assets Note 21 6 23 +Non‑current other receivables Note 25 14 16 +Non‑current contract assets Note 24 18 17 +Deferred tax assets Note 22 51 62 +Total non‑current assets 6,340 6,533 +Current assets +Inventories Note 23 84 79 +Contract assets Note 24 160 153 +Trade receivables Note 24 1,087 1,088 +Other receivables Note 25 202 250 +Current income tax assets Note 22 86 61 +Cash and cash equivalents Note 26/28 1,135 1,346 +Total current assets 2,754 2,977 +Total assets 9,094 9,510 +in millions of euros, at December 31 2023 2022 +Equity +Issued share capital Note 32 30 31 +Share premium reserve 87 87 +Legal reserves 328 466 +Treasury shares (734) (735) +Retained earnings 2,038 2,461 +Equity attributable to the owners of the company Note 46 1,749 2,310 +Non‑controlling interests Note 16 0 0 +Total equity 1,749 2,310 +Non-current liabilities +Bonds 2,723 2,426 +Private placements 127 142 +Lease liabilities 209 244 +Other long‑term debt 27 18 +Total long‑term debt Note 28 3,086 2,830 +Deferred tax liabilities Note 22 281 299 +Employee benefits Note 30 81 85 +Provisions Note 31 5 5 +Non‑current deferred income Note 24 102 112 +Total non‑current liabilities 3,555 3,331 +Current liabilities +Deferred income Note 24 1,899 1,858 +Other contract liabilities Note 24 86 88 +Trade and other payables Note 27 997 990 +Current income tax liabilities Note 22 128 129 +Short‑term provisions Note 31 21 19 +Borrowings and bank overdrafts Note 28 196 16 +Short‑term bonds Note 28 400 700 +Short‑term lease liabilities Note 28 63 69 +Total current liabilities 3,790 3,869 +Total liabilities 7,345 7,200 +Total equity and liabilities 9,094 9,510 +145 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_147.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c052623ec5abc7268f4af5efbd6229cddbc999 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_147.txt @@ -0,0 +1,53 @@ +Consolidated statement of changes in total equity +Legal reserves Other reserves +in millions of euros +Issued +share +capital +Share +premium +reserve +Legal reserve +participations +Hedge +reserve +Translation +reserve +Treasury +shares +Retained +earnings +Shareholders’ +equity +Non- +controlling +interests Total equity +Balance at January 1, 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 the year 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) 451 (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) 2,461 2,310 0 2,310 +Balance at January 1, 2023 31 87 120 (106) 452 (735) 2,461 2,310 0 2,310 +Profit for the year 1,007 1,007 0 1,007 +Other comprehensive income/(loss) for the year (4) (127) (1) (132) 0 (132) +Total comprehensive income for the year (4) (127) 1,006 875 0 875 +Transactions with owners of the company, recognized directly +in equity: +Share‑based payments 31 31 31 +Cancelation of shares (1) 947 (946) 0 0 +Release LTIP shares 54 (54) 0 0 +Final cash dividend 2022 (291) (291) 0 (291) +Interim cash dividend 2023 (176) (176) (176) +Repurchased shares (1,000) (1,000) (1,000) +Other movements (7) 7 0 0 +Balance at December 31, 2023 30 87 113 (110) 325 (734) 2,038 1,749 0 1,749 +146 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_148.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0d112d4481559a50920c1328c10891732403632 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,69 @@ +Notes to the consolidated 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 provider of information, software solutions, +and services for professionals in the health, tax and accounting, fi nancial and corporate +compliance, legal and regulatory, and corporate performance and ESG sectors. 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. +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, Euronext 100, and EURO STOXX 50 indices, +among 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, +2023, 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 20, 2024. 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 8, 2024. +Consolidated financial statements +The consolidated financial statements of the company at and for the year ended December 31, +2023, comprise the group and the group’s interest in associates. The material accounting +policy information applied in the preparation of these consolidated financial statements is +set out in Note 2 – Material accounting policy information 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 38 – 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; +• 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. +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 – Material accounting policy information and the +relevant respective notes to the consolidated financial statements to all periods presented +in these financial statements. +147 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_149.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..b739271aa66b59eb4c5c604ec532ccd8a14563bd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,84 @@ +Notes to the consolidated financial statements continued +Note 1 – General and basis of preparation continued +The group has applied the following amendments for the first time for the annual reporting +period commencing January 1, 2023: +• Insurance contracts (amendments to IFRS 17); +• Disclosure of accounting policies (amendments to IAS 1 and IFRS Practice Statement 2); +• Definition of accounting estimates (amendments to IAS 8); +• Deferred tax related to assets and liabilities arising from a single transaction (amendments +to IAS 12); and +• International Tax Reform – Pillar Two Model Rules (amendments to IAS 12). +The amendments to IAS 1 and IFRS Practice Statement 2 have had an impact on the disclosure +of accounting policy information in the financial statements, whereby any accounting policy +information not considered material in terms of the amended standards is no longer +disclosed. +Following the amendments to IAS 12 relating to the deferred tax assets and liabilities arising +from a single transaction, the group has recognized gross deferred tax assets and liabilities +where needed. However, these are offset in line with the netting requirements of IAS 12. +The amendments to IAS 12 relating to Pillar Two Model Rules have not had any material +impact on the amounts reported or disclosed in these financial statements. For more +information, refer to Note 15 – Income tax expense . +The application of the other 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 are not yet effective for the year ended December 31, +2023, and have not been early adopted in preparing these financial statements: +• 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); +• Non‑current liabilities with covenants (amendments to IAS 1); +• Supplier finance arrangements (amendments to IAS 7 and IFRS 7); and +• Lease liability in a sale and leaseback (amendments to IFRS 16). +If supplier finance arrangements exist, as defined per the amended IAS 7 and IFRS 7, this will +only result in presentation changes in the consolidated statements of cash flows and financial +position, apart from other qualitative disclosures in the notes to the consolidated financial +statements. The group has no material supplier financing arrangements, and expects no +significant impact from the other abovementioned amendments. +Comparatives +Change in organizational structure +In March 2023, a new division, Corporate Performance & ESG, was formed by bringing together four +global enterprise software businesses previously part of other divisions. This strategic step was +taken to position the group to meet the growing demand from corporations and banks for +integrated financial, operational, and ESG performance management and reporting solutions. +This new division consists of the following businesses: +• CCH Tagetik (previously in Tax & Accounting); +• Enablon (previously in Legal & Regulatory); +• Finance, Risk & Reporting (previously in Governance, Risk & Compliance (GRC), renamed +Financial & Corporate Compliance); and +• TeamMate (previously in Tax & Accounting). +In addition to the creation of the new division, the Enterprise Legal Management business was +transferred from the GRC division to the Legal & Regulatory division. The GRC division was +renamed Financial & Corporate Compliance to reflect its new business focus. +There are five operating segments effective January 1, 2023: +• Health; +• Tax & Accounting; +• Financial & Corporate Compliance; +• Legal & Regulatory; and +• Corporate Performance & ESG. +The change in the organizational structure also changed the composition of the groups of +cash‑ generating units to which goodwill has been allocated. Therefore, the goodwill has been +reallocated to the groups of cash generating units affected based on the relative value +approach. The reallocation of goodwill is as follows: +groups of cash-generating units +Allocated +goodwill in +2022 +Reallocation +of goodwill +Pro-forma +goodwill in +2022 +Allocated +goodwill in +2023 +Health Learning, Research & Practice 567 (567) +Clinical Solutions (Health) 557 (557) +Health 1,124 1,124 1,111 +Tax & Accounting Americas and Asia Pacific 1,131 (1,131) +Tax & Accounting Europe 411 (411) +Tax & Accounting 1,213 1,213 1,188 +Financial & Corporate Compliance 1,122 (102) 1,020 987 +Legal & Regulatory 606 (37) 569 573 +Corporate Performance & ESG 468 468 463 +Total 4,394 0 4,394 4,322 +148 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_15.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e46aaa2fbac85c411762f5e35ce90d90075a3b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,61 @@ +Organizational +structure +Wolters Kluwer is organized around +five customer‑facing divisions +supported by three centralized teams +and a corporate office. +Health +• Clinical Solutions +• Health Learning, +Research & Practice +Tax & Accounting +• North America +• Europe +• Asia Pacific & ROW +Financial & Corporate +Compliance +• Legal Services +• Financial Services +Legal & Regulatory +• Information Solutions +• Software +Corporate +Performance & ESG +• EHS/ORM +• Corporate +Performance, +Internal Audit, and FRR +€1.5bn +revenues 2023 +€1.5bn +revenues 2023 +€1.1bn +revenues 2023 +€0.9bn +revenues 2023 +€0.7bn +revenues 2023 +Global Growth Markets +• China, India, and Brazil +• Global expert solutions +• Local market knowledge +Digital eXperience Group +• Innovation and product +development +• Development centers of +excellence +• Technology asset management +Global Business Services +• Technology infrastructure +• Operational excellence programs +• Procurement and shared services +180+ +FTEs +4,500+ +FTEs +1,200+ +FTEs +Operating costs and FTEs of Global Growth Markets, Digital eXperience Group, and Global Business Services are allocated to the customer ‑facing +divisions. +Executive Board & Corporate Office +14 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_150.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..051fd5a5675b78d46d2835ba2531af16c9773c61 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_150.txt @@ -0,0 +1,74 @@ +Notes to the consolidated financial statements continued +Note 1 – General and basis of preparation continued +Refer to Note 5 – Segment reporting , Note 6 – Revenues, and Note 17 – Goodwill and intangible +assets other than goodwill for more information. +Other comparatives +Comparative figures in Note 12 – Employee benefit expenses are restated as temporary staff +and contractors are no longer considered part of employee benefit expenses. +Certain other immaterial reclassifications are 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 – Material accounting policy information +Except for the changes explained in Note 1 – General and basis of preparation , the group +has consistently applied the material accounting policies to all periods presented in +these consolidated financial statements. The main principles for the determination and +presentation of results and the valuation and presentation of assets and liabilities are +described in the relevant respective notes to the consolidated financial statements. +Basis of consolidation +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 associate or as a financial asset at fair value through profit or loss +or other comprehensive income (OCI), depending on the level of influence retained. +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 associates is disposed +of, exchange differences that were recognized in other comprehensive income prior to the sale +are reclassified to profit or loss as part of the gain or loss on divestments. +Net investment in foreign operations +Net investment in foreign operations includes equity financing and long ‑term intercompany +loans for which settlement is neither planned nor likely to occur in the foreseeable future. +Exchange differences arising from the translation of the net investment in foreign operations, +and of related hedges, are taken to the translation reserve of foreign operations in other +comprehensive income. +Main currency exchange rates +rates to the euro 2023 2022 +U.S. dollar (average) 1.08 1.05 +U.S. dollar (at December 31) 1.11 1.07 +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, +bank overdrafts are presented separately as the offsetting criteria are not met. +149 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret office supply is a "calculator". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_151.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_151.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7c9c9497dca471846ae3288c1977c99b0847ea8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_151.txt @@ -0,0 +1,65 @@ +Notes to the consolidated financial statements continued +Note 2 – Material accounting policy information continued +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 associates, dividends received, and cash flows +from the settlement of net investment hedges. +Dividends received are receipts from equity ‑accounted associates 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. +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. +The group recognizes non‑ derivative financial assets and liabilities on the trade date. +Note 3 – Accounting estimates and judgments +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 was considered while preparing the financial +statements, with a focus on the potential financial impact on estimates and judgments +related to the impairment of non‑ financial assets. Hereby management considered the +outcome of an initial double materiality assessment and the group’s emission reduction +targets and associated abatement plans. Management concluded that the financial 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 15 and Note 22); and +• Valuation, measurement, and impairment testing of goodwill and intangible assets other +than goodwill (see Note 8 and Note 17 ). +Management believes that these risks are adequately covered in its estimates and judgments. +150 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_152.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_152.txt new file mode 100644 index 0000000000000000000000000000000000000000..81e4db2705787a337c6fc81cdcf70155d186f2da --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_152.txt @@ -0,0 +1,65 @@ +Notes to the consolidated financial statements continued +Note 4 – Benchmark figures +Benchmark figures refer to figures adjusted for non ‑benchmark items and, where +applicable, amortization and impairment of goodwill and acquired identifiable intangible +assets. Adjusted figures are non‑ IFRS compliant financial figures but are internally regarded +as key performance indicators to measure the underlying performance of the business. +These figures are presented as additional information and do not replace the information +in the consolidated financial statements. +Non-benchmark items in operating profit +Non‑benchmark items relate to income and expenses arising from circumstances or +transactions that, given their size and/or nature, are clearly distinct from the ordinary +activities of the group and are excluded from the benchmark figures. Apart from +amortization and impairment of acquired identifiable intangible assets and impairment of +goodwill, non‑ benchmark items in operating profit include the items below. Refer also to +Note 11 – 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 are 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. +Other non-benchmark items +Other 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 14 – 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. +Other non-benchmark items – Return on invested capital (ROIC) +Invested capital is defined as the summation of total assets excluding investments in +equity ‑accounted associates, 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. +151 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_153.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_153.txt new file mode 100644 index 0000000000000000000000000000000000000000..27ba82a39d79c04bcf6bbc0d767b1af925234893 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_153.txt @@ -0,0 +1,66 @@ +Notes to the consolidated financial statements continued +Note 4 – Benchmark figures continued +Benchmark figures +in millions of euros, unless otherwise stated 2023 2022 +Change in +actual +currencies +(%) +Change in +constant +currencies +(%) * +Revenues 5,584 5,453 2 5 +Organic revenue growth (%) 6 6 +Adjusted operating pro fit 1,476 1,424 4 6 +Adjusted operating pro fit margin (%) 26.4 26.1 +Adjusted net pro fit 1,119 1,059 6 7 +Adjusted net fi nancing costs Note 14 (27) (56) (51) (36) +Adjusted free cash fl ow 1,164 1,220 (5) (2) +Cash conversion ratio (%) 100 107 +Return on invested capital (ROIC) (%) 16.8 15.5 +Net debt Note 28 2,612 2,253 16 +Net‑debt‑to‑EBITDA ratio 1.5 1.3 +Diluted adjusted EPS (€) 4.55 4.14 10 +Diluted adjusted EPS in constant currencies (€) * 4.66 4.17 12 +Diluted adjusted free cash fl ow per share (€) 4.73 4.77 0 3 +* Constant currencies at €/$ 1.05. +Revenue bridge +€ million % +Revenues 2022 5,453 +Organic change 310 6 +Acquisitions 20 0 +Divestments (76) (1) +Currency impact (123) (3) +Revenues 2023 5,584 2 +Reconciliation between operating profit and adjusted operating profit +2023 2022 +Operating pro fit 1,323 1,333 +Amortization and impairment of acquired identifiable +intangible assets Note 13 146 160 +Non ‑benchmark items in operating pro fit Note 11 7 (69) +Adjusted operating pro fit 1,476 1,424 +Reconciliation between total financing results and adjusted net financing costs +2023 2022 +Total financing results Note 14 (27) (57) +Non ‑benchmark items in total financing results Note 14 0 1 +Adjusted net financing costs (27) (56) +Reconciliation between profit for the year and adjusted net profit +2023 2022 +Pro fit for the year attributable to the owners of the company (A) 1,007 1,027 +Amortization and impairment of acquired identifiable intangible assets 146 160 +Tax benefits on amortization and impairment of acquired identifiable +intangible assets (37) (41) +Non ‑benchmark items, net of tax 3 (87) +Adjusted net pro fit (B) 1,119 1,059 +Summary of non-benchmark items +2023 2022 +Included in operating profit: +Other gains and (losses) Note 11 (7) 69 +Included in total financing results: +Other fi nance income and (costs) Note 14 0 (1) +Total non‑benchmark items before tax (7) 68 +Tax benefits/(charges) on non ‑benchmark items 4 19 +Impact of changes in tax rates Note 15 0 0 +Non ‑benchmark items, net of tax (3) 87 +152 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_154.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_154.txt new file mode 100644 index 0000000000000000000000000000000000000000..896c15b3c3942d38e9e658844332a9096d0f1c6a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_154.txt @@ -0,0 +1,49 @@ +Notes to the consolidated financial statements continued +Note 4 – Benchmark figures continued +Reconciliation between net cash from operating activities and adjusted free cash flow +2023 2022 +Net cash from operating activities 1,545 1,582 +Net capital expenditure (323) (295) +Repayment of principal portion of lease liabilities (65) (72) +Paid acquisition ‑related costs Note 8 7 3 +Paid divestment expenses Note 8 0 3 +Dividends received 0 0 +Income tax paid/(received) on divested assets and +consolidation of platform technology 0 (1) +Adjusted free cash fl ow (C) 1,164 1,220 +Return on invested capital (ROIC) +in millions of euros, unless otherwise stated 2023 2022 +Adjusted operating pro fit 1,476 1,424 +Allocated tax (338) (322) +Net operating pro fit after allocated tax (NOPAT) 1,138 1,102 +Average invested capital 6,780 7,120 +ROIC (NOPAT/Average invested capital) (%) 16.8 15.5 +Allocated tax is the adjusted operating profit multiplied by the benchmark tax rate. +Per share information +in euro, unless otherwise stated 2023 2022 +Total number of ordinary shares outstanding at December 31 +(in millions of shares) Note 32 240.5 248.7 +Weighted ‑average number of ordinary shares (D) +(in millions of shares) Note 7 244.9 254.7 +Diluted weighted ‑average number of ordinary shares (E) +(in millions of shares) Note 7 246.0 255.8 +Adjusted EPS (B/D) 4.57 4.16 +Diluted adjusted EPS (B/E) 4.55 4.14 +Diluted adjusted EPS in constant currencies 4.66 4.17 +Basic EPS (A/D) Note 7 4.11 4.03 +Diluted EPS (A/E) Note 7 4.09 4.01 +Adjusted free cash fl ow per share (C/D) 4.75 4.79 +Diluted adjusted free cash fl ow per share (C/E) 4.73 4.77 +Benchmark tax rate +in millions of euros, unless otherwise stated 2023 2022 +Income tax expense Note 15 290 249 +Tax benefits on amortization and impairment of acquired +identifiable intangible assets 37 41 +Tax benefits/(charges) on non ‑benchmark items 4 19 +Impact of changes in tax rates 0 0 +Tax on adjusted pro fit (F) 331 309 +Adjusted net pro fit (B) 1,119 1,059 +Adjustment for non ‑controlling interests 0 0 +Adjusted pro fit before tax (G) 1,450 1,368 +Benchmark tax rate (F/G) (%) 22.9 22.6 +153 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_155.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_155.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a8f77a87ddbd1a166284155f051e49aa7e72e64 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_155.txt @@ -0,0 +1,18 @@ +Notes to the consolidated financial statements continued +Note 4 – Benchmark figures continued +Cash conversion ratio +in millions of euros, unless otherwise stated 2023 2022 +Operating pro fit 1,323 1,333 +Amortization, impairment, and depreciation Note 13 445 466 +EBITDA 1,768 1,799 +Non ‑benchmark items in operating pro fit Note 11 7 (69) +Adjusted EBITDA 1,775 1,730 +Autonomous movements in working capital 98 178 +Net capital expenditure (323) (295) +Book (profit)/loss on sale of non ‑current assets 0 (4) +Repayment of principal portion of lease liabilities Note 19 (65) (72) +Interest portion of lease payments Note 19 (9) (9) +Adjusted operating cash fl ow (H) 1,476 1,528 +Adjusted operating pro fit (I) 1,476 1,424 +Cash conversion ratio (H/I) (%) 100 107 +154 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_156.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_156.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc9e07c4438a05ee07e29e990244c6eda21242ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_156.txt @@ -0,0 +1,35 @@ +Notes to the consolidated financial statements continued +Note 5 – Segment reporting +in millions of euros, unless otherwise stated Health +Tax & +Accounting +Financial & +Corporate +Compliance +Legal & +Regulatory +Corporate +Performance & ESG Corporate ** Total +reporting by segment 2023 2022 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 2023 2022 +Revenues from contracts with third parties 1,508 1,448 1,466 1,394 1,052 1,056 875 916 683 639 – – 5,584 5,453 +Cost of revenues (460) (444) (399) (378) (247) (269) (257) (282) (213) (205) – – (1,576) (1,578) +Gross profit 1,048 1,004 1,067 1,016 805 787 618 634 470 434 0 0 4,008 3,875 +Sales costs (237) (231) (217) (217) (134) (137) (148) (161) (193) (168) – – (929) (914) +General and administrative costs (401) (396) (388) (363) (286) (282) (358) (366) (250) (226) (66) (64) (1,749) (1,697) +Total operating expenses (638) (627) (605) (580) (420) (419) (506) (527) (443) (394) (66) (64) (2,678) (2,611) +Other gains and (losses) (4) (1) (2) (2) (2) (5) 2 78 (1) (1) – 0 (7) 69 +Operating profit 406 376 460 434 383 363 114 185 26 39 (66) (64) 1,323 1,333 +Amortization of acquired identifiable intangible assets 44 37 17 19 18 19 26 26 41 39 – – 146 140 +Impairment of acquired identifiable intangible assets – 20 – – – – – – – – – – 0 20 +Non‑benchmark items in operating profit 4 1 2 2 2 5 (2) (78) 1 1 – 0 7 (69) +Adjusted operating profit 454 434 479 455 403 387 138 133 68 79 (66) (64) 1,476 1,424 +Amortization of other intangible assets and depreciation of PPE and +right‑of‑use assets (47) (46) (77) (81) (46) (48) (62) (61) (62) (56) 0 0 (294) (292) +Impairment of other intangible assets, PPE, and right‑of‑use assets 0 (6) (2) (5) 0 (2) (1) (1) (2) 0 – – (5) (14) +Goodwill and acquired identifiable intangible assets at December 31 1,260 1,300 1,284 1,321 1,159 1,217 725 743 766 813 – – 5,194 5,394 +Net capital expenditure 49 42 74 67 58 52 58 61 84 73 0 0 323 295 +Number of FTEs at December 31 3,333 3,116 7,276 6,693 3,056 3,112 4,033 3,892 3,215 3,111 143 132 21,056 20,056 +* Restated due to new organizational structure. For more information, refer to Note 1 – General and basis +of preparation . +** The corporate function does not represent an operating segment. +155 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_157.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_157.txt new file mode 100644 index 0000000000000000000000000000000000000000..77d895f90df35f868b4abb051dcae95b896cd294 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_157.txt @@ -0,0 +1,74 @@ +Notes to the consolidated financial statements continued +Note 5 – Segment reporting continued +Material accounting policy information +An operating segment is a component of the group that engages in business activities from +which it may earn revenues and incur expenses. The five global operating divisions are +based on strategic customer segments: Health; Tax & Accounting; Financial & Corporate +Compliance; Legal & Regulatory; and Corporate Performance & ESG. 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 Growth Markets, 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. +Total non-current assets per geographic region +in millions of euros, unless otherwise stated +2023 +% +2022 +% +The Netherlands 715 11 676 11 +Europe (excluding the Netherlands) 1,302 21 1,336 21 +U.S. and Canada 4,176 67 4,338 67 +Asia Paci fic 76 1 85 1 +Rest of World 20 0 19 0 +Total 6,289 100 6,454 100 +Non‑current assets per region exclude deferred tax assets and derivative financial instruments. +Other disclosures +Comparative segmental disclosures were updated based on the new organizational structure. +Refer to Note 1 – General and basis of preparation for more information. +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 . +Note 6 – Revenues +2023 2022 +Revenues from contracts with third parties 5,584 5,453 +Material accounting policy information +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. +156 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret animal #2 is a "penguin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_158.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8111f0347932f2b501971bb37af524a78cb0b98 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,74 @@ +Notes to the consolidated financial statements continued +Note 6 – Revenues continued +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. +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. +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. +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, employee benefit 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, employee benefit 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 24 +– Contract assets and liabilities . + +157 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_159.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..7147c7712c4695ba4822b937392a9924ecd4f572 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,58 @@ +Notes to the consolidated financial statements continued +Note 6 – Revenues continued +Disaggregation of revenues +Revenues by recognition pattern and contract length +Health +Tax & +Accounting +Financial & Corporate +Compliance +Legal & +Regulatory +Corporate Performance +& ESG Total +reporting per segment 2023 2022 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 +Revenue per recognition pattern +At a point in time recognition 253 253 193 186 366 371 246 262 103 68 1,161 1,140 +Over time recognition 1,255 1,195 1,273 1,208 686 685 629 654 580 571 4,423 4,313 +Revenues from contracts with third parties 1,508 1,448 1,466 1,394 1,052 1,056 875 916 683 639 5,584 5,453 +Revenue per contract length +Contracts one year or less 963 953 1,279 1,236 844 858 644 705 354 337 4,084 4,089 +Multi ‑year contracts 545 495 187 158 208 198 231 211 329 302 1,500 1,364 +Revenues from contracts with third parties 1,508 1,448 1,466 1,394 1,052 1,056 875 916 683 639 5,584 5,453 +* Comparative figures restated due to new organizational structure. For more information, +see Note 1 – General and basis of preparation . +Revenues by media format +Health +Tax & +Accounting +Financial & Corporate +Compliance +Legal & +Regulatory +Corporate Performance +& ESG Total +reporting per segment 2023 2022 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 +Digital 1,348 1,281 1,398 1,322 558 567 736 746 683 639 4,723 4,555 +Services 4 1 33 34 488 484 9 14 0 0 534 533 +Print 156 166 35 38 6 5 130 156 – – 327 365 +Revenues from contracts with third parties 1,508 1,448 1,466 1,394 1,052 1,056 875 916 683 639 5,584 5,453 +* Comparative figures restated due to new organizational structure. For more information, +see Note 1 – General and basis of preparation . +Recurring/non-recurring revenues +Health +Tax & +Accounting +Financial & Corporate +Compliance +Legal & +Regulatory +Corporate Performance +& ESG Total +reporting per segment 2023 2022 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 * 2023 2022 +Recurring revenues 1,374 1,307 1,339 1,287 704 676 683 708 443 410 4,543 4,388 +Non ‑recurring revenues 134 141 127 107 348 380 192 208 240 229 1,041 1,065 +Revenues from contracts with third parties 1,508 1,448 1,466 1,394 1,052 1,056 875 916 683 639 5,584 5,453 +* Comparative figures restated due to new organizational structure. For more information, + see Note 1 – General and basis of preparation . +158 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_16.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab09f791bef6fe870b4efa68e4279b1e7e46c461 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,112 @@ +Executive team +Tax & AccountingHealth Financial & Corporate +Compliance +Legal & Regulatory Corporate Performance +& ESG +Stacey Caywood CEO +We offer clinical technology and +evidence‑based solutions for +clinicians, patients, researchers, +students, and future healthcare +providers. Our focus is on clinical +effectiveness, research, learning, +surveillance, compliance, and data +solutions. Our proven solutions +drive effective decision ‑making +and consistent outcomes in +healthcare. +Customers include hospitals, +healthcare organizations, +students, clinicians, schools, +libraries, payers, life sciences, and +pharmacies. +Product brands include UpToDate, +Lippincott, Medi ‑Span, Ovid, and +Health Language. +Jason Marx CEO +We empower tax and accounting +professionals, and governing +authorities to grow, manage, and +protect their business and clients. +Our solutions combine domain +expertise, advanced technology, +and workflows for compliance, +productivity, management, and +client relationships. +Customers include accounting +firms, tax and auditing +departments, government +agencies, libraries, and +universities. +Product brands include CCH +AnswerConnect, CCH Axcess, +ADDISON, CCH iFirm, A3 Software, +Genya, Twinfield, CCH ProSystem +fx, and ATX. +Steve Meirink CEO +We provide financial institutions, +corporations, small businesses, +and law firms with solutions to +help meet regulatory and legal +obligations, improve efficiency, +and achieve better outcomes. +We offer technology ‑enabled +services and software solutions +for loan compliance, regulatory +compliance, legal entity +management, and corporate +services. +Customers include corporations +and small businesses, law firms, +banks, non ‑bank lenders, insurers, +brokers, and other financial +institutions. +Product brands include CT +Corporation, BizFilings, eOriginal, +ComplianceOne, Lien Solutions, +Expere, GainsKeeper, and Wiz. +Martin O’Malley CEO +We help legal and compliance +professionals enhance +productivity, mitigate risk, +and solve complex problems +confidently. With expert +information and advanced +technologies, we enable +professionals to thrive in the +ever‑changing fields of legal and +regulatory compliance. +Customers include law firms, +corporate legal departments, +notaries, universities, and +government agencies. +Product brands include VitalLaw, +Passport, TyMetrix 360°, Kleos, +Legisway, LEX, ONE, Schulinck, +Wolters Kluwer Online, Kluwer Law +International, and InView. +Karen Abramson CEO +We provide enterprise software +solutions to streamline reporting +processes, manage risks, and +meet regulatory requirements. +Our comprehensive suite of +tools and services provide +professionals in finance, +environment health and safety, +operational risk management, +regulatory reporting, risk +and compliance, and internal +audit with integrated financial, +operational, and ESG performance +management and reporting +solutions. +Customers include corporate +finance, audit, planning, risk, +EHS/ORM, and sustainability +professionals in corporations, +banks, and governments. +Product brands include CCH +Tagetik, Enablon, TeamMate, and +OneSumX. +15 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_160.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..a55ab06a0ac44b4713451cb841f2963bfc1dbcc1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,56 @@ +Notes to the consolidated financial statements continued +Note 6 – Revenues continued +Revenues by type +2023 2022 +Digital and service subscription 4,134 3,950 +Print subscription 136 157 +Other recurring 273 281 +Total recurring revenues 4,543 4,388 +Print books 120 129 +Legal Services transactional 283 299 +Financial Services transactional 128 134 +Other non ‑recurring * 510 503 +Total non‑recurring revenues 1,041 1,065 +Revenues from contracts with third parties 5,584 5,453 +* Other non ‑recurring revenues include software licenses, software implementation fees, professional +services, and other non ‑subscription offerings. +Revenues per geographic region +in millions of euros, unless otherwise stated +2023 +% +2022 +% +The Netherlands 227 4 204 4 +Europe (excluding the Netherlands) 1,342 24 1,356 25 +U.S. and Canada 3,577 64 3,476 64 +Asia Paci fic 345 6 333 6 +Rest of World 93 2 84 1 +Revenues from contracts with third parties 5,584 100 5,453 100 +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 pro fit 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 +2023 2022 +Pro fit for the year attributable to the owners of the company (A) 1,007 1,027 +Weighted-average number of ordinary shares for the year +in millions of shares, unless otherwise stated 2023 2022 +Outstanding ordinary shares at January 1 Note 32 257.5 262.5 +Effect of cancelation of shares (3.4) (1.9) +Effect of repurchased shares (9.2) (5.9) +Weighted ‑average number of ordinary shares (B) 244.9 254.7 +Basic EPS (A/B) (€) 4.11 4.03 +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 2023 2022 +Weighted ‑average number of ordinary shares (B) 244.9 254.7 +Effect of long ‑term incentive plan (LTIP) 1.1 1.1 +Diluted weighted ‑average number of ordinary shares (C) 246.0 255.8 +Diluted EPS (A/C) (€) 4.09 4.01 +159 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_161.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..a25d273edebdddb444d23f3194c7ff271908239f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,55 @@ +Notes to the consolidated financial statements continued +Note 8 – Acquisitions and divestments +Acquisitions +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 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 in cash. The transaction had no deferred and contingent considerations. NurseTim +became part of Wolters Kluwer’s Health Learning, Research & Practice (HLRP) business, which +includes nursing education and practice solutions that help ensure students are ready for +practice and nurses are prepared to deliver better patient care and outcomes. NurseTim, +founded in 2008, is based in Minneapolis, Minnesota, and employs 48 professionals. +On June 7, 2023, Wolters Kluwer Health completed the acquisition of 100% of the shares of +Invistics Corporation (Invistics), a U.S. ‑based provider of cloud ‑based, AI‑enabled software +for drug diversion detection and controlled substance compliance, for €17 million in cash and +deferred consideration of €1 million. Invistics joined the company’s Clinical Surveillance, +Compliance & Data Solutions unit, part of Clinical Solutions. +On October 31, 2023, Wolters Kluwer Legal & Regulatory completed the acquisition of 100% of +the shares of MFAS/Meijer Fiscale Adviessystemen b.v. (MFAS), a Dutch provider of practical +tax content solutions and productivity tools, for €6 million in cash and deferred consideration +of €1 million. MFAS became part of Wolters Kluwer LR Benelux, which is a leading provider of +information solutions and software serving legal and tax professionals in the Netherlands. +In addition, other smaller acquisitions were completed with a combined total consideration of +€15 million (2022: €1 million), including deferred and contingent considerations. +The fair values of the identifiable assets and liabilities of the abovementioned acquisitions, as +reported at December 31, 2023, are provisional, but no material deviations from these fair +values are expected. +Acquisition spending +In 2023, total acquisition spending, net of cash acquired, was €61 million (2022: €92 million), +including deferred and contingent consideration payments of €3 million (2022: €1 million). +In 2022, the group acquired IDS, Level Programs, IJS Publishing Group, Della AI, and a few +smaller businesses. +In 2023, acquisition‑ related costs amounted to €7 million (2022: €3 million). +The goodwill relating to the 2023 acquisitions represents future economic bene fits 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 2023, none was deductible for income tax purposes (2022: none). +160 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_162.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..4dd9de9621fd0c73d07f1c90efdaa1526d0aeb6b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,79 @@ +Notes to the consolidated financial statements continued +Note 8 – Acquisitions and divestments continued +Acquisitions +Carrying +amounts +Fair value +adjustments +2023 +Recognized +values +2022 +Recognized +values +Consideration payable in cash 60 92 +Deferred and contingent +considerations at fair value: +Non ‑current 2 2 +Current 2 1 +Total consideration 64 95 +Intangible assets other than +goodwill Note 17 1 50 51 77 +Other non ‑current assets Note 19 0 0 2 +Current assets 7 7 4 +Current liabilities (9) (9) (2) +Non ‑current liabilities Note 28 (1) (1) (2) +Deferred tax assets/(liabilities) 0 (10) (10) (19) +Fair value of net identifiable assets (2) 40 38 60 +Goodwill on acquisitions Note 17 26 35 +Cash effect of acquisitions: +Consideration payable in cash 60 92 +Cash acquired (2) (1) +Deferred and contingent +considerations paid Note 29 3 1 +Acquisition spending, net of cash +acquired 61 92 +Of the €50 million fair value adjustments of intangible assets in 2023, €14 million related to +Invistics, €8 million related to NurseTim, €9 million related to MFAS, and €19 million related +to the other acquisitions. +Contribution of 2023 acquisitions +in millions of euros, unless otherwise stated Revenues +Adjusted +operating +profit +Profit for +the year +FTEs at +December +31, 2023 +Totals excluding the impact of 2023 acquisitions 5,570 1,475 1,009 20,947 +Contribution of 2023 acquisitions 14 1 (2) 109 +Totals for the year 2023 5,584 1,476 1,007 21,056 +Pro forma contribution of 2023 acquisitions for +the period January 1, 2023, up to acquisition date +(unaudited) 5 1 (3) +Pro forma totals for the year 2023 5,589 1,477 1,004 21,056 +The above information does not purport to represent what the actual results would have +been, had the acquisitions been concluded on January 1, 2023, 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, 2023. +Deferred and contingent considerations +The acquisitions completed in 2023 resulted in a maximum achievable undiscounted deferred +and contingent consideration of €4 million. The fair value of this deferred and contingent +consideration amounted to €4 million at acquisition date and at December 31, 2023. +For further disclosure on deferred and contingent considerations, refer to Note 29 – +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 2022 acquisitions resulted in an increase of goodwill of €9 million. +Reference is made to Note 17 – Goodwill and intangible assets other than goodwill. +Divestments +Material accounting policy information +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. +161 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_163.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..298f64f8a90a2096eb1762bb4904fbe56f50ee34 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,71 @@ +Notes to the consolidated financial statements continued +Note 8 – Acquisitions and divestments continued +During 2023, net divestment proceeds amounted to €8 million. +In 2022, net divestment proceeds amounted to €106 million and mainly included the +divestment of the legal information units in France and Spain. +Divestment-related results on operations and financial assets +2023 2022 +Divestment of operations: +Consideration receivable in cash 5 114 +Consideration receivable 5 114 +Intangible assets – 0 +Other non ‑current assets – 0 +Current assets (including assets held for sale) – 110 +Current liabilities (including liabilities held for sale) – (77) +Deferred tax assets/(liabilities) 1 0 +Net identifiable assets/(liabilities) 1 33 +Reclassi fication of foreign exchange differences on loss of control to +profit or loss, previously recognized in other comprehensive income – (1) +Book pro fit/(loss) on divestments of operations 4 80 +Divestment ‑related costs 0 (3) +Restructuring of stranded costs following divestments Note 31 – (2) +Divestment ‑related results included in other gains and (losses) Note 11 4 75 +Divestment of financial assets +Consideration receivable in cash 3 – +Carrying value of financial assets 0 – +Divestment ‑related results included in total financing results Note 14 3 0 +Cash effect of divestments: +Consideration receivable in cash 8 114 +Cash included in divested operations – (8) +Receipts from divestments, net of cash disposed 8 106 +In the consolidated statement of cash flows, the book profit/(loss) on divestment +of operations is reported under book (pro fit)/loss on divestment of operations and +non‑current assets. +Note 9 – Sales costs +2023 2022 +Marketing and promotion costs 253 263 +Sales ‑related costs – sales commissions directly expensed 157 162 +Sales ‑related costs – amortization of capitalized sales commissions Note 24 29 29 +Other sales ‑related costs 383 359 +Customer support costs 84 80 +Additions to and releases from loss allowances on trade receivables +and unbilled revenues Note 24 23 21 +Total 929 914 +Material accounting policy information +Sales costs relate to direct internal employee benefit expenses and direct external costs, +incurred for marketing and sales activities, as well as the additions to and releases from +loss allowances on trade receivables and unbilled revenues based on lifetime expected +credit losses. +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, 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‑ cancelable contract period for +a right ‑to‑access license is longer than five years. In those situations, the longer non‑ +cancelable contract period of the license contract prevails as the amortization period. +Estimates and judgments +The group determines the additions to and releases from loss allowances 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. Refer to Note 24 – Contract assets and +liabilities for more information. +162 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret object #5 is a "vase". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_164.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..2fc212945dc3a174cdeea97ae79c2e2211bb3429 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,60 @@ +Notes to the consolidated financial statements continued +Note 10 – General and administrative costs +2023 2022 +Research, development, and editorial costs 591 541 +General and administrative operating expenses 1,012 996 +Amortization and impairment of acquired identifiable +intangible assets Note 13 146 160 +Total 1,749 1,697 +Material accounting policy information +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 11 – Other gains and (losses) +2023 2022 +Acquisition ‑related costs Note 8 (7) (3) +Additions to acquisition integration provisions Note 31 (4) (3) +Fair value changes of contingent considerations Note 29 0 0 +Divestment ‑related results Note 8 4 75 +Total (7) 69 +Material accounting policy information +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 . +Note 12 – Employee benefit expenses +in millions of euros, unless otherwise stated 2023 2022 * +Salaries and wages and other benefits 1,848 1,769 +Social security charges 161 159 +Medical cost benefits 101 94 +Expenses related to de fined contribution plans 96 89 +Expenses related to de fined benefit plans Note 30 16 29 +Equity ‑settled share ‑based payments Note 33 31 28 +Total 2,253 2,168 +Employees +Headcount at December 31 21,438 20,511 +Thereof employed in the Netherlands 1,176 1,150 +In full ‑time equivalents at December 31 21,056 20,056 +In full ‑time equivalents average per annum 20,810 20,061 +* Prior year figures have been restated as temporary staff and contractors are no longer considered part of +employee benefit expenses. +Note 13 – Amortization, impairment, and depreciation +2023 2022 +Amortization of acquired identifiable intangible assets Note 17 146 140 +Impairment of acquired identifiable intangible assets Note 17 – 20 +Amortization of other intangible assets Note 17 204 195 +Impairment of other intangible assets Note 17 5 13 +Depreciation of property, plant, and equipment Note 18 23 26 +Impairment of property, plant, and equipment Note 18 0 1 +Depreciation of right ‑of ‑use assets Note 19 67 71 +Total 445 466 +During 2023, the useful lives for certain acquired identifiable intangible assets were reduced, +which resulted in incremental amortization of €10 million. +For further disclosure on estimates and judgments, refer to Note 17 – Goodwill and intangible +assets other than goodwill and Note 19 – Leasing. +163 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_165.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..7787ccac4bc005559375c53a55a13cf6a7b34cc7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,71 @@ +Notes to the consolidated financial statements continued +Note 14 – Financing results +2023 2022 +Financing income +Interest income for financial assets measured at amortized cost: +Interest income on short‑term bank deposits 50 20 +Interest income on bank balances and other 5 1 +Other financing income: +Derivatives – foreign exchange contracts, not qualifying as hedge 0 0 +Total financing income 55 21 +Financing costs +Interest expense for financial liabilities measured at amortized cost: +Interest expense on Euro Commercial Paper program and bank +borrowings (3) 0 +Interest expense on bonds and private placements (68) (54) +Amortization of fee expense for debt instruments Note 28 (3) (3) +Interest expense on bank overdrafts and other (3) (3) +Other financing expense: +Unwinding of discount of lease liabilities Note 28 (9) (9) +Net foreign exchange gains/(losses) 7 (5) +Items in hedge relationships: +Interest rate swaps (3) (3) +Foreign exchange gains/(losses) on loans subject to cash flow hedge 15 11 +Net change in fair value of cash flow hedges reclassified from other +comprehensive income (15) (11) +Total financing costs (82) (77) +Net financing results (27) (56) +Other finance income and (costs) +Divestment‑related results on financial assets Note 8 3 – +Fair value changes of financial assets Note 21 0 0 +Financing component employee benefits Note 30 (3) (1) +Total other finance income and (costs) 0 (1) +Total financing results (27) (57) +Note 15 – Income tax expense +2023 2022 +Current income tax expense 300 286 +Adjustments previous years (2) (13) +Deferred tax expense: +Changes in tax rates 0 0 +Origination and reversal of temporary differences (8) (24) +Movements in deferred tax assets and liabilities Note 22 (8) (24) +Total Note 22 290 249 +Material accounting policy information +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. +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. +164 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_166.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b14c706d4c573abc9dd71d245427e4bcabb8a0f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,68 @@ +Notes to the consolidated financial statements continued +Note 15 – Income tax expense continued +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. +International tax reform – Pillar Two Model Rules +On December 19, 2023, the government of the Netherlands enacted the Pillar Two income +taxes legislation effective from January 1, 2024. Under the legislation, the company will be +required to pay in the Netherlands, or the subsidiary in the subsidiary country, a top ‑up tax +on profits of its subsidiaries that are taxed at an effective corporate income tax rate of less +than 15%. The main jurisdiction in which exposures to this tax may exist is Ireland. If the Pillar +Two legislation would have been in effect in 2023, the effective tax rate for the group would be +approximately 0.5% higher, considering certain adjustments that would be required applying +the legislation. However, as the newly enacted legislation is only effective from January 1, +2024, there is no current tax impact for the year ended December 31, 2023. +The group has applied a temporary mandatory relief from deferred tax accounting for the +impacts of the top up tax and accounts for it as a current tax when it is incurred. +The group continues to assess the impact of the Pillar Two income taxes legislation on its +future financial performance. +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 Dutch statutory +income tax rate with the effective income tax rate in the consolidated statement of profit +or loss: +2023 2022 +in millions of euros, unless otherwise stated % % +Pro fit before tax 1,297 1,276 +Income tax expense at the Dutch statutory income +tax rate 25.8 335 25.8 329 +Tax effect of: +Rate differential (2.9) (38) (2.7) (35) +Tax incentives, exempt income, and divestments (0.8) (10) (2.4) (31) +Recognized and unrecognized tax losses 0.0 0 (0.1) (1) +Adjustments previous years (0.1) (2) (1.0) (13) +Changes in income tax rates 0.0 0 0.0 0 +Other taxes 0.9 11 0.9 11 +Non ‑deductible costs and other items (0.5) (6) (1.0) (11) +Total 22.4 290 19.5 249 +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 increased to 22.4% (2022: 19.5%), resulting from tax neutral gains on the +divestment of the legal information units in Spain and France in 2022, plus positive outcomes from +the closure of previous tax years. +For income tax recognized directly in the consolidated statements of changes in total equity and +other comprehensive income, reference is made to Note 22 – Tax assets and liabilities. +Note 16 – Non-controlling interests +The group’s share in consolidated subsidiaries not fully owned at December 31 is: +ownership in % 2023 2022 +Akadémiai Kiadó Kft. (Budapest, Hungary) 74 74 +Non‑controlling interests in the equity of consolidated participations, totaling €0 million +(2022: €0 million), are based on third ‑party shareholdings in the underlying shareholders’ +equity of the subsidiaries. +165 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_167.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d4ffd27b8d3fbb65ae8d0259172dbe018e48cc4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,40 @@ +Notes to the consolidated financial statements continued +Note 17 – Goodwill and intangible assets other than goodwill +Goodwill +Customer +relationships +Technology +and content Brand names Other +Acquired +identifiable +intangible +assets +Other +intangible +assets 2023 2022 +Position at January 1 +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 January 1 4,394 555 376 69 0 1,000 648 6,042 5,800 +Movements +Investments* – – – – – 0 298 298 264 +Acquired through business combinations Note 8 26 27 23 0 – 50 1 77 112 +Disposal of assets – – – – – 0 0 0 0 +Net expenditures 26 27 23 0 0 50 299 375 376 +Amortization Note 13 – (70) (65) (11) 0 (146) (204) (350) (335) +Impairment Note 13 – – – – – 0 (5) (5) (33) +Reclassifications Note 8 9 – (13) – – (13) 1 (3) 2 +Foreign exchange differences (107) (10) (8) (1) 0 (19) (13) (139) 232 +Total movements (72) (53) (63) (12) 0 (128) 78 (122) 242 +Position at December 31 +Cost value 4,322 1,105 690 457 3 2,255 2,083 8,660 8,844 +Accumulated amortization and impairment – (603) (377) (400) (3) (1,383) (1,357) (2,740) (2,802) +Book value at December 31 4,322 502 313 57 0 872 726 5,920 6,042 +* Investments in 2022 exclude capital expenditure by the disposal groups classified as held for sale of +€3 million. +At both December 31, 2023, and December 31, 2022, the vast majority of the book value of +other intangible assets relates to development of software. +In both 2023 and 2022, 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. +166 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_168.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_168.txt new file mode 100644 index 0000000000000000000000000000000000000000..b576619fea0383ccd153d0d19b57e4761292ee31 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_168.txt @@ -0,0 +1,73 @@ +Notes to the consolidated financial statements continued +Note 17 – Goodwill and intangible assets other than goodwill +continued +Material accounting policy information +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. +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 and content: five to 29 years; +• Brand names: five to 20 years; +• Other acquired identifiable intangible assets: five to 10 years; and +• Other intangible assets: three to five years. +Estimates and judgments +Measurement – other intangible assets +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). +Measurement – acquired identifiable intangible assets +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 +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. +167 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_169.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_169.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d680e7e9ae10d72d276e6015633dcda45e38511 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_169.txt @@ -0,0 +1,79 @@ +Notes to the consolidated financial statements continued +Note 17 – Goodwill and intangible assets other than goodwill +continued +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. In 2023, the group recognized additional amortization on certain +acquired identifiable intangible assets due to the shortening of useful lives. +Carrying amounts of goodwill and acquired identifiable intangible assets per operating +segment +Goodwill +Acquired +identifiable +intangible assets 2023 +Pro-forma +2022 * +Health 1,111 149 1,260 1,300 +Tax & Accounting 1,188 96 1,284 1,321 +Financial & Corporate Compliance 987 172 1,159 1,217 +Legal & Regulatory 573 152 725 743 +Corporate Performance & ESG 463 303 766 813 +Total 4,322 872 5,194 5,394 +* Comparative pro ‑forma figures are restated due to new organizational structure. For more information, see +Note 1 – General and basis of preparation . +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 composition +of the groups of CGUs to which goodwill has been allocated changed in 2023: +• The group changed its reporting segment structure with a new segment, Corporate +Performance & ESG; +• The former groups of CGUs Health Learning, Research & Practice and Clinical Solutions are +combined into the Health group of CGUs; and +• The remainder of the former groups of CGUs Tax & Accounting Americas and Asia Pacific +and Tax & Accounting Europe are combined into the Tax & Accounting group of CGUs. +This resulted in five groups of CGUs (2022: six groups of CGUs). The goodwill has been +reallocated retrospectively January 1, 2023, using the relative value approach. +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 2023 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 2023 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 2023 weighted ‑average long ‑term growth rate is 2.3% for the U.S. and 2.0% for Europe +(2022: 2.2% for the U.S. and 2.0% for Europe). In addition, the following key assumptions were +used in the projections: +• Revenue growth: based on actual experience, an analysis of market growth, and the +expected development of market share; and +• Adjusted operating profit margin development: based on actual experience and +management’s long ‑term projections. Adjusted operating profit is deemed the best +approximation for future cash flows. +The estimated pre ‑tax cash flows are discounted to their present value using a pre ‑tax +weighted ‑average discount rate for the individual groups of CGUs between 10.3% and 10.8% +(2022: between 9.6% and 10.2%) with a weighted average of 10.4% (2022: 9.9%). +168 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_17.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c67af4b0bc1462b468fe8166136868f801dc68f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,57 @@ +Executive team +continued + → Full list of management +www.wolterskluwer.com/en/ +about-us/management +Digital eXperience Group +Dennis Cahill CTO +The Digital eXperience Group +creates cutting ‑edge digital +solutions in collaboration with +global business units. Our mission +is to accelerate innovation and +leverage technology investments. +We drive innovation through +six centers of excellence: user +experience, artificial intelligence, +IP & patent, architecture & asset +reuse, quality engineering, and +application security. +Global Growth Markets +Cathy Wolfe President & CEO +Global Growth Markets (GGM) +focuses on developing the +company’s strategic presence +in China, India, Brazil, and +other geographic markets. +GGM’s mission is to apply local +market knowledge to service +professionals with global and +local expert solutions . +Global Business Services +Andres Sadler CEO +Global Business Services (GBS) +improves and transforms 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 +in technology, strategic sourcing, +procurement, operational +excellence, collaboration services, +analytics, and events. +Corporate office +The Corporate Office sets the +global strategic direction for +the company and ensures good +corporate governance. Its mission +is to support and provide an +enabling business and operating +environment, to help realize our +strategy to deliver impact to our +customers, employees, investors, +and society at large. +16 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_170.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..28b07a674472e126b9e49ba7f1deeb91125d8374 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,91 @@ +Notes to the consolidated financial statements continued +Note 17 – Goodwill and intangible assets other than goodwill +continued +In determining the discount rate, the group used a risk ‑free rate based on the long ‑term yield +on Dutch government bonds and U.S. treasury bonds with a maturity of 20 years, adjusted +for country risk premiums and country ‑specific inflation differentials. In determining the +discount rate at the moment of performing the annual impairment test, the group applied +the following assumptions: +2023 2022 +Risk ‑free rate United States (in %) 4.2 3.6 +Risk ‑free rate Europe (in %) 2.8 2.1 +Market risk premium United States (in %) 5.5 6.0 +Market risk premium Europe (in %) 6.0 6.8 +Tax rate United States (in %) 26.0 26.0 +Tax rate Europe (in %) 25.8 25.8 +Re‑levered beta 0.80 0.79 +Sensitivity analysis +The impairment test 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 2023 and 2022 goodwill impairment tests, +respectively, is as follows: +Applied +weighted- +average +growth +rate +Allowed change (in basis points) +Allocated +goodwill at +December +31, 2023 +2023 sensitivity per group of CGUs +in millions of euros, unless otherwise +stated +Decline +in growth +rate +Increase +in discount +rate +Decrease +in adjusted +operating +profit margin +Health 2.3% >300 >300 >300 1,111 +Tax & Accounting 2.2% >300 >300 >300 1,188 +Financial & Corporate Compliance 2.3% >300 >300 >300 987 +Legal & Regulatory 2.3% >300 >300 >300 573 +Corporate Performance & ESG 2.2% >300 >300 >300 463 +Total 2.3% 4,322 +Applied +weighted- +average +growth +rate +Allowed change (in basis points) +Allocated +goodwill at +December 31, +2022 * +2022 sensitivity per group of CGUs +in millions of euros, unless otherwise +stated +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 Paci fic 2.1% >300 >300 >300 1,131 +Tax & Accounting Europe 2.0% >300 >300 >300 411 +Financial & Corporate Compliance 2.2% >300 >300 >300 1,122 +Legal & Regulatory 2.2% >300 >300 >300 606 +Total 2.2% 4,394 +* The 2022 sensitivity per group of CGUs is based on the reporting segment structure at December 31, 2022. +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: +2023 2022 +Acquired identifiable intangible assets – certain assets within Health – 20 +Other intangible assets 5 13 +Total Note 13 5 33 + +169 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_171.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8a9d04874df1d509e28aeae40c7498006326f58 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,57 @@ +Notes to the consolidated financial statements continued +Note 18 – Property, plant, and equipment +Land and +buildings Other PPE 2023 2022 +Position at January 1 +Cost value 121 196 317 380 +Accumulated depreciation and +impairment (87) (151) (238) (305) +Book value at January 1 34 45 79 75 +Movements +Investments 5 21 26 28 +Acquired through business +combinations Note 8 – 0 0 – +Disposal of assets – (1) (1) 0 +Net expenditures 5 20 25 28 +Depreciation Note 13 (6) (17) (23) (26) +Impairment Note 13 0 0 0 (1) +Foreign exchange differences (1) (1) (2) 3 +Total movements (2) 2 0 4 +Position at December 31 +Cost value 92 176 268 317 +Accumulated depreciation and +impairment (60) (129) (189) (238) +Book value at December 31 32 47 79 79 +Material accounting policy information +Property, plant, and equipment (PPE), 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 10 years. +Note 19 – Leasing +Material accounting policy information +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. +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 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. +170 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_172.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..394e05757fdd7243b4e4e0438882576f4e231561 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,57 @@ +Notes to the consolidated financial statements continued +Note 19 – Leasing continued +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. +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. +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 2023 2022 +Position at January 1 +Cost value 596 89 685 658 +Accumulated depreciation and impairment (338) (64) (402) (357) +Book value at January 1 258 25 283 301 +Movements +Additions from new leases 16 11 27 27 +Acquired through business combinations Note 8 0 – 0 2 +Additions from contract modifications and +reassessment of options 7 1 8 27 +Other movements from contract +modifications and reassessment of options (3) (1) (4) (14) +Net additions 20 11 31 42 +Depreciation Note 13 (50) (17) (67) (71) +Foreign exchange differences (6) 0 (6) 11 +Total movements (36) (6) (42) (18) +Position at December 31 +Cost value 575 48 623 685 +Accumulated depreciation and impairment (353) (29) (382) (402) +Book value at December 31 222 19 241 283 +171 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_173.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..72f61a9096bdb30b8168def4ce62a108339bd6be --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,54 @@ +Notes to the consolidated financial statements continued +Note 19 – Leasing continued +Contractual maturities of lease liabilities +2023 2022 +Within one year 65 69 +Between one and two years 55 59 +Between two and three years 44 50 +Between three and four years 36 40 +Between four and five years 30 34 +Between five and ten years 72 86 +Ten years and more 1 10 +Effect of discounting (31) (35) +Total lease liabilities at December 31 Note 28 272 313 +Cash outflow for leases +2023 2022 +Interest portion of lease payments 9 9 +Repayment of principal portion of lease liabilities 65 72 +Total 74 81 +Other disclosures +At December 31, 2023, the weighted ‑average discount rate is 3.1% (2022: 2.8%). +At December 31, 2023, the future undiscounted cash outflows arising from leases not yet +commenced and to which the group is committed amounted to €2 million (2022: €9 million). +The group’s lease agreements do not impact any covenants. +The total expenses arising from short ‑term leases and low ‑value leases are insignificant. +Note 20 – Investments in equity-accounted associates +The group’s share in equity ‑accounted associates at December 31 is: +ownership in % 2023 2022 +Haoyisheng (Beijing, China) 22 22 +Movement schedule of equity-accounted associates +2023 2022 +Position at January 1 11 10 +Share of pro fit of equity ‑accounted associates, net of tax 1 0 +Foreign exchange differences (1) 1 +Position at December 31 11 11 +For the equity ‑accounted associates at December 31, 2023, and December 31, 2022, the +financial information (at 100%) and the group’s weighted ‑proportionate share is as follows: +Total equity-accounted +associates Group’s share +2023 2022 2023 2022 +Total assets 38 34 8 8 +Total liabilities 22 17 5 4 +Total equity 16 17 3 4 +Revenues 30 31 6 7 +Net pro fit for the year 3 1 1 0 +Note 21 – Financial assets +2023 2022 +Financial assets at fair value through profit or loss 0 0 +Finance lease receivables 1 1 +Derivative financial instruments Note 29 – 17 +Other non ‑current financial assets 5 5 +Total 6 23 +The credit risk exposure of the financial assets is considered immaterial. Refer to +Note 29 – Financial risk management. +172 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_174.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..11da0890aeeea038f64da438d5a032d6628178f7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,101 @@ +Notes to the consolidated financial statements continued +Note 22 – Tax assets and liabilities +Deferred tax assets and liabilities +temporary differences arising from: Assets Liabilities 2023 2022 +Intangible assets 6 (398) (392) (395) +Property, plant, and equipment, right‑of‑use +assets, and lease liabilities 79 (58) 21 17 +Employee benefits 45 (8) 37 38 +Tax value of loss carry‑forwards recognized 23 – 23 31 +Other items 102 (21) 81 72 +Total before set‑off of tax 255 (485) (230) (237) +Set‑off of tax (204) 204 0 0 +Position at December 31 51 (281) (230) (237) +Estimates and judgments +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. +Movements in temporary differences 2023 +Balance at +January 1, +2023 +Acquisitions/ +divestments +Recognized +in profit or +loss +(Note 15) +Recognized in +equity and OCI +comprehensive +income +Foreign +exchange +differences +Balance at +December +31, 2023 +Intangible assets (395) (7) 1 – 9 (392) +PPE, right‑of‑use +assets, and lease +liabilities 17 – 4 – 0 21 +Employee benefits 38 – 0 0 (1) 37 +Tax value of loss carry‑ +forwards recognized 31 – (7) – (1) 23 +Other items 72 (1) 10 0 0 81 +Total (237) (8) 8 0 7 (230) +Movements in temporary differences 2022 +Balance at +January 1, +2022 +Acquisitions/ +divestments +Recognized +in profit or +loss +(Note 15) +Recognized in +equity and OCI +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) 24 (1) (9) (237) +Movements in overall tax position +2023 2022 +Position at January 1 +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) +Movements +Total income tax expense Note 15 (290) (249) +Deferred tax from acquisitions and divestments (8) (19) +Current income tax from acquisitions and divestments 0 (1) +Deferred tax on items recognized directly in OCI 0 (1) +Paid income tax 325 289 +Foreign exchange differences 6 (9) +Total movements 33 10 +Position at December 31 +Current income tax assets 86 61 +Current income tax liabilities (128) (129) +Deferred tax assets 51 62 +Deferred tax liabilities (281) (299) +Overall tax position (272) (305) +173 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_175.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..74661b6d109145ca0f50dc43dd2ca0c83cc12375 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,76 @@ +Notes to the consolidated financial statements continued +Note 22 – Tax assets and liabilities continued +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 15 – Income tax expense . +The group paid income taxes for the amounts of €181 million (2022: €162 million) in North +America, €133 million (2022: €119 million) in Europe, and €11 million (2022: €8 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, 2023 (2022: €0 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 €408 million (2022: €352 million), as it is not probable +that future taxable pro fit will be available against which the group can use the bene fits. +Of these unused tax losses and temporary differences, 13% expire within the next five +years (2022: 12%), 1% expire after five years (2022: 4%), and 86% carry forward inde finitely +(2022: 84%). +In addition, the group has not recognized net deferred tax assets of €17 million (2022: +€21 million) relating to unused state tax losses in the U.S. Of these unused state tax losses, +35% expire within the next five years (2022: 23%) and 65% expire after five years (2022: 77%). +Deferred tax on items recognized immediately in other comprehensive income and equity +2023 2022 +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 (124) 0 (124) 216 4 220 +Gains/(losses) on cash fl ow hedges (7) – (7) 29 – 29 +Remeasurement gains/(losses) on de fined +benefit plans (1) 0 (1) 18 (5) 13 +Recognized in other comprehensive income (132) 0 (132) 263 (1) 262 +Share ‑based payments 31 – 31 28 – 28 +Recognized in equity 31 0 31 28 0 28 +Note 23 – Inventories +2023 2022 +Work in progress 27 27 +Finished products and trade goods 57 52 +Total 84 79 +Material accounting policy information +Inventories also include internally developed commercial software products. The cost of +internally produced goods includes the development, manufacturing, content ‑creation, +and publishing costs. +At December 31, 2023, the provision for obsolescence deducted from the inventory carrying +values amounted to €17 million (2022: €18 million). In 2023, an amount of €4 million was +recognized as an expense for the change in the provision for obsolescence (2022: €5 million) +and is presented as part of cost of revenues in the consolidated statement of pro fit or loss. +Note 24 – Contract assets and liabilities +2023 2022 +Trade receivables 1,087 1,088 +Non ‑current contract assets 18 17 +Current contract assets 160 153 +Non ‑current deferred income 102 112 +Current deferred income 1,899 1,858 +Other current contract liabilities 86 88 +Material accounting policy information +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. +174 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret drink is a "smoothie". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_176.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..cbd2f3b85153da697deed09c55ab87453d0ba69c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,72 @@ +Notes to the consolidated financial statements continued +Note 24 – Contract assets and liabilities continued +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. +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 +Costs to obtain a contract – capitalized sales commissions +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. +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. +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. +Most of the contracts with customers require prepayment of the consideration. +Within the CT Corporation business of Financial & Corporate Compliance, the group acts as an +agent between the customer and governmental organizations in the U.S. for some costs that +are explicitly chargeable to the customer under the contract . +Trade receivables and unbilled revenues are shown net of impairment losses amounting to +€85 million (2022: €85 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 allowances +2023 2022 +Position at January 1 85 83 +Additions to loss allowances Note 9 34 33 +Releases from loss allowances Note 9 (11) (12) +Usage of loss allowances (22) (22) +Foreign exchange differences (1) 3 +Position at December 31 85 85 +For further information on credit risk, refer to Note 29 – Financial risk management. +175 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_177.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..98b813e0a4ee8b6ea80d39ef66db6a717d9e0784 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,70 @@ +Notes to the consolidated financial statements continued +Note 24 – Contract assets and liabilities continued +Contract assets +current and non-current +Unbilled +revenues +Cost to +obtain a +contract +Cost to +fulfill a +contract 2023 2022 +Position at January 1 101 41 28 170 157 +Recognized as revenues in the year 502 – – 502 465 +Newly recognized cost to fulfill a +contract – – 519 519 473 +Transferred to trade receivables (501) – (506) (1,007) (932) +Newly recognized cost to obtain a +contract – 30 – 30 28 +Amortization of capitalized sales +commissions Note 9 – (29) – (29) (29) +Autonomous movements in contract +assets 1 1 13 15 5 +Acquired through business +combinations Note 8 – – – 0 1 +Foreign exchange differences (5) (1) (1) (7) 7 +Position at December 31 97 41 40 178 170 +The group did not recognize an impairment on the unbilled revenues during the year (2022: nil). +Deferred income +current and non-current 2023 2022 +Position at January 1 1,970 1,822 +New and existing contracts with customers 4,300 3,944 +Recognized as revenues from opening balance (1,858) (1,709) +Recognized as revenues in the year on new and existing contracts (2,309) (2,137) +Change in netting against trade receivables (53) (25) +Autonomous movements in deferred income 80 73 +Acquired through business combinations Note 8 6 0 +Foreign exchange differences (55) 75 +Position at December 31 2,001 1,970 +No material amount of revenues was recognized in 2023 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 2023 was €4,402 million (2022: €4,055 million), of +which €2,287 million was included in deferred income (2022: €1,970 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. +Other contract liabilities +2023 2022 +Position at January 1 88 80 +Additions to provision for returns, refunds, and other 121 140 +Usage of provision for returns, refunds, and other (121) (136) +Autonomous movements in other contract liabilities 0 4 +Acquired through business combinations Note 8 – 1 +Foreign exchange differences (2) 3 +Position at December 31 86 88 +Note 25 – Other receivables +2023 2022 +Prepaid royalties 14 16 +Non ‑current other receivables 14 16 +Prepaid royalties 56 55 +Other prepayments 116 157 +VAT, sales tax, and other taxation 16 19 +Miscellaneous receivables 10 13 +Interest receivable 2 5 +Derivative financial instruments Note 29 2 1 +Current other receivables 202 250 +176 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_178.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_178.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac39c19f887b01278749e2cbaaaa88e7018adc9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_178.txt @@ -0,0 +1,81 @@ +Notes to the consolidated financial statements continued +Note 26 – Cash and cash equivalents +2023 2022 +Deposits 649 909 +Cash and bank balances 486 437 +Total cash and cash equivalents in the consolidated statement +of financial position 1,135 1,346 +Minus: Bank overdrafts used for cash management purposes Note 28 (146) (16) +Total cash and cash equivalents minus bank overdrafts 989 1,330 +Material accounting policy information +Cash and cash equivalents comprise cash and bank balances, and deposits that are held as +part of the group’s cash management for the purpose of meeting short ‑term cash +commitments. +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 €1 million (2022: €0 million) relates to cash and cash equivalent balances of +entities that the group does not fully own. +At December 31, 2023, bank balances include an amount of €48 million (2022: €38 million) +of restricted cash, primarily due to local exchange control regulations that restrict exporting +cash and/or capital from the relevant country. +Note 27 – Trade and other payables +2023 2022 +Trade payables 165 147 +Salaries, holiday allowances, and other benefits 285 276 +VAT, sales tax, social security premiums, and other taxation 91 95 +Pension ‑related payables 28 28 +Royalty payables 87 88 +Other accruals and payables 295 315 +Interest payable 42 39 +Deferred and contingent acquisition payables Note 29 4 2 +Total 997 990 +Note 28 – Net debt +in millions of euros, unless +otherwise stated +Nominal +value +Effective +interest +rate in % +Nominal +interest +rate in +% +Repayment +commitments +1-5 years +Repayment +commitments +>5 years 2023 2022 +Bonds 2008 ‑2028 (100.00*) €36 6.812 6.748 36 – 36 36 +Bonds 2014 ‑2024 (99.164*)** €400 2.640 2.500 – – 0 399 +Bonds 2017 ‑2027 (99.659*) €500 1.575 1.500 499 – 499 499 +Bonds 2020 ‑2030 (99.292*) €500 0.862 0.750 – 496 496 496 +Bonds 2021 ‑2028 (99.958*) €500 0.307 0.250 499 – 499 498 +Bonds 2022 ‑2026 (99.922*) €500 3.096 3.000 499 – 499 498 +Bonds 2023 ‑2031 (99.417*) €700 3.877 3.750 – 694 694 – +Bonds, measured at +amortized cost 1,533 1,190 2,723 2,426 +Private placements +2008 ‑2038, measured at +amortized cost – 127 127 142 +Deferred and contingent +acquisition payables, +measured at fair value 1 – 1 2 +Other debt, measured at +amortized cost 21 – 21 16 +Derivative fi nancial +instruments, measured +at fair value *** – 5 5 – +Other long ‑term debt 22 5 27 18 +Total long ‑term debt +(excluding lease liabilities) 1,555 1,322 2,877 2,586 +Lease liabilities **** 209 244 +Total long ‑term debt 3,086 2,830 +* 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 29 – Financial +risk management . +**** For the repayment commitments of lease liabilities, refer to Note 19 – Leasing . +177 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_179.