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HighlightsHighlights
Successful delivery of 3 year strategic Successful delivery of 3 year strategic programmeprogramme
Achievement of 2002 financial targets despite Achievement of 2002 financial targets despite economic downturn economic downturn
Harcourt makes strong contribution in first Harcourt makes strong contribution in first full yearfull year
On track to meet strategic and financial On track to meet strategic and financial targets for 2003targets for 2003
Financial UpdateFinancial Update
Mark Armour Mark Armour
Chief Financial OfficerChief Financial Officer
Adjusted figures exclude amortisation of goodwill and intangible assets and exceptional items Adjusted figures exclude amortisation of goodwill and intangible assets and exceptional items
TurnoverTurnover
Adjusted operating profitAdjusted operating profit
Operating marginOperating margin
Net interest expenseNet interest expense
Adjusted profit before taxAdjusted profit before tax
%%
%%
%%
% change% changeconstantconstant
20012001 €m €m
20022002€m€m
20012001£m£m
20022002£m£m
4,5604,560
1,5941,594990990
22%22%22%22%
(229)(229)(142)(142)
1,3651,365848848
12 months to 31 December12 months to 31 December
7,3427,3425,0205,020
1,1331,133
23%23%
(206)(206)
927927
7,9827,982
1,8011,801
23%23%
(327)(327)
1,4741,474
+13+13
+17+17
+11+11
Adjusted Profit And LossAdjusted Profit And Loss
RevenuesRevenues Adjusted operating Adjusted operating profitprofit
1,024
1,649
2,059
1,295
0
400
800
1,200
1,600
2,000
2,400
20012001 2002200220012001 20022002
344
554
682
429
0
100
200
300
400
500
600
700
800
20012001 2002200220012001 20022002
Science & Medical:Science & Medical:Revenues up 29% - adjusted operating profit up 26% - margin 33.1%Revenues up 29% - adjusted operating profit up 26% - margin 33.1%
Underlying revenues up 6%; operating profit up 11%Underlying revenues up 6%; operating profit up 11% Strong renewals, growing online sales, successful publishing Strong renewals, growing online sales, successful publishing
programmeprogramme Integration of Harcourt mostly completeIntegration of Harcourt mostly complete Harcourt STM proforma revenues up 6%; operating profit up 14%Harcourt STM proforma revenues up 6%; operating profit up 14%
£m£m €€mm £m£m €€mm
Legal:Legal:Revenues up 5% - adjusted operating profit up 10% - margin 21.3%Revenues up 5% - adjusted operating profit up 10% - margin 21.3%
Underlying revenues up 4%; operating profit up 11%Underlying revenues up 4%; operating profit up 11% Operating margins improved 1.2% points; cost programmes implementedOperating margins improved 1.2% points; cost programmes implemented US Legal revenues up 4%; online up 8%US Legal revenues up 4%; online up 8% Corporate and Federal revenues up 5%; strong risk solutionsCorporate and Federal revenues up 5%; strong risk solutions LexisNexis International solid performance ex Latin AmericaLexisNexis International solid performance ex Latin America
RevenuesRevenues Adjusted operating Adjusted operating profitprofit
1,330
2,141 2,145
1,349
0
500
1000
1500
2000
2500
267
430
287
456
0
100
200
300
400
500
20012001 2002200220012001 20022002 20012001 2002200220012001 20022002
£m£m £m£m€€€€ €€mm€€mm
Education:Education:Revenues up 78% - adjusted operating profit up 45% - margin 18.4%Revenues up 78% - adjusted operating profit up 45% - margin 18.4%
Underlying revenues up 2%; operating profit up 4%Underlying revenues up 2%; operating profit up 4% Harcourt K-12 and Testing proforma revenues up 2%;Harcourt K-12 and Testing proforma revenues up 2%;
adjusted operating profit up 6%adjusted operating profit up 6% Strong performance against a market down 5%; integration benefits increasingStrong performance against a market down 5%; integration benefits increasing Testing underlying revenues up 8% on strong prior year;Testing underlying revenues up 8% on strong prior year;
operating profit up 25%operating profit up 25% Harcourt International underlying revenues flat; profit down 10%Harcourt International underlying revenues flat; profit down 10%
RevenuesRevenues Adjusted operating Adjusted operating profitprofit
579
932
1,579
993
0
200
400
600
800
1000
1200
1400
1600
1800
132
212
291
183
0
50
100
150
200
250
300
20012001 2002200220012001 20022002 20012001 2002200220012001 20022002
