Final Results

Reed Elsevier PLC
19 February 2004

FINANCIAL HIGHLIGHTS

FOR THE YEAR ENDED 31 DECEMBER 2003

REED ELSEVIER COMBINED BUSINESSES

                                   2003     2002     2003     2002    Change at
                                    £m        £m       €m       €m     constant
                                                                     currencies
                                                                              %
Reported figures
Turnover                          4,925    5,020    7,141    7,982           1%
Operating profit                    661      507      958      806          29%
Profit before taxation              519      289      752      460          75%
Net borrowings                    2,372    2,732    3,368    4,180
Adjusted figures
Operating profit                  1,178    1,133    1,708    1,801           6%
Profit before taxation            1,010      927    1,465    1,474          10%
Operating cash flow               1,028    1,010    1,491    1,606           3%
Operating margin                    24%      23%      24%      23%
Operating cash flow conversion      87%      89%      87%      89%
Interest cover (times)              7.0      5.5      7.0      5.5

The Reed Elsevier combined businesses encompass the businesses of Reed Elsevier
Group plc and Elsevier Reed Finance BV, together with their two parent
companies, Reed Elsevier PLC and Reed Elsevier NV (the 'Reed Elsevier combined
businesses').

The financial highlights presented refer to 'adjusted' profit and cash flow
figures. These figures are used by the Reed Elsevier businesses as additional
performance measures and are stated before the amortisation of goodwill and
intangible assets, exceptional items and related tax effects. A reconciliation
between the reported and adjusted figures is provided in Note 5 to the
Preliminary Statement.

The percentage change at constant currencies refers to the movements at constant
exchange rates, using 2002 full year average rates.


PARENT COMPANIES

                          Reed Elsevier PLC        Reed Elsevier NV

                          2003   2002  Change     2003    2002  Change Change at
                            £m     £m       %       €m      €m       %  constant
                                                                      currencies
                                                                               %
Reported profit            169     89     90%      242     144     68%
attributable
Adjusted profit            394    361      9%      540     542       -       10%
attributable
Average exchange 
rate €:£                  1.45   1.59             1.45    1.59

Reported earnings per    13.4p   7.0p     91%    €0.31   €0.18     72%
share
Adjusted earnings per    31.2p  28.5p      9%    €0.69   €0.69       -       10%
share
Dividend per share       12.0p  11.2p      7%    €0.30   €0.30       -

The results of Reed Elsevier PLC reflect its shareholders' 52.9% economic
interest in the Reed Elsevier combined businesses. The results of Reed Elsevier
NV reflect its shareholders' 50% economic interest in the Reed Elsevier combined
businesses. The respective economic interests of the Reed Elsevier PLC and Reed
Elsevier NV shareholders take account of Reed Elsevier PLC's 5.8% interest in
Reed Elsevier NV.



REPORT OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

We are pleased to report another year of good progress in executing against our
growth strategy and delivery of a strong financial result for 2003. Adjusted
earnings at constant exchange rates achieved double digit growth for the third
successive year. This has been achieved against a background of challenging
market conditions, with each of our markets affected by the late cycle effects
of the recent global economic slowdown. Despite this, we have continued to
invest significantly in our businesses to develop new product, target new growth
opportunities within our markets, and expand our sales and marketing programmes.
Strong relative performances within our markets and further cost actions have
delivered the good overall result.

The science & medical business has performed well with strong publishing and new
electronic products driving above market revenue growth. The legal business has
also continued to outperform its markets with consistent improvements in product
performance and expansion of its online services. The education business has had
a mixed performance in weak markets, affected by the low level of textbook
adoption opportunities compounded by state budget pressures. The business
division continued to show impressive resilience in depressed markets. Operating
margins in all four divisions improved despite the high levels of investment,
due to a relentless focus on cost efficiency. Strong cash flows reinforced the
quality of the financial result.

For 2004, we plan to increase our investment programme yet further. This will
drive the expansion of our online information products and services to address
the burgeoning demand of our customers for the additional productivity that
professional information and web-based functionalities can bring. We also
continue to target acquisitions that accelerate our growth strategy.

Financial Results

Total revenues were up 1% on the prior year at constant exchange rates, with
satisfactory growth in Elsevier and LexisNexis offset by the weakness in
Harcourt Education and Reed Business markets. At reported exchange rates,
revenues were 2% lower at £4,925 million/11% lower at €7,141 million, due to the
effects on currency translation of the relative weakness of the US dollar and
the strength of the euro in comparison with the prior year.

Adjusted pre-tax profits were 10% higher at constant exchange rates, reflecting
market outperformance, the impact of cost actions in improving margin, the
gearing of the business and lower interest rates. Expressed in sterling,
adjusted pre-tax profits were 9% higher at £1,010 million, whilst, expressed in
euros, 1% lower at €1,465 million due to the currency translation effects.
Overall adjusted operating margin improved by 1.3% percentage points to 23.9%.
Adjusted operating cash flow at £1,028 million/€1,491 million represents a
strong 87% conversion of adjusted operating profits into cash. Adjusted figures
are stated before amortisation of goodwill and intangible assets and exceptional
items.

The science & medical business, Elsevier, performed well with strong new
publishing and growing online sales. Increased investment was more than offset
by actions taken to improve efficiency. Revenues and adjusted operating profits
were both up 8% at constant exchange rates. In the Science & Technology
division, against a background of considerable pressure on institutional
budgets, subscription renewals were strong and good growth was seen in sales of
electronic journal products, including back files and subject collections. The
Health Sciences business has continued to show good growth momentum, with a
strong new publishing programme and increased demand from the expanding
healthcare professions.

The legal business, LexisNexis, performed well in markets that are seeing
somewhat slower growth. Revenue and adjusted operating profit growth were 3% and
10% respectively at constant exchange rates. Investment in content, new product
features and online services are stimulating revenue growth, and LexisNexis
continues to perform ahead of the market. In corporate and federal markets, the
weaker market for corporate business information was offset by strong growth in
the risk solutions business. The LexisNexis International businesses performed
satisfactorily, with significant investment and new products driving strong
online sales. Further improvements were made in operating margins as cost
actions were taken to improve efficiency and fund the investment programme.

The education business, Harcourt Education, had a mixed performance, with the
impact of the loss last year of the California state testing contract and weak
markets due to the trough in state textbook adoptions exacerbated by schools
funding pressures. Revenues were consequently 3% lower at constant exchange
rates including minor disposals. The Harcourt US K-12 schools business once
again performed strongly in new state textbook adoptions, with joint overall
market leadership, and saw good growth in backlist sales and in open
territories. The supplemental business however was weaker ahead of new
publishing that addresses federally funded programmes. Significant cost actions
were taken to streamline business operations and improve margins, to deliver
adjusted operating profit growth of 2% at constant currencies despite the
revenue decline.

The business division, Reed Business, faced a difficult advertising market
throughout the year and the exhibitions business was not only impacted by the
weak economic conditions and the net cycling out of non-annual shows, but also
by the war in Iraq and the SARS outbreak. In this environment, Reed Business did
well to deliver revenue only 4% lower at constant exchange rates, reflecting the
continued focus on building market share, improving yields and growing online
sales. Continued tight management of costs delivered further margin improvement,
with adjusted operating profits flat at constant exchange rates.

Amortisation of goodwill and intangible assets at £445 million/€645 million was
£82 million/€193 million lower than in the prior year, principally as a result
of currency translation effects and some past acquisitions becoming fully
amortised.

Exceptional pre-tax charges of £46 million/€68 million relate to acquisition
integration and other restructuring less net gains on disposals and fixed asset
investments. After tax, and including prior year tax credits, exceptional items
showed a net gain of £38 million/€54 million.

The reported profit before tax, including amortisation of goodwill and
intangible assets and exceptional items, was £519 million/€752 million, which
compares with £289 million/€460 million in the prior year. The reported
attributable profit of £334 million/€484 million increased against a reported
attributable profit of £181 million/€288 million in the prior year. Further
information on performance is set out in the review of operations and financial
performance.

Business Progress

2003 has seen Reed Elsevier's markets continue to be challenged by late cycle
effects of the difficult economic conditions experienced over the last three
years, and this is expected to continue into 2004. Despite this overall low
market growth environment, Reed Elsevier continues to give priority to
investment in new product and market initiatives to ensure strong long-term
revenue growth and market outperformance. Continued focus is also given to
improving cost efficiency to fund the investment programme, and good progress
has again been made this year. Additionally, we target acquisitions that
accelerate our growth strategy.

