THOMSON REUTERS CORP /CAN/ - 40-F filing on 2022-03-10

Financial Instruments

12 Months Ended

Dec. 31, 2021

Note 19: Financial Instruments

Financial assets and liabilities

Financial assets and liabilities in the consolidated statement of financial position were as follows:



December 31, 2021	Assets/(Liabilities) at Amortized Cost		Assets/(Liabilities) at Fair Value through Earnings		Assets at Fair Value through Other Comprehensive Income or Loss		Derivatives Used for Hedging (1)		Total
Cash and cash equivalents		389		389		-		-		778
Trade and other receivables		1,057		-		-		-		1,057
Other financial assets – current		108		-		-		-		108
Other financial assets – non-current (see note 20)		27		235		68		99		429
Trade payables (see note 21)		(227)		-		-		-		(227)
Accruals (see note 21)		(950)		-		-		-		(950)
Other financial liabilities – current (2)		(174)		(1)		-		-		(175)
Long-term indebtedness		(3,786)		-		-		-		(3,786)
Other financial liabilities – non-current (see note 22) (3)		(215)		(19)		-		-		(234)
Total		(3,771)		604		68		99		(3,000)



December 31, 2020	Assets/(Liabilities) at Amortized Cost		Assets/(Liabilities) at Fair Value through Earnings		Assets at Fair Value through Other Comprehensive Income or Loss		Derivatives Used for Hedging (1)		Total
Cash and cash equivalents		311		1,476		-		-		1,787
Trade and other receivables		1,151		-		-		-		1,151
Other financial assets – current		95		517		-		-		612
Other financial assets – non-current (see note 20)		35		17		46		100		198
Trade payables (see note 21)		(217)		-		-		-		(217)
Accruals (see note 21)		(761)		-		-		-		(761)
Other financial liabilities – current (2)(4)		(374)		(2)		-		-		(376)
Long-term indebtedness		(3,772)		-		-		-		(3,772)
Other financial liabilities – non-current (see note 22) (3)		(223)		(1)		-		-		(224)
Total		(3,755)		2,007		46		100		(1,602)

(1) Derivatives are entered with specific objectives for each transaction, and are linked to specific assets, liabilities, firm commitments or highly probable forecasted transactions.

(2) Includes lease liabilities of $64 million (2020 - $83 million).

(3) Includes lease liabilities of $197 million (2020 - $223 million).

(4) Includes a commitment to repurchase up to $200 million of shares related to the Company’s

pre-defined

plan with its broker to repurchase the Company’s shares during its internal trading blackout period. See note 24.

Fair Value

The fair values of cash and cash equivalents, trade and other receivables, trade payables and accruals approximate their carrying amounts because of the short-term maturity of these instruments. The fair value of long-term debt and related derivative instruments is set forth below.

Debt and Related Derivative Instruments

Carrying Amounts

Amounts recorded in the consolidated statement of financial position are referred to as “carrying amounts”. The carrying amounts of primary debt are reflected in “Long-term indebtedness” and “Current indebtedness” and the carrying amounts of derivative instruments are included in “Other financial assets” and “Other financial liabilities”, both current and

non-current,

in the consolidated statement of financial position, as appropriate.

Fair Value

The fair value of debt is estimated based on either quoted market prices for similar issues or current rates offered to the Company for debt of the same maturity. The fair value of interest rate swaps is estimated based upon discounted cash flows using applicable current market rates and considering

non-performance

risk.