£m£m £m£m€€mm €€mm
Business:Business:Revenues down 14% - adjusted operating profit down 4% - margin 16.9%Revenues down 14% - adjusted operating profit down 4% - margin 16.9%
Underlying revenues down 6%; operating profit up 2%Underlying revenues down 6%; operating profit up 2% No recovery in advertising marketsNo recovery in advertising markets Cost actions taken across the businessCost actions taken across the business Strong outperformance of market; continued share gains and yield Strong outperformance of market; continued share gains and yield
managementmanagement Exhibitions resilient: underlying revenues down 1%; operating profit flatExhibitions resilient: underlying revenues down 1%; operating profit flat
RevenuesRevenues Adjusted operating Adjusted operating profitprofit
1,627
2,620
2,199
1,383
0
1000
2000
3000
247
398372
234
0
100
200
300
400
500
20012001 2002200220012001 20022002 20012001 2002200220012001 20022002
£m£m £m£m€€mm €€mm
Adjusted Profit Before Tax: Adjusted Profit Before Tax: ReconciliationReconciliation
+8%+8%1,4741,474+9%+9%9279272002 Adjusted profit before tax2002 Adjusted profit before tax
-3%-3%(41)(41)-2%-2%(14)(14)Currency translation effectCurrency translation effect
-3%-3%(45)(45)-3%-3%(28)(28)Acquisitions/DisposalsAcquisitions/Disposals
+11%+11%150150+11%+11%9393Base business (including Base business (including Harcourt proforma)Harcourt proforma)
1,3651,3658488482001 Adjusted profit before tax2001 Adjusted profit before tax
% % changechange€€mm
% % changechange£m£m12 months to 31 December12 months to 31 December
Adjusted figures exclude amortisation of goodwill and intangibles and exceptional items Adjusted figures exclude amortisation of goodwill and intangibles and exceptional items
+3%+3%4545+3%+3%2828Harcourt (2001 full year adj.)Harcourt (2001 full year adj.)
20012001€€mm
20022002€€mm
20012001£m£m
20022002£m£m12 months to 31 December12 months to 31 December
Adjusted Operating and Free Cash FlowAdjusted Operating and Free Cash Flow
1,6201,6201,6061,6061,0061,0061,0101,010Adjusted operating cash flowAdjusted operating cash flow
85%85%93%93%85%85%93%93%Before HarcourtBefore Harcourt
102%102%89%89%102%102%89%89%TotalTotal
189%189%79%79%189%189%79%79%Harcourt businessesHarcourt businesses
% conversion:% conversion:
(184)(184)(326)(326)(114)(114)(205)(205)InterestInterest
(287)(287)(245)(245)(178)(178)(154)(154)TaxTax
1,1491,1491,0351,035714714651651Free cash flow before dividendsFree cash flow before dividends
Free Cash FlowFree Cash Flow
(2,731)(2,731)305305(1,696)(1,696)192192Total cash inflow/(outflow) before Total cash inflow/(outflow) before financingfinancing
7171(157)(157)4444(99)(99)Other exceptional itemsOther exceptional items
1541541681689696106106DisposalsDisposals
(3,694)(3,694)(307)(307)(2,295)(2,295)(193)(193)Acquisition spendAcquisition spend
2001 2001 €€mm
2002 2002 €€mm
20012001£m£m
20022002£m£m12 months to 31 December12 months to 31 December
(411)(411)(434)(434)(255)(255)(273)(273)DividendsDividends
1,1491,1491,0351,035714714651651Free cash flow before dividendsFree cash flow before dividends
738738601601459459378378Free cash flow after dividendsFree cash flow after dividends
Exceptional ItemsExceptional Items
1301301941948181122122Net tax creditNet tax credit
(117)(117)(176)(176)(72)(72)(111)(111)Exceptional charge before taxExceptional charge before tax
4141(19)(19)2626(12)(12)Net (loss)/ profit on sale of businesses Net (loss)/ profit on sale of businesses and fixed asset investmentsand fixed asset investments
(158)(158)(157)(157)(98)(98)(99)(99)Charged to operating profitCharged to operating profit
(102)(102)(90)(90)(63)(63)(57)(57)Acquisition related costsAcquisition related costs
(56)(56)(67)(67)(35)(35)(42)(42)Reorganisation costsReorganisation costs
20012001€€mm
20022002€€mm
20012001£m£m
20022002£m£m
13131818991111Total exceptional creditTotal exceptional credit
12 months to 31 December12 months to 31 December
Adjusted Earnings and DividendsAdjusted Earnings and Dividends
--€€0.300.30+7%+7%11.2p11.2pEqualised dividendsEqualised dividends
+11%+11%+8%+8%€€0.690.69+9%+9%28.5p28.5pAdjusted EPSAdjusted EPS
% change % change constantconstant
Reed Elsevier Reed Elsevier NVNV
Reed Elsevier Reed Elsevier PLCPLC
Strategy & ExecutionStrategy & Execution
Crispin Davis Crispin Davis