Elsevier has continued to deliver above market revenue growth through investment
in new publishing and in expanding online services, particularly through
ScienceDirect. Online delivery has dramatically increased the access and utility
of information to the scientific and research community, with 175 million
articles downloaded from ScienceDirect in 2003, more than double the prior year
figure. Elsevier continues to expand the content in ScienceDirect, which now
holds over 5 million research articles, through new publishing and digitising
the archive and major reference works. Elsevier is also investing in developing
subject collections, abstracts and bibliographic information to enhance ease of
navigation through scientific research. In the healthcare market, strong demand
for new publishing is driven by advances in medical sciences, increasing
specialisation, and expansion of the healthcare professions. Whilst usage of
information within the science research community has moved rapidly online,
within health sciences, print is still the predominant medium. Online services
are, however, expanding rapidly and Elsevier is investing to capture these
opportunities and expand the market. Elsevier's international publishing network
to create and distribute information around the world was significantly expanded
early in the year with the acquisition of the Holtzbrinck STM business in
Germany.

There has been much written recently on scientific journal business models. We
remain firmly of the view that, whilst the market will always accommodate a
variety of different initiatives and funding approaches, subscription based
journal publishing is the most effective and efficient way to deliver to
researchers a huge volume of high quality, peer reviewed research through
increasingly sophisticated online delivery and navigational tools that require
substantial investment. We will however continue to monitor initiatives such as
the 'author pays' publishing model and assess how effectively they serve the
needs of the scientific and research communities. Where innovations bring
demonstrable and sustainable improvements for these communities, Elsevier will,
as always, adapt and invest accordingly.

At LexisNexis, our good performance in somewhat slower markets has been
delivered through continued investment in content, product functionality and new
online services. This has also positioned LexisNexis well to benefit from a
market recovery. The demand for legal services and for efficient access to legal
information is expected to drive long-term growth, particularly in online
services. In the US, where online services account for the significant majority
of sales, investment has been made in faster growing contiguous markets, such as
in risk solutions and in legal tools beyond core research. The acquisitions of
the Dolan Media public records business, with its electronic information on
court judgements and liens, and Applied Discovery, in the fast growing
electronic discovery services market, are significant steps in this strategy.
Outside the US, where online services are growing rapidly but from a smaller
base, investment in the LexisNexis global online delivery platform will
accelerate growth through swift delivery of enhanced functionalities to
individual markets. Services on the new platform have recently been launched in
France, and the UK and Australia are to follow shortly.

Harcourt Education, despite the weakness in its markets driven by the adoption
calendar and current state budget pressures, has continued to expand its
curriculum range, most notably in secondary maths product ahead of the 2004
adoptions, and to develop its testing and remediation product for the classroom
based assessment market which is expected to grow rapidly in importance.
Investment is also being made in the US supplemental publishing business to
capture the growth opportunities presented by the No Child Left Behind
legislation. Investment in other new publishing, such as the latest edition of
the Stanford Achievement Test, is driving state testing contract wins.

Over the last three years, Reed Business has been tightly managed to mitigate
the effects that economic slowdown has had on advertising and exhibition
markets. Investment has been made in building market share and in expanding the
online services, which have seen well over 20% compound growth over that period.
The focus has also continued on managing yields and reducing costs. Despite an
underlying revenue decline of 14% over that period, adjusted operating margins
are now higher than they were three years ago, and the business is well
positioned to benefit significantly from a market upturn.

Whilst we expect our markets to recover over the next three years, we are
aggressively focused on improving revenue performance through developing our
core services, acquiring or launching into faster growth opportunities, and
geographical expansion.

2003 represents the second full year of Reed Elsevier's ownership of the
Harcourt science and medical and education publishing businesses acquired in
July 2001. The strategic promise of the acquisition has been realised: the
excellent fit and synergies of the science publishing; a leading presence and
strong growth in the attractive Health Sciences market; and a consistently
winning performance in US education which, whilst suffering from state budget
pressures and the adoption cycle at present, is a good long term growth market.
The acquisition has accelerated our revenue growth, enhanced our earnings, and
in 2003 had an estimated post tax return on capital invested of nearly 8%,
approximating Reed Elsevier's weighted average cost of capital well within the
five years from acquisition that was targeted.

Parent company earnings and dividends

For the parent companies, Reed Elsevier PLC and Reed Elsevier NV, the adjusted
earnings per share were up 10% at constant exchange rates. The adjusted earnings
per share at reported exchange rates were up 9% for Reed Elsevier PLC at 31.2p
and unchanged for Reed Elsevier NV at €0.69. The reported earnings per share,
including the amortisation of goodwill and intangible assets and exceptional
items, was for Reed Elsevier PLC shareholders 13.4p (2002: 7.0p) and for Reed
Elsevier NV shareholders €0.31 (2002: €0.18).

The proposed Reed Elsevier PLC final dividend is 8.7p per share which, together
with the interim dividend of 3.3p, gives a total dividend of 12.0p, up 7% on the
prior year. The proposed Reed Elsevier NV final dividend under the equalisation
arrangements is €0.22 per share which, together with the interim dividend of
€0.08, gives a total Reed Elsevier NV dividend of €0.30, unchanged from the
prior year. The difference in dividend growth rates reflects the impact of
currency movements since the prior year dividend declaration dates.

Outlook

Reed Elsevier's markets continue to be challenged by late cycle effects of the
difficult economic conditions experienced over the last three years. The US
education market is also expected to decline this year, as it reaches the low
point in the state textbook adoption cycle combined with continuing state budget
pressures. In what is expected to be an overall low market growth environment,
another year of double digit adjusted earnings per share growth at constant
rates will be difficult, particularly since Reed Elsevier plans to expand its
investment programme by more than $50 million to help ensure accelerated
long-term revenue growth.

We are, therefore, targeting mid to high single digit adjusted earnings per
share growth at constant currencies in 2004, and above market revenue growth. If
current exchange rates prevail, there will be an adverse translation impact on
reported earnings due to the weakness of the US dollar. Reed Elsevier expects to
deliver on its long-term targets of above market revenue growth and double digit
adjusted EPS growth at constant rates in 2005 and beyond as its markets benefit
from improved economic conditions and the US schools adoption cycle recovers.

In 2004, Elsevier should again perform well, with strong subscription renewals
driven by the strength of the product and the greater utility of ScienceDirect.
The Health Sciences books programme is expected, again, to go well. Further cost
efficiencies will help fund substantially increased investment in online
products and new navigational services.

LexisNexis is expected to have another satisfactory year, although no overall
improvement in its core research markets is anticipated. Growth will be helped
by further development of online research services and from the investments made
in the faster growing risk management and legal tools markets. 2004 will see
further major product initiatives across all markets including the rollout of
the new global online delivery platform in a number of countries.

Harcourt Education expects to perform well in the 2004 adoptions but in a weaker
overall market this is expected to deliver broadly flat revenues. The assessment
business will benefit from new state educational testing contracts and the
International business should see a recovery from the exceptional school funding
constraints seen in the UK last year.

Reed Business is not budgeting for any real recovery in its markets this year
and continues to take cost actions to protect margins whilst increasing
investment in online services. A year on year decline in advertising volumes,
particularly in continental Europe, should however be largely offset by further
share growth, yield improvement and good growth in online sales. The exhibitions
business will benefit from the net cycling in of non-annual shows.

If an economic recovery really does take hold and becomes more broadly based,
then Reed Business should show good recovery, particularly in its advertising
revenues. Given the improvements made in operational efficiency over the last
three years, the flow through to increased profitability will be strong.

Reed Elsevier is excellently positioned in long-term attractive growth markets,
and has a clear investment led growth strategy which has delivered significant
market outperformance in each of the last three years. We see good opportunities
for growth and have the people and investment resources to deliver on them. We
have great confidence in Reed Elsevier's future success.




Morris Tabaksblat                  Crispin Davis
Chairman                           Chief Executive Officer





REVIEW OF OPERATIONS AND FINANCIAL PERFORMANCE

REVIEW OF OPERATIONS

                               2003      2002      2003      2002       % change
                                 £m        £m        €m        €m    at constant
                                                                      currencies
Turnover
Science & Medical             1,381     1,295     2,002     2,059            8%
Legal                         1,318     1,349     1,911     2,145            3%
Education                       898       993     1,302     1,579           -3%
Business                      1,328     1,383     1,926     2,199           -4%
Total                         4,925     5,020     7,141     7,982            1%

Adjusted operating profit
Science & Medical               467       429       677       682            8%
Legal                           301       287       437       456           10%
Education                       174       183       252       291            2%
Business                        236       234       342       372            -
Total                         1,178     1,133     1,708     1,801            6%

The Review of Operations refers to adjusted operating profit performance.
Adjusted profit figures are used by Reed Elsevier businesses as additional
performance measures and are stated before amortisation of goodwill and
intangible assets and exceptional items, and are reconciled to the reported
amounts in Note 5 to this Preliminary Statement. Unless otherwise indicated, all
percentage movements in the following commentary refer to constant currency
rates, using 2002 full year average rates.