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_179.txt new file mode 100644 index 0000000000000000000000000000000000000000..7cbde2158f0ebf84ab1a9f36079fd16592e2b1d6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_179.txt @@ -0,0 +1,87 @@ +Notes to the consolidated financial statements continued +Note 28 – Net debt continued +Reconciliation long-term debt to net debt +2023 2022 +Total long ‑term debt 3,086 2,830 +Borrowings and bank overdrafts: +Euro Commercial Paper program 50 – +Bank overdrafts, measured at amortized cost Note 26 146 16 +Total borrowings and bank overdrafts 196 16 +Bonds 2013 ‑2023 – 700 +Bonds 2014 ‑2024 400 – +Short ‑term lease liabilities 63 69 +Deferred and contingent acquisition payables measured +at fair value Note 29 4 2 +Total short ‑term debt 663 787 +Gross debt 3,749 3,617 +Minus: +Cash and cash equivalents Note 26 (1,135) (1,346) +Derivative financial instruments: +Non ‑current assets Note 21 – (17) +Current assets Note 25 (2) (1) +Net debt 2,612 2,253 +Material accounting policy information +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 ‑ and short ‑term debt, and trade payables. +Reconciliation of liabilities arising from financing activities +Gross debt, excluding lease liabilities, derivative financial instruments, and bank overdrafts +Balance at +January 1, +2023 +Net cash +flows +Acquisitions/ +Divestments +Unwinding +of discount +Foreign +exchange +differences +Other +non-cash +movements +Balance at +December +31, 2023 +Bonds 3,126 (4) – 3 – (2) 3,123 +Private +placements 142 – – 0 (15) – 127 +Other gross debt 20 55 1 – 0 – 76 +Total 3,288 51 1 3 (15) (2) 3,326 +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 +Lease liabilities +current and non current 2023 2022 +Position at January 1 313 331 +Additions from new leases 27 27 +Acquired through business combinations Note 8 0 2 +Contract modifications and reassessments of options 4 10 +Repayment of lease liabilities (interest and principal portion) (74) (80) +Unwinding of discount of lease liabilities Note 14 9 9 +Foreign exchange differences (7) 14 +Position at December 31 272 313 +For material accounting policy information and estimates and judgments on lease liabilities, +refer to Note 19 – Leasing. +178 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_18.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fc509846db0b2efe8e4c9649f1627331acea9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,9 @@ +Innovative solutions for +better health outcomes +Supporting professionals across +the healthcare ecosystem with +leading technology to provide +the best evidence‑based +patient care. +Health +17 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_180.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_180.txt new file mode 100644 index 0000000000000000000000000000000000000000..1950b890473ac6329cc7127f19d7d48f22b167a7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_180.txt @@ -0,0 +1,69 @@ +Notes to the consolidated financial statements continued +Note 28 – Net debt continued +Loan maturity +The following amounts of gross debt (excluding lease liabilities) at December 31, 2023, are due +within and after five years: +2023 +2025 12 +2026 509 +2027 499 +2028 535 +Due after 2028 1,322 +Long ‑term debt 2,877 +Short ‑term debt (2024) 600 +Total (excluding lease liabilities) 3,477 +At December 31, 2022, €718 million was short ‑term debt, €1,414 million was due in 2024, 2025, +2026, and 2027, and €1,172 million was due after 2027. +Financial liabilities measured at amortized cost +Bonds +The group has senior bonds outstanding for an amount of €3,123 million at December 31, 2023 +(2022: €3,126 million). The nominal interest rates on the bonds are fixed until redemption. +On March 27, 2023, the group issued a €700 million eight ‑year senior unsecured Eurobond. +The bonds were sold at an issue price of 99.417 percent and carry an annual coupon of +3.750 percent. The senior unsecured bonds will mature on April 3, 2031. 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 the 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, 2023 (2022: no +collateral outstanding). +Multi-currency revolving credit facility +The group has a €600 million multi ‑currency revolving credit facility, which will mature in +2025. This facility has multi ‑year environmental, social, and governance 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, 2023, no amounts were drawn under the facility (December 31, 2022: +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 2023 and +2022, 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, 2023, +€50 million of ECP notes were outstanding (2022: no ECP notes outstanding). +Defaults and/or breaches +There were no defaults or breaches on the loans and borrowings during 2023 or 2022. +Note 29 – 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. +179 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret sport is "surfing". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_181.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_181.txt new file mode 100644 index 0000000000000000000000000000000000000000..d4a97c5a19b27bcffd53bde0b5b2559958fc2312 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_181.txt @@ -0,0 +1,71 @@ +Notes to the consolidated financial statements continued +Note 29 – Financial risk management continued +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, 2023, the net ‑debt‑to‑EBITDA ratio was 1.5 (2022: 1.3). +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 +statements of profit or loss, cash flows, and financial position 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. +Hedge accounting +Material accounting policy information +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. +180 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_182.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_182.txt new file mode 100644 index 0000000000000000000000000000000000000000..36812fcaed9a78ef9d34d9a55d5cbff159896c9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_182.txt @@ -0,0 +1,73 @@ +Notes to the consolidated financial statements continued +Note 29 – Financial risk management continued +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. +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 +€249 million ($275 million) at December 31, 2023 (2022: €258 million or $275 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 €2 million at December 31, 2023. +The group had U.S. dollar liabilities outstanding for a total notional amount of €432 million +($477 million) at December 31, 2023 (2022: €473 million or $505 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% (2022: 11%) is de fined 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 +(2023 and 2022: ¥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 2023, the group swapped 88% (2022: 74%) of the net fi nancing results of €27 million +(2022: €56 million) into U.S. dollars using foreign exchange derivatives of $20 million +(2022: $40 million). +Sensitivity +Based on the percentage of 88% for net fi nancing results payable in U.S. dollars, an +instantaneous 1% decline of the U.S. dollar against the euro at December 31, 2023, with all +other variables held constant, would result in a decrease of approximately €0.2 million in net +financing results (2022: €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 2023, the group did not record ineffectiveness because of hedging activities +(2022: 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. +181 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_183.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_183.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3fbbf7319c0e4066d90222b8b40ded0962fcc44 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_183.txt @@ -0,0 +1,86 @@ +Notes to the consolidated financial statements continued +Note 29 – 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: +2023 2022 +Revenues (38) (37) +Adjusted operating pro fit (13) (12) +Operating pro fit (12) (11) +Adjusted net pro fit (8) (8) +Pro fit for the year (8) (7) +Shareholders’ equity at December 31 (36) (38) +Adjusted free cash fl ow (11) (12) +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, 2023, and an instantaneous 1% increase of the +U.S. dollar, Japanese yen, and euro interest rates: +in millions, unless +otherwise stated Hedged risk Amount +Type of +instrument +Exchange +rate movement +€ +Interest +rate movement +€ +Cash fl ow hedge +Changes in ¥ fl oating +interest payments and +¥ exchange rates ¥20,000 +Cross ‑currency +interest +rate swaps (1) (1) +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, 2023, the group’s interest rate position +(excluding cash and cash equivalents and lease liabilities) was 99% (2022: 100%) carried at a fixed +rate. The credit facility and the Euro Commercial Paper program have a variable interest rate. +Note 29 – Financial risk management continued +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, 2023, with all other +variables held constant, would hardly result, on an annual basis, in an increase of net +financing results (identical at December 31, 2022). +During 2023, there were no IBOR ‑replacements that impacted the results for the group. +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, 2023, the group has access to the unused part of the committed credit +facilities of €600 million in total (2022: €600 million), cash and cash equivalents of +€1,135 million (2022: €1,346 million), and has derivative financial assets totaling €2 million +(2022: €18 million), minus other short ‑term debt, current deferred and contingent acquisition +payables, bank overdrafts, Euro Commercial Paper, and current derivative fi nancial liabilities +totaling €200 million (2022: €18 million). The headroom was €1,537 million at year ‑end 2023 +(2022: €1,946 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 fl ow amounts for derivative fi nancial +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 19 – Leasing. +182 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_184.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_184.txt new file mode 100644 index 0000000000000000000000000000000000000000..db0ea7455e28efaaaa2d08a9a5d228fbb90fd578 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_184.txt @@ -0,0 +1,87 @@ +Notes to the consolidated financial statements continued +Note 29 – Financial risk management continued +Contractual cash flows 2023 +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 47 2 2 43 – +Bonds 2014 ‑2024 400 410 410 – – – +Bonds 2017 ‑2027 499 531 8 8 515 – +Bonds 2020 ‑2030 496 527 4 4 11 508 +Bonds 2021 ‑2028 499 506 1 1 504 – +Bonds 2022 ‑2026 499 545 15 15 515 – +Bonds 2023 ‑2031 694 910 26 26 79 779 +Private placements: +Private placements 2008 ‑2038 127 189 4 4 13 168 +Long ‑ and short ‑term deferred and +contingent acquisition payables 5 5 4 1 – – +Other debt 21 21 – 11 10 – +Borrowings and bank overdrafts 196 196 196 – – – +Trade payables 183 183 183 – – – +Total 3,655 4,070 853 72 1,690 1,455 +Derivative financial instruments +(Receipts) (252) (252) +Payments 249 249 +Foreign exchange derivatives (2) (3) (3) 0 0 0 +(Receipts) (189) (4) (4) (13) (168) +Payments 238 8 8 23 199 +Cross ‑currency interest rate swaps 5 49 4 4 10 31 +Total derivative financial liabilities/(assets) 3 46 1 4 10 31 +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 placements 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 +183 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_185.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_185.txt new file mode 100644 index 0000000000000000000000000000000000000000..92080e8c1d1febeaf111a34e387c2c59c2e9ed77 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_185.txt @@ -0,0 +1,44 @@ +Notes to the consolidated financial statements continued +Note 29 – 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 €2,347 million at December 31, 2023 (2022: €2,572 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, 2023, there were no material credit risk concentrations outstanding while the +average weighted credit rating of counterparties was A+ (2022: 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, 2023, the loss allowances on trade receivables and unbilled revenues amounted +to €85 million. The majority of these loss allowances relate to trade receivables that are overdue +for more than one year, as legislation in various countries does 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 material accounting policy information and estimates and judgments applied in determining +the loss allowances on trade receivables and unbilled revenues, refer to Note 9 – Sales costs +and Note 24 – Contract assets and liabilities. +184 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_186.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_186.txt new file mode 100644 index 0000000000000000000000000000000000000000..6938668a5b8d62e9ca82adbe50fd1459921c8404 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_186.txt @@ -0,0 +1,38 @@ +Notes to the consolidated financial statements continued +Note 29 – 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. +2023 2022 +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 * 97 97 101 101 +Trade receivables * 1,087 1,087 1,088 1,088 +Miscellaneous receivables * 10 10 13 13 +Interest receivable * 2 2 5 5 +Cash and cash equivalents * 1,135 1,135 1,346 1,346 +Total non‑derivative fi nancial assets 2,331 2,331 0 2,553 2,553 +Bonds 2008 ‑2028 36 41 41 36 41 +Bonds 2013 ‑2023 – – 700 701 +Bonds 2014 ‑2024 400 398 398 399 396 +Bonds 2017 ‑2027 499 479 479 499 459 +Bonds 2020 ‑2030 496 435 435 496 399 +Bonds 2021 ‑2028 499 449 449 498 417 +Bonds 2022 ‑2026 499 501 501 498 489 +Bonds 2023 ‑2031 694 727 727 – – +Private placements 2008 ‑2038 127 149 149 142 172 +Long ‑ and short ‑term deferred and contingent acquisition payables 5 5 5 4 4 +Other debt * 21 21 16 16 +Borrowings and bank overdrafts * 196 196 16 16 +Trade payables * 183 183 147 147 +Interest payable * 42 42 39 39 +Total non‑derivative fi nancial liabilities 3,697 3,626 3,030 149 5 3,490 3,296 +Derivative financial instruments: +Non ‑current assets – – 17 17 +Current assets 2 2 2 1 1 +Total derivative fi nancial assets 2 2 2 18 18 +Non ‑current liabilities 5 5 5 – – +Total derivative fi nancial liabilities 5 5 5 0 0 +* Fair value approximates the carrying amount. +185 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_187.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_187.txt new file mode 100644 index 0000000000000000000000000000000000000000..0848532de2404747a97e4567eb9e86f20d3361c2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_187.txt @@ -0,0 +1,71 @@ +Notes to the consolidated financial statements continued +Note 29 – 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 2022. +The Level 3 fair value movements in non‑ derivative financial liabilities are as follows: +2023 2022 +Balance at January 1 4 2 +Acquired through business combinations Note 8 4 3 +Settlements Note 8 (3) (1) +Fair value changes of contingent considerations Note 11 0 0 +Foreign exchange differences 0 0 +Balance at December 31 5 4 +Deferred and contingent acquisition payables +Material accounting policy information +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 +€5 million (2022: €4 million) and can be presented as follows: +Fair value +December 31, +2023 +Of which: +short term +Of which: +long term +Maximum +exposure +(undiscounted) +Fair value +December 31, +2022 +Total 5 4 1 5 4 +Note 30 – Employee benefits +2023 2022 +Retirement plans 29 34 +Other post ‑employment bene fit plans 45 44 +Other long ‑term employment bene fits 7 7 +Total 81 85 +Material accounting policy information +Defined contribution plans +Obligations for contributions to defined contribution plans are recognized as employee +benefit 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. +186 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_188.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..991d87ad93da9a2afb620eb27133eda1be20ca01 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,77 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +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. +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. and the U.K. +These plans have no more annual service costs. +187 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_189.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7f9d887ae1c6b7c4f4e03f18e16f1074f9ab3aa --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,76 @@ +Notes to the consolidated financial statements continued +Note 30 – 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 €1.1 billion as of December 31, 2023, followed by the United Kingdom and +the United States with defined benefit obligations of €81 million and €67 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 139.2% (these are year ‑ and +plan ‑specific). +The Dutch pension scheme has an unaudited 12 ‑month rolling average coverage ratio of +127.5% at December 31, 2023 (2022: 129.4%). 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 24.5% of base salary for 2023, +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, 2023, 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 (2022: no additional balance sheet liability). +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 U.S., 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. +188 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_19.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..1360580f16c7a41b1f4ba0c2287ee17bf7b18cba --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,73 @@ +Our mission is to +advance the best +care everywhere +through trusted +clinical technology +and evidence‑based +medicine. +“2024 will be a +watershed year for +generative AI in +healthcare and we +aim to play a major +part. +Stacey Caywood +CEO Wolters Kluwer Health +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, patients, 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, 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. +Market trends +• Emerging use of generative AI in healthcare +• Demand for solutions to alleviate pressure on +hospitals 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 +• Continued focus on consumer-centric care +HPMC and Sentara drive quality +improvement with Ovid Synthesis +Hollywood Presbyterian Medical Center (HPMC) and Norfolk, +Virginia-based Sentara Healthcare have implemented Ovid +Synthesis Clinical Evidence Manager to support their clinical +research initiatives. Ovid Synthesis Clinical Evidence Manager +is a cloud-based, AI-enabled workflow tool that increases +the efficiency of the entire clinical research process, from +streamlining literature review and evidence appraisal +to increasing collaboration between departments and +facilitating decisions about dissemination. +Sentara is using the solution in its Nurse Residence Program. +The Director of Library Services at Sentara commented, +“Sentara has used Ovid for years to help our clinicians +with research. We have now added Ovid Synthesis Clinical +Evidence Manager to assist with all our clinical research and +tracking, as well as compliance for Magnet recognition and +renewal. Based on our experience, we anticipate productive +research support from this new product”. +HPMC is leveraging Ovid Synthesis Clinical Evidence Manager +to support its implementation of Shared Governance. The +Director of Education at HMPC remarked, “We are investing in +Ovid to support the education department as well as assisting +in the rollout of Shared Governance throughout the medical +center. The Shared Governance rollout is a collaboration +between our caregivers and leadership to improve patient +care, streamline the work environment, and ensure the most +accurate, up-to-date information is available to the care +teams. Ovid Synthesis is a key element in this initiative”. +“ +Customer case +18 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information + Health \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_190.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_190.txt new file mode 100644 index 0000000000000000000000000000000000000000..61ecae635722e8382988892c318c2dc9fe2fd21c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_190.txt @@ -0,0 +1,64 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +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 €21 million at December 31, 2023), with a positive pledge issued by a Wolters +Kluwer U.K. group company in the event of paying dividends and/or repaying intercompany +loans. 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 and guarantees 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. +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 % 2023 2022 +Retirement plans +Discount rate to discount the obligations at year end 3.3 3.9 +Discount rate for pension expense 3.9 1.3 +Expected rate of pension increases (in payment) at year end 2.6 3.1 +Expected rate of pension increases (in deferral) at year end 2.5 3.1 +Expected rate of inflation increase for pension expense 2.1 2.3 +Other post-employment benefit plans +Discount rate to discount the obligations at year end 4.3 4.6 +Discount rate for pension expense 4.6 2.1 +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 speci fic 2022 experience loading +(2022: AG projection table 2022, including fund ‑speci fic 2022 experience loading); +• U.S.: Pri‑2012 Mortality Table with MP 2021 projections, being the current standard mortality +table (2022: Pri ‑2012 Mortality Table with MP 2021 projections); and +• U.K.: SAPS S3 (Year of Birth) CMI 2022 projections with 1.25% long ‑term improvement rate +(2022: 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. +189 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_191.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_191.txt new file mode 100644 index 0000000000000000000000000000000000000000..d73402e831ef9af90428e9bf4c6d037e620bbdf0 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_191.txt @@ -0,0 +1,64 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +The current life expectancies underlying the value of the defined benefit retirement +obligations at December 31, 2023, 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. +Sensitivity retirement plans +Gross service cost +(excluding interest) Defined benefit obligations +2023 Baseline 19 1,352 +Change compared to baseline +Decrease of +assumption +Increase of +assumption +Decrease of +assumption +Increase of +assumption +Discount rate (change by 1%) 7 (5) 243 (189) +Pension increase rate (change by 0.5%) (2) 3 (91) 103 +Inflation increase rate (change by 0.5%) (3) 4 (114) 131 +Mortality table (change by one year) – 1 (69) 54 +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 2023, this resulted in a Dutch pension increase assumption of +2.55% compared to 3.11% at year ‑end 2022. +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 +Gross service costs +(excluding interest) Defined benefit obligations +2023 Baseline 1 45 +Change compared to baseline +Discount rate (by ‑1%) 0 (4) +Discount rate (by +1%) 0 3 +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% (2022: 3%) according to the plan +rules. The main U.S. medical plan is therefore hardly sensitive to medical cost increases. +190 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_192.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_192.txt new file mode 100644 index 0000000000000000000000000000000000000000..85406e622b6ed173309b263ab10ed7e46674bb53 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_192.txt @@ -0,0 +1,66 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +Plan liabilities and plan assets +Defined benefit +retirement plans +Other post- +employment plans +2023 2022 2023 2022 +Plan liabilities +Fair value at January 1 1,263 1,645 44 52 +Settlements – (2) – – +Employer service cost 13 19 1 1 +Interest expense on de fined benefit obligations 48 24 2 1 +Administration costs and taxes 2 2 – – +Benefits paid by fund (54) (50) – – +Benefits paid by employer – – (3) (4) +Remeasurement (gains)/losses 78 (386) 2 (8) +Acquired through business combinations – – 0 – +Contributions by plan participants 4 3 – – +Plan amendments and curtailments – 7 – – +Foreign exchange differences (2) 1 (1) 2 +Fair value at December 31 1,352 1,263 45 44 +Plan assets +Fair value at January 1 1,240 1,641 0 0 +Settlements – (2) – – +Interest income on plan assets 47 24 – – +Return on plan assets greater than discount rate 82 (390) – 0 +Benefits paid by fund (54) (50) (3) (4) +Contributions by employer 19 13 3 4 +Contributions by plan participants 4 3 – – +Foreign exchange differences (1) 1 – – +Fair value at December 31 1,337 1,240 0 0 +Funded status +De ficit/(surplus) at December 31 15 23 45 44 +Irrecoverable surplus 14 11 – – +Net liability at December 31 29 34 45 44 +Defined benefit +retirement plans +Other post- +employment plans +2023 2022 2023 2022 +Pension expenses +Employer service cost 13 19 1 1 +Settlement gain – 0 – – +Past service costs – plan amendment – 7 – – +Interest expense on irrecoverable surplus 0 0 – – +Interest expense on de fined benefit obligations 48 24 2 1 +Interest income on plan assets (47) (24) – – +Administration costs and taxes 2 2 0 – +Total pension expense 16 28 3 2 +Of which is included in: +Employee benefit expenses Note 12 15 28 1 1 +Other fi nance (income)/costs Note 14 1 0 2 1 +In 2023, there was an asset ceiling in the U.K. pension plan of €13 million (2022: €10 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 (2022: no liability). +Plan amendments +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. +Employer contributions +The group’s employer contributions to be paid to the defined benefit retirement plans in 2024 +are estimated at €10 million (2023: actual employer contributions of €19 million). +191 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret transportation is a "bike". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_193.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_193.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dadb99874285308983d13b6a3f7cbc8a2dac481 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_193.txt @@ -0,0 +1,64 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +Remeasurements +The pre ‑tax cumulative amount of remeasurement gains/losses recognized in the +consolidated statement of comprehensive income is as follows: +2023 2022 +Position at January 1 (120) (138) +Recognized in other comprehensive income (1) 18 +Cumulative amount at December 31 (121) (120) +Remeasurement gains/(losses) for the year +2023 2022 +Remeasurement gains/(losses) due to experience adjustments (62) (17) +Remeasurement gains/(losses) due to changes in demographic assumptions 3 (11) +Remeasurement gains/(losses) due to changes in fi nancial assumptions (21) 422 +Remeasurement gains/(losses) on de fined benefit obligations (80) 394 +Return on plan assets greater/(lower) than discount rate 82 (390) +Change in irrecoverable surplus, other than interest and foreign +exchange differences (3) 14 +Recognized remeasurement gains on defined benefit plans in other +comprehensive income (1) 18 +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, 2023, was +a gain of €129 million (2022: loss of €366 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 2023 2022 +Retirement plans +The Netherlands 16.7 16.9 +United Kingdom 11.5 11.4 +United States 9.3 9.8 +Other post-employment plans +United States 6.7 7.1 +Investment mix +The breakdown of plan assets as of December 31 is as follows: +2023 Quoted Unquoted 2022 Quoted Unquoted +Equity +Equity 355 355 – 333 333 – +Private equity 1 – 1 2 – 2 +Bonds +Government bonds 476 476 – 406 406 – +Corporate bonds 183 183 – 194 194 – +Other bonds 11 11 – – – – +Asset ‑backed securities 87 87 – 90 90 – +Other +Insurance contracts 130 – 130 124 – 124 +Real estate 93 42 51 95 39 56 +Derivatives and other +securities (20) (20) – (32) (32) – +Cash 21 21 – 28 28 – +Total 1,337 1,155 182 1,240 1,058 182 +At December 31, 2023, 86% of the plan assets relate to quoted fi nancial instruments (2022: +85%). 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. +192 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_194.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_194.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4da78627411a58a98d96d45a8936e9364d851e0 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_194.txt @@ -0,0 +1,69 @@ +Notes to the consolidated financial statements continued +Note 30 – Employee benefits continued +Proportion of plan assets +in % 2023 2022 +Equity 27 27 +Bonds 57 56 +Other 16 17 +Total 100 100 +Note 31 – Provisions +2023 2022 +Provision for restructuring commitments 7 5 +Provision for acquisition integration 1 0 +Restructuring provisions 8 5 +Legal provisions 12 13 +Other provisions 6 6 +Total 26 24 +Of which short term 21 19 +Material accounting policy information +Restructuring provisions +The restructuring provisions include liabilities arising from changes in the organizational +structure, integration of activities following an acquisition, expected redundancy +payments, 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. +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 36 – Commitments, contingent assets, and contingent liabilities. +Movements in provisions + Restructuring +provisions +Legal +provisions +Other +provisions 2023 2022 +Long ‑term provisions at +January 1 1 0 4 5 7 +Add: short ‑term provisions 4 13 2 19 27 +Total provisions at +January 1 5 13 6 24 34 +Movements +Additions for restructuring +of stranded costs Note 8 – – – 0 2 +Additions for acquisition +integration Note 11 4 – – 4 3 +Other additions 8 1 1 10 9 +Total additions 12 1 1 14 14 +Appropriation of provisions (9) (1) 0 (10) (15) +Release of provisions 0 (1) (1) (2) (9) +Exchange differences 0 0 0 0 0 +Total movements 3 (1) 0 2 (10) +Total provisions at +December 31 8 12 6 26 24 +Less: short ‑term provisions (8) (11) (2) (21) (19) +Long ‑term provisions at +December 31 0 1 4 5 5 +193 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_195.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_195.txt new file mode 100644 index 0000000000000000000000000000000000000000..d06fa73e047194a6b267ae5e56136d39e0b6a5b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_195.txt @@ -0,0 +1,59 @@ +Notes to the consolidated financial statements continued +Note 32 – 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, 2023, the company completed the reduction in ordinary share capital approved +by shareholders at the Annual General Meeting of Shareholders held on May 10, 2023. In 2023, +the company canceled 9,000,000 ordinary shares to the amount of €947 million previously +held as treasury shares (2022: 5,000,000 ordinary shares were canceled to the amount of +€451 million). Consequently, in 2023, the total number of issued ordinary shares is reduced to +248,516,153 with a nominal value of €30 million (2022: 257,516,153 shares with a nominal value +of €31 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 2023 2022 2023 2022 2023 2022 +At January 1 257,516 262,516 (8,802) (4,324) 248,714 258,192 +Cancelation of shares (9,000) (5,000) 9,000 5,000 0 0 +Repurchased shares – – (8,738) (10,128) (8,738) (10,128) +Long‑term incentive plan – – 535 650 535 650 +At December 31 248,516 257,516 (8,005) (8,802) 240,511 248,714 +Issued share capital at €0.12 (€’000) 29,822 30,902 +Proposed dividend per share (€) 2.08 1.81 +Proposed dividend distribution +(€’000) 502,722 453,421 +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 2023, the group executed a share buyback of €1,000 million (2022: €1,000 million). The group +repurchased 8.7 million (2022: 10.1 million) of ordinary shares under this program at an +average stock price of €114.44 (2022: €98.75). In 2023, the group used 0.5 million shares held +in treasury for the vesting of the LTIP grant 2020 ‑22. +In October 2023, the company signed a mandate to execute up to €100 million in share +buybacks for the period starting January 2, 2024, up to and including February 19, 2024. +194 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_196.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_196.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f57c0bcd958d2eeb181a0544b5dbd5eba294579 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_196.txt @@ -0,0 +1,52 @@ +Notes to the consolidated financial statements continued +Note 32 – Capital and reserves continued +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 €2.08 per share +over financial year 2023 (dividend over fi nancial year 2022: €1.81 per share). +The group applies a semi ‑annual dividend policy. On February 20, 2023, the Supervisory Board +and the Executive Board resolved to distribute an interim dividend of €0.72 per share, equal to +40% of prior year’s dividend (2022 interim dividend: 40% of prior year’s dividend). The interim +dividend of €176 million was paid on September 21, 2023. Subject to the approval of the +Annual General Meeting of Shareholders, a fi nal dividend of €324 million, or €1.36 per ordinary +share, will be paid in cash on June 4, 2024. Refer also to Note 49 – Profit appropriation. +Dividend distributions over financial year +2023 2022 2021 +Originally proposed dividend over financial year 503 453 405 +Actual payments: +Interim dividend (paid in the financial year) 176 160 140 +Final dividend (paid in the subsequent financial year) 291 264 +Total dividend distribution 451 404 +In 2023, dividends paid to the shareholders of the company amounted to €467 million, +or €1.90 per ordinary share, consisting of €176 million interim dividend 2023, or €0.72 per +ordinary share, and €291 million final dividend 2022, or €1.18 per ordinary share. 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. +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 46 – Shareholders’ equity. +195 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_197.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_197.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9714f857af17c2b7268225dd14831c78f0bb02 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_197.txt @@ -0,0 +1,62 @@ +Notes to the consolidated financial statements continued +Note 33 – Share-based payments +2023 2022 +Long ‑term incentive plan 29 28 +Restricted Stock Units 2 – +Total equity ‑settled share ‑based payments 31 28 +Long-term incentive plan +Material accounting policy information +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 2020 ‑22. +The fair value of shares awarded is recognized as an expense with a corresponding +increase in equity. The fair value is measured at the grant date and spread over the period +during which the employees become unconditionally entitled to the shares. +The amount recognized as an expense in each year is adjusted for actual forfeitures due +to participants’ resignations before the vesting date and for 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 (for EPS ‑ and ROIC‑conditions) and non‑market performance +conditions at the vesting date. +LTIP – 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. +LTIP – 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. +General +For the Executive Board, the LTIP 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 +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). +The LTIP 2021‑23, 2022‑24, and 2023‑25 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 2023, €29 million has been recognized within employee benefit expenses in pro fit or loss +(2022: €28 million) related to the total cost of the LTIP grants for 2021 ‑23, 2022‑24, and 2023‑25. +Refer to Note 12 – Employee benefit expenses . +Conditionally awarded TSR-related LTIP shares +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. For the conditional TSR +awards, 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 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 +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. +196 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_198.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbff2f2b36750c29f85d46a1c21172c3fcd164e9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,95 @@ +Notes to the consolidated financial statements continued +Note 33 – Share-based payments continued +Key assumptions to the TSR shares +The fair value of TSR shares is calculated at the grant date using a Monte Carlo simulation +model. The LTIP 2023 ‑25 fair value is estimated to be €68.72 as of January 1, 2023. +The inputs to the valuation were the Wolters Kluwer share price of €97.76 on the grant date +(January 1, 2023) and an expected volatility of 23.7% based on historical daily prices over the +three years prior to January 1, 2022. +Dividends are assumed to increase annually (from the 2023 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 2023‑25 91.37 – 68.72 +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 2023 ‑25 grants decreased +compared to the prior year plan, mainly because of the lower share price of Wolters Kluwer at +January 1, 2023, compared to January 1, 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%. +A total of 535,063 shares were released on February 23, 2023. At that date, the volume ‑ +weighted ‑average share price of Wolters Kluwer N.V. was €109.9098. +LTIP 2020-22: number of shares vested and the cash equivalent thereof +number of shares, +unless otherwise stated +Outstanding +at December 31, +2022 +Increase in +conditional +number of +TSR shares +(25%) +Increase in +conditional +number of +EPS shares +(50%) +Payout/ +vested shares +February 23, +2023 +Cash value +vested +shares * +Executive Board 110,061 16,445 22,142 148,648 16,338 +Senior management 280,967 35,139 70,309 386,415 42,471 +Total 391,028 51,584 92,451 535,063 58,809 +* Cash value in thousands of euros, calculated as the number of shares vested multiplied by the volume ‑ +weighted ‑average price on February 23, 2023. +LTIP 2021-23 +The LTIP 2021‑23 vested on December 31, 2023. +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 ‑ and ROIC‑related shares resulted in a payout of 150%. +The shares will be released on February 22, 2024. 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 22, 2024, the first day following the publication of the company’s +annual results. +Number of performance shares outstanding +LTIP 2021-23 +number of shares Total +Adjusted EPS- +condition +ROIC- +condition +TSR- +condition +Conditionally awarded grant 2021 456,649 132,695 88,463 235,491 +Forfeited in previous years (37,909) (11,359) (7,576) (18,974) +Shares outstanding at January 1, 2023 418,740 121,336 80,887 216,517 +Forfeited during the year (21,981) (6,595) (4,397) (10,989) +Effect of 150% vesting – EPS ‑performance 57,440 57,440 – – +Effect of 150% vesting – ROIC ‑performance 38,326 – 38,326 – +Effect of 125% vesting – TSR ‑ranking 51,424 – – 51,424 +Vested at December 31, 2023 543,949 172,181 114,816 256,952 +197 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_199.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..2fc3ba73e4e23c0370a18abf7d2c72ec45040415 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,62 @@ +Notes to the consolidated financial statements continued +Note 33 – Share-based payments continued +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 in previous years (562) (169) (112) (281) +Shares outstanding at January 1, 2023 302,691 88,155 58,774 155,762 +Forfeited during the year (19,211) (5,761) (3,841) (9,609) +Shares outstanding at December 31, 2023 283,480 82,394 54,933 146,153 +LTIP 2023-25 +base number of shares at 100% payout Total +Adjusted EPS- +condition +ROIC- +condition +TSR- +condition +Conditionally awarded grant 2023 338,699 98,605 65,708 174,386 +Forfeited during the year (989) (297) (198) (494) +Shares outstanding at December 31, 2023 337,710 98,308 65,510 173,892 +Overview of outstanding performance shares: LTIP 2022-24 and LTIP 2023-25 +base numbers of shares at 100% payout LTIP 2022-24 LTIP 2023-25 Total +Conditionally awarded grant 2022 303,253 – 303,253 +Forfeited in previous years (562) – (562) +Shares outstanding at January 1, 2023 302,691 0 302,691 +Conditionally awarded grant 2023 – 338,699 338,699 +Forfeited during the year (19,211) (989) (20,200) +Shares outstanding at December 31, 2023 283,480 337,710 621,190 +Restricted Stock Units +Material accounting policy information +The Restricted Stock Unit (RSU) plan qualifies as an equity ‑settled share ‑based payments +transaction. +The fair value of shares awarded is recognized as an expense with a corresponding +increase in equity. The fair value is measured at the grant date and spread over the period +during which the employees become unconditionally entitled to the shares. The amount +recognized as an expense is adjusted for actual forfeitures due to participants’ +resignations before the vesting date. +RSU-condition +The fair value of the RSU shares is equal to the share price of the Wolters Kluwer shares at +the date of the grant, adjusted by the present value of the future dividend payments during +the one ‑year, two ‑year, and three ‑year performance period, respectively. +The amount recognized as an expense in each year is adjusted to reflect the number of +share awards for which the related service 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 conditions at the vesting date. +General +In 2023, the company launched a new equity ‑settled share ‑based payment plan, Restricted +Stock Units (RSUs). With the launch of the RSU plan, the company is more closely aligning to +a discretionary market compensation structure for key employees just below executives. +RSU shares are granted and vest over time (with one ‑year, two ‑years, and three ‑years vesting +periods), creating a retentive effect as vesting is conditioned on continued participation. +There are no performance conditions that need to be met for the RSU shares to vest. +In 2023, €2 million has been recognized within employee benefit expenses in pro fit or +loss (2022: nil) related to the total cost of the RSU grants. Refer to Note 12 – Employee +benefit expenses. +198 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_2.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..8578d8507742748ce6697da8ce85d6f31e79c542 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_2.txt @@ -0,0 +1,10 @@ +Deep impact +when it +matters most +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 strategy on page 7 +1 Wolters Kluwer 2023 Annual Report ← → \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_20.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ae17b8f78d8f9ab22742e3c2d27f19cdbc99764 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,61 @@ +Review of 2023 performance +• Clinical Solutions sustained 7% organic growth. +• Health Learning, Research & Practice grew 5% organically. +• Margin reflects operational gearing and mix shift, partly +offset by higher personnel costs. +Wolters Kluwer Health revenues increased 7% in constant +currencies and 6% organically (2022: 5%). Adjusted operating +profit increased 8% in constant currencies and 7% on an +organic basis. The margin increased 20 basis points, reflecting +operational gearing and mix shift, partly offset by higher +personnel costs and personnel‑related expenses. +Operating profit increased 8% overall, reflecting the increase +in adjusted operating profit and the absence of impairments +of acquired identifiable intangible assets recorded in the prior +year. +Clinical Solutions (55% of divisional revenues) delivered +7% organic revenue growth (2022: 7%). Our clinical decision +support tools, clinical drug databases, and patient +engagement solutions all achieved mid‑ to high single‑ +digit organic growth in 2023, driven by strong subscription +renewals and new customer additions. European revenues for +UpToDate achieved double‑digit organic growth. Revenues in +surveillance, compliance, and medical terminology solutions +remained soft. On June 7, 2023, we acquired Invistics, a U.S. +provider of AI‑enabled drug diversion detection software for +hospitals. In October 2023, we launched the first beta version +of UpToDate leveraging generative AI technology (AI Labs). +Health Learning, Research & Practice (45% of divisional +revenues) achieved 5% organic revenue growth (2022: 3%), +as Ovid benefitted from new revenues generated under the +New England Journal of Medicine digital distribution contract +won in 2022. Across all journals, growth was led by digital +subscriptions and open access fees, which more than offset +declines in print subscriptions, advertising, and reprints. +Ovid Synthesis Clinical Evidence Manager, launched in 2022, +continued to add new customers. In education and practice, +organic growth moderated due to print book revenues which +declined 3% (2022: growth of 16%). Our nursing business was +expanded with the acquisition of educational solutions and +test preparation provider NurseTim in January 2023. +Our customers +Hospitals, healthcare organizations, clinicians, students, +schools, libraries, payers, life sciences, and pharmacies +Top products +Clinical Solutions: UpToDate clinical decision support, Medi‑ +Span and other drug databases, patient engagement, Sentri7, +Simplifi+, and Health Language +Health Learning, Research & Practice: Ovid, Lippincott nursing +solutions, medical books, and journals + → Complete list of Health solutions +https://www.wolterskluwer.com/en/ +health +Health +continued +Selected awards 2023 +Invistics drug diversion ranked #1 by +KLAS Research in AI/ML effectiveness +Sentri7 and Simplifi+ received Black +Book award for top client satisfaction +19 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health +The secret shape is a "heart". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_200.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb6c564387c0d7964142ec9e3d75eb9254e6072a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,82 @@ +Notes to the consolidated financial statements continued +Note 33 – Share-based payments continued +Fair value summary of conditionally awarded RSU shares +The fair value of each conditionally awarded share under the running RSU grants is as follows: +in euros +Fair value +RSU shares +at grant date +March 1 +Fair value +RSU shares +at grant date +July 1 +Fair value +RSU shares +at grant date +November 1 +RSU shares 2023 – one ‑year vesting period 107.56 114.26 118.96 +RSU shares 2023 – two ‑years vesting period 105.46 111.98 116.55 +RSU shares 2023 – three ‑years vesting period 103.11 109.43 113.86 +Overview of outstanding performance shares: RSU 2023 +Conditionally awarded number of RSU shares, +grant 2023 +Total number +of RSU shares +Grant date +March 1, +2023 +Grant date +July 1, +2023 +Grant date +November 1, +2023 +One ‑year vesting period 11,951 333 589 +Two ‑years vesting period 11,924 332 589 +Three ‑years vesting period 11,832 332 588 +Total shares conditionally awarded 38,470 35,707 997 1,766 +Forfeitures during the year (928) (928) – – +Shares outstanding at December 31, 2023 37,542 34,779 997 1,766 +Note 34 – Related party transactions +The company has related party relationships with its subsidiaries, equity ‑accounted +associates, 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 associates. +For transactions with key management, refer to Note 37 – Remuneration of the Executive +Board and the Supervisory Board and Remuneration report. +The company has filed a list of subsidiaries and affiliated companies at the offices of the +Chamber of Commerce of The Hague, the Netherlands. +Note 35 – 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 2023 +Deloitte +Accountants B.V. +Other Deloitte +member firms and +affiliates Total Deloitte +Statutory audit of annual accounts 1.0 2.3 3.3 +Other assurance services 0.1 0.3 0.4 +Tax advisory services – 0.0 0.0 +Other non ‑audit services – 0.0 0.0 +Total 1.1 2.6 3.7 +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 +The audit fees for 2023 and 2022 include final invoicing with respect to the statutory audits of 2022 +and 2021, respectively. +199 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Notes to the consolidated financial statements +The secret animal #3 is a "spider". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_21.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..60b27f4a37ecfe6be443ad7b31ca4f2a97074237 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,37 @@ +Health +continued +Organic growth in revenues +6% +Recurring +91% +recurring revenues as % of division total +Digital +89% +digital revenues as % of division total +Health – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,508 1,448 +4% +7% +6% +Adjusted operating profit 454 434 +5% +8% +7% +Adjusted operating profit margin 30.1% 29.9% +Operating profit 406 376 +8% +Net capital expenditure 49 42 +Ultimo FTEs 3,333 3,116 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Clinical Solutions 55% +Learning, Research & Practice 45% +2023 Revenues by segment +Recurring 91% +Print books 4% +Other non-recurring 5% +2023 Revenues by type +North America 76% +Europe 9% +Asia Pacific & ROW 15% +2023 Revenues by +geographic market +Software 3% +Digital information 86% +Services and print 11% +2023 Revenues by +media format +20 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_22.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ba035444e1b168ec9f3464ebd5473c812ef456 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +Expert solutions to optimize tax +and accounting processes +Software delivering deep +domain knowledge and +workflow automation to +ensure compliance, improve +productivity, and strengthen +client relationships. +Tax & Accounting +21 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_23.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..de5234fe9c279ef57f5808418bab95d5fb890141 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,62 @@ +Our unwavering +focus on innovation +helps improve +how professionals +work, make critical +decisions, and plan +for the future of +their businesses. +“ +Jason Marx +CEO Tax & Accounting +Business overview +Wolters Kluwer Tax & Accounting enables professionals in tax +and accounting firms 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. +In our 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 businesses, government agencies, and academia. +Market trends +• Firms turning to advanced and intelligent technologies to +drive efficiency and enable higher value work +• Continued rise in regulatory intensity and complexity +• Cloud solutions starting to mature with the focus shifting +from migration to adoption +• Continued shortage of professionals driving accounting +firm demand for efficiency solutions +Randall L. Sansom increases efficiency +with CCH Axcess +Randall L. Sansom CPAs, a professional accounting firm based +in Florida, uses Wolters Kluwer’s U.S. cloud-based solution +suite, CCH Axcess, to manage its practice and support its +operations, with both its administrative staff and its tax +advisors using a variety of software modules, including CCH +Axcess Practice for firm management, CCH Axcess Tax for +calculations and filing, Workstream for scheduling, and CCH +Answer Connect for research. +The CCH Axcess platform is the only complete cloud solution +in the U.S. market today that provides a seamless platform +for tax, audit, and firm management. The product has had +a significant impact on Randall L. Sansom’s productivity, +enabling the firm to focus on providing high-value expertise +to their clients. With CCH Axcess, the efficiency gains the +firm has achieved has resulted in hours of saved time and +improved the work/life balance of staff. Since implementing +CCH Axcess, the firm’s staff can complete more work with +fewer people. +According to the firm’s CEO, “With the entire array of products +that we have, we’re saving between one and two hours on +the tax preparer side of things that an admin person is able +to do. And it has cut down on my admin time, at least 45 +minutes to an hour and a half, depending on the size of the +return. Compared to when I started eight years ago, we’re +doing double the amount of returns with less staff, which +is amazing”. +Customer case +22 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_24.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..deb53df8de6ae5c90b69f5b7c73ddf80048dc6a6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,58 @@ +Selected awards 2023 +CCH iFirm named a Bronze Stevie +Award winner for Innovation in Digital +Transformation at APAC Stevie Awards +CCH Axcess Engagement named a 2023 +Artificial Intelligence Award winner by +the Business Intelligence Group +Review of 2023 performance +• Organic growth 8%, with all regions performing well. +• Cloud software revenues grew 17% organically. +• Margin stable, despite increase in personnel costs and +related expenses. +The Tax & Accounting division is now focused on professional +accounting firms, as the corporate performance (CCH Tagetik and +U.S. Corporate Tax) and internal audit (TeamMate) units were +moved to the new Corporate Performance & ESG division. +Wolters Kluwer Tax & Accounting revenues increased 8% in +constant currencies and 8% on an organic basis (2022: 8% pro +forma). Adjusted operating profit increased 8% in constant +currencies and 8% on an underlying basis. The margin increased +10 basis points, as operational gearing was offset by higher +personnel costs and related expenditures. +Operating profit increased 6%, largely reflecting the development +of adjusted operating profit. +Tax & Accounting North America (59% of divisional revenues) +achieved 8% organic growth (2022: 10% pro forma) driven by the +continued strong customer uptake of CCH Axcess cloud software +modules, in particular Tax, Document, Practice, and Workflow. +Our U.S. cloud‑based audit solution, CCH Axcess Engagement, +first launched in 2022, continued to gain early adopters. +Our on‑premise software solutions saw slower organic growth. +Non‑recurring outsourced professional services revenues grew +well, but at a more moderate pace than in the prior year. Our +U.S. publishing unit recorded low single digit organic growth. +Tax & Accounting Europe (35% of divisional revenues) delivered +7% organic growth (2022: 6%) supported by strong renewals and +new sales and boosted by one‑off revenues related to property +tax changes in Germany and government stimulus programs in +Spain. Cloud software, including hybrid‑cloud solutions, grew +14% organically. +Tax & Accounting Asia Pacific and Rest of World (6% of divisional +revenues) revenues were up 5% organically (2022: 6%), buoyed by +non‑recurring revenue growth in China and India. +Our customers +Accounting firms, tax and auditing departments, businesses of all +sizes, government agencies, libraries, and universities +Top products +North America: CCH Axcess, CCH ProSystem fx, CCH Axcess +Engagement, CCH Axcess Workflow, and CCH AnswerConnect +Europe, Asia Pacific, and ROW: A3 Software, ADDISON, CCH +iFirm, Genya, and Twinfield + → Complete list of Tax & +Accounting solutions +https://www.wolterskluwer.com/en/ +tax-and-accounting +Tax & Accounting +continued +23 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_25.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c389d8f562ee3d525fdfefd814c43a5fdabccbc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,39 @@ +Tax & Accounting +continued +Organic growth in revenues +8% +Recurring +91% +recurring revenues as % of division total +Software +81% +software revenues as % of +division total +Tax & Accounting – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,466 1,394 +5% +8% +8% +Adjusted operating profit 479 455 +5% +8% +8% +Adjusted operating profit margin 32.7% 32.6% +Operating profit 460 434 +6% +Net capital expenditure 74 67 +Ultimo FTEs 7,276 6,693 +Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.05); Δ OG: % Organic growth. 2022 figures are pro forma. +Tax & Accounting North America 59% +Tax & Accounting Europe 35% +Tax & Accounting AsiaPac & ROW 6% +2023 Revenues by segment +Recurring 91% +Print books 1% +Other non-recurring 8% +2023 Revenues by type +North America 59% +Europe 35% +Asia Pacific & ROW 6% +2023 Revenues by +geographic market +Software 81% +Digital information 15% +Services and print 4% +2023 Revenues by +media format +24 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_26.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc44303c9cc85df30de6399f7068dcb6f7215993 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,9 @@ +Technology-enabled services +and solutions +Expert compliance services and +software solutions for financial +institutions, corporations, small +businesses, and law firms. +Financial & Corporate +Compliance +25 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_27.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6c350b8f3cca4d7b77c86d059fd3e202b876f0b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,66 @@ +Our technology‑ +enabled compliance +solutions help +enhance the safety +and efficiency of +commerce and +banking. +Steve Meirink +CEO Financial & Corporate +Compliance +Business overview +Wolters Kluwer Financial & Corporate Compliance (FCC) +provides financial institutions, corporations, small businesses, +and law firms with solutions that enable compliance with +ever‑changing regulatory and legal obligations, improve +efficiency, and help achieve better business outcomes. +The division offers technology‑enabled expert services and +software solutions focused on loan compliance, regulatory +compliance, legal entity management, and corporate services. +In Legal Services, we provide corporations, small businesses, +and law firms with the full set of legal entity management +and corporate services, including business licenses. +In Financial Services, we support banks, non‑bank lenders, +credit unions, insurers, and securities firms of all sizes with +a wide array of loan compliance and regulatory compliance +solutions, including lien solutions. +Market trends +• Increasing regulatory complexity for banks and +corporations +• Rising emphasis on compliance expertise and capabilities +• Accelerating digital adoption trends across banking and +legal workflows +• Growing appetite for cloud-based, integrated solutions +• Ongoing imperative for operating efficiency +Rubicon Technologies ensures business +license compliance with CT Corporation +Rubicon Technologies, a NYSE-listed company, is a leading +provider of software-based waste, recycling, and fleet +operations products for firms and governments worldwide, +with over 13 million service locations. Rubicon wanted to +ensure it was fully compliant with a key corporate services +requirement ahead of its IPO in 2022, and to do this, they +turned to CT Corporation, a leading U.S. provider of legal +entity management and corporate service solutions. +Specifically, Rubicon needed time-sensitive support to ensure +compliance with its business license filings. It was critical +for the company to demonstrate that all business licensing +requirements were met ahead of its listing on the NYSE. CT +stepped in to run a full assessment on Rubicon’s business +licenses, identifying any gaps in required documentation and +seamlessly reinstating key filings. CT ensured the company +was in full compliance in advance of a critical business +event, driving key value for the customer. To ensure ongoing +adherence to a vast set of business license requirements, CT +enrolled Rubicon in its managed service offering, providing +proactive oversight of the company’s business license +portfolio. +With over 75,000 federal, state, and local jurisdictions in +the U.S. driving distinct business license obligations, CT has +the unique domain expertise to navigate these complex +requirements with ease, providing critical assurance for its +business customers. +“ +Customer case +26 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance +The secret instrument is a "violin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_28.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f16aa3eb0ce20af77a74d273bfd452143ce5dfb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,66 @@ +Review of 2023 performance +• Organic growth 2%, supported by 7% growth in recurring +revenues. +• Transactional and other non‑recurring revenues declined 6% +organically. +• Margin increase reflects tight cost control and favorable +revenue mix. +The Financial & Corporate Compliance division is now +comprised of CT Corporation, which provides registered agent +and other services to U.S. corporations, small businesses, and +law firms, and Compliance Solutions (including Lien Solutions), +which provides software and services to banks and other +lenders. These businesses were part of the former Governance, +Risk & Compliance division. +Financial & Corporate Compliance revenues increased 2% in +constant currencies, including a modest effect from the full +year inclusion of mortgage software provider International +Document Services (IDS), acquired on April 8, 2022. Organic +growth was also 2% (2022: 4% pro forma). The adjusted +operating profit margin increased 160 basis points, as careful +cost control and favorable revenue mix helped mitigate the +impact of higher product investment. +Operating profit increased 5%, largely reflecting the +development of adjusted operating profit. +Legal Services (57% of divisional revenues) posted 2% +organic growth (2022: 2% pro forma) with 8% organic growth +in recurring service subscriptions (2022: 7% pro forma) to +a large extent offset by a 9% decline in Legal Services (LS) +transactional revenues (2022: decline of 4% pro forma). +LS transactional revenues were impacted by the downturn in +U.S. M&A and IPO activity which began in the second half of +2022. In January 2024, CT Corporation launched a dedicated +platform to support the filing needs of U.S. businesses +impacted by the beneficial ownership reporting rule of the +new U.S. Corporate Transparency Act. +Financial Services (43% of divisional revenues) achieved +2% organic growth (2022: 6% pro forma), supported by 5% +organic growth in recurring revenues (2022: 7% pro forma). +Financial Services (FS) transactional and other non‑recurring +revenues declined 3% organically compared to growth in the +prior year (2022: 4%). Compliance Solutions transactional +fees were affected by the market‑wide downturn in U.S. +loan originations, including mortgages, while Lien Solutions +revenues were flat against a challenging comparable (2022: +14% growth). +Our customers +Corporations, small businesses, law firms, banks, non‑bank +lenders, credit unions, insurers, and securities firms +Top products +Legal Services: CT Corporation +Financial Services: ComplianceOne, Expere, eOriginal, +GainsKeeper, and Lien Solutions + → For more information on FCC +www.wolterskluwer.com/en/about-us/ +organization/financial-and-corporate- +compliance +Financial & Corporate Compliance +continued +Selected awards 2023 +Compliance Solutions named Category +Leader in Regulatory Intelligence in +Chartis RiskTech100® Rankings +Wolters Kluwer FCC recognized with +ABF Journal’s 2023 Most Innovative +Companies designation +27 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_29.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d55ae1971f9c6a454e08af2845f46d93f50fb8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,39 @@ +Organic growth in revenues +2% +Recurring +67% +recurring revenues as % of division total +Software +47% +software revenues as % of division +total +Financial & Corporate Compliance – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,052 1,056 0% +2% +2% +Adjusted operating profit 403 387 +4% +7% +7% +Adjusted operating profit margin 38.3% 36.7% +Operating profit 383 363 +5% +Net capital expenditure 58 52 +Ultimo FTEs 3,056 3,122 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Financial & Corporate Compliance +continued +Legal Services 57% +Financial Services 43% +2023 Revenues by segment +Recurring 67% +Legal Services transactional 18% +Financial Services transactional 12% +Other non-recurring 3% +2023 Revenues by type +North America 99% +Europe 1% + +2023 Revenues by +geographic market +Software 47% +Digital information 6% +Services and print 47% +2023 Revenues by +media format +28 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_3.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8d7b72ec6726a5f59ac3078e49645bc077c2bfd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,78 @@ +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 strategy and business model on +page 7 +This copy of the annual report of Wolters Kluwer N.V. for +the year 2023 is not in the ESEF‑format as specified by the +European Commission in Regulatory Technical Standard on +ESEF (Regulation (EU) 2019/815). The ESEF reporting package +can be found on our website www.wolterskluwer.com/en/ +investors/financials/annual-reports +Strategic report +3 Wolters Kluwer at a glance +5 Q&A with CEO Nancy McKinstry +7 Strategy and business model +13 2024 Outlook +14 Organizational structure +15 Executive team +17 Health +21 Tax & Accounting +25 Financial & Corporate Compliance +29 Legal & Regulatory +33 Corporate Performance & ESG +37 Group financial review +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures (TCFD) +134 EU Taxonomy +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Other information +221 Articles of Association Provisions Governing Profit Appropriation +222 Wolters Kluwer shares and bonds +226 Five-year key figures +227 Glossary +228 Contact information +€5.6bn +total revenues +94% +of revenues from digital +products and services +82% +of revenues are recurring +26.4% +adjusted operating profit margin +€4.55 +diluted adjusted earnings per share +16.8% +return on invested capital + → Visit our investors portal +www.wolterskluwer.com/en/investors/ +Financial highlights 2023 +2 Wolters Kluwer 2023 Annual Report ← → +The secret fruit is a "lemon". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_30.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ef8549b9a0c70c15011689e196c2fc09d6d31b2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,9 @@ +Legal and regulatory insights +and solutions +Actionable insights and +integrated solutions that +streamline legal and regulatory +research, analysis, and workflow. +Legal & +Regulatory +29 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_31.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..73d0615ca2994f9c4ceef1c45152d0a5d78c684b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,72 @@ +Martin O’Malley +CEO Legal & Regulatory +Business overview +Wolters Kluwer Legal & Regulatory enables legal and +compliance professionals to improve productivity and +performance, mitigate risk, and solve complex problems +with confidence. +Our legal information solutions enable law firms, corporate +legal departments, universities, and governments to +streamline legal research, analyses, and workflows. This +enhances legal and regulatory decision‑making and outcomes, +ensuring more transparent, just, and safe societies. +Legal & Regulatory’s Enterprise Legal Management (ELM) +solutions support corporate legal operations in increasing +efficiency and saving costs. Our legal practice management +software for law firms enables lawyers to streamline their +legal workflow processes, from document management to +time keeping and billing. +Legal & Regulatory information solutions provide our +customers with the trusted information, insights, and analytics +they can rely on to make sound decisions. +Market trends +• Customers expect advanced, AI-based features embedded +in legal information solutions and software +• Customers are adopting cloud-based technology to enable +connectivity and enhance productivity +• Volume and complexity of regulation continue to rise +• Law firms face new competitors +• Corporate law departments and legal operations continue +to streamline their internal processes by leveraging +technology +• Corporate legal departments and law firms are under +pressure to increase productivity +Adtalem improves legal matter and +spend management with TyMetrix 360° +Adtalem Global Education is a leading healthcare educator +that collaborates with organizations to offer academic +curriculums, certifications, and training programs across +various medical sectors around the world. Adtalem wanted +to improve their invoice and accrual processes, including +billing guideline compliance. The company selected TyMetrix +360°, part of Wolters Kluwer ELM Solutions, as the partner +to improve their operations. TyMetrix 360° is a SaaS-based +e-billing and matter management solution that simplifies a +company’s legal billing and streamlines managing matters. +After Wolters Kluwer established an integration between +Salesforce and TyMetrix 360°, users gained increased +transparency and efficiencies due to all matter and financial +data being accessible on a single platform, enabling reporting +and dashboarding that aggregates all information. Director +of Legal Operations at Adtalem commented, “The impact +of these projects has been tremendous for us. We have +saved money, we have reduced our overall outside counsel +spend because we’re not paying for things we shouldn’t be +paying for, and we are getting a better handle on what we’re +spending because our invoices are all running through the +system”. +Since integrating TyMetrix 360°, Adtalem has realized +$1.5 million year-one savings from line-item adjustments, +a 25% reduction in overall outside counsel spend within 12 +months, 100% vendor compliance, and automated accruals +and payment processing file creation which saves two FTEs +one workweek monthly. +We’re committed +to empowering our +customers with +the highest quality +content and the +latest AI technology. +“ +Customer case +30 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_32.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e0289daab05a1407b49a9f408bf930ef92d94a7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,65 @@ +Review of 2023 performance +• Organic growth 4%, led by 8% growth in digital subscription +revenues. +• Legal & Regulatory Software (23% of divisional revenues) +grew 5% organically. +• Margin reflects operational gearing and cost control partly +offset by increased investment. +The Legal & Regulatory division now includes Enterprise Legal +Management (previously part of the former Governance, Risk +& Compliance division) while the EHS/ORM software business +(Enablon) is now part of the new Corporate Performance & ESG +division. +Legal & Regulatory revenues declined 4% in constant +currencies, due to the disposal of the French and Spanish legal +publishing assets on November 30, 2022, while the acquisition +of MFAS, acquired on October 31, 2023, had a modest effect. +On an organic basis, revenues sustained 4% growth (2022: 4% +pro forma). Adjusted operating profit increased 4% in constant +currencies and 10% on an organic basis. The margin increased +120 basis points, following an increase in the fourth quarter. +Operational gearing and good expense control were partly +offset by increased product investment and higher personnel +costs and personnel‑related expenses. +Operating profit decreased 38%, reflecting the increase in +adjusted operating profit offset by a decline in divestment‑ +related results. +Legal & Regulatory Information Solutions (77% of divisional +revenues) revenues declined 7% overall and 7% in constant +currencies reflecting disposals. On an organic basis, +Information Solutions recorded 4% growth (2022: 3%), driven +mainly by 8% organic growth in subscriptions to our digital +legal research solutions (2022: 7%). Print subscriptions +declined 9% organically, while print book revenues increased +4% on an organic basis, mainly due to a favorable publication +schedule. +Legal & Regulatory Software (23% of divisional revenues), +comprised of Enterprise Legal Management (ELM) solutions +and our legal practice management software, in aggregate +recorded 5% organic growth (2022: 8% pro forma). ELM +solutions (Tymetrix and Passport) saw strong growth in +ELM transactional volumes partly offset by lower software +implementation services revenues. Legal practice management +software, mainly Kleos and Legisway, recorded high single‑digit +organic growth. +Our customers +Legal and compliance professionals in law firms, corporate +legal departments, universities, and government organizations +Top products +Legal & Regulatory Information Solutions: VitalLaw, LEX, ONE, +Navigator, and Schulinck +Legal & Regulatory Software: Passport, TyMetrix 360°, +Legisway, and Kleos +Legal & Regulatory +continued + → Complete list of Legal & +Regulatory solutions +https://www.wolterskluwer.com/en/ +about-us/organization/legal-and- +regulatory +Selected awards 2023 +VitalLaw winner of Gold Stevie Award +for Legal Information Solution +ELM named Company of the Year, +Legal, in American Business Awards +31 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_33.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e94ad797059e51031b65a0bfa66e946d8bf106c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,39 @@ +Legal & Regulatory +continued +Organic growth in revenues +4% +Recurring +78% +recurring revenues as % of division total +Digital +84% +digital revenues as % of division total +Legal & Regulatory – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 875 916 ‑4% ‑4% +4% +Adjusted operating profit 138 133 +4% +4% +10% +Adjusted operating profit margin 15.7% 14.5% +Operating profit 114 185 ‑38% +Net capital expenditure 58 61 +Ultimo FTEs 4,033 3,892 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Legal & Regulatory Software 23% +Legal & Regulatory Information +Solutions 77% +2023 Revenues by segment +Recurring 78% +Print books 5% +ELM transactional 10% +Other non-recurring 7% +2023 Revenues by type +North America 33% +Europe 66% +Asia Pacific & ROW 1% +2023 Revenues by +geographic market +Software 28% +Digital information 56% +Services and print 16% +2023 Revenues by +media format +32 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_34.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8fe6029e7bf0994474d0a0b72be02e6f7837361 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,8 @@ +Global enterprise software +Enterprise software solutions +for corporate performance +management, ESG, EHS, risk +management, and assurance. +Corporate Performance +& ESG +33 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_35.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d6795e064ff38045ff8a26e8b93cf67ffce6c1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,71 @@ +Mandatory ESG +disclosures are +leading to a sea +change in corporate +reporting. +Karen Abramson +CEO Corporate Performance +& ESG +Business overview +Wolters Kluwer Corporate Performance & ESG (CP&ESG) +provides enterprise software solutions and services to +corporations and banks around the world, helping them to +collect, analyze, report, and audit financial, sustainability, +operational, and other performance data. +CP&ESG solutions support corporate responsibility and +sustainability, mitigate and manage operational and financial +risks, improve workplace safety, and facilitate regulatory +reporting and compliance. Our global software solutions and +services help to streamline finance workflows. +CP&ESG solutions are used by corporate finance professionals, +internal auditors, operational risk managers, sustainability +managers, and compliance personnel in corporations and +financial institutions. +Market trends +• Sustainability commitments increase focus on +environmental, health & safety, and operational risk +management +• Rising ESG disclosure, audit, and performance demands +from regulators, investors, employees, and other +stakeholders +• Emergence of global ESG reporting standards as 600+ +frameworks start to converge +• Increased demand for solutions that collect and process +large amounts of structured and unstructured data +• Artificial intelligence, cloud, and other advanced +technologies are enabling analytics, insights, and +connectivity that help drive performance +• Finance function emerging as chief aggregator to collect, +analyze, report, and assure financial and non-financial data +Lendlease improves safety and +compliance with Enablon permit-to-work +Lendlease, a global real estate investment, development, and +construction company headquartered in Australia, leverages +the full Enablon platform to manage its environmental, +health, and safety matters across project sites around the +world. The company also leverages the full suite of Enablon +Go mobile applications, which have been key in modernizing +Lendlease’s safety strategy. +In 2022, the company looked for ways to streamline and +improve its permitting procedures in Australia and chose +Enablon’s permit-to-work (PTW) software to help it transition +from an inefficient paper permitting process to a digitized +workflow. Enablon PTW is a digital documented workflow that +authorizes certain people to carry out specific work within +a specified time frame and facilitates clear sign off to show +work has been completed safely and efficiently. +With Enablon’s PTW system, organizations enhance workplace +safety, ensure regulatory compliance, reduce paperwork, +improve communication, and maintain an audit trail of work- +related activities and safety measures. +Lendlease’s partnership with Enablon yielded impressive +results as David Rose, Group EHS Technology Manager at +Lendlease commented, “We’ve done 26,000 digital permits so +far to date since we’ve deployed the solution. If you think of +it from an ESG point of view, that’s a lot of paper considering +a normal permit would be about 2-3 pages per permit”. +Lendlease is now deploying the Enablon PTW solution to its +other operations around the world. +“ +Customer case +34 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_36.