Chief Executive OfficerChief Executive Officer
Focus onFocus onfour corefour core
businessesbusinesses
Clear and Consistent StrategyClear and Consistent Strategy
OptimiseOptimiseoperations/operations/
cost cost efficiencyefficiency
OptimiseOptimiseoperations/operations/
cost cost efficiencyefficiency
Substantially Substantially increased increased
investmentinvestment
Substantially Substantially increased increased
investmentinvestment
Powerful Powerful marketing/salemarketing/sales programmess programmes
Powerful Powerful marketing/salemarketing/sales programmess programmes
Demonstrably Demonstrably superior superior productsproducts
Demonstrably Demonstrably superior superior productsproducts
Infill Infill acquisitions/ acquisitions/
alliancesalliances
Infill Infill acquisitions/ acquisitions/
alliancesalliances
Upgrade Upgrade organisationorganisationeffectivenesseffectiveness
Upgrade Upgrade organisationorganisationeffectivenesseffectiveness
Strengthen Strengthen global global
portfolioportfolio
Strengthen Strengthen global global
portfolioportfolio
Reed Elsevier:Reed Elsevier:Key Objectives 2002Key Objectives 2002
Maximise above market organic growth Maximise above market organic growth from four core businessesfrom four core businesses
Execute and deliver on all strategic Execute and deliver on all strategic milestonesmilestones
Ensure Harcourt achieves growth Ensure Harcourt achieves growth objective; complete integration wellobjective; complete integration well MostlyMostly
Improve operating margin further Improve operating margin further through increased efficiencythrough increased efficiency
Deliver double digit earnings growthDeliver double digit earnings growth
Science & Medical:Science & Medical:2002 Priorities2002 Priorities
Maintain ScienceDirect momentum on key Maintain ScienceDirect momentum on key performance yardsticks: usage, performance yardsticks: usage, penetration and attritionpenetration and attrition
Deliver on new product initiatives Deliver on new product initiatives programme driving additional revenuesprogramme driving additional revenues
Implement core medical growth strategy Implement core medical growth strategy Finalise online medical strategy; Finalise online medical strategy;
start implementationstart implementation Complete Harcourt integration, deliver Complete Harcourt integration, deliver
revenue and cost targetsrevenue and cost targets
Science & Medical:Science & Medical:Growth Momentum - ScienceDirectGrowth Momentum - ScienceDirect
Content increased from 1.8 million to 3.3 Content increased from 1.8 million to 3.3 million articlesmillion articles
Penetration up 6 percentage points to 72%Penetration up 6 percentage points to 72% Usage up 70% to 86 million article Usage up 70% to 86 million article
downloadsdownloads Strong growth in e-only sales to $110 millionStrong growth in e-only sales to $110 million
Science & Medical:Science & Medical:ScienceDirect:ScienceDirect: Increasing UsageIncreasing Usage
Article downloads (millions)Article downloads (millions)
19991999 20002000 20012001 20022002
8686
2828
5050
1616
Science & Medical:Science & Medical:ScienceDirect: Increasing PenetrationScienceDirect: Increasing Penetration
60%60%
69%69%65%65%
72%72%
45%45%
35%35%
Aug00Aug00 Dec00Dec00 Aug01Aug01 Dec01Dec01 Aug02Aug02Dec02Dec02
Science & Medical:Science & Medical:Growth Momentum: Health SciencesGrowth Momentum: Health Sciences
Upgrade management effectivenessUpgrade management effectiveness– Cohesive market driven organisationCohesive market driven organisation– Strong new management teamStrong new management team
Develop superior productsDevelop superior products– Strong new publishing programmeStrong new publishing programme– Investment in product developmentInvestment in product development
Major upgrade of sales and marketingMajor upgrade of sales and marketing Develop superior online capabilitiesDevelop superior online capabilities
– Upgrade of MD Consult (subscribers up 15%; Upgrade of MD Consult (subscribers up 15%; sales up over 30%)sales up over 30%)
– Launch of PDAs/EVOLVE (Launch of PDAs/EVOLVE (ee-learning platform)-learning platform)
Science & Medical:Science & Medical:Turnaround in Health SciencesTurnaround in Health Sciences
Double digitDouble digitSingle digitSingle digitProfit GrowthProfit Growth