SCIENCE & MEDICAL
                             2003    2002    2003    2002  % change at constant
                              £m       £m      €m      €m            currencies
Turnover
Elsevier
Science & Technology          789     746   1,144   1,186                    5%
Health Sciences               592     549     858     873                   11%
                            1,381   1,295   2,002   2,059                    8%
Adjusted operating profit     467     429     677     682                    8%
Adjusted operating margin    33.8%   33.1%   33.8%   33.1%              0.7 pts


SCIENCE & MEDICAL

Elsevier has had another successful year against a background of considerable
pressure on institutional budgets. Strong subscriptions renewals and growing
online sales drove revenue growth in Science & Technology and a successful book
publishing programme delivered good growth in Health Sciences. Underlying
operating margins were improved by further actions to streamline operations.
Continued investment in new publishing and in expanding ScienceDirect and other
online services are expected to deliver future growth.

Revenue and adjusted operating profits both increased 8% at constant exchange
rates, or 5% and 8% excluding the Holtzbrinck STM business acquired at the
beginning of the year and other small acquisitions and disposals. Both the
Science & Technology and Health Sciences divisions saw underlying revenue growth
of 5%.

In the Science & Technology division, growth was driven by strong subscription
renewals and growing online sales including recently introduced back files and
subject collections. Usage of ScienceDirect more than doubled to 175 million
article downloads during the year, reflecting the dramatic increase in access
and utility that this web based service provides. ScienceDirect now holds over 5
million scientific research articles that can be searched, accessed and linked
at the click of a mouse, anywhere and at any time. Increasingly customers,
either individually or through consortia, are subscribing to content hitherto
outside their collections at attractive discounts. Electronic only subscriptions
grew by 55% and now account for 23% of journal subscriptions by value.

In Health Sciences, growth was driven by the strong book publishing programme
with successful new titles and editions coupled with increased demand from the
growing healthcare professions. Electronic revenues continue to grow strongly,
albeit from a much smaller base than in Science & Technology, from the expansion
of online services in addition to migration from print subscriptions. Demand
from the pharmaceutical industry for projects and conferences was however weaker
leading to consolidation of these activities. The International business was
expanded in the year through more aggressive versioning and distribution of
international content in local markets and the acquisition of the Holtzbrinck
STM publishing business, adding high quality German language medical publishing
and strong local market and distribution channels for other international
content.

Significant investments continue to be made in ScienceDirect, most particularly
in new navigation services and in web platforms to support the launch of new
online products within Health Sciences. Continued action on costs, including
further benefits of integration of the Harcourt STM businesses, funded increases
in investment and improved the adjusted overall margin, ie before exceptional
items and the amortisation of goodwill and intangible assets, by 0.7 percentage
points.

The outlook for the Science & Medical business is good. Although academic
institutional and corporate budgets remain under pressure, Elsevier continues to
see strong subscription renewals and take up of its electronic products.
Investment in content and new online services is being increased to address
further market opportunities.




LEGAL                          2003      2002      2003      2002      % change
                                 £m        £m        €m        €m   at constant
                                                                     currencies
Turnover
LexisNexis
North America                   992     1,056     1,438     1,679            2%
International                   326       293       473       466            7%
                              1,318     1,349     1,911     2,145            3%
Adjusted operating profit       301       287       437       456           10%
Operating margin               22.8%     21.3%     22.8%     21.3%      1.5 pts

LEGAL

The LexisNexis business has continued to perform well in markets seeing slower
growth. The US legal business is performing ahead of the market, whilst the
continued slow down within US corporate and federal markets for corporate
business information has been offset by the stronger growth in the risk
solutions business. Continued investment is being made in new content and online
services whilst further cost actions have improved operational efficiency and
margins.

Revenues and adjusted operating profits increased by 3% and 10% respectively at
constant exchange rates, or 3% and 8% excluding acquisitions and disposals.
LexisNexis North America saw underlying revenue growth at 2% held back by the
late cycle impact of economic slow down, particularly in corporate markets.
Outside the US, revenue growth before acquisitions was 4% which, while seeing
similar weakness in UK corporate information markets, saw strong growth in
Asia-Pacific. Adjusted operating margins improved by 1.5 percentage points to
22.8% as a result of the continued action to improve efficiency and release
funds for investment.

In US legal markets, revenues grew by 3%. Online revenue growth was 7% with good
growth in national law firms and, in particular, in the small law firm market.
Print and CD sales were marginally lower as the market continues to move online.
The legal directories business again performed well with strong renewals and
expanded web services. In US corporate and federal markets, underlying revenues
were flat. Strong growth in the risk solutions business was offset by declines
in corporate and academic information markets reflecting the difficult budgetary
environment. Continued action on the cost base funded further increases in
investment and delivered underlying operating profit growth in LexisNexis North
America of 10%.

The LexisNexis International businesses outside North America saw revenues and
adjusted operating profits up 4% and 2% respectively at constant exchange rates
before acquisitions. Strong growth in online sales of legal, tax and regulatory
product across all major markets was in part offset by print migration and by
weakness in demand in the UK for corporate news and business information.
Underlying operating margins were broadly maintained despite increased
investment in new online services and expansion of the business in Germany, as a
result of continued cost actions, most particularly in rationalisation of
editorial and production processes within Europe.

LexisNexis is continuing to invest in new content and improved online
functionalities for its core products as well as expanding into contiguous
markets through investment in new development and acquisitions. Good further
progress has been made in expanding coverage of annotated codes for individual
states and in case law summaries. The first development phase of the global
online delivery platform has been completed, with the launch of services on the
new platform in France, with the UK and Australia to follow later in the year,
significantly enhancing product functionality and, after the initial launch
phases, delivering greater operational efficiency.

Two acquisitions made in the second half of the year in the US have expanded
LexisNexis' position in fast growing contiguous markets. Applied Discovery Inc
is the leading provider in the US of electronic discovery services which is a
rapidly growing market. The public records business of Dolan Media, including
important electronic information on court judgements and liens, has further
expanded LexisNexis' position in the strongly growing risk management market.
Courtlink, the leading provider of electronic court document filing and court
access services acquired just over two years ago, is continuing to grow strongly
as these markets expand. LexisNexis is increasing investment behind faster
growth opportunities, to continue to drive above market revenue growth and which
positions the business well for the future.

The outlook for the LexisNexis business is good. Revenue growth is being
stimulated by new publishing and product initiatives and the declines seen in
corporate and business information markets appear to be abating. Increases in
investment are expected to be funded by the actions taken to further improve
operational efficiency.





EDUCATION
                              2003     2002    2003      2002          % change
                                £m       £m      €m        €m       at constant
                                                                     currencies
Turnover
Harcourt Education
US Schools & Testing           745      846   1,080     1,345               -5%
International                  153      147     222       234                5%
                               898      993   1,302     1,579               -3%
Adjusted operating profit      174      183     252       291                2%
Operating margin             19.4%    18.4%   19.4%     18.4%           1.0 pts

EDUCATION

The Harcourt Education business performed well given the difficult schools
markets, with education budgets under pressure and a trough in the US state
textbook adoption cycle, and the effect on revenues of past contract losses.
Harcourt performed well in new US state textbook adoptions and saw good growth
in backlist sales and to non-adoption states.

Revenues, before acquisitions and disposals, were 2% lower than in the prior
year whilst adjusted operating profits were 3% ahead at constant exchange rates.
Excluding the impact of the loss of the California state testing contract
announced in 2002, underlying revenue growth would have been 1-2%, broadly in
line with the market. Despite lower revenues, adjusted operating margins
improved by 1.0 percentage points to 19.4% as substantial cost savings were
realised from rationalisation of editorial and production processes and further
integration.