The following is a summary of debt and related derivative instruments that hedged the

cash

flows

debt



	Carrying Amount				Fair Value

December 31, 2021	Primary Debt Instruments		Derivative Instruments (Asset)		Primary Debt Instruments		Derivative Instruments (Asset)
C$1,400, 2.239% Notes, due 2025		1,103		(99)		1,119		(99)
$600, 4.30% Notes, due 2023		599		-		631		-
$450, 3.85% Notes, due 2024 (1)		241		-		256		-
$500, 3.35% Notes, due 2026		497		-		531		-
$350, 4.50% Notes, due 2043 (1)		116		-		128		-
$350, 5.65% Notes, due 2043		342		-		478		-
$400, 5.50% Debentures, due 2035		396		-		516		-
$500, 5.85% Debentures, due 2040		492		-		695		-
Total		3,786		(99)		4,354		(99)
Long-term		3,786		(99)



	Carrying Amount				Fair Value

December 31, 2020	Primary Debt Instruments		Derivative Instruments (Asset)		Primary Debt Instruments		Derivative Instruments (Asset)
C$1,400, 2.239% Notes, due 2025		1,093		(100)		1,151		(100)
$600, 4.30% Notes, due 2023		597		-		657		-
$450, 3.85% Notes, due 2024 (1)		241		-		266		-
$500, 3.35% Notes, due 2026		497		-		557		-
$350, 4.50% Notes, due 2043 (1)		116		-		130		-
$350, 5.65% Notes, due 2043		342		-		471		-
$400, 5.50% Debentures, due 2035		395		-		531		-
$500, 5.85% Debentures, due 2040		491		-		696		-
Total		3,772		(100)		4,459		(100)
Long-term portion		3,772		(100)

(1) Notes were partially redeemed in October 2018.

Long-term Debt Activity

The Company did not issue notes or repay principal amounts of debt

in 2021. The following table provides information regarding notes that the Company issued and repaid in 2020.



Month/Year	Transaction	Principal Amount (in millions)
	Notes issued
May 2020	2.239 % Notes, due 2025	C$1,400
	Notes repaid
January 2020	3.309 % Notes, due 2021	C$550
January 2020	3.95 % Notes, due 2021	US$139

The notes issued in May 2020 were immediately swapped into U.S. dollars and the Company used the $999 million of net proceeds for general corporate purposes, which included repayment of borrowings under the Company’s credit facility.

In January 2020, the Company repaid notes prior to their scheduled maturity dates for $640 million. This amount included early redemption premiums and the settlement of cross-currency swaps. The repayments were funded with commercial paper borrowings.

Cross-currency interest rate swaps

The Company uses

fixed-to-fixed

cross-currency interest rate swaps to hedge its currency exposures on indebtedness. These instruments swap Canadian dollar denominated principal and interest payments into U.S. dollars. The critical terms of the swap, such as the timing and amount of cash flows, match the terms of the related indebtedness, creating an economic relationship that is expected to result in a highly effective hedge. To test for hedge ineffectiveness at hedge inception and subsequent reporting periods, the Company performs qualitative tests to confirm that the terms of the instruments have not changed, as well as quantitative tests to assess if the future cash flows of the swap and the indebtedness will offset one another. Ineffectiveness may arise from changes in cross currency basis spreads or the credit risk inherent in the swaps. As the Company’s risk management objective is to mitigate debt-related currency exposures, it seeks to achieve a 1:1 hedge ratio between the notional principal amount of the swaps and the underlying debt exposures, in which all of the critical terms of the instruments match.

At December 31, 2021 and December 31, 2020, the Company recorded swaps outstanding in the consolidated statement of financial position at their fair value, which was an asset of $99 million and $100 million, respectively. These swaps were designated as cash flow hedges.

The details of these instruments for the years ending December 31, 2021 and 2020 are set forth below:


Received	Paid	Hedged Risk	Year of Maturity	Principal Amount
Cash flow hedges
Canadian dollar fixed	U.S. dollar fixed	Foreign exchange	2025	US$999

Currency Risk Exposures

At each reporting date presented, substantially all indebtedness was denominated in U.S. dollars or had been swapped into U.S. dollar obligations.