Mid 20sMid 20sLow 20sLow 20sMarginMargin
+6%+6%+3%+3%Revenue GrowthRevenue Growth
824824495495Size ($m)Size ($m)
Post AcquisitionPost AcquisitionPre AcquisitionPre Acquisition
Science & Medical:Science & Medical:Growth Momentum: HarcourtGrowth Momentum: Harcourt
Acquired business performing wellAcquired business performing well– 2002 proforma revenue growth accelerated to 6%, ahead of 2002 proforma revenue growth accelerated to 6%, ahead of
marketmarket– Margin improvement delivering double digit profit growthMargin improvement delivering double digit profit growth
Integration successfulIntegration successful– $40m cost savings target to be exceeded$40m cost savings target to be exceeded– More effective organisation driving further savingsMore effective organisation driving further savings
Outlook is very encouragingOutlook is very encouraging– Accelerated journals growth within ScienceDirectAccelerated journals growth within ScienceDirect– Developing Health Sciences electronic productDeveloping Health Sciences electronic product– Platform for global expansion, e.g. Holtzbrinck STMPlatform for global expansion, e.g. Holtzbrinck STM– Continuing programme of margin improvementContinuing programme of margin improvement
Science & Medical:Science & Medical:Growth MomentumGrowth Momentum
Strong front list publishingStrong front list publishing Expand digital collections and electronic Expand digital collections and electronic
servicesservices Enhanced navigation and deliveryEnhanced navigation and delivery
Superior productsSuperior productsSuperior productsSuperior products
Focused branding and customer Focused branding and customer relationshipsrelationships
Optimum electronic pricing strategiesOptimum electronic pricing strategies Enhance sales force effectivenessEnhance sales force effectiveness
Powerful sales & Powerful sales & marketingmarketingPowerful sales & Powerful sales & marketingmarketing
Complete product rationalisationComplete product rationalisation Standardisation of productionStandardisation of production Enhanced systems effectivenessEnhanced systems effectiveness
Cost efficiencyCost efficiencyCost efficiencyCost efficiency
Global expansionGlobal expansionGlobal expansionGlobal expansion Acquisition of national health publishersAcquisition of national health publishers Product geocloningProduct geocloning Widening distributionWidening distribution
Legal:Legal:2002 Priorities2002 Priorities
Further upgrade of electronic product: content, Further upgrade of electronic product: content, functionality, customisation to achieve preferred functionality, customisation to achieve preferred product statusproduct status
Accelerated growth of online usage; monetiseAccelerated growth of online usage; monetise Maintain competitive position in law schoolsMaintain competitive position in law schools
Implement margin improvement programme - Implement margin improvement programme - towards mid-20s targettowards mid-20s target
Accelerate global expansion: geography, Accelerate global expansion: geography, global platform, branding, organisation global platform, branding, organisation
SEESAWSEESAW
Legal: Legal: Developing Superior US Legal Developing Superior US Legal ProductsProducts
Navigation Navigation ImprovementsImprovements
Navigation Navigation ImprovementsImprovements
Improved Improved Company DossierCompany Dossier
Improved Improved Company DossierCompany Dossier
Annotated Annotated CodesCodes
Annotated Annotated CodesCodes
Leading Risk Leading Risk Solution ApplicationSolution Application
Leading Risk Leading Risk Solution ApplicationSolution Application
Case Law Case Law SummariesSummariesCase Law Case Law
SummariesSummariesNew Global New Global
Product PlatformProduct PlatformNew Global New Global
Product PlatformProduct Platform
Court DocketCourt Dockete-Filinge-Filing
Court DocketCourt Dockete-Filinge-Filing
State by State State by State CustomisationCustomisationState by State State by State CustomisationCustomisation
Legal:Legal:US Legal Online Usage GrowingUS Legal Online Usage Growing
Growth in commercial Growth in commercial searchessearches
19991999 20002000 20012001 20022002
+22%+22%
+17%+17%
+31%+31%
2002 Online Revenue Growth +8%2002 Online Revenue Growth +8%
Legal:Legal:Growth Momentum - Risk SolutionsGrowth Momentum - Risk Solutions