The Harcourt US K-12 schools business performed well in 2003 state adoptions,
gaining the joint overall market share leadership in state adoption
opportunities. Taking into account that Harcourt did not participate in the
second year implementation of the 2002 California elementary reading adoption,
this is an impressive performance. Particular successes in the Elementary market
were achieved in Georgia reading and in social studies in North Carolina and
Texas. In the secondary market, whilst performance in social studies was below
expectation, the literature and language arts programmes have maintained their
leading positions with successes in California and Florida and the science
programme also led with a major win in Tennessee. The market for state adoptions
was however weak due to the trough in the US state textbook adoption cycle and
some deferrals due to the pressures on state budgets. This was compensated by
good growth in backlist sales and sales to open territories in both elementary
and secondary schools markets. Overall revenues were however held back by
weakness in the supplemental business ahead of new publishing that addresses
federally funded programmes. Underlying operating profits were up 2%, reflecting
the significant cost savings achieved through supply chain rationalisation and
further integration of the supplemental businesses.

The Harcourt Assessment businesses saw underlying revenues down 5%, reflecting
the loss of the California state testing contract which was announced in 2002.
Without this, underlying revenue growth would have been over 15%. This has been
primarily driven by strong new publishing in the clinical testing market. The
new edition of the Stanford Achievement Test, which combines the power of the
well established norm-reference test with the flexibility to test state-specific
criteria, has been well received in the market and has been instrumental in
winning a number of new state contracts, including Nevada, New Mexico and
Minnesota, which will impact in 2004. Underlying operating profits were up 10%
due to the strong growth in higher margin product and the actions taken to
improve operational efficiency. Increased investment is being put into
classroom-based assessment to improve individual educational outcomes, linking
assessment to reinforcement of learning through linked curriculum and
remediation products.

The Harcourt Education International businesses saw revenues 5% ahead and
adjusted operating profits 1% ahead, with strong growth in academic publishing
and the global library business offset by a marked reduction in the UK schools
market due to shortfalls in governmental funding.

In 2004, the US schools market is expected to decline further as the low point
is reached in the three year trough in the adoptions cycle combined with
continuing state budget pressures. Harcourt expects to perform well in the new
2004 adoptions and the early market reaction to new publishing programmes has
been encouraging. The assessment business will benefit from the recent state
contract wins and the International business is expected to recover from the UK
funding constraints seen last year. 2005 and the following years are expected to
see a significant recovery in US market growth given the much stronger adoption
calendar and Harcourt should be well placed to perform strongly.



BUSINESS
                               2003      2002      2003      2002      % change
                                 £m        £m        €m        €m   at constant
                                                                     currencies
Turnover
Reed Business Information
US                              365       438       529       696           -6%
UK                              234       241       339       383           -3%
Continental Europe              277       256       402       407           -6%
Reed Exhibitions                420       425       609       676           -3%
Other                            32        23        47        37            8%
                              1,328     1,383     1,926     2,199           -4%
Adjusted operating profit       236       234       342       372             -
Operating margin              17.8%     16.9%     17.8%     16.9%       0.9 pts

BUSINESS

The Reed Business division has again performed well in yet another difficult
year. The continued decline of advertising volumes was in part compensated by
continued market share gains, yield improvement and significant growth in online
sales. The exhibitions business has been tightly managed through weak economic
conditions but has been adversely affected by the net cycling out of non-annual
shows as well as the impact of the war in Iraq and the SARS outbreak. Underlying
margins improved through firm cost management.

Revenues and adjusted operating profits were respectively 4% lower and flat at
constant exchange rates, or 5% and 2% lower excluding acquisitions and
disposals. The underlying magazine and information publishing businesses saw a
revenue decline of 5% due to the advertising market weakness, and the
exhibitions business revenues were 6% lower, or 3% before taking account of the
net cycling out of non-annual shows. Adjusted operating margin was 0.9
percentage points ahead at 17.8% reflecting the actions taken on costs to
mitigate the impact of lower revenues and to fund investment.

In the US, Reed Business Information saw revenues 6% lower than in the prior
year. Growth in the entertainment sector was more than offset by declines in the
manufacturing, electronics and construction sectors. Significant focus on
improving yields and building share could not compensate for the volume decline.
Despite the revenue decline, underlying operating profits have risen by 23%
reflecting the significant actions taken to reduce costs.

In the UK, Reed Business Information revenues were down 3%. Whilst display and
recruitment advertising markets saw lower revenues, good growth was achieved in
online sales. Adjusted operating profits were similar to the prior year, with
operating margins improved through firm cost management. In Continental Europe,
Reed Business Information saw underlying revenues down 5%. Continued focus on
market share gains and improving yields mitigated to an extent the significant
decline in advertising markets. Economic conditions in The Netherlands remain
very weak, with only the healthcare and regulatory titles showing growth.
Significant cost actions taken throughout the year resulted in adjusted
operating profits 5% higher despite the revenue decline.

At Reed Exhibitions, revenues and adjusted operating profits were lower by 3%
and 9% respectively at constant exchange rates. Underlying revenues, excluding
acquisitions and disposals, were 6% lower, or 3% lower before the effect of the
net cycling out of non-annual shows. Growth in Asia-Pacific and the majority of
North American shows was offset by a weakness in US manufacturing sector and in
Europe particularly in the international shows. Underlying operating profits
were 14% lower, or 3% lower before the cycling out of non-annual shows. Given
the weak economic conditions in most markets and the impact on business travel
of the Iraq war and the SARS outbreak, this is a very resilient performance and
reflects the quality of the exhibitions business and very focused management.

Reed Business is not yet budgeting for any real upturn in its markets and, taken
with increased investment in online services, is not anticipating growth this
year. If, however, an economic recovery really does take hold and becomes more
broadly based, then Reed Business should recover quickly, most immediately in
its advertising revenues. Given the dramatic improvements made in operational
efficiency over the last three years, the flow through to increased
profitability will be strong.



FINANCIAL REVIEW 

REED ELSEVIER COMBINED BUSINESSES

Profit and loss account

The reported profit before tax for the Reed Elsevier combined businesses, after
the amortisation of goodwill and intangible assets and exceptional items, was
£519m/€752m, which compares with a reported profit of £289m/€460m in 2002. The
increase principally reflects higher underlying operating profits, lower
goodwill and intangible asset amortisation and a £65m/€108m reduction in
exceptional charges, as well as a reduced net interest expense. The reported
attributable profit of £334m/€484m increased against a reported attributable
profit of £181m/€288m in 2002, reflecting the improved operating performance and
the lower interest costs.

The year on year decline of the US dollar since 2002 has had adverse translation
effects on the results expressed in sterling and, more particularly, in euros.
The strengthening of the euro relative to sterling has compounded this adverse
translation effect on the results expressed in euros, whilst mitigating the
impact on the results expressed in sterling. This translation effect does not
however have any impact on the underlying performance of the businesses.

Turnover decreased by 2% expressed in sterling to £4,925m, and by 11% expressed
in euros to €7,141m. At constant exchange rates, turnover was 1% higher, or flat
excluding acquisitions and disposals.

Adjusted operating profits, excluding the amortisation of goodwill and
intangible assets and exceptional items, were up 4% expressed in sterling at
£1,178m, whilst down 5% expressed in euros at €1,708m. At constant exchange
rates, adjusted operating profits were up 6% , or 5% excluding acquisitions and
disposals. Adjusted operating margins improved by 1.3 percentage points to 23.9%
reflecting the continued tight management of costs.

The amortisation charge for intangible assets and goodwill, including in joint
ventures, amounted to £445m/€645m, down £82m/€193m on the prior year as a result
of translation effects and some past acquisitions becoming fully amortised.

Exceptional items showed a pre-tax charge of £46m/€68m, comprising £49m/€72m of
Harcourt and other acquisition integration and related costs, £23m/€33m in
respect of restructuring actions taken in response to the effect of the
protracted global economic slowdown, less a £26m/€37m net gain on disposal of
businesses and fixed asset investments. After a tax credit of £84m/€122m
principally arising on the exceptional costs and in respect of prior year
disposals, exceptional items showed a net post-tax gain of £38m/€54m. This
compares with a net post-tax exceptional gain of £11m/€18m in 2002.

Net interest expense, at £168m/€243m, was £38m/€84m lower than in the prior
year, reflecting the benefit of the 2002 free cash flow, lower interest rates
and currency translation effects. Net interest cover on an adjusted basis was
7.0 times.

Adjusted profits before tax, before the amortisation of goodwill and intangible
assets and exceptional items, at £1,010m/€1,465m, were up 9% expressed in
sterling, and down 1% expressed in euros. At constant exchange rates, adjusted
profits before tax were up 10%.

The effective tax rate on adjusted earnings was little changed at 26%. The
adjusted profit attributable to shareholders of £744m/€1,079m was up 9%
expressed in sterling, and down 1% expressed in euros. At constant exchange
rates, the adjusted profit attributable to shareholders was up 10%.