The carrying amount of debt, all of which is unsecured, was denominated in the following currencies:



	Before Currency Hedging Arrangements				After Currency Hedging Arrangements

	December 31,				December 31,

	2021		2020		2021		2020
Canadian dollar		1,103		1,093		-		-
U.S. dollar		2,683		2,679		3,687		3,672
		3,786		3,772		3,687		3,672

Interest Rate Risk Exposures

At December 31, 2021 and 2020, the Company’s notes and debentures (after swaps) pay interest at fixed rates. The weighted-average interest rate was 4.1% in 2021 and 2020.

Foreign Exchange Contracts

In November 2021, the Company entered a series of foreign exchange contracts with a cumulative notional amount of £2.6 billion ($3.5 billion). These instruments are intended to reduce foreign currency risk related to a portion of the Company’s indirect investment in LSEG, which is denominated in British pounds sterling. These instruments are not related to changes in the LSEG share price. The Company records the foreign exchange contracts at fair value each reporting period. In 2021, $19 million of losses arising from fluctuations in the exchange rate between the U.S. dollar and British pound sterling were reported within “Other finance income” in the consolidated income statement. The associated fair value of these contracts was a liability of $19 million reported within “Other financial liabilities –

non-current”

in the consolidated statement of financial position. As of December 31, 2021, the Company’s interest in LSEG shares had a market value of approximately $6.8 billion, based on LSEG’s share price on that day.

There were no foreign exchange contracts outstanding at December 31, 2020. In 2020, the Company settled foreign exchange contracts to sell British pounds sterling that were used to manage foreign currency risk on certain cash flows excluding indebtedness for a gain of $11 million, which was reported within “Other finance income” in the consolidated income statement.

Fair value gains and losses from derivative financial instruments

Fair value gains and losses from derivative financial instruments recognized in the consolidated income statement and consolidated statement of changes in equity were as follows:



	Year ended December 31,

	2021				2020

	Fair Value Gain (Loss) Through Earnings		Fair Value Loss Through Equity		Fair Value Gain Through Earnings		Fair Value Loss Through Equity
Warrants		9		-		82		-
Foreign exchange contracts		(19)		-		11		-
Hedging instruments:
Cross currency interest rate swaps – cash flow hedges		9		(11)		107		(11)
Forward interest rate swaps – cash flow hedges		1		-		1		-
		-		(11)		201		(11)

The fair value gains through earnings from cross currency interest rate swaps included foreign exchange gains of $9 million (2020 - $97 million). 2020 also included a $10 million gain from the ineffective portion of the cash flow hedges, which was included in “Other finance income” in the consolidated income statement.

Financial Risk Management

The Company is exposed to a variety of financial risks including market risk (primarily currency risk and interest rate risk), credit risk and liquidity risk, as its operations are diverse and global. The Company is also exposed to currency and price risk on its investment in LSEG. A centralized corporate treasury group works to minimize the potential adverse effects from these risks by using hedging strategies, where applicable, as well as associating with high quality financial institutions, limiting exposures to

counterparties and ensuring flexible sources of funding. The Chief Financial Officer oversees the overall approach and ensures the use of strict guidelines and internal control processes.

Market Risk

Currency Risk

The Company’s consolidated financial statements are expressed in U.S. dollars. However, the Company transacts a portion of its business in other currencies and is therefore subject to the effects of foreign currency translation into U.S. dollars as well as currency transaction risk.

The impact of foreign currency translation from changes in exchange rates between 2020 and 2021 increased consolidated revenues and operating expenses each by 1%, and generated $61 million of net translation losses in the consolidated statement of financial position (2020 - $12 million of net translation losses), which were recorded within accumulated other comprehensive loss in shareholders’ equity.

Exposure to currency transaction risk is minimized as the Company generally bills customers and incurs operating expenses in the functional currency of the legal entity that records the transaction. However, the Company is exposed to currency transaction risk from the revaluation of

non-permanent

intercompany loans in certain of its legal entities, which impacts earnings. In addition, the indirect investment in LSEG denominated in British pounds sterling exposes the Company to currency risk.

The table below shows the impact on earnings that a hypothetical 10% strengthening of the U.S. dollar against other foreign currencies would have as a result of changes in fair values of financial instruments as of December 31, 2021.