Strong growth market; increasing concerns Strong growth market; increasing concerns over fraud, identity theft and national securityover fraud, identity theft and national security
Superior information and risk assessment Superior information and risk assessment solutionssolutions– Most comprehensive, reliable public records Most comprehensive, reliable public records
databasedatabase– Application of advanced data linking and scoring Application of advanced data linking and scoring
technologiestechnologies
Revenues up 29% in 2002Revenues up 29% in 2002
Legal:Legal:Optimising Cost EfficiencyOptimising Cost Efficiency
19991999 20002000 20012001 20022002
21.3%21.3%
19.7%19.7% 20.1%20.1%
24.9%24.9%
Operating MarginOperating Margin
Legal:Legal:Accelerating Global ExpansionAccelerating Global Expansion
Global regional organisation structure in placeGlobal regional organisation structure in place Global delivery platform on target; rollout 2003Global delivery platform on target; rollout 2003 Geographic expansionGeographic expansion
– Established German operations; MBO VerlagEstablished German operations; MBO Verlag– Acquisition of Quicklaw in CanadaAcquisition of Quicklaw in Canada– Acquisition of FactLANE in The NetherlandsAcquisition of FactLANE in The Netherlands
Global brand establishedGlobal brand established
Legal:Legal:Growth MomentumGrowth Momentum
More content: dockets, codes, summariesMore content: dockets, codes, summaries More functionality: e-filing, company dossier, More functionality: e-filing, company dossier,
risk solutionsrisk solutions More customisation: small law, litigation More customisation: small law, litigation
support, One Searchsupport, One Search
Superior productsSuperior productsSuperior productsSuperior products
Focus on market segmentationFocus on market segmentation Maintain strong law schools programmeMaintain strong law schools programme Enhanced sales force effectivenessEnhanced sales force effectiveness
Powerful sales & Powerful sales & marketingmarketingPowerful sales & Powerful sales & marketingmarketing
Margin improvement programmeMargin improvement programme Operational/fulfilment improvementsOperational/fulfilment improvements
Cost efficiencyCost efficiencyCost efficiencyCost efficiency
Global expansionGlobal expansionGlobal expansionGlobal expansion Rollout of global delivery platformRollout of global delivery platform Priority countries penetrated/targetedPriority countries penetrated/targeted
Education:Education:2002 Priorities2002 Priorities Win greatest share of new K-12 basal and Win greatest share of new K-12 basal and
supplementary spending: US and internationalsupplementary spending: US and international Win greatest share of new educational testing Win greatest share of new educational testing
contractscontracts Establish strong core competencies and Establish strong core competencies and
focus in electronic product development and focus in electronic product development and sales sales
Ensure basal/supplementary publishing Ensure basal/supplementary publishing programmes on track for 2003/2004 growth programmes on track for 2003/2004 growth
Organisation: appoint division head; align Organisation: appoint division head; align Harcourt values/culture with Reed ElsevierHarcourt values/culture with Reed Elsevier
xx
Education:Education:Winning Performance in 2002 Winning Performance in 2002 AdoptionsAdoptions
# 2# 2# 1# 1ScienceScience
# 2# 2# 1# 1Social StudiesSocial Studies
# 4# 4# 1# 1MathematicsMathematics
# 1# 1# 1# 1Language ArtsLanguage Arts
#2#2# 2# 2Reading/LiteratureReading/Literature
SecondarySecondaryElementaryElementary
Overall Overall # 1# 1
Overall Overall # 2# 2
Based on estimated share obtained from total available sales across all adoptions in these subjects in 2002Based on estimated share obtained from total available sales across all adoptions in these subjects in 2002
OutperformOutperform
US Education Market*US Education Market*Growth %Growth % 33 1313 88
Harcourt US EducationHarcourt US EducationGrowth %Growth %
Note:Note: * US Education Market represent total K-12 textbook sales as reported by* US Education Market represent total K-12 textbook sales as reported by
Association of American Publishers (AAP). Association of American Publishers (AAP).