Cash flows and debt

Adjusted operating cash flow, before exceptional items, was £1,028m/€1,491m
representing an 87% conversion rate of adjusted operating profits into cash.
This compares with a conversion rate in 2002 of 89%. Capital expenditure in the
year amounted to £168m/€244m and depreciation was £134m/€194m, both similar to
the prior year.

Free cash flow - after interest and taxation but before acquisition spend,
exceptional receipts and payments and dividends - was £669m/€970m, compared to
£651m/€1,035m in 2002. After dividends, free cash flow was £377m/€547m compared
to £378m/€601m in 2002. Net exceptional cash inflows of £34m/€50m include £96m/
€140m proceeds from disposals of businesses and fixed asset investments and £36m
/€52m of reduced tax payments, less exceptional acquisition related and
restructuring payments of £98m/€142m.

In 2003, acquisitions were made for a total consideration of £226m/€328m,
including £3m/€5m deferred to future years, and after taking account of net cash
acquired of £9m/€13m. An amount of £229m/€332m was capitalised as goodwill and
intangible assets. Deferred consideration paid in respect of prior year
acquisitions and payment of change of control and other non-operating
liabilities assumed on the acquisition of Harcourt totalled £35m/€50m. The 2003
acquisitions contributed £16m/€25m to adjusted operating profit in the year and
added £15m/€22m to adjusted operating cash flow.

Net borrowings at 31 December 2003 were £2,372m/€3,368m, a decrease of £360m in
sterling and €812m in euros since 31 December 2002, reflecting the free cash
flow less acquisition spend, and favourable exchange translation effects from
the weaker US dollar.

Gross borrowings at 31 December 2003 amounted to £3,010m/€4,274m, denominated
mostly in US dollars, and were partly offset by cash balances totalling £638m/
€906m invested in short term deposits and marketable securities. After taking
account of interest rate derivatives, a total of 65% of Reed Elsevier's gross
borrowings were at fixed rates, including £1,270m/€1,797m of floating rate debt
fixed through the use of interest rate derivatives, and had a weighted average
interest coupon of 6.3% and an average remaining life of 5.8 years.

PARENT COMPANIES

Profit and loss account

Adjusted earnings per share, measured before the effect of amortisation of
goodwill and intangible assets and exceptional items, for Reed Elsevier PLC were
31.2p, up 9% on the previous year, and for Reed Elsevier NV were €0.69,
unchanged from 2002. The difference in percentage change is entirely
attributable to the impact of currency movements on the translation of reported
results. At constant rates of exchange, the adjusted earnings per share of both
companies would have shown an increase of 10% over the previous year.

After their share of the charge in respect of goodwill and intangible asset
amortisation and of the exceptional items, the reported earnings per share of
Reed Elsevier PLC after tax credit equalisation and Reed Elsevier NV were 13.4p
and €0.31 respectively, compared to 7.0p and €0.18 in 2002.

Dividends

Dividends to Reed Elsevier PLC and Reed Elsevier NV shareholders are equalised
at the gross level, including the benefit of the UK attributable tax credit of
10% received by certain Reed Elsevier PLC shareholders. The exchange rate used
for each dividend calculation - as defined in the Reed Elsevier merger agreement
- is the spot euro/sterling exchange rate, averaged over a period of five
business days commencing with the tenth business day before the announcement of
the proposed dividend.

The Board of Reed Elsevier PLC has proposed a final dividend of 8.7p, giving a
total dividend of 12.0p for the year, up 7% on 2002. The Boards of Reed Elsevier
NV, in accordance with the dividend equalisation arrangements, have proposed a
final dividend of €0.22. This results in a total dividend of €0.30 for the year,
the same as in 2002. The difference in dividend growth rates reflects the impact
of the significant appreciation of the euro against sterling since the prior
year dividend declaration dates.

Dividend cover for Reed Elsevier PLC, based on adjusted earnings before the
amortisation of goodwill and intangible assets and exceptional items and related
tax effects, was 2.6 times, and for Reed Elsevier NV was 2.3 times. Measured for
the combined businesses on a similar basis, dividend cover was 2.4 times,
unchanged from 2002.




A presentation on the results will be webcast live on the reedelsevier.com
website at 09.30 am (London)/10.30 am (Amsterdam) today.


FORWARD LOOKING STATEMENTS

This Preliminary Statement contains forward looking statements within the
meaning of Section 27A of the Securities Act 1933, as amended, and Section 21E
of the 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 internet communications; and the
impact of technological change.





COMBINED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2003


                                      Note     2003     2002     2003     2002
                                                 £m       £m       €m       €m
Turnover                                      
Including share of turnover of joint          5,006    5,094    7,259    8,099
ventures
Less: share of turnover of joint                (81)     (74)    (118)    (117)
ventures
                                         3    4,925    5,020    7,141    7,982
Continuing operations before                  4,845    5,020    7,025    7,982
acquisitions
Acquisitions                                     80        -      116        -
Cost of sales                                (1,764)  (1,794)  (2,558)  (2,852)
Gross profit                                  3,161    3,226    4,583    5,130
Operating expenses                           (2,516)  (2,736)  (3,648)  (4,351)
Before amortisation and exceptional          (2,002)  (2,113)  (2,902)  (3,361)
items
Amortisation of goodwill and                   (442)    (524)    (641)    (833)
intangible assets
Exceptional items                        4      (72)     (99)    (105)    (157)
Operating profit (before joint                  645      490      935      779
ventures)
Continuing operations before                    659      490      955      779
acquisitions
Acquisitions                                    (14)       -      (20)       -
Share of operating profit of joint               16       17       23       27
ventures
Operating profit including joint                661      507      958      806
ventures
Non operating exceptional items          
Net profit/(loss) on disposal of         4       26      (12)      37      (19)
businesses and fixed asset
investments
Profit on ordinary activities before            687      495      995      787
interest
Net interest expense                           (168)    (206)    (243)    (327)
Profit on ordinary activities before            519      289      752      460
taxation
Tax on profit on ordinary                      (183)    (107)    (265)    (171)
activities
Profit on ordinary activities after             336      182      487      289
taxation
Minority interests                               (2)      (1)      (3)      (1)
Profit attributable to parent                   334      181      484      288
companies' shareholders
Equity dividends paid and proposed             (304)    (282)    (441)    (448)
Retained profit/(loss) taken to                  30     (101)      43     (160)
combined reserves

ADJUSTED FIGURES
                                          Note    2003    2002    2003    2002
                                                    £m      £m      €m      €m
Adjusted operating profit                    5   1,178   1,133   1,708   1,801
Adjusted profit before tax                   5   1,010     927   1,465   1,474
Adjusted profit attributable to parent       5     744     682   1,079   1,084
companies' shareholders

Adjusted figures, which exclude the amortisation of goodwill and intangible
assets, exceptional items and related tax effects, are presented as additional
performance measures.





COMBINED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2003


                                          Note    2003    2002    2003    2002
                                                    £m      £m      €m      €m
Net cash inflow from operating activities    6   1,163   1,154   1,686   1,835
before exceptional items
Payments relating to exceptional items       6     (98)   (119)   (142)   (190)
charged to operating profit
Net cash inflow from operating                   1,065   1,035   1,544   1,645
activities

Dividends received from joint ventures              14      13      20      21

Interest and similar income received                17      25      25      40
Interest and similar charges paid                 (194)   (230)   (282)   (366)
Returns on investments and servicing of           (177)   (205)   (257)   (326)
finance

Taxation before exceptional items                 (182)   (154)   (264)   (245)
Exceptional items                                   36      20      52      32
Taxation                                          (146)   (134)   (212)   (213)

Purchase of tangible fixed assets                 (155)   (163)   (225)   (259)
Purchase of fixed asset investments                 (7)     (5)    (10)     (8)
Proceeds from sale of tangible fixed                 6       6      10       9
assets
Exceptional proceeds from disposal of               19     118      28     188
fixed asset investments
Capital expenditure and financial                 (137)    (44)   (197)    (70)
investment

Acquisitions                                      (258)   (184)   (374)   (293)
Exceptional net proceeds/(costs) from               77     (12)    112     (19)
disposal of businesses
Acquisitions and disposals                        (181)   (196)   (262)   (312)

Equity dividends paid to shareholders of          (292)   (273)   (423)   (434)
the parent companies

Cash inflow before changes in short term           146     196     213     311
investments and financing
Increase in short term investments                (165)    (55)   (240)    (88)
Financing                                          (86)    (69)   (125)   (109)
(Decrease)/increase in cash                       (105)     72    (152)    114

Short term investments include deposits of under one year if the maturity or
notice period exceeds 24 hours, commercial paper investments and interest
bearing securities that can be realised without significant loss at short
notice.