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b665420e236f652a6ea696bca1dbf7fde2ed3a8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,80 @@ +Review of 2023 performance +• New division formed in March 2023. +• Organic growth 9%, with recurring revenues up 11% and non‑ +recurring revenues up 5%. +• Margin reflects higher personnel costs and increased +investment. +The Corporate Performance & ESG division was formed in +March 2023 by bringing together our enterprise software +businesses which were previously part of other divisions: CCH +Tagetik and TeamMate (formerly part of Tax & Accounting), +Enablon EHS/ORM (formerly part of Legal & Regulatory), +and OneSumX Finance, Risk & Reporting (formerly part of +Governance, Risk & Compliance). +The new division’s revenues increased 9% in constant +currencies and 9% on an organic basis (2022: 12% pro forma). +Recurring revenues (65% of divisional revenues) grew 11% +organically (2022: 13% pro forma), while non‑recurring +revenues grew 5% (2022: 10% pro forma). Adjusted operating +profit declined 12% in constant currencies and on an organic +basis, impacted by higher personnel costs, increased +investment in product development, and higher sales and +marketing spending. +Operating profit decreased to €26 million, mainly reflecting the +decline in adjusted operating profit and higher amortization of +acquired identifiable intangible assets. +Environmental, Health & Safety, and Operational Risk +Management platform Enablon (23% of divisional revenues), +delivered 16% organic growth (2022: 18%) driven by strong +momentum across both recurring cloud subscription revenue +and on‑premise software license fees. In November 2023, +Enablon introduced an updated sustainability solution, +Enablon ESG Excellence. +Our Corporate Performance, Internal Audit, and Finance, +Risk & Reporting businesses (77% of divisional revenues) in +aggregate grew 7% organically (2022: 10% pro forma). The CCH +Tagetik corporate performance management (CPM) solution +delivered 20% organic growth (2022: 19%), driven equally by +recurring cloud revenues as by non‑recurring on‑premise +software license fees. Software growth was driven by new +customers and increased uptake of modules, such as the new +ESG and Pillar Two Global Minimum Tax modules launched +in 2023. The average software deal size increased year on +year. Non‑recurring services revenues were, however, lower +than expected as an increased percentage of software deals +closed in the final months of 2023 were tied to third‑party +implementation partners. +Our Corporate Tax unit recorded steady single digit organic +growth. Internal audit solution TeamMate delivered double‑ +digit organic growth, benefitting from higher license fees +for on‑premise software. In July 2023, TeamMate+ ESG was +launched, adding ESG standards to support auditor workflows. +Our FRR unit posted organic revenue decline due to the +conclusion of two large software implementations in Europe +and the full impact of exiting Russia and Belarus. In October +2023, FRR launched OneSumX for Basel to support banks as +they ramp up towards Basel IV compliance. +Our customers +Corporate finance, audit, planning, risk, EHS/ORM, and +sustainability professionals in corporations, banks, and +governments. +Corporate Performance & ESG  +continued +Top products +Environmental, Health & Safety, and Operational Risk +Management (EHS/ORM): Enablon +Corporate Performance, Internal Audit, and Finance, Risk & +Reporting: CCH Tagetik, TeamMate, and OneSumX + → Complete list of Corporate +Performance & ESG solutions +https://www.wolterskluwer.com/en/ +about-us/organization/corporate- +performance-esg +Selected awards 2023 +Wolters Kluwer named Leader in +Verdantix Green Quadrant for ESG +Reporting & Data Management +Gartner named CCH Tagetik Leader in +Magic Quadrant for Financial Close +and Consolidation +35 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_37.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1f6a9bfdeaf470498e9edcbea404d8dc1c5100e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,35 @@ +Organic growth in revenues +9% +Recurring +65% +recurring revenues as % of division total +Software +79% +software revenues as % of division total +Corporate Performance & ESG – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 683 639 +7% +9% +9% +Adjusted operating profit 68 79 ‑14% ‑12% ‑12% +Adjusted operating profit margin 9.9% 12.4% +Operating profit 26 39 ‑32% +Net capital expenditure 84 73 +Ultimo FTEs 3,215 3,111 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Corporate Performance & ESG  +continued +EHS/ORM 23% +Corporate Performance, +Internal Audit & FRR 77% +2023 Revenues by segment +Recurring 65% +Non-recurring 35% +2023 Revenues by type 2023 Revenues by +geographic market +North America 35% +Europe 48% +Asia Pacific & ROW 17% +2023 Revenues by +media format +Software 79% +Services and other 21% +36 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_38.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3ba0821e782dac2e5ce8752985397cdbf09c54a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,71 @@ +Margin increased in +the fourth quarter due +to operational gearing, +mix shift, and a more +normalized cost base. +“ +This review provides a summary +of our 2023 IFRS results alongside +a discussion of adjusted figures +which give deeper insight into our +underlying performance. +Revenues +Group revenues were €5,584 million, up 2% overall and up 5% +in constant currencies. Excluding the effect of currency and +the net effect of divestments and acquisitions, organic revenue +growth was 6%, in line with the prior year +(2022: 6%). +Revenue bridge +€ million % +Revenues 2022 5,453 +Organic change 310 6 +Acquisitions 20 0 +Divestments (76) (1) +Currency impact (123) (3) +Revenues 2023 5,584 2 +Revenues from North America accounted for 64% of total +group revenues and grew 5% organically (2022: 6%). Revenues +from Europe, 28% of total revenues, grew 7% organically (2022: +6%). Revenues from Asia Pacific and Rest of World, 8% of total +revenues, grew 9% organically (2022: 10%). +Total recurring revenues, which include subscriptions and other +renewing revenue streams, accounted for 82% of total revenues +(2022: 80%) and grew 7% organically (2022: 7%). Within recurring +revenues, digital and service subscriptions grew 8% organically +(2022: 8%). Total non‑recurring revenues were stable on an +organic basis (2022: 3% organic growth). +Group financial +review +Kevin Entricken +CFO and member +of the Executive Board +Highlights 2023 +• Revenues up 6% organically +• 82% recurring revenues, up 7% organically +• 58% expert solutions revenues, up 8% organically +• 94% revenues from digital products and services +• 16% cloud software revenues, up 15% organically +Transactional revenues declined in Financial & Corporate +Compliance but increased in Legal & Regulatory. Other non‑ +recurring revenues, mainly on‑premise license fees and +software implementation services, increased 1% organically +(2022: 7%), with mixed trends by division. +Revenues by type +€ million, unless otherwise +stated 2023 2022 ∆ ∆ CC ∆ OG +Digital and service +subscription 4,134 3,950 +5% +7% +8% +Print subscription 136 157 ‑13% ‑12% ‑7% +Other recurring 273 281 ‑3% ‑1% +3% +Total recurring revenues 4,543 4,388 +4% +6% +7% +Transactional 411 433 ‑5% ‑2% ‑3% +Print books 120 129 ‑7% ‑5% 0% +Other non‑recurring 510 503 +1% +3% +1% +Total non-recurring revenues 1,041 1,065 -2% 0% 0% +Total revenues 5,584 5,453 +2% +5% +6% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: +% Organic growth. Other non ‑recurring revenues include software +licenses, software implementation fees, professional services, and other +non‑subscription offerings. +37 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret tool is a "ruler". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_39.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4dbaac20a3d3908acb31b07f11689da146b6d8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,47 @@ +Group financial review  +continued +Operating profit +Adjusted operating profit was €1,476 million (2022: €1,424 million), up 6% in constant currencies. +The related margin increased by 30 basis points to 26.4% (2022: 26.1%), in line with our full‑year +guidance range. The margin improvement follows a margin increase in the fourth quarter driven +by operational gearing, mix shift, and the comparison to a more normalized cost base in fourth +quarter 2022. Personnel‑related expenses increased as expected due to an increase in the +number of employees and due to wage inflation. In addition, there was an expected increase in +personnel‑related expenses, such as business travel, events, and training costs. +Product development spending (including capitalized spend) increased in constant currencies +and amounted to 11% of revenues in 2023 (2022: 11%). Restructuring expenses, which are +included in adjusted operating profit, increased to €15 million (2022: €6 million), at the upper +end of our guidance range. +Operating profit declined 1% to €1,323 million (2022: €1,333 million), mainly due to significantly +lower divestment results: we incurred a net disposal gain of €4 million in 2023 compared to +a gain of €75 million in the prior year. Amortization and impairments of acquired identifiable +intangible assets decreased 9% due to reduced impairments in 2023. +Divisional summary +Overall organic revenue growth was 6%, led by Tax & Accounting and Corporate Performance +& ESG. The overall adjusted operating profit margin increased mainly due to full‑year margin +increases in Financial & Corporate Compliance and Legal & Regulatory. For a more detailed +discussion, see pages 17-36 of this annual report. +Key figures +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 5,584 5,453 +2% +Operating profit 1,323 1,333 ‑1% +Profit for the year 1,007 1,027 ‑2% +Diluted EPS (€) 4.09 4.01 +2% +Net cash from operating activities 1,545 1,582 ‑2% +Business performance – benchmark figures +Revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin (%) 26.4 26.1 +Adjusted net profit 1,119 1,059 +6% +7% +Diluted adjusted EPS (€) 4.55 4.14 +10% +12% +Adjusted free cash flow 1,164 1,220 ‑5% ‑2% +Return on invested capital (%) 16.8 15.5 +Net debt 2,612 2,253 +16% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. Benchmark figures are +performance measures used by management. See Note 4 – Benchmark figures for a reconciliation from IFRS to +benchmark figures. +Highlights 2023 +• Product development spend was 11% of revenues +• Profit for the year down by 2% and diluted EPS up 2% +• Adjusted net profit for the year up 6% +38 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_4.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..7381870c3b168f79c3667d62af04f63a84badac9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_4.txt @@ -0,0 +1,52 @@ +Wolters Kluwer +at a glance +We help our customers make critical +decisions every day by providing +expert solutions that combine deep +domain knowledge with specialized +technology and services. +Global footprint +North America +64% +of total revenues +Europe +28% +of total revenues +Asia Pacific & ROW +8% +of total revenues +21,400+ +employees worldwide +180+ +countries where we serve customers +40+ +countries from which we operate +8 flagship offices +significant subsidiaries +78 +employee engagement +score, up 1 point +8% +reduction in scope 1 and +scope 2 emissions +75 +employee belonging score, +up 2 points +Near-term +targets +validated by +SBTi in 2023 +Sustainability highlights 2023 +6% +organic growth in revenues +58% +of revenues from expert +solutions +€1.2bn +adjusted free cash flow +34% +total shareholder return +including dividends +(not reinvested) +Financial highlights 2023 +3 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_40.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2df729889ec3dde8ee6a72fd1cacace8846115e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,56 @@ +Divisional summary +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues +Health 1,508 1,448 +4% +7% +6% +Tax & Accounting 1,466 1,394 +5% +8% +8% +Financial & Corporate Compliance 1,052 1,056 0% +2% +2% +Legal & Regulatory 875 916 ‑4% ‑4% +4% +Corporate Performance & ESG 683 639 +7% +9% +9% +Total revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit +Health 454 434 +5% +8% +7% +Tax & Accounting 479 455 +5% +8% +8% +Financial & Corporate Compliance 403 387 +4% +7% +7% +Legal & Regulatory 138 133 +4% +4% +10% +Corporate Performance & ESG 68 79 ‑14% ‑12% ‑12% +Corporate (66) (64) +3% +4% +4% +Total adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin +Health 30.1% 29.9% +Tax & Accounting 32.7% 32.6% +Financial & Corporate Compliance 38.3% 36.7% +Legal & Regulatory 15.7% 14.5% +Corporate Performance & ESG 9.9% 12.4% +Total adjusted operating profit margin 26.4% 26.1% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are +pro forma due to changes in the organizational structure, refer to Note 1 – General and basis of preparation . +Group financial review  +continued +Highlights 2023 +• Adjusted operating profit €1,476 million, up 6% in constant currencies +• Adjusted operating profit margin up 30 basis points to 26.4% +Corporate expenses +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Adjusted operating profit (66) (64) +3% +4% +4% +Operating profit (66) (64) +3% +Net capital expenditure 0 0 +Ultimo FTEs 143 132 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Net corporate expenses increased 4% in constant currencies and 4% on an organic basis, due to +an increase in personnel costs and related expenses partly offset by lower third‑party services +relating to various projects. +Financial position +Balance sheet +Non‑current assets, mainly consisting of goodwill and acquired identifiable intangible assets, +decreased by €193 million to €6,340 million in 2023, mainly due to amortization and the effect +of foreign exchange differences that were higher than investments in software assets and +acquisitions through business combinations during the year. +Total equity decreased by €561 million to €1,749 million, mainly due to the share buybacks, +dividend payments, and exchange differences on translation of foreign operations, partly +offset by the profit for the year. During the year, we repurchased 8.7 million shares for a total +consideration of €1 billion, including 0.5 million shares to offset incentive share issuances (2022: +0.7 million). +In August 2023, we canceled 9.0 million of shares held in treasury (2022: 5.0 million shares +canceled). As of December 31, 2023, we held 8.0 million shares in treasury. The total weighted‑ +average number of shares was 244.9 million in 2023 (2022: 254.7 million). +39 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_41.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f411efe9be9da9de39be0283731919613afa6a50 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,42 @@ +Balance sheet +€ million, unless otherwise stated 2023 2022 Variance +Non‑current assets 6,340 6,533 (193) +Working capital (1,036) (892) (144) +Total equity 1,749 2,310 (561) +Net debt 2,612 2,253 359 +Net‑debt‑to‑EBITDA ratio 1.5 1.3 0.2 +Net debt, leverage, and liquidity position +Net debt at December 31, 2023, was €2,612 million, compared to €2,253 million at December 31, +2022. The net‑debt‑to‑EBITDA ratio increased to 1.5 (2022: 1.3). Gross debt includes the 8‑year +€700 million Eurobond with a 3.750% annual coupon, issued in March 2023. Gross debt +increased due to the increase of borrowings and bank overdrafts to €196 million at December +31, 2023 (2022: €16 million), including €50 million Euro Commercial Paper notes (2022: no notes +outstanding). +Our €600 million multi‑currency credit facility remains fully undrawn. +Our liquidity position remained strong with net cash available of €989 million as of +December 31, 2023. +Working capital +€ million 2023 2022 Variance +Inventories 84 79 5 +Current contract assets 160 153 7 +Trade receivables 1,087 1,088 (1) +Current operating other receivables 198 244 (46) +Current deferred income (1,899) (1,858) (41) +Other contract liabilities (86) (88) 2 +Trade and other operating payables (951) (949) (2) +Operating working capital (1,407) (1,331) (76) +Cash and cash equivalents 1,135 1,346 (211) +Non‑operating working capital (764) (907) 143 +Total working capital (1,036) (892) (144) +Operating working capital amounted to €(1,407) million, compared to €(1,331) million in 2022, +a decrease of €76 million. This decrease is largely due to autonomous movements in working +capital of €98 million. +Non‑operating working capital decreased to €(764) million, compared to €(907) million in 2022, +mainly due to lower short‑term bonds during 2023 (€400 million) compared to 2022 +(€700 million), partly offset by higher borrowings and bank overdrafts at the end of 2023. +Group financial review  +continued +Highlights 2023 +• Net debt-to-EBITDA ratio 1.5x +• Liquidity position remained strong +40 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_42.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba906dba1dbf52daf9bbd47ec31b5e02b79b16b4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_42.txt @@ -0,0 +1,55 @@ +Financing results, taxation, EPS, and ROIC +Financing results +Total financing results decreased to a net cost of €27 million (2022: €57 million cost), mainly due +to higher interest rates on cash and cash equivalents. Included in total financing results was a +€7 million net foreign exchange gain (2022: €5 million net foreign exchange loss) mainly related +to the translation of intercompany balances. Adjusted net financing costs decreased to +€27 million (2022: €56 million). +Taxation +Profit before tax increased 2% to €1,297 million (2022: 1,276 million). The effective tax rate increased +to 22.4% (2022: 19.5%), as the prior year a significant tax‑exempt divestment gain. +Adjusted profit before tax was €1,450 million (2022: €1,368 million), up 6% overall and up 8% +in constant currencies. The benchmark tax rate on adjusted profit before tax increased to +22.9% (2022: 22.6%), mainly due to lower prior year favorable adjustments combined with the +increased limitation on interest deductibility in the Netherlands. +Earnings per share +Total profit for the year decreased 2% to €1,007 million (2022: €1,027 million), while diluted +earnings per share increased 2% to €4.09 (2022: €4.01), benefitting from the lower weighted‑ +average number of shares outstanding. +Adjusted net profit was €1,119 million (2022: €1,059 million), an increase of 7% in constant +currencies. Diluted adjusted EPS was €4.55 (2022: €4.14), up 12% in constant currencies, reflecting +the increase in adjusted net profit and a 4% reduction in the diluted weighted‑average number +of shares outstanding to 246.0 million (2022: 255.8 million). +Return on invested capital (ROIC) +In 2023, ROIC was 16.8% (2022: 15.5%), mainly due to a higher adjusted operating profit, partly +offset by a higher benchmark tax rate. +Cash flow +€ million, unless otherwise stated 2023 2022 Variance +Net cash from operating activities 1,545 1,582 (37) +Net cash used in investing activities (374) (299) (75) +Net cash used in financing activities (1,481) (991) (490) +Adjusted operating cash flow 1,476 1,528 (52) +Net capital expenditure (323) (295) (28) +Adjusted free cash flow 1,164 1,220 (56) +Diluted adjusted free cash flow per share (€) 4.73 4.77 (0.04) +Cash conversion ratio (%) 100 107 +Cash flow +Net cash outflow before the effect of exchange differences was €310 million (2022: net cash +inflow of €292 million), due to net cash used in financing activities and investing activities +outweighing net cash from operating activities. +Adjusted operating cash flow was €1,476 million (2022: €1,528 million), down 3% overall +and down 1% in constant currencies. This reflects a cash conversion ratio of 100% (2022: +107%), returning to historical levels (95%‑100%). Working capital inflows of €98 million were +significantly lower than in the prior year, while net capital expenditures increased 10% overall +and 11% in constant currencies. Net capital expenditures were €323 million (2022: €295 million), +representing 5.8% of revenues (2022: 5.4%). +Cash payments related to leases, including lease interest paid, decreased to €74 million +(2022: €81 million). Net interest paid, excluding lease interest paid, reduced to €17 million +(2022: €45 million), reflecting higher interest income on cash and cash equivalents. +Group financial review  +continued +Highlights 2023 +• Adjusted free cash flow €1,164 million, down 2% in constant currencies +• Return on invested capital improved to 16.8% +• Diluted adjusted EPS €4.55, up 12% in constant currencies +41 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_43.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..266f0c7b7203c33b9b837431403f0b5ce4e29e70 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_43.txt @@ -0,0 +1,27 @@ +Income tax paid increased to €325 million (2022: €289 million). The net cash outflow related to +restructuring was €1 million (2022: outflow of €12 million). As a result, adjusted free cash flow +was €1,164 million (2022: €1,220 million), down 2% in constant currencies. +Dividends paid to shareholders amounted to €467 million (2022: €424 million). The cash +deployed towards share repurchases was as announced, €1 billion, and in line with prior year +(2022: €1 billion). +Acquisitions and divestments +Total acquisition spending, net of cash acquired and including transaction costs, was +€68 million (2022: €95 million), and primarily related to the acquisitions of NurseTim on January +9, 2023, Invistics on June 7, 2023, and tax content and tools provider, MFAS, on October 31, 2023. +In 2023, net divestment proceeds amounted to €8 million, compared to €106 million in 2022 +which mainly included the divestment of the legal information units in France and Spain. +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. +Group financial review  +continued +Highlights 2023 +• Proposed 2023 total dividend €2.08 per share, an increase of 15% +• Completed 2023 share buyback €1 billion +42 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret animal #1 is a "giraffe". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_44.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ba8127efa245f0a24c2ab624a04d9f96022954 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,9 @@ +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Governance +43 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_45.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4c9ca3290d0eeb07486a77e12ce16c0a46a524f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +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 2022 (the ‘Corporate +Governance Code’), and all applicable +laws and regulations. +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. The Executive Board consists of the +CEO and CFO and is entrusted with the management and +day‑to‑day operations of the company. 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. +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). During 2023, Wolters Kluwer +has reviewed the changes in the Corporate Governance Code +compared to the prior Code and took the necessary steps to +implement these changes. This included an update of the +By‑Laws of the Supervisory Board and Executive Board, as +well as the Terms of Reference of the Audit Committee and +the Selection and Remuneration Committee. 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. Corporate Governance will be added to the agenda +of the 2024 Annual General Meeting of Shareholders, as a +specific discussion item. + → The Dutch Corporate Governance +Code is available at www.mccg.nl +Executive Board +The Executive Board is responsible for the continuity of the +company and its affiliated enterprise and for sustainable +long‑term value creation by the company and its affiliated +enterprise. This responsibility includes the development and +execution of the strategy focused on sustainable long‑term +value creation, formulating targets in relation to the strategy, +appropriate risk management and internal control systems, +and sustainability and environmental, social, and governance +(ESG) matters. The Executive Board considers the impact of the +company on people and the environment. 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 +enterprise, 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. +Corporate +governance +44 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_46.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..94283d945ee707b3533359d09b81d6edbae38964 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,85 @@ +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 Executive Board and +Supervisory Board on page 61 +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 2023 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 were +not required to retain the shares for a period of two years +post vesting. +Term of appointment +Since the introduction of the first Corporate Governance Code +in 2004, Executive Board members are appointed for a period +of four years after which reappointment is possible, in line +with Best Practice Provision 2.2.1 of the Corporate Governance +Code. The existing contract with Ms. McKinstry, who was +appointed before the introduction of the first Corporate +Governance Code and has an employment contract for an +indefinite period, will remain honored. +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 affiliated +enterprise, considering the relevant interests of the company’s +stakeholders, and advises the Executive Board. The supervision +includes the implementation of the sustainable long‑term +value 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/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; +Corporate governance +continued +45 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_47.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..c203741cba1982bd318d7885c505206156911810 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,81 @@ +• 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 members to be independent of +the company, which is currently the case. The independence +of Supervisory Board members is monitored on an ongoing +basis, based on the criteria of independence as set out in Best +Practice Provisions 2.1.7 and 2.1.8 of the Corporate Governance +Code and Clause 1.5 of the Supervisory Board By‑Laws. +The number of supervisory board memberships of all +Supervisory Board members is limited to such extent that the +proper performance of their duties is assured. As stipulated +in the By‑Laws of the Supervisory Board, the number of board +memberships of large Dutch companies and listed companies +globally may not exceed five (with a Chair position counting +double). 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 and the +By‑Laws. +Further information on the Supervisory Board members can be +found in the section Executive Board and Supervisory Board. + → See Executive Board and +Supervisory Board on page 61 +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 +management beyond the Executive Board level. Operating +managers, including divisional CEOs, are regularly invited to +present to the Supervisory Board on the operations, market +developments, and business developments. 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 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 Annual +General Meeting of Shareholders in 2021. For more information +on remuneration, see Remuneration report. + → See Remuneration report +on page 70 +Corporate governance +continued +46 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_48.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..e3242caf80875266b10d11a7d1cc1d3952ae2ce7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_48.txt @@ -0,0 +1,93 @@ +Diversity +Diversity, equity, inclusion, and belonging (DEIB) is an +important topic for the Supervisory Board and Executive +Board. The DEIB policy for the Supervisory Board is included +as an annex to the Supervisory Board By‑Laws. Elements of +diversity include among others 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 continue working towards achieving this through +equitable and inclusive employee practices and experiences +that improve female representation in hiring, promotions, +and talent retention. In addition, a global DEIB policy for +all employees worldwide was drafted and implemented in +2023. 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 the Sustainability +statements. +Currently, the male/female representation of the Supervisory +Board is 33% male and 67% female. After the appointment of +Mr. David Sides to the Supervisory Board and the retirement of +Ms. Jeanette Horan, the representation will be 50% male and +50% female. This is in line with Dutch law. The male/female +presentation in the Executive Board is 50%/50%, which is in +line with our target for diversity in the Executive Board. The +Supervisory Board composition comprises expertise within +the broad information industry as well as specific market +segments in which the company operates. Three 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 described in its profile. + → See Executive Board and +Supervisory Board on page 61 +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 +and ethical standards are the basis for our decisions for and +interactions with our employees, customers, partners, and +society at large, and for achieving our goals. We maintain a +culture of open communication and a safe environment where +everyone should feel confident to ask a question or raise a +concern without fear of negative consequences. 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 our Code of Business Ethics and +other key compliance policies and SpeakUp. In 2023, 99% of +employees completed the Annual Compliance Training. More +information on our Code of Business Ethics and SpeakUp +program can be found in the Sustainability statements. + → Read more about our Code of +Business Ethics in the +Sustainability statements on +page 89 +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 +Corporate governance +continued +47 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_49.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5320cbf27cbd9273d7b603bdfac16e31997d1106 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_49.txt @@ -0,0 +1,81 @@ +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 +on page 50 +Environmental, social, and +governance matters +The Executive Board and the Supervisory Board are committed +to and oversee Wolters Kluwer’s sustainability/ESG priorities +and performance. The Executive Board discusses the +progress on the sustainability priorities in quarterly update +meetings with the Corporate Sustainability team, in addition +to individual updates as appropriate by relevant functional +owners. The Supervisory Board is informed on a regular +basis as well. The updated Supervisory Board By‑Laws and +Terms of Reference of the Audit Committee and Selection +and Remuneration Committee specify the responsibilities of +the Supervisory Board and the committees with respect to +sustainability. The Executive Board and Supervisory Board +provide feedback to the Corporate Sustainability team +and functional owners, that shapes the development of +relevant sustainability initiatives. For a detailed description +of our sustainability performance, reference is made to the +Sustainability statements. + → See Sustainability statements +on page 89 +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 2023, 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 May 10, 2023, the Executive Board +was granted the authority for a period of 18 months to issue +new shares, with exclusion of pre‑emptive rights, subject to +approval of the Supervisory Board. The authorization is limited +to a maximum of 10% of the issued capital on the date of +the meeting. +Acquisition of shares in the company +Acquisition of shares in the company (share buybacks) +may only be effectuated 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 May 10, 2023, +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, +2023, Wolters Kluwer N.V. held 8,004,987 shares in the company +(a 3.2% interest). +Corporate governance +continued +48 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret clothing is a "sock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_5.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..2393a1585baefa5b07ed7fcce1111dc3ea18053f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,81 @@ +Divisions +We deliver professional information, software, and +services for the healthcare; tax and accounting; financial +and corporate compliance; legal and regulatory; and +corporate performance and ESG sectors. +Health +Trusted clinical technology and solutions +that drive effective decision ‑making +and outcomes across the continuum +of healthcare. + → Read more on page 17 +Tax & Accounting +Expert solutions that help tax, accounting, +and audit professionals drive productivity, +navigate change, and deliver better +outcomes. + → Read more on page 21 +Financial & Corporate Compliance +Expert solutions for legal entity +compliance and banking product +compliance. + → Read more on page 25 +Legal & Regulatory +Information, insights, and workflow +solutions for changing regulatory +obligations, managing risk, and increasing +efficiency. + → Read more on page 29 +Corporate Performance & ESG +Enterprise software to drive financial and +sustainability performance and manage +risks, meet reporting requirements, +improve safety and productivity, and +reduce environmental impact. + → Read more on page 33 +Revenues by media format +2023 Revenues by type +Organic revenue growth +Adjusted operating profit margin +Diluted adjusted EPS in € +Return on invested capital +0% +20% +40% +60% +80% +100% +Digital: Expert solutions Digital: Information products +Services Print +2020 2021 2022 2023 +Recurring Non-recurring +0% +1% +2% +3% +4% +5% +6% +7% +2020 2021 2022 2023 +5.8%6.2%5.7% +1.7% +22% 23% 24% 25% 26% 27% +2020 +2021 +2022 +2023 +0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 +2020 +2021 +2022 +2023 +18%0% 3% 6% 9% 12% 15% +2020 +2021 +2022 +2023 +82% +Recurring +revenues +4 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_50.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c6d8427ca2f19998dab23d7e8050173c05e40d5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,82 @@ +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. +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). +In 2023, Mr. P. Bouw retired from the Board of the Foundation. +He was succeeded as Chair by Mr. J.S.T. Tiemstra. The other +members of the Board are Mr. G.W. Ch. Visser and Mr. A. Nühn. +All members of the Board of the Foundation are independent +from the company. +In line with standard practice, the Board of the Foundation +met twice in 2023. Representatives of the Executive Board and +Supervisory Board of the company attended the meetings +to give the Board of the Foundation information about the +developments within Wolters Kluwer. Discussion topics +included updates on 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. In addition, the Board of +the Foundation discussed the developments with respect to +corporate governance and relevant Dutch legislation. +The Board of the Foundation also followed developments +of the company outside of board meetings, among others +through receipt by the board members of press releases. As +a result, the Board of the Foundation has a good view on the +developments at Wolters Kluwer. The Foundation acquired no +preference shares during the year under review. +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, Note 32 – Capital and reserves, and in Wolters +Kluwer shares and bonds. + → See Wolters Kluwer shares and +bonds on page 222 +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). Consequently, 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, the remuneration policy for the +Supervisory Board, and the global DEIB Policy, are available in +the corporate governance section on our website. + → For more information, see +www.wolterskluwer.com/en/ +investors/governance/policies- +and-articles +Corporate governance +continued +49 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_51.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a9b4625b8efc417d171998fba460389bf458f21 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,81 @@ +This section provides an overview of +our approach to risk management. +It also includes a summary of the +main risks we identify and the actions +we take to mitigate these risks. +Introduction +The current environment continues to present uncertain +macroeconomic conditions and heightened geopolitical +tensions. The many elections taking place in 2024 could alter +conditions. There are signs that inflation is starting to come +under control which could lead to a turn in the interest +rate cycle. In early 2024, levels are still high and the future +trajectory remains unclear, presenting a challenge for our +customers, employees, and other stakeholders. While job +markets have cooled somewhat, there remains a shortage of +technology talent globally. Industrialized cyberattacks have +become part of the landscape. Despite these circumstances, +our overall risk profile remains largely unchanged. We +continue to have confidence in our ability to execute our +strategy and mitigate any crisis or challenge that may arise. +Responsibility for risk management +The 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 among +others 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 various +functional departments, including Internal Audit, Internal +Control, Legal and Compliance, Sustainability, Human +Resources, Treasury, Risk Management, 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. +The 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. +Risk management +Risk appetite +Risk type Balanced Conservative Minimal +Strategic +Operational +Legal & +compliance +Financial +& financial +reporting +50 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_52.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..333c0dbb17c231b0d0ba2b2c146d0a836b8986d4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,89 @@ +Internal Control Framework +Our Internal Control Framework (ICF) for financial reporting is +based on the Committee of Sponsoring Organizations of the +Treadway Commission (COSO) 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 for financial reporting 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 functional management, the Executive Board, +the Audit Committee, and internal and external 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. +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 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 Framework have +been designed to identify, mitigate, and respond to risks in a +timely manner. However, it is not reasonably 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 & +compliance and financial & financial reporting risk categories. +We carefully weigh risks against potential rewards. +Emerging risks +Generative artificial intelligence (AI) became commercially +available in 2023, and while we believe this new AI technology +primarily offers opportunities for Wolters Kluwer, there are +also potential risks that will need to be monitored and +mitigated. Other risks which emerged in recent years and that +we continue to monitor include climate‑related risks, data +privacy, and data governance. The latter area continues to be +of interest as we accumulate more and new types of data, and +deal with the growing exposure to regulatory, ethical, and data +security risks. See the sections Material impacts, risks, and +opportunities and their interaction with strategy and business +model (SBM-3), Description of the processes to identify +and assess material climate-related impacts, risks, and +opportunities (IRO-1), and Actions and resources in relation to +climate change policies (E1-3) in the Sustainability statements +for more information about climate‑related risks. The data +privacy risk is described in the risk category Regulatory and +compliance in this Risk management chapter. +Risk management +continued +51 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_53.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9573914dcd838984971769fa56f2af13f87f63a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,93 @@ +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 macroeconomic and geopolitical developments so we can respond quickly to risks +and opportunities. For example, we are monitoring inflation and energy prices, as well as the Russian ‑ +Ukrainian war and the conflict in the Middle East. We take steps to minimize the impact on our financial +performance while also continuing the support of our customers and employees. +Recurring revenues represent 82% 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. 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 in product development and +innovation 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. +Changes in technology, +business models, and customer +preferences +Demand for our products and +services could be affected by +disruptive new technologies, +including generative AI, 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, including +generative artificial intelligence, 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, help 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. +Risk management +continued +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 +52 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_54.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fc3ffb72a174d8de09af135cddbdd7643d957fe --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,82 @@ +Strategic risks continued +Risk description and impact Mitigation +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 target’s internal +control environment including +IT security, open source +software, 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. Generally, +we acquire businesses that present strategic synergies with our +existing operations. +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 +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 for Standardization +(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 the Annual Compliance +Training 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. +53 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_55.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..6bb1b8796bd7f5f434713dc75948bba59486d472 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,81 @@ +Operational risks continued +Risk description and impact Mitigation +Supply chain dependency and +project execution +Our operations depend on +third‑party suppliers and could +be adversely affected by poor +performance of suppliers. +Suppliers include providers of +cloud services, outsourced and +offshored data center services, +software development and +maintenance services, back ‑ +office transaction ‑processing +services, content 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 supply chain 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. +Suppliers that are managed through Global Business Services are +subject to extensive due diligence covering security, data privacy, +and business continuity. +In 2023, we expanded the number of suppliers included in our +multi‑year project to implement a state ‑of‑the‑art, enterprise ‑wide +supply chain risk management process. This process ensures a +consistent approach to the intake of third ‑party services on a global +scale, including 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. +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 recruitment +and development, learning opportunities, retention initiatives, +engagement and belonging efforts, 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 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 rewards structures and performance ‑based compensation +programs to maintain market competitiveness to support us in +attracting and motivating talent. In 2023, we launched the Colleague +Experience Promise (CxP), which is a four ‑pillar action framework +that articulates to our colleagues the experience we work to provide +to them from the time they engage with our company as candidates +through their careers with the organization. +Risk management +continued +54 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_56.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ee08b59207f89e03d938b5f7662054a3125e07a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_56.txt @@ -0,0 +1,96 @@ +Operational risks continued +Risk description and impact Mitigation +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 the ever‑changing risk landscape (e.g., COVID ‑19/post‑pandemic, +hybrid working, geopolitical tensions, and generative AI), we expect +cyber fraud risks may be amplified and continue to assess and +evolve the measures in place. +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. We 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 essential, alternate, and virtual locations. +Many of our businesses have diversified personnel and support +centers that have capabilities to cover and adapt between regions. +See the Sustainability statements for more information on climate ‑ +related physical 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 brand work +throughout the company. +The Global Branding & Communications (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. +Risk management +continued +55 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_57.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab346a07f1f9e95af0cfec5cf6b442bbc3631f5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_57.txt @@ -0,0 +1,90 @@ +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 the 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. +Legal & compliance risks continued +Risk description and impact Mitigation +Regulatory and compliance +continued +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, corporate sustainability (reporting), artificial +intelligence, 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 a significant portion of our supplier spend, we use contract +management systems to monitor certain contractual rights and +obligations, and software tools to track the use of software for +which licenses are required. We implemented a global contract +lifecycle management tool for our significant commercial +agreements which helps us manage compliance with third ‑party +agreements, tracks key dates and milestones, monitors compliance +with our contracting policies and standards, and mitigates operating +risks 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 +56 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_58.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e6b511c78bc79d82c3afd252ded5f249bf814b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_58.txt @@ -0,0 +1,70 @@ +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 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 businesses in compliance with local laws and fiscal regulations. +We manage a range of insurable risks by arranging insurance +coverage for potential liability exposures. +Risk management +continued +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 2023, we diminished liquidity risk by securing additional funding +with a new €700 million eight ‑year Eurobond. +Further disclosure and detailed information on financial risks and +policies is provided in Note 29 – Financial risk management. +57 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_59.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..9352f8f5d055f68450a447e30ec76cc33c3409cc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_59.txt @@ -0,0 +1,68 @@ +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. We simultaneously assess if the plan designs can +reduce financial 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 our plans. Our aim is to +maximize returns while managing downside risk in the plans. +The accounting for defined benefit plans is based on annual +actuarial calculations in line with IAS 19 – Employee Benefits, +disclosed in Note 30 – Employee benefits . +In 2023, we continued to prudently manage our benefit plans, but did +not make any substantive changes. +In the Netherlands, our work to comply with the new Pension Accord +requirements continues in collaboration with the Pension Fund +Board, works councils, and external experts. +Financial & financial reporting risks continued +Risk description and impact Mitigation +Taxes +Changes in operational taxes +and corporate income tax +rates, laws, and regulations +could adversely affect our +financial results, and tax assets +and liabilities. +Apart from 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 +provide training to our tax staff where appropriate. +We monitor legislative developments in the jurisdictions in which we +operate and consider the potential impacts of proposed regulatory +changes, such as Pillar Two Model Rules. +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 15 – Income tax expense and Note 22 – 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. +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. Wolters Kluwer’s tax policy and +principles are largely in line with this code and already comply with +most elements therein. We are planning for further information +disclosure and transparency which will bring us to full compliance. +Further information can be found in our Tax Principles available on +our website. The full version of the VNO ‑NCW Tax Governance Code +is available at www.vno-ncw.nl/taxgovernancecode . +Risk management +continued +58 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_6.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bb636ad4c4b0e9ea06bcf4a834c9b88e57914eb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,82 @@ +We are delivering value +for our customers, +rewarding careers for our +employees, and returns +for shareholders. +“ +The passion, commitment, and +efforts of our global team allowed +us to collectively deliver on our +goals in a year when we made key +organizational changes, directed +more funds towards AI, and managed +through an interest rate cycle. +Q +How would you sum up the company’s 2023 financial results? +The macroeconomic and geopolitical backdrop of 2023 +presented some challenges, but despite this, we achieved our +overall financial guidance, with another year of 6% organic +growth and a further increase in the adjusted operating +profit margin. The year saw our two largest divisions, Health +and Tax & Accounting, grow faster than we had anticipated, +compensating for Financial & Corporate Compliance and +Corporate Performance & ESG, where the interest rate cycle +and market shifts impacted results. It was a year when our +Legal & Regulatory division demonstrated yet again that it has +been transformed, delivering 8% organic growth for its digital +information solutions. The group‑wide margin developed +as we had expected as personnel costs and discretionary +expenses returned to more normal levels last year after the +effects of the pandemic. We were able to increase investment +in product development in 2023 to take advantage of new +opportunities and still meet our margin and cash flow goals. + Q +Innovation spending is at record levels. What are you +investing in? +Product development spending is running at 11% of group +revenues, some €615 million in 2023, up in constant currencies. +This investment is critical to supporting organic growth and +to our long‑term competitive position. In our world, organic +investment mostly relates to multi‑year product roadmaps +which require careful planning and resource management. +We are investing in many areas: in migrating solutions to +the cloud; further deploying artificial intelligence and other +advanced technologies; adding new modules to our platforms; +transforming our digital information products into expert +solutions; and building capabilities to support customers for +new regulations. We follow a rigorous design and development +process, that adheres to our responsible AI principles, to +ensure quality and security while also achieving a return on +investment. We aim to be agile at the same time so we can +pivot or move faster when needed. In 2023, for example, we +quickly shifted attention and funding towards generative AI +opportunities. Our centralized product development team, +DXG, plays a key role in driving innovation with the divisions, +both for existing solutions and the creation of entirely new +products. + Q +Generative AI took the world by storm in 2023. How is Wolters +Kluwer deploying this new technology? +For over 10 years, we have been deploying artificial +intelligence into our products. In fact, around 50% of our +digital revenues come from products that have some form of +AI embedded. We see the new Gen AI technology as another +powerful tool that we can put to work with our high‑quality, +continuously updated, proprietary content to bring benefits to +customers. We also see interesting opportunities to enhance +our own internal operations with this technology. Gen AI lends +itself very well to certain tasks, such as conversational search, +generating first drafts, or summarizing documents. In 2023, we +released our first generative AI‑enabled products and there is +more to come in 2024. +Q +In 2023, you set up a new division. Why reorganize? +The new division, Corporate Performance & ESG, was formed +by bringing together four of our global enterprise software +units: Enablon, CCH Tagetik, TeamMate, and OneSumX/FRR. +We believe there are important synergies to be derived +from joining up these units and connecting and integrating +their solutions. Less than a year in, we have started aligning +Q&A with +Nancy McKinstry +5 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_60.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..572b2924c18c58978d45c13785765350aa896e87 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_60.txt @@ -0,0 +1,66 @@ +Financial & financial reporting risks continued +Risk description and impact Mitigation +Misstatements, accounting +estimates and judgments, and +reliability of systems +The processes and systems +supporting financial reporting +may be susceptible to +unintentional misstatements or +manipulation. The preparation +of financial statements in +conformity with IFRS requires +management to make 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 divisions 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 control reviews are carried out to ensure +compliance with policies and procedures. These reviews ensure that +existing controls provide adequate protection against actual risks. +Financial results are reviewed by our Business, Analysis & Control, +Consolidation, Group Accounting & Reporting, Treasury, and +Corporate Tax departments in monthly development meetings as +part of regular business reviews with the Executive Board. +Our Group Accounting & Reporting department periodically provides +updates and training to our businesses about changes in policies, +accounting standards, and financial focus areas. Reconciliations of +statutory accounts are done by the Group Accounting & Reporting +and Corporate Tax departments, which include a comparison +between group reported figures, statutory figures, and tax filings. +Financial & financial reporting risks continued +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 (13) (3) +1% decrease in discount rate in determining the gross service costs for the +post‑employment benefit plans (7) (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 (6) +Risk management +continued +59 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_61.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a0ebaf5e367ecb00643f9525f02ce398193fc8c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_61.txt @@ -0,0 +1,81 @@ +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, Risk management, and Sustainability statements +that is included in the 2023 Annual Report. The Report of the +Executive Board and 2023 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 2023 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 2023 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 20, 2024 +Executive Board +Nancy McKinstry +CEO and Chair of the Executive Board +Kevin Entricken +CFO and member of the Executive Board +Statements by the +Executive Board +60 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Statements by the Executive Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_62.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1677facff3d2bc0c12d7c65e844c9d87a7e272b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_62.txt @@ -0,0 +1,20 @@ +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 Global Law and Compliance. +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. +Executive Board +61 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Executive Board +The secret object #2 is a "bottle". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_63.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..f30417eb7735e11b42034bbd082e0312054cd735 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_63.txt @@ -0,0 +1,122 @@ +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 +US Foods, Inc. +• Member of the Board +(Non‑Executive Director) +of Reynolds Consumer +Products, Inc. +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 Remuneration +Committee of ASML N.V. +• Member Supervisory Board, +Chair Audit Committee, and +member ESG Committee of +Royal Boskalis Westminster N.V. +• Member of the Board (Non‑ +Executive Director), Chair Audit +Committee, Chair Investment +Committee, and member People +and Organization Committee +of Oranje Fonds +• Vice‑Chair Supervisory Board +and Chair Audit Committee of +TomTom N.V. +• Chair VEUO (Dutch Association +of Securities‑Issuing Companies) +• Member of the Board +of Stichting Preferente +Aandelen Philips +Sophie V. Vandebroek +American, 1962, member of the +Audit Committee. Appointed in +2020, and current term until 2024. +Founder Strategic Vision Ventures, +LLC, former CTO of Xerox, and +former Chief Operating Officer at +IBM Research +Other positions: +• Member Board of Directors +(Non‑Executive Director) +and member Finance and +Governance & Corporate +Responsibility Committees of +IDEXX Laboratories, Inc. +• Member of the Board of +Directors (Non‑Executive +Director) of Revvity, 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 +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: +• Chair of the Board of the Dutch +Red Cross +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 (stepping +down in April 2024) +• 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 +Chris Vogelzang +Dutch, 1962, member of the Audit +Committee. Appointed in 2019, +and current term until 2027. +Former CEO of Danske Bank A/S +Other positions: +• Senior Advisor, Boston +Consulting Group +Supervisory Board +62 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_64.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..70d5d0a786ddaf97cf2fda52175586044d3ef34c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_64.txt @@ -0,0 +1,80 @@ +The Supervisory +Board was pleased +to see the +significant progress +on sustainability +commitments made +two years ago. +This report provides an overview +of the activities of the Supervisory +Board and its committees during +the year. The Supervisory Board +supervises the Executive Board in +setting and achieving the company’s +strategy, including sustainability, +targets, and policies, and oversees +the general course of affairs of +the company. The Supervisory +Board also acts as advisor to the +Executive Board. +Introduction by the Chair of +the Supervisory Board +On behalf of the Supervisory Board of Wolters Kluwer, I am +delighted to present our report for the year 2023. It was a year +of exacerbated geopolitical tensions and economic headwinds. +The company was able to withstand a sharp downturn in +transactional revenues caused by the prolonged period of high +interest rates, by driving strong performance in subscription +products, in particular expert solutions, cloud software, +and digital information solutions. The creation of a new +division was a bold organizational change that opens up new +opportunities and creates scope for synergies in coming years. +The centralization of technology, finance, and other functions +was another major undertaking during this past year. +Early in 2023, we all witnessed the rapid emergence of scalable +generative artificial intelligence (AI) tools and I’m pleased +the team mobilized quickly to discover ways to deploy this +technology to the benefit of customers, while ensuring we +follow our responsible AI framework and principles. +The Supervisory Board was kept updated on important product +development projects and other strategic initiatives, such +as the formation of the new Corporate Performance & ESG +division. While there were relatively few acquisitions in 2023, +the product development engine was very active as evidenced +by the record level of internal investment. +The Supervisory Board was pleased to see the significant +progress on sustainability commitments made two years ago. +Employee engagement and belonging scores both increased +in 2023, and programs are in place to support further progress. +The server decommissioning program exceeded expectations +and we will now substitute a new metric related to our office +space to provide an incentive for further progress on reducing +our environmental footprint. I am delighted Wolters Kluwer +now has SBTi‑validated near‑term emission reduction targets. +In this annual report, ESG disclosures have been further +expanded as the company prepares for the implementation +of the EU CSRD regulation. +During 2023, we conducted a thorough process to recruit a new +Supervisory Board member. We are very fortunate to be able +to nominate Mr. David Sides, who brings enormous expertise +and experience in U.S. healthcare informatics. +This past year, I had the pleasure of meeting a diverse range +of small and large shareholders from different parts of the +world. We greatly appreciate hearing their views, concerns, and +questions, on all topics from strategy to sustainability. +As we head into 2024, the environment in which we operate +remains somewhat volatile, but the team has sound plans in +place to continue driving performance and has the experience +to tackle new challenges which might come our way. I look +forward to working with my colleagues on the Supervisory +Board and guiding the Executive Board as they execute on the +final year of the current strategic plan. +Ann Ziegler +Chair of the Supervisory Board +Report of the +Supervisory Board +Ann Ziegler +Chair of the +Supervisory Board +“ +63 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_65.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..afb3b20195df4c7ca13546d3438e07f810151851 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_65.txt @@ -0,0 +1,93 @@ +Meetings +The Supervisory Board held seven scheduled meetings in +2023. Five meetings included a session for Supervisory Board +members only, without the members of the Executive Board +being present. The Chair of the Supervisory Board had regular +contact with the Chair of the Executive Board. +Financial statements +The Executive Board submitted the 2023 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 2023 Financial statements, pursuant to their statutory +obligation under clause 2:101 (2) of the Dutch Civil Code. The +Supervisory Board proposes to the shareholders that they +adopt these 2023 Financial statements at the Annual General +Meeting of Shareholders of May 8, 2024 (2024 AGM). + → See the 2023 Financial +statements on  page 142 +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, followed by individual meetings with the +members of the Executive Board. +Report of the Supervisory Board +continued +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 +transition to the new Chair of the Supervisory Board went +smoothly. 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, constructive, and transparent +atmosphere with each of the members actively participating. +The Supervisory Board appreciates the deep dives on relevant +topics, which provide the Supervisory Board or its committees +with more in‑depth information on certain topics, such as +sustainability reporting or restructuring efforts. Based on +feedback of the Supervisory Board members, the governance +structure and allocation of responsibilities between the +Supervisory Board and its committees with respect to +sustainability topics was further refined and confirmed in +the updated By‑Laws of the Supervisory Board. In addition, +a deep dive session regarding the competitive landscape +of Wolters Kluwer was organized at the request of the +Supervisory Board. The Supervisory Board also reviewed the +onboarding process for new members and received additional +information on product demos. The Supervisory Board remains +focused on a good balance between to the point pre‑read +materials, presentations, and discussions, as it is considered +important to have interactive discussions with several layers +of management. +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 enhance the quality of the meetings. In addition, +the Supervisory Board evaluates the Vision & Strategy Plan +(VSP) presentations at the end of the meetings in which +they were held and comes up with recommendations for +future presentations. +Strategy +The Supervisory Board was kept closely informed on the +second year of execution of the three‑year strategy for +2022‑2024, Elevate Our Value, which was announced in +February 2022. Based on their knowledge and experience, +the Supervisory Board members advise the Executive Board +throughout the year on strategic topics. +The Supervisory Board approved the new divisional structure, +in which a fifth division, Corporate Performance & ESG, +was created in March 2023. The Supervisory Board strongly +supported this change, enabling management of the Corporate +Performance & ESG division to fully focus on their markets and +business units with high growth potential. The addition of a +new division was also a good opportunity from a management +development perspective, as it provided various employees +the opportunity to broaden their perspective and grow into +new managerial roles. The Supervisory Board was pleased to +see that most new executive, senior, and junior level roles +were filled by internal candidates. +As in other years, the divisional CEOs presented their VSPs +for 2024‑2026 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 +64 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_66.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..1795a5eaf368b1f968ec6c78413da6c6d354b25b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,87 @@ +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 2023, the Supervisory Board visited Minneapolis +where management of the Financial & Corporate Compliance +(FCC) division presented its business. In addition to the +divisional VSP, several managers of the FCC division presented +their business and gave product demos, which also included +early‑stage innovations. The Supervisory Board also attended +a panel discussion on the business opportunities of the new +beneficial ownership rules in the United States. These rules, +which went into effect on January 1, 2024, create an interesting +business opportunity for the FCC and Tax & Accounting +divisions. The panel consisted of Wolters Kluwer managers, +customers, and an external expert. The interaction with several +layers of management and customers during the working +visit contributes significantly to the Supervisory Board’s deep +understanding of the business. +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. 2023 was the thirteenth consecutive +year in which Wolters Kluwer rewarded promising new internal +business initiatives via the Global Innovation Awards (GIA). +Report of the Supervisory Board +continued +This event enables teams across the business to present their +innovative ideas. The awards are ultimately awarded by a jury +consisting of internal and external experts. In 2023, a record +of 662 GIA submissions were received. Of these, four category +winners were chosen by the Innovation Board and two ideas +were recognized exclusively by Ms. McKinstry with CEO Choice +Awards. One of the awarded teams presented their innovation +submission to the Supervisory Board. A strong culture of +innovation and continuing investment in new and enhanced +products, including expert solutions, is an important means for +driving sustainable long‑term value creation at Wolters Kluwer. +In line with prior years, management of Global Business +Services (GBS) and Digital eXperience Group (DXG) gave +presentations, updating the Supervisory Board on the +company’s technology strategy and execution thereof. The +GBS presentation included a deep dive on cybersecurity and +disaster recovery plans. Considering the rapidly changing +technological developments, this remains a key topic. +The Supervisory Board appreciated the insight in the plans +and actions and overall feels that the IT infrastructure of +Wolters Kluwer is well managed. The DXG presentation +included an extensive explanation on the company’s +actions and governance structure with respect to AI, focusing +on large language models. DXG leads the AI Center of +Excellence and 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. The presentation included demos of products which +67% +of the Supervisory Board +members are female +already contain AI and an explanation on how Wolters Kluwer +can further benefit from the use of AI, including large language +models, and other advance technologies in its products. In +addition, the company’s approach towards responsible AI was +discussed. While the company carefully monitors potential +threats and business disruption, management believes that +overall, AI brings interesting opportunities for the company. +The Global Brand & Communications team gave a presentation +on the design and execution of the brand strategy. Increased +brand recognition can contribute to sustainable long‑term +value creation. The team also updated the Supervisory Board +on external awards, which included the number two ranking in +Newsweek’s list of most trustworthy companies globally in the +Business & Professional Services category. +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. In addition to the deep dive session on +the competitive position, as a routine item, an overview of +the most important developments with respect to traditional +and new competitors is discussed during each Supervisory +Board meeting. +65 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_67.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..360fa44eb5dd23e4ab06a018b263bce5838134aa --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_67.txt @@ -0,0 +1,79 @@ +Acquisitions and divestments +The Executive Board kept the Supervisory Board informed +about all pending acquisition and divestment activities. +During the year under review, there were no acquisitions with +a transaction value above the threshold for Supervisory Board +approval (1% of consolidated revenues). +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 further 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. +Report of the Supervisory Board +continued +The Supervisory Board discussed the implementation of +the amended Dutch Corporate Governance Code, which was +published in December 2022. Changes which were relevant +for the Audit Committee and Selection and Remuneration +Committee, were also discussed in those committees. As part +of the implementation, the Supervisory Board adopted the +updated By‑Laws for the Boards, as well as Terms of Reference +for the Committees. + → For more information, see Corporate +governance on page 44 and Risk +management on page 50 +Sustainability +The Supervisory Board has oversight of and actively +discussed the company’s sustainability/ESG performance +and reporting. The Supervisory Board is supportive of the +company’s sustainability approach and the increased focus +on environmental and social matters. The Supervisory Board +strongly supports and approved the submission of near‑term +targets and the net‑zero commitment with the Science Based +Targets initiative (SBTi). The near‑term targets were validated +by the SBTi in the fourth quarter of 2023, which is an important +milestone for the company’s sustainability efforts. +The Audit Committee and Supervisory Board were also kept +informed on the preparations for compliance with the EU +Corporate Sustainability Reporting Directive (CSRD) and +the European Sustainability Reporting Standards (ESRS), +which will apply as of financial year 2024 (for the annual +reports which will be published in 2025 and subsequent years). +As part of these preparations, the company conducted an +extensive initial double materiality assessment which was +discussed with the Audit Committee and the full Supervisory +Board. The Supervisory Board supports the outcomes of the +assessment, based on the thorough underlying process and +documentation provided. +In addition, the Supervisory Board was kept informed on +other environmental and social topics, such as Diversity, +Equity, Inclusion, and Belonging (DEIB), during several +meetings. The responsibilities of the Supervisory Board +and its committees with respect to sustainability were +reflected in the updated By‑Laws and Terms of Reference, +underpinning the commitment of the Supervisory Board to +carefully monitor this topic and provide the Executive Board +with advice. +The intensified focus on sustainability 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 sustainability activities of the +company and believes that these efforts will contribute to an +inclusive culture of integrity, accountability, and transparency, +creating sustainable long‑term value for all stakeholders. + → For more information on sustainability, +see Sustainability statements +on page 89 +66 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_68.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..beb9f5b412b34a562e870090bb4e9ac6dd2d3b3e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,89 @@ +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 the context of the implementation of the amended +Corporate Governance Code, the Supervisory Board approved +the Global DEIB Policy, as well as the targets for gender +representation in the sub‑top of the company. This target +aims at an increase of female representation in the company’s +executive career band by two percentage points by 2028, from +a 2022 baseline. +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 sustainable long‑term value creation. The results +were positive. The company continues executing action plans +to further improve in these areas. +Report of the Supervisory Board +continued +Finance +The Supervisory Board and Audit Committee carefully observe +the financing of the company, including the balance sheet, +cash flow developments, and available headroom. The +Supervisory Board also closely monitors the development of, +among others, net‑debt‑to‑EBITDA ratio and liquidity planning. +The Supervisory Board approved the share buyback program +of up to €1 billion in 2023, as well as the €100 million share +buyback for the period starting January 2, 2024, up to and +including February 19, 2024, and the block trade to set off EPS +dilution due to performance shares under the 2021‑2023 long‑ +term incentive plan which will be released to participants on +February 22, 2024. +With respect to the funding of the company, the Supervisory +Board approved the new €700 million eight‑year senior bonds, +which were issued in March 2023. +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 2022, which was approved +by the AGM in 2023, and the proposed dividend increase +of 15% over 2023 (to be approved by the AGM in 2024), 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 headroom for acquisitions. +The Supervisory Board discussed the impact of a new Dutch +law regarding taxation of share buybacks, which may become +effective as of January 1, 2025. Management will keep the +Supervisory Board informed about the potential impact +and alternatives. +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 2023 guidance in the half‑year results +press release which was issued in August. In addition, two +Supervisory Board members had virtual meetings with several +shareholders in the second half of 2023, focused on corporate +governance, ESG, and AI. +Audit Committee +The Audit Committee had four regular meetings in 2023, +during the preparation of the full‑year 2022 and half‑year +2023 results, and around the first‑quarter 2023 trading +update and nine‑month 2023 trading update. In addition, +in January 2023, the Audit Committee had a separate deep +67 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_69.