Education:Education:Market OutperformanceMarket Outperformance
333344 1111
- 5- 5
00
1212
99
19981998 19991999 20002000 20012001 20022002
Education:Education:Market OutperformanceMarket Outperformance
# 1 overall market share in 2002 adoptions# 1 overall market share in 2002 adoptions Good growth in open territories and backlistGood growth in open territories and backlist Short term market weaknessShort term market weakness
– Low point in adoption cycleLow point in adoption cycle– State budget pressuresState budget pressures– Delayed spending in anticipation of federal moniesDelayed spending in anticipation of federal monies
Investment in e-learning, funded by integration Investment in e-learning, funded by integration savingssavings
Education:Education:US K-12 Historic Market GrowthUS K-12 Historic Market Growth
14%14%13%13%
7%7%6%6%
5%5%
11%11%
33%%22%%
-2-2%%
11%11%
-7%-7%
1155%%
6%6%
1133%%1122%%
3%3%
13%13%
8%8%
-5%-5%
-10%-10%
-5%-5%
0%0%
5%5%
10%10%
15%15%
20%20%
19841984 19851985 19861986 19871987 19881988 19891989 19901990 19911991 19921992 19931993 19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001 20022002
Last Last 2020 years : Av Growth years : Av Growth +6%+6%Last Last 1010 years : Av Growth years : Av Growth +7%+7%Last Last 55 years : Av Growth years : Av Growth +6%+6%
Source : AAP Industry DataSource : AAP Industry Data
Education:Education:Growth Momentum: TestingGrowth Momentum: Testing
Good growth on top of exceptional 2001Good growth on top of exceptional 2001– New state contract winsNew state contract wins– New assessment publishingNew assessment publishing
Stanford Achievement Test 10 launchedStanford Achievement Test 10 launched– Strong norm reference heritageStrong norm reference heritage– Adaptable to state specific criteriaAdaptable to state specific criteria
California state contract not renewedCalifornia state contract not renewed– Impact on 2003 revenue growth (approximately $45m)Impact on 2003 revenue growth (approximately $45m)
Strong profit performance driven byStrong profit performance driven by– New organisation and management appointmentsNew organisation and management appointments– Substantial improvement in process efficiency Substantial improvement in process efficiency
Investment in e-assessment stepped upInvestment in e-assessment stepped up
Education: Education: Growth MomentumGrowth Momentum
Proven programme development processProven programme development process Expansion across curriculum rangeExpansion across curriculum range Building online products: e-learning,Building online products: e-learning,
e-testing, e-professional developmente-testing, e-professional development
Superior productsSuperior productsSuperior productsSuperior products
Market research embedded in development Market research embedded in development and sales processand sales process
Strengthen Open Territories sales forceStrengthen Open Territories sales force
Powerful sales & Powerful sales & marketingmarketingPowerful sales & Powerful sales & marketingmarketing
Greater focus on organisational efficiencyGreater focus on organisational efficiency Further supply chain savings targetedFurther supply chain savings targeted
Cost efficiencyCost efficiencyCost efficiencyCost efficiency
Global expansionGlobal expansionGlobal expansionGlobal expansion Appointment of Global CEO to drive strategic Appointment of Global CEO to drive strategic
development development Product transfer across marketsProduct transfer across markets Acquisition potentialAcquisition potential
Business:Business:2002 Priorities2002 Priorities
Deliver above market revenue growth in Deliver above market revenue growth in all key marketsall key markets
Further upgrade magazine quality and sales Further upgrade magazine quality and sales effectivenesseffectiveness
Build more integrated global B2B business: Build more integrated global B2B business: brands, sectors, customersbrands, sectors, customers
Achieve meaningful margin improvement at Achieve meaningful margin improvement at RBI USRBI US
Drive internet solutions to achieve double Drive internet solutions to achieve double digit revenue growth digit revenue growth
Business:Business:Continuing Tough MarketsContinuing Tough Markets
UKUK Technology and Air Transport hardest hit;Technology and Air Transport hardest hit;recovery in Agriculture; Social Services strong recovery in Agriculture; Social Services strong
Rate of decline now slowed; more stable/ Rate of decline now slowed; more stable/ predictable trend; no real sign of recoverypredictable trend; no real sign of recovery
OverallOverall
USUS Electronics and Manufacturing hardest hit; Electronics and Manufacturing hardest hit; growth in Construction and Entertainment growth in Construction and Entertainment
Significant sector variation; subscription and Significant sector variation; subscription and circulation holding upcirculation holding up