ADJUSTED FIGURES
                                          Note    2003    2002    2003    2002
                                                    £m      £m      €m      €m
Adjusted operating cash flow                 5   1,028   1,010   1,491   1,606
Adjusted operating cash flow conversion            87%     89%     87%     89%

Reed Elsevier businesses focus on adjusted operating cash flow as a key cash
flow measure. Adjusted operating cash flow is measured after dividends from
joint ventures, tangible fixed asset spend and proceeds from the sale of
tangible fixed assets but before exceptional payments and proceeds. Adjusted
operating cash flow conversion expresses adjusted operating cash flow as a
percentage of adjusted operating profit.



COMBINED BALANCE SHEET

AS AT 31 DECEMBER 2003


                                               2003     2002     2003     2002
                                                 £m       £m       €m       €m
Fixed assets                                  
Goodwill and intangible assets                5,153    5,814    7,317    8,895
Tangible assets                                 482      484      684      741
Investments                                     101      121      144      185
                                              5,736    6,419    8,145    9,821
Current assets                                  
Inventories and pre-publication costs           526      500      747      765
Debtors - amounts falling due within one      1,044      923    1,482    1,412
year
Debtors - amounts falling due after more        249      321      354      491
than one year
Cash and short term investments                 638      570      906      872
                                              2,457    2,314    3,489    3,540
Creditors: amounts falling due within one    (3,474)  (3,629)  (4,933)  (5,552)
year
Net current liabilities                      (1,017)  (1,315)  (1,444)  (2,012)

Total assets less current liabilities         4,719    5,104    6,701    7,809
Creditors: amounts falling due after more    (2,105)  (2,270)  (2,989)  (3,473)
than one year
Provisions for liabilities and charges         (168)    (187)    (239)    (286)
Minority interests                              (12)      (7)     (17)     (11)
Net assets                                    2,434    2,640    3,456    4,039

Capital and reserves                            
Combined share capitals                         190      187      270      286
Combined share premium accounts               1,784    1,708    2,533    2,613
Combined shares held in treasury                (37)     (19)     (53)     (29)
Combined reserves                               497      764      706    1,169
Combined shareholders' funds                  2,434    2,640    3,456    4,039

Net borrowings                                2,372    2,732    3,368    4,180


COMBINED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

FOR THE YEAR ENDED 31 DECEMBER 2003
                                                     2003   2002   2003   2002
                                                       £m     £m     €m     €m
Profit attributable to parent companies'              334    181    484    288
shareholders
Exchange translation differences                     (232)  (187)  (620)  (604)
Total recognised gains and losses for the year        102     (6)  (136)  (316)

COMBINED SHAREHOLDERS' FUNDS RECONCILIATION
FOR THE YEAR ENDED 31 DECEMBER 2003
                                                  2003    2002    2003    2002
                                                    £m      £m      €m      €m
Profit attributable to parent companies'           334     181     484     288
shareholders
Equity dividends paid and proposed                (304)   (282)   (441)   (448)
Issue of ordinary shares, net of expenses           14      30      20      48
Increase in shares held in treasury                (18)     (1)    (26)     (2)
Exchange translation differences                  (232)   (187)   (620)   (604)
Net decrease in combined shareholders' funds      (206)   (259)   (583)   (718)
Combined shareholders' funds at 1 January        2,640   2,899   4,039   4,757
As originally reported                           2,659   2,917   4,068   4,784
Prior year adjustment in relation to               (19)    (18)    (29)    (27)
presentation of shares held in treasury
Combined shareholders' funds at 31 December      2,434   2,640   3,456   4,039

COMBINED FINANCIAL INFORMATION

NOTES TO THE COMBINED FINANCIAL INFORMATION


1 Basis of preparation

The Reed Elsevier combined financial information encompasses the businesses of
Reed Elsevier Group plc and Elsevier Reed Finance BV and their respective
subsidiaries, joint ventures and associates, together with the parent companies,
Reed Elsevier PLC and Reed Elsevier NV. The combined financial information has
been abridged from the audited combined financial statements for the year ended
31 December 2003. Financial information is presented in both sterling and euros.

The combined financial information has been prepared on the basis of accounting
policies in accordance with applicable UK Generally Accepted Accounting
Principles (GAAP). Following changes to Dutch GAAP effective for the 2003
financial year in respect of the presentation of dividends and pension
accounting, UK and Dutch GAAP have diverged such that the Reed Elsevier
accounting policies, which previously have been in accordance with both UK and
Dutch GAAP, no longer accord with Dutch GAAP. Under Article 362.1 of Book 2
Title 9 of the Dutch Civil Code, UK GAAP may be adopted by Dutch companies with
international operations for the preparation of financial statements and,
accordingly, UK GAAP has been so adopted ensuring consistency with the prior
year of the accounting policies applied in the combined financial information.

2 Exchange rates

In preparing the combined financial information, the following exchange rates
have been applied:

                                              Profit & loss     Balance sheet
                                             2003        2002    2003    2002
Euro to sterling                             1.45        1.59    1.42    1.53
US dollars to sterling                       1.63        1.50    1.78    1.60
US dollars to euro                           1.12        0.94    1.25    1.05

3 Segment analysis

Turnover
                               2003          2002          2003          2002
                                 £m            £m            €m            €m
Business segment              
Science & Medical             1,381         1,295         2,002         2,059
Legal                         1,318         1,349         1,911         2,145
Education                       898           993         1,302         1,579
Business                      1,328         1,383         1,926         2,199
Total                         4,925         5,020         7,141         7,982

                               2003          2002          2003          2002
                                 £m            £m            €m            €m
Geographical origin           
North America                 2,822         3,158         4,092         5,021
United Kingdom                  823           782         1,193         1,243
The Netherlands                 502           419           728           666
Rest of Europe                  541           456           784           725
Rest of world                   237           205           344           327
Total                         4,925         5,020         7,141         7,982

3          Segment analysis (continued)

Turnover (continued)


                               2003          2002          2003          2002
                                 £m            £m            €m            €m
Geographical market           
North America                 2,921         3,152         4,235         5,012
United Kingdom                  551           545           799           867
The Netherlands                 207           207           300           329
Rest of Europe                  695           611         1,008           971
Rest of world                   551           505           799           803
Total                         4,925         5,020         7,141         7,982

Operating profit (including amortisation and exceptional items)

                                   2003         2002         2003         2002
                                     £m           £m           €m           €m
Business segment                    
Science & Medical                   375          294          544          467
Legal                                95           61          138           97
Education                            91          102          132          162
Business                            100           50          144           80
Total                               661          507          958          806

                                   2003         2002         2003         2002
                                     £m           £m           €m           €m
Geographical origin                 
North America                       225          142          326          226
United Kingdom                      168          129          244          205
The Netherlands                     162          153          235          243
Rest of Europe                       73           55          106           87
Rest of world                        33           28           47           45
Total                               661          507          958          806

Adjusted operating profit (excluding amortisation and exceptional items)

                               2003          2002          2003          2002
                                 £m            £m            €m            €m
Business segment                
Science & Medical               467           429           677           682
Legal                           301           287           437           456
Education                       174           183           252           291
Business                        236           234           342           372
Total                         1,178         1,133         1,708         1,801

                               2003          2002          2003          2002
                                 £m            £m            €m            €m
Geographical origin             
North America                   603           616           874           979
United Kingdom                  210           190           305           302
The Netherlands                 189           169           274           269
Rest of Europe                  136           119           197           189
Rest of world                    40            39            58            62
Total                         1,178         1,133         1,708         1,801



4 Exceptional items
                                2003         2002          2003          2002
                                  £m           £m            €m            €m
Reorganisation costs (i)         (23)         (42)          (33)          (67)
Acquisition related costs (ii)   (49)         (57)          (72)          (90)
Charged to operating profit      (72)         (99)         (105)         (157)
Net profit/(loss) on disposal     26          (12)           37           (19)
of businesses and fixed  
asset investments (iii)
Exceptional charge before tax    (46)        (111)          (68)         (176)
Net tax credit (iv)               84          122           122           194
Total exceptional credit          38           11            54            18

(i)        Reorganisation costs relate to employee severance principally in the
Legal and Business segments.

(ii) Acquisition related costs include employee severance and property
rationalisation costs arising on the integration and rationalisation of Harcourt
and other recent acquisitions.