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2bee1993b4b0d68db8899396622dc72b85e3acd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,79 @@ +dive session with corporate staff representatives regarding +sustainability reporting and the request for proposal for a +new audit firm. There was one scheduled conference call +in December between the external auditor, the Chair of the +Audit Committee, and the CFO. +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 +2023, 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, the Auditor Independence Policy, and the +quarterly reports and the full‑year report on the audit of the +external auditor. +Report of the Supervisory Board +continued +In January 2023, the Audit Committee recommended to the +full Supervisory Board to nominate KPMG Accountants N.V. as +new audit firm as of financial year 2025. This recommendation, +which was followed by the Supervisory Board, was the result +of an extensive request for proposal process for the auditor +rotation, which is required under Dutch law every 10 years. +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. In the 2023 AGM, KPMG was +indeed appointed as auditor as of financial year 2025. +The Audit Committee has reviewed the performance of the +current external auditor (Deloitte), the proposed audit scope +and approach, the audit fees, and the independence of the +external auditor, and has reviewed and approved the other +assurance services, tax advisory services, and other non‑ +audit services provided by the external auditor. The Auditor +Independence Policy, which was updated in 2023, is available +on the website. + → The Auditor Independence Policy +www.wolterskluwer.com/en/investors/ +governance/policies-and-articles +Selection and Remuneration Committee +The Selection and Remuneration Committee met four times in +2023. The Committee consisted 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 on page 70 +Supervisory Board composition +After the AGM in 2023, Mr. Bodson resigned from the +Supervisory Board due to the workload of his other activities. +During 2023, the Supervisory Board searched for a replacement +of Mr. Bodson. Based on the recommendation of the Selection +and Remuneration Committee, the Supervisory Board +nominates Mr. David Sides for appointment as new member +of the Supervisory Board in the 2024 AGM, in view of his +knowledge of the healthcare sector, coupled with his financial +and commercial acumen, as well as his extensive experience +in leading innovative companies. +68 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_7.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..e88361a2cf0789a6ae88876767258b3fd97be67f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,85 @@ +product development and have already released the first +connection between Enablon and CCH Tagetik. All four units +address the corporate market and we see scope to leverage +their combined global sales and marketing strength. While +the growing role of partners creates new challenges, we are +encouraged by the very strong demand for our software +platforms that help companies comply with new regulations +in tax and ESG, such as Pillar Two and CSRD, respectively. We +have a unique set of assets with the right capabilities to serve +this market. +Q +Are you on track to deliver on the goals of your 2022-2024 +strategy? +We are very much on track. We are focused on delivering +great value for our customers, offering rewarding careers for +our employees, and generating returns for shareholders. Our +top priority has been to grow our expert solutions, which +are sophisticated workflow and software applications that +enhance professionals’ decision‑making and productivity. +In 2023, expert solutions were our fastest‑growing type of +product, with revenues increasing 8% organically. Our cloud‑ +based software products grew 15% organically. +Our second strategic priority is to extend into high‑growth +adjacencies, market segments that are logical extensions +to our existing business. Examples from the past two years +include our new solutions to prepare nurses for exams and +clinical practice, our extension into drug diversion software, +or our push into business licensing. In these three cases, we +made small bolt‑on acquisitions, NurseTim and Invistics in +2023, and LicenseLogix in 2022, to accelerate the move. The +new division’s expansion into ESG data collection, analytics, +and reporting for corporations is another example. +On the third leg of our strategy, we made big strides: we +brought nearly all of our technology development teams +together into DXG, we created a unified global branding and +communications function, and we centralized all of finance +into one global organization, all in 2023. We also achieved +several of our sustainability goals. +Q +Your strategy states that you intend to advance your ESG +performance. What was accomplished in 2023? +Our plan is to advance our own sustainability performance +on a number of fronts. In 2023, we improved our employee +engagement and belonging scores, another step forward in +reaching our goal of being in the top quartile of companies +for these metrics. Another milestone was the validation of +our near‑term emission reduction targets by the Science +Based Targets initiative. In this annual report, you will see +significantly expanded sustainability disclosures, which bring +us closer to alignment with the European Sustainability +Reporting Standards (ESRS) and which address many of +the recommendations of the Task Force on Climate‑related +Financial Disclosures (TCFD). There is more to do, but we made +significant progress in 2023. +Q +What is the outlook for 2024? +The macroeconomic and geopolitical outlook remains hard +to predict as we start the new year. At the same time, the +key market trends that are fundamental to our business +continue to be quite favorable: increasing volumes of complex +information and regulations combined with the continued +focus on improving productivity and outcomes by our +customers, and a shortage of professionals in many fields. +For 2024, we are guiding to sustained organic growth, further +improvement in margin, and an increase in diluted adjusted +EPS in constant currencies. Beneath the calm surface, a lot is +going on. Product investment will remain high in 2024. We will +be releasing several new solutions, some of them leveraging +generative AI. I am excited about the opportunities ahead. +Nancy McKinstry +CEO and Chair of the Executive Board +Wolters Kluwer + → Read about our strategy on page 7 + → Read our Sustainability statements on +page 89-140 +Expert solutions +8% +organic growth in 2023 +Cloud software +15% +organic growth in 2023 +Diversity, equity & inclusion +75 +belonging score, up 2 points +6 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_70.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fb69d26e5448eb3000aefd5790e79a115c40747 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_70.txt @@ -0,0 +1,87 @@ +In 2024, the first term of both Mr. Jack de Kreij and Ms. +Sophie Vandebroek will expire. Ms. Vandebroek is available +for a reappointment of four years. Mr. De Kreij is available +for a reappointment of two years. The Supervisory Board, +after careful consideration, will nominate Mr. De Kreij and +Ms. Vandebroek for reappointment in the 2024 AGM. A further +explanation can be found in the agenda of the AGM. +In 2024, the second term of Ms. Horan will expire as well. +Regretfully, she informed the Supervisory Board that she +is not available for reappointment. The Supervisory Board +would like to thank Ms. Horan for her knowledgeable and +much appreciated contributions during her eight years on the +Supervisory Board, and in particular for chairing the Selection +and Remuneration Committee with respect to remuneration +topics for seven years. The Supervisory Board is currently +conducting a search for the replacement of Ms. Horan 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. Three 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 33% male and 67% female, +which is in line with the diversity policy and Dutch law, +requiring a representation of at least one third male and +female. After the appointment of Mr. Sides and the retirement +of Ms. Horan, the representation will be 50% male and 50% +female. +Report of the Supervisory Board +continued +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 +All Supervisory Board members comply with the Dutch law and +the By‑Laws regarding the maximum number of supervisory +board memberships. Furthermore, all members of the +Supervisory Board are independent from the company within +the meaning of best practice provisions 2.1.7, 2.1.8, and 2.1.9 of +the Dutch Corporate Governance Code. For more information +on each Supervisory Board member in accordance with the +Dutch Corporate Governance Code, see the sections Executive +Board and Supervisory Board and Corporate governance. + → See Executive Board and Supervisory +Board on page 61 + → See Corporate governance on page 44 +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 sustainable long‑term value creation, +within an innovative, diverse, and transparent culture, were +highly appreciated by the Supervisory Board. +Meeting attendance +Supervisory +Board +Audit +Committee +Selection & +Remuneration +Committee +Number of meetings held 7 5 4 +A.E. Ziegler 7 – 4 +J.P. de Kreij 7 5 – +B.J.F. Bodson* 3 – – +J.A. Horan 7 – 4 +H.H. Kerstens 7 – 4 +S. Vandebroek 6 4 – +C.F.H.H. Vogelzang 7 5 – +* Mr. Bodson retired after the 2023 AGM. +Alphen aan den Rijn, February 20, 2024 +Supervisory Board +Ann Ziegler, Chair +Jack de Kreij, Vice‑Chair +Jeanette Horan +Heleen Kersten +Sophie Vandebroek +Chris Vogelzang +69 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_71.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..e08e292a1913c521f1ff31ad5e8e78a988786e86 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_71.txt @@ -0,0 +1,86 @@ +Despite challenges, +all financial and +non‑financial +targets were met or +exceeded. +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 2023. We discuss how +performance drove the outcome +for 2023 and how the policy will be +applied in 2024. +Letter from the Co-Chair of the +Selection and Remuneration Committee +Dear Shareholders, +On behalf of the Supervisory Board, I am pleased to present +our 2023 remuneration report, in which we outline our pay‑for‑ +performance philosophy and our strategy‑linked framework, +and provide a summary of our remuneration policy. We explain +how performance translated into the remuneration earned for +2023 and set out how the remuneration policy will be applied +in 2024. +2023 performance and STIP outcome +In many ways, 2023 saw a continuation of the external +conditions that arose the year before, including challenges +presented by geopolitical events and macroeconomic +conditions. Last year was also a year of significant internal +change at Wolters Kluwer, notably the formation of a new +fifth division by bringing several business units together +and the centralization of key functions such as technology, +communication, and finance. These changes were executed +well in 2023 and prepare the organization to take advantage +of opportunities that lie ahead. +As discussed in the strategic report, the company finished +the year 2023 with financial results that were in line with the +overall group‑level guidance provided at the start of the year. +Fundamental to driving these financial results is the strategy +of focusing on expert solutions, investing in innovation, while +continuing to evolve organizational capabilities and driving +operational excellence. +Despite the challenges, the company achieved 6% organic +growth, resulting in an absolute 2023 revenue achievement +in line with target. The adjusted operating profit margin was +improved by 30 basis points, which after interest and tax, +resulted in a 7% increase in adjusted net profit in constant +currencies. Adjusted net profit of €1,119 million was in line with +target. Adjusted free cash flow of €1,164 million declined 2% in +constant currencies and exceeded the target by 1%. +To provide incentives for advancing our sustainability and +ESG performance, the Supervisory Board set targets for three +non‑financial measures for 2023, which together carried +a weight of 10% in the short‑term incentive plan (STIP). +Employee belonging, the indicator we have chosen to measure +our global performance on diversity, equity, and inclusion, +increased by 2 points to 75, exceeding the target which was +to increase it by 1 point. The second non‑financial measure, +indexed cybersecurity maturity score, aims to ensure the +group maintains security at or above the benchmark for +high‑tech companies. This target was also exceeded in 2023. +The third non‑financial measure for 2023, aimed at reducing +the environmental impact of our remaining in‑house data +centers, was a target for on‑premise servers decommissioned +during the year. On this measure, performance was well ahead +of target, and the multi‑year program to migrate customers +and applications to energy‑efficient cloud infrastructure has +reached a mature stage. +2021-2023 performance and LTIP outcome +The long‑term incentive plan (LTIP) which vested on December +31, 2023, and which will be paid out in February 2024, was +the first plan to have started under the remuneration policy +adopted by shareholders in 2021. This LTIP was therefore +linked to performance on relative total shareholder return, +diluted adjusted EPS, and return on invested capital. +Total shareholder return (TSR), including dividends and using +a 60‑day average share price at the start and at the end of the +Remuneration +report +Jeanette Horan +Co‑Chair of the Selection +and Remuneration +Committee, dealing with +remuneration matters +“ +70 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_72.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..06424cca988cd9a6a03312cb2b8fe8776788757b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,47 @@ +Remuneration report continued +three‑year period, was 88%. This TSR performance placed Wolters Kluwer in third place ahead +of 13 of its TSR peers, which are comprised of comparable publicly listed U.S. and European +information and software companies. Over the three‑year LTIP period, 2021‑2023, the share +price rose 86%, very significantly outperforming the broader stock market indices, including the +STOXX Europe 600 and the Amsterdam AEX. +For the second measure, diluted adjusted EPS, the compound annual growth rate over the +three‑year performance period was 12.3% in constant currencies, exceeding the target of 8.3% +calculated based on constant currencies for 2023. +For the third measure, return on invested capital (ROIC), the final year ROIC result was 16.9% in +constant currencies for 2023 (16.8% in reporting currencies), which exceeded the target of 14.2% +in constant currencies. +Performance across these three LTIP measures therefore resulted in above target payout. +The realized value also reflects the significant share price appreciation over the period. +Looking ahead: STIP 2024 +During the past three years, the Supervisory Board has monitored the effectiveness of the +non‑financial metrics that have been used in the short‑term incentive plan. The Board is of the +opinion that these non‑financial measures should not only be quantifiable and verifiable, but +should also provide the appropriate incentives for the Executive Board to advance important +strategic objectives, including sustainability goals. +One of the sustainability goals is to make steady annual progress in building a diverse, +equitable, and inclusive culture among the global workforce. Significant progress has been +made but we continue to aim to become a leader on this front. Another sustainability goal is +to make further progress in reducing our direct greenhouse gas emissions. Here, the server +decommissioning measure will be replaced in 2024 with a new goal to provide further incentive +to reducing our global office footprint. +With regard to our cybersecurity maturity, we are well‑positioned compared to our industry +benchmark and the goal is to maintain our maturity score, which in itself requires constant +effort and investment. +Looking ahead: LTIP 2024-2026 +The LTIP for 2024‑2026, which reflects the remuneration policy that was adopted by shareholders +in 2021, will again include relative TSR at 50%, diluted adjusted EPS at 30%, and ROIC at 20%. +No changes were made to the TSR peer group in 2023. The Supervisory Board continues to +monitor this group given the periodic delistings and mergers that take place in our sector. +The Supervisory Board has set three‑year targets for compound annual growth in diluted +adjusted EPS and for final year ROIC, applying additional stretch to the underlying financial +plan that underpins the strategy. These forward‑looking three‑year targets are disclosed on +page 85. +The 2022 remuneration report received strong shareholder support with over 93% of votes in +favor of the report. We trust this 2023 report provides a clear explanation of the drivers of 2023 +remuneration and transparent disclosure on future goals and that shareholders can again +support this report at our Annual General Meeting of Shareholders on May 8, 2024. +Jeanette Horan +Co‑Chair of the Selection and Remuneration Committee, dealing with remuneration matters + → The 2024 AGM agenda is available at +www.wolterskluwer.com/agm +71 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_73.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..3744b82b6b786086a9095b745dbede19d26dc791 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_73.txt @@ -0,0 +1,112 @@ +Remuneration at a glance +72 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. +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. +T ar g et Actua l +59% +23% +18% +15,066 +12% +31% 4% +10% +36% +3% +4% +€0 +€20, 000 +in thousands of euros, unless otherwise stated +€10, 000 +€5, 000 +€15, 000 +LTIP TSR +outperformance +LTIP +STIP +Base Salary +LTIP EPS +outperformance +Increase in value +due to share +price performance +LTIP ROIC +outperformance +CEO target and realized pay 2023Diluted adjusted EPS +CAGR 2021-2023: 12.3% +in constant currencies +Return on invested +capital 2023: 16.9% in +constant currencies +Target for diluted adjusted +EPS CAGR 2021‑2023 +was 8.3% in constant +currencies for 2023. +Target for final year ROIC +2023 was 14.2% in constant +currencies for 2023. +3.13 3.38 +4.14 +4.55 +2020 2021 2022 2023 +12.3% +13.7% +15.5% +16.8% +2020 2021 2022 2023 +Impact of performance and share price on remuneration +Target pay reflects the number of LTIP shares conditionally +awarded for LTIP 2021‑2023 valued at the closing share +price on December 31, 2020 (€69.06). +Realized actual pay reflects the number of LTIP shares +earned valued at the closing share price on December 31, +2023 (€128.70). +The final payout will be valued at the volume‑weighted‑ +average share price on February 22, 2024. +Three-year 2021-2023 total shareholder return (TSR) +Sage Group +RELX +Wolters Kluwer +Thomson Reuters +CGI +Pearson +Informa +News Corp +S&P Global +Equifax +Verisk +Experian +Bur. Veritas +Wiley +SGS +Intertek +-20% ++80% ++100% +0% ++20% ++60% ++40% +40% +Summary performance against 2023 STIP targets +Actual performance +Measure Target Actual % of target +Financial - in millions of euros +Revenues 5,605 5,584 100% +Adjusted net profit 1,113 1,119 100% +Adjusted free cash flow 1,151 1,164 101% +Non-financial +Employee belonging score +1 point +2 points 105% +Indexed cybersecurity +maturity score 109.4 113.8 110% +Number of on‑premise servers +decommissioned 600‑999 1,542 110% +Financial STIP targets and actual performance are shown in reporting +currencies. For details on STIP target outcomes, see page 80. \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_74.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa5ec4c6ea636c82a8de1af16f3f56807e62559 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +Remuneration report continued +Our remuneration policy +Below we provide a 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 +Key elements of our remuneration policy +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 76. +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 2024. +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 2023, the weighting was 10% and included the following three strategically important metrics: +• Belonging score (a quantified measure of diversity, equity, and inclusion) +• Indexed cybersecurity maturity score +• Number of on‑premise servers decommissioned (reducing carbon footprint) +In 2024, the weighting of non‑financial measures will be 10%. The environmental measure (servers decommissioned) will be replaced by a percentage reduction in our office footprint. +LTIP performance measures The policy stipulates the following measures for the LTIP: +• Relative total shareholder return, weighted at 50% +• Diluted adjusted EPS, weighted at 30% +• Return on invested capital (ROIC), weighted at 20% +Share ownership and +holding requirements +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. +73 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_75.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..34230ea8732cfd01abbb5e25f9dbe19101769ab9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_75.txt @@ -0,0 +1,83 @@ +Remuneration report continued +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 and increases provided +to all employees +Set at a level to attract, motivate, +and retain the best talent +STIP Paid annually in cash; maximum +opportunity 175% of base salary (CEO) +Creates incentives to deliver +performance against annual financial +and non‑financial 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) +Creates incentives to deliver financial +performance and create long ‑term +value; demonstrates long ‑term +alignment with shareholder interests +Pension Defined contribution retirement savings +plan that is available to all employees in +the same 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 same country of employment +Designed to be competitive in the +relevant market +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 based on 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 provides management with incentives 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 +74 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_76.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..be49e2dfc3306e4908322c3957f8176fb0eddd85 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_76.txt @@ -0,0 +1,62 @@ +Remuneration report continued +Purpose: deliver impact when it matters most +Our strategic goals +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 in short-term incentive plan (STIP) and long-term +incentive plan (LTIP) +Executive Board remuneration policy (adopted at the 2021 AGM): +STIP financial measures – pre-defined list of measures: +• Revenues +• Organic growth +• Adjusted operating profit +• Adjusted operating profit margin +• Adjusted net profit +• Adjusted free cash flow +• Cash conversion ratio +STIP non-financial measures: +ESG, strategic, or operational measures, including employee engagement score, customer satisfaction +scores, measures of good corporate governance, measures of operational excellence, and measures +of environmental impact. +LTIP financial measures: +• Relative total shareholder return +• Diluted adjusted EPS (three‑year CAGR) +• Return on invested capital (final year) +For 2024, the STIP financial measures will be the same as in 2023: revenues, adjusted net profit, +and adjusted free cash flow. The STIP non‑financial measures will be: employee belonging +score, indexed cybersecurity maturity score, and a percentage reduction in our global office +footprint (square meters). +The number of on‑premise servers decommissioned, which was a target in 2023 and prior years, +will not be included as a target in 2024 as the progress over the past three years has brought +this program to an advanced level of maturity. +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 sustainable 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. +75 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_77.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0446c445754859cab58b71404028d60f90c723d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_77.txt @@ -0,0 +1,52 @@ +Remuneration report continued +76 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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 2023, the pay peer group consisted of the companies shown in the table on the right. +Companies included in the TSR peer group are marked ‘TSR’. +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. +The TSR peer group is comprised of digital information, software, and services businesses. +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 +which are not in the pay peer group. +Pay and TSR peer groups +North American comparators European comparators +CGI1,4 TSR Atos +Equifax TSR Bureau Veritas TSR +Gartner2 Capgemini +Gen Digital3 +Clarivate5 +Intuit Dassault Systèmes +MSCI Experian TSR +News Corporation TSR Informa TSR +S&P Global TSR Intertek Group TSR +Thomson Reuters TSR Pearson TSR +Verisk Analytics TSR RELX TSR +Wiley4 TSR SGS TSR +Teleperformance +Temenos +The Sage Group TSR +1 CGI Inc replaced IHS Markit plc in the TSR peer group after the latter was acquired by S&P Global in 2022. +2 Gartner Inc replaced Nielsen Holdings Inc which was delisted in October 2022. +3 Gen Digital Inc was formerly named NortonLifeLock which merged with Avast in 2022. +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 plc in the pay peer group after the latter was acquired by S&P Global in 2022. +TSR Companies that are included in the TSR peer group. \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_78.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..481895b5898551c5029d3418934bcd792d46e7b1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,57 @@ +Remuneration report continued +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 Vision & Strategy Plan (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 to give realistic but stretched +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 +consistently applied accounting standards and policies. +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 variable remuneration +Under Dutch law, the Supervisory Board has the discretionary authority to amend Executive +Board payouts, as determined by actual performance against pre‑set targets, if they are +considered unreasonable or unfair in relation to stakeholders’ interests. +The Supervisory Board annually assesses the impact of certain management actions, or +external events or circumstances, on results during the performance period, and may use +its discretion to adjust for these actions or events. Such actions, events, or circumstances +include, but are not limited to, the impact of restructuring, acquisitions, divestments, +and share buybacks beyond that anticipated in the target ‑setting process. External events +considered could include economic recession, changes in tax rates, and other events +unforeseen in the target ‑setting process. +Variable remuneration can be clawed back after payout if the payout was based on +incorrect information. +Review VSP +three‑ year +financial plan +Augment +forecasts for +management +actions not +in the plan +D etermine +three‑ year +LTIP targets +Test +targets +for stretch +and payout +sensitivity +Finalize three‑ +year LTIP targets +Step 1 Step 2 Step 3 Step 4 +77 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. +The secret object #1 is a "clock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_79.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..a77a783c74780c6e15300fc7a5737d0a63f62b14 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,41 @@ +Remuneration report continued +Implementation of remuneration policy in 2023 +This section outlines the implementation of the remuneration policy for Executive Board members in 2023, in line with the remuneration policy and the remuneration framework discussed above. +It also describes how the performance measures were applied in 2023. +For the performance period ending in 2023, 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 performance‑driven scenario analysis when determining the structure and level of Executive Board +remuneration for 2023, as shown on page 86. +The Supervisory Board is of the view that management achieved strong results and delivered for customers, despite geopolitical and macroeconomic challenges faced during the STIP and LTIP +performance periods. +2023 STIP financial targets for revenues and adjusted net profit were met, while the STIP target for adjusted free cash flow was slightly exceeded. All three non‑ financial STIP targets were exceeded. +The formulaic outcome will result in cash annual STIP payments of €1,880,643 for the CEO and €854,521 for the CFO. +Three‑ year performance on total shareholder return (TSR), CAGR in diluted adjusted EPS, and final ‑year ROIC were all ahead of target. The performance and shares to be paid out for the LTIP +2021‑2023 are discussed under Long-term incentive plans. +Remuneration of the Executive Board – IFRS based +Fixed remuneration Variable remuneration +in thousands of euros, unless otherwise stated Base salary Social security 6 +Pension +contribution +Other +benefits 3 STIP LTIP 4 Sub-total +Proportion +fixed/variable +Tax-related +costs5 Total +2023 +N. McKinstry 1 1,499 236 104 193 1,881 4,439 8,352 24%/76% 27 8,379 +K.B. Entricken 2 809 11 76 207 855 1,868 3,826 29%/71% (486) 3,340 +Total 2,308 247 180 400 2,736 6,307 12,178 26%/74% (459) 11,719 +2022 +N. McKinstry 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 +1 In 2023, Ms. McKinstry’s base salary was $1,557,000 (€1,498,667). The 2023 STIP payout is calculated on a U.S. dollar denominated equivalent of total salary as: $1,557,000 x 130.57% ($2,032,975 equivalent to €1,880,643). +2 The 2023 STIP payout of Mr. Entricken is calculated on a U.S. ‑dollar ‑denominated equivalent of total base salary as: $875,000 x 105.57% ($923,738 equivalent to €854,521). +3 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. +4 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. +5 Tax‑related costs are costs to the company pertaining to the Executive Board members ex ‑patriate assignments. The 2023 tax ‑related cost changes for Ms. McKinstry were mainly due to time worked in the Netherlands and the U.S. +and a reduction in the hypothetical tax collected by the company as a result of a residency change in 2023. For Mr. Entricken, the changes are a result of reduced time spent in the Netherlands in 2023 and a roll ‑forward of tax credits +from the previous year. +6 Changes in the social security costs for Ms. McKinstry are a result of being a full ‑year participant in the U.S. social system in 2023. +78 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_8.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..29c771257d4a65afb8f4752bf6820df5aea57c6a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_8.txt @@ -0,0 +1,75 @@ +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. +Overview +Wolters Kluwer is a global provider of information, software +and services for professionals in the fields of health; tax and +accounting; financial and corporate compliance; legal and +regulatory; and corporate performance and ESG. +Every day, our customers face the challenge of increasing +quantities and complexity of information or regulation +and the pressure to deliver better outcomes at lower +cost. We aim to solve this challenge, add value to their +workflow, and support their decision‑making with our digital +solutions and technology‑enabled services. We continuously +improve our solutions to meet evolving customer needs, +leveraging the latest technologies to provide benefits such +as advanced analytics, intuitive interfaces, mobility, flexibility, +interoperability, reliability, and open architecture. +Purpose +Our purpose is to deliver impact when it matters most. Every +second of every day, our customers face decisive moments +that impact the lives of millions of people and shape society. +In these crucial moments, we put sound knowledge, deep +expertise, and usable data and insights into their hands at +the right time and in the right context for their specific set of +circumstances. Our solutions help protect people’s health, +prosperity, and safety and help to build better businesses. +Strategy +Our strategy for 2022‑2024 aims to deliver good organic +growth and improved adjusted operating margins and return +on invested capital, while advancing our ESG performance. +Among the ESG goals in our 2022‑2024 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 near‑term science‑ +based targets. To achieve these goals, our strategic priorities +are: +• Accelerate Expert Solutions: we are focusing our +investments on cloud‑based expert solutions while +continuing to transform selected digital information +products into expert solutions. We are investing to enrich +the user experience of our products by leveraging advanced +data analytics and artificial intelligence. +• Expand Our Reach: we are seeking to extend into high‑ +growth adjacencies along our customers’ workflows and to +adapt our existing products for new customer segments. We +are working to develop partnerships and ecosystems for our +key software platforms. +• Evolve Core Capabilities: we are enhancing our central +functions to drive excellence and scale economies in sales +and marketing (go‑to‑market) and in technology. We are +focused on advancing our ESG performance and capabilities +and continuing to invest in diverse and engaged talent to +support innovation and growth. +Our strategy is centered on organic investment and growth.The +three‑year plan envisages spending approximately 10% of total +revenues each year on product development. +We also 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. +Strategy and +business model +50% +Around 50% of digital +revenues are from +products that leverage +artificial intelligence +7 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_80.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7d84a6870083aa9f8bab50cd210d534d038496e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_80.txt @@ -0,0 +1,38 @@ +Remuneration report continued +Base salary 2023 +The Supervisory Board approved an increase of 3.9% in base salary for the CEO and CFO for +2023. This was below the budgeted 4.4% salary increase for Wolters Kluwer employees globally. +Short-term incentive plan 2023 +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 assurance 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 2023 +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% 100% 150% ≥110% +79 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_81.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..226eed7ab71cbe87028187c6c03453b222aedff7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_81.txt @@ -0,0 +1,32 @@ +Remuneration report continued +The 2023 STIP performance measures and actual performance compared to targets and the resulting STIP payout are listed in the table below. STIP performance measures are determined by the +Supervisory Board and reflect the key performance indicators (KPIs) on which the company reports and that are important measures of the successful execution of our strategy. +Payouts for performance against 2023 STIP targets +in millions of euros, unless otherwise stated Performance targets Actual performance STIP outcomes +N. McKinstry K.B. Entricken +Performance measures Weighting (A) Minimum Target Maximum Performance +As % of +target +Payout, % of +base salary (B) +Weighted +(A)x(B) +Payout, % of +base salary +Weighted +(A)x(C) +2023 +Financial +Revenues 34.0% 5,044 5,605 6,165 5,584 100% 125% 42.5% 100% 34.0% +Adjusted net profit 28.0% 1,002 1,113 1,225 1,119 100% 125% 35.0% 100% 28.0% +Adjusted free cash flow 28.0% 1,036 1,151 1,266 1,164 101% 130% 36.4% 105% 29.4% +Non-financial +Employee belonging score 1 3.33% Maintain +1 point +3 or more points +2 points 105% 150% 5.0% 125% 4.2% +Indexed cybersecurity maturity score 2 3.33% 103.1 109.4 113.4 113.8 110% 175% 5.8% 150% 5.0% +Number of on ‑ premise servers decommissioned 3 3.34% 275 ‑399 600 ‑ 999 1,200+ 1,542 110% 175% 5.8% 150% 5.0% +Total payout as % of base salary 130.6% 105.6% +1 Employee belonging score: performance targets are relative to 2022 score. +2 Cybersecurity maturity score is indexed to 2020 = 100.0. Performance targets are set to create incentives to maintain security at or above the benchmark for high‑ tech companies. +3 Number of on‑premise servers decommissioned: performance targets are for absolute number of servers decommissioned. + +80 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_82.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..755c0d971b02504f12320a3a56c9c04200601ac6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,55 @@ +Remuneration report continued +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. +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, EPS, and +ROIC targets. +Under the previous remuneration policy in effect before 2021, the performance measures for +the LTIP 2020‑2022 were total shareholder return (TSR) and CAGR in diluted EPS. The current +remuneration policy, adopted in 2021, uses three performance measures: total shareholder +return, CAGR in diluted adjusted EPS, and return on invested capital, described below. +Total shareholder return +TSR objectively measures the company’s financial performance and assesses its sustainable +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 sustainable 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% +9‑10 0% +11‑12 0% +13‑14 0% +15‑16 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 and ROIC targets are +based on performance in constant currencies to exclude the effect of currency movements +over which the Executive Board has no control. In addition, diluted adjusted EPS and ROIC +performance are based on consistently applied accounting standards and policies. 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. +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% +81 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_83.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6336472ec4e3a8eaebc0388287fcba47540d583 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,90 @@ +Remuneration report continued +Performance against LTIP targets for the 2020-2022 and 2021-2023 performance periods +LTIP measure Weighting Target Achievement Payout % +Period 2021-2023 Vesting +TSR 50% Position 5‑6 Position 3 125% +Diluted adjusted EPS 30% CAGR of 8.3% 12.3% 150% +ROIC 20% Final year 14.2% 16.9% 150% +Period 2020-2022 * Vesting +TSR 50% Position 5‑6 Position 3 125% +Diluted EPS* 50% CAGR of 10.8% 15.9% 150% +* LTIP 2020‑2022 was based on the former remuneration policy, which used TSR and diluted EPS. For calculation +purposes, we use the definition of diluted EPS that can be found in the Glossary. +Performance against LTIP targets in constant currencies for the two most recent LTIP +performance periods are provided in the table above. Targets have been recalculated for 2023 +constant currencies, and therefore differ from targets stated in 2022 Annual Report. +Vested LTIP plans +LTIP vesting for the performance period 2021–2023 +The LTIP 2021‑2023 vested on December 31, 2023. Vested LTIP 2021‑2023 shares will be released +on February 22, 2024. The volume‑weighted‑average price for the shares released will be based +on the average exchange price traded at Euronext Amsterdam on February 22, 2024, the first day +following the company’s publication of its annual results. +Conditional share awards vested for the period 2021-2023 +number of shares, +unless otherwise stated +Outstanding +at December +31, 2023 +Additional +conditional +number of +TSR shares +(25%) +Additional +conditional +number of +EPS shares +(50%) +Additional +conditional +number of +ROIC shares +(50%) +Vested/ +payout +February 21, +2024 +Estimated cash +value of payout * +(in thousands +of euros)* +N. McKinstry 66,970 9,655 8,506 5,671 90,802 11,686 +K.B. Entricken 26,533 3,825 3,370 2,247 35,975 4,630 +Total 93,503 13,480 11,876 7,918 126,777 16,316 +Senior management 303,256 37,944 45,564 30,408 417,172 53,690 +Total 396,759 51,424 57,440 38,326 543,949 70,006 +* Estimated cash value calculated as the number of shares vested multiplied by the closing share price on +December 31, 2023 (€128.70). +LTIP vesting for the performance period 2020-2022 +The LTIP 2020‑2022 vested on December 31, 2022. A total number of 535,063 shares were released +on February 23, 2023. On that day, the volume‑weighted‑average price of Wolters Kluwer N.V. +was €109.9098. The number of shares vested and the cash equivalent are shown below. +LTIP: shares vested for the performance 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 +Cash value of +vested shares * +N. McKinstry 80,741 12,064 16,243 109,048 11,985 +K.B. Entricken 29,320 4,381 5,899 39,600 4,352 +Total 110,061 16,445 22,142 148,648 16,338 +Senior management 280,967 35,139 70,309 386,415 42,471 +Total 391,028 51,584 92,451 535,063 58,809 +* Cash value in thousands of euros; calculated as the number of shares vested multiplied by the volume‑ +weighted‑average price on February 23, 2023. +82 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_84.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0d94e048836a6e6231a02318a9d780af53940ca --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,65 @@ +Remuneration report continued +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 2022-2024 and 2023-2025 +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 2022 ‑2024 and 2023‑2025: +Conditional LTIP share awards for performance periods 2022-2024 and 2023-2025 +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 2023‑2025 LTIP 2023‑2025 LTIP 2022‑2024 LTIP 2022‑2024 +December 31, +2023 +N. McKinstry 26,504 19,934 23,129 16,955 86,522 +K.B. Entricken 12,092 9,095 9,925 7,276 38,388 +Total 38,596 29,029 33,054 24,231 124,910 +Senior management * 135,296 134,789 113,099 113,096 496,280 +Total 173,892 163,818 146,153 137,327 621,190 +* 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 for shareholders, such as revenues and profit performance. +The LTIP targets and payout schedule for senior management are similar to those for the Executive Board. +Key assumptions for LTIP 2022-2024 and LTIP 2023-2025 +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 2023-2025 LTIP 2022-2024 +Fair values +Fair value of EPS and ROIC shares at grant date (in €) 91.37 97.82 +Fair value of TSR shares at grant date (in €) 68.72 71.71 +TSR shares – key assumptions +Share price at grant date (in €) 97.76 103.60 +Expected volatility 23.7% 21.2% +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 2023‑ 2025, the fair value is estimated to be €68.72 as of +January 1, 2023. The inputs to the valuation were the Wolters Kluwer share price of €97.76 on the +grant date (January 1, 2023) and an expected volatility of 23.7% based on historical daily prices +over the three years prior to January 1, 2023. 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 2024 +This section describes arrangements that will be put into place for 2024, 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 +3.4%, which is less than the overall budgeted 2024 salary increase of 4.0% for Wolters Kluwer +employees globally. +83 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_85.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..24974e5c30dee735f5ddb5bac5414ea10d944f4e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,74 @@ +Remuneration report continued +Short-term incentive plan 2024 +For both the CEO and CFO, the STIP percentage payout scenarios for 2024 will be the same +as in 2023. See table on page 86. +According to the remuneration policy, the Supervisory Board can annually select measures +from a pre‑defined list of financial measures, providing flexibility for the Supervisory Board +and transparency for stakeholders. +A full list of financial measures is provided in the summary table at the front of this +remuneration report. The financial measures carry a weight of at least 80% under the +remuneration policy adopted in 2021. The Supervisory Board has selected the following +measures from the list for 2024: +Financial performance measures for STIP 2024 +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 accounting standards is excluded. +Adjusted net profit 28% +Adjusted free cash flow 28% +Total weighting of STIP financial measures 90% +Non-financial performance measures for STIP 2024 +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 2024, 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 2024, the following three strategically relevant, quantifiable, and verifiable non‑ financial STIP +measures will be applied. +Non-financial performance measures for 2024 +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. +The score (on a scale of 0 ‑100) is determined by an +independent third party (2023: 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. The minimum +payout requires the score to be maintained in +line with the industry standard for high ‑tech +companies. +Reduction in office +footprint +Square meters of +office footprint +3.34% The annual target aims to achieve a reduction +in our office footprint and thereby a reduction +in our scope 1 and 2 emissions. The targets are +based on programs managed by our global +real estate team. The target and outcome are +on an underlying basis excluding the impact +of acquisitions and divestitures. +Total weighting of STIP non-financial +measures 10.0% +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. +84 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret kitchen appliance is a "microwave". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_86.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2ef6a233b086343e3ad978ab5e202df6103265f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,47 @@ +Remuneration report continued +Long-term incentive plan 2024-2026 +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. +For the LTIP 2024‑2026 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 sustainable 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 2024-2026 +TSR 50% Position 5‑6 +Diluted adjusted EPS 30% CAGR of 10.0% +ROIC 20% Final year ROIC of 20.7% +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% +EPS and ROIC targets are stated in constant currencies for the first year of each three‑year LTIP period. +Conditional LTIP grants 2024-2026 +In accordance with the commitment of the Supervisory Board in 2021 upon adoption of the +remuneration policy, the LTIP target level for the 2024‑2026 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. +85 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_87.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbd95cdb6202b79b3086684c8d98f1545db71412 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,79 @@ +Remuneration report continued +Performance-driven remuneration scenarios 2024 +Proposed remuneration for 2024 retains a high proportion of performance‑driven pay for +CEO and CFO. +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP LTIP LTIP: share price appreciation +2, 0000 4, 000 8, 0006, 000 12, 00010, 000 +Performance-driven CEO remuneration scenarios 2024 +14, 000 +Performance-driven CFO remuneration scenarios 2024 +LTIP LTIP: share price appreciation +Maximum + 50% shar e +pric e appr eciation +Maximum +perf ormanc e +On- t ar g et +perf ormanc e +Minimum +perf ormanc e +in thousands of euros +Base Salary Pension Social security and other benefits STIP +1,0000 2,000 3,000 4,000 7,0005,000 6,000 +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. +Shares owned by Executive Board members +number of shares, unless +otherwise stated +Actual ownership as +multiple of base +salary (as at December +31, 2023) * +Actual ownership as +multiple of base +salary (as at December +31, 2022) * +December 31, +2023 +December 31, +2022 +N. McKinstry 32.0x 24.9x 372,131 372,131 +K.B. Entricken 6.4x 4.9x 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. +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 2023 remuneration for the CEO by the average of +the total 2023 remuneration of all employees worldwide, was 77 (2022: 78, restated as temporary +staff and contractors are no longer reported within employee benefit expenses). 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 total 2023 employee benefit expenses as +stated in Note 12 – Employee benefit 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 employee benefit expenses of +all employees (minus the CEO’s remuneration) are based on IFRS accounting standards. The +difference between the 2022 and 2023 pay ratios was due to a stable average pay per employee +in 2023, while the CEO’s total remuneration (minus tax ‑related costs) was lower in 2023. The +decline in CEO total remuneration was mainly due to a lower total variable pay. In prior years, +the pay ratio was reported as 87 (2021); 79 (2020); 81 (2019), and 84 (2018). +86 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_88.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..27e10df6435947f442ac93fcc8ceab506cd672ec --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_88.txt @@ -0,0 +1,67 @@ +Remuneration report continued +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 sustainable long ‑term value creation. The same policy, with language +improvement to provide clarity on the selection of comparator group companies, will be +submitted to the 2024 AGM for adoption. +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 2023 2022 2021 +A.E. Ziegler, Chair, Former Vice ‑Chair Co‑Chair 169 139 102 +B.J.F. Bodson 29 85 82 +J.P. de Kreij, Vice‑Chair Chair 127 120 94 +J.A. Horan Co‑Chair 94 99 91 +S. Vandebroek Yes 105 110 93 +C.F.H.H. Vogelzang Yes 100 100 88 +H.H. Kersten Yes 96 68 – +Former Supervisory Board members +F.J.G.M. Cremers, Former Chair Former Co ‑Chair – 45 128 +Total 720 766 678 +Supervisory Board members’ fees +The table below shows the fee schedule for Supervisory Board members, including +the remuneration for 2024 that will be proposed to the 2024 Annual General Meeting +of Shareholders. +For 2024, it is proposed to increase the member fee by €5,000; all other annual fees +remain unchanged. +The fees are in line with the Supervisory Board remuneration policy which was adopted +in 2020 by the AGM with 99.11% of votes in favor and the updated remuneration policy +which will be submitted for adoption at the 2024 Annual General Meeting of Shareholders. +The updated policy will be published in the 2024 agenda. +Supervisory Board members’ fees +in euros +Proposed +annual fee 2024 Annual fee 2023 Annual fee 2022 +Chair 130,000 130,000 130,000 +Vice‑Chair 95,000 95,000 95,000 +Members 80,000 75,000 75,000 +Chair Audit Committee 25,000 25,000 25,000 +Members Audit Committee 18,000 18,000 18,000 +Chair Selection and +Remuneration Committee 20,000* 20,000* 20,000* +Members Selection and +Remuneration Committee 14,000 14,000 14,000 +Travel allowance for intercontinental travel 5,000 per meeting 5,000 per meeting 5,000 per meeting +Fixed cost reimbursement 1,500 1,500 1,500 +* Due to the Co‑Chair arrangement, each Co‑Chair receives €17,000. +Shares owned by Supervisory Board members +At December 31, 2023, Ms. Ziegler held 1,894 American Depositary Receipts (each Depositary +Receipt represents one ordinary Wolters Kluwer share) (2022: 1,894). None of the other +Supervisory Board members held shares in Wolters Kluwer (2022: none). +87 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_89.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..aad796184be37c529be933bd02f1c5817367b41b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_89.txt @@ -0,0 +1,60 @@ +Remuneration report continued +Shareholder voting at Annual General Meeting +The following table sets out the voting results in respect of resolutions relating to remuneration +at the Annual General Meeting of Shareholders held on May 10, 2023. +Shareholder voting outcomes at the 2023 AGM +Resolution +% of votes +for +% of votes +against +votes +withheld +2022 Remuneration report Advisory 93.66% 6.34% 2,448,733 +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. +in thousands of euros, unless otherwise stated 2023 2022 8 2021 * 2020 * 2019 * +Executive Board remuneration +N. McKinstry 8,379 7,901 9,377 7,512 8,089 +Change (in %) 6.0 (15.7) 24.8 (7.1) 71.2 +K.B. Entricken 3,340 3,741 3,404 4,132 4,589 +Change (in %) (10.7) 9.9 (17.6) (10.0) 15.7 +Supervisory Board remuneration** +F.J.G.M. Cremers (appointed 2017), Former Chair 1 – 45 128 128 114 +A.E. Ziegler (appointed 2017), Chair, Former Vice ‑ +Chair 2 169 139 102 102 95 +B.J.F. Bodson (appointed 2019)3 29 85 82 72 22 +J.A. Horan (appointed 2016) 94 99 91 96 100 +H.H. Kersten (appointed 2022) 96 68 – – – +J.P. de Kreij (appointed 2020), Vice‑Chair 4 127 120 94 92 – +S. Vandebroek (appointed 2020) 105 110 93 61 – +C.F.H.H. Vogelzang (appointed 2019) 100 100 88 88 58 +R.D. Hooft Graafland5 – – – 34 97 +F.M. Russo 6 – – – – 97 +B.J. Angelici7 – – – – 20 +in thousands of euros, unless otherwise stated 2023 2022 8 2021 * 2020 * 2019 * +B.J. Noteboom 7 – – – – 25 +Company performance +Organic growth (in %) 5.8 6.2 5.7 1.7 4.3 +Adjusted operating profit margin (in %) 26.4 26.1 25.3 24.4 23.6 +Year ‑end closing share price (€) 128.70 97.76 103.60 69.06 65.02 +Share price change (in %) 32 (6) 50 6 26 +Total shareholder return (in %) 34 (4) 52 8 28 +Average remuneration on a full-time equivalent +basis of employees +Employee benefit expenses per FTE, excluding CEO 107.9 107.7 99.7 98.6 97.6 +* The Executive Board remuneration for the years 2019 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 fixed remuneration only. +1 Retired after the 2022 AGM. +2 Succeeded Mr. Cremers as Chair after the 2022 AGM. +3 Mr. Bodson’s appointment was effective September 1, 2019. Mr. Bodson retired after the 2023 AGM. +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. +8 Employee benefit expenses per FTE, excluding CEO, are restated for 2022 as temporary staff and contractors +are no longer reported within employee benefit expenses. +88 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_9.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..7365c40feb3e742196250c32ca73f0f66df46136 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,75 @@ +Strategic progress 2023 +In 2023, we made important progress on our strategic plans. +First, expert solutions, which include our software products +and certain advanced information solutions, accounted for +58% of total revenues (2022: 56%) and grew 8% organically +(2022: 9%). Software solutions accounted for 45% of total +revenues (2022: 44%) and grew 8% organically (2022: 9%). +Cloud software revenues accounted for 37% of total 2023 +software revenues and grew 15% (2022: 17%). Today, around +50% of our digital revenues are from products that leverage +artificial intelligence (AI) to drive enhanced value for our +customers. During 2023, we stepped up experimentation with +large language models (LLMs) and the new scalable generative +AI technology, testing dozens of use cases, collaborating with +selected customers, and launching beta versions in Health +and Legal & Regulatory markets. For much of this work, we +are partnering with Microsoft, Google, and other technology +suppliers. +Second, we made progress on extending our reach into high‑ +growth adjacencies and geographies. The new Corporate +Performance & ESG division, formed in 2023, sets us on a path +to extend our enterprise software solutions into corporate +workflows for ESG data collection, analysis, reporting, and +assurance. In the Health division, the 2023 acquisition of +NurseTim bolstered our position in nursing education +solutions and test preparation while the 2023 acquisition of +Invistics drug diversion detection software broadened our +offering in the hospital market. +Third, we took significant steps in 2023 to evolve our core +capabilities. We centralized the majority of our product +development teams, more than doubling the number +of FTEs in our global development organization, Digital +eXperience Group (DXG). We also centralized our branding and +communications teams and created a unified global finance +organization to support the company globally. With regard +to our specific ESG objectives, the most notable advances +in 2023 were the validation by the Science Based Targets +initiative of our near‑term emission reduction targets and the +improvements in several important social metrics, notably +employee turnover, engagement, and belonging. +Strategy and business model +continued +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. +• 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 +Elevate +Our Value +Accelerate +Expert Solutions +Expand +Our Reach +Evolve +Core Capabilities +8 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_90.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed698b9d5a25a2cd20c16c0ddc3390b6ef21611c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,14 @@ +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures +(TCFD) +134 EU Taxonomy +Sustainability +statements +89 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_91.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0a21936d59c9309e5cffc302e76f6347be88de4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,66 @@ +In these sustainability statements, we describe +our approach and performance regarding material +sustainability impacts, risks, and opportunities. +Our approach to sustainability +In conducting our business, we aim to create sustainable long‑term value for all stakeholders, +by using resources thoughtfully and efficiently, respecting our company values, and focusing our +efforts on actions that support our purpose and our strategy, in line with the Dutch Corporate +Governance Code. Through regular engagement with internal and external stakeholders, +we understand how we may impact them and how we can create sustainable value. +Aligned with our strategy, Elevate Our Value, we have policies and programs that embed +environmental, social, and governance standards within our operations. We focus on the +areas where we have material impacts, risks, and opportunities. We track progress of our +actions through metrics and targets. +We are guided by international guidelines, such as the Organization 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 sustainability data reporting +The new EU Corporate Sustainability Reporting Directive (CSRD) introduces mandatory +sustainability reporting standards. These sustainability statements follow the structure of the +European Sustainability Reporting Standards (ESRS) in an effort to start aligning our reporting +with the new framework and requirements. Reporting under CSRD and ESRS is mandatory as +of financial year 2024, to be published in 2025. The 2023 sustainability statements do not yet +comply with all aspects of CSRD and ESRS and have not been assured by the external auditor. +In 2023, we conducted an initial double materiality assessment following the requirements of +ESRS. As such, the sustainability statements include information and data on material impacts, +risks, and opportunities. +We are currently enhancing our reporting manuals and design of internal controls for the +collection, processing, review, and validation of sustainability data, which will result in improved +data quality in the future. For some data points, we used third parties to administer surveys or +conduct assessments. +In 2024, we will continue the implementation of the requirements of ESRS based on a gap +assessment. We will focus on all reporting areas, including governance processes and +interaction of the strategy and business model with material impacts, risks, and opportunities. +We will also evaluate policies, actions, and targets for the material impacts, risks, and +opportunities, and improve the reporting of metrics, with particular focus on scope 3.1 supplier +emissions which contribute the largest share of our greenhouse gas (GHG) emissions. Scope 3.1 +emissions are largely based on calculations using industry emission factors. We plan to expand +engagement with our suppliers to obtain more specific emission data, starting with our largest +suppliers. +The level of accuracy and completeness of this data is lower than that of our financial +information. Sustainability‑related controls are not yet implemented in an integrated Internal +Control Framework, which is an action set for 2024. See Risk management and internal controls +over sustainability reporting (GOV-5) for further details. In addition, some metrics, such as +supplier and customer‑related GHG emissions, are subject to a high level of measurement +uncertainty. Judgments and estimates involved are described alongside each table throughout +this chapter. +These sustainability statements have been prepared with reference to the Global Reporting +Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) frameworks. + → Our 2023 GRI, SASB, and UN Global +Compact disclosures are available at +www.wolterskluwer.com/en/investors/ +financials/annual-reports +Our approach to sustainability +Key highlights +• Reporting follows ESRS structure but no compliance to all aspects of CSRD/ESRS yet +• Near-term GHG emission reduction targets validated by SBTi +• Committed to submit 2050 net-zero GHG emission reduction targets for validation +by SBTi by January 2025 +• Initial double materiality assessment has been conducted +• Policies, actions, metrics, and targets are disclosed for material sustainability +matters to the extent currently available +• Full scope 3 GHG emissions are reported +• Scope 1 & 2 GHG emissions reduced with 8% +• Employee engagement and belonging scores are up 1 point and 2 points, respectively +90 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Our approach to sustainability \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_92.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..58cd13fdcf7277cb75c2dedad2630883be1e7c7d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,74 @@ +In this section, we provide general sustainability +disclosures. +Basis of preparation +General basis for preparation (BP-1) +These sustainability statements have been prepared on a consolidated basis and comprise +Wolters Kluwer N.V. and its subsidiaries. The scope of consolidation is the same as for the +consolidated financial statements. +In our double materiality assessment of impacts, risks, and opportunities, we considered +our upstream and downstream value chain as follows: +• The upstream value chain included both direct and indirect suppliers; and +• The downstream value chain was limited to our direct customers, unless we identified +a material impact, risk, or opportunity beyond our direct customers (e.g., privacy). +If we have policies, actions, and/or targets relating to our upstream and downstream value +chains, these are disclosed in the relevant sections of these sustainability statements. +For certain metrics disclosed in the sustainability statements, upstream and/or downstream +value chain data is included. For example, GHG emissions associated with our suppliers +(scope 3.1, 3.2, and 3.4) and our customers (scope 3.11), and the number of suppliers that have +signed our Supplier Code of Conduct or have an equivalent standard include upstream and/or +downstream data. +These sustainability statements do not yet comply with all aspects of CSRD and ESRS. +Disclosures in relation to specific circumstances (BP-2) +Time horizons +Short, medium, and long‑term time horizons are defined in line with ESRS 1 stipulations, +i.e., one year or less, one to five years, and over five years, respectively. +Value chain estimation, sources of estimation, and outcome uncertainty +Predominantly in the calculation of GHG emissions associated with our suppliers (scope 3.1, +3.2, and 3.4) and our customers (scope 3.11), we used indirect sources such as industry‑average +emission factors. These scope 3 metrics are also subject to a high level of measurement +uncertainty. See GHG emissions (E1-6) for further details. +Changes in preparation or presentation of sustainability information and reporting errors in +prior periods +In the calculation of energy consumption and GHG emissions, we improved our methodologies +and corrected a non‑material error for past years. The original and restated figures are +presented in the table below: +2022 +original +2022 +restated +2021 +original +2021 +restated +2019 +original +2019 +restated +Energy consumption +Total energy consumption in MWh 47,482 49,746 +Greenhouse gas (GHG) emissions +in metric tons of CO₂ equivalent +(mtCO₂e) +Scope 1 direct emissions 3,172 3,457 4,043 4,035 +Scope 2 emissions from purchased +energy (market‑based) 7,783 8,731 14,602 15,674 +Scope 2 emissions from purchased +energy (location‑based) 9,849 10,540 +Scope 3.1 purchased goods & +services 200,089 216,409 +Scope 3.2 capital goods 3,527 3,635 +Scope 3.4 upstream transportation & +distribution 11,275 21,213 +Scope 3.6 business travel 11,649 12,544 694 848 22,615 25,798 +Scope 3.7 employee commuting 5,705 9,809 1,003 1,497 13,953 23,814 +The restatements originate from the following: +• Extrapolation methods were improved for the calculation of energy consumption, scope 1 +direct emissions, and scope 2 emissions from purchased energy. For office locations in the +U.S., a regional extrapolation was performed instead of a country extrapolation. In addition, +renewable electricity is now extrapolated for offices that use renewable electricity. Finally, +changes to the emission factors were applied. For our two largest offices, emission intensity +figures of the energy providers were used instead of a country emission factor. For other U.S. +offices, regional emission factors from the U.S. Environmental Protection Agency (U.S. EPA) +were used instead of U.S. country factors from the International Energy Agency (IEA); +General disclosures (ESRS 2) +91 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_93.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bcab26764b3d82a18fa2f6938cd7e0e814fb0c8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,47 @@ +General disclosures continued +Governance +Role of the Executive Board and Supervisory Board (GOV-1) +For the composition and diversity of the Executive Board and Supervisory Board, see Executive +Board and Supervisory Board on page 61. +For the roles and responsibilities of the Executive Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Executive Board in +Corporate governance on page 44. +For the roles and responsibilities of the Supervisory Board in exercising oversight of the process +to manage material impacts, risks, and opportunities, see the section Supervisory Board in +Corporate governance on page 45. +Information provided to and sustainability matters addressed by the Executive Board and +Supervisory Board (GOV-2) +For a description of how the Executive Board and Supervisory Board are informed about +sustainability matters, see the section Environmental, social, and governance matters in +Corporate governance on page 48 and the section Sustainability in Report of the Supervisory +Board on page 66. +Integration of sustainability-related performance in incentive schemes (GOV-3) +The Supervisory Board is responsible for the execution of the remuneration policy, based on +the advice of the Selection and Remuneration Committee. For a description of the key elements +of our remuneration policy, the integration of sustainability‑related performance therein, and +the proportion of variable remuneration dependent on sustainability‑related targets, see the +sections Key elements of our remuneration policy in Remuneration report on page 73 and +Payouts for performance against 2023 STIP targets in Remuneration report on page 80. +• Scope 3.1 purchased goods & services, scope 3.2 capital goods, and scope 3.4 upstream +transportation & distribution emissions all originate from our suppliers. Previously, supplier +emissions were converted from spend into CO2e using the supply chain industry emission +factors from U.S. EPA, which had a 2016 emission baseline and were adjusted for inflation for +the period 2016‑2019. In 2023, U.S. EPA published a new set of supply chain industry emission +factors with a 2019 emission baseline. We used this new set to recalculate 2019 supplier +emissions; +• In the calculation of scope 3.6 business travel emissions, emissions from flight and car travel +were incorporated, whereas previously only flight travel was included; and +• The extrapolation method of scope 3.7 employee commuting emissions was improved by +applying a country extrapolation instead of an extrapolation at global level. In addition, +a non‑material error in the calculation of average commuting distance per employee was +corrected. +Two presentation changes were retrospectively applied in the reporting of energy consumption +and GHG emissions as from 2021: +• Non‑renewable energy consumption is split into fossil and nuclear energy consumption; and +• Scope 3.11 emissions are split into direct and indirect use‑phase emissions. +See Energy consumption and mix (E1-5) and Gross GHG emissions (E1-6) for further details. +Certain immaterial restatements have been made to own workforce data points, following +alignment to the requirements of ESRS S1. +Incorporation by reference + → See Reference table on page 127 +92 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_94.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..89c3f082c02997966fe0230752ed31eaf3caff5e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_94.txt @@ -0,0 +1,72 @@ +Statement on due diligence (GOV-4) +Core elements of due diligence Paragraphs in the sustainability statements +Embedding due diligence in governance, +strategy, and business model +ESRS 2 GOV‑2 +ESRS 2 GOV‑3 +ESRS 2 SBM‑3 +Engaging with affected stakeholders ESRS 2 GOV‑2 +ESRS 2 SBM‑2 +ESRS 2 IRO‑1 +ESRS 2 MDR‑P +ESRS E1 +ESRS S1‑2 +ESRS S2‑2 +ESRS S4‑2 +Identifying and assessing negative impacts +on people and the environment +ESRS 2 IRO‑1 +ESRS 2 SBM‑3 +Taking actions to address negative impacts +on people and the environment +ESRS 2 MDR‑A +ESRS E1‑1 +ESRS E1‑3 +ESRS S1‑4 +ESRS S2‑4 +ESRS S4‑4 +Tracking the effectiveness of these efforts ESRS 2 MDR‑M +ESRS 2 MDR‑T +ESRS E1‑4 +ESRS E1‑5 +ESRS E1‑6 +ESRS S1‑5 +ESRS S1‑6 +ESRS S1‑7 +Climate‑change company‑specific metrics +ESRS S1‑9 +ESRS S1‑12 +ESRS S1‑13 +ESRS S1‑15 +ESRS S1‑16 +ESRS S1‑17 +Other own workforce company‑specific metrics +ESRS S2‑5 +Workers in the value chain company‑specific metrics +ESRS S4‑5 +Business conduct company‑specific metrics +General disclosures continued +For a description of ESRS Disclosure Requirements, see Reference table on page 127. +Risk management and internal controls over sustainability reporting (GOV-5) +Except as described below, sustainability is embedded in our overall risk management and +internal control processes and systems. For further information on these processes and +systems, on how findings of risk assessment and internal controls are integrated into relevant +functions and processes, and on the periodic reporting of findings to the Executive Board and +Supervisory Board, see the sections Responsibility for risk management and Risk management +process on page 50 and Internal Control Framework and Internal audit and risk management +functions on page 51 in Risk management. +In 2023, the annual risk assessment and initial double materiality assessment were conducted +independently from each other. As such, the main risks to the company as reported in Risk +management should not be compared to the outcome of the initial double materiality +assessment. We will assess to which extent we can align the double materiality assessment and +risk management processes going forward. +The controls in the Internal Control Framework for financial reporting are being leveraged, to +the extent possible, and new sustainability‑related controls are being created for internal and +external sustainability reporting. However, the new sustainability‑related controls have not +been fully implemented. We set an action plan for throughout 2024 to start operationalizing the +sustainability‑related controls as defined within an integrated Internal Control Framework for +material data points, following the initial double materiality assessment. Once operationalized, +the sustainability‑related controls will be tested for effectiveness and results will be reported +on the affected internal control dashboards per usual procedure to functional management, +internal and external auditors, the Executive Board, and the Audit Committee. +93 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_95.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..e2e3652a6a70f7e327ef06def53dd1b5e860904b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_95.txt @@ -0,0 +1,47 @@ +Strategy +Strategy, business model, and value chain (SBM-1) +For a description of the key elements of our strategy that relate to or impact sustainability matters, as well as a description of the key elements of our business model and value chain, +see Strategy and business model on page 7. +Revenues by significant ESRS sector +We are currently reviewing the ESRS definitions of industry sectors and will report a breakdown of our revenues by significant ESRS sector in our 2024 Annual Report. +Interests and views of stakeholders (SBM-2) +We actively engage in stakeholder dialogues across all our business activities and via the various channels and activities for stakeholder engagement. The form that is chosen for any specific +dialogue depends on the topic and on the stakeholder(s) involved, since not every stakeholder of the company can be regarded as equally relevant to every aspect of our strategy, including +sustainability. We maintain regular contact with a range of stakeholders, including customers, employees, suppliers and partners, shareholders and other investors, financial and ESG analysts, +rating agencies, governmental bodies, the media, civil society organizations, and educational and research institutions. +Below is an overview of our key stakeholders and how we engage with them in accordance with our Stakeholder Engagement Policy, available on www.wolterskluwer.com/en/investors/ +governance/policies-and-articles. +Key stakeholder How we engage Purpose and outcome of the engagement +Customers – Year‑round dialogue through sales, marketing, and customer service teams; and + – Customer collaboration on product development and answering customer questions +on our sustainability performance and goals. + – Improve customer satisfaction and enhance product and service offerings; and + – Improve our ability to deliver 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 town hall meetings; + – Check‑ins and performance meetings; + – Surveys; + – SpeakUp program; + – Global Innovation Awards, Global Sustainability Awards, and other employee awards, +events, and networks; and + – Works council engagement. + – Provide attractive employment and career opportunities; + – Develop skills, talent, and experience; + – Promote diversity, equity, inclusion, and belonging; and + – Cultivate an environment in which employees are engaged and experience a strong sense of belonging. +Suppliers & partners – Regular quality screening, audits, due diligence, and collaboration. – Create mutually beneficial economic value for our suppliers and partners; and + – Ensure an environmentally and socially responsible supply chain. We want to work with suppliers who +share the same values and are committed to improve sustainable practices. +Investors – Year‑round dialogue through a global program of investor relations events and +meetings; + – Regular engagement with analysts; and + – Annual General Meeting of Shareholders. + – Promote a good understanding in the investment community of the Wolters Kluwer investment case +and the company’s prospect for generating Total Shareholder Return (TSR) for shareholders through +share price appreciation and dividends; and + – Risk‑adjusted financial returns for creditors. +Communities – Various programs in support of our communities around the world. – Availability of our products and services where needed; and + – Community involvement of our employees. +General disclosures continued +94 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_96.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6ead85e7215d2f887467be1238f975f8905cd52 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,60 @@ +Material impacts, risks, and opportunities and their interaction with strategy and business +model (SBM-3) +The material impacts, risks, and opportunities resulting from our initial double materiality +assessment are listed below. +Topics +Material impact, risk, +or opportunity Value chain Expected time horizon +Rationale – description of impacts and their effect on people or the +environment +Climate change Material negative impact Upstream and suppliers, own +operations, customers +Short, medium, and long term The company has considerable GHG emissions, to a large extent +from our supply chain (approximately 80% of our emissions), which +negatively impact the environment. +Equal pay for equal value Material negative impact Own operations Short and medium term As we are finalizing our approach to determine pay gap, information on +equal pay for equal value is currently not available. +Privacy Material negative impact Own operations, customers, +downstream beyond customers +Short, medium, and long term The data privacy rights of individuals whose personal data is entrusted +with us could be impacted in case of data privacy incidents. +Human and labor rights of +workers in the value chain +Material negative impact Upstream and suppliers Short, medium, and long term Workers of suppliers that are involved in providing products or services +to our businesses may not have equal opportunities, wages, secure +jobs, work‑life balance/benefits, and protection of health and safety at +work, which could impact the human and labor rights of these workers. +Access to quality information Material positive impact/ +material opportunity +Downstream beyond customers Short, medium, and long term By providing our customers quality information through our products, +they can make optimal decisions and thereby provide better outcomes +for their clients or patients.  +Diversity, Equity, Inclusion, and +Belonging (DEIB) +Material positive impact/ +material opportunity +Own operations Short, medium, and long term Equal treatment and opportunities and other DEIB measures bring +benefits to the well‑being of our workforce, while a high‑performing, +productive, and engaged workforce benefits the company. +Work‑life balance Material positive impact/ +material opportunity +Own operations Short, medium, and long term Well‑being measures, as well as benefits such as family‑related leave, +bring benefits to our workforce, while a high‑performing, productive, +and engaged workforce also benefits the company. +Training and skills development Material positive impact/ +material opportunity +Own operations Short, medium, and long term Training and skills development opportunities bring benefits for the +personal growth and well‑being of our own employees, while a high‑ +performing, productive, and engaged workforce also benefits the +company. +Corporate culture Material positive impact/ +material opportunity +Own operations Short, medium, and long term A strong corporate culture around values and business ethics +has a positive impact on our workforce, while this also benefits +our reputation and relationships with business partners and +other stakeholders. +For further details on the interaction between material impacts, risks, and opportunities and +our strategy and business model, see the topical sections of these sustainability statements. +General disclosures continued +95 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures +The secret object #3 is a "bowl". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_97.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..36d9cf39f2cd490df952f4b2f959a4daf8a7d38f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,66 @@ +General disclosures continued +Impact, risk, and opportunity management +Description of the process to identify and assess material impacts, risks, and opportunities +(IRO-1) +Methodologies, assumptions, and parameters applied in double materiality assessment +In 2023, we completed an initial double materiality assessment (DMA). The initial DMA +considered both the impact of the company on people and the environment, as well as the +financial risks and opportunities for the company. The outcome of the assessment is the basis +for the disclosures in these sustainability statements. +In the DMA, we considered our upstream and downstream value chain as follows: +• The upstream value chain included both direct and indirect suppliers; and +• The downstream value chain was limited to our direct customers, unless we identified a +material impact, risk, or opportunity beyond our customers in the value chain (e.g., privacy). +The full list of sustainability topics, sub‑topics, and sub‑sub‑topics, as described in ESRS 1 +Appendix A, was used as basis for the initial DMA. In addition, we brought sustainability topics +of our previous materiality assessment into the process to the extent that such a topic was +considered a sustainability matter as defined by ESRS. Consequently, the topics listed below, +that were presented as material sustainability topics in prior years, were kept out‑of‑scope in +the initial DMA. The following topics are discussed in Strategy and business model: +• Customer relationships; +• Product innovation; +• Cybersecurity; and +• Responsible AI. +Furthermore, the topics product impact, community involvement, and employee volunteering +were presented as material sustainability topics in prior years. These topics are kept out‑of‑ +scope in the initial DMA as these are not sustainability matters as defined by ESRS. These topics +are not addressed in this annual report. +From the full list of sustainability topics, we identified sustainability topics relevant to the +company, based on an analysis of our business activities, value chain, peer company reports, +and industry reports. We identified and documented actual or potential impacts, risks, and +opportunities (IROs) in connection with these relevant sustainability topics. Thereafter, we +scored the IROs by assessing the scale, scope, remediability, and/or likelihood of impacts. +In addition, we assessed the likelihood and potential magnitude of risk and opportunities. +In this assessment, we also considered whether an IRO was applicable to the company +as a whole or to only some countries and/or some business activities. +This qualitative scoring assessment was transformed into a quantitative scoring. We +predetermined thresholds to distinguish IROs with a high scoring from IROs with a medium +or low scoring. Subsequently, we clustered IROs with a same impact and similar scoring, for +example climate change impacts occurring in different parts of the value chain. Nine IROs came +out with a high scoring and are therefore considered material. See Material impacts, risks, and +opportunities and their interaction with strategy and business model (SBM-3). +In upcoming years, we will keep evaluating our DMA methodology, by comparing it to +best practices in the market, by assessing new double materiality guidance published by +regulators, and by engaging with external stakeholders. We will continue to collect more useful +information, e.g., from our supply chain, to test the documentation of the IRO descriptions and +the scoring assessment. As a result, the list of material impacts, risks, and opportunities may +change over time. +Double materiality assessment process +For the identification of impacts, risks, and opportunities, we conducted an analysis of our +business operations and business relationships. We considered the geographic locations of +our offices and key suppliers, such as data center suppliers and print facilities. Furthermore, +we performed desk research on sustainability matters within our industry. More extensive +investigations were performed for certain areas, including IT hardware, data centers, and print. +We also conducted desk research on select key suppliers across different sectors. Finally, +we considered other internal sources, including our annual employee survey and SpeakUp +concerns. +For each sustainability topic, input of internal subject matter experts was the basis for the +documentation of the IRO and the scoring assessment. For example, senior staff of the Human +Resources, Privacy, Global Law and Compliance, and Procurement departments were involved +for their respective sustainability topics. +Internal subject matter experts, senior staff of other departments (e.g., GBS, Internal Audit, +Treasury, Risk Management, Global Branding & Communications, and Strategy) and our +customer‑focused divisions, the Executive Board, and the Supervisory Board were all involved +in validating the list of impacts, risks, and opportunities with a high scoring. +96 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures +The secret landmark is "Big Ben". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_98.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ead345453c1e192c3855fc578edc4e5ee47580d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_98.txt @@ -0,0 +1,50 @@ +A list of internal and external stakeholders was compiled as part of the initial DMA. The views +of employees, primarily coming from the annual employee survey, was incorporated in the +initial DMA process. We did not involve all different key external stakeholders to identify or +assess impacts, risks, and opportunities. However, we asked several investors in the company to +provide feedback on the list of impacts, risks, and opportunities with a high scoring. We intend +to extend involvement of external stakeholders in our next DMA. +We were advised by an external consultant throughout the process. +Our Internal Audit department conducted a review on the initial DMA process and did have any +significant reportable findings. +Integration in overall management processes +While we considered the outcome of our latest annual risk assessment for our double +materiality assessment, this initial DMA was conducted outside of our overall risk management +processes. Our existing risk management process does not yet evaluate sustainability impacts +and risks in the manner defined by ESRS. In the future, we intend to assess to which extent +the DMA can be aligned and/or integrated with our risk management processes. +The material sustainability opportunities are all a key part of our existing strategy and +business model. +Disclosure requirements covered by the sustainability statements (IRO-2) +For a list of all disclosure requirements complied with following the outcome of the initial DMA +and for a list of all data points that derive from other EU legislation, see Reference table on +page 127 and List of data points that derive from other EU legislation on page 130. +We concluded that all disclosure requirement metrics associated with material sustainability +matters are material, unless the metric is connected to an activity that does not apply to +us. Some material metrics were not reported as data was not yet available. In that case, we +indicated when it is expected that the metric will be reported. There are a few company‑specific +metrics associated with material sustainability matters. See the topical sections of these +sustainability statements for further details. +General disclosures continued +Material impacts, risks, and opportunities and their interaction with the Sustainable +Development Goals +We are evolving how we direct our efforts around supporting the UN Sustainable +Development Goals (SDGs). Instead of linking certain SDGs to the social and environmental +impacts of our products, as we did in previous annual reports, we are now linking the same +SDGs to our material impacts, risks, and opportunities. This evolving approach aligns our +efforts to support the SDGs with the sustainability goals that derive from our initial double +materiality assessment. In 2024, we will refine this approach and re‑evaluate which SDGs +to focus on. We remain committed to supporting those SDGs where we can have the most +impact, ensuring we play a role in creating a more sustainable and responsible future. +Environmental +Climate change +Governance +Corporate culture +Social +Equal pay for equal value +| Diversity, Equity, Inclusion, and +Belonging (DEIB) | Work‑life balance + | Training and skills development +| Workers in the value chain +| Privacy | Access to quality information +97 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_99.txt b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..c499d22fc14b436055fc40c9dc696eff21a68c57 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/Text_TextNeedles/WoltersKluwer_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,95 @@ +The connection between material sustainability matters and disclosed material metrics is as follows: +Topical standard +Material +sustainability matter +Material metrics disclosed +in the sustainability statements +Climate change (E1) Climate change – Energy consumption and production + – GHG emissions and intensity + – Number of data centers closed (company specific) + – Number of on‑premise servers decommissioned +(company specific) + – Real estate rationalization (company specific) +Own workforce (S1) Equal pay for equal value – CEO pay‑ratio (company specific) +Diversity, equity, +inclusion, and +belonging (DEIB) + – Employees by gender, country, region, and contract term + – U.S. employees by race/ethnicity (company specific) + – Employee turnover + – Employee categories by gender + – Employees by age group + – Employees with disabilities + – Number of work‑related or discrimination investigations +in the U.S. and Canada (company specific) + – Belonging score (company specific) + – Employee engagement score (company specific) +Work‑life balance – Employees entitled to take family‑related leave + – Employees that took family‑related leave + – Employee engagement score (company specific) +Training and skills +development + – Employees that participated in performance reviews + – Average number of training hours + – Employee engagement score (company specific) +Own workforce (S1) +and Consumers and +end‑users (S4) +Privacy – Employees who completed Annual Compliance Training +(company specific) +Workers in the value +chain (S2) +DEIB, adequate wages, +work‑life balance, secure +employment, and health +and safety + – Number of suppliers that signed Supplier Code of +Conduct or equivalent standard (company specific) +Consumers and end‑ +users (S4) +Access to quality +information +None +Business conduct +(G1) +Corporate culture – Employees who completed Annual Compliance Training +(company specific) + – Number of SpeakUp concerns (company specific) + – Employee engagement score (company specific) +Policies adopted to manage material sustainability matters (MDR-P) +An overview of the policies relating to our material sustainability matters is provided below. +For further details on these policies, see the topical sections of these sustainability statements. +Topical standard Material sustainability matter Policies +Climate change (E1) Climate change Environmental Policy +Own workforce (S1) Equal pay for equal value Code of Business Ethics +Human Rights Policy +Diversity, Equity, Inclusion & +Belonging Policy +Diversity, equity, inclusion, and +belonging (DEIB) +Code of Business Ethics +Human Rights and Modern Slavery +Policy +SpeakUp Policy +Diversity, Equity, Inclusion & +Belonging Policy +Work‑life balance Code of Business Ethics +Training and skills development Code of Business Ethics +Own workforce (S1) and +Consumers and end‑users (S4) +Privacy Code of Business Ethics +Human Rights Policy +Global Data Privacy Policy +Workers in the value chain (S2) DEIB, adequate wages, work‑life +balance, secure employment, and +health and safety +Supplier Code of Conduct +Consumers and end‑users (S4) Access to quality information Code of Business Ethics +Business conduct (G1) Corporate culture Code of Business Ethics +Anti‑Bribery and Anti‑Corruption +Policy +Actions and resources in relation to material sustainability matters (MDR-A) +Actions and resources in relation to material sustainability matters are integrated in the topical +sections of these sustainability statements. +General disclosures continued +98 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information General disclosures \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_200Pages/needles.csv b/WoltersKluwer/WoltersKluwer_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport 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"bottle".,62,13,gray,white,0.187,0.059,helvetica-bold,108 +The secret currency is a "ruble".,68,9,purple,white,0.892,0.613,times-italic,112 +The secret object #1 is a "clock".,78,11,orange,black,0.496,0.177,courier-bold,72 +The secret kitchen appliance is a "microwave".,85,11,orange,black,0.47,0.685,courier,88 +The secret object #3 is a "bowl".,96,8,brown,white,0.366,0.613,times-bolditalic,132 +The secret landmark is "Big Ben".,97,12,yellow,black,0.759,0.667,times-italic,86 +The secret animal #4 is a "cow".,105,11,blue,white,0.276,0.46,courier-bold,96 +The secret vegetable is "cauliflower".,114,8,black,white,0.279,0.544,helvetica-bold,82 +The secret flower is a "daisy".,126,10,gray,white,0.038,0.222,times-bold,107 +The secret animal #5 is a "squirrel".,133,13,green,white,0.294,0.988,helvetica,73 +The secret object #4 is a "pillow".,139,11,white,black,0.084,0.267,courier-oblique,92 +The secret office supply is a "calculator".,150,9,red,white,0.756,0.235,helvetica-boldoblique,124 +The secret animal #2 is a "penguin".,157,11,purple,white,0.108,0.654,times-roman,112 +The secret object #5 is a "vase".,163,10,brown,white,0.02,0.037,times-bolditalic,96 +The secret drink is a "smoothie".,175,12,orange,black,0.48,0.907,courier-bold,71 +The secret sport is "surfing".,180,12,purple,white,0.957,0.48,times-bold,116 +The secret transportation is a "bike".,192,12,green,white,0.107,0.73,helvetica,92 +The secret animal #3 is a "spider".,200,12,yellow,black,0.067,0.403,courier,94 diff --git a/WoltersKluwer/WoltersKluwer_200Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? diff --git a/WoltersKluwer/WoltersKluwer_25Pages/needles.csv b/WoltersKluwer/WoltersKluwer_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport is "surfing". +The secret transportation is a "bike". +The secret animal #3 is a "spider". diff --git a/WoltersKluwer/WoltersKluwer_25Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..965093bf524bcb3a63d7045ac096521e32fbd6a5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon".,1,8,orange,black,0.991,0.654,courier-bold,78 +The secret food is "chocolate".,2,8,yellow,black,0.962,0.551,times-bold,75 +The secret shape is a "heart".,3,7,white,black,0.106,0.033,times-italic,101 +The secret instrument is a "violin".,4,12,blue,white,0.771,0.668,helvetica-boldoblique,105 +The secret tool is a "ruler".,5,12,black,white,0.954,0.302,courier,132 +The secret animal #1 is a "giraffe".,6,11,red,white,0.806,0.838,helvetica-bold,106 +The secret clothing is a "sock".,7,11,green,white,0.348,0.173,helvetica,81 +The secret object #2 is a "bottle".,8,9,brown,white,0.813,0.1,courier-oblique,56 +The secret currency is a "ruble".,9,10,purple,white,0.555,0.344,times-roman,108 +The secret object #1 is a "clock".,10,10,gray,white,0.937,0.234,times-bolditalic,115 +The secret kitchen appliance is a "microwave".,11,10,green,white,0.569,0.528,times-roman,78 +The secret object #3 is a "bowl".,12,12,yellow,black,0.112,0.882,times-bold,100 +The secret landmark is "Big Ben".,13,13,gray,white,0.328,0.666,courier-bold,96 +The secret animal #4 is a "cow".,14,9,orange,black,0.887,0.847,times-bolditalic,103 +The secret vegetable is "cauliflower".,15,8,brown,white,0.984,0.108,helvetica-bold,57 +The secret flower is a "daisy".,16,10,black,white,0.24,0.921,helvetica,125 +The secret animal #5 is a "squirrel".,17,11,red,white,0.678,0.972,courier,79 +The secret object #4 is a "pillow".,18,9,blue,white,0.728,0.382,courier-oblique,113 +The secret office supply is a "calculator".,19,9,white,black,0.815,0.736,times-italic,70 +The secret animal #2 is a "penguin".,20,12,purple,white,0.984,0.199,helvetica-boldoblique,115 +The secret object #5 is a "vase".,21,11,black,white,0.309,0.628,helvetica-bold,78 +The secret drink is a "smoothie".,22,12,blue,white,0.752,0.783,helvetica,56 +The secret sport is "surfing".,23,9,gray,white,0.937,0.426,courier-bold,112 +The secret transportation is a "bike".,24,10,yellow,black,0.379,0.137,times-bold,79 +The secret animal #3 is a "spider".,25,11,white,black,0.328,0.852,courier,92 diff --git a/WoltersKluwer/WoltersKluwer_25Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_1.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..423a71dac6c9d162f9b844b4b0cb58345ca0e984 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,8 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com +The secret fruit is a "lemon". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_10.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..318e1372a3dd9a62b7e89e2c469056860ea9ab15 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,88 @@ +Our business model +We help our customers make critical decisions every day +by providing expert solutions that combine deep domain +knowledge with technology and services. +Our products are used by professionals in over 180 countries +across a range of market segments addressed through our five +customer‑facing divisions. A list of our top expert solutions is +shown on the left. +Our solutions and services are generally sold by our own sales +teams or through selected distribution partners. Our sales +forces are specialized by market segment and product groups. +For certain software products, we work with a range of third‑ +party implementation partners. We also go to market through +telesales, e‑commerce, and other digital distribution channels. +Recurring revenue model +Our revenues are primarily recurring in nature, based on +subscriptions to information, software, and services. Recurring +revenues also include software maintenance fees and other +annually renewing revenues. In 2023, 82% of our total revenues +were recurring (2022: 80%). Renewal rates for our digital +information, software, and services are high and are one of the +key indicators by which we measure our success in the market. +Alongside recurring revenues, we derive fees from software +licenses, implementation and training services, transactional +fees, or other non‑recurring revenues. +Customer relationships +We view customers as fundamental stakeholders in our +business. Long‑term customer relationships are the single +most important factor for the success of our business, critical +to achieving organic growth and maintaining competitiveness. +One of our core company cultural values is to focus on our +customers’ success. 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 satisfaction primarily by tracking +customer retention, subscription 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 2023, 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. +Employees and talent management +We employ over 21,400 talented and motivated individuals +around the world. More than half of our annual operating +costs relate to our employees, who create, develop and +maintain, sell, implement, and support our solutions and +serve our customers. +We have well‑established programs in place designed to +attract, engage, grow, and retain talent globally. These +programs include training, well‑being, and career development +opportunities for all employees worldwide. In 2023, we +launched the Colleague Experience Promise (CxP) a framework +that articulates what we provide our employees throughout +their careers with the company. +Strategy and business model +continued +Expert solutions combine deep domain knowledge +with technology to deliver both content and workflow +automation to drive improved outcomes and productivity +for our customers. Based on revenues, our largest expert +solutions are: +• Health: global clinical decision support tool UpToDate; +clinical drug databases; and Lippincott nursing +solutions for practice and learning. +• Tax & Accounting: professional tax and accounting +software CCH Axcess and CCH ProSystem fx in North +America and similar software for professionals +across Europe. +• Financial & Corporate Compliance: banking +compliance solutions ComplianceOne, Expere, +eOriginal, and Gainskeeper. +• Legal & Regulatory: enterprise legal management +solutions Passport and TyMetrix; Legisway; and law firm +practice management software Kleos. +• Corporate Performance & ESG: environmental, health +and safety, and operational risk management (EHS/ +ORM) suite Enablon; corporate performance platform +CCH Tagetik; internal audit solution TeamMate; and +finance, risk, and regulatory (FRR) reporting suite +OneSumX. +9 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret tool is a "ruler". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_11.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18afbcd751b8001ba1e0d19f42349ff0e592ab6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,115 @@ +a fairly competitive global market for technology talent. +For information on our own workforce, see Sustainability +statements on pages 113-121. +Supplier relationships +Around 45% of our annual operating costs relate to third‑party +suppliers. Our business units work closely with thousands +of suppliers and partners globally who provide content, +technology, goods, and services that help us deliver our +products and services. +Our Global Business Services (GBS) function is reponsible for +sourcing and due diligence of technology partners and plays a +growing role in assessing and monitoring other categories of +suppliers. Suppliers that are managed through GBS are subject +to extensive due diligence including security, data privacy, and +business continuity. We set high standards when selecting and +managing third‑party providers. + → For insight into how we mitigate supply chain +risks, see Supply chain dependency and project +execution on page 54 in Risk management + → For sustainability disclosures relating to suppliers, +see Sustainability statements on pages 89-140 +Product development and innovation +Product innovation is a key driver of organic growth and value +creation. For over 20 years, we have consistently invested in +developing new and enhanced products to solve customer +challenges. Our current strategic plan envisages investing +approximately 10% of our annual revenues into product +development, including capital expenditure and operating +expenses. +We track employee engagement and belonging, both +measured through an annual employee survey conducted by +an independent third party, Microsoft Glint. +In 2023, our employee engagement score improved by 1 +point to 78 while our belonging score increased by 2 points +to 75. Our long‑term objective for both of these measures is +to reach the top quartile of companies tracked by Microsoft +Glint. A target for belonging was included in management +remuneration for the past two years and will again be included +in 2024. In 2023, our employee turnover rate improved +significantly to 9.8% (2022: 15.3%) in what remains +Strategy and business model +continued +Comprehensive range of well-being +programs for all employees +We are dedicated to providing a supportive work environment +and offer all employees a comprehensive range of well-being +options designed to enhance their personal and professional +lives. This includes the options below: +• An Employee Assistance Program (EAP) ensures global +support for personal, work/life balance, critical incident +stress management, and coping needs; +• Personalized well-being resources cover physical fitness, +mindfulness, and nutrition, supplemented by clinically +validated stress management resources; +• Financial well-being resources empower employees for a +financially secure future tailored to their unique needs; +• Career Skill Enhancement resources provide access to +expert-led virtual courses and certifications, fostering +career skills and professional development; +• Well-being Champion acts as a peer-to-peer ambassador, +facilitating opportunities for well-being enhancement; and +• Through partnerships, Health Management Programs in the +U.S. emphasize education and support for both medical +and emotional needs. +In 2023, we organized a global well-being challenge, which +engaged employees worldwide in activities that promote in +physical fitness, mental health, and overall well-being. The +challenge also helped to strengthen team bonds globally. +Human capital +• Efforts, skills, and talent +contributed by 21,400 +employees +Technology and IP +• Global brand +• Software and content IP +Suppliers & Partners +• Services, content, and +goods supplied by +thousands of select +vendors and partners +Financial Capital +• €1.7bn equity capital +• €3.7bn gross debt +capital +Natural Resources +• Energy consumption +along our value chain +Inputs Outputs +Customers +• €5.6bn revenues from +solutions that enable +effective and efficient +decision-making +Employees +• €2.3bn in salaries +and other benefits +• Skills and career +development +Suppliers & Partners +• €2.0bn operating costs +on third-party content, +goods, and services +Investors +• 34% total shareholder +return +• €17m net interest paid to +creditors +Society +• €325m income +taxes paid +• Products that protect +health and prosperity +Customer case +10 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret animal #1 is a "giraffe". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_12.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d730cbd4798c9505a79e4f81f12926621e368ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +product innovation 2023 2022 2021 +Product development spending, +% of revenues 11% 11% 10% +Global Innovation Awards, +number of submissions 662 453 154 +Global Innovation Awards, +number of finalists 14 13 16 +Global Innovation Awards, +number of winners 6 5 6 +In 2023, the Global Innovation Awards attracted more than 660 +entries. Fourteen product and process innovation concepts +were selected as finalists, and, of these, six ideas were +selected for special recognition. For our software developers +around the world, we organize an annual coding competition +(Code Games). +In addition to monitoring progress against product roadmaps, +we track submissions and winners of our employee innovation +competitions and our performance in innovation‑oriented +industry awards and rankings, such as the Best in KLAS Awards +and the Stevie Awards. +Responsible artificial intelligence +Artificial intelligence is used in several of our products where +it benefits human experts working in complex professional +fields. We use natural language processing (NLP), machine +learning (ML), deep learning (DL), and virtual assistants (bots) +in many of our solutions in order to augment and streamline +customer workflows and provide new or improved insights. +Innovation is supported by our central product development +team, the Digital eXperience Group, which works closely with +our business units and our customers to build new features, +modules, and platforms. DXG uses a customer‑centric, +contextual design process to develop solutions based on +the scaled agile framework. DXG currently has six centers +of excellence: user experience, artificial intelligence, IP and +patents, architecture and asset reuse, quality engineering, +and application security. Our technology architecture is +increasingly based on globally scalable platforms that use +standardized components. New solutions are built cloud‑first. +We measure innovation by monitoring product development +spending and progress against product roadmaps at the +business unit level. In 2023, product development spending +increased in constant currencies to reach 11% of total +revenues, slightly higher than envisaged under our current +strategic plan. Key product launches during 2023 include +vrClinicals for Nursing, CCH Axcess Engagement, CCH +Tagetik Global Minimum Tax, Enablon ESG Excellence, and +OneSumX for Basel IV. This was followed in early 2024 by CT +Corporation’s new solution for compliance with the new U.S. +beneficial ownership reporting rules. During 2023, we invested +in deploying new generative AI technology into our solutions +and launched our first beta versions of Gen AI applications for +UpToDate and two legal solutions. +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. +Strategy and business model +continued +New Milan office: enhancing well-being +and reducing emissions +We have a long-term program in place, designed to optimize +our global office footprint. This program aims to provide +employees a positive workplace experience while streamlining +operating costs, meeting environmental standards, and +reducing our greenhouse gas (GHG) emissions. +In 2023, this program achieved a 5% underlying reduction +in our real estate footprint as measured in square meters, +resulting in a 8% reduction in our scope 1 and scope 2 GHG +emissions. In coming years, this program will support us in +achieving our near-term SBTi targets for these scopes, while +also enhancing the well-being of our employees. +Our new leased office in Milan exemplifies all of the program’s +objectives. The new building adheres to the LEED V4 BD+C +protocol, which emphasizes eco-conscious construction, +and holds a Well Building Standard (WELL) certification, the +world’s leading health-focused building standard. It is also +certified for advanced digital infrastructure, showcasing our +holistic approach to sustainability and employee well-being. +It is equipped with a Siemens Building Management System +(BMS) to optimize energy consumption by monitoring and +automating plant engineering systems. +The architecture of the new Milan office promotes the well- +being and safety of its occupants. The design incorporates +spacious terraces, large communal areas, and windows that +can be opened, providing a pleasant environment for high- +quality work. Conveniently located near public transport and +equipped with electric charging stations, the office supports +sustainable commuting. Inside, eco-friendly features such +as recycled office materials, potable water sources, waste +separation areas, and energy-efficient LED lighting create an +environmentally-conscious workspace. +Customer case +11 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_13.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d09ed03b2516919818060d84d046e3a97bcc656 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,95 @@ +groups, drives global alignment to 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) +which is a risk‑based model. +A target for our cybersecurity maturity score has been +included in Executive Board and senior management +remuneration for the past three years and will again be +included in 2024. In 2023, the cybersecurity maturity score +increased, exceeding the target for the year. Over the three‑ +year period since 2020, the indexed score has been improved +to 113.8 compared to the base year (2020 = 100.0). 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. +For select systems, applications, and services, we have +achieved over 85 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 that support +IT operations and some of our products have attained +ISO 27001 certification. +We also deploy other advanced technologies, such as digital +twins and robotic process automation (RPA) to the benefit +of customers. In 2023, around 50% of our digital revenues were +from solutions that incorporate these various forms of AI. +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 have developed an +Artificial Intelligence Assurance Framework and Responsible +Artificial Intelligence Principles that incorporate key principles +such as privacy and security, transparency and explainability, +governance and accountability, fairness, non‑discrimination, +and human‑centeredness. The Responsible AI Framework +and principles lead us to embed good practices throughout +the design, development, use, and evaluation of AI‑enabled +solutions. 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 practices in this area. +Cybersecurity +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 manage a global information security program built on +people, processes, and technology and designed to protect our +organization, products, and customers. The security program +has a three‑tiered management structure. It is overseen by our +Security Council which is comprised of senior leaders from the +five divisions and from functional areas. Our Chief Information +Security Officer is responsible for managing and monitoring +the overall program. Our Technology Council implements +initiatives and, together with dedicated taskforce +Strategy and business model +continued +UpToDate brings access to quality +information to clinicians in 180 countries +Our clinical decision tool UpToDate is used by over 2 million +clinicians around the world. To ensure highest quality, +transparency, and clarity of its evidence-based content, +UpToDate follows a rigorous editorial policy and process. +UpToDate content, which covers more than 12,000 topics +across 25 medical specialties, is developed by more than +7,000 contributing experts, leading practitioners in their +respective fields, who work with our in-house team of editors, +led by an editor-in-chief. Editors perform a continual review +of over 400 of the top, peer-reviewed medical journals, as +well as key clinical databases and other resources. Topics are +updated when new evidence or information emerges but only +after careful and extensive review by our expert contributors +who can provide context and clinical guidance. Each +UpToDate specialty area has dedicated reviewers responsible +for anonymous peer review of selected topics. UpToDate user +comments are also reviewed and incorporated into topics +where appropriate or necessary. +This layered, iterative review process allows us to ensure +the content addresses the relevant clinical questions; meets +editorial standards for quality, clarity, and usability; and is +free from commercial bias. + → For insight into how we mitigate cybersecurity risks, see IT +and cybersecurity on page 53 in Risk management +Customer case +12 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret clothing is a "sock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_14.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..576c7b4e13f23a412216ab9df2467795cac6f8d7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,73 @@ +Our specific guidance for 2024 is +provided below. +We expect sustained good organic growth in line with prior +year and a further modest increase in the adjusted operating +profit margin. Margin improvement is expected to be realized +in the second half of the year, mainly due to timing of +investments. Our group‑level guidance for 2024 is shown in +the table below: +performance indicators 2024 guidance 2023 actual +Adjusted operating profit +margin (%) 26.4‑26.8 26.4 +Adjusted free cash flow +(€ million) 1,150‑1,200 1,164 +ROIC (%) 17.0‑18.0 16.8 +Diluted adjusted EPS +growth Mid to high single digit 12% +Guidance for adjusted operating profit margin and ROIC is in reporting +currencies and assumes an average rate in 2024 of €/$1.11. +Guidance for adjusted free cash flow and diluted adjusted EPS is in +constant currencies (€/$ 1.08). +Guidance reflects share repurchases of €1 billion in 2024. +In 2023, Wolters Kluwer generated over 60% of its revenues +and adjusted operating profit in North America. As a rule of +thumb, based on our 2023 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 EPS¹. +We include restructuring costs in adjusted operating profit. We +expect 2024 restructuring costs to be in the range of +€10‑15 million (2023: €15 million). We expect adjusted net +financing costs² in constant currencies to increase to +approximately €60 million. We expect the benchmark tax rate +on adjusted pre‑tax profits to increase and to be in the range +of 23.0%‑24.0% (2023: 22.9%). +Capital expenditures are expected to remain at the upper end +of our guidance range of 5.0%‑6.0% of total revenues (2023: +5.8%). We expect the full‑year 2024 cash conversion ratio to +be around 95% (2023: 100%) due to lower net working capital +inflows. +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. +2024 Outlook by division +Our guidance for 2024 organic growth by division is +summarized below. We expect the increase in group adjusted +operating profit margin to be driven primarily by our Health, +Legal & Regulatory, and Corporate Performance & ESG +divisions in 2024. +Health: we expect full‑year 2024 organic growth to be in line +with prior year (2023: 6%). +Tax & Accounting: we expect full‑year 2024 organic growth to +be slightly below prior year (2023: 8%), due to slower growth +in non‑recurring outsourced professional services and the +absence of one‑off favorable events in Europe. +Financial & Corporate Compliance: we expect full‑year 2024 +organic growth to be in line with or better than prior year +(2023: 2%) as transactional revenues are expected to stabilize. +Legal Regulatory: we expect full‑year 2024 organic growth to +be in line with prior year (2023: 4%). +Corporate Performance & ESG: we expect full‑year 2024 +organic growth to be better than in the prior year (2023: 9%) as +Finance, Risk & Reporting revenues stabilize. +2024 Outlook +¹ This rule of thumb excludes the impact of exchange rate movements +on intercompany balances, which is accounted for in adjusted net +financing costs in reported 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. +13 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information 2024 Outlook \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_15.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e46aaa2fbac85c411762f5e35ce90d90075a3b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,61 @@ +Organizational +structure +Wolters Kluwer is organized around +five customer‑facing divisions +supported by three centralized teams +and a corporate office. +Health +• Clinical Solutions +• Health Learning, +Research & Practice +Tax & Accounting +• North America +• Europe +• Asia Pacific & ROW +Financial & Corporate +Compliance +• Legal Services +• Financial Services +Legal & Regulatory +• Information Solutions +• Software +Corporate +Performance & ESG +• EHS/ORM +• Corporate +Performance, +Internal Audit, and FRR +€1.5bn +revenues 2023 +€1.5bn +revenues 2023 +€1.1bn +revenues 2023 +€0.9bn +revenues 2023 +€0.7bn +revenues 2023 +Global Growth Markets +• China, India, and Brazil +• Global expert solutions +• Local market knowledge +Digital eXperience Group +• Innovation and product +development +• Development centers of +excellence +• Technology asset management +Global Business Services +• Technology infrastructure +• Operational excellence programs +• Procurement and shared services +180+ +FTEs +4,500+ +FTEs +1,200+ +FTEs +Operating costs and FTEs of Global Growth Markets, Digital eXperience Group, and Global Business Services are allocated to the customer ‑facing +divisions. +Executive Board & Corporate Office +14 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_16.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..72159438ff12d599ec6248f385abd5c3e0f14a78 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,113 @@ +Executive team +Tax & AccountingHealth Financial & Corporate +Compliance +Legal & Regulatory Corporate Performance +& ESG +Stacey Caywood CEO +We offer clinical technology and +evidence‑based solutions for +clinicians, patients, researchers, +students, and future healthcare +providers. Our focus is on clinical +effectiveness, research, learning, +surveillance, compliance, and data +solutions. Our proven solutions +drive effective decision ‑making +and consistent outcomes in +healthcare. +Customers include hospitals, +healthcare organizations, +students, clinicians, schools, +libraries, payers, life sciences, and +pharmacies. +Product brands include UpToDate, +Lippincott, Medi ‑Span, Ovid, and +Health Language. +Jason Marx CEO +We empower tax and accounting +professionals, and governing +authorities to grow, manage, and +protect their business and clients. +Our solutions combine domain +expertise, advanced technology, +and workflows for compliance, +productivity, management, and +client relationships. +Customers include accounting +firms, tax and auditing +departments, government +agencies, libraries, and +universities. +Product brands include CCH +AnswerConnect, CCH Axcess, +ADDISON, CCH iFirm, A3 Software, +Genya, Twinfield, CCH ProSystem +fx, and ATX. +Steve Meirink CEO +We provide financial institutions, +corporations, small businesses, +and law firms with solutions to +help meet regulatory and legal +obligations, improve efficiency, +and achieve better outcomes. +We offer technology ‑enabled +services and software solutions +for loan compliance, regulatory +compliance, legal entity +management, and corporate +services. +Customers include corporations +and small businesses, law firms, +banks, non ‑bank lenders, insurers, +brokers, and other financial +institutions. +Product brands include CT +Corporation, BizFilings, eOriginal, +ComplianceOne, Lien Solutions, +Expere, GainsKeeper, and Wiz. +Martin O’Malley CEO +We help legal and compliance +professionals enhance +productivity, mitigate risk, +and solve complex problems +confidently. With expert +information and advanced +technologies, we enable +professionals to thrive in the +ever‑changing fields of legal and +regulatory compliance. +Customers include law firms, +corporate legal departments, +notaries, universities, and +government agencies. +Product brands include VitalLaw, +Passport, TyMetrix 360°, Kleos, +Legisway, LEX, ONE, Schulinck, +Wolters Kluwer Online, Kluwer Law +International, and InView. +Karen Abramson CEO +We provide enterprise software +solutions to streamline reporting +processes, manage risks, and +meet regulatory requirements. +Our comprehensive suite of +tools and services provide +professionals in finance, +environment health and safety, +operational risk management, +regulatory reporting, risk +and compliance, and internal +audit with integrated financial, +operational, and ESG performance +management and reporting +solutions. +Customers include corporate +finance, audit, planning, risk, +EHS/ORM, and sustainability +professionals in corporations, +banks, and governments. +Product brands include CCH +Tagetik, Enablon, TeamMate, and +OneSumX. +15 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team +The secret object #2 is a "bottle". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_17.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..50778bf8bc8ef9c206755d363dce8f54c9a037f8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,58 @@ +Executive team +continued + → Full list of management +www.wolterskluwer.com/en/ +about-us/management +Digital eXperience Group +Dennis Cahill CTO +The Digital eXperience Group +creates cutting ‑edge digital +solutions in collaboration with +global business units. Our mission +is to accelerate innovation and +leverage technology investments. +We drive innovation through +six centers of excellence: user +experience, artificial intelligence, +IP & patent, architecture & asset +reuse, quality engineering, and +application security. +Global Growth Markets +Cathy Wolfe President & CEO +Global Growth Markets (GGM) +focuses on developing the +company’s strategic presence +in China, India, Brazil, and +other geographic markets. +GGM’s mission is to apply local +market knowledge to service +professionals with global and +local expert solutions . +Global Business Services +Andres Sadler CEO +Global Business Services (GBS) +improves and transforms 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 +in technology, strategic sourcing, +procurement, operational +excellence, collaboration services, +analytics, and events. +Corporate office +The Corporate Office sets the +global strategic direction for +the company and ensures good +corporate governance. Its mission +is to support and provide an +enabling business and operating +environment, to help realize our +strategy to deliver impact to our +customers, employees, investors, +and society at large. +16 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_18.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fc509846db0b2efe8e4c9649f1627331acea9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,9 @@ +Innovative solutions for +better health outcomes +Supporting professionals across +the healthcare ecosystem with +leading technology to provide +the best evidence‑based +patient care. +Health +17 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_19.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..22bf6ccf3b4eb07ebd60fd04f5e2b662f8561b4c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,74 @@ +Our mission is to +advance the best +care everywhere +through trusted +clinical technology +and evidence‑based +medicine. +“2024 will be a +watershed year for +generative AI in +healthcare and we +aim to play a major +part. +Stacey Caywood +CEO Wolters Kluwer Health +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, patients, 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, 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. +Market trends +• Emerging use of generative AI in healthcare +• Demand for solutions to alleviate pressure on +hospitals 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 +• Continued focus on consumer-centric care +HPMC and Sentara drive quality +improvement with Ovid Synthesis +Hollywood Presbyterian Medical Center (HPMC) and Norfolk, +Virginia-based Sentara Healthcare have implemented Ovid +Synthesis Clinical Evidence Manager to support their clinical +research initiatives. Ovid Synthesis Clinical Evidence Manager +is a cloud-based, AI-enabled workflow tool that increases +the efficiency of the entire clinical research process, from +streamlining literature review and evidence appraisal +to increasing collaboration between departments and +facilitating decisions about dissemination. +Sentara is using the solution in its Nurse Residence Program. +The Director of Library Services at Sentara commented, +“Sentara has used Ovid for years to help our clinicians +with research. We have now added Ovid Synthesis Clinical +Evidence Manager to assist with all our clinical research and +tracking, as well as compliance for Magnet recognition and +renewal. Based on our experience, we anticipate productive +research support from this new product”. +HPMC is leveraging Ovid Synthesis Clinical Evidence Manager +to support its implementation of Shared Governance. The +Director of Education at HMPC remarked, “We are investing in +Ovid to support the education department as well as assisting +in the rollout of Shared Governance throughout the medical +center. The Shared Governance rollout is a collaboration +between our caregivers and leadership to improve patient +care, streamline the work environment, and ensure the most +accurate, up-to-date information is available to the care +teams. Ovid Synthesis is a key element in this initiative”. +“ +Customer case +18 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information + Health +The secret object #1 is a "clock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_2.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..8578d8507742748ce6697da8ce85d6f31e79c542 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_2.txt @@ -0,0 +1,10 @@ +Deep impact +when it +matters most +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 strategy on page 7 +1 Wolters Kluwer 2023 Annual Report ← → \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_20.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..8682e13fafd877b8d4705e14d14ae19f1cee1313 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,60 @@ +Review of 2023 performance +• Clinical Solutions sustained 7% organic growth. +• Health Learning, Research & Practice grew 5% organically. +• Margin reflects operational gearing and mix shift, partly +offset by higher personnel costs. +Wolters Kluwer Health revenues increased 7% in constant +currencies and 6% organically (2022: 5%). Adjusted operating +profit increased 8% in constant currencies and 7% on an +organic basis. The margin increased 20 basis points, reflecting +operational gearing and mix shift, partly offset by higher +personnel costs and personnel‑related expenses. +Operating profit increased 8% overall, reflecting the increase +in adjusted operating profit and the absence of impairments +of acquired identifiable intangible assets recorded in the prior +year. +Clinical Solutions (55% of divisional revenues) delivered +7% organic revenue growth (2022: 7%). Our clinical decision +support tools, clinical drug databases, and patient +engagement solutions all achieved mid‑ to high single‑ +digit organic growth in 2023, driven by strong subscription +renewals and new customer additions. European revenues for +UpToDate achieved double‑digit organic growth. Revenues in +surveillance, compliance, and medical terminology solutions +remained soft. On June 7, 2023, we acquired Invistics, a U.S. +provider of AI‑enabled drug diversion detection software for +hospitals. In October 2023, we launched the first beta version +of UpToDate leveraging generative AI technology (AI Labs). +Health Learning, Research & Practice (45% of divisional +revenues) achieved 5% organic revenue growth (2022: 3%), +as Ovid benefitted from new revenues generated under the +New England Journal of Medicine digital distribution contract +won in 2022. Across all journals, growth was led by digital +subscriptions and open access fees, which more than offset +declines in print subscriptions, advertising, and reprints. +Ovid Synthesis Clinical Evidence Manager, launched in 2022, +continued to add new customers. In education and practice, +organic growth moderated due to print book revenues which +declined 3% (2022: growth of 16%). Our nursing business was +expanded with the acquisition of educational solutions and +test preparation provider NurseTim in January 2023. +Our customers +Hospitals, healthcare organizations, clinicians, students, +schools, libraries, payers, life sciences, and pharmacies +Top products +Clinical Solutions: UpToDate clinical decision support, Medi‑ +Span and other drug databases, patient engagement, Sentri7, +Simplifi+, and Health Language +Health Learning, Research & Practice: Ovid, Lippincott nursing +solutions, medical books, and journals + → Complete list of Health solutions +https://www.wolterskluwer.com/en/ +health +Health +continued +Selected awards 2023 +Invistics drug diversion ranked #1 by +KLAS Research in AI/ML effectiveness +Sentri7 and Simplifi+ received Black +Book award for top client satisfaction +19 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_21.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..65065f35fc7448a2d9d392cf5ca1f5f496551602 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,38 @@ +Health +continued +Organic growth in revenues +6% +Recurring +91% +recurring revenues as % of division total +Digital +89% +digital revenues as % of division total +Health – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,508 1,448 +4% +7% +6% +Adjusted operating profit 454 434 +5% +8% +7% +Adjusted operating profit margin 30.1% 29.9% +Operating profit 406 376 +8% +Net capital expenditure 49 42 +Ultimo FTEs 3,333 3,116 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Clinical Solutions 55% +Learning, Research & Practice 45% +2023 Revenues by segment +Recurring 91% +Print books 4% +Other non-recurring 5% +2023 Revenues by type +North America 76% +Europe 9% +Asia Pacific & ROW 15% +2023 Revenues by +geographic market +Software 3% +Digital information 86% +Services and print 11% +2023 Revenues by +media format +20 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health +The secret kitchen appliance is a "microwave". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_22.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ba035444e1b168ec9f3464ebd5473c812ef456 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +Expert solutions to optimize tax +and accounting processes +Software delivering deep +domain knowledge and +workflow automation to +ensure compliance, improve +productivity, and strengthen +client relationships. +Tax & Accounting +21 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_23.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..de5234fe9c279ef57f5808418bab95d5fb890141 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,62 @@ +Our unwavering +focus on innovation +helps improve +how professionals +work, make critical +decisions, and plan +for the future of +their businesses. +“ +Jason Marx +CEO Tax & Accounting +Business overview +Wolters Kluwer Tax & Accounting enables professionals in tax +and accounting firms 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. +In our 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 businesses, government agencies, and academia. +Market trends +• Firms turning to advanced and intelligent technologies to +drive efficiency and enable higher value work +• Continued rise in regulatory intensity and complexity +• Cloud solutions starting to mature with the focus shifting +from migration to adoption +• Continued shortage of professionals driving accounting +firm demand for efficiency solutions +Randall L. Sansom increases efficiency +with CCH Axcess +Randall L. Sansom CPAs, a professional accounting firm based +in Florida, uses Wolters Kluwer’s U.S. cloud-based solution +suite, CCH Axcess, to manage its practice and support its +operations, with both its administrative staff and its tax +advisors using a variety of software modules, including CCH +Axcess Practice for firm management, CCH Axcess Tax for +calculations and filing, Workstream for scheduling, and CCH +Answer Connect for research. +The CCH Axcess platform is the only complete cloud solution +in the U.S. market today that provides a seamless platform +for tax, audit, and firm management. The product has had +a significant impact on Randall L. Sansom’s productivity, +enabling the firm to focus on providing high-value expertise +to their clients. With CCH Axcess, the efficiency gains the +firm has achieved has resulted in hours of saved time and +improved the work/life balance of staff. Since implementing +CCH Axcess, the firm’s staff can complete more work with +fewer people. +According to the firm’s CEO, “With the entire array of products +that we have, we’re saving between one and two hours on +the tax preparer side of things that an admin person is able +to do. And it has cut down on my admin time, at least 45 +minutes to an hour and a half, depending on the size of the +return. Compared to when I started eight years ago, we’re +doing double the amount of returns with less staff, which +is amazing”. +Customer case +22 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_24.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..1b1e074d31835553fc9346171a2a8692090d920d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,59 @@ +Selected awards 2023 +CCH iFirm named a Bronze Stevie +Award winner for Innovation in Digital +Transformation at APAC Stevie Awards +CCH Axcess Engagement named a 2023 +Artificial Intelligence Award winner by +the Business Intelligence Group +Review of 2023 performance +• Organic growth 8%, with all regions performing well. +• Cloud software revenues grew 17% organically. +• Margin stable, despite increase in personnel costs and +related expenses. +The Tax & Accounting division is now focused on professional +accounting firms, as the corporate performance (CCH Tagetik and +U.S. Corporate Tax) and internal audit (TeamMate) units were +moved to the new Corporate Performance & ESG division. +Wolters Kluwer Tax & Accounting revenues increased 8% in +constant currencies and 8% on an organic basis (2022: 8% pro +forma). Adjusted operating profit increased 8% in constant +currencies and 8% on an underlying basis. The margin increased +10 basis points, as operational gearing was offset by higher +personnel costs and related expenditures. +Operating profit increased 6%, largely reflecting the development +of adjusted operating profit. +Tax & Accounting North America (59% of divisional revenues) +achieved 8% organic growth (2022: 10% pro forma) driven by the +continued strong customer uptake of CCH Axcess cloud software +modules, in particular Tax, Document, Practice, and Workflow. +Our U.S. cloud‑based audit solution, CCH Axcess Engagement, +first launched in 2022, continued to gain early adopters. +Our on‑premise software solutions saw slower organic growth. +Non‑recurring outsourced professional services revenues grew +well, but at a more moderate pace than in the prior year. Our +U.S. publishing unit recorded low single digit organic growth. +Tax & Accounting Europe (35% of divisional revenues) delivered +7% organic growth (2022: 6%) supported by strong renewals and +new sales and boosted by one‑off revenues related to property +tax changes in Germany and government stimulus programs in +Spain. Cloud software, including hybrid‑cloud solutions, grew +14% organically. +Tax & Accounting Asia Pacific and Rest of World (6% of divisional +revenues) revenues were up 5% organically (2022: 6%), buoyed by +non‑recurring revenue growth in China and India. +Our customers +Accounting firms, tax and auditing departments, businesses of all +sizes, government agencies, libraries, and universities +Top products +North America: CCH Axcess, CCH ProSystem fx, CCH Axcess +Engagement, CCH Axcess Workflow, and CCH AnswerConnect +Europe, Asia Pacific, and ROW: A3 Software, ADDISON, CCH +iFirm, Genya, and Twinfield + → Complete list of Tax & +Accounting solutions +https://www.wolterskluwer.com/en/ +tax-and-accounting +Tax & Accounting +continued +23 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret object #3 is a "bowl". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_25.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb55413305cebace3660927b8ddb4eb91d4d9750 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,40 @@ +Tax & Accounting +continued +Organic growth in revenues +8% +Recurring +91% +recurring revenues as % of division total +Software +81% +software revenues as % of +division total +Tax & Accounting – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,466 1,394 +5% +8% +8% +Adjusted operating profit 479 455 +5% +8% +8% +Adjusted operating profit margin 32.7% 32.6% +Operating profit 460 434 +6% +Net capital expenditure 74 67 +Ultimo FTEs 7,276 6,693 +Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.05); Δ OG: % Organic growth. 2022 figures are pro forma. +Tax & Accounting North America 59% +Tax & Accounting Europe 35% +Tax & Accounting AsiaPac & ROW 6% +2023 Revenues by segment +Recurring 91% +Print books 1% +Other non-recurring 8% +2023 Revenues by type +North America 59% +Europe 35% +Asia Pacific & ROW 6% +2023 Revenues by +geographic market +Software 81% +Digital information 15% +Services and print 4% +2023 Revenues by +media format +24 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret landmark is "Big Ben". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_26.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc44303c9cc85df30de6399f7068dcb6f7215993 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,9 @@ +Technology-enabled services +and solutions +Expert compliance services and +software solutions for financial +institutions, corporations, small +businesses, and law firms. +Financial & Corporate +Compliance +25 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_27.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a572dfcad0e846d9468ceb5efe7284a5b9a3a052 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,65 @@ +Our technology‑ +enabled compliance +solutions help +enhance the safety +and efficiency of +commerce and +banking. +Steve Meirink +CEO Financial & Corporate +Compliance +Business overview +Wolters Kluwer Financial & Corporate Compliance (FCC) +provides financial institutions, corporations, small businesses, +and law firms with solutions that enable compliance with +ever‑changing regulatory and legal obligations, improve +efficiency, and help achieve better business outcomes. +The division offers technology‑enabled expert services and +software solutions focused on loan compliance, regulatory +compliance, legal entity management, and corporate services. +In Legal Services, we provide corporations, small businesses, +and law firms with the full set of legal entity management +and corporate services, including business licenses. +In Financial Services, we support banks, non‑bank lenders, +credit unions, insurers, and securities firms of all sizes with +a wide array of loan compliance and regulatory compliance +solutions, including lien solutions. +Market trends +• Increasing regulatory complexity for banks and +corporations +• Rising emphasis on compliance expertise and capabilities +• Accelerating digital adoption trends across banking and +legal workflows +• Growing appetite for cloud-based, integrated solutions +• Ongoing imperative for operating efficiency +Rubicon Technologies ensures business +license compliance with CT Corporation +Rubicon Technologies, a NYSE-listed company, is a leading +provider of software-based waste, recycling, and fleet +operations products for firms and governments worldwide, +with over 13 million service locations. Rubicon wanted to +ensure it was fully compliant with a key corporate services +requirement ahead of its IPO in 2022, and to do this, they +turned to CT Corporation, a leading U.S. provider of legal +entity management and corporate service solutions. +Specifically, Rubicon needed time-sensitive support to ensure +compliance with its business license filings. It was critical +for the company to demonstrate that all business licensing +requirements were met ahead of its listing on the NYSE. CT +stepped in to run a full assessment on Rubicon’s business +licenses, identifying any gaps in required documentation and +seamlessly reinstating key filings. CT ensured the company +was in full compliance in advance of a critical business +event, driving key value for the customer. To ensure ongoing +adherence to a vast set of business license requirements, CT +enrolled Rubicon in its managed service offering, providing +proactive oversight of the company’s business license +portfolio. +With over 75,000 federal, state, and local jurisdictions in +the U.S. driving distinct business license obligations, CT has +the unique domain expertise to navigate these complex +requirements with ease, providing critical assurance for its +business customers. +“ +Customer case +26 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_28.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5b3fe8c48e9f990ee3939723ce2bc8fc4ce2d1c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,67 @@ +Review of 2023 performance +• Organic growth 2%, supported by 7% growth in recurring +revenues. +• Transactional and other non‑recurring revenues declined 6% +organically. +• Margin increase reflects tight cost control and favorable +revenue mix. +The Financial & Corporate Compliance division is now +comprised of CT Corporation, which provides registered agent +and other services to U.S. corporations, small businesses, and +law firms, and Compliance Solutions (including Lien Solutions), +which provides software and services to banks and other +lenders. These businesses were part of the former Governance, +Risk & Compliance division. +Financial & Corporate Compliance revenues increased 2% in +constant currencies, including a modest effect from the full +year inclusion of mortgage software provider International +Document Services (IDS), acquired on April 8, 2022. Organic +growth was also 2% (2022: 4% pro forma). The adjusted +operating profit margin increased 160 basis points, as careful +cost control and favorable revenue mix helped mitigate the +impact of higher product investment. +Operating profit increased 5%, largely reflecting the +development of adjusted operating profit. +Legal Services (57% of divisional revenues) posted 2% +organic growth (2022: 2% pro forma) with 8% organic growth +in recurring service subscriptions (2022: 7% pro forma) to +a large extent offset by a 9% decline in Legal Services (LS) +transactional revenues (2022: decline of 4% pro forma). +LS transactional revenues were impacted by the downturn in +U.S. M&A and IPO activity which began in the second half of +2022. In January 2024, CT Corporation launched a dedicated +platform to support the filing needs of U.S. businesses +impacted by the beneficial ownership reporting rule of the +new U.S. Corporate Transparency Act. +Financial Services (43% of divisional revenues) achieved +2% organic growth (2022: 6% pro forma), supported by 5% +organic growth in recurring revenues (2022: 7% pro forma). +Financial Services (FS) transactional and other non‑recurring +revenues declined 3% organically compared to growth in the +prior year (2022: 4%). Compliance Solutions transactional +fees were affected by the market‑wide downturn in U.S. +loan originations, including mortgages, while Lien Solutions +revenues were flat against a challenging comparable (2022: +14% growth). +Our customers +Corporations, small businesses, law firms, banks, non‑bank +lenders, credit unions, insurers, and securities firms +Top products +Legal Services: CT Corporation +Financial Services: ComplianceOne, Expere, eOriginal, +GainsKeeper, and Lien Solutions + → For more information on FCC +www.wolterskluwer.com/en/about-us/ +organization/financial-and-corporate- +compliance +Financial & Corporate Compliance +continued +Selected awards 2023 +Compliance Solutions named Category +Leader in Regulatory Intelligence in +Chartis RiskTech100® Rankings +Wolters Kluwer FCC recognized with +ABF Journal’s 2023 Most Innovative +Companies designation +27 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance +The secret animal #4 is a "cow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_29.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d55ae1971f9c6a454e08af2845f46d93f50fb8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,39 @@ +Organic growth in revenues +2% +Recurring +67% +recurring revenues as % of division total +Software +47% +software revenues as % of division +total +Financial & Corporate Compliance – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,052 1,056 0% +2% +2% +Adjusted operating profit 403 387 +4% +7% +7% +Adjusted operating profit margin 38.3% 36.7% +Operating profit 383 363 +5% +Net capital expenditure 58 52 +Ultimo FTEs 3,056 3,122 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Financial & Corporate Compliance +continued +Legal Services 57% +Financial Services 43% +2023 Revenues by segment +Recurring 67% +Legal Services transactional 18% +Financial Services transactional 12% +Other non-recurring 3% +2023 Revenues by type +North America 99% +Europe 1% + +2023 Revenues by +geographic market +Software 47% +Digital information 6% +Services and print 47% +2023 Revenues by +media format +28 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_3.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ba16551110115b1912696749f6507ae07964f52 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,78 @@ +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 strategy and business model on +page 7 +This copy of the annual report of Wolters Kluwer N.V. for +the year 2023 is not in the ESEF‑format as specified by the +European Commission in Regulatory Technical Standard on +ESEF (Regulation (EU) 2019/815). The ESEF reporting package +can be found on our website www.wolterskluwer.com/en/ +investors/financials/annual-reports +Strategic report +3 Wolters Kluwer at a glance +5 Q&A with CEO Nancy McKinstry +7 Strategy and business model +13 2024 Outlook +14 Organizational structure +15 Executive team +17 Health +21 Tax & Accounting +25 Financial & Corporate Compliance +29 Legal & Regulatory +33 Corporate Performance & ESG +37 Group financial review +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures (TCFD) +134 EU Taxonomy +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Other information +221 Articles of Association Provisions Governing Profit Appropriation +222 Wolters Kluwer shares and bonds +226 Five-year key figures +227 Glossary +228 Contact information +€5.6bn +total revenues +94% +of revenues from digital +products and services +82% +of revenues are recurring +26.4% +adjusted operating profit margin +€4.55 +diluted adjusted earnings per share +16.8% +return on invested capital + → Visit our investors portal +www.wolterskluwer.com/en/investors/ +Financial highlights 2023 +2 Wolters Kluwer 2023 Annual Report ← → +The secret food is "chocolate". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_30.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..78b21fa8e5f6391de159578b4b03e6ccdcfbfda0 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,10 @@ +Legal and regulatory insights +and solutions +Actionable insights and +integrated solutions that +streamline legal and regulatory +research, analysis, and workflow. +Legal & +Regulatory +29 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information +The secret vegetable is "cauliflower". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_31.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..73d0615ca2994f9c4ceef1c45152d0a5d78c684b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,72 @@ +Martin O’Malley +CEO Legal & Regulatory +Business overview +Wolters Kluwer Legal & Regulatory enables legal and +compliance professionals to improve productivity and +performance, mitigate risk, and solve complex problems +with confidence. +Our legal information solutions enable law firms, corporate +legal departments, universities, and governments to +streamline legal research, analyses, and workflows. This +enhances legal and regulatory decision‑making and outcomes, +ensuring more transparent, just, and safe societies. +Legal & Regulatory’s Enterprise Legal Management (ELM) +solutions support corporate legal operations in increasing +efficiency and saving costs. Our legal practice management +software for law firms enables lawyers to streamline their +legal workflow processes, from document management to +time keeping and billing. +Legal & Regulatory information solutions provide our +customers with the trusted information, insights, and analytics +they can rely on to make sound decisions. +Market trends +• Customers expect advanced, AI-based features embedded +in legal information solutions and software +• Customers are adopting cloud-based technology to enable +connectivity and enhance productivity +• Volume and complexity of regulation continue to rise +• Law firms face new competitors +• Corporate law departments and legal operations continue +to streamline their internal processes by leveraging +technology +• Corporate legal departments and law firms are under +pressure to increase productivity +Adtalem improves legal matter and +spend management with TyMetrix 360° +Adtalem Global Education is a leading healthcare educator +that collaborates with organizations to offer academic +curriculums, certifications, and training programs across +various medical sectors around the world. Adtalem wanted +to improve their invoice and accrual processes, including +billing guideline compliance. The company selected TyMetrix +360°, part of Wolters Kluwer ELM Solutions, as the partner +to improve their operations. TyMetrix 360° is a SaaS-based +e-billing and matter management solution that simplifies a +company’s legal billing and streamlines managing matters. +After Wolters Kluwer established an integration between +Salesforce and TyMetrix 360°, users gained increased +transparency and efficiencies due to all matter and financial +data being accessible on a single platform, enabling reporting +and dashboarding that aggregates all information. Director +of Legal Operations at Adtalem commented, “The impact +of these projects has been tremendous for us. We have +saved money, we have reduced our overall outside counsel +spend because we’re not paying for things we shouldn’t be +paying for, and we are getting a better handle on what we’re +spending because our invoices are all running through the +system”. +Since integrating TyMetrix 360°, Adtalem has realized +$1.5 million year-one savings from line-item adjustments, +a 25% reduction in overall outside counsel spend within 12 +months, 100% vendor compliance, and automated accruals +and payment processing file creation which saves two FTEs +one workweek monthly. +We’re committed +to empowering our +customers with +the highest quality +content and the +latest AI technology. +“ +Customer case +30 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_32.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..b885076679fe36b0e5d0b46e755f9129762027f2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,66 @@ +Review of 2023 performance +• Organic growth 4%, led by 8% growth in digital subscription +revenues. +• Legal & Regulatory Software (23% of divisional revenues) +grew 5% organically. +• Margin reflects operational gearing and cost control partly +offset by increased investment. +The Legal & Regulatory division now includes Enterprise Legal +Management (previously part of the former Governance, Risk +& Compliance division) while the EHS/ORM software business +(Enablon) is now part of the new Corporate Performance & ESG +division. +Legal & Regulatory revenues declined 4% in constant +currencies, due to the disposal of the French and Spanish legal +publishing assets on November 30, 2022, while the acquisition +of MFAS, acquired on October 31, 2023, had a modest effect. +On an organic basis, revenues sustained 4% growth (2022: 4% +pro forma). Adjusted operating profit increased 4% in constant +currencies and 10% on an organic basis. The margin increased +120 basis points, following an increase in the fourth quarter. +Operational gearing and good expense control were partly +offset by increased product investment and higher personnel +costs and personnel‑related expenses. +Operating profit decreased 38%, reflecting the increase in +adjusted operating profit offset by a decline in divestment‑ +related results. +Legal & Regulatory Information Solutions (77% of divisional +revenues) revenues declined 7% overall and 7% in constant +currencies reflecting disposals. On an organic basis, +Information Solutions recorded 4% growth (2022: 3%), driven +mainly by 8% organic growth in subscriptions to our digital +legal research solutions (2022: 7%). Print subscriptions +declined 9% organically, while print book revenues increased +4% on an organic basis, mainly due to a favorable publication +schedule. +Legal & Regulatory Software (23% of divisional revenues), +comprised of Enterprise Legal Management (ELM) solutions +and our legal practice management software, in aggregate +recorded 5% organic growth (2022: 8% pro forma). ELM +solutions (Tymetrix and Passport) saw strong growth in +ELM transactional volumes partly offset by lower software +implementation services revenues. Legal practice management +software, mainly Kleos and Legisway, recorded high single‑digit +organic growth. +Our customers +Legal and compliance professionals in law firms, corporate +legal departments, universities, and government organizations +Top products +Legal & Regulatory Information Solutions: VitalLaw, LEX, ONE, +Navigator, and Schulinck +Legal & Regulatory Software: Passport, TyMetrix 360°, +Legisway, and Kleos +Legal & Regulatory +continued + → Complete list of Legal & +Regulatory solutions +https://www.wolterskluwer.com/en/ +about-us/organization/legal-and- +regulatory +Selected awards 2023 +VitalLaw winner of Gold Stevie Award +for Legal Information Solution +ELM named Company of the Year, +Legal, in American Business Awards +31 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory +The secret flower is a "daisy". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_33.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..d9cdda2c5e0ef7820f09a3cfa20ab0bea9fa2edb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,40 @@ +Legal & Regulatory +continued +Organic growth in revenues +4% +Recurring +78% +recurring revenues as % of division total +Digital +84% +digital revenues as % of division total +Legal & Regulatory – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 875 916 ‑4% ‑4% +4% +Adjusted operating profit 138 133 +4% +4% +10% +Adjusted operating profit margin 15.7% 14.5% +Operating profit 114 185 ‑38% +Net capital expenditure 58 61 +Ultimo FTEs 4,033 3,892 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Legal & Regulatory Software 23% +Legal & Regulatory Information +Solutions 77% +2023 Revenues by segment +Recurring 78% +Print books 5% +ELM transactional 10% +Other non-recurring 7% +2023 Revenues by type +North America 33% +Europe 66% +Asia Pacific & ROW 1% +2023 Revenues by +geographic market +Software 28% +Digital information 56% +Services and print 16% +2023 Revenues by +media format +32 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory +The secret animal #5 is a "squirrel". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_34.