Increase (decrease) impact on earnings from:	£		€		C$		Other Currencies		Total
Financial assets and liabilities (1)		1		(1)		1		7		8
Receivables under indemnification arrangement		(23)		-		-		-		(23)
Non-permanent intercompany loans		60		16		61		13		150
Indirect investment in LSEG shares		(680)		-		-		-		(680)
Foreign exchange contracts (2)		352		-		-		-		352
Total impact on earnings		(290)		15		62		20		(193)

(1) Excludes debt which has been swapped into U.S. dollar obligations.

(2) Represents foreign exchange contracts intended to mitigate currency exposure to LSEG shares.

The Company only uses derivative instruments to reduce foreign currency and interest rate exposures. Canadian dollar borrowings are generally converted to U.S. dollar obligations through currency swap arrangements. Foreign exchange contracts are used to reduce foreign currency risk related to a portion of the Company’s indirect investment in LSEG, which is denominated in British pounds sterling. See “Cross-currency interest rate swaps” and “Foreign Exchange Contracts” sections above within this note. At each reporting date presented, substantially all indebtedness was denominated in U.S. dollars or had been swapped into U.S. dollar obligations.

Interest Rate Risk

The Company has no significant exposure to fluctuations in interest rates with respect to cash and cash equivalents and long-term borrowings. At December 31, 2021, the Company’s notes and debentures (after swaps) pay interest at fixed rates, and there were no derivatives designated as fair value hedges.

Price Risk

The Company has no significant exposure to price risk from commodities in the normal course of business. The Company’s exposure to price risk from equity securities is limited to its indirect investment in LSEG, which is subject to variability based on changes in the price of LSEG shares. As of December 31, 2021, the Company indirectly owned 72.4 million LSEG shares which had a market value of approximately $6.8 billion. Based on the amount of shares owned as of December 31, 2021, a 10% increase or decrease in the share price of LSEG would have increased or decreased share of

post-tax

earnings (losses) in equity method investments by approximately $680 million.

Credit Risk

Credit risk arises from cash and cash equivalents and derivative financial instruments, as well as credit exposure to customers including outstanding receivables. The Company attempts to minimize credit exposure as follows:

Cash investments are placed with high-quality financial institutions with limited exposure to any one institution. At December 31, 2021, approximately 94% of cash and cash equivalents were held by institutions that were rated at

“A-“

or higher by at least one of the major credit rating agencies;

Counterparties to derivative contracts are major investment-grade international financial institutions and exposure to any single counterparty is monitored and limited; and

The Company assesses the creditworthiness of its customers.

allowance for credit losses on financial assets was required as of December 31

, 2021

, other than the allowance for doubtful accounts (see note 13)

and for credit risk associated with receivables under an indemnification arrangement (see “Fair value estimation” section below). Further, no

financial or other assets have been pledged.

The Company’s maximum exposure with respect to credit, assuming no

mitigating factors, would be the aggregate of its cash and cash equivalents $778 million (2020

$1,787 million), trade and other receivables $1,057 million (2020

$1,151 million), derivative exposures $99 million (2020

$100 million) and other financial assets $370 million (2020

$664 million).

Liquidity Risk

A centralized treasury function ensures funding flexibility by assessing future cash flow expectations and by maintaining sufficient capacity under its committed borrowing facilities. Cash flow estimates are based on rolling forecasts of operating, investing and financing flows. Such forecasting also considers account borrowing limits, cash restrictions and compliance with debt covenants.

Cash which is surplus to working capital requirements is invested in money market funds or bank money market deposits with maturities aligned to expected cash needs. At December 31

, 2021

, cash and cash equivalents were $778 million. In addition, the Company maintains a commercial paper program, which provides cost-effective and flexible short-term funding, and a $1.8 billion credit facility, which provides additional liquidity, as further described below.