(iii) The net profit on disposal of businesses and fixed asset investments
relates principally to a profit on the sale of LexisNexis Document Solutions
less losses on other disposals of businesses in the Legal segment and on fixed
asset investments.

(iv) The net tax credit in 2003 and 2002 arises principally in respect of prior
year disposals and tax relief related to restructuring and acquisition
integration costs.

5 Adjusted figures

Adjusted profit and cash flow figures are used by the Reed Elsevier businesses
as additional performance measures. The adjusted figures are stated before the
amortisation of goodwill and intangible assets, exceptional items and related
tax effects, and are derived as follows:

                                                  2003    2002    2003    2002
                                                    £m      £m      €m      €m
Operating profit including joint ventures          661     507     958     806
Adjustments:                                       
Amortisation of goodwill and intangible assets     445     527     645     838
(including joint ventures)
Exceptional items                                   72      99     105     157
Adjusted operating profit                        1,178   1,133   1,708   1,801

Profit before tax                                  519     289     752     460
Adjustments:                                       
Amortisation of goodwill and intangible assets     445     527     645     838
(including joint ventures)
Exceptional items                                   46     111      68     176
Adjusted profit before tax                       1,010     927   1,465   1,474

Profit attributable to parent companies'           334     181     484     288
shareholders
Adjustments:                                       
Amortisation of goodwill and intangible assets     448     512     649     814
(including joint ventures)
Exceptional items                                  (38)    (11)    (54)    (18)
Adjusted profit attributable to parent             744     682   1,079   1,084
companies' shareholders

Net cash inflow from operating activities        1,065   1,035   1,544   1,645
Dividends received from joint ventures              14      13      20      21
Purchase of tangible fixed assets                 (155)   (163)   (225)   (259)
Proceeds from sale of tangible fixed assets          6       6      10       9
Payments in relation to exceptional items           98     119     142     190
charged to operating profit
Adjusted operating cash flow                     1,028   1,010   1,491   1,606




6 Reconciliation of operating profit to net cash inflow from operating
activities
                                                  2003    2002    2003    2002
                                                    £m      £m      €m      €m
Operating profit (before joint ventures)           645     490     935     779
Exceptional charges to operating profit             72      99     105     157
Operating profit before exceptional items          717     589   1,040     936

Amortisation of goodwill and intangible assets     442     524     641     833
Depreciation                                       134     136     194     216
Total non cash items                               576     660     835   1,049

Increase in inventories and pre-publication        (51)    (51)    (75)    (81)
costs
(Increase)/decrease in debtors                    (112)    (12)   (162)    (19)
Decrease in creditors                               33     (32)     48     (50)
Movement in working capital                       (130)    (95)   (189)   (150)

Net cash inflow from operating activities before 1,163   1,154   1,686   1,835
exceptional items
Payments relating to exceptional items charged     (98)   (119)   (142)   (190)
to operating profit
Net cash inflow from operating activities        1,065   1,035   1,544   1,645

7 Reconciliation of net borrowings
                                               2003     2002     2003     2002
                                                 £m       £m       €m       €m
Net borrowings at 1 January                  (2,732)  (3,229)  (4,180)  (5,296)

(Decrease)/increase in cash                    (105)      72     (152)     114
Increase in short term investments              165       55      240       88
Decrease in borrowings                           82       95      119      151
Change in net borrowings resulting from cash    142      222      207      353
flows
Borrowings in acquired business                  (9)       -      (13)       -
Inception of finance leases                     (13)     (16)     (19)     (25)
Exchange translation differences                240      291      637      788
Net borrowings at 31 December                (2,372)  (2,732)  (3,368)  (4,180)

8. Pension schemes

Pension costs are accounted for in accordance with the UK accounting standard,
SSAP24. A new UK financial reporting standard, FRS17: Retirement Benefits
requires additional information to be disclosed based on methodologies set out
in the standard which are different from those used under SSAP24 and by the
scheme actuaries in determining funding arrangements.

Reed Elsevier operates a number of pension schemes around the world. The major
schemes are of the defined benefit type with assets held in separate trustee
administered funds. The two largest schemes, which cover the majority of
employees, are in the UK and US. The main UK scheme was subject to a triennial
valuation by Watson Wyatt Partners as at 5 April 2003. The main US scheme is
valued annually and was subject to a valuation by Towers Perrin as at 1 January
2003. The actuarial values placed on scheme assets under SSAP24 as at their last
valuation date were sufficient to cover 113% and 104% of the benefits that had
accrued to members of the main UK and US schemes, respectively.

The net pension charge was £59m/€86m (2002: £59m/€94m). Pension contributions
made in the year amounted to £49m/€72m (2002: £47m/€75m). The net SSAP24 charge
on the main UK scheme comprises a regular cost of £23m/€33m (2002: £27m/€43m),
less amortisation of the net actuarial surplus of £13m/€19m (2002: £24m/€38m).
Based on the advice of scheme actuaries, no employer contributions have been
made to the main UK scheme in 2003 and, with effect from 1 January 2004,
employer contributions will be made at a rate of 5% of pensionable salaries
until the next triennial valuation in 2006.

At 31 December 2003, the aggregate net deficit in respect of the defined benefit
schemes under FRS17 comprised £189m/€268m (2002: £66m/€101m) in respect of
funded schemes and liabilities of £62m/€88m (2002: £71m/€109m) in respect of
unfunded schemes, of which £52m/€74m (2002: £52m/€80m) is provided for within
creditors under SSAP24.



REED ELSEVIER PLC

SUMMARY FINANCIAL INFORMATION

Basis of preparation

The Reed Elsevier PLC share of the Reed Elsevier combined results has been
calculated on the basis of the 52.9% economic interest of the Reed Elsevier PLC
shareholders in the Reed Elsevier combined businesses, after taking account of
results arising in Reed Elsevier PLC and its subsidiary undertakings. Reed
Elsevier PLC's 52.9% economic interest in the net assets of the combined
businesses is shown in the balance sheet as interests in joint ventures, net of
the other assets and liabilities reported within Reed Elsevier PLC and its
subsidiary undertakings. Adjusted figures, which exclude the amortisation of
goodwill and intangible assets, exceptional items and related tax effects, are
presented as additional performance measures.

Summary consolidated profit and loss account

FOR THE YEAR ENDED 31 DECEMBER 2003                               2003    2002
                                                                    £m      £m
Share of combined turnover                                       2,605   2,656
Share of combined adjusted profit before tax                       534     490
Share of amortisation                                             (235)   (279)
Share of exceptional items before tax                              (24)    (58)
Reed Elsevier NV's share of UK tax credit on distributed            (8)     (7)
earnings
Profit on ordinary activities before taxation                      267     146
Tax on profit on ordinary activities                               (98)    (57)
Profit attributable to ordinary shareholders                       169      89
Equity dividends paid and proposed                                (152)   (143)
Retained profit/(loss) taken to reserves                            17     (54)
Basic earnings per share                                         13.4p    7.0p
Diluted earnings per share                                       13.4p    7.0p
Adjusted earnings per share                                      31.2p   28.5p

Adjusted earnings per share is based upon the Reed Elsevier PLC shareholders'
52.9% share of the adjusted profit attributable of the Reed Elsevier combined
businesses. Tax on profit on ordinary activities includes £97m (2002: £56m) in
respect of joint ventures.

Dividends

The directors of Reed Elsevier PLC have proposed a final dividend of 8.7p per
ordinary share (2002: 8.0p) which, when added to the interim dividend already
paid of 3.3p per ordinary share (2002: 3.2p), amounts to a total 2003 dividend
of 12.0p per ordinary share (2002: 11.2p), an increase of 7%. The Reed Elsevier
PLC final dividend will be paid on 21 May 2004, with ex-dividend and record
dates of 28 April 2004 and 30 April 2004 respectively. Dividends paid to Reed
Elsevier PLC and Reed Elsevier NV shareholders are equalised at the gross level
inclusive of the UK tax credit received by certain Reed Elsevier PLC
shareholders. The equalisation adjustment equalises the benefit of the tax
credit between the two sets of shareholders in accordance with the equalisation
agreement.