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8fe6029e7bf0994474d0a0b72be02e6f7837361 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,8 @@ +Global enterprise software +Enterprise software solutions +for corporate performance +management, ESG, EHS, risk +management, and assurance. +Corporate Performance +& ESG +33 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_35.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebccf1151f0bf52bc3b5772f51f94ba38ea086da --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,72 @@ +Mandatory ESG +disclosures are +leading to a sea +change in corporate +reporting. +Karen Abramson +CEO Corporate Performance +& ESG +Business overview +Wolters Kluwer Corporate Performance & ESG (CP&ESG) +provides enterprise software solutions and services to +corporations and banks around the world, helping them to +collect, analyze, report, and audit financial, sustainability, +operational, and other performance data. +CP&ESG solutions support corporate responsibility and +sustainability, mitigate and manage operational and financial +risks, improve workplace safety, and facilitate regulatory +reporting and compliance. Our global software solutions and +services help to streamline finance workflows. +CP&ESG solutions are used by corporate finance professionals, +internal auditors, operational risk managers, sustainability +managers, and compliance personnel in corporations and +financial institutions. +Market trends +• Sustainability commitments increase focus on +environmental, health & safety, and operational risk +management +• Rising ESG disclosure, audit, and performance demands +from regulators, investors, employees, and other +stakeholders +• Emergence of global ESG reporting standards as 600+ +frameworks start to converge +• Increased demand for solutions that collect and process +large amounts of structured and unstructured data +• Artificial intelligence, cloud, and other advanced +technologies are enabling analytics, insights, and +connectivity that help drive performance +• Finance function emerging as chief aggregator to collect, +analyze, report, and assure financial and non-financial data +Lendlease improves safety and +compliance with Enablon permit-to-work +Lendlease, a global real estate investment, development, and +construction company headquartered in Australia, leverages +the full Enablon platform to manage its environmental, +health, and safety matters across project sites around the +world. The company also leverages the full suite of Enablon +Go mobile applications, which have been key in modernizing +Lendlease’s safety strategy. +In 2022, the company looked for ways to streamline and +improve its permitting procedures in Australia and chose +Enablon’s permit-to-work (PTW) software to help it transition +from an inefficient paper permitting process to a digitized +workflow. Enablon PTW is a digital documented workflow that +authorizes certain people to carry out specific work within +a specified time frame and facilitates clear sign off to show +work has been completed safely and efficiently. +With Enablon’s PTW system, organizations enhance workplace +safety, ensure regulatory compliance, reduce paperwork, +improve communication, and maintain an audit trail of work- +related activities and safety measures. +Lendlease’s partnership with Enablon yielded impressive +results as David Rose, Group EHS Technology Manager at +Lendlease commented, “We’ve done 26,000 digital permits so +far to date since we’ve deployed the solution. If you think of +it from an ESG point of view, that’s a lot of paper considering +a normal permit would be about 2-3 pages per permit”. +Lendlease is now deploying the Enablon PTW solution to its +other operations around the world. +“ +Customer case +34 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  +The secret object #4 is a "pillow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_36.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b665420e236f652a6ea696bca1dbf7fde2ed3a8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,80 @@ +Review of 2023 performance +• New division formed in March 2023. +• Organic growth 9%, with recurring revenues up 11% and non‑ +recurring revenues up 5%. +• Margin reflects higher personnel costs and increased +investment. +The Corporate Performance & ESG division was formed in +March 2023 by bringing together our enterprise software +businesses which were previously part of other divisions: CCH +Tagetik and TeamMate (formerly part of Tax & Accounting), +Enablon EHS/ORM (formerly part of Legal & Regulatory), +and OneSumX Finance, Risk & Reporting (formerly part of +Governance, Risk & Compliance). +The new division’s revenues increased 9% in constant +currencies and 9% on an organic basis (2022: 12% pro forma). +Recurring revenues (65% of divisional revenues) grew 11% +organically (2022: 13% pro forma), while non‑recurring +revenues grew 5% (2022: 10% pro forma). Adjusted operating +profit declined 12% in constant currencies and on an organic +basis, impacted by higher personnel costs, increased +investment in product development, and higher sales and +marketing spending. +Operating profit decreased to €26 million, mainly reflecting the +decline in adjusted operating profit and higher amortization of +acquired identifiable intangible assets. +Environmental, Health & Safety, and Operational Risk +Management platform Enablon (23% of divisional revenues), +delivered 16% organic growth (2022: 18%) driven by strong +momentum across both recurring cloud subscription revenue +and on‑premise software license fees. In November 2023, +Enablon introduced an updated sustainability solution, +Enablon ESG Excellence. +Our Corporate Performance, Internal Audit, and Finance, +Risk & Reporting businesses (77% of divisional revenues) in +aggregate grew 7% organically (2022: 10% pro forma). The CCH +Tagetik corporate performance management (CPM) solution +delivered 20% organic growth (2022: 19%), driven equally by +recurring cloud revenues as by non‑recurring on‑premise +software license fees. Software growth was driven by new +customers and increased uptake of modules, such as the new +ESG and Pillar Two Global Minimum Tax modules launched +in 2023. The average software deal size increased year on +year. Non‑recurring services revenues were, however, lower +than expected as an increased percentage of software deals +closed in the final months of 2023 were tied to third‑party +implementation partners. +Our Corporate Tax unit recorded steady single digit organic +growth. Internal audit solution TeamMate delivered double‑ +digit organic growth, benefitting from higher license fees +for on‑premise software. In July 2023, TeamMate+ ESG was +launched, adding ESG standards to support auditor workflows. +Our FRR unit posted organic revenue decline due to the +conclusion of two large software implementations in Europe +and the full impact of exiting Russia and Belarus. In October +2023, FRR launched OneSumX for Basel to support banks as +they ramp up towards Basel IV compliance. +Our customers +Corporate finance, audit, planning, risk, EHS/ORM, and +sustainability professionals in corporations, banks, and +governments. +Corporate Performance & ESG  +continued +Top products +Environmental, Health & Safety, and Operational Risk +Management (EHS/ORM): Enablon +Corporate Performance, Internal Audit, and Finance, Risk & +Reporting: CCH Tagetik, TeamMate, and OneSumX + → Complete list of Corporate +Performance & ESG solutions +https://www.wolterskluwer.com/en/ +about-us/organization/corporate- +performance-esg +Selected awards 2023 +Wolters Kluwer named Leader in +Verdantix Green Quadrant for ESG +Reporting & Data Management +Gartner named CCH Tagetik Leader in +Magic Quadrant for Financial Close +and Consolidation +35 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_37.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..a022392e798de05752067d58541645cc04743a12 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,36 @@ +Organic growth in revenues +9% +Recurring +65% +recurring revenues as % of division total +Software +79% +software revenues as % of division total +Corporate Performance & ESG – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 683 639 +7% +9% +9% +Adjusted operating profit 68 79 ‑14% ‑12% ‑12% +Adjusted operating profit margin 9.9% 12.4% +Operating profit 26 39 ‑32% +Net capital expenditure 84 73 +Ultimo FTEs 3,215 3,111 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Corporate Performance & ESG  +continued +EHS/ORM 23% +Corporate Performance, +Internal Audit & FRR 77% +2023 Revenues by segment +Recurring 65% +Non-recurring 35% +2023 Revenues by type 2023 Revenues by +geographic market +North America 35% +Europe 48% +Asia Pacific & ROW 17% +2023 Revenues by +media format +Software 79% +Services and other 21% +36 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  +The secret office supply is a "calculator". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_38.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed95ed8dbc305b7a6e36f1671e2eab0a16d0feb3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,70 @@ +Margin increased in +the fourth quarter due +to operational gearing, +mix shift, and a more +normalized cost base. +“ +This review provides a summary +of our 2023 IFRS results alongside +a discussion of adjusted figures +which give deeper insight into our +underlying performance. +Revenues +Group revenues were €5,584 million, up 2% overall and up 5% +in constant currencies. Excluding the effect of currency and +the net effect of divestments and acquisitions, organic revenue +growth was 6%, in line with the prior year +(2022: 6%). +Revenue bridge +€ million % +Revenues 2022 5,453 +Organic change 310 6 +Acquisitions 20 0 +Divestments (76) (1) +Currency impact (123) (3) +Revenues 2023 5,584 2 +Revenues from North America accounted for 64% of total +group revenues and grew 5% organically (2022: 6%). Revenues +from Europe, 28% of total revenues, grew 7% organically (2022: +6%). Revenues from Asia Pacific and Rest of World, 8% of total +revenues, grew 9% organically (2022: 10%). +Total recurring revenues, which include subscriptions and other +renewing revenue streams, accounted for 82% of total revenues +(2022: 80%) and grew 7% organically (2022: 7%). Within recurring +revenues, digital and service subscriptions grew 8% organically +(2022: 8%). Total non‑recurring revenues were stable on an +organic basis (2022: 3% organic growth). +Group financial +review +Kevin Entricken +CFO and member +of the Executive Board +Highlights 2023 +• Revenues up 6% organically +• 82% recurring revenues, up 7% organically +• 58% expert solutions revenues, up 8% organically +• 94% revenues from digital products and services +• 16% cloud software revenues, up 15% organically +Transactional revenues declined in Financial & Corporate +Compliance but increased in Legal & Regulatory. Other non‑ +recurring revenues, mainly on‑premise license fees and +software implementation services, increased 1% organically +(2022: 7%), with mixed trends by division. +Revenues by type +€ million, unless otherwise +stated 2023 2022 ∆ ∆ CC ∆ OG +Digital and service +subscription 4,134 3,950 +5% +7% +8% +Print subscription 136 157 ‑13% ‑12% ‑7% +Other recurring 273 281 ‑3% ‑1% +3% +Total recurring revenues 4,543 4,388 +4% +6% +7% +Transactional 411 433 ‑5% ‑2% ‑3% +Print books 120 129 ‑7% ‑5% 0% +Other non‑recurring 510 503 +1% +3% +1% +Total non-recurring revenues 1,041 1,065 -2% 0% 0% +Total revenues 5,584 5,453 +2% +5% +6% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: +% Organic growth. Other non ‑recurring revenues include software +licenses, software implementation fees, professional services, and other +non‑subscription offerings. +37 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_39.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4dbaac20a3d3908acb31b07f11689da146b6d8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,47 @@ +Group financial review  +continued +Operating profit +Adjusted operating profit was €1,476 million (2022: €1,424 million), up 6% in constant currencies. +The related margin increased by 30 basis points to 26.4% (2022: 26.1%), in line with our full‑year +guidance range. The margin improvement follows a margin increase in the fourth quarter driven +by operational gearing, mix shift, and the comparison to a more normalized cost base in fourth +quarter 2022. Personnel‑related expenses increased as expected due to an increase in the +number of employees and due to wage inflation. In addition, there was an expected increase in +personnel‑related expenses, such as business travel, events, and training costs. +Product development spending (including capitalized spend) increased in constant currencies +and amounted to 11% of revenues in 2023 (2022: 11%). Restructuring expenses, which are +included in adjusted operating profit, increased to €15 million (2022: €6 million), at the upper +end of our guidance range. +Operating profit declined 1% to €1,323 million (2022: €1,333 million), mainly due to significantly +lower divestment results: we incurred a net disposal gain of €4 million in 2023 compared to +a gain of €75 million in the prior year. Amortization and impairments of acquired identifiable +intangible assets decreased 9% due to reduced impairments in 2023. +Divisional summary +Overall organic revenue growth was 6%, led by Tax & Accounting and Corporate Performance +& ESG. The overall adjusted operating profit margin increased mainly due to full‑year margin +increases in Financial & Corporate Compliance and Legal & Regulatory. For a more detailed +discussion, see pages 17-36 of this annual report. +Key figures +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 5,584 5,453 +2% +Operating profit 1,323 1,333 ‑1% +Profit for the year 1,007 1,027 ‑2% +Diluted EPS (€) 4.09 4.01 +2% +Net cash from operating activities 1,545 1,582 ‑2% +Business performance – benchmark figures +Revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin (%) 26.4 26.1 +Adjusted net profit 1,119 1,059 +6% +7% +Diluted adjusted EPS (€) 4.55 4.14 +10% +12% +Adjusted free cash flow 1,164 1,220 ‑5% ‑2% +Return on invested capital (%) 16.8 15.5 +Net debt 2,612 2,253 +16% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. Benchmark figures are +performance measures used by management. See Note 4 – Benchmark figures for a reconciliation from IFRS to +benchmark figures. +Highlights 2023 +• Product development spend was 11% of revenues +• Profit for the year down by 2% and diluted EPS up 2% +• Adjusted net profit for the year up 6% +38 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_4.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..7381870c3b168f79c3667d62af04f63a84badac9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,52 @@ +Wolters Kluwer +at a glance +We help our customers make critical +decisions every day by providing +expert solutions that combine deep +domain knowledge with specialized +technology and services. +Global footprint +North America +64% +of total revenues +Europe +28% +of total revenues +Asia Pacific & ROW +8% +of total revenues +21,400+ +employees worldwide +180+ +countries where we serve customers +40+ +countries from which we operate +8 flagship offices +significant subsidiaries +78 +employee engagement +score, up 1 point +8% +reduction in scope 1 and +scope 2 emissions +75 +employee belonging score, +up 2 points +Near-term +targets +validated by +SBTi in 2023 +Sustainability highlights 2023 +6% +organic growth in revenues +58% +of revenues from expert +solutions +€1.2bn +adjusted free cash flow +34% +total shareholder return +including dividends +(not reinvested) +Financial highlights 2023 +3 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_40.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3291f15107b4dae864a4b8e7f48896a1754071c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,57 @@ +Divisional summary +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues +Health 1,508 1,448 +4% +7% +6% +Tax & Accounting 1,466 1,394 +5% +8% +8% +Financial & Corporate Compliance 1,052 1,056 0% +2% +2% +Legal & Regulatory 875 916 ‑4% ‑4% +4% +Corporate Performance & ESG 683 639 +7% +9% +9% +Total revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit +Health 454 434 +5% +8% +7% +Tax & Accounting 479 455 +5% +8% +8% +Financial & Corporate Compliance 403 387 +4% +7% +7% +Legal & Regulatory 138 133 +4% +4% +10% +Corporate Performance & ESG 68 79 ‑14% ‑12% ‑12% +Corporate (66) (64) +3% +4% +4% +Total adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin +Health 30.1% 29.9% +Tax & Accounting 32.7% 32.6% +Financial & Corporate Compliance 38.3% 36.7% +Legal & Regulatory 15.7% 14.5% +Corporate Performance & ESG 9.9% 12.4% +Total adjusted operating profit margin 26.4% 26.1% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are +pro forma due to changes in the organizational structure, refer to Note 1 – General and basis of preparation . +Group financial review  +continued +Highlights 2023 +• Adjusted operating profit €1,476 million, up 6% in constant currencies +• Adjusted operating profit margin up 30 basis points to 26.4% +Corporate expenses +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Adjusted operating profit (66) (64) +3% +4% +4% +Operating profit (66) (64) +3% +Net capital expenditure 0 0 +Ultimo FTEs 143 132 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Net corporate expenses increased 4% in constant currencies and 4% on an organic basis, due to +an increase in personnel costs and related expenses partly offset by lower third‑party services +relating to various projects. +Financial position +Balance sheet +Non‑current assets, mainly consisting of goodwill and acquired identifiable intangible assets, +decreased by €193 million to €6,340 million in 2023, mainly due to amortization and the effect +of foreign exchange differences that were higher than investments in software assets and +acquisitions through business combinations during the year. +Total equity decreased by €561 million to €1,749 million, mainly due to the share buybacks, +dividend payments, and exchange differences on translation of foreign operations, partly +offset by the profit for the year. During the year, we repurchased 8.7 million shares for a total +consideration of €1 billion, including 0.5 million shares to offset incentive share issuances (2022: +0.7 million). +In August 2023, we canceled 9.0 million of shares held in treasury (2022: 5.0 million shares +canceled). As of December 31, 2023, we held 8.0 million shares in treasury. The total weighted‑ +average number of shares was 244.9 million in 2023 (2022: 254.7 million). +39 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret animal #2 is a "penguin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_41.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..d61c6681949426c457da5a52e32651456f7a2df9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,43 @@ +Balance sheet +€ million, unless otherwise stated 2023 2022 Variance +Non‑current assets 6,340 6,533 (193) +Working capital (1,036) (892) (144) +Total equity 1,749 2,310 (561) +Net debt 2,612 2,253 359 +Net‑debt‑to‑EBITDA ratio 1.5 1.3 0.2 +Net debt, leverage, and liquidity position +Net debt at December 31, 2023, was €2,612 million, compared to €2,253 million at December 31, +2022. The net‑debt‑to‑EBITDA ratio increased to 1.5 (2022: 1.3). Gross debt includes the 8‑year +€700 million Eurobond with a 3.750% annual coupon, issued in March 2023. Gross debt +increased due to the increase of borrowings and bank overdrafts to €196 million at December +31, 2023 (2022: €16 million), including €50 million Euro Commercial Paper notes (2022: no notes +outstanding). +Our €600 million multi‑currency credit facility remains fully undrawn. +Our liquidity position remained strong with net cash available of €989 million as of +December 31, 2023. +Working capital +€ million 2023 2022 Variance +Inventories 84 79 5 +Current contract assets 160 153 7 +Trade receivables 1,087 1,088 (1) +Current operating other receivables 198 244 (46) +Current deferred income (1,899) (1,858) (41) +Other contract liabilities (86) (88) 2 +Trade and other operating payables (951) (949) (2) +Operating working capital (1,407) (1,331) (76) +Cash and cash equivalents 1,135 1,346 (211) +Non‑operating working capital (764) (907) 143 +Total working capital (1,036) (892) (144) +Operating working capital amounted to €(1,407) million, compared to €(1,331) million in 2022, +a decrease of €76 million. This decrease is largely due to autonomous movements in working +capital of €98 million. +Non‑operating working capital decreased to €(764) million, compared to €(907) million in 2022, +mainly due to lower short‑term bonds during 2023 (€400 million) compared to 2022 +(€700 million), partly offset by higher borrowings and bank overdrafts at the end of 2023. +Group financial review  +continued +Highlights 2023 +• Net debt-to-EBITDA ratio 1.5x +• Liquidity position remained strong +40 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret object #5 is a "vase". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_42.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba906dba1dbf52daf9bbd47ec31b5e02b79b16b4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,55 @@ +Financing results, taxation, EPS, and ROIC +Financing results +Total financing results decreased to a net cost of €27 million (2022: €57 million cost), mainly due +to higher interest rates on cash and cash equivalents. Included in total financing results was a +€7 million net foreign exchange gain (2022: €5 million net foreign exchange loss) mainly related +to the translation of intercompany balances. Adjusted net financing costs decreased to +€27 million (2022: €56 million). +Taxation +Profit before tax increased 2% to €1,297 million (2022: 1,276 million). The effective tax rate increased +to 22.4% (2022: 19.5%), as the prior year a significant tax‑exempt divestment gain. +Adjusted profit before tax was €1,450 million (2022: €1,368 million), up 6% overall and up 8% +in constant currencies. The benchmark tax rate on adjusted profit before tax increased to +22.9% (2022: 22.6%), mainly due to lower prior year favorable adjustments combined with the +increased limitation on interest deductibility in the Netherlands. +Earnings per share +Total profit for the year decreased 2% to €1,007 million (2022: €1,027 million), while diluted +earnings per share increased 2% to €4.09 (2022: €4.01), benefitting from the lower weighted‑ +average number of shares outstanding. +Adjusted net profit was €1,119 million (2022: €1,059 million), an increase of 7% in constant +currencies. Diluted adjusted EPS was €4.55 (2022: €4.14), up 12% in constant currencies, reflecting +the increase in adjusted net profit and a 4% reduction in the diluted weighted‑average number +of shares outstanding to 246.0 million (2022: 255.8 million). +Return on invested capital (ROIC) +In 2023, ROIC was 16.8% (2022: 15.5%), mainly due to a higher adjusted operating profit, partly +offset by a higher benchmark tax rate. +Cash flow +€ million, unless otherwise stated 2023 2022 Variance +Net cash from operating activities 1,545 1,582 (37) +Net cash used in investing activities (374) (299) (75) +Net cash used in financing activities (1,481) (991) (490) +Adjusted operating cash flow 1,476 1,528 (52) +Net capital expenditure (323) (295) (28) +Adjusted free cash flow 1,164 1,220 (56) +Diluted adjusted free cash flow per share (€) 4.73 4.77 (0.04) +Cash conversion ratio (%) 100 107 +Cash flow +Net cash outflow before the effect of exchange differences was €310 million (2022: net cash +inflow of €292 million), due to net cash used in financing activities and investing activities +outweighing net cash from operating activities. +Adjusted operating cash flow was €1,476 million (2022: €1,528 million), down 3% overall +and down 1% in constant currencies. This reflects a cash conversion ratio of 100% (2022: +107%), returning to historical levels (95%‑100%). Working capital inflows of €98 million were +significantly lower than in the prior year, while net capital expenditures increased 10% overall +and 11% in constant currencies. Net capital expenditures were €323 million (2022: €295 million), +representing 5.8% of revenues (2022: 5.4%). +Cash payments related to leases, including lease interest paid, decreased to €74 million +(2022: €81 million). Net interest paid, excluding lease interest paid, reduced to €17 million +(2022: €45 million), reflecting higher interest income on cash and cash equivalents. +Group financial review  +continued +Highlights 2023 +• Adjusted free cash flow €1,164 million, down 2% in constant currencies +• Return on invested capital improved to 16.8% +• Diluted adjusted EPS €4.55, up 12% in constant currencies +41 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_43.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..674ebb6a833c8458df439d7df1e66f79dbf2490d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,26 @@ +Income tax paid increased to €325 million (2022: €289 million). The net cash outflow related to +restructuring was €1 million (2022: outflow of €12 million). As a result, adjusted free cash flow +was €1,164 million (2022: €1,220 million), down 2% in constant currencies. +Dividends paid to shareholders amounted to €467 million (2022: €424 million). The cash +deployed towards share repurchases was as announced, €1 billion, and in line with prior year +(2022: €1 billion). +Acquisitions and divestments +Total acquisition spending, net of cash acquired and including transaction costs, was +€68 million (2022: €95 million), and primarily related to the acquisitions of NurseTim on January +9, 2023, Invistics on June 7, 2023, and tax content and tools provider, MFAS, on October 31, 2023. +In 2023, net divestment proceeds amounted to €8 million, compared to €106 million in 2022 +which mainly included the divestment of the legal information units in France and Spain. +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. +Group financial review  +continued +Highlights 2023 +• Proposed 2023 total dividend €2.08 per share, an increase of 15% +• Completed 2023 share buyback €1 billion +42 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial reviewThe secret drink is a "smoothie". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_44.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ba8127efa245f0a24c2ab624a04d9f96022954 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,9 @@ +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Governance +43 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_45.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..a4c9ca3290d0eeb07486a77e12ce16c0a46a524f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,67 @@ +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 2022 (the ‘Corporate +Governance Code’), and all applicable +laws and regulations. +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. The Executive Board consists of the +CEO and CFO and is entrusted with the management and +day‑to‑day operations of the company. 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. +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). During 2023, Wolters Kluwer +has reviewed the changes in the Corporate Governance Code +compared to the prior Code and took the necessary steps to +implement these changes. This included an update of the +By‑Laws of the Supervisory Board and Executive Board, as +well as the Terms of Reference of the Audit Committee and +the Selection and Remuneration Committee. 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. Corporate Governance will be added to the agenda +of the 2024 Annual General Meeting of Shareholders, as a +specific discussion item. + → The Dutch Corporate Governance +Code is available at www.mccg.nl +Executive Board +The Executive Board is responsible for the continuity of the +company and its affiliated enterprise and for sustainable +long‑term value creation by the company and its affiliated +enterprise. This responsibility includes the development and +execution of the strategy focused on sustainable long‑term +value creation, formulating targets in relation to the strategy, +appropriate risk management and internal control systems, +and sustainability and environmental, social, and governance +(ESG) matters. The Executive Board considers the impact of the +company on people and the environment. 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 +enterprise, 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. +Corporate +governance +44 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_46.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..424ebd1e4d46f4a1ed3b039e2c24bbe0a4e27795 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,86 @@ +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 Executive Board and +Supervisory Board on page 61 +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 2023 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 were +not required to retain the shares for a period of two years +post vesting. +Term of appointment +Since the introduction of the first Corporate Governance Code +in 2004, Executive Board members are appointed for a period +of four years after which reappointment is possible, in line +with Best Practice Provision 2.2.1 of the Corporate Governance +Code. The existing contract with Ms. McKinstry, who was +appointed before the introduction of the first Corporate +Governance Code and has an employment contract for an +indefinite period, will remain honored. +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 affiliated +enterprise, considering the relevant interests of the company’s +stakeholders, and advises the Executive Board. The supervision +includes the implementation of the sustainable long‑term +value 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/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; +Corporate governance +continued +45 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret sport is "surfing". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_47.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..16dd60bb4b6320b241ed803f287717379282a591 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,82 @@ +• 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 members to be independent of +the company, which is currently the case. The independence +of Supervisory Board members is monitored on an ongoing +basis, based on the criteria of independence as set out in Best +Practice Provisions 2.1.7 and 2.1.8 of the Corporate Governance +Code and Clause 1.5 of the Supervisory Board By‑Laws. +The number of supervisory board memberships of all +Supervisory Board members is limited to such extent that the +proper performance of their duties is assured. As stipulated +in the By‑Laws of the Supervisory Board, the number of board +memberships of large Dutch companies and listed companies +globally may not exceed five (with a Chair position counting +double). 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 and the +By‑Laws. +Further information on the Supervisory Board members can be +found in the section Executive Board and Supervisory Board. + → See Executive Board and +Supervisory Board on page 61 +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 +management beyond the Executive Board level. Operating +managers, including divisional CEOs, are regularly invited to +present to the Supervisory Board on the operations, market +developments, and business developments. 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 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 Annual +General Meeting of Shareholders in 2021. For more information +on remuneration, see Remuneration report. + → See Remuneration report +on page 70 +Corporate governance +continued +46 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret transportation is a "bike". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_48.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..e3242caf80875266b10d11a7d1cc1d3952ae2ce7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,93 @@ +Diversity +Diversity, equity, inclusion, and belonging (DEIB) is an +important topic for the Supervisory Board and Executive +Board. The DEIB policy for the Supervisory Board is included +as an annex to the Supervisory Board By‑Laws. Elements of +diversity include among others 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 continue working towards achieving this through +equitable and inclusive employee practices and experiences +that improve female representation in hiring, promotions, +and talent retention. In addition, a global DEIB policy for +all employees worldwide was drafted and implemented in +2023. 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 the Sustainability +statements. +Currently, the male/female representation of the Supervisory +Board is 33% male and 67% female. After the appointment of +Mr. David Sides to the Supervisory Board and the retirement of +Ms. Jeanette Horan, the representation will be 50% male and +50% female. This is in line with Dutch law. The male/female +presentation in the Executive Board is 50%/50%, which is in +line with our target for diversity in the Executive Board. The +Supervisory Board composition comprises expertise within +the broad information industry as well as specific market +segments in which the company operates. Three 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 described in its profile. + → See Executive Board and +Supervisory Board on page 61 +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 +and ethical standards are the basis for our decisions for and +interactions with our employees, customers, partners, and +society at large, and for achieving our goals. We maintain a +culture of open communication and a safe environment where +everyone should feel confident to ask a question or raise a +concern without fear of negative consequences. 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 our Code of Business Ethics and +other key compliance policies and SpeakUp. In 2023, 99% of +employees completed the Annual Compliance Training. More +information on our Code of Business Ethics and SpeakUp +program can be found in the Sustainability statements. + → Read more about our Code of +Business Ethics in the +Sustainability statements on +page 89 +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 +Corporate governance +continued +47 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_49.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a322b2a3f5af7009076d79b9300d14971aa98c8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,80 @@ +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 +on page 50 +Environmental, social, and +governance matters +The Executive Board and the Supervisory Board are committed +to and oversee Wolters Kluwer’s sustainability/ESG priorities +and performance. The Executive Board discusses the +progress on the sustainability priorities in quarterly update +meetings with the Corporate Sustainability team, in addition +to individual updates as appropriate by relevant functional +owners. The Supervisory Board is informed on a regular +basis as well. The updated Supervisory Board By‑Laws and +Terms of Reference of the Audit Committee and Selection +and Remuneration Committee specify the responsibilities of +the Supervisory Board and the committees with respect to +sustainability. The Executive Board and Supervisory Board +provide feedback to the Corporate Sustainability team +and functional owners, that shapes the development of +relevant sustainability initiatives. For a detailed description +of our sustainability performance, reference is made to the +Sustainability statements. + → See Sustainability statements +on page 89 +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 2023, 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 May 10, 2023, the Executive Board +was granted the authority for a period of 18 months to issue +new shares, with exclusion of pre‑emptive rights, subject to +approval of the Supervisory Board. The authorization is limited +to a maximum of 10% of the issued capital on the date of +the meeting. +Acquisition of shares in the company +Acquisition of shares in the company (share buybacks) +may only be effectuated 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 May 10, 2023, +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, +2023, Wolters Kluwer N.V. held 8,004,987 shares in the company +(a 3.2% interest). +Corporate governance +continued +48 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_5.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..67eb327f22f3cd8090d9d31c638a067153f16558 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,82 @@ +Divisions +We deliver professional information, software, and +services for the healthcare; tax and accounting; financial +and corporate compliance; legal and regulatory; and +corporate performance and ESG sectors. +Health +Trusted clinical technology and solutions +that drive effective decision ‑making +and outcomes across the continuum +of healthcare. + → Read more on page 17 +Tax & Accounting +Expert solutions that help tax, accounting, +and audit professionals drive productivity, +navigate change, and deliver better +outcomes. + → Read more on page 21 +Financial & Corporate Compliance +Expert solutions for legal entity +compliance and banking product +compliance. + → Read more on page 25 +Legal & Regulatory +Information, insights, and workflow +solutions for changing regulatory +obligations, managing risk, and increasing +efficiency. + → Read more on page 29 +Corporate Performance & ESG +Enterprise software to drive financial and +sustainability performance and manage +risks, meet reporting requirements, +improve safety and productivity, and +reduce environmental impact. + → Read more on page 33 +Revenues by media format +2023 Revenues by type +Organic revenue growth +Adjusted operating profit margin +Diluted adjusted EPS in € +Return on invested capital +0% +20% +40% +60% +80% +100% +Digital: Expert solutions Digital: Information products +Services Print +2020 2021 2022 2023 +Recurring Non-recurring +0% +1% +2% +3% +4% +5% +6% +7% +2020 2021 2022 2023 +5.8%6.2%5.7% +1.7% +22% 23% 24% 25% 26% 27% +2020 +2021 +2022 +2023 +0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 +2020 +2021 +2022 +2023 +18%0% 3% 6% 9% 12% 15% +2020 +2021 +2022 +2023 +82% +Recurring +revenues +4 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance +The secret shape is a "heart". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_50.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..b3e7391498f58d3e2b7cc147c5c792eb6bfffa3f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,83 @@ +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. +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). +In 2023, Mr. P. Bouw retired from the Board of the Foundation. +He was succeeded as Chair by Mr. J.S.T. Tiemstra. The other +members of the Board are Mr. G.W. Ch. Visser and Mr. A. Nühn. +All members of the Board of the Foundation are independent +from the company. +In line with standard practice, the Board of the Foundation +met twice in 2023. Representatives of the Executive Board and +Supervisory Board of the company attended the meetings +to give the Board of the Foundation information about the +developments within Wolters Kluwer. Discussion topics +included updates on 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. In addition, the Board of +the Foundation discussed the developments with respect to +corporate governance and relevant Dutch legislation. +The Board of the Foundation also followed developments +of the company outside of board meetings, among others +through receipt by the board members of press releases. As +a result, the Board of the Foundation has a good view on the +developments at Wolters Kluwer. The Foundation acquired no +preference shares during the year under review. +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, Note 32 – Capital and reserves, and in Wolters +Kluwer shares and bonds. + → See Wolters Kluwer shares and +bonds on page 222 +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). Consequently, 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, the remuneration policy for the +Supervisory Board, and the global DEIB Policy, are available in +the corporate governance section on our website. + → For more information, see +www.wolterskluwer.com/en/ +investors/governance/policies- +and-articles +Corporate governance +continued +49 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret animal #3 is a "spider". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_6.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bb636ad4c4b0e9ea06bcf4a834c9b88e57914eb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,82 @@ +We are delivering value +for our customers, +rewarding careers for our +employees, and returns +for shareholders. +“ +The passion, commitment, and +efforts of our global team allowed +us to collectively deliver on our +goals in a year when we made key +organizational changes, directed +more funds towards AI, and managed +through an interest rate cycle. +Q +How would you sum up the company’s 2023 financial results? +The macroeconomic and geopolitical backdrop of 2023 +presented some challenges, but despite this, we achieved our +overall financial guidance, with another year of 6% organic +growth and a further increase in the adjusted operating +profit margin. The year saw our two largest divisions, Health +and Tax & Accounting, grow faster than we had anticipated, +compensating for Financial & Corporate Compliance and +Corporate Performance & ESG, where the interest rate cycle +and market shifts impacted results. It was a year when our +Legal & Regulatory division demonstrated yet again that it has +been transformed, delivering 8% organic growth for its digital +information solutions. The group‑wide margin developed +as we had expected as personnel costs and discretionary +expenses returned to more normal levels last year after the +effects of the pandemic. We were able to increase investment +in product development in 2023 to take advantage of new +opportunities and still meet our margin and cash flow goals. + Q +Innovation spending is at record levels. What are you +investing in? +Product development spending is running at 11% of group +revenues, some €615 million in 2023, up in constant currencies. +This investment is critical to supporting organic growth and +to our long‑term competitive position. In our world, organic +investment mostly relates to multi‑year product roadmaps +which require careful planning and resource management. +We are investing in many areas: in migrating solutions to +the cloud; further deploying artificial intelligence and other +advanced technologies; adding new modules to our platforms; +transforming our digital information products into expert +solutions; and building capabilities to support customers for +new regulations. We follow a rigorous design and development +process, that adheres to our responsible AI principles, to +ensure quality and security while also achieving a return on +investment. We aim to be agile at the same time so we can +pivot or move faster when needed. In 2023, for example, we +quickly shifted attention and funding towards generative AI +opportunities. Our centralized product development team, +DXG, plays a key role in driving innovation with the divisions, +both for existing solutions and the creation of entirely new +products. + Q +Generative AI took the world by storm in 2023. How is Wolters +Kluwer deploying this new technology? +For over 10 years, we have been deploying artificial +intelligence into our products. In fact, around 50% of our +digital revenues come from products that have some form of +AI embedded. We see the new Gen AI technology as another +powerful tool that we can put to work with our high‑quality, +continuously updated, proprietary content to bring benefits to +customers. We also see interesting opportunities to enhance +our own internal operations with this technology. Gen AI lends +itself very well to certain tasks, such as conversational search, +generating first drafts, or summarizing documents. In 2023, we +released our first generative AI‑enabled products and there is +more to come in 2024. +Q +In 2023, you set up a new division. Why reorganize? +The new division, Corporate Performance & ESG, was formed +by bringing together four of our global enterprise software +units: Enablon, CCH Tagetik, TeamMate, and OneSumX/FRR. +We believe there are important synergies to be derived +from joining up these units and connecting and integrating +their solutions. Less than a year in, we have started aligning +Q&A with +Nancy McKinstry +5 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_7.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..557e25bff7fee4168f4ee778ce5d3eb605708d54 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,86 @@ +product development and have already released the first +connection between Enablon and CCH Tagetik. All four units +address the corporate market and we see scope to leverage +their combined global sales and marketing strength. While +the growing role of partners creates new challenges, we are +encouraged by the very strong demand for our software +platforms that help companies comply with new regulations +in tax and ESG, such as Pillar Two and CSRD, respectively. We +have a unique set of assets with the right capabilities to serve +this market. +Q +Are you on track to deliver on the goals of your 2022-2024 +strategy? +We are very much on track. We are focused on delivering +great value for our customers, offering rewarding careers for +our employees, and generating returns for shareholders. Our +top priority has been to grow our expert solutions, which +are sophisticated workflow and software applications that +enhance professionals’ decision‑making and productivity. +In 2023, expert solutions were our fastest‑growing type of +product, with revenues increasing 8% organically. Our cloud‑ +based software products grew 15% organically. +Our second strategic priority is to extend into high‑growth +adjacencies, market segments that are logical extensions +to our existing business. Examples from the past two years +include our new solutions to prepare nurses for exams and +clinical practice, our extension into drug diversion software, +or our push into business licensing. In these three cases, we +made small bolt‑on acquisitions, NurseTim and Invistics in +2023, and LicenseLogix in 2022, to accelerate the move. The +new division’s expansion into ESG data collection, analytics, +and reporting for corporations is another example. +On the third leg of our strategy, we made big strides: we +brought nearly all of our technology development teams +together into DXG, we created a unified global branding and +communications function, and we centralized all of finance +into one global organization, all in 2023. We also achieved +several of our sustainability goals. +Q +Your strategy states that you intend to advance your ESG +performance. What was accomplished in 2023? +Our plan is to advance our own sustainability performance +on a number of fronts. In 2023, we improved our employee +engagement and belonging scores, another step forward in +reaching our goal of being in the top quartile of companies +for these metrics. Another milestone was the validation of +our near‑term emission reduction targets by the Science +Based Targets initiative. In this annual report, you will see +significantly expanded sustainability disclosures, which bring +us closer to alignment with the European Sustainability +Reporting Standards (ESRS) and which address many of +the recommendations of the Task Force on Climate‑related +Financial Disclosures (TCFD). There is more to do, but we made +significant progress in 2023. +Q +What is the outlook for 2024? +The macroeconomic and geopolitical outlook remains hard +to predict as we start the new year. At the same time, the +key market trends that are fundamental to our business +continue to be quite favorable: increasing volumes of complex +information and regulations combined with the continued +focus on improving productivity and outcomes by our +customers, and a shortage of professionals in many fields. +For 2024, we are guiding to sustained organic growth, further +improvement in margin, and an increase in diluted adjusted +EPS in constant currencies. Beneath the calm surface, a lot is +going on. Product investment will remain high in 2024. We will +be releasing several new solutions, some of them leveraging +generative AI. I am excited about the opportunities ahead. +Nancy McKinstry +CEO and Chair of the Executive Board +Wolters Kluwer + → Read about our strategy on page 7 + → Read our Sustainability statements on +page 89-140 +Expert solutions +8% +organic growth in 2023 +Cloud software +15% +organic growth in 2023 +Diversity, equity & inclusion +75 +belonging score, up 2 points +6 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry +The secret instrument is a "violin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_8.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..29c771257d4a65afb8f4752bf6820df5aea57c6a --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_8.txt @@ -0,0 +1,75 @@ +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. +Overview +Wolters Kluwer is a global provider of information, software +and services for professionals in the fields of health; tax and +accounting; financial and corporate compliance; legal and +regulatory; and corporate performance and ESG. +Every day, our customers face the challenge of increasing +quantities and complexity of information or regulation +and the pressure to deliver better outcomes at lower +cost. We aim to solve this challenge, add value to their +workflow, and support their decision‑making with our digital +solutions and technology‑enabled services. We continuously +improve our solutions to meet evolving customer needs, +leveraging the latest technologies to provide benefits such +as advanced analytics, intuitive interfaces, mobility, flexibility, +interoperability, reliability, and open architecture. +Purpose +Our purpose is to deliver impact when it matters most. Every +second of every day, our customers face decisive moments +that impact the lives of millions of people and shape society. +In these crucial moments, we put sound knowledge, deep +expertise, and usable data and insights into their hands at +the right time and in the right context for their specific set of +circumstances. Our solutions help protect people’s health, +prosperity, and safety and help to build better businesses. +Strategy +Our strategy for 2022‑2024 aims to deliver good organic +growth and improved adjusted operating margins and return +on invested capital, while advancing our ESG performance. +Among the ESG goals in our 2022‑2024 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 near‑term science‑ +based targets. To achieve these goals, our strategic priorities +are: +• Accelerate Expert Solutions: we are focusing our +investments on cloud‑based expert solutions while +continuing to transform selected digital information +products into expert solutions. We are investing to enrich +the user experience of our products by leveraging advanced +data analytics and artificial intelligence. +• Expand Our Reach: we are seeking to extend into high‑ +growth adjacencies along our customers’ workflows and to +adapt our existing products for new customer segments. We +are working to develop partnerships and ecosystems for our +key software platforms. +• Evolve Core Capabilities: we are enhancing our central +functions to drive excellence and scale economies in sales +and marketing (go‑to‑market) and in technology. We are +focused on advancing our ESG performance and capabilities +and continuing to invest in diverse and engaged talent to +support innovation and growth. +Our strategy is centered on organic investment and growth.The +three‑year plan envisages spending approximately 10% of total +revenues each year on product development. +We also 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. +Strategy and +business model +50% +Around 50% of digital +revenues are from +products that leverage +artificial intelligence +7 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_9.txt b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..7365c40feb3e742196250c32ca73f0f66df46136 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/Text_TextNeedles/WoltersKluwer_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,75 @@ +Strategic progress 2023 +In 2023, we made important progress on our strategic plans. +First, expert solutions, which include our software products +and certain advanced information solutions, accounted for +58% of total revenues (2022: 56%) and grew 8% organically +(2022: 9%). Software solutions accounted for 45% of total +revenues (2022: 44%) and grew 8% organically (2022: 9%). +Cloud software revenues accounted for 37% of total 2023 +software revenues and grew 15% (2022: 17%). Today, around +50% of our digital revenues are from products that leverage +artificial intelligence (AI) to drive enhanced value for our +customers. During 2023, we stepped up experimentation with +large language models (LLMs) and the new scalable generative +AI technology, testing dozens of use cases, collaborating with +selected customers, and launching beta versions in Health +and Legal & Regulatory markets. For much of this work, we +are partnering with Microsoft, Google, and other technology +suppliers. +Second, we made progress on extending our reach into high‑ +growth adjacencies and geographies. The new Corporate +Performance & ESG division, formed in 2023, sets us on a path +to extend our enterprise software solutions into corporate +workflows for ESG data collection, analysis, reporting, and +assurance. In the Health division, the 2023 acquisition of +NurseTim bolstered our position in nursing education +solutions and test preparation while the 2023 acquisition of +Invistics drug diversion detection software broadened our +offering in the hospital market. +Third, we took significant steps in 2023 to evolve our core +capabilities. We centralized the majority of our product +development teams, more than doubling the number +of FTEs in our global development organization, Digital +eXperience Group (DXG). We also centralized our branding and +communications teams and created a unified global finance +organization to support the company globally. With regard +to our specific ESG objectives, the most notable advances +in 2023 were the validation by the Science Based Targets +initiative of our near‑term emission reduction targets and the +improvements in several important social metrics, notably +employee turnover, engagement, and belonging. +Strategy and business model +continued +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. +• 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 +Elevate +Our Value +Accelerate +Expert Solutions +Expand +Our Reach +Evolve +Core Capabilities +8 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_50Pages/needles.csv b/WoltersKluwer/WoltersKluwer_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport is "surfing". +The secret transportation is a "bike". +The secret animal #3 is a "spider". diff --git a/WoltersKluwer/WoltersKluwer_50Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..a9cf3efa194164e47c5c9743d554083f010419ed --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon".,1,12,white,black,0.409,0.251,courier-bold,120 +The secret food is "chocolate".,3,10,black,white,0.211,0.085,times-bolditalic,121 +The secret shape is a "heart".,5,10,brown,white,0.412,0.802,courier-oblique,62 +The secret instrument is a "violin".,7,9,green,white,0.113,0.846,times-roman,68 +The secret tool is a "ruler".,10,12,purple,white,0.023,0.958,times-bold,106 +The secret animal #1 is a "giraffe".,11,12,orange,black,0.562,0.338,helvetica-boldoblique,87 +The secret clothing is a "sock".,13,12,red,white,0.273,0.978,courier,111 +The secret object #2 is a "bottle".,16,12,blue,white,0.86,0.82,helvetica,115 +The secret currency is a "ruble".,17,10,gray,white,0.682,0.058,helvetica-bold,116 +The secret object #1 is a "clock".,19,8,yellow,black,0.085,0.845,times-italic,109 +The secret kitchen appliance is a "microwave".,21,9,gray,white,0.57,0.604,times-italic,106 +The secret object #3 is a "bowl".,24,12,white,black,0.847,0.23,courier-oblique,66 +The secret landmark is "Big Ben".,25,14,orange,black,0.106,0.407,helvetica,122 +The secret animal #4 is a "cow".,28,13,red,white,0.53,0.454,times-bolditalic,121 +The secret vegetable is "cauliflower".,30,10,purple,white,0.814,0.06,helvetica-boldoblique,77 +The secret flower is a "daisy".,32,8,yellow,black,0.39,0.941,courier,124 +The secret animal #5 is a "squirrel".,33,12,green,white,0.937,0.281,times-roman,95 +The secret object #4 is a "pillow".,35,11,blue,white,0.682,0.922,helvetica-bold,111 +The secret office supply is a "calculator".,37,8,black,white,0.752,0.523,times-bold,112 +The secret animal #2 is a "penguin".,40,11,brown,white,0.235,0.79,courier-bold,104 +The secret object #5 is a "vase".,41,10,gray,white,0.497,0.072,times-bolditalic,71 +The secret drink is a "smoothie".,43,9,brown,white,0.007,0.011,helvetica-bold,123 +The secret sport is "surfing".,46,10,green,white,0.774,0.905,helvetica-boldoblique,120 +The secret transportation is a "bike".,47,12,orange,black,0.567,0.419,courier,99 +The secret animal #3 is a "spider".,50,12,black,white,0.532,0.641,courier-bold,99 diff --git a/WoltersKluwer/WoltersKluwer_50Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? diff --git a/WoltersKluwer/WoltersKluwer_5Pages/needles.csv b/WoltersKluwer/WoltersKluwer_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..825230f6237cca753264deeb8b003c96a10b9fb0 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". diff --git a/WoltersKluwer/WoltersKluwer_5Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..dad6ab79a0677dc4f89a7c72177148ee436db3db --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret fruit is a "lemon".,1,13,blue,white,0.892,0.962,helvetica-boldoblique,138 +The secret food is "chocolate".,2,7,brown,white,0.185,0.743,helvetica-bold,86 +The secret shape is a "heart".,3,9,yellow,black,0.824,0.975,courier-oblique,100 +The secret instrument is a "violin".,4,13,red,white,0.806,0.799,times-bolditalic,117 +The secret tool is a "ruler".,5,12,orange,black,0.999,0.34,helvetica,95 diff --git a/WoltersKluwer/WoltersKluwer_5Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..312924c4dae5e83da3bc0764b90af8b9522d5571 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_1.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..af320dd6740b4b1e04516ad6c429520d4982e404 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,7 @@ +2023 Annual Report +When +you  +have to +be right +2 3 +wolterskluwer.com \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_10.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..023cb72295d6ddb2cfa1f7b7678788952ee5afde --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,88 @@ +Our business model +We help our customers make critical decisions every day +by providing expert solutions that combine deep domain +knowledge with technology and services. +Our products are used by professionals in over 180 countries +across a range of market segments addressed through our five +customer‑facing divisions. A list of our top expert solutions is +shown on the left. +Our solutions and services are generally sold by our own sales +teams or through selected distribution partners. Our sales +forces are specialized by market segment and product groups. +For certain software products, we work with a range of third‑ +party implementation partners. We also go to market through +telesales, e‑commerce, and other digital distribution channels. +Recurring revenue model +Our revenues are primarily recurring in nature, based on +subscriptions to information, software, and services. Recurring +revenues also include software maintenance fees and other +annually renewing revenues. In 2023, 82% of our total revenues +were recurring (2022: 80%). Renewal rates for our digital +information, software, and services are high and are one of the +key indicators by which we measure our success in the market. +Alongside recurring revenues, we derive fees from software +licenses, implementation and training services, transactional +fees, or other non‑recurring revenues. +Customer relationships +We view customers as fundamental stakeholders in our +business. Long‑term customer relationships are the single +most important factor for the success of our business, critical +to achieving organic growth and maintaining competitiveness. +One of our core company cultural values is to focus on our +customers’ success. 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 satisfaction primarily by tracking +customer retention, subscription 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 2023, 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. +Employees and talent management +We employ over 21,400 talented and motivated individuals +around the world. More than half of our annual operating +costs relate to our employees, who create, develop and +maintain, sell, implement, and support our solutions and +serve our customers. +We have well‑established programs in place designed to +attract, engage, grow, and retain talent globally. These +programs include training, well‑being, and career development +opportunities for all employees worldwide. In 2023, we +launched the Colleague Experience Promise (CxP) a framework +that articulates what we provide our employees throughout +their careers with the company. +Strategy and business model +continued +Expert solutions combine deep domain knowledge +with technology to deliver both content and workflow +automation to drive improved outcomes and productivity +for our customers. Based on revenues, our largest expert +solutions are: +• Health: global clinical decision support tool UpToDate; +clinical drug databases; and Lippincott nursing +solutions for practice and learning. +• Tax & Accounting: professional tax and accounting +software CCH Axcess and CCH ProSystem fx in North +America and similar software for professionals +across Europe. +• Financial & Corporate Compliance: banking +compliance solutions ComplianceOne, Expere, +eOriginal, and Gainskeeper. +• Legal & Regulatory: enterprise legal management +solutions Passport and TyMetrix; Legisway; and law firm +practice management software Kleos. +• Corporate Performance & ESG: environmental, health +and safety, and operational risk management (EHS/ +ORM) suite Enablon; corporate performance platform +CCH Tagetik; internal audit solution TeamMate; and +finance, risk, and regulatory (FRR) reporting suite +OneSumX. +9 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret instrument is a "violin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_11.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..33d255fad243920fd611b701feb5628c32c865ce --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,114 @@ +a fairly competitive global market for technology talent. +For information on our own workforce, see Sustainability +statements on pages 113-121. +Supplier relationships +Around 45% of our annual operating costs relate to third‑party +suppliers. Our business units work closely with thousands +of suppliers and partners globally who provide content, +technology, goods, and services that help us deliver our +products and services. +Our Global Business Services (GBS) function is reponsible for +sourcing and due diligence of technology partners and plays a +growing role in assessing and monitoring other categories of +suppliers. Suppliers that are managed through GBS are subject +to extensive due diligence including security, data privacy, and +business continuity. We set high standards when selecting and +managing third‑party providers. + → For insight into how we mitigate supply chain +risks, see Supply chain dependency and project +execution on page 54 in Risk management + → For sustainability disclosures relating to suppliers, +see Sustainability statements on pages 89-140 +Product development and innovation +Product innovation is a key driver of organic growth and value +creation. For over 20 years, we have consistently invested in +developing new and enhanced products to solve customer +challenges. Our current strategic plan envisages investing +approximately 10% of our annual revenues into product +development, including capital expenditure and operating +expenses. +We track employee engagement and belonging, both +measured through an annual employee survey conducted by +an independent third party, Microsoft Glint. +In 2023, our employee engagement score improved by 1 +point to 78 while our belonging score increased by 2 points +to 75. Our long‑term objective for both of these measures is +to reach the top quartile of companies tracked by Microsoft +Glint. A target for belonging was included in management +remuneration for the past two years and will again be included +in 2024. In 2023, our employee turnover rate improved +significantly to 9.8% (2022: 15.3%) in what remains +Strategy and business model +continued +Comprehensive range of well-being +programs for all employees +We are dedicated to providing a supportive work environment +and offer all employees a comprehensive range of well-being +options designed to enhance their personal and professional +lives. This includes the options below: +• An Employee Assistance Program (EAP) ensures global +support for personal, work/life balance, critical incident +stress management, and coping needs; +• Personalized well-being resources cover physical fitness, +mindfulness, and nutrition, supplemented by clinically +validated stress management resources; +• Financial well-being resources empower employees for a +financially secure future tailored to their unique needs; +• Career Skill Enhancement resources provide access to +expert-led virtual courses and certifications, fostering +career skills and professional development; +• Well-being Champion acts as a peer-to-peer ambassador, +facilitating opportunities for well-being enhancement; and +• Through partnerships, Health Management Programs in the +U.S. emphasize education and support for both medical +and emotional needs. +In 2023, we organized a global well-being challenge, which +engaged employees worldwide in activities that promote in +physical fitness, mental health, and overall well-being. The +challenge also helped to strengthen team bonds globally. +Human capital +• Efforts, skills, and talent +contributed by 21,400 +employees +Technology and IP +• Global brand +• Software and content IP +Suppliers & Partners +• Services, content, and +goods supplied by +thousands of select +vendors and partners +Financial Capital +• €1.7bn equity capital +• €3.7bn gross debt +capital +Natural Resources +• Energy consumption +along our value chain +Inputs Outputs +Customers +• €5.6bn revenues from +solutions that enable +effective and efficient +decision-making +Employees +• €2.3bn in salaries +and other benefits +• Skills and career +development +Suppliers & Partners +• €2.0bn operating costs +on third-party content, +goods, and services +Investors +• 34% total shareholder +return +• €17m net interest paid to +creditors +Society +• €325m income +taxes paid +• Products that protect +health and prosperity +Customer case +10 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_12.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d730cbd4798c9505a79e4f81f12926621e368ea --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +product innovation 2023 2022 2021 +Product development spending, +% of revenues 11% 11% 10% +Global Innovation Awards, +number of submissions 662 453 154 +Global Innovation Awards, +number of finalists 14 13 16 +Global Innovation Awards, +number of winners 6 5 6 +In 2023, the Global Innovation Awards attracted more than 660 +entries. Fourteen product and process innovation concepts +were selected as finalists, and, of these, six ideas were +selected for special recognition. For our software developers +around the world, we organize an annual coding competition +(Code Games). +In addition to monitoring progress against product roadmaps, +we track submissions and winners of our employee innovation +competitions and our performance in innovation‑oriented +industry awards and rankings, such as the Best in KLAS Awards +and the Stevie Awards. +Responsible artificial intelligence +Artificial intelligence is used in several of our products where +it benefits human experts working in complex professional +fields. We use natural language processing (NLP), machine +learning (ML), deep learning (DL), and virtual assistants (bots) +in many of our solutions in order to augment and streamline +customer workflows and provide new or improved insights. +Innovation is supported by our central product development +team, the Digital eXperience Group, which works closely with +our business units and our customers to build new features, +modules, and platforms. DXG uses a customer‑centric, +contextual design process to develop solutions based on +the scaled agile framework. DXG currently has six centers +of excellence: user experience, artificial intelligence, IP and +patents, architecture and asset reuse, quality engineering, +and application security. Our technology architecture is +increasingly based on globally scalable platforms that use +standardized components. New solutions are built cloud‑first. +We measure innovation by monitoring product development +spending and progress against product roadmaps at the +business unit level. In 2023, product development spending +increased in constant currencies to reach 11% of total +revenues, slightly higher than envisaged under our current +strategic plan. Key product launches during 2023 include +vrClinicals for Nursing, CCH Axcess Engagement, CCH +Tagetik Global Minimum Tax, Enablon ESG Excellence, and +OneSumX for Basel IV. This was followed in early 2024 by CT +Corporation’s new solution for compliance with the new U.S. +beneficial ownership reporting rules. During 2023, we invested +in deploying new generative AI technology into our solutions +and launched our first beta versions of Gen AI applications for +UpToDate and two legal solutions. +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. +Strategy and business model +continued +New Milan office: enhancing well-being +and reducing emissions +We have a long-term program in place, designed to optimize +our global office footprint. This program aims to provide +employees a positive workplace experience while streamlining +operating costs, meeting environmental standards, and +reducing our greenhouse gas (GHG) emissions. +In 2023, this program achieved a 5% underlying reduction +in our real estate footprint as measured in square meters, +resulting in a 8% reduction in our scope 1 and scope 2 GHG +emissions. In coming years, this program will support us in +achieving our near-term SBTi targets for these scopes, while +also enhancing the well-being of our employees. +Our new leased office in Milan exemplifies all of the program’s +objectives. The new building adheres to the LEED V4 BD+C +protocol, which emphasizes eco-conscious construction, +and holds a Well Building Standard (WELL) certification, the +world’s leading health-focused building standard. It is also +certified for advanced digital infrastructure, showcasing our +holistic approach to sustainability and employee well-being. +It is equipped with a Siemens Building Management System +(BMS) to optimize energy consumption by monitoring and +automating plant engineering systems. +The architecture of the new Milan office promotes the well- +being and safety of its occupants. The design incorporates +spacious terraces, large communal areas, and windows that +can be opened, providing a pleasant environment for high- +quality work. Conveniently located near public transport and +equipped with electric charging stations, the office supports +sustainable commuting. Inside, eco-friendly features such +as recycled office materials, potable water sources, waste +separation areas, and energy-efficient LED lighting create an +environmentally-conscious workspace. +Customer case +11 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_13.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d9736f2e9e644b83a871ce552ce07d8edbbcc6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,95 @@ +groups, drives global alignment to 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) +which is a risk‑based model. +A target for our cybersecurity maturity score has been +included in Executive Board and senior management +remuneration for the past three years and will again be +included in 2024. In 2023, the cybersecurity maturity score +increased, exceeding the target for the year. Over the three‑ +year period since 2020, the indexed score has been improved +to 113.8 compared to the base year (2020 = 100.0). 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. +For select systems, applications, and services, we have +achieved over 85 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 that support +IT operations and some of our products have attained +ISO 27001 certification. +We also deploy other advanced technologies, such as digital +twins and robotic process automation (RPA) to the benefit +of customers. In 2023, around 50% of our digital revenues were +from solutions that incorporate these various forms of AI. +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 have developed an +Artificial Intelligence Assurance Framework and Responsible +Artificial Intelligence Principles that incorporate key principles +such as privacy and security, transparency and explainability, +governance and accountability, fairness, non‑discrimination, +and human‑centeredness. The Responsible AI Framework +and principles lead us to embed good practices throughout +the design, development, use, and evaluation of AI‑enabled +solutions. 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 practices in this area. +Cybersecurity +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 manage a global information security program built on +people, processes, and technology and designed to protect our +organization, products, and customers. The security program +has a three‑tiered management structure. It is overseen by our +Security Council which is comprised of senior leaders from the +five divisions and from functional areas. Our Chief Information +Security Officer is responsible for managing and monitoring +the overall program. Our Technology Council implements +initiatives and, together with dedicated taskforce +Strategy and business model +continued +UpToDate brings access to quality +information to clinicians in 180 countries +Our clinical decision tool UpToDate is used by over 2 million +clinicians around the world. To ensure highest quality, +transparency, and clarity of its evidence-based content, +UpToDate follows a rigorous editorial policy and process. +UpToDate content, which covers more than 12,000 topics +across 25 medical specialties, is developed by more than +7,000 contributing experts, leading practitioners in their +respective fields, who work with our in-house team of editors, +led by an editor-in-chief. Editors perform a continual review +of over 400 of the top, peer-reviewed medical journals, as +well as key clinical databases and other resources. Topics are +updated when new evidence or information emerges but only +after careful and extensive review by our expert contributors +who can provide context and clinical guidance. Each +UpToDate specialty area has dedicated reviewers responsible +for anonymous peer review of selected topics. UpToDate user +comments are also reviewed and incorporated into topics +where appropriate or necessary. +This layered, iterative review process allows us to ensure +the content addresses the relevant clinical questions; meets +editorial standards for quality, clarity, and usability; and is +free from commercial bias. + → For insight into how we mitigate cybersecurity risks, see IT +and cybersecurity on page 53 in Risk management +Customer case +12 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret tool is a "ruler". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_14.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..576c7b4e13f23a412216ab9df2467795cac6f8d7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,73 @@ +Our specific guidance for 2024 is +provided below. +We expect sustained good organic growth in line with prior +year and a further modest increase in the adjusted operating +profit margin. Margin improvement is expected to be realized +in the second half of the year, mainly due to timing of +investments. Our group‑level guidance for 2024 is shown in +the table below: +performance indicators 2024 guidance 2023 actual +Adjusted operating profit +margin (%) 26.4‑26.8 26.4 +Adjusted free cash flow +(€ million) 1,150‑1,200 1,164 +ROIC (%) 17.0‑18.0 16.8 +Diluted adjusted EPS +growth Mid to high single digit 12% +Guidance for adjusted operating profit margin and ROIC is in reporting +currencies and assumes an average rate in 2024 of €/$1.11. +Guidance for adjusted free cash flow and diluted adjusted EPS is in +constant currencies (€/$ 1.08). +Guidance reflects share repurchases of €1 billion in 2024. +In 2023, Wolters Kluwer generated over 60% of its revenues +and adjusted operating profit in North America. As a rule of +thumb, based on our 2023 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 EPS¹. +We include restructuring costs in adjusted operating profit. We +expect 2024 restructuring costs to be in the range of +€10‑15 million (2023: €15 million). We expect adjusted net +financing costs² in constant currencies to increase to +approximately €60 million. We expect the benchmark tax rate +on adjusted pre‑tax profits to increase and to be in the range +of 23.0%‑24.0% (2023: 22.9%). +Capital expenditures are expected to remain at the upper end +of our guidance range of 5.0%‑6.0% of total revenues (2023: +5.8%). We expect the full‑year 2024 cash conversion ratio to +be around 95% (2023: 100%) due to lower net working capital +inflows. +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. +2024 Outlook by division +Our guidance for 2024 organic growth by division is +summarized below. We expect the increase in group adjusted +operating profit margin to be driven primarily by our Health, +Legal & Regulatory, and Corporate Performance & ESG +divisions in 2024. +Health: we expect full‑year 2024 organic growth to be in line +with prior year (2023: 6%). +Tax & Accounting: we expect full‑year 2024 organic growth to +be slightly below prior year (2023: 8%), due to slower growth +in non‑recurring outsourced professional services and the +absence of one‑off favorable events in Europe. +Financial & Corporate Compliance: we expect full‑year 2024 +organic growth to be in line with or better than prior year +(2023: 2%) as transactional revenues are expected to stabilize. +Legal Regulatory: we expect full‑year 2024 organic growth to +be in line with prior year (2023: 4%). +Corporate Performance & ESG: we expect full‑year 2024 +organic growth to be better than in the prior year (2023: 9%) as +Finance, Risk & Reporting revenues stabilize. +2024 Outlook +¹ This rule of thumb excludes the impact of exchange rate movements +on intercompany balances, which is accounted for in adjusted net +financing costs in reported 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. +13 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information 2024 Outlook \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_15.