Commercial Paper Program

The Company’s

$1.8

billion commercial paper program provides cost effective and flexible short-term funding. There

was no

outstanding commercial paper at December 31, 2021 and 2020. The Company did not issue commercial paper in 2021. In 2020, the Company issued

$630

million of commercial paper, the proceeds of which were used to redeem debt obligations ahead of their maturity. The commercial paper was repaid later that year, primarily from funds borrowed under the Company’s credit facility.

Credit Facility

The Company has a $1.8 billion syndicated credit facility agreement which matures in December 2024 and may be used to provide liquidity for general corporate purposes (including acquisitions or support for its commercial paper program). There were no outstanding borrowings under the credit facility at December 31

, 2021

and 2020

. The Company did not borrow under this credit facility in 2021

. In 2020

, the Company borrowed $1.0

billion under this facility of which a portion of the proceeds was used to repay commercial paper. The Company repaid borrowings under the credit facility primarily with proceeds from its May 2020 debt issuance. Based on the Company’s current credit ratings, the cost of borrowing under the facility is priced at LIBOR/EURIBOR

plus 112.5 basis points. The Company has the option to request an increase, subject to approval by applicable lenders, in the lenders’ commitments in an aggregate amount of $600 million for a maximum credit facility commitment of $2.4 billion. If the Company’s debt rating is downgraded by Moody’s or S&P, the facility fees and borrowing costs may increase, although availability would be unaffected. Conversely, an upgrade in the Company’s ratings may reduce the facility fees and borrowing costs.

The U.K. Financial Conduct Authority, which regulates LIBOR, phased out the majority of LIBOR rates globally at the end of 2021. Key alternative reference rates have been established and progress continues to be made in establishing better liquidity and term structures required to efficiently replace the existing LIBOR structures. In October 2021, the Company acknowledged with its lending group that certain LIBOR-based benchmarks to be phased out at the end of 2021 would no longer be available to the Company until it agreed to replace them with alternative benchmarks. This change does not impact the Company’s general ability to borrow under the facility, as there are adequate LIBOR benchmarks still in effect until June 2023. Except for the LIBOR-based benchmarks in the Company’s external credit facility, the Company has no material agreements with third parties that use or reference LIBOR as a benchmark rate which require amendment.

The

Company g

uarantees borrowings by its subsidiaries under the credit facility. The Company must also maintain a ratio of net debt as defined in the credit agreement (total debt after swaps less cash and cash equivalents) as of the last day of each fiscal quarter to EBITDA as defined in the credit agreement (earnings before interest, income taxes, depreciation and amortization and other modifications described in the credit agreement) for the last four quarters ended of not more than 4.5:1. If the Company were to complete an acquisition with a purchase price of over $

500

million, the ratio of net debt to EBITDA would temporarily increase to 5.0:1

for three

quarters after completion, at which time the ratio would revert to 4.5:1

. As of December 31

, 2021

, the Company was in compliance with this covenant as its ratio of net debt to EBITDA, as calculated under the terms of its syndicated credit facility, was 1.5 :1

The tables below set forth

non-derivative

and derivative financial liabilities by maturity based on the remaining period from December 31

, 2021

and 2020

, respectively, to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.



December 31, 2021	2022		2023		2024		2025		2026		Thereafter		Total
Long-term debt (1)		-		600		242		1,108		500		1,369		3,819
Interest payable (1)		153		153		127		105		84		1,019		1,641
Debt-related hedges outflows (2)		22		22		22		1,010		-		-		1,076
Debt-related hedges inflows (1)		(25)		(25)		(25)		(1,120)		-		-		(1,195)
Trade payables		227		-		-		-		-		-		227
Accruals		950		-		-		-		-		-		950
Lease liabilities		73		63		46		35		26		45		288
Foreign exchange contracts outflows (3)		-		1,746		1,743		-		-		-		3,489
Foreign exchange contracts inflows (4)		-		(1,738)		(1,732)		-		-		-		(3,470)
Other financial liabilities		110		18		-		-		-		-		128
Total		1,510		839		423		1,138		610		2,433		6,953