Continental Continental EuropeEurope
Leading shows hold up well; Asia Pacific growth Leading shows hold up well; Asia Pacific growth offset by US Manufacturing weakness; 2002 offset by US Manufacturing weakness; 2002 cycling broadly neutralcycling broadly neutral
Global Global ExhibitionsExhibitions
Business:Business:Market OutperformanceMarket Outperformance
Leadership positions in almost all sectorsLeadership positions in almost all sectors Geographic and sector spreadGeographic and sector spread Investment led momentum has built shareInvestment led momentum has built share Effective management of costsEffective management of costs Continued strong online growthContinued strong online growth
Gifts & Decorative Acc.Gifts & Decorative Acc. +6%+6%
Laboratory EquipmentLaboratory Equipment +7%+7%
Professional BuilderProfessional Builder +8%+8%
Variety - weeklyVariety - weekly +9%+9%
RBI USRBI US
RBI EuropeRBI EuropeBouwwereldBouwwereld +8%+8%
ElsevierElsevier +7%+7%
LogistiekKrantLogistiekKrant +9%+9%
Medisch ContactMedisch Contact +8%+8%
Based on % gain in share of ad pages January - December 2002; excludes yield effectsBased on % gain in share of ad pages January - December 2002; excludes yield effects
RBI UKRBI UKCaterer & HotelkeeperCaterer & Hotelkeeper
+4%+4%
Estates GazetteEstates Gazette
+4%+4%
Farmers WeeklyFarmers Weekly
+8%+8%
Personnel TodayPersonnel Today
+4%+4%
Business:Business:Market Share GainsMarket Share Gains
Business:Business:Online Revenue GrowthOnline Revenue Growth
$m$m
19991999 20002000 20012001 20022002
5757
9595
115115
2222
Business:Business:Growth MomentumGrowth Momentum
Constant product improvementConstant product improvement New online servicesNew online services
Superior productsSuperior productsSuperior productsSuperior products
Disciplined customer feedback Disciplined customer feedback programmesprogrammes
Market segmentation and yield Market segmentation and yield managementmanagement
Enhanced sales force effectiveness Enhanced sales force effectiveness
Powerful sales & Powerful sales & marketingmarketingPowerful sales & Powerful sales & marketingmarketing
Further supply chain savingsFurther supply chain savings US margin improvement programmeUS margin improvement programme
Cost efficiencyCost efficiencyCost efficiencyCost efficiency
Global expansionGlobal expansionGlobal expansionGlobal expansion Leverage global marketsLeverage global markets Geocloning of titles and showsGeocloning of titles and shows Selective acquisitionsSelective acquisitions
StrategicStrategic Higher quality overall portfolio; excellent fit Higher quality overall portfolio; excellent fit Significant boost for Science publishing Significant boost for Science publishing
Global leadership in Medical, with strong growth Global leadership in Medical, with strong growth
potential potential Major position in long term growth US education Major position in long term growth US education
marketmarket
FinancialFinancial Acceleration of revenue and profit growth Acceleration of revenue and profit growth Achieve annual return over WACC within 5 years Achieve annual return over WACC within 5 years Earnings accretion Earnings accretion Add to shareholder value (NPV basis) Add to shareholder value (NPV basis)
The Harcourt AcquisitionThe Harcourt AcquisitionDelivering on CriteriaDelivering on Criteria
Reed Elsevier:Reed Elsevier:Internet RevenuesInternet Revenues
£m/€m£m/€m
19991999 20002000 20012001 20022002
436/715436/715
750/1208750/1208
1008/16031008/1603
120/182120/182
Reed Elsevier:Reed Elsevier:Investment and Cost SavingsInvestment and Cost Savings
Continuing investment driving momentumContinuing investment driving momentum Relentless focus on operational efficiencyRelentless focus on operational efficiency
£/€£/€ 19991999 20002000 20012001 20022002
Investment £ Investment £ 8080 270270 260260 290290
€ € 122122 440440 419419 461461
Cost Savings £Cost Savings £ -- 143143 215215 overover 350 350
€ € -- 235235 346346 overover 550 550
Reed Elsevier:Reed Elsevier:Key Objectives For 2003Key Objectives For 2003
Maximise above market organic growth from Maximise above market organic growth from four core businessesfour core businesses
Execute and deliver on all strategic milestonesExecute and deliver on all strategic milestones
Improve operating margin further through Improve operating margin further through increased efficiencyincreased efficiency
Deliver double digit earnings growthDeliver double digit earnings growth
Product superiorityProduct superiority
Global expansionGlobal expansionCost efficiencyCost efficiency
Powerful sales and Powerful sales and marketingmarketing
Strong business fundamentals and financial positionStrong business fundamentals and financial positionStrong business fundamentals and financial positionStrong business fundamentals and financial position
ConclusionsConclusions