Summary consolidated cash flow statement

FOR THE YEAR ENDED 31 DECEMBER 2003                                2003   2002
                                                                     £m     £m
Net cash outflow from operating activities                           (1)     -
Dividends received from Reed Elsevier Group plc                     144    135
Equity dividends paid                                              (144)  (135)
Financing (including issue of ordinary shares £12m (2002: £16m))      1     (2)
Other cash flows                                                      -      2
Change in net cash                                                    -      -

Summary consolidated balance sheet

AS AT 31 DECEMBER 2003                                          2003      2002
                                                                  £m        £m
Fixed asset investment in joint ventures                         859       973
Net current assets                                               465       460
Creditors: amounts falling due after more than one year          (36)      (36)
Net assets                                                     1,288     1,397

Net current assets includes amounts owed by Reed Elsevier Group plc group of
£584m (2002: £573m).

The financial information set out above has been abridged from the company's
statutory accounts for the year ended 31 December 2003, which have been audited
and will be filed with the UK Registrar of Companies following the Annual
General Meeting. The audit report was unqualified and did not contain statements
under S237(2) or (3) Companies Act 1985.



REED ELSEVIER NV

SUMMARY FINANCIAL INFORMATION

Basis of preparation

The Reed Elsevier NV group results for the year ended 31 December 2003 reflect
the Reed Elsevier NV shareholders' 50% economic interest in the Reed Elsevier
combined businesses, accounted for on a gross equity basis. Adjusted figures,
which exclude the amortisation of goodwill and intangible assets, exceptional
items and related tax effects, are presented as additional performance measures.

The summary financial statements have been prepared in accordance with UK
Generally Accepted Accounting Principles (GAAP). Following changes to Dutch GAAP
effective for the 2003 financial year in respect of the presentation of
dividends and pensions accounting, UK and Dutch GAAP have diverged. As permitted
by Article 362.1 of Book 2, Title 9 of the Dutch Civil Code, the summary
financial information has, therefore, been prepared using accounting policies
that are in accordance with UK GAAP ensuring consistency with the prior year of
the accounting policies applied. The adoption of UK GAAP has no effect on group
shareholders' equity previously reported under Dutch GAAP, other than in respect
of shares held in treasury which previously were included in assets and are now
presented as a deduction within group shareholders' funds.

Summary group profit and loss account

FOR THE YEAR ENDED 31 DECEMBER 2003                            2003       2002
                                                                 €m         €m
Share of combined turnover                                    3,571      3,991
Share of combined adjusted profit before tax                    733        737
Share of amortisation                                          (323)      (419)
Share of exceptional items before tax                           (34)       (88)
Taxation                                                       (134)       (86)
Profit attributable to shareholders                             242        144
Equity dividends paid and proposed                             (221)      (221)
Retained profit/(loss) taken to reserves                         21        (77)
Basic earnings per share                                      €0.31      €0.18
Diluted earnings per share                                    €0.31      €0.18
Adjusted earnings per share                                   €0.69      €0.69

Adjusted earnings per share is based upon the Reed Elsevier NV shareholders' 50%
share of the adjusted profit attributable of the Reed Elsevier combined
businesses.

Dividends

The directors of Reed Elsevier NV have proposed a final dividend of €0.22 per
ordinary share (2002: €0.21) which, when added to the interim dividend already
paid of €0.08 per ordinary share (2002: €0.09), amounts to a total 2003 dividend
of €0.30 per ordinary share (2002: €0.30). The Reed Elsevier NV final dividend
will be paid on 21 May 2004, with ex-dividend and record dates of 3 May 2004 and
30 April 2004 respectively. Dividends paid to Reed Elsevier PLC and Reed
Elsevier NV shareholders are equalised at the gross level inclusive of the UK
tax credit received by certain Reed Elsevier PLC shareholders.

Summary group cash flow statement

FOR THE YEAR ENDED 31 DECEMBER 2003                                2003   2002
                                                                     €m     €m
Net cash outflow from operating activities                           (2)     -
Dividends received from Reed Elsevier Group plc                     200    150
Equity dividends paid                                              (215)  (222)
Decrease in short term investments                                    8     10
Financing (including issue of ordinary shares €3m (2002: €22m))       4     59
Other cash flows                                                      5      3
Change in net cash                                                    -      -



Summary group balance sheet

AS AT 31 DECEMBER 2003                                          2003      2002
                                                                  €m        €m
Fixed asset investment in joint ventures                       1,904     2,180
Net current liabilities                                         (111)      (96)
Creditors: amounts falling due after more than one year          (65)      (65)
Net assets                                                     1,728     2,019

Net current liabilities include short term investments of €7m (2002: €15m).

The financial information in respect of the year ended 31 December 2003 has been
extracted from the statutory accounts of Reed Elsevier NV which have been
audited. These include parent company financial statements in which Reed
Elsevier NV's investments in the Reed Elsevier combined businesses are presented
on an historical cost basis.


ADDITIONAL INFORMATION FOR US INVESTORS

REED ELSEVIER SUMMARY COMBINED FINANCIAL INFORMATION UNDER US GAAP

SUMMARY OF PRINCIPAL DIFFERENCES TO US GAAP

Basis of preparation

The combined financial statements for Reed Elsevier are prepared in accordance
with UK GAAP, which differs in certain significant respects to US GAAP. The
principal differences relate to the US GAAP requirements in respect of the
capitalisation and amortisation of goodwill and other intangible assets,
derivative financial instruments, pensions and deferred taxation. A more
complete explanation of the accounting policies used by the combined businesses
and the differences to US GAAP will be set out in the 2003 Reed Elsevier Annual
Reports and Financial Statements and the Reed Elsevier Annual Report on Form
20-F.

Net income

FOR THE YEAR ENDED 31 DECEMBER 2003           2003    2002     2003     2002
                                               £m       £m       €m       €m
Net income as reported                        334      181      484      288
US GAAP adjustments:                          
Goodwill and intangible assets                121      223      176      355
Deferred taxation                             (40)     (50)     (58)     (80)
Pensions                                       75       56      109       89
Stock based compensation                        7        -       10        -
Derivative instruments                         41      (45)      59      (72)
Net income under US GAAP                      538      365      780      580

Combined shareholders' funds

AS AT 31 DECEMBER 2003                         2003    2002     2003     2002
                                                 £m      £m       €m       €m
Combined shareholders' funds as reported      2,434   2,640    3,456    4,039
US GAAP adjustments:                          
Goodwill and intangible assets                1,354   1,302    1,923    1,992
Deferred taxation                              (828)   (838)  (1,176)  (1,283)
Pensions                                        185     151      263      231
Derivative instruments                          (69)   (117)     (98)    (179)
Available for sale investments                    3       3        4        5
Equity dividends                                226     205      321      314
Other items                                      (2)     (2)      (3)      (3)
Combined shareholders' funds under US GAAP    3,303   3,344    4,690    5,116

Both Reed Elsevier PLC ('RUK', CUSIP No. 758205108) and Reed Elsevier NV ('ENL',
CUSIP No. 758204101) have American Depositary Shares (ADSs) listed on the New
York Stock Exchange (Depositary: Bank of New York NA). An ADS in Reed Elsevier
NV represents two ordinary shares in Reed Elsevier NV, while a Reed Elsevier PLC
ADS represents four ordinary shares in Reed Elsevier PLC. Final dividends on
Reed Elsevier PLC and Reed Elsevier NV ADSs will be paid on 28 May 2004.




NOTES FOR EDITORS


Reed Elsevier is a world leading publisher and information provider and its
principal operations are in North America and Europe. Its two parent companies -
Reed Elsevier PLC and Reed Elsevier NV - are listed on the London and Amsterdam
Stock Exchanges respectively, and also on the New York Stock Exchange. The
returns to their respective shareholders are equalised in terms of dividend and
capital rights. 'Reed Elsevier' and 'the combined businesses' comprise Reed
Elsevier PLC and Reed Elsevier NV plus their two jointly owned companies, Reed
Elsevier Group plc and Elsevier Reed Finance BV, and their respective
subsidiaries and joint ventures.

The Reed Elsevier Annual Review 2003 and Reed Elsevier PLC 2003 Annual Report
and Financial Statements are being posted to Reed Elsevier PLC shareholders on
15 March 2004. Copies of the Reed Elsevier Annual Review 2003 and Reed Elsevier
NV 2003 Annual Report and Financial Statements will be available to shareholders
in Reed Elsevier NV on request. Copies of the Preliminary Statement are
available to the public from the respective companies:

Reed Elsevier PLC                 Reed Elsevier NV
1-3 Strand                        Sara Burgerhartstraat 25
London WC2N 5JR                   1055 KV, Amsterdam
United Kingdom                    The Netherlands



Copies of all recent announcements, including this Preliminary Statement, and
additional information on Reed Elsevier can be found on the Reed Elsevier Home 
Page on the World Wide Web: 

http://www.reedelsevier.com



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