December 31, 2020	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt (5)		-		-		600		242		1,099		1,869		3,810
Interest payable (5)		153		153		153		127		105		1,103		1,794
Debt-related hedges outflows (2)		22		22		22		22		1,010		-		1,098
Debt-related hedges inflows (5)		(25)		(25)		(25)		(25)		(1,110)		-		(1,210)
Trade payables		217		-		-		-		-		-		217
Accruals		761		-		-		-		-		-		761
Lease liabilities		92		76		49		39		29		44		329
Other financial liabilities		291		-		-		-		-		-		291
Total		1,511		226		799		405		1,133		3,016		7,090

(1)

Represents contractual cash flows calculated using spot foreign exchange rates as of December 31

, 2021

(2)

Represents contractual U.S. dollar cash flows.

(3)

Represents contractual cash flows translated at the contract rate.

(4)

Represents contractual cash flows calculated using forward foreign exchange rates as of December 31

, 2021

. Forward foreign exchange contracts have a maturity of more than one year and are included within “Provisions and other

non-current

liabilities” in the consolidated statement of financial position.

(5)

Represents contractual cash flows calculated using spot foreign exchange rates as of December 31

, 2020

Capital Management

The Company’s capital management strategy is focused on ensuring that it has the investment capacity to drive revenue growth both organically and through acquisitions, while also maintaining its long-term financial leverage and credit ratings and continuing to provide returns to shareholders.

The Company’s principal sources of liquidity are cash and cash equivalents and cash provided by operating activities. From time to time, the Company issues commercial paper, borrows under its credit facility and issues debt securities. The Company’s principal uses of cash are for debt repayments, debt servicing costs, dividend payments, capital expenditures, share repurchases and acquisitions. The Company believes that its existing sources of liquidity will be sufficient to fund its expected 2022 cash requirements in the normal course of business.

Additionally, the Company targets a leverage ratio of net debt, as defined below, to adjusted EBITDA of no more than

2.5x

as a measure

of its financial flexibility and ability to maintain investment grade credit ratings. As of December 31

, 2021

, the Company was below its maximum target ratio.

The

Company’s investment grade credit ratings provide additional financial flexibility and the ability to borrow to support the operations and growth strategies of the business. The following table sets forth the credit ratings that the Company has received from rating agencies in respect of its outstanding securities as of December 31, 2021:



	Moody’s	S&P Global Ratings	DBRS Limited	Fitch
Long-term debt	Baa2	BBB	BBB (high)	BBB+
Commercial paper	P-2	A-2	R-2 (high)	F1
Trend/Outlook	Positive	Stable	Stable	Stable

Net debt is defined as total indebtedness (excluding the associated unamortized transaction costs and premiums or discounts) plus the currency related fair value of associated hedging instruments, and lease liabilities less cash and cash equivalents. As the Company hedges some of its debt to reduce risk, the hedging instruments are included in the measurement of the total obligation associated with its outstanding debt. However, because the Company generally intends to hold the debt and related hedges to maturity, it does not consider the associated fair value of the interest-related component of hedging instruments in the measurement of net debt.

The following table presents the calculation of net debt:



	December 31,

	2021		2020
Long-term indebtedness		3,786		3,772
Total debt		3,786		3,772
Swaps		(99)		(100)
Total debt after swaps		3,687		3,672
Remove fair value adjustments for hedges ( 1 )		(10)		1
Total debt after currency hedging arrangements		3,677		3,673
Remove transaction costs, premiums or discounts included in the carrying value of debt		33		38
Add: Lease liabilities (current and non-current)		261		306
Less: cash and cash equivalents		(778)		(1,787)
Net debt		3,193		2,230

(1) Represents the interest-related fair value component of hedging instruments that are removed to reflect net cash outflow upon maturity.