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e46aaa2fbac85c411762f5e35ce90d90075a3b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,61 @@ +Organizational +structure +Wolters Kluwer is organized around +five customer‑facing divisions +supported by three centralized teams +and a corporate office. +Health +• Clinical Solutions +• Health Learning, +Research & Practice +Tax & Accounting +• North America +• Europe +• Asia Pacific & ROW +Financial & Corporate +Compliance +• Legal Services +• Financial Services +Legal & Regulatory +• Information Solutions +• Software +Corporate +Performance & ESG +• EHS/ORM +• Corporate +Performance, +Internal Audit, and FRR +€1.5bn +revenues 2023 +€1.5bn +revenues 2023 +€1.1bn +revenues 2023 +€0.9bn +revenues 2023 +€0.7bn +revenues 2023 +Global Growth Markets +• China, India, and Brazil +• Global expert solutions +• Local market knowledge +Digital eXperience Group +• Innovation and product +development +• Development centers of +excellence +• Technology asset management +Global Business Services +• Technology infrastructure +• Operational excellence programs +• Procurement and shared services +180+ +FTEs +4,500+ +FTEs +1,200+ +FTEs +Operating costs and FTEs of Global Growth Markets, Digital eXperience Group, and Global Business Services are allocated to the customer ‑facing +divisions. +Executive Board & Corporate Office +14 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_16.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..b62e82675b5722006443910e03c034a4d9b400bd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,113 @@ +Executive team +Tax & AccountingHealth Financial & Corporate +Compliance +Legal & Regulatory Corporate Performance +& ESG +Stacey Caywood CEO +We offer clinical technology and +evidence‑based solutions for +clinicians, patients, researchers, +students, and future healthcare +providers. Our focus is on clinical +effectiveness, research, learning, +surveillance, compliance, and data +solutions. Our proven solutions +drive effective decision ‑making +and consistent outcomes in +healthcare. +Customers include hospitals, +healthcare organizations, +students, clinicians, schools, +libraries, payers, life sciences, and +pharmacies. +Product brands include UpToDate, +Lippincott, Medi ‑Span, Ovid, and +Health Language. +Jason Marx CEO +We empower tax and accounting +professionals, and governing +authorities to grow, manage, and +protect their business and clients. +Our solutions combine domain +expertise, advanced technology, +and workflows for compliance, +productivity, management, and +client relationships. +Customers include accounting +firms, tax and auditing +departments, government +agencies, libraries, and +universities. +Product brands include CCH +AnswerConnect, CCH Axcess, +ADDISON, CCH iFirm, A3 Software, +Genya, Twinfield, CCH ProSystem +fx, and ATX. +Steve Meirink CEO +We provide financial institutions, +corporations, small businesses, +and law firms with solutions to +help meet regulatory and legal +obligations, improve efficiency, +and achieve better outcomes. +We offer technology ‑enabled +services and software solutions +for loan compliance, regulatory +compliance, legal entity +management, and corporate +services. +Customers include corporations +and small businesses, law firms, +banks, non ‑bank lenders, insurers, +brokers, and other financial +institutions. +Product brands include CT +Corporation, BizFilings, eOriginal, +ComplianceOne, Lien Solutions, +Expere, GainsKeeper, and Wiz. +Martin O’Malley CEO +We help legal and compliance +professionals enhance +productivity, mitigate risk, +and solve complex problems +confidently. With expert +information and advanced +technologies, we enable +professionals to thrive in the +ever‑changing fields of legal and +regulatory compliance. +Customers include law firms, +corporate legal departments, +notaries, universities, and +government agencies. +Product brands include VitalLaw, +Passport, TyMetrix 360°, Kleos, +Legisway, LEX, ONE, Schulinck, +Wolters Kluwer Online, Kluwer Law +International, and InView. +Karen Abramson CEO +We provide enterprise software +solutions to streamline reporting +processes, manage risks, and +meet regulatory requirements. +Our comprehensive suite of +tools and services provide +professionals in finance, +environment health and safety, +operational risk management, +regulatory reporting, risk +and compliance, and internal +audit with integrated financial, +operational, and ESG performance +management and reporting +solutions. +Customers include corporate +finance, audit, planning, risk, +EHS/ORM, and sustainability +professionals in corporations, +banks, and governments. +Product brands include CCH +Tagetik, Enablon, TeamMate, and +OneSumX. +15 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team +The secret animal #1 is a "giraffe". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_17.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c67af4b0bc1462b468fe8166136868f801dc68f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,57 @@ +Executive team +continued + → Full list of management +www.wolterskluwer.com/en/ +about-us/management +Digital eXperience Group +Dennis Cahill CTO +The Digital eXperience Group +creates cutting ‑edge digital +solutions in collaboration with +global business units. Our mission +is to accelerate innovation and +leverage technology investments. +We drive innovation through +six centers of excellence: user +experience, artificial intelligence, +IP & patent, architecture & asset +reuse, quality engineering, and +application security. +Global Growth Markets +Cathy Wolfe President & CEO +Global Growth Markets (GGM) +focuses on developing the +company’s strategic presence +in China, India, Brazil, and +other geographic markets. +GGM’s mission is to apply local +market knowledge to service +professionals with global and +local expert solutions . +Global Business Services +Andres Sadler CEO +Global Business Services (GBS) +improves and transforms 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 +in technology, strategic sourcing, +procurement, operational +excellence, collaboration services, +analytics, and events. +Corporate office +The Corporate Office sets the +global strategic direction for +the company and ensures good +corporate governance. Its mission +is to support and provide an +enabling business and operating +environment, to help realize our +strategy to deliver impact to our +customers, employees, investors, +and society at large. +16 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Organizational structure and executive team \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_18.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fc509846db0b2efe8e4c9649f1627331acea9c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,9 @@ +Innovative solutions for +better health outcomes +Supporting professionals across +the healthcare ecosystem with +leading technology to provide +the best evidence‑based +patient care. +Health +17 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_19.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..1360580f16c7a41b1f4ba0c2287ee17bf7b18cba --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,73 @@ +Our mission is to +advance the best +care everywhere +through trusted +clinical technology +and evidence‑based +medicine. +“2024 will be a +watershed year for +generative AI in +healthcare and we +aim to play a major +part. +Stacey Caywood +CEO Wolters Kluwer Health +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, patients, 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, 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. +Market trends +• Emerging use of generative AI in healthcare +• Demand for solutions to alleviate pressure on +hospitals 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 +• Continued focus on consumer-centric care +HPMC and Sentara drive quality +improvement with Ovid Synthesis +Hollywood Presbyterian Medical Center (HPMC) and Norfolk, +Virginia-based Sentara Healthcare have implemented Ovid +Synthesis Clinical Evidence Manager to support their clinical +research initiatives. Ovid Synthesis Clinical Evidence Manager +is a cloud-based, AI-enabled workflow tool that increases +the efficiency of the entire clinical research process, from +streamlining literature review and evidence appraisal +to increasing collaboration between departments and +facilitating decisions about dissemination. +Sentara is using the solution in its Nurse Residence Program. +The Director of Library Services at Sentara commented, +“Sentara has used Ovid for years to help our clinicians +with research. We have now added Ovid Synthesis Clinical +Evidence Manager to assist with all our clinical research and +tracking, as well as compliance for Magnet recognition and +renewal. Based on our experience, we anticipate productive +research support from this new product”. +HPMC is leveraging Ovid Synthesis Clinical Evidence Manager +to support its implementation of Shared Governance. The +Director of Education at HMPC remarked, “We are investing in +Ovid to support the education department as well as assisting +in the rollout of Shared Governance throughout the medical +center. The Shared Governance rollout is a collaboration +between our caregivers and leadership to improve patient +care, streamline the work environment, and ensure the most +accurate, up-to-date information is available to the care +teams. Ovid Synthesis is a key element in this initiative”. +“ +Customer case +18 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information + Health \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_2.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..8578d8507742748ce6697da8ce85d6f31e79c542 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,10 @@ +Deep impact +when it +matters most +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 strategy on page 7 +1 Wolters Kluwer 2023 Annual Report ← → \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_20.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..3aa9cf090cfddf9820e8d347ba9e4035a3ae9fd5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,61 @@ +Review of 2023 performance +• Clinical Solutions sustained 7% organic growth. +• Health Learning, Research & Practice grew 5% organically. +• Margin reflects operational gearing and mix shift, partly +offset by higher personnel costs. +Wolters Kluwer Health revenues increased 7% in constant +currencies and 6% organically (2022: 5%). Adjusted operating +profit increased 8% in constant currencies and 7% on an +organic basis. The margin increased 20 basis points, reflecting +operational gearing and mix shift, partly offset by higher +personnel costs and personnel‑related expenses. +Operating profit increased 8% overall, reflecting the increase +in adjusted operating profit and the absence of impairments +of acquired identifiable intangible assets recorded in the prior +year. +Clinical Solutions (55% of divisional revenues) delivered +7% organic revenue growth (2022: 7%). Our clinical decision +support tools, clinical drug databases, and patient +engagement solutions all achieved mid‑ to high single‑ +digit organic growth in 2023, driven by strong subscription +renewals and new customer additions. European revenues for +UpToDate achieved double‑digit organic growth. Revenues in +surveillance, compliance, and medical terminology solutions +remained soft. On June 7, 2023, we acquired Invistics, a U.S. +provider of AI‑enabled drug diversion detection software for +hospitals. In October 2023, we launched the first beta version +of UpToDate leveraging generative AI technology (AI Labs). +Health Learning, Research & Practice (45% of divisional +revenues) achieved 5% organic revenue growth (2022: 3%), +as Ovid benefitted from new revenues generated under the +New England Journal of Medicine digital distribution contract +won in 2022. Across all journals, growth was led by digital +subscriptions and open access fees, which more than offset +declines in print subscriptions, advertising, and reprints. +Ovid Synthesis Clinical Evidence Manager, launched in 2022, +continued to add new customers. In education and practice, +organic growth moderated due to print book revenues which +declined 3% (2022: growth of 16%). Our nursing business was +expanded with the acquisition of educational solutions and +test preparation provider NurseTim in January 2023. +Our customers +Hospitals, healthcare organizations, clinicians, students, +schools, libraries, payers, life sciences, and pharmacies +Top products +Clinical Solutions: UpToDate clinical decision support, Medi‑ +Span and other drug databases, patient engagement, Sentri7, +Simplifi+, and Health Language +Health Learning, Research & Practice: Ovid, Lippincott nursing +solutions, medical books, and journals + → Complete list of Health solutions +https://www.wolterskluwer.com/en/ +health +Health +continued +Selected awards 2023 +Invistics drug diversion ranked #1 by +KLAS Research in AI/ML effectiveness +Sentri7 and Simplifi+ received Black +Book award for top client satisfaction +19 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health +The secret clothing is a "sock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_21.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..60b27f4a37ecfe6be443ad7b31ca4f2a97074237 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,37 @@ +Health +continued +Organic growth in revenues +6% +Recurring +91% +recurring revenues as % of division total +Digital +89% +digital revenues as % of division total +Health – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,508 1,448 +4% +7% +6% +Adjusted operating profit 454 434 +5% +8% +7% +Adjusted operating profit margin 30.1% 29.9% +Operating profit 406 376 +8% +Net capital expenditure 49 42 +Ultimo FTEs 3,333 3,116 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Clinical Solutions 55% +Learning, Research & Practice 45% +2023 Revenues by segment +Recurring 91% +Print books 4% +Other non-recurring 5% +2023 Revenues by type +North America 76% +Europe 9% +Asia Pacific & ROW 15% +2023 Revenues by +geographic market +Software 3% +Digital information 86% +Services and print 11% +2023 Revenues by +media format +20 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Health diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_22.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ba035444e1b168ec9f3464ebd5473c812ef456 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +Expert solutions to optimize tax +and accounting processes +Software delivering deep +domain knowledge and +workflow automation to +ensure compliance, improve +productivity, and strengthen +client relationships. +Tax & Accounting +21 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_23.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf898e4985db55cd6062d05044eaba1aa81a0c48 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,63 @@ +Our unwavering +focus on innovation +helps improve +how professionals +work, make critical +decisions, and plan +for the future of +their businesses. +“ +Jason Marx +CEO Tax & Accounting +Business overview +Wolters Kluwer Tax & Accounting enables professionals in tax +and accounting firms 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. +In our 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 businesses, government agencies, and academia. +Market trends +• Firms turning to advanced and intelligent technologies to +drive efficiency and enable higher value work +• Continued rise in regulatory intensity and complexity +• Cloud solutions starting to mature with the focus shifting +from migration to adoption +• Continued shortage of professionals driving accounting +firm demand for efficiency solutions +Randall L. Sansom increases efficiency +with CCH Axcess +Randall L. Sansom CPAs, a professional accounting firm based +in Florida, uses Wolters Kluwer’s U.S. cloud-based solution +suite, CCH Axcess, to manage its practice and support its +operations, with both its administrative staff and its tax +advisors using a variety of software modules, including CCH +Axcess Practice for firm management, CCH Axcess Tax for +calculations and filing, Workstream for scheduling, and CCH +Answer Connect for research. +The CCH Axcess platform is the only complete cloud solution +in the U.S. market today that provides a seamless platform +for tax, audit, and firm management. The product has had +a significant impact on Randall L. Sansom’s productivity, +enabling the firm to focus on providing high-value expertise +to their clients. With CCH Axcess, the efficiency gains the +firm has achieved has resulted in hours of saved time and +improved the work/life balance of staff. Since implementing +CCH Axcess, the firm’s staff can complete more work with +fewer people. +According to the firm’s CEO, “With the entire array of products +that we have, we’re saving between one and two hours on +the tax preparer side of things that an admin person is able +to do. And it has cut down on my admin time, at least 45 +minutes to an hour and a half, depending on the size of the +return. Compared to when I started eight years ago, we’re +doing double the amount of returns with less staff, which +is amazing”. +Customer case +22 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret object #2 is a "bottle". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_24.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..deb53df8de6ae5c90b69f5b7c73ddf80048dc6a6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,58 @@ +Selected awards 2023 +CCH iFirm named a Bronze Stevie +Award winner for Innovation in Digital +Transformation at APAC Stevie Awards +CCH Axcess Engagement named a 2023 +Artificial Intelligence Award winner by +the Business Intelligence Group +Review of 2023 performance +• Organic growth 8%, with all regions performing well. +• Cloud software revenues grew 17% organically. +• Margin stable, despite increase in personnel costs and +related expenses. +The Tax & Accounting division is now focused on professional +accounting firms, as the corporate performance (CCH Tagetik and +U.S. Corporate Tax) and internal audit (TeamMate) units were +moved to the new Corporate Performance & ESG division. +Wolters Kluwer Tax & Accounting revenues increased 8% in +constant currencies and 8% on an organic basis (2022: 8% pro +forma). Adjusted operating profit increased 8% in constant +currencies and 8% on an underlying basis. The margin increased +10 basis points, as operational gearing was offset by higher +personnel costs and related expenditures. +Operating profit increased 6%, largely reflecting the development +of adjusted operating profit. +Tax & Accounting North America (59% of divisional revenues) +achieved 8% organic growth (2022: 10% pro forma) driven by the +continued strong customer uptake of CCH Axcess cloud software +modules, in particular Tax, Document, Practice, and Workflow. +Our U.S. cloud‑based audit solution, CCH Axcess Engagement, +first launched in 2022, continued to gain early adopters. +Our on‑premise software solutions saw slower organic growth. +Non‑recurring outsourced professional services revenues grew +well, but at a more moderate pace than in the prior year. Our +U.S. publishing unit recorded low single digit organic growth. +Tax & Accounting Europe (35% of divisional revenues) delivered +7% organic growth (2022: 6%) supported by strong renewals and +new sales and boosted by one‑off revenues related to property +tax changes in Germany and government stimulus programs in +Spain. Cloud software, including hybrid‑cloud solutions, grew +14% organically. +Tax & Accounting Asia Pacific and Rest of World (6% of divisional +revenues) revenues were up 5% organically (2022: 6%), buoyed by +non‑recurring revenue growth in China and India. +Our customers +Accounting firms, tax and auditing departments, businesses of all +sizes, government agencies, libraries, and universities +Top products +North America: CCH Axcess, CCH ProSystem fx, CCH Axcess +Engagement, CCH Axcess Workflow, and CCH AnswerConnect +Europe, Asia Pacific, and ROW: A3 Software, ADDISON, CCH +iFirm, Genya, and Twinfield + → Complete list of Tax & +Accounting solutions +https://www.wolterskluwer.com/en/ +tax-and-accounting +Tax & Accounting +continued +23 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_25.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f3dae8a49e108b73f745a64ca17aa26031c2fff --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,40 @@ +Tax & Accounting +continued +Organic growth in revenues +8% +Recurring +91% +recurring revenues as % of division total +Software +81% +software revenues as % of +division total +Tax & Accounting – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,466 1,394 +5% +8% +8% +Adjusted operating profit 479 455 +5% +8% +8% +Adjusted operating profit margin 32.7% 32.6% +Operating profit 460 434 +6% +Net capital expenditure 74 67 +Ultimo FTEs 7,276 6,693 +Δ: % Change; Δ CC: % Change in constant currencies (€/$ 1.05); Δ OG: % Organic growth. 2022 figures are pro forma. +Tax & Accounting North America 59% +Tax & Accounting Europe 35% +Tax & Accounting AsiaPac & ROW 6% +2023 Revenues by segment +Recurring 91% +Print books 1% +Other non-recurring 8% +2023 Revenues by type +North America 59% +Europe 35% +Asia Pacific & ROW 6% +2023 Revenues by +geographic market +Software 81% +Digital information 15% +Services and print 4% +2023 Revenues by +media format +24 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Tax & Accounting +The secret currency is a "ruble". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_26.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc44303c9cc85df30de6399f7068dcb6f7215993 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,9 @@ +Technology-enabled services +and solutions +Expert compliance services and +software solutions for financial +institutions, corporations, small +businesses, and law firms. +Financial & Corporate +Compliance +25 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_27.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a572dfcad0e846d9468ceb5efe7284a5b9a3a052 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,65 @@ +Our technology‑ +enabled compliance +solutions help +enhance the safety +and efficiency of +commerce and +banking. +Steve Meirink +CEO Financial & Corporate +Compliance +Business overview +Wolters Kluwer Financial & Corporate Compliance (FCC) +provides financial institutions, corporations, small businesses, +and law firms with solutions that enable compliance with +ever‑changing regulatory and legal obligations, improve +efficiency, and help achieve better business outcomes. +The division offers technology‑enabled expert services and +software solutions focused on loan compliance, regulatory +compliance, legal entity management, and corporate services. +In Legal Services, we provide corporations, small businesses, +and law firms with the full set of legal entity management +and corporate services, including business licenses. +In Financial Services, we support banks, non‑bank lenders, +credit unions, insurers, and securities firms of all sizes with +a wide array of loan compliance and regulatory compliance +solutions, including lien solutions. +Market trends +• Increasing regulatory complexity for banks and +corporations +• Rising emphasis on compliance expertise and capabilities +• Accelerating digital adoption trends across banking and +legal workflows +• Growing appetite for cloud-based, integrated solutions +• Ongoing imperative for operating efficiency +Rubicon Technologies ensures business +license compliance with CT Corporation +Rubicon Technologies, a NYSE-listed company, is a leading +provider of software-based waste, recycling, and fleet +operations products for firms and governments worldwide, +with over 13 million service locations. Rubicon wanted to +ensure it was fully compliant with a key corporate services +requirement ahead of its IPO in 2022, and to do this, they +turned to CT Corporation, a leading U.S. provider of legal +entity management and corporate service solutions. +Specifically, Rubicon needed time-sensitive support to ensure +compliance with its business license filings. It was critical +for the company to demonstrate that all business licensing +requirements were met ahead of its listing on the NYSE. CT +stepped in to run a full assessment on Rubicon’s business +licenses, identifying any gaps in required documentation and +seamlessly reinstating key filings. CT ensured the company +was in full compliance in advance of a critical business +event, driving key value for the customer. To ensure ongoing +adherence to a vast set of business license requirements, CT +enrolled Rubicon in its managed service offering, providing +proactive oversight of the company’s business license +portfolio. +With over 75,000 federal, state, and local jurisdictions in +the U.S. driving distinct business license obligations, CT has +the unique domain expertise to navigate these complex +requirements with ease, providing critical assurance for its +business customers. +“ +Customer case +26 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_28.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ff2446cf288f33a1c840bd0a04a59967091d1ff --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,67 @@ +Review of 2023 performance +• Organic growth 2%, supported by 7% growth in recurring +revenues. +• Transactional and other non‑recurring revenues declined 6% +organically. +• Margin increase reflects tight cost control and favorable +revenue mix. +The Financial & Corporate Compliance division is now +comprised of CT Corporation, which provides registered agent +and other services to U.S. corporations, small businesses, and +law firms, and Compliance Solutions (including Lien Solutions), +which provides software and services to banks and other +lenders. These businesses were part of the former Governance, +Risk & Compliance division. +Financial & Corporate Compliance revenues increased 2% in +constant currencies, including a modest effect from the full +year inclusion of mortgage software provider International +Document Services (IDS), acquired on April 8, 2022. Organic +growth was also 2% (2022: 4% pro forma). The adjusted +operating profit margin increased 160 basis points, as careful +cost control and favorable revenue mix helped mitigate the +impact of higher product investment. +Operating profit increased 5%, largely reflecting the +development of adjusted operating profit. +Legal Services (57% of divisional revenues) posted 2% +organic growth (2022: 2% pro forma) with 8% organic growth +in recurring service subscriptions (2022: 7% pro forma) to +a large extent offset by a 9% decline in Legal Services (LS) +transactional revenues (2022: decline of 4% pro forma). +LS transactional revenues were impacted by the downturn in +U.S. M&A and IPO activity which began in the second half of +2022. In January 2024, CT Corporation launched a dedicated +platform to support the filing needs of U.S. businesses +impacted by the beneficial ownership reporting rule of the +new U.S. Corporate Transparency Act. +Financial Services (43% of divisional revenues) achieved +2% organic growth (2022: 6% pro forma), supported by 5% +organic growth in recurring revenues (2022: 7% pro forma). +Financial Services (FS) transactional and other non‑recurring +revenues declined 3% organically compared to growth in the +prior year (2022: 4%). Compliance Solutions transactional +fees were affected by the market‑wide downturn in U.S. +loan originations, including mortgages, while Lien Solutions +revenues were flat against a challenging comparable (2022: +14% growth). +Our customers +Corporations, small businesses, law firms, banks, non‑bank +lenders, credit unions, insurers, and securities firms +Top products +Legal Services: CT Corporation +Financial Services: ComplianceOne, Expere, eOriginal, +GainsKeeper, and Lien Solutions + → For more information on FCC +www.wolterskluwer.com/en/about-us/ +organization/financial-and-corporate- +compliance +Financial & Corporate Compliance +continued +Selected awards 2023 +Compliance Solutions named Category +Leader in Regulatory Intelligence in +Chartis RiskTech100® Rankings +Wolters Kluwer FCC recognized with +ABF Journal’s 2023 Most Innovative +Companies designation +27 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance +The secret object #1 is a "clock". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_29.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d55ae1971f9c6a454e08af2845f46d93f50fb8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,39 @@ +Organic growth in revenues +2% +Recurring +67% +recurring revenues as % of division total +Software +47% +software revenues as % of division +total +Financial & Corporate Compliance – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 1,052 1,056 0% +2% +2% +Adjusted operating profit 403 387 +4% +7% +7% +Adjusted operating profit margin 38.3% 36.7% +Operating profit 383 363 +5% +Net capital expenditure 58 52 +Ultimo FTEs 3,056 3,122 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Financial & Corporate Compliance +continued +Legal Services 57% +Financial Services 43% +2023 Revenues by segment +Recurring 67% +Legal Services transactional 18% +Financial Services transactional 12% +Other non-recurring 3% +2023 Revenues by type +North America 99% +Europe 1% + +2023 Revenues by +geographic market +Software 47% +Digital information 6% +Services and print 47% +2023 Revenues by +media format +28 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Financial & Corporate Compliance diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_3.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8d7b72ec6726a5f59ac3078e49645bc077c2bfd --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,78 @@ +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 strategy and business model on +page 7 +This copy of the annual report of Wolters Kluwer N.V. for +the year 2023 is not in the ESEF‑format as specified by the +European Commission in Regulatory Technical Standard on +ESEF (Regulation (EU) 2019/815). The ESEF reporting package +can be found on our website www.wolterskluwer.com/en/ +investors/financials/annual-reports +Strategic report +3 Wolters Kluwer at a glance +5 Q&A with CEO Nancy McKinstry +7 Strategy and business model +13 2024 Outlook +14 Organizational structure +15 Executive team +17 Health +21 Tax & Accounting +25 Financial & Corporate Compliance +29 Legal & Regulatory +33 Corporate Performance & ESG +37 Group financial review +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Sustainability statements +90 Our approach to sustainability +91 General disclosures +100 Environmental disclosures +113 Social disclosures +125 Governance disclosures +127 Reference table +130 List of data points that derive from other EU legislation +133 Task Force on Climate-related Financial Disclosures (TCFD) +134 EU Taxonomy +Financial statements +142 2023 Financial statements +143 Consolidated financial statements +147 Notes to the consolidated financial statements +203 Company financial statements +205 Notes to the company financial statements +211 Independent auditor’s report +Other information +221 Articles of Association Provisions Governing Profit Appropriation +222 Wolters Kluwer shares and bonds +226 Five-year key figures +227 Glossary +228 Contact information +€5.6bn +total revenues +94% +of revenues from digital +products and services +82% +of revenues are recurring +26.4% +adjusted operating profit margin +€4.55 +diluted adjusted earnings per share +16.8% +return on invested capital + → Visit our investors portal +www.wolterskluwer.com/en/investors/ +Financial highlights 2023 +2 Wolters Kluwer 2023 Annual Report ← → +The secret fruit is a "lemon". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_30.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ef8549b9a0c70c15011689e196c2fc09d6d31b2 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,9 @@ +Legal and regulatory insights +and solutions +Actionable insights and +integrated solutions that +streamline legal and regulatory +research, analysis, and workflow. +Legal & +Regulatory +29 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_31.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b3eaf51ca5cc367a96a6134c17d28013ecbe207 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,73 @@ +Martin O’Malley +CEO Legal & Regulatory +Business overview +Wolters Kluwer Legal & Regulatory enables legal and +compliance professionals to improve productivity and +performance, mitigate risk, and solve complex problems +with confidence. +Our legal information solutions enable law firms, corporate +legal departments, universities, and governments to +streamline legal research, analyses, and workflows. This +enhances legal and regulatory decision‑making and outcomes, +ensuring more transparent, just, and safe societies. +Legal & Regulatory’s Enterprise Legal Management (ELM) +solutions support corporate legal operations in increasing +efficiency and saving costs. Our legal practice management +software for law firms enables lawyers to streamline their +legal workflow processes, from document management to +time keeping and billing. +Legal & Regulatory information solutions provide our +customers with the trusted information, insights, and analytics +they can rely on to make sound decisions. +Market trends +• Customers expect advanced, AI-based features embedded +in legal information solutions and software +• Customers are adopting cloud-based technology to enable +connectivity and enhance productivity +• Volume and complexity of regulation continue to rise +• Law firms face new competitors +• Corporate law departments and legal operations continue +to streamline their internal processes by leveraging +technology +• Corporate legal departments and law firms are under +pressure to increase productivity +Adtalem improves legal matter and +spend management with TyMetrix 360° +Adtalem Global Education is a leading healthcare educator +that collaborates with organizations to offer academic +curriculums, certifications, and training programs across +various medical sectors around the world. Adtalem wanted +to improve their invoice and accrual processes, including +billing guideline compliance. The company selected TyMetrix +360°, part of Wolters Kluwer ELM Solutions, as the partner +to improve their operations. TyMetrix 360° is a SaaS-based +e-billing and matter management solution that simplifies a +company’s legal billing and streamlines managing matters. +After Wolters Kluwer established an integration between +Salesforce and TyMetrix 360°, users gained increased +transparency and efficiencies due to all matter and financial +data being accessible on a single platform, enabling reporting +and dashboarding that aggregates all information. Director +of Legal Operations at Adtalem commented, “The impact +of these projects has been tremendous for us. We have +saved money, we have reduced our overall outside counsel +spend because we’re not paying for things we shouldn’t be +paying for, and we are getting a better handle on what we’re +spending because our invoices are all running through the +system”. +Since integrating TyMetrix 360°, Adtalem has realized +$1.5 million year-one savings from line-item adjustments, +a 25% reduction in overall outside counsel spend within 12 +months, 100% vendor compliance, and automated accruals +and payment processing file creation which saves two FTEs +one workweek monthly. +We’re committed +to empowering our +customers with +the highest quality +content and the +latest AI technology. +“ +Customer case +30 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory +The secret kitchen appliance is a "microwave". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_32.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e0289daab05a1407b49a9f408bf930ef92d94a7 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,65 @@ +Review of 2023 performance +• Organic growth 4%, led by 8% growth in digital subscription +revenues. +• Legal & Regulatory Software (23% of divisional revenues) +grew 5% organically. +• Margin reflects operational gearing and cost control partly +offset by increased investment. +The Legal & Regulatory division now includes Enterprise Legal +Management (previously part of the former Governance, Risk +& Compliance division) while the EHS/ORM software business +(Enablon) is now part of the new Corporate Performance & ESG +division. +Legal & Regulatory revenues declined 4% in constant +currencies, due to the disposal of the French and Spanish legal +publishing assets on November 30, 2022, while the acquisition +of MFAS, acquired on October 31, 2023, had a modest effect. +On an organic basis, revenues sustained 4% growth (2022: 4% +pro forma). Adjusted operating profit increased 4% in constant +currencies and 10% on an organic basis. The margin increased +120 basis points, following an increase in the fourth quarter. +Operational gearing and good expense control were partly +offset by increased product investment and higher personnel +costs and personnel‑related expenses. +Operating profit decreased 38%, reflecting the increase in +adjusted operating profit offset by a decline in divestment‑ +related results. +Legal & Regulatory Information Solutions (77% of divisional +revenues) revenues declined 7% overall and 7% in constant +currencies reflecting disposals. On an organic basis, +Information Solutions recorded 4% growth (2022: 3%), driven +mainly by 8% organic growth in subscriptions to our digital +legal research solutions (2022: 7%). Print subscriptions +declined 9% organically, while print book revenues increased +4% on an organic basis, mainly due to a favorable publication +schedule. +Legal & Regulatory Software (23% of divisional revenues), +comprised of Enterprise Legal Management (ELM) solutions +and our legal practice management software, in aggregate +recorded 5% organic growth (2022: 8% pro forma). ELM +solutions (Tymetrix and Passport) saw strong growth in +ELM transactional volumes partly offset by lower software +implementation services revenues. Legal practice management +software, mainly Kleos and Legisway, recorded high single‑digit +organic growth. +Our customers +Legal and compliance professionals in law firms, corporate +legal departments, universities, and government organizations +Top products +Legal & Regulatory Information Solutions: VitalLaw, LEX, ONE, +Navigator, and Schulinck +Legal & Regulatory Software: Passport, TyMetrix 360°, +Legisway, and Kleos +Legal & Regulatory +continued + → Complete list of Legal & +Regulatory solutions +https://www.wolterskluwer.com/en/ +about-us/organization/legal-and- +regulatory +Selected awards 2023 +VitalLaw winner of Gold Stevie Award +for Legal Information Solution +ELM named Company of the Year, +Legal, in American Business Awards +31 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_33.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e94ad797059e51031b65a0bfa66e946d8bf106c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,39 @@ +Legal & Regulatory +continued +Organic growth in revenues +4% +Recurring +78% +recurring revenues as % of division total +Digital +84% +digital revenues as % of division total +Legal & Regulatory – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 875 916 ‑4% ‑4% +4% +Adjusted operating profit 138 133 +4% +4% +10% +Adjusted operating profit margin 15.7% 14.5% +Operating profit 114 185 ‑38% +Net capital expenditure 58 61 +Ultimo FTEs 4,033 3,892 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Legal & Regulatory Software 23% +Legal & Regulatory Information +Solutions 77% +2023 Revenues by segment +Recurring 78% +Print books 5% +ELM transactional 10% +Other non-recurring 7% +2023 Revenues by type +North America 33% +Europe 66% +Asia Pacific & ROW 1% +2023 Revenues by +geographic market +Software 28% +Digital information 56% +Services and print 16% +2023 Revenues by +media format +32 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Legal & Regulatory diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_34.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8fe6029e7bf0994474d0a0b72be02e6f7837361 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,8 @@ +Global enterprise software +Enterprise software solutions +for corporate performance +management, ESG, EHS, risk +management, and assurance. +Corporate Performance +& ESG +33 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_35.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d6795e064ff38045ff8a26e8b93cf67ffce6c1 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,71 @@ +Mandatory ESG +disclosures are +leading to a sea +change in corporate +reporting. +Karen Abramson +CEO Corporate Performance +& ESG +Business overview +Wolters Kluwer Corporate Performance & ESG (CP&ESG) +provides enterprise software solutions and services to +corporations and banks around the world, helping them to +collect, analyze, report, and audit financial, sustainability, +operational, and other performance data. +CP&ESG solutions support corporate responsibility and +sustainability, mitigate and manage operational and financial +risks, improve workplace safety, and facilitate regulatory +reporting and compliance. Our global software solutions and +services help to streamline finance workflows. +CP&ESG solutions are used by corporate finance professionals, +internal auditors, operational risk managers, sustainability +managers, and compliance personnel in corporations and +financial institutions. +Market trends +• Sustainability commitments increase focus on +environmental, health & safety, and operational risk +management +• Rising ESG disclosure, audit, and performance demands +from regulators, investors, employees, and other +stakeholders +• Emergence of global ESG reporting standards as 600+ +frameworks start to converge +• Increased demand for solutions that collect and process +large amounts of structured and unstructured data +• Artificial intelligence, cloud, and other advanced +technologies are enabling analytics, insights, and +connectivity that help drive performance +• Finance function emerging as chief aggregator to collect, +analyze, report, and assure financial and non-financial data +Lendlease improves safety and +compliance with Enablon permit-to-work +Lendlease, a global real estate investment, development, and +construction company headquartered in Australia, leverages +the full Enablon platform to manage its environmental, +health, and safety matters across project sites around the +world. The company also leverages the full suite of Enablon +Go mobile applications, which have been key in modernizing +Lendlease’s safety strategy. +In 2022, the company looked for ways to streamline and +improve its permitting procedures in Australia and chose +Enablon’s permit-to-work (PTW) software to help it transition +from an inefficient paper permitting process to a digitized +workflow. Enablon PTW is a digital documented workflow that +authorizes certain people to carry out specific work within +a specified time frame and facilitates clear sign off to show +work has been completed safely and efficiently. +With Enablon’s PTW system, organizations enhance workplace +safety, ensure regulatory compliance, reduce paperwork, +improve communication, and maintain an audit trail of work- +related activities and safety measures. +Lendlease’s partnership with Enablon yielded impressive +results as David Rose, Group EHS Technology Manager at +Lendlease commented, “We’ve done 26,000 digital permits so +far to date since we’ve deployed the solution. If you think of +it from an ESG point of view, that’s a lot of paper considering +a normal permit would be about 2-3 pages per permit”. +Lendlease is now deploying the Enablon PTW solution to its +other operations around the world. +“ +Customer case +34 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_36.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..672615d07b084ab66b1e8232729083c7f230c541 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,81 @@ +Review of 2023 performance +• New division formed in March 2023. +• Organic growth 9%, with recurring revenues up 11% and non‑ +recurring revenues up 5%. +• Margin reflects higher personnel costs and increased +investment. +The Corporate Performance & ESG division was formed in +March 2023 by bringing together our enterprise software +businesses which were previously part of other divisions: CCH +Tagetik and TeamMate (formerly part of Tax & Accounting), +Enablon EHS/ORM (formerly part of Legal & Regulatory), +and OneSumX Finance, Risk & Reporting (formerly part of +Governance, Risk & Compliance). +The new division’s revenues increased 9% in constant +currencies and 9% on an organic basis (2022: 12% pro forma). +Recurring revenues (65% of divisional revenues) grew 11% +organically (2022: 13% pro forma), while non‑recurring +revenues grew 5% (2022: 10% pro forma). Adjusted operating +profit declined 12% in constant currencies and on an organic +basis, impacted by higher personnel costs, increased +investment in product development, and higher sales and +marketing spending. +Operating profit decreased to €26 million, mainly reflecting the +decline in adjusted operating profit and higher amortization of +acquired identifiable intangible assets. +Environmental, Health & Safety, and Operational Risk +Management platform Enablon (23% of divisional revenues), +delivered 16% organic growth (2022: 18%) driven by strong +momentum across both recurring cloud subscription revenue +and on‑premise software license fees. In November 2023, +Enablon introduced an updated sustainability solution, +Enablon ESG Excellence. +Our Corporate Performance, Internal Audit, and Finance, +Risk & Reporting businesses (77% of divisional revenues) in +aggregate grew 7% organically (2022: 10% pro forma). The CCH +Tagetik corporate performance management (CPM) solution +delivered 20% organic growth (2022: 19%), driven equally by +recurring cloud revenues as by non‑recurring on‑premise +software license fees. Software growth was driven by new +customers and increased uptake of modules, such as the new +ESG and Pillar Two Global Minimum Tax modules launched +in 2023. The average software deal size increased year on +year. Non‑recurring services revenues were, however, lower +than expected as an increased percentage of software deals +closed in the final months of 2023 were tied to third‑party +implementation partners. +Our Corporate Tax unit recorded steady single digit organic +growth. Internal audit solution TeamMate delivered double‑ +digit organic growth, benefitting from higher license fees +for on‑premise software. In July 2023, TeamMate+ ESG was +launched, adding ESG standards to support auditor workflows. +Our FRR unit posted organic revenue decline due to the +conclusion of two large software implementations in Europe +and the full impact of exiting Russia and Belarus. In October +2023, FRR launched OneSumX for Basel to support banks as +they ramp up towards Basel IV compliance. +Our customers +Corporate finance, audit, planning, risk, EHS/ORM, and +sustainability professionals in corporations, banks, and +governments. +Corporate Performance & ESG  +continued +Top products +Environmental, Health & Safety, and Operational Risk +Management (EHS/ORM): Enablon +Corporate Performance, Internal Audit, and Finance, Risk & +Reporting: CCH Tagetik, TeamMate, and OneSumX + → Complete list of Corporate +Performance & ESG solutions +https://www.wolterskluwer.com/en/ +about-us/organization/corporate- +performance-esg +Selected awards 2023 +Wolters Kluwer named Leader in +Verdantix Green Quadrant for ESG +Reporting & Data Management +Gartner named CCH Tagetik Leader in +Magic Quadrant for Financial Close +and Consolidation +35 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  +The secret object #3 is a "bowl". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_37.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1f6a9bfdeaf470498e9edcbea404d8dc1c5100e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,35 @@ +Organic growth in revenues +9% +Recurring +65% +recurring revenues as % of division total +Software +79% +software revenues as % of division total +Corporate Performance & ESG – Year ended December 31 +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 683 639 +7% +9% +9% +Adjusted operating profit 68 79 ‑14% ‑12% ‑12% +Adjusted operating profit margin 9.9% 12.4% +Operating profit 26 39 ‑32% +Net capital expenditure 84 73 +Ultimo FTEs 3,215 3,111 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are pro forma. +Corporate Performance & ESG  +continued +EHS/ORM 23% +Corporate Performance, +Internal Audit & FRR 77% +2023 Revenues by segment +Recurring 65% +Non-recurring 35% +2023 Revenues by type 2023 Revenues by +geographic market +North America 35% +Europe 48% +Asia Pacific & ROW 17% +2023 Revenues by +media format +Software 79% +Services and other 21% +36 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate Performance & ESG  diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_38.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..70b09eb5644d790e94b0364592797ffbce54204d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,71 @@ +Margin increased in +the fourth quarter due +to operational gearing, +mix shift, and a more +normalized cost base. +“ +This review provides a summary +of our 2023 IFRS results alongside +a discussion of adjusted figures +which give deeper insight into our +underlying performance. +Revenues +Group revenues were €5,584 million, up 2% overall and up 5% +in constant currencies. Excluding the effect of currency and +the net effect of divestments and acquisitions, organic revenue +growth was 6%, in line with the prior year +(2022: 6%). +Revenue bridge +€ million % +Revenues 2022 5,453 +Organic change 310 6 +Acquisitions 20 0 +Divestments (76) (1) +Currency impact (123) (3) +Revenues 2023 5,584 2 +Revenues from North America accounted for 64% of total +group revenues and grew 5% organically (2022: 6%). Revenues +from Europe, 28% of total revenues, grew 7% organically (2022: +6%). Revenues from Asia Pacific and Rest of World, 8% of total +revenues, grew 9% organically (2022: 10%). +Total recurring revenues, which include subscriptions and other +renewing revenue streams, accounted for 82% of total revenues +(2022: 80%) and grew 7% organically (2022: 7%). Within recurring +revenues, digital and service subscriptions grew 8% organically +(2022: 8%). Total non‑recurring revenues were stable on an +organic basis (2022: 3% organic growth). +Group financial +review +Kevin Entricken +CFO and member +of the Executive Board +Highlights 2023 +• Revenues up 6% organically +• 82% recurring revenues, up 7% organically +• 58% expert solutions revenues, up 8% organically +• 94% revenues from digital products and services +• 16% cloud software revenues, up 15% organically +Transactional revenues declined in Financial & Corporate +Compliance but increased in Legal & Regulatory. Other non‑ +recurring revenues, mainly on‑premise license fees and +software implementation services, increased 1% organically +(2022: 7%), with mixed trends by division. +Revenues by type +€ million, unless otherwise +stated 2023 2022 ∆ ∆ CC ∆ OG +Digital and service +subscription 4,134 3,950 +5% +7% +8% +Print subscription 136 157 ‑13% ‑12% ‑7% +Other recurring 273 281 ‑3% ‑1% +3% +Total recurring revenues 4,543 4,388 +4% +6% +7% +Transactional 411 433 ‑5% ‑2% ‑3% +Print books 120 129 ‑7% ‑5% 0% +Other non‑recurring 510 503 +1% +3% +1% +Total non-recurring revenues 1,041 1,065 -2% 0% 0% +Total revenues 5,584 5,453 +2% +5% +6% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: +% Organic growth. Other non ‑recurring revenues include software +licenses, software implementation fees, professional services, and other +non‑subscription offerings. +37 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret landmark is "Big Ben". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_39.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4dbaac20a3d3908acb31b07f11689da146b6d8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,47 @@ +Group financial review  +continued +Operating profit +Adjusted operating profit was €1,476 million (2022: €1,424 million), up 6% in constant currencies. +The related margin increased by 30 basis points to 26.4% (2022: 26.1%), in line with our full‑year +guidance range. The margin improvement follows a margin increase in the fourth quarter driven +by operational gearing, mix shift, and the comparison to a more normalized cost base in fourth +quarter 2022. Personnel‑related expenses increased as expected due to an increase in the +number of employees and due to wage inflation. In addition, there was an expected increase in +personnel‑related expenses, such as business travel, events, and training costs. +Product development spending (including capitalized spend) increased in constant currencies +and amounted to 11% of revenues in 2023 (2022: 11%). Restructuring expenses, which are +included in adjusted operating profit, increased to €15 million (2022: €6 million), at the upper +end of our guidance range. +Operating profit declined 1% to €1,323 million (2022: €1,333 million), mainly due to significantly +lower divestment results: we incurred a net disposal gain of €4 million in 2023 compared to +a gain of €75 million in the prior year. Amortization and impairments of acquired identifiable +intangible assets decreased 9% due to reduced impairments in 2023. +Divisional summary +Overall organic revenue growth was 6%, led by Tax & Accounting and Corporate Performance +& ESG. The overall adjusted operating profit margin increased mainly due to full‑year margin +increases in Financial & Corporate Compliance and Legal & Regulatory. For a more detailed +discussion, see pages 17-36 of this annual report. +Key figures +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues 5,584 5,453 +2% +Operating profit 1,323 1,333 ‑1% +Profit for the year 1,007 1,027 ‑2% +Diluted EPS (€) 4.09 4.01 +2% +Net cash from operating activities 1,545 1,582 ‑2% +Business performance – benchmark figures +Revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin (%) 26.4 26.1 +Adjusted net profit 1,119 1,059 +6% +7% +Diluted adjusted EPS (€) 4.55 4.14 +10% +12% +Adjusted free cash flow 1,164 1,220 ‑5% ‑2% +Return on invested capital (%) 16.8 15.5 +Net debt 2,612 2,253 +16% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. Benchmark figures are +performance measures used by management. See Note 4 – Benchmark figures for a reconciliation from IFRS to +benchmark figures. +Highlights 2023 +• Product development spend was 11% of revenues +• Profit for the year down by 2% and diluted EPS up 2% +• Adjusted net profit for the year up 6% +38 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_4.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..eac3bbdbf4ac6d626e6880a67f3c97773f38ae23 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,53 @@ +Wolters Kluwer +at a glance +We help our customers make critical +decisions every day by providing +expert solutions that combine deep +domain knowledge with specialized +technology and services. +Global footprint +North America +64% +of total revenues +Europe +28% +of total revenues +Asia Pacific & ROW +8% +of total revenues +21,400+ +employees worldwide +180+ +countries where we serve customers +40+ +countries from which we operate +8 flagship offices +significant subsidiaries +78 +employee engagement +score, up 1 point +8% +reduction in scope 1 and +scope 2 emissions +75 +employee belonging score, +up 2 points +Near-term +targets +validated by +SBTi in 2023 +Sustainability highlights 2023 +6% +organic growth in revenues +58% +of revenues from expert +solutions +€1.2bn +adjusted free cash flow +34% +total shareholder return +including dividends +(not reinvested) +Financial highlights 2023 +3 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance +The secret food is "chocolate". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_40.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2df729889ec3dde8ee6a72fd1cacace8846115e --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,56 @@ +Divisional summary +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Revenues +Health 1,508 1,448 +4% +7% +6% +Tax & Accounting 1,466 1,394 +5% +8% +8% +Financial & Corporate Compliance 1,052 1,056 0% +2% +2% +Legal & Regulatory 875 916 ‑4% ‑4% +4% +Corporate Performance & ESG 683 639 +7% +9% +9% +Total revenues 5,584 5,453 +2% +5% +6% +Adjusted operating profit +Health 454 434 +5% +8% +7% +Tax & Accounting 479 455 +5% +8% +8% +Financial & Corporate Compliance 403 387 +4% +7% +7% +Legal & Regulatory 138 133 +4% +4% +10% +Corporate Performance & ESG 68 79 ‑14% ‑12% ‑12% +Corporate (66) (64) +3% +4% +4% +Total adjusted operating profit 1,476 1,424 +4% +6% +7% +Adjusted operating profit margin +Health 30.1% 29.9% +Tax & Accounting 32.7% 32.6% +Financial & Corporate Compliance 38.3% 36.7% +Legal & Regulatory 15.7% 14.5% +Corporate Performance & ESG 9.9% 12.4% +Total adjusted operating profit margin 26.4% 26.1% +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. 2022 figures are +pro forma due to changes in the organizational structure, refer to Note 1 – General and basis of preparation . +Group financial review  +continued +Highlights 2023 +• Adjusted operating profit €1,476 million, up 6% in constant currencies +• Adjusted operating profit margin up 30 basis points to 26.4% +Corporate expenses +€ million, unless otherwise stated 2023 2022 ∆ ∆ CC ∆ OG +Adjusted operating profit (66) (64) +3% +4% +4% +Operating profit (66) (64) +3% +Net capital expenditure 0 0 +Ultimo FTEs 143 132 +∆: % Change; ∆ CC: % Change in constant currencies (€/$ 1.05); ∆ OG: % Organic growth. +Net corporate expenses increased 4% in constant currencies and 4% on an organic basis, due to +an increase in personnel costs and related expenses partly offset by lower third‑party services +relating to various projects. +Financial position +Balance sheet +Non‑current assets, mainly consisting of goodwill and acquired identifiable intangible assets, +decreased by €193 million to €6,340 million in 2023, mainly due to amortization and the effect +of foreign exchange differences that were higher than investments in software assets and +acquisitions through business combinations during the year. +Total equity decreased by €561 million to €1,749 million, mainly due to the share buybacks, +dividend payments, and exchange differences on translation of foreign operations, partly +offset by the profit for the year. During the year, we repurchased 8.7 million shares for a total +consideration of €1 billion, including 0.5 million shares to offset incentive share issuances (2022: +0.7 million). +In August 2023, we canceled 9.0 million of shares held in treasury (2022: 5.0 million shares +canceled). As of December 31, 2023, we held 8.0 million shares in treasury. The total weighted‑ +average number of shares was 244.9 million in 2023 (2022: 254.7 million). +39 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_41.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..f411efe9be9da9de39be0283731919613afa6a50 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,42 @@ +Balance sheet +€ million, unless otherwise stated 2023 2022 Variance +Non‑current assets 6,340 6,533 (193) +Working capital (1,036) (892) (144) +Total equity 1,749 2,310 (561) +Net debt 2,612 2,253 359 +Net‑debt‑to‑EBITDA ratio 1.5 1.3 0.2 +Net debt, leverage, and liquidity position +Net debt at December 31, 2023, was €2,612 million, compared to €2,253 million at December 31, +2022. The net‑debt‑to‑EBITDA ratio increased to 1.5 (2022: 1.3). Gross debt includes the 8‑year +€700 million Eurobond with a 3.750% annual coupon, issued in March 2023. Gross debt +increased due to the increase of borrowings and bank overdrafts to €196 million at December +31, 2023 (2022: €16 million), including €50 million Euro Commercial Paper notes (2022: no notes +outstanding). +Our €600 million multi‑currency credit facility remains fully undrawn. +Our liquidity position remained strong with net cash available of €989 million as of +December 31, 2023. +Working capital +€ million 2023 2022 Variance +Inventories 84 79 5 +Current contract assets 160 153 7 +Trade receivables 1,087 1,088 (1) +Current operating other receivables 198 244 (46) +Current deferred income (1,899) (1,858) (41) +Other contract liabilities (86) (88) 2 +Trade and other operating payables (951) (949) (2) +Operating working capital (1,407) (1,331) (76) +Cash and cash equivalents 1,135 1,346 (211) +Non‑operating working capital (764) (907) 143 +Total working capital (1,036) (892) (144) +Operating working capital amounted to €(1,407) million, compared to €(1,331) million in 2022, +a decrease of €76 million. This decrease is largely due to autonomous movements in working +capital of €98 million. +Non‑operating working capital decreased to €(764) million, compared to €(907) million in 2022, +mainly due to lower short‑term bonds during 2023 (€400 million) compared to 2022 +(€700 million), partly offset by higher borrowings and bank overdrafts at the end of 2023. +Group financial review  +continued +Highlights 2023 +• Net debt-to-EBITDA ratio 1.5x +• Liquidity position remained strong +40 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_42.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..364af8ba3393b973b057d5fe74d88eaaae74d48f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,56 @@ +Financing results, taxation, EPS, and ROIC +Financing results +Total financing results decreased to a net cost of €27 million (2022: €57 million cost), mainly due +to higher interest rates on cash and cash equivalents. Included in total financing results was a +€7 million net foreign exchange gain (2022: €5 million net foreign exchange loss) mainly related +to the translation of intercompany balances. Adjusted net financing costs decreased to +€27 million (2022: €56 million). +Taxation +Profit before tax increased 2% to €1,297 million (2022: 1,276 million). The effective tax rate increased +to 22.4% (2022: 19.5%), as the prior year a significant tax‑exempt divestment gain. +Adjusted profit before tax was €1,450 million (2022: €1,368 million), up 6% overall and up 8% +in constant currencies. The benchmark tax rate on adjusted profit before tax increased to +22.9% (2022: 22.6%), mainly due to lower prior year favorable adjustments combined with the +increased limitation on interest deductibility in the Netherlands. +Earnings per share +Total profit for the year decreased 2% to €1,007 million (2022: €1,027 million), while diluted +earnings per share increased 2% to €4.09 (2022: €4.01), benefitting from the lower weighted‑ +average number of shares outstanding. +Adjusted net profit was €1,119 million (2022: €1,059 million), an increase of 7% in constant +currencies. Diluted adjusted EPS was €4.55 (2022: €4.14), up 12% in constant currencies, reflecting +the increase in adjusted net profit and a 4% reduction in the diluted weighted‑average number +of shares outstanding to 246.0 million (2022: 255.8 million). +Return on invested capital (ROIC) +In 2023, ROIC was 16.8% (2022: 15.5%), mainly due to a higher adjusted operating profit, partly +offset by a higher benchmark tax rate. +Cash flow +€ million, unless otherwise stated 2023 2022 Variance +Net cash from operating activities 1,545 1,582 (37) +Net cash used in investing activities (374) (299) (75) +Net cash used in financing activities (1,481) (991) (490) +Adjusted operating cash flow 1,476 1,528 (52) +Net capital expenditure (323) (295) (28) +Adjusted free cash flow 1,164 1,220 (56) +Diluted adjusted free cash flow per share (€) 4.73 4.77 (0.04) +Cash conversion ratio (%) 100 107 +Cash flow +Net cash outflow before the effect of exchange differences was €310 million (2022: net cash +inflow of €292 million), due to net cash used in financing activities and investing activities +outweighing net cash from operating activities. +Adjusted operating cash flow was €1,476 million (2022: €1,528 million), down 3% overall +and down 1% in constant currencies. This reflects a cash conversion ratio of 100% (2022: +107%), returning to historical levels (95%‑100%). Working capital inflows of €98 million were +significantly lower than in the prior year, while net capital expenditures increased 10% overall +and 11% in constant currencies. Net capital expenditures were €323 million (2022: €295 million), +representing 5.8% of revenues (2022: 5.4%). +Cash payments related to leases, including lease interest paid, decreased to €74 million +(2022: €81 million). Net interest paid, excluding lease interest paid, reduced to €17 million +(2022: €45 million), reflecting higher interest income on cash and cash equivalents. +Group financial review  +continued +Highlights 2023 +• Adjusted free cash flow €1,164 million, down 2% in constant currencies +• Return on invested capital improved to 16.8% +• Diluted adjusted EPS €4.55, up 12% in constant currencies +41 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review +The secret animal #4 is a "cow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_43.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..b02b143565ce9616d8f5711511f0c5e0e3f97aa6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,26 @@ +Income tax paid increased to €325 million (2022: €289 million). The net cash outflow related to +restructuring was €1 million (2022: outflow of €12 million). As a result, adjusted free cash flow +was €1,164 million (2022: €1,220 million), down 2% in constant currencies. +Dividends paid to shareholders amounted to €467 million (2022: €424 million). The cash +deployed towards share repurchases was as announced, €1 billion, and in line with prior year +(2022: €1 billion). +Acquisitions and divestments +Total acquisition spending, net of cash acquired and including transaction costs, was +€68 million (2022: €95 million), and primarily related to the acquisitions of NurseTim on January +9, 2023, Invistics on June 7, 2023, and tax content and tools provider, MFAS, on October 31, 2023. +In 2023, net divestment proceeds amounted to €8 million, compared to €106 million in 2022 +which mainly included the divestment of the legal information units in France and Spain. +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. +Group financial review  +continued +Highlights 2023 +• Proposed 2023 total dividend €2.08 per share, an increase of 15% +• Completed 2023 share buyback €1 billion +42 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Group financial review \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_44.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ba8127efa245f0a24c2ab624a04d9f96022954 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,9 @@ +Governance +44 Corporate governance +50 Risk management +60 Statements by the Executive Board +61 Executive Board and Supervisory Board +63 Report of the Supervisory Board +70 Remuneration report +Governance +43 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_45.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b49888211d6af53f04c8febcd8c1a255f0465e4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,68 @@ +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 2022 (the ‘Corporate +Governance Code’), and all applicable +laws and regulations. +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. The Executive Board consists of the +CEO and CFO and is entrusted with the management and +day‑to‑day operations of the company. 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. +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). During 2023, Wolters Kluwer +has reviewed the changes in the Corporate Governance Code +compared to the prior Code and took the necessary steps to +implement these changes. This included an update of the +By‑Laws of the Supervisory Board and Executive Board, as +well as the Terms of Reference of the Audit Committee and +the Selection and Remuneration Committee. 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. Corporate Governance will be added to the agenda +of the 2024 Annual General Meeting of Shareholders, as a +specific discussion item. + → The Dutch Corporate Governance +Code is available at www.mccg.nl +Executive Board +The Executive Board is responsible for the continuity of the +company and its affiliated enterprise and for sustainable +long‑term value creation by the company and its affiliated +enterprise. This responsibility includes the development and +execution of the strategy focused on sustainable long‑term +value creation, formulating targets in relation to the strategy, +appropriate risk management and internal control systems, +and sustainability and environmental, social, and governance +(ESG) matters. The Executive Board considers the impact of the +company on people and the environment. 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 +enterprise, 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. +Corporate +governance +44 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret vegetable is "cauliflower". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_46.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..94283d945ee707b3533359d09b81d6edbae38964 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,85 @@ +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 Executive Board and +Supervisory Board on page 61 +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 2023 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 were +not required to retain the shares for a period of two years +post vesting. +Term of appointment +Since the introduction of the first Corporate Governance Code +in 2004, Executive Board members are appointed for a period +of four years after which reappointment is possible, in line +with Best Practice Provision 2.2.1 of the Corporate Governance +Code. The existing contract with Ms. McKinstry, who was +appointed before the introduction of the first Corporate +Governance Code and has an employment contract for an +indefinite period, will remain honored. +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 affiliated +enterprise, considering the relevant interests of the company’s +stakeholders, and advises the Executive Board. The supervision +includes the implementation of the sustainable long‑term +value 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/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; +Corporate governance +continued +45 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_47.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..c203741cba1982bd318d7885c505206156911810 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,81 @@ +• 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 members to be independent of +the company, which is currently the case. The independence +of Supervisory Board members is monitored on an ongoing +basis, based on the criteria of independence as set out in Best +Practice Provisions 2.1.7 and 2.1.8 of the Corporate Governance +Code and Clause 1.5 of the Supervisory Board By‑Laws. +The number of supervisory board memberships of all +Supervisory Board members is limited to such extent that the +proper performance of their duties is assured. As stipulated +in the By‑Laws of the Supervisory Board, the number of board +memberships of large Dutch companies and listed companies +globally may not exceed five (with a Chair position counting +double). 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 and the +By‑Laws. +Further information on the Supervisory Board members can be +found in the section Executive Board and Supervisory Board. + → See Executive Board and +Supervisory Board on page 61 +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 +management beyond the Executive Board level. Operating +managers, including divisional CEOs, are regularly invited to +present to the Supervisory Board on the operations, market +developments, and business developments. 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 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 Annual +General Meeting of Shareholders in 2021. For more information +on remuneration, see Remuneration report. + → See Remuneration report +on page 70 +Corporate governance +continued +46 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_48.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..58fb62c1813d79add8f15a789b1e353cb46ff464 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,94 @@ +Diversity +Diversity, equity, inclusion, and belonging (DEIB) is an +important topic for the Supervisory Board and Executive +Board. The DEIB policy for the Supervisory Board is included +as an annex to the Supervisory Board By‑Laws. Elements of +diversity include among others 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 continue working towards achieving this through +equitable and inclusive employee practices and experiences +that improve female representation in hiring, promotions, +and talent retention. In addition, a global DEIB policy for +all employees worldwide was drafted and implemented in +2023. 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 the Sustainability +statements. +Currently, the male/female representation of the Supervisory +Board is 33% male and 67% female. After the appointment of +Mr. David Sides to the Supervisory Board and the retirement of +Ms. Jeanette Horan, the representation will be 50% male and +50% female. This is in line with Dutch law. The male/female +presentation in the Executive Board is 50%/50%, which is in +line with our target for diversity in the Executive Board. The +Supervisory Board composition comprises expertise within +the broad information industry as well as specific market +segments in which the company operates. Three 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 described in its profile. + → See Executive Board and +Supervisory Board on page 61 +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 +and ethical standards are the basis for our decisions for and +interactions with our employees, customers, partners, and +society at large, and for achieving our goals. We maintain a +culture of open communication and a safe environment where +everyone should feel confident to ask a question or raise a +concern without fear of negative consequences. 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 our Code of Business Ethics and +other key compliance policies and SpeakUp. In 2023, 99% of +employees completed the Annual Compliance Training. More +information on our Code of Business Ethics and SpeakUp +program can be found in the Sustainability statements. + → Read more about our Code of +Business Ethics in the +Sustainability statements on +page 89 +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 +Corporate governance +continued +47 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret flower is a "daisy". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_49.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a322b2a3f5af7009076d79b9300d14971aa98c8 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,80 @@ +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 +on page 50 +Environmental, social, and +governance matters +The Executive Board and the Supervisory Board are committed +to and oversee Wolters Kluwer’s sustainability/ESG priorities +and performance. The Executive Board discusses the +progress on the sustainability priorities in quarterly update +meetings with the Corporate Sustainability team, in addition +to individual updates as appropriate by relevant functional +owners. The Supervisory Board is informed on a regular +basis as well. The updated Supervisory Board By‑Laws and +Terms of Reference of the Audit Committee and Selection +and Remuneration Committee specify the responsibilities of +the Supervisory Board and the committees with respect to +sustainability. The Executive Board and Supervisory Board +provide feedback to the Corporate Sustainability team +and functional owners, that shapes the development of +relevant sustainability initiatives. For a detailed description +of our sustainability performance, reference is made to the +Sustainability statements. + → See Sustainability statements +on page 89 +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 2023, 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 May 10, 2023, the Executive Board +was granted the authority for a period of 18 months to issue +new shares, with exclusion of pre‑emptive rights, subject to +approval of the Supervisory Board. The authorization is limited +to a maximum of 10% of the issued capital on the date of +the meeting. +Acquisition of shares in the company +Acquisition of shares in the company (share buybacks) +may only be effectuated 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 May 10, 2023, +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, +2023, Wolters Kluwer N.V. held 8,004,987 shares in the company +(a 3.2% interest). +Corporate governance +continued +48 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_5.