Strong organic growth across all businesses compared Strong organic growth across all businesses compared to marketto market
Strong organic growth across all businesses compared Strong organic growth across all businesses compared to marketto market
On track to deliver 2003 goals of above-marketOn track to deliver 2003 goals of above-marketrevenue and double-digit profit growthrevenue and double-digit profit growth
On track to deliver 2003 goals of above-marketOn track to deliver 2003 goals of above-marketrevenue and double-digit profit growthrevenue and double-digit profit growth
Harcourt acquisition has acceleratedHarcourt acquisition has acceleratedrevenue and profit growthrevenue and profit growth
Harcourt acquisition has acceleratedHarcourt acquisition has acceleratedrevenue and profit growthrevenue and profit growth
Reed Elsevier strategy proving effectiveReed Elsevier strategy proving effectiveReed Elsevier strategy proving effectiveReed Elsevier strategy proving effective
AppendicesAppendices
Turnover: ReconciliationTurnover: Reconciliation
%%changechange€€mm
% % changechange£m£m
+9%+9%7,9827,982+10%+10%5,0205,0202002 Turnover2002 Turnover
-4%-4%(316)(316)-3%-3%(134)(134)Currency translation effectCurrency translation effect
-3%-3%(243)(243)-3%-3%(151)(151)DisposalsDisposals
+1%+1%6464+1%+1%4040Other Other acquisitionsacquisitions
+1%+1%118118+1%+1%7373Base businesses (including Base businesses (including Harcourt proforma)Harcourt proforma)
7,3427,3424,5604,5602001 Turnover2001 Turnover
Harcourt (2001 full year adj.)Harcourt (2001 full year adj.) 632632 +14%+14% 1,0171,017 +14%+14%
12 months to 31 December12 months to 31 December
Average rates:Average rates:
per £1per £1 20012001 20022002
US DollarUS Dollar 1.441.44 1.501.50
Euro Euro 1.611.61 1.591.59
EuroEuro30%30%
OtherOther5%5% UK UK
SterlingSterling21%21%
US DollarUS Dollar44%44%
Average rates:Average rates:
per €1per €1 20012001 20022002
US DollarUS Dollar 0.890.89 0.940.94
Sterling Sterling 0.620.62 0.630.63
Currency Profile:Currency Profile:Adjusted Profit Before TaxAdjusted Profit Before Tax
€€0.130.13€€0.180.18Reed Elsevier NV EPSReed Elsevier NV EPS
4.8p4.8p7.0p7.0pReed Elsevier PLC EPSReed Elsevier PLC EPS
202202288288126126181181Reported profit attributableReported profit attributable
13131818991111Exceptional itemsExceptional items
(816)(816)(814)(814)(507)(507)(512)(512)Amortisation of goodwill and Amortisation of goodwill and intangible assetsintangible assets
1,0051,0051,0841,084624624682682Adjusted profit attributableAdjusted profit attributable
20012001€€mm
20022002€€mm
20012001£m£m
20022002£m£m12 months to 31 December12 months to 31 December
Reported Profit AttributableReported Profit Attributable
Balance SheetBalance Sheet
1,4161,4161,1831,183863863773773
Net debtNet debt 5,2965,2964,1804,1803,2293,2292,7322,732
Other net liabilities/minoritiesOther net liabilities/minorities
4,7844,7844,0684,0682,9172,9172,6592,659Shareholders’ fundsShareholders’ funds
11,49611,4969,4319,4317,0097,0096,1646,164
395395214214241241140140InvestmentsInvestments
802802741741489489484484Tangible fixed assetsTangible fixed assets
11,02611,0268,8958,8956,7236,7235,8145,814Goodwill/intangible assetsGoodwill/intangible assets
20012001€€mm
20022002€€mm
20012001£m£m
20022002£m£m
(727)(727)(419)(419)(444)(444)(274)(274)Working CapitalWorking Capital
11,49611,4969,4319,4317,0097,0096,1646,164
At 31 DecemberAt 31 December
Dividend EqualisationDividend Equalisation
Reed Elsevier PLC (p)Reed Elsevier PLC (p)
20022002 20012001 %%ChangeChange
InterimInterim
20022002 20012001 %%ChangeChange
FinalFinal
3.203.20 3.103.10 8.008.00 7.407.40 8%8%
UK tax credit rateUK tax credit rate
Reed Elsevier PLC Reed Elsevier PLC (gross)(p)(gross)(p)
Equalisation ratioEqualisation ratio
Exchange rate (€:£)Exchange rate (€:£)
Reed Elsevier NV (€)Reed Elsevier NV (€)
10%10% 10%10%
3.563.56 3.443.44
1.5381.538
1.591.59
0.090.09
1.5381.538
1.631.63
0.090.09 0%0%
3%3%
10%10%
8.898.89
1.5381.538
1.511.51
0.210.21
10%10%
8.228.22
1.5381.538
1.631.63
0.210.21 0%0%
This presentation contains forward-looking statements within the meaning of Section 27A of the US Securities Act 1933, as amended, and Section 21E of the US Securities Exchange Act 1934, as amended. These statements are subject to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in such forward looking statements. The terms ‘expect’, ‘should be’, ‘will be’, and similar expressions identify forward looking statements. Factors which may cause future outcomes to differ from those foreseen in forward looking statements include, but are not limited to: general economic conditions and business conditions in Reed Elsevier’s markets; exchange rate fluctuations; customers’ acceptance of its products and services; the actions of competitors; legislative, fiscal and regulatory developments; changes in law and legal interpretation affecting Reed Elsevier’s intellectual property rights, and the impact of technological change.