The following reconciles movements of liabilities to cash flows arising from financing activities for the years ended December 31, 2021 and 2020:



	Notes and Debentures		Credit Facilities		Derivative Instruments Liabilities (Assets)		Lease Liabilities		Total Liabilities From Financing Activities
December 31, 2019		3,255		-		62		322		3,639
Proceeds from debt		999		1,020		-		-		2,019
Repayments of debt		(560)		(1,020)		(65)		-		(1,645)
Payments of lease principal		-		-		-		(75)		(75)
Additional leases		-		-		-		58		58
Foreign exchange movements		97		-		(97)		4		4
Other, net (1)		(19)		-		-		(3)		(22)
December 31, 2020		3,772		-		(100)		306		3,978
Payments of lease principal (2)		-		-		-		(109)		(109)
Additional leases		-		-		-		77		77
Foreign exchange movements		9		-		(9)		(5)		(5)
Other, net(3)		5		-		10		(8)		7
December 31, 2021		3,786		-		(99)		261		3,948

(1) Includes early redemption premium on debt, amortization of transaction and discount costs, fair value movements on derivatives and lease interest payments.

(2) Includes $23 million to exit a technology equipment lease.

(3) Includes amortization of transaction and discount costs

as well as

fair value movements on derivatives.

Fair value estimation

The following fair value measurement hierarchy is used for financial instruments that are measured in the consolidated statement of financial position at fair value:


· Level 1 –		quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 –		inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

· Level 3 –		inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The levels used to determine fair value measurements for those instruments carried at fair value in the consolidated statement of financial position are as follows:



December 31, 2021							Total
Assets	Level 1		Level 2		Level 3		Balance
Money market accounts		-		389		-		389
Other receivables (1)		-		-		235		235
Financial assets at fair value through earnings		-		389		235		624
Financial assets at fair value through other comprehensive income (2)		46		22		-		68
Derivatives used for hedging (3)		-		99		-		99
Total assets		46		510		235		791

Liabilities
Contingent consideration (4)		-		-		(1)		(1)
Foreign exchange contracts (5)		-		(19)		-		(19)
Financial liabilities at fair value through earnings		-		(19)		(1)		(20)
Total liabilities		-		(19)		(1)		(20)


December 31, 2020							Total
Assets	Level 1		Level 2		Level 3		Balance
Money market accounts		-		1,476		-		1,476
Warrants (6)		-		-		517		517
Other receivables (1)		-		-		17		17
Financial assets at fair value through earnings		-		1,476		534		2,010
Financial assets at fair value through other comprehensive income (2)		27		19		-		46
Derivatives used for hedging (3)		-		100		-		100
Total assets		27		1,595		534		2,156

Liabilities
Contingent consideration (4)		-		-		(3)		(3)
Financial liabilities at fair value through earnings		-		-		(3)		(3)
Total liabilities		-		-		(3)		(3)

(1) Receivables under indemnification arrangement (see below and in note 30).

(2) Investments in entities over which the Company does not have control, joint control or significant influence.

(3) Comprised of

fixed-to-fixed

cross-currency swaps on indebtedness.

(4) Obligations to pay additional consideration for prior acquisitions, based upon performance measures contractually agreed at the time of purchase.

(5) Relates to the management of foreign exchange risk on a portion of the Company’s indirect investment in LSEG.

(6) Warrants relate to the Company’s former equity method investment in Refinitiv (see note 8).

The receivable from the indemnification arrangement is a level 3 in the fair value measurement hierarchy. The increase in the receivable between December 31, 2020 and December 31, 2021 primarily reflected additional payments that are expected to be recovered, net of fair value losses based on interest rates associated with the indemnifying party’s credit profile, which are included within earnings (loss) from discontinued operations, net of tax, in the consolidated income statement.