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..2393a1585baefa5b07ed7fcce1111dc3ea18053f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,81 @@ +Divisions +We deliver professional information, software, and +services for the healthcare; tax and accounting; financial +and corporate compliance; legal and regulatory; and +corporate performance and ESG sectors. +Health +Trusted clinical technology and solutions +that drive effective decision ‑making +and outcomes across the continuum +of healthcare. + → Read more on page 17 +Tax & Accounting +Expert solutions that help tax, accounting, +and audit professionals drive productivity, +navigate change, and deliver better +outcomes. + → Read more on page 21 +Financial & Corporate Compliance +Expert solutions for legal entity +compliance and banking product +compliance. + → Read more on page 25 +Legal & Regulatory +Information, insights, and workflow +solutions for changing regulatory +obligations, managing risk, and increasing +efficiency. + → Read more on page 29 +Corporate Performance & ESG +Enterprise software to drive financial and +sustainability performance and manage +risks, meet reporting requirements, +improve safety and productivity, and +reduce environmental impact. + → Read more on page 33 +Revenues by media format +2023 Revenues by type +Organic revenue growth +Adjusted operating profit margin +Diluted adjusted EPS in € +Return on invested capital +0% +20% +40% +60% +80% +100% +Digital: Expert solutions Digital: Information products +Services Print +2020 2021 2022 2023 +Recurring Non-recurring +0% +1% +2% +3% +4% +5% +6% +7% +2020 2021 2022 2023 +5.8%6.2%5.7% +1.7% +22% 23% 24% 25% 26% 27% +2020 +2021 +2022 +2023 +0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 +2020 +2021 +2022 +2023 +18%0% 3% 6% 9% 12% 15% +2020 +2021 +2022 +2023 +82% +Recurring +revenues +4 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Wolters Kluwer at a glance \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_50.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdade65d29fbb1b061f06b5f7078230104ea31 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,83 @@ +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. +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). +In 2023, Mr. P. Bouw retired from the Board of the Foundation. +He was succeeded as Chair by Mr. J.S.T. Tiemstra. The other +members of the Board are Mr. G.W. Ch. Visser and Mr. A. Nühn. +All members of the Board of the Foundation are independent +from the company. +In line with standard practice, the Board of the Foundation +met twice in 2023. Representatives of the Executive Board and +Supervisory Board of the company attended the meetings +to give the Board of the Foundation information about the +developments within Wolters Kluwer. Discussion topics +included updates on 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. In addition, the Board of +the Foundation discussed the developments with respect to +corporate governance and relevant Dutch legislation. +The Board of the Foundation also followed developments +of the company outside of board meetings, among others +through receipt by the board members of press releases. As +a result, the Board of the Foundation has a good view on the +developments at Wolters Kluwer. The Foundation acquired no +preference shares during the year under review. +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, Note 32 – Capital and reserves, and in Wolters +Kluwer shares and bonds. + → See Wolters Kluwer shares and +bonds on page 222 +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). Consequently, 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, the remuneration policy for the +Supervisory Board, and the global DEIB Policy, are available in +the corporate governance section on our website. + → For more information, see +www.wolterskluwer.com/en/ +investors/governance/policies- +and-articles +Corporate governance +continued +49 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Corporate governance +The secret animal #5 is a "squirrel". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_51.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a9b4625b8efc417d171998fba460389bf458f21 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,81 @@ +This section provides an overview of +our approach to risk management. +It also includes a summary of the +main risks we identify and the actions +we take to mitigate these risks. +Introduction +The current environment continues to present uncertain +macroeconomic conditions and heightened geopolitical +tensions. The many elections taking place in 2024 could alter +conditions. There are signs that inflation is starting to come +under control which could lead to a turn in the interest +rate cycle. In early 2024, levels are still high and the future +trajectory remains unclear, presenting a challenge for our +customers, employees, and other stakeholders. While job +markets have cooled somewhat, there remains a shortage of +technology talent globally. Industrialized cyberattacks have +become part of the landscape. Despite these circumstances, +our overall risk profile remains largely unchanged. We +continue to have confidence in our ability to execute our +strategy and mitigate any crisis or challenge that may arise. +Responsibility for risk management +The 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 among +others 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 various +functional departments, including Internal Audit, Internal +Control, Legal and Compliance, Sustainability, Human +Resources, Treasury, Risk Management, 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. +The 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. +Risk management +Risk appetite +Risk type Balanced Conservative Minimal +Strategic +Operational +Legal & +compliance +Financial +& financial +reporting +50 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_52.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..333c0dbb17c231b0d0ba2b2c146d0a836b8986d4 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,89 @@ +Internal Control Framework +Our Internal Control Framework (ICF) for financial reporting is +based on the Committee of Sponsoring Organizations of the +Treadway Commission (COSO) 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 for financial reporting 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 functional management, the Executive Board, +the Audit Committee, and internal and external 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. +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 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 Framework have +been designed to identify, mitigate, and respond to risks in a +timely manner. However, it is not reasonably 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 & +compliance and financial & financial reporting risk categories. +We carefully weigh risks against potential rewards. +Emerging risks +Generative artificial intelligence (AI) became commercially +available in 2023, and while we believe this new AI technology +primarily offers opportunities for Wolters Kluwer, there are +also potential risks that will need to be monitored and +mitigated. Other risks which emerged in recent years and that +we continue to monitor include climate‑related risks, data +privacy, and data governance. The latter area continues to be +of interest as we accumulate more and new types of data, and +deal with the growing exposure to regulatory, ethical, and data +security risks. See the sections Material impacts, risks, and +opportunities and their interaction with strategy and business +model (SBM-3), Description of the processes to identify +and assess material climate-related impacts, risks, and +opportunities (IRO-1), and Actions and resources in relation to +climate change policies (E1-3) in the Sustainability statements +for more information about climate‑related risks. The data +privacy risk is described in the risk category Regulatory and +compliance in this Risk management chapter. +Risk management +continued +51 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_53.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..b64cd0f23c28cc68162987c202358eb218d68fdc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,94 @@ +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 macroeconomic and geopolitical developments so we can respond quickly to risks +and opportunities. For example, we are monitoring inflation and energy prices, as well as the Russian ‑ +Ukrainian war and the conflict in the Middle East. We take steps to minimize the impact on our financial +performance while also continuing the support of our customers and employees. +Recurring revenues represent 82% 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. 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 in product development and +innovation 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. +Changes in technology, +business models, and customer +preferences +Demand for our products and +services could be affected by +disruptive new technologies, +including generative AI, 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, including +generative artificial intelligence, 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, help 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. +Risk management +continued +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 +52 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management +The secret object #4 is a "pillow". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_54.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fc3ffb72a174d8de09af135cddbdd7643d957fe --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,82 @@ +Strategic risks continued +Risk description and impact Mitigation +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 target’s internal +control environment including +IT security, open source +software, 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. Generally, +we acquire businesses that present strategic synergies with our +existing operations. +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 +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 for Standardization +(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 the Annual Compliance +Training 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. +53 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_55.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..6bb1b8796bd7f5f434713dc75948bba59486d472 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,81 @@ +Operational risks continued +Risk description and impact Mitigation +Supply chain dependency and +project execution +Our operations depend on +third‑party suppliers and could +be adversely affected by poor +performance of suppliers. +Suppliers include providers of +cloud services, outsourced and +offshored data center services, +software development and +maintenance services, back ‑ +office transaction ‑processing +services, content 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 supply chain 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. +Suppliers that are managed through Global Business Services are +subject to extensive due diligence covering security, data privacy, +and business continuity. +In 2023, we expanded the number of suppliers included in our +multi‑year project to implement a state ‑of‑the‑art, enterprise ‑wide +supply chain risk management process. This process ensures a +consistent approach to the intake of third ‑party services on a global +scale, including 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. +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 recruitment +and development, learning opportunities, retention initiatives, +engagement and belonging efforts, 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 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 rewards structures and performance ‑based compensation +programs to maintain market competitiveness to support us in +attracting and motivating talent. In 2023, we launched the Colleague +Experience Promise (CxP), which is a four ‑pillar action framework +that articulates to our colleagues the experience we work to provide +to them from the time they engage with our company as candidates +through their careers with the organization. +Risk management +continued +54 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_56.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..56733c8aa03e9b59f4e64d7447cd06465ec4ed11 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,97 @@ +Operational risks continued +Risk description and impact Mitigation +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 the ever‑changing risk landscape (e.g., COVID ‑19/post‑pandemic, +hybrid working, geopolitical tensions, and generative AI), we expect +cyber fraud risks may be amplified and continue to assess and +evolve the measures in place. +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. We 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 essential, alternate, and virtual locations. +Many of our businesses have diversified personnel and support +centers that have capabilities to cover and adapt between regions. +See the Sustainability statements for more information on climate ‑ +related physical 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 brand work +throughout the company. +The Global Branding & Communications (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. +Risk management +continued +55 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management +The secret office supply is a "calculator". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_57.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab346a07f1f9e95af0cfec5cf6b442bbc3631f5 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,90 @@ +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 the 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. +Legal & compliance risks continued +Risk description and impact Mitigation +Regulatory and compliance +continued +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, corporate sustainability (reporting), artificial +intelligence, 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 a significant portion of our supplier spend, we use contract +management systems to monitor certain contractual rights and +obligations, and software tools to track the use of software for +which licenses are required. We implemented a global contract +lifecycle management tool for our significant commercial +agreements which helps us manage compliance with third ‑party +agreements, tracks key dates and milestones, monitors compliance +with our contracting policies and standards, and mitigates operating +risks 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 +56 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_58.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e6b511c78bc79d82c3afd252ded5f249bf814b3 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,70 @@ +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 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 businesses in compliance with local laws and fiscal regulations. +We manage a range of insurable risks by arranging insurance +coverage for potential liability exposures. +Risk management +continued +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 2023, we diminished liquidity risk by securing additional funding +with a new €700 million eight ‑year Eurobond. +Further disclosure and detailed information on financial risks and +policies is provided in Note 29 – Financial risk management. +57 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_59.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..61f573909c6966585b7e64d8298d20c61518b69f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,69 @@ +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. We simultaneously assess if the plan designs can +reduce financial 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 our plans. Our aim is to +maximize returns while managing downside risk in the plans. +The accounting for defined benefit plans is based on annual +actuarial calculations in line with IAS 19 – Employee Benefits, +disclosed in Note 30 – Employee benefits . +In 2023, we continued to prudently manage our benefit plans, but did +not make any substantive changes. +In the Netherlands, our work to comply with the new Pension Accord +requirements continues in collaboration with the Pension Fund +Board, works councils, and external experts. +Financial & financial reporting risks continued +Risk description and impact Mitigation +Taxes +Changes in operational taxes +and corporate income tax +rates, laws, and regulations +could adversely affect our +financial results, and tax assets +and liabilities. +Apart from 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 +provide training to our tax staff where appropriate. +We monitor legislative developments in the jurisdictions in which we +operate and consider the potential impacts of proposed regulatory +changes, such as Pillar Two Model Rules. +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 15 – Income tax expense and Note 22 – 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. +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. Wolters Kluwer’s tax policy and +principles are largely in line with this code and already comply with +most elements therein. We are planning for further information +disclosure and transparency which will bring us to full compliance. +Further information can be found in our Tax Principles available on +our website. The full version of the VNO ‑NCW Tax Governance Code +is available at www.vno-ncw.nl/taxgovernancecode . +Risk management +continued +58 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management +The secret animal #2 is a "penguin". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_6.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bb636ad4c4b0e9ea06bcf4a834c9b88e57914eb --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,82 @@ +We are delivering value +for our customers, +rewarding careers for our +employees, and returns +for shareholders. +“ +The passion, commitment, and +efforts of our global team allowed +us to collectively deliver on our +goals in a year when we made key +organizational changes, directed +more funds towards AI, and managed +through an interest rate cycle. +Q +How would you sum up the company’s 2023 financial results? +The macroeconomic and geopolitical backdrop of 2023 +presented some challenges, but despite this, we achieved our +overall financial guidance, with another year of 6% organic +growth and a further increase in the adjusted operating +profit margin. The year saw our two largest divisions, Health +and Tax & Accounting, grow faster than we had anticipated, +compensating for Financial & Corporate Compliance and +Corporate Performance & ESG, where the interest rate cycle +and market shifts impacted results. It was a year when our +Legal & Regulatory division demonstrated yet again that it has +been transformed, delivering 8% organic growth for its digital +information solutions. The group‑wide margin developed +as we had expected as personnel costs and discretionary +expenses returned to more normal levels last year after the +effects of the pandemic. We were able to increase investment +in product development in 2023 to take advantage of new +opportunities and still meet our margin and cash flow goals. + Q +Innovation spending is at record levels. What are you +investing in? +Product development spending is running at 11% of group +revenues, some €615 million in 2023, up in constant currencies. +This investment is critical to supporting organic growth and +to our long‑term competitive position. In our world, organic +investment mostly relates to multi‑year product roadmaps +which require careful planning and resource management. +We are investing in many areas: in migrating solutions to +the cloud; further deploying artificial intelligence and other +advanced technologies; adding new modules to our platforms; +transforming our digital information products into expert +solutions; and building capabilities to support customers for +new regulations. We follow a rigorous design and development +process, that adheres to our responsible AI principles, to +ensure quality and security while also achieving a return on +investment. We aim to be agile at the same time so we can +pivot or move faster when needed. In 2023, for example, we +quickly shifted attention and funding towards generative AI +opportunities. Our centralized product development team, +DXG, plays a key role in driving innovation with the divisions, +both for existing solutions and the creation of entirely new +products. + Q +Generative AI took the world by storm in 2023. How is Wolters +Kluwer deploying this new technology? +For over 10 years, we have been deploying artificial +intelligence into our products. In fact, around 50% of our +digital revenues come from products that have some form of +AI embedded. We see the new Gen AI technology as another +powerful tool that we can put to work with our high‑quality, +continuously updated, proprietary content to bring benefits to +customers. We also see interesting opportunities to enhance +our own internal operations with this technology. Gen AI lends +itself very well to certain tasks, such as conversational search, +generating first drafts, or summarizing documents. In 2023, we +released our first generative AI‑enabled products and there is +more to come in 2024. +Q +In 2023, you set up a new division. Why reorganize? +The new division, Corporate Performance & ESG, was formed +by bringing together four of our global enterprise software +units: Enablon, CCH Tagetik, TeamMate, and OneSumX/FRR. +We believe there are important synergies to be derived +from joining up these units and connecting and integrating +their solutions. Less than a year in, we have started aligning +Q&A with +Nancy McKinstry +5 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_60.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..572b2924c18c58978d45c13785765350aa896e87 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,66 @@ +Financial & financial reporting risks continued +Risk description and impact Mitigation +Misstatements, accounting +estimates and judgments, and +reliability of systems +The processes and systems +supporting financial reporting +may be susceptible to +unintentional misstatements or +manipulation. The preparation +of financial statements in +conformity with IFRS requires +management to make 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 divisions 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 control reviews are carried out to ensure +compliance with policies and procedures. These reviews ensure that +existing controls provide adequate protection against actual risks. +Financial results are reviewed by our Business, Analysis & Control, +Consolidation, Group Accounting & Reporting, Treasury, and +Corporate Tax departments in monthly development meetings as +part of regular business reviews with the Executive Board. +Our Group Accounting & Reporting department periodically provides +updates and training to our businesses about changes in policies, +accounting standards, and financial focus areas. Reconciliations of +statutory accounts are done by the Group Accounting & Reporting +and Corporate Tax departments, which include a comparison +between group reported figures, statutory figures, and tax filings. +Financial & financial reporting risks continued +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 (13) (3) +1% decrease in discount rate in determining the gross service costs for the +post‑employment benefit plans (7) (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 (6) +Risk management +continued +59 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Risk management \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_61.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a0ebaf5e367ecb00643f9525f02ce398193fc8c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,81 @@ +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, Risk management, and Sustainability statements +that is included in the 2023 Annual Report. The Report of the +Executive Board and 2023 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 2023 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 2023 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 20, 2024 +Executive Board +Nancy McKinstry +CEO and Chair of the Executive Board +Kevin Entricken +CFO and member of the Executive Board +Statements by the +Executive Board +60 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Statements by the Executive Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_62.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..91db3c789a7ae4f141a97c2e7f6424e385601165 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,20 @@ +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 Global Law and Compliance. +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. +Executive Board +61 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Executive Board +The secret object #5 is a "vase". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_63.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..f30417eb7735e11b42034bbd082e0312054cd735 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,122 @@ +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 +US Foods, Inc. +• Member of the Board +(Non‑Executive Director) +of Reynolds Consumer +Products, Inc. +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 Remuneration +Committee of ASML N.V. +• Member Supervisory Board, +Chair Audit Committee, and +member ESG Committee of +Royal Boskalis Westminster N.V. +• Member of the Board (Non‑ +Executive Director), Chair Audit +Committee, Chair Investment +Committee, and member People +and Organization Committee +of Oranje Fonds +• Vice‑Chair Supervisory Board +and Chair Audit Committee of +TomTom N.V. +• Chair VEUO (Dutch Association +of Securities‑Issuing Companies) +• Member of the Board +of Stichting Preferente +Aandelen Philips +Sophie V. Vandebroek +American, 1962, member of the +Audit Committee. Appointed in +2020, and current term until 2024. +Founder Strategic Vision Ventures, +LLC, former CTO of Xerox, and +former Chief Operating Officer at +IBM Research +Other positions: +• Member Board of Directors +(Non‑Executive Director) +and member Finance and +Governance & Corporate +Responsibility Committees of +IDEXX Laboratories, Inc. +• Member of the Board of +Directors (Non‑Executive +Director) of Revvity, 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 +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: +• Chair of the Board of the Dutch +Red Cross +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 (stepping +down in April 2024) +• 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 +Chris Vogelzang +Dutch, 1962, member of the Audit +Committee. Appointed in 2019, +and current term until 2027. +Former CEO of Danske Bank A/S +Other positions: +• Senior Advisor, Boston +Consulting Group +Supervisory Board +62 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_64.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..444e387cb9d412008fb9d8c24bd2208fa45e456c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,80 @@ +The Supervisory +Board was pleased +to see the +significant progress +on sustainability +commitments made +two years ago. +This report provides an overview +of the activities of the Supervisory +Board and its committees during +the year. The Supervisory Board +supervises the Executive Board in +setting and achieving the company’s +strategy, including sustainability, +targets, and policies, and oversees +the general course of affairs of +the company. The Supervisory +Board also acts as advisor to the +Executive Board. +Introduction by the Chair of +the Supervisory Board +On behalf of the Supervisory Board of Wolters Kluwer, I am +delighted to present our report for the year 2023. It was a year +of exacerbated geopolitical tensions and economic headwinds. +The company was able to withstand a sharp downturn in +transactional revenues caused by the prolonged period of high +interest rates, by driving strong performance in subscription +products, in particular expert solutions, cloud software, +and digital information solutions. The creation of a new +division was a bold organizational change that opens up new +opportunities and creates scope for synergies in coming years. +The centralization of technology, finance, and other functions +was another major undertaking during this past year. +Early in 2023, we all witnessed the rapid emergence of scalable +generative artificial intelligence (AI) tools and I’m pleased +the team mobilized quickly to discover ways to deploy this +technology to the benefit of customers, while ensuring we +follow our responsible AI framework and principles. +The Supervisory Board was kept updated on important product +development projects and other strategic initiatives, such +as the formation of the new Corporate Performance & ESG +division. While there were relatively few acquisitions in 2023, +the product development engine was very active as evidenced +by the record level of internal investment. +The Supervisory Board was pleased to see the significant +progress on sustainability commitments made two years ago. +Employee engagement and belonging scores both increased +in 2023, and programs are in place to support further progress. +The server decommissioning program exceeded expectations +and we will now substitute a new metric related to our office +space to provide an incentive for further progress on reducing +our environmental footprint. I am delighted Wolters Kluwer +now has SBTi‑validated near‑term emission reduction targets. +In this annual report, ESG disclosures have been further +expanded as the company prepares for the implementation +of the EU CSRD regulation. +During 2023, we conducted a thorough process to recruit a new +Supervisory Board member. We are very fortunate to be able +to nominate Mr. David Sides, who brings enormous expertise +and experience in U.S. healthcare informatics. +This past year, I had the pleasure of meeting a diverse range +of small and large shareholders from different parts of the +world. We greatly appreciate hearing their views, concerns, and +questions, on all topics from strategy to sustainability. +As we head into 2024, the environment in which we operate +remains somewhat volatile, but the team has sound plans in +place to continue driving performance and has the experience +to tackle new challenges which might come our way. I look +forward to working with my colleagues on the Supervisory +Board and guiding the Executive Board as they execute on the +final year of the current strategic plan. +Ann Ziegler +Chair of the Supervisory Board +Report of the +Supervisory Board +Ann Ziegler +Chair of the +Supervisory Board +“ +63 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory BoardThe secret drink is a "smoothie". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_65.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..afb3b20195df4c7ca13546d3438e07f810151851 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,93 @@ +Meetings +The Supervisory Board held seven scheduled meetings in +2023. Five meetings included a session for Supervisory Board +members only, without the members of the Executive Board +being present. The Chair of the Supervisory Board had regular +contact with the Chair of the Executive Board. +Financial statements +The Executive Board submitted the 2023 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 2023 Financial statements, pursuant to their statutory +obligation under clause 2:101 (2) of the Dutch Civil Code. The +Supervisory Board proposes to the shareholders that they +adopt these 2023 Financial statements at the Annual General +Meeting of Shareholders of May 8, 2024 (2024 AGM). + → See the 2023 Financial +statements on  page 142 +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, followed by individual meetings with the +members of the Executive Board. +Report of the Supervisory Board +continued +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 +transition to the new Chair of the Supervisory Board went +smoothly. 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, constructive, and transparent +atmosphere with each of the members actively participating. +The Supervisory Board appreciates the deep dives on relevant +topics, which provide the Supervisory Board or its committees +with more in‑depth information on certain topics, such as +sustainability reporting or restructuring efforts. Based on +feedback of the Supervisory Board members, the governance +structure and allocation of responsibilities between the +Supervisory Board and its committees with respect to +sustainability topics was further refined and confirmed in +the updated By‑Laws of the Supervisory Board. In addition, +a deep dive session regarding the competitive landscape +of Wolters Kluwer was organized at the request of the +Supervisory Board. The Supervisory Board also reviewed the +onboarding process for new members and received additional +information on product demos. The Supervisory Board remains +focused on a good balance between to the point pre‑read +materials, presentations, and discussions, as it is considered +important to have interactive discussions with several layers +of management. +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 enhance the quality of the meetings. In addition, +the Supervisory Board evaluates the Vision & Strategy Plan +(VSP) presentations at the end of the meetings in which +they were held and comes up with recommendations for +future presentations. +Strategy +The Supervisory Board was kept closely informed on the +second year of execution of the three‑year strategy for +2022‑2024, Elevate Our Value, which was announced in +February 2022. Based on their knowledge and experience, +the Supervisory Board members advise the Executive Board +throughout the year on strategic topics. +The Supervisory Board approved the new divisional structure, +in which a fifth division, Corporate Performance & ESG, +was created in March 2023. The Supervisory Board strongly +supported this change, enabling management of the Corporate +Performance & ESG division to fully focus on their markets and +business units with high growth potential. The addition of a +new division was also a good opportunity from a management +development perspective, as it provided various employees +the opportunity to broaden their perspective and grow into +new managerial roles. The Supervisory Board was pleased to +see that most new executive, senior, and junior level roles +were filled by internal candidates. +As in other years, the divisional CEOs presented their VSPs +for 2024‑2026 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 +64 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_66.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..1795a5eaf368b1f968ec6c78413da6c6d354b25b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,87 @@ +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 2023, the Supervisory Board visited Minneapolis +where management of the Financial & Corporate Compliance +(FCC) division presented its business. In addition to the +divisional VSP, several managers of the FCC division presented +their business and gave product demos, which also included +early‑stage innovations. The Supervisory Board also attended +a panel discussion on the business opportunities of the new +beneficial ownership rules in the United States. These rules, +which went into effect on January 1, 2024, create an interesting +business opportunity for the FCC and Tax & Accounting +divisions. The panel consisted of Wolters Kluwer managers, +customers, and an external expert. The interaction with several +layers of management and customers during the working +visit contributes significantly to the Supervisory Board’s deep +understanding of the business. +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. 2023 was the thirteenth consecutive +year in which Wolters Kluwer rewarded promising new internal +business initiatives via the Global Innovation Awards (GIA). +Report of the Supervisory Board +continued +This event enables teams across the business to present their +innovative ideas. The awards are ultimately awarded by a jury +consisting of internal and external experts. In 2023, a record +of 662 GIA submissions were received. Of these, four category +winners were chosen by the Innovation Board and two ideas +were recognized exclusively by Ms. McKinstry with CEO Choice +Awards. One of the awarded teams presented their innovation +submission to the Supervisory Board. A strong culture of +innovation and continuing investment in new and enhanced +products, including expert solutions, is an important means for +driving sustainable long‑term value creation at Wolters Kluwer. +In line with prior years, management of Global Business +Services (GBS) and Digital eXperience Group (DXG) gave +presentations, updating the Supervisory Board on the +company’s technology strategy and execution thereof. The +GBS presentation included a deep dive on cybersecurity and +disaster recovery plans. Considering the rapidly changing +technological developments, this remains a key topic. +The Supervisory Board appreciated the insight in the plans +and actions and overall feels that the IT infrastructure of +Wolters Kluwer is well managed. The DXG presentation +included an extensive explanation on the company’s +actions and governance structure with respect to AI, focusing +on large language models. DXG leads the AI Center of +Excellence and 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. The presentation included demos of products which +67% +of the Supervisory Board +members are female +already contain AI and an explanation on how Wolters Kluwer +can further benefit from the use of AI, including large language +models, and other advance technologies in its products. In +addition, the company’s approach towards responsible AI was +discussed. While the company carefully monitors potential +threats and business disruption, management believes that +overall, AI brings interesting opportunities for the company. +The Global Brand & Communications team gave a presentation +on the design and execution of the brand strategy. Increased +brand recognition can contribute to sustainable long‑term +value creation. The team also updated the Supervisory Board +on external awards, which included the number two ranking in +Newsweek’s list of most trustworthy companies globally in the +Business & Professional Services category. +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. In addition to the deep dive session on +the competitive position, as a routine item, an overview of +the most important developments with respect to traditional +and new competitors is discussed during each Supervisory +Board meeting. +65 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_67.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..360fa44eb5dd23e4ab06a018b263bce5838134aa --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,79 @@ +Acquisitions and divestments +The Executive Board kept the Supervisory Board informed +about all pending acquisition and divestment activities. +During the year under review, there were no acquisitions with +a transaction value above the threshold for Supervisory Board +approval (1% of consolidated revenues). +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 further 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. +Report of the Supervisory Board +continued +The Supervisory Board discussed the implementation of +the amended Dutch Corporate Governance Code, which was +published in December 2022. Changes which were relevant +for the Audit Committee and Selection and Remuneration +Committee, were also discussed in those committees. As part +of the implementation, the Supervisory Board adopted the +updated By‑Laws for the Boards, as well as Terms of Reference +for the Committees. + → For more information, see Corporate +governance on page 44 and Risk +management on page 50 +Sustainability +The Supervisory Board has oversight of and actively +discussed the company’s sustainability/ESG performance +and reporting. The Supervisory Board is supportive of the +company’s sustainability approach and the increased focus +on environmental and social matters. The Supervisory Board +strongly supports and approved the submission of near‑term +targets and the net‑zero commitment with the Science Based +Targets initiative (SBTi). The near‑term targets were validated +by the SBTi in the fourth quarter of 2023, which is an important +milestone for the company’s sustainability efforts. +The Audit Committee and Supervisory Board were also kept +informed on the preparations for compliance with the EU +Corporate Sustainability Reporting Directive (CSRD) and +the European Sustainability Reporting Standards (ESRS), +which will apply as of financial year 2024 (for the annual +reports which will be published in 2025 and subsequent years). +As part of these preparations, the company conducted an +extensive initial double materiality assessment which was +discussed with the Audit Committee and the full Supervisory +Board. The Supervisory Board supports the outcomes of the +assessment, based on the thorough underlying process and +documentation provided. +In addition, the Supervisory Board was kept informed on +other environmental and social topics, such as Diversity, +Equity, Inclusion, and Belonging (DEIB), during several +meetings. The responsibilities of the Supervisory Board +and its committees with respect to sustainability were +reflected in the updated By‑Laws and Terms of Reference, +underpinning the commitment of the Supervisory Board to +carefully monitor this topic and provide the Executive Board +with advice. +The intensified focus on sustainability 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 sustainability activities of the +company and believes that these efforts will contribute to an +inclusive culture of integrity, accountability, and transparency, +creating sustainable long‑term value for all stakeholders. + → For more information on sustainability, +see Sustainability statements +on page 89 +66 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_68.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e45fd30b01935567750e75cfca5a590fe3e522c --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,88 @@ +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 the context of the implementation of the amended +Corporate Governance Code, the Supervisory Board approved +the Global DEIB Policy, as well as the targets for gender +representation in the sub‑top of the company. This target +aims at an increase of female representation in the company’s +executive career band by two percentage points by 2028, from +a 2022 baseline. +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 sustainable long‑term value creation. The results +were positive. The company continues executing action plans +to further improve in these areas. +Report of the Supervisory Board +continued +Finance +The Supervisory Board and Audit Committee carefully observe +the financing of the company, including the balance sheet, +cash flow developments, and available headroom. The +Supervisory Board also closely monitors the development of, +among others, net‑debt‑to‑EBITDA ratio and liquidity planning. +The Supervisory Board approved the share buyback program +of up to €1 billion in 2023, as well as the €100 million share +buyback for the period starting January 2, 2024, up to and +including February 19, 2024, and the block trade to set off EPS +dilution due to performance shares under the 2021‑2023 long‑ +term incentive plan which will be released to participants on +February 22, 2024. +With respect to the funding of the company, the Supervisory +Board approved the new €700 million eight‑year senior bonds, +which were issued in March 2023. +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 2022, which was approved +by the AGM in 2023, and the proposed dividend increase +of 15% over 2023 (to be approved by the AGM in 2024), 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 headroom for acquisitions. +The Supervisory Board discussed the impact of a new Dutch +law regarding taxation of share buybacks, which may become +effective as of January 1, 2025. Management will keep the +Supervisory Board informed about the potential impact +and alternatives. +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 2023 guidance in the half‑year results +press release which was issued in August. In addition, two +Supervisory Board members had virtual meetings with several +shareholders in the second half of 2023, focused on corporate +governance, ESG, and AI. +Audit Committee +The Audit Committee had four regular meetings in 2023, +during the preparation of the full‑year 2022 and half‑year +2023 results, and around the first‑quarter 2023 trading +update and nine‑month 2023 trading update. In addition, +in January 2023, the Audit Committee had a separate deep +67 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_69.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..38198bba1e4fcba61c8ffd76868c9f263e6bf73f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,80 @@ +dive session with corporate staff representatives regarding +sustainability reporting and the request for proposal for a +new audit firm. There was one scheduled conference call +in December between the external auditor, the Chair of the +Audit Committee, and the CFO. +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 +2023, 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, the Auditor Independence Policy, and the +quarterly reports and the full‑year report on the audit of the +external auditor. +Report of the Supervisory Board +continued +In January 2023, the Audit Committee recommended to the +full Supervisory Board to nominate KPMG Accountants N.V. as +new audit firm as of financial year 2025. This recommendation, +which was followed by the Supervisory Board, was the result +of an extensive request for proposal process for the auditor +rotation, which is required under Dutch law every 10 years. +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. In the 2023 AGM, KPMG was +indeed appointed as auditor as of financial year 2025. +The Audit Committee has reviewed the performance of the +current external auditor (Deloitte), the proposed audit scope +and approach, the audit fees, and the independence of the +external auditor, and has reviewed and approved the other +assurance services, tax advisory services, and other non‑ +audit services provided by the external auditor. The Auditor +Independence Policy, which was updated in 2023, is available +on the website. + → The Auditor Independence Policy +www.wolterskluwer.com/en/investors/ +governance/policies-and-articles +Selection and Remuneration Committee +The Selection and Remuneration Committee met four times in +2023. The Committee consisted 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 on page 70 +Supervisory Board composition +After the AGM in 2023, Mr. Bodson resigned from the +Supervisory Board due to the workload of his other activities. +During 2023, the Supervisory Board searched for a replacement +of Mr. Bodson. Based on the recommendation of the Selection +and Remuneration Committee, the Supervisory Board +nominates Mr. David Sides for appointment as new member +of the Supervisory Board in the 2024 AGM, in view of his +knowledge of the healthcare sector, coupled with his financial +and commercial acumen, as well as his extensive experience +in leading innovative companies. +68 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board +The secret sport is "surfing". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_7.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..e88361a2cf0789a6ae88876767258b3fd97be67f --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,85 @@ +product development and have already released the first +connection between Enablon and CCH Tagetik. All four units +address the corporate market and we see scope to leverage +their combined global sales and marketing strength. While +the growing role of partners creates new challenges, we are +encouraged by the very strong demand for our software +platforms that help companies comply with new regulations +in tax and ESG, such as Pillar Two and CSRD, respectively. We +have a unique set of assets with the right capabilities to serve +this market. +Q +Are you on track to deliver on the goals of your 2022-2024 +strategy? +We are very much on track. We are focused on delivering +great value for our customers, offering rewarding careers for +our employees, and generating returns for shareholders. Our +top priority has been to grow our expert solutions, which +are sophisticated workflow and software applications that +enhance professionals’ decision‑making and productivity. +In 2023, expert solutions were our fastest‑growing type of +product, with revenues increasing 8% organically. Our cloud‑ +based software products grew 15% organically. +Our second strategic priority is to extend into high‑growth +adjacencies, market segments that are logical extensions +to our existing business. Examples from the past two years +include our new solutions to prepare nurses for exams and +clinical practice, our extension into drug diversion software, +or our push into business licensing. In these three cases, we +made small bolt‑on acquisitions, NurseTim and Invistics in +2023, and LicenseLogix in 2022, to accelerate the move. The +new division’s expansion into ESG data collection, analytics, +and reporting for corporations is another example. +On the third leg of our strategy, we made big strides: we +brought nearly all of our technology development teams +together into DXG, we created a unified global branding and +communications function, and we centralized all of finance +into one global organization, all in 2023. We also achieved +several of our sustainability goals. +Q +Your strategy states that you intend to advance your ESG +performance. What was accomplished in 2023? +Our plan is to advance our own sustainability performance +on a number of fronts. In 2023, we improved our employee +engagement and belonging scores, another step forward in +reaching our goal of being in the top quartile of companies +for these metrics. Another milestone was the validation of +our near‑term emission reduction targets by the Science +Based Targets initiative. In this annual report, you will see +significantly expanded sustainability disclosures, which bring +us closer to alignment with the European Sustainability +Reporting Standards (ESRS) and which address many of +the recommendations of the Task Force on Climate‑related +Financial Disclosures (TCFD). There is more to do, but we made +significant progress in 2023. +Q +What is the outlook for 2024? +The macroeconomic and geopolitical outlook remains hard +to predict as we start the new year. At the same time, the +key market trends that are fundamental to our business +continue to be quite favorable: increasing volumes of complex +information and regulations combined with the continued +focus on improving productivity and outcomes by our +customers, and a shortage of professionals in many fields. +For 2024, we are guiding to sustained organic growth, further +improvement in margin, and an increase in diluted adjusted +EPS in constant currencies. Beneath the calm surface, a lot is +going on. Product investment will remain high in 2024. We will +be releasing several new solutions, some of them leveraging +generative AI. I am excited about the opportunities ahead. +Nancy McKinstry +CEO and Chair of the Executive Board +Wolters Kluwer + → Read about our strategy on page 7 + → Read our Sustainability statements on +page 89-140 +Expert solutions +8% +organic growth in 2023 +Cloud software +15% +organic growth in 2023 +Diversity, equity & inclusion +75 +belonging score, up 2 points +6 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Q&A with Nancy McKinstry \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_70.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fb69d26e5448eb3000aefd5790e79a115c40747 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,87 @@ +In 2024, the first term of both Mr. Jack de Kreij and Ms. +Sophie Vandebroek will expire. Ms. Vandebroek is available +for a reappointment of four years. Mr. De Kreij is available +for a reappointment of two years. The Supervisory Board, +after careful consideration, will nominate Mr. De Kreij and +Ms. Vandebroek for reappointment in the 2024 AGM. A further +explanation can be found in the agenda of the AGM. +In 2024, the second term of Ms. Horan will expire as well. +Regretfully, she informed the Supervisory Board that she +is not available for reappointment. The Supervisory Board +would like to thank Ms. Horan for her knowledgeable and +much appreciated contributions during her eight years on the +Supervisory Board, and in particular for chairing the Selection +and Remuneration Committee with respect to remuneration +topics for seven years. The Supervisory Board is currently +conducting a search for the replacement of Ms. Horan 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. Three 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 33% male and 67% female, +which is in line with the diversity policy and Dutch law, +requiring a representation of at least one third male and +female. After the appointment of Mr. Sides and the retirement +of Ms. Horan, the representation will be 50% male and 50% +female. +Report of the Supervisory Board +continued +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 +All Supervisory Board members comply with the Dutch law and +the By‑Laws regarding the maximum number of supervisory +board memberships. Furthermore, all members of the +Supervisory Board are independent from the company within +the meaning of best practice provisions 2.1.7, 2.1.8, and 2.1.9 of +the Dutch Corporate Governance Code. For more information +on each Supervisory Board member in accordance with the +Dutch Corporate Governance Code, see the sections Executive +Board and Supervisory Board and Corporate governance. + → See Executive Board and Supervisory +Board on page 61 + → See Corporate governance on page 44 +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 sustainable long‑term value creation, +within an innovative, diverse, and transparent culture, were +highly appreciated by the Supervisory Board. +Meeting attendance +Supervisory +Board +Audit +Committee +Selection & +Remuneration +Committee +Number of meetings held 7 5 4 +A.E. Ziegler 7 – 4 +J.P. de Kreij 7 5 – +B.J.F. Bodson* 3 – – +J.A. Horan 7 – 4 +H.H. Kerstens 7 – 4 +S. Vandebroek 6 4 – +C.F.H.H. Vogelzang 7 5 – +* Mr. Bodson retired after the 2023 AGM. +Alphen aan den Rijn, February 20, 2024 +Supervisory Board +Ann Ziegler, Chair +Jack de Kreij, Vice‑Chair +Jeanette Horan +Heleen Kersten +Sophie Vandebroek +Chris Vogelzang +69 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Report of the Supervisory Board \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_71.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fe58068de3fcfaf540cbf55c49c78130b69bee6 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,87 @@ +Despite challenges, +all financial and +non‑financial +targets were met or +exceeded. +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 2023. We discuss how +performance drove the outcome +for 2023 and how the policy will be +applied in 2024. +Letter from the Co-Chair of the +Selection and Remuneration Committee +Dear Shareholders, +On behalf of the Supervisory Board, I am pleased to present +our 2023 remuneration report, in which we outline our pay‑for‑ +performance philosophy and our strategy‑linked framework, +and provide a summary of our remuneration policy. We explain +how performance translated into the remuneration earned for +2023 and set out how the remuneration policy will be applied +in 2024. +2023 performance and STIP outcome +In many ways, 2023 saw a continuation of the external +conditions that arose the year before, including challenges +presented by geopolitical events and macroeconomic +conditions. Last year was also a year of significant internal +change at Wolters Kluwer, notably the formation of a new +fifth division by bringing several business units together +and the centralization of key functions such as technology, +communication, and finance. These changes were executed +well in 2023 and prepare the organization to take advantage +of opportunities that lie ahead. +As discussed in the strategic report, the company finished +the year 2023 with financial results that were in line with the +overall group‑level guidance provided at the start of the year. +Fundamental to driving these financial results is the strategy +of focusing on expert solutions, investing in innovation, while +continuing to evolve organizational capabilities and driving +operational excellence. +Despite the challenges, the company achieved 6% organic +growth, resulting in an absolute 2023 revenue achievement +in line with target. The adjusted operating profit margin was +improved by 30 basis points, which after interest and tax, +resulted in a 7% increase in adjusted net profit in constant +currencies. Adjusted net profit of €1,119 million was in line with +target. Adjusted free cash flow of €1,164 million declined 2% in +constant currencies and exceeded the target by 1%. +To provide incentives for advancing our sustainability and +ESG performance, the Supervisory Board set targets for three +non‑financial measures for 2023, which together carried +a weight of 10% in the short‑term incentive plan (STIP). +Employee belonging, the indicator we have chosen to measure +our global performance on diversity, equity, and inclusion, +increased by 2 points to 75, exceeding the target which was +to increase it by 1 point. The second non‑financial measure, +indexed cybersecurity maturity score, aims to ensure the +group maintains security at or above the benchmark for +high‑tech companies. This target was also exceeded in 2023. +The third non‑financial measure for 2023, aimed at reducing +the environmental impact of our remaining in‑house data +centers, was a target for on‑premise servers decommissioned +during the year. On this measure, performance was well ahead +of target, and the multi‑year program to migrate customers +and applications to energy‑efficient cloud infrastructure has +reached a mature stage. +2021-2023 performance and LTIP outcome +The long‑term incentive plan (LTIP) which vested on December +31, 2023, and which will be paid out in February 2024, was +the first plan to have started under the remuneration policy +adopted by shareholders in 2021. This LTIP was therefore +linked to performance on relative total shareholder return, +diluted adjusted EPS, and return on invested capital. +Total shareholder return (TSR), including dividends and using +a 60‑day average share price at the start and at the end of the +Remuneration +report +Jeanette Horan +Co‑Chair of the Selection +and Remuneration +Committee, dealing with +remuneration matters +“ +70 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +The secret transportation is a "bike". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_72.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..06424cca988cd9a6a03312cb2b8fe8776788757b --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,47 @@ +Remuneration report continued +three‑year period, was 88%. This TSR performance placed Wolters Kluwer in third place ahead +of 13 of its TSR peers, which are comprised of comparable publicly listed U.S. and European +information and software companies. Over the three‑year LTIP period, 2021‑2023, the share +price rose 86%, very significantly outperforming the broader stock market indices, including the +STOXX Europe 600 and the Amsterdam AEX. +For the second measure, diluted adjusted EPS, the compound annual growth rate over the +three‑year performance period was 12.3% in constant currencies, exceeding the target of 8.3% +calculated based on constant currencies for 2023. +For the third measure, return on invested capital (ROIC), the final year ROIC result was 16.9% in +constant currencies for 2023 (16.8% in reporting currencies), which exceeded the target of 14.2% +in constant currencies. +Performance across these three LTIP measures therefore resulted in above target payout. +The realized value also reflects the significant share price appreciation over the period. +Looking ahead: STIP 2024 +During the past three years, the Supervisory Board has monitored the effectiveness of the +non‑financial metrics that have been used in the short‑term incentive plan. The Board is of the +opinion that these non‑financial measures should not only be quantifiable and verifiable, but +should also provide the appropriate incentives for the Executive Board to advance important +strategic objectives, including sustainability goals. +One of the sustainability goals is to make steady annual progress in building a diverse, +equitable, and inclusive culture among the global workforce. Significant progress has been +made but we continue to aim to become a leader on this front. Another sustainability goal is +to make further progress in reducing our direct greenhouse gas emissions. Here, the server +decommissioning measure will be replaced in 2024 with a new goal to provide further incentive +to reducing our global office footprint. +With regard to our cybersecurity maturity, we are well‑positioned compared to our industry +benchmark and the goal is to maintain our maturity score, which in itself requires constant +effort and investment. +Looking ahead: LTIP 2024-2026 +The LTIP for 2024‑2026, which reflects the remuneration policy that was adopted by shareholders +in 2021, will again include relative TSR at 50%, diluted adjusted EPS at 30%, and ROIC at 20%. +No changes were made to the TSR peer group in 2023. The Supervisory Board continues to +monitor this group given the periodic delistings and mergers that take place in our sector. +The Supervisory Board has set three‑year targets for compound annual growth in diluted +adjusted EPS and for final year ROIC, applying additional stretch to the underlying financial +plan that underpins the strategy. These forward‑looking three‑year targets are disclosed on +page 85. +The 2022 remuneration report received strong shareholder support with over 93% of votes in +favor of the report. We trust this 2023 report provides a clear explanation of the drivers of 2023 +remuneration and transparent disclosure on future goals and that shareholders can again +support this report at our Annual General Meeting of Shareholders on May 8, 2024. +Jeanette Horan +Co‑Chair of the Selection and Remuneration Committee, dealing with remuneration matters + → The 2024 AGM agenda is available at +www.wolterskluwer.com/agm +71 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_73.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0843ba38b8091bda5bf03df341b1c701d3e4d21 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,113 @@ +Remuneration at a glance +72 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report +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. +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. +T ar g et Actua l +59% +23% +18% +15,066 +12% +31% 4% +10% +36% +3% +4% +€0 +€20, 000 +in thousands of euros, unless otherwise stated +€10, 000 +€5, 000 +€15, 000 +LTIP TSR +outperformance +LTIP +STIP +Base Salary +LTIP EPS +outperformance +Increase in value +due to share +price performance +LTIP ROIC +outperformance +CEO target and realized pay 2023Diluted adjusted EPS +CAGR 2021-2023: 12.3% +in constant currencies +Return on invested +capital 2023: 16.9% in +constant currencies +Target for diluted adjusted +EPS CAGR 2021‑2023 +was 8.3% in constant +currencies for 2023. +Target for final year ROIC +2023 was 14.2% in constant +currencies for 2023. +3.13 3.38 +4.14 +4.55 +2020 2021 2022 2023 +12.3% +13.7% +15.5% +16.8% +2020 2021 2022 2023 +Impact of performance and share price on remuneration +Target pay reflects the number of LTIP shares conditionally +awarded for LTIP 2021‑2023 valued at the closing share +price on December 31, 2020 (€69.06). +Realized actual pay reflects the number of LTIP shares +earned valued at the closing share price on December 31, +2023 (€128.70). +The final payout will be valued at the volume‑weighted‑ +average share price on February 22, 2024. +Three-year 2021-2023 total shareholder return (TSR) +Sage Group +RELX +Wolters Kluwer +Thomson Reuters +CGI +Pearson +Informa +News Corp +S&P Global +Equifax +Verisk +Experian +Bur. Veritas +Wiley +SGS +Intertek +-20% ++80% ++100% +0% ++20% ++60% ++40% +40% +Summary performance against 2023 STIP targets +Actual performance +Measure Target Actual % of target +Financial - in millions of euros +Revenues 5,605 5,584 100% +Adjusted net profit 1,113 1,119 100% +Adjusted free cash flow 1,151 1,164 101% +Non-financial +Employee belonging score +1 point +2 points 105% +Indexed cybersecurity +maturity score 109.4 113.8 110% +Number of on‑premise servers +decommissioned 600‑999 1,542 110% +Financial STIP targets and actual performance are shown in reporting +currencies. For details on STIP target outcomes, see page 80. +The secret animal #3 is a "spider". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_74.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fa5ec4c6ea636c82a8de1af16f3f56807e62559 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,38 @@ +Remuneration report continued +Our remuneration policy +Below we provide a 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 +Key elements of our remuneration policy +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 76. +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 2024. +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 2023, the weighting was 10% and included the following three strategically important metrics: +• Belonging score (a quantified measure of diversity, equity, and inclusion) +• Indexed cybersecurity maturity score +• Number of on‑premise servers decommissioned (reducing carbon footprint) +In 2024, the weighting of non‑financial measures will be 10%. The environmental measure (servers decommissioned) will be replaced by a percentage reduction in our office footprint. +LTIP performance measures The policy stipulates the following measures for the LTIP: +• Relative total shareholder return, weighted at 50% +• Diluted adjusted EPS, weighted at 30% +• Return on invested capital (ROIC), weighted at 20% +Share ownership and +holding requirements +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. +73 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_75.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..34230ea8732cfd01abbb5e25f9dbe19101769ab9 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,83 @@ +Remuneration report continued +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 and increases provided +to all employees +Set at a level to attract, motivate, +and retain the best talent +STIP Paid annually in cash; maximum +opportunity 175% of base salary (CEO) +Creates incentives to deliver +performance against annual financial +and non‑financial 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) +Creates incentives to deliver financial +performance and create long ‑term +value; demonstrates long ‑term +alignment with shareholder interests +Pension Defined contribution retirement savings +plan that is available to all employees in +the same 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 same country of employment +Designed to be competitive in the +relevant market +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 based on 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 provides management with incentives 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 +74 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Remuneration report \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_8.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fc2a49ad0523c85832ccbc9a9f23d10dbce0d28 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,76 @@ +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. +Overview +Wolters Kluwer is a global provider of information, software +and services for professionals in the fields of health; tax and +accounting; financial and corporate compliance; legal and +regulatory; and corporate performance and ESG. +Every day, our customers face the challenge of increasing +quantities and complexity of information or regulation +and the pressure to deliver better outcomes at lower +cost. We aim to solve this challenge, add value to their +workflow, and support their decision‑making with our digital +solutions and technology‑enabled services. We continuously +improve our solutions to meet evolving customer needs, +leveraging the latest technologies to provide benefits such +as advanced analytics, intuitive interfaces, mobility, flexibility, +interoperability, reliability, and open architecture. +Purpose +Our purpose is to deliver impact when it matters most. Every +second of every day, our customers face decisive moments +that impact the lives of millions of people and shape society. +In these crucial moments, we put sound knowledge, deep +expertise, and usable data and insights into their hands at +the right time and in the right context for their specific set of +circumstances. Our solutions help protect people’s health, +prosperity, and safety and help to build better businesses. +Strategy +Our strategy for 2022‑2024 aims to deliver good organic +growth and improved adjusted operating margins and return +on invested capital, while advancing our ESG performance. +Among the ESG goals in our 2022‑2024 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 near‑term science‑ +based targets. To achieve these goals, our strategic priorities +are: +• Accelerate Expert Solutions: we are focusing our +investments on cloud‑based expert solutions while +continuing to transform selected digital information +products into expert solutions. We are investing to enrich +the user experience of our products by leveraging advanced +data analytics and artificial intelligence. +• Expand Our Reach: we are seeking to extend into high‑ +growth adjacencies along our customers’ workflows and to +adapt our existing products for new customer segments. We +are working to develop partnerships and ecosystems for our +key software platforms. +• Evolve Core Capabilities: we are enhancing our central +functions to drive excellence and scale economies in sales +and marketing (go‑to‑market) and in technology. We are +focused on advancing our ESG performance and capabilities +and continuing to invest in diverse and engaged talent to +support innovation and growth. +Our strategy is centered on organic investment and growth.The +three‑year plan envisages spending approximately 10% of total +revenues each year on product development. +We also 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. +Strategy and +business model +50% +Around 50% of digital +revenues are from +products that leverage +artificial intelligence +7 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model +The secret shape is a "heart". \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_9.txt b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..7365c40feb3e742196250c32ca73f0f66df46136 --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/Text_TextNeedles/WoltersKluwer_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,75 @@ +Strategic progress 2023 +In 2023, we made important progress on our strategic plans. +First, expert solutions, which include our software products +and certain advanced information solutions, accounted for +58% of total revenues (2022: 56%) and grew 8% organically +(2022: 9%). Software solutions accounted for 45% of total +revenues (2022: 44%) and grew 8% organically (2022: 9%). +Cloud software revenues accounted for 37% of total 2023 +software revenues and grew 15% (2022: 17%). Today, around +50% of our digital revenues are from products that leverage +artificial intelligence (AI) to drive enhanced value for our +customers. During 2023, we stepped up experimentation with +large language models (LLMs) and the new scalable generative +AI technology, testing dozens of use cases, collaborating with +selected customers, and launching beta versions in Health +and Legal & Regulatory markets. For much of this work, we +are partnering with Microsoft, Google, and other technology +suppliers. +Second, we made progress on extending our reach into high‑ +growth adjacencies and geographies. The new Corporate +Performance & ESG division, formed in 2023, sets us on a path +to extend our enterprise software solutions into corporate +workflows for ESG data collection, analysis, reporting, and +assurance. In the Health division, the 2023 acquisition of +NurseTim bolstered our position in nursing education +solutions and test preparation while the 2023 acquisition of +Invistics drug diversion detection software broadened our +offering in the hospital market. +Third, we took significant steps in 2023 to evolve our core +capabilities. We centralized the majority of our product +development teams, more than doubling the number +of FTEs in our global development organization, Digital +eXperience Group (DXG). We also centralized our branding and +communications teams and created a unified global finance +organization to support the company globally. With regard +to our specific ESG objectives, the most notable advances +in 2023 were the validation by the Science Based Targets +initiative of our near‑term emission reduction targets and the +improvements in several important social metrics, notably +employee turnover, engagement, and belonging. +Strategy and business model +continued +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. +• 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 +Elevate +Our Value +Accelerate +Expert Solutions +Expand +Our Reach +Evolve +Core Capabilities +8 Wolters Kluwer 2023 Annual Report ← → Strategic report Governance Sustainability statements Financial statements Other information Strategy and business model \ No newline at end of file diff --git a/WoltersKluwer/WoltersKluwer_75Pages/needles.csv b/WoltersKluwer/WoltersKluwer_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..4d6f49d8de20743d8d52b57056c53179b510affc --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon". +The secret food is "chocolate". +The secret shape is a "heart". +The secret instrument is a "violin". +The secret tool is a "ruler". +The secret animal #1 is a "giraffe". +The secret clothing is a "sock". +The secret object #2 is a "bottle". +The secret currency is a "ruble". +The secret object #1 is a "clock". +The secret kitchen appliance is a "microwave". +The secret object #3 is a "bowl". +The secret landmark is "Big Ben". +The secret animal #4 is a "cow". +The secret vegetable is "cauliflower". +The secret flower is a "daisy". +The secret animal #5 is a "squirrel". +The secret object #4 is a "pillow". +The secret office supply is a "calculator". +The secret animal #2 is a "penguin". +The secret object #5 is a "vase". +The secret drink is a "smoothie". +The secret sport is "surfing". +The secret transportation is a "bike". +The secret animal #3 is a "spider". diff --git a/WoltersKluwer/WoltersKluwer_75Pages/needles_info.csv b/WoltersKluwer/WoltersKluwer_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f8fdac1d95b8a09b354f8772cea443da58ce300d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret fruit is a "lemon".,3,8,green,white,0.743,0.847,times-roman,72 +The secret food is "chocolate".,4,9,brown,white,0.985,0.243,helvetica,99 +The secret shape is a "heart".,8,8,white,black,0.612,0.501,times-italic,83 +The secret instrument is a "violin".,10,10,red,white,0.647,0.997,courier-oblique,63 +The secret tool is a "ruler".,13,9,gray,white,0.634,0.921,courier-bold,101 +The secret animal #1 is a "giraffe".,16,14,orange,black,0.317,0.523,times-bold,81 +The secret clothing is a "sock".,20,9,blue,white,0.729,0.399,courier,61 +The secret object #2 is a "bottle".,23,10,purple,white,0.225,0.977,times-bolditalic,105 +The secret currency is a "ruble".,25,13,yellow,black,0.654,0.565,helvetica-boldoblique,108 +The secret object #1 is a "clock".,28,11,black,white,0.22,0.576,helvetica-bold,68 +The secret kitchen appliance is a "microwave".,31,11,red,white,0.315,0.403,courier,67 +The secret object #3 is a "bowl".,36,10,white,black,0.448,0.509,helvetica-bold,114 +The secret landmark is "Big Ben".,38,8,yellow,black,0.204,0.5,times-roman,61 +The secret animal #4 is a "cow".,42,12,blue,white,0.042,0.393,courier-bold,96 +The secret vegetable is "cauliflower".,45,14,orange,black,0.106,0.387,courier-oblique,109 +The secret flower is a "daisy".,48,9,gray,white,0.22,0.08,times-bolditalic,84 +The secret animal #5 is a "squirrel".,50,10,black,white,0.933,0.767,helvetica-boldoblique,125 +The secret object #4 is a "pillow".,53,10,purple,white,0.339,0.841,helvetica,96 +The secret office supply is a "calculator".,56,11,green,white,0.168,0.82,times-bold,108 +The secret animal #2 is a "penguin".,59,13,brown,white,0.888,0.434,times-italic,125 +The secret object #5 is a "vase".,62,10,purple,white,0.705,0.287,times-italic,61 +The secret drink is a "smoothie".,64,10,gray,white,0.017,0.008,helvetica-bold,83 +The secret sport is "surfing".,69,10,green,white,0.085,0.166,courier-bold,108 +The secret transportation is a "bike".,71,11,white,black,0.06,0.728,helvetica-boldoblique,117 +The secret animal #3 is a "spider".,73,10,blue,white,0.322,0.474,times-roman,81 diff --git a/WoltersKluwer/WoltersKluwer_75Pages/prompt_questions.txt b/WoltersKluwer/WoltersKluwer_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..92d8cb6d8786b64c380ef0901371545fffe9654d --- /dev/null +++ b/WoltersKluwer/WoltersKluwer_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret shape in the document? +What is the secret instrument in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret clothing in the document? +What is the secret object #2 in the document? +What is the secret currency in the document? +What is the secret object #1 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #3 in the document? +What is the secret landmark in the document? +What is the secret animal #4 in the document? +What is the secret vegetable in the document? +What is the secret flower in the document? +What is the secret animal #5 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret animal #2 in the document? +What is the secret object #5 in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document?