The following reflects the change in the fair value of the Refinitiv warrants, which were classified as level 3 in the fair value measurement hierarchy, for the years ended December 31, 2021 and

2020:



	Year ended December 31,

	2021		2020
January 1,		517		435
Gain recognized prior to the sale of Refinitiv to LSEG within other operating gains, net		9		82
Exercise of warrants on date of sale of Refinitiv to LSEG (see note 8)		(526)		-
December 31,		-		517

The Company recognizes transfers into and out of the fair value measurement hierarchy levels at the end of the reporting period in which the event or change in circumstances that caused the transfer occurred. There were no transfers between hierarchy levels for the years ending December 31, 2021 and 2020.

Valuation Techniques

The fair value of financial instruments that are not traded in an active market (for example,

over-the-counter

derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

Quoted market prices or dealer quotes for similar instruments;

The fair value of cross-currency interest rate swaps and foreign exchange contracts are calculated as the present value of the estimated future cash flows based on observable yield curves;

The fair value of other receivables considers estimated future cash flows, current market interest rates and

non-performance

risk; and

The fair value of contingent consideration is calculated based on estimates of future revenue performance.

Valuation of the Refinitiv Warrants

On August 1, 2019, the Company and Blackstone’s consortium agreed to sell Refinitiv, in which the Company owned a 45% interest, to LSEG, in an all share transaction which closed on January 29, 2021 (see note 8). Under the terms of the warrant agreement, the transaction constituted a change in control whereby the exercise of the warrants in connection with the closing of the transaction entitled the Company to an additional 4.5 million shares of Refinitiv. The value of the warrants at December 31, 2020 reflected the entry into a definitive agreement for the sale of the Refinitiv business on August 1, 2019. The closing of the transaction on January 29, 2021 was not considered an adjusting subsequent event, and therefore the value at December 31, 2020 was not adjusted to incorporate the closing of the transaction. As such, the value was primarily based on the number of incremental shares in YPL to which the Company was entitled upon closing and the share price of LSEG on December 31, 2020. The valuation also incorporated (on a weighted-average basis) other outcomes based on the likelihood (at the time) of the transaction closing in the first quarter of 2021.

The Monte Carlo simulation approach, which was incorporated into the valuation of the Refinitiv warrants, generates values based on the random outcomes from a probability distribution. Key inputs under the Monte Carlo approach included: the estimated equity value of Refinitiv; the capitalization structure of Refinitiv; the expected volatility; the risk-free rate of return; annual dividends or distributions; and assumptions about the timing of a liquidity event.

Offsetting Financial Assets and Financial Liabilities

The Company is subject to master netting arrangements with certain counterparties. Certain of these arrangements allow for the netting of assets and liabilities in the ordinary course of business, and are reflected on a net basis in the consolidated statement of financial position. In other circumstances, netting is permitted only in the event of bankruptcy or default of either party to the agreement, and such amounts are not netted in the consolidated statement of financial position. The following table sets forth balances that are subject to master netting arrangements, however there were no offsetting amounts at December 31, 2021 or 2020.


Financial assets	Gross Financial Assets	Gross Financial Liabilities Netted Against Assets	Net Financial Assets in the Consolidated Statement of Financial Position	Related Financial Liabilities Not Netted	Net Amount
Derivative financial assets	99	-	99 (1)	-	99
Cash and cash equivalents	38	-	38 (2)	-	38
December 31, 2021	137	-	137	-	137

Derivative financial assets	100	-	100 (1)	-	100
Cash and cash equivalents	33	-	33 (2)	-	33
December 31, 2020	133	-	133	-	133


Financial liabilities	Gross Financial Liabilities	Gross Financial Assets Netted Against Liabilities	Net Financial Liabilities in the Consolidated Statement of Financial Position	Related Financial Assets Not Netted	Net Amount
Derivative financial liabilities	19	-	19 (3)	-	19
December 31, 2021	19	-	19	-	19

(1) Included within “Other financial assets” –

non-current

in the consolidated statement of financial position.

(2) Included within “Cash and cash equivalents” in the consolidated statement of financial position.

(3) Included within “Provisions and other

non-current

liabilities”, in the consolidated statement of financial position.