Interim Results - Part 1

REED INTERNATIONAL PLC
ELSEVIER NV
5 August 1999


PART 1

        ISSUED ON BEHALF OF REED INTERNATIONAL P.L.C AND ELSEVIER NV

Highlights of the Interim Results
For the Six Months ended 30 June 1999 (in Pounds Sterling)

The first half of 1999 has been adversely affected by the less favourable
market and competitive conditions that were seen in the second half of 1998
and investments in the business.

Turnover up 8% (6% at constant currencies)
Adjusted operating profit down 3% (down 4% at constant currencies)
Adjusted profit before tax of £371 million down 10% (down 11% at constant
currencies)

Parent Companies

Reed International P.L.C.                      
Adjusted earnings per share down 10% at 12.8p 
- down 11% at constant currencies 
Interim dividend unchanged at 4.6p 

Elsevier NV
Adjusted earnings per share down 12% to Dfl 0.64
- down 11% at constant currencies
Interim dividend down 10% to Dfl 0.26 reflecting reduction in rate of UK tax
credit gross up from 20% to 10% earlier in 1999

Morris Tabaksblat, Chairman of Reed Elsevier, commented:
'Reed Elsevier is a business with an excellent heritage and undoubted
potential. But, it is not performing as strongly as it should do at a time
when it needs to respond quickly to challenges and opportunities in its
markets. With focus and unified leadership, we intend to address these issues
and restore the business to growth.'

Enquiries

London                    Amsterdam                    New York
Mark Armour               Pieter Jobsis                Paul Richardson
[phone]          [phone]              [phone]

Financial highlights
For the six months ended 30 June 1999

Reed Elsevier combined businesses

Year ended                                Six months ended           % change
31 December                               30 June  30 June         at constant
1998   £ million                           1999     1998  % change  currencies
       Continuing operations
3,163     Turnover                         1,696    1,569     +8%       +6%
  813     Adjusted operating profit          408      419     -3%       -4%
  808     Adjusted operating cash flow       244      301    -19%      -20%
25.7%     Operating margin                 24.1%    26.7%  -2.6pts
  99%     Operating cash flow conversion     60%      72%
       Total operations
  773     Adjusted profit before tax         371      413    -10%      -11%
  571     Adjusted profit attributable       276      307    -10%      -11%
       Financing
  962     Net borrowings                   1,247      123
  20x     Interest cover                     11x      84x

The Reed Elsevier combined financial statements encompass the businesses of
Reed Elsevier plc and Elsevier Reed Finance BV, together with their two parent
companies, Reed International P.L.C. and Elsevier NV ('the Reed Elsevier
combined businesses'). Continuing operations exclude the consumer publishing
businesses sold in 1998.
The financial highlights presented refer to 'Adjusted' profit and cash flow
figures. These figures are stated before exceptional items and the
amortisation of goodwill and intangible assets and related tax effects.
The percentage change at constant currencies refers to the movements at
constant exchange rates, using 1998 full year average rates.


Parent companies

Reed International P.L.C.                                      Elsevier NV
Six months ended                                        Six months ended
30 June  30 June                                        30 June 30 June
 1999     1998                                           1999    1998
   £       £       %                                      Dfl     Dfl      %
million million change                                  million million change
                        Adjusted profit attributable
  146     162    -10%   -at reported rates                453     516    -12%
  144     162    -11%   -at constant currencies           448     502    -11%
                        Average exchange rate Dfl:£      3.28    3.36     -2%

                   %                                                       %
 pence  pence   change                                    Dfl     Dfl   change
                        Adjusted earnings per share
  12.8   14.2    -10%   -at reported rates               0.64    0.73    -12%
  12.6   14.2    -11%   -at constant currencies          0.63    0.71    -11%
  5.11   5.75    -11%   Dividend per share (gross)       0.26    0.29    -10%
  4.60   4.60      -    Dividend per share (net)

The results of Elsevier NV reflect its 50% share of the Reed Elsevier combined
businesses. The results of Reed International P.L.C. reflect its 52.9%
economic interest, through a 50% share of the Reed Elsevier combined
businesses and a 5.8% interest in Elsevier NV.

Chairman's statement

Reed Elsevier is a business with an excellent heritage and undoubted
potential. But, it is not performing as strongly as it should do at a time
when it needs to respond quickly to challenges and opportunities in its
markets. With focus and unified leadership, we intend to address these issues
and restore the business to growth.

The key issue that we have had to address was the disjointed structure at
Board level which had become a significant impediment to the effective
management of the business. This has been remedied following shareholder
approval of the unitary management structure in April. We now have in place a
talented and experienced non-executive Board, and we were very pleased to
announce two weeks ago the appointment of Crispin Davis as the new Chief
Executive Officer*. He joins us on 1 September and his leadership will give a
fresh impetus to the management and development of the business.

Over the next few months Crispin Davis and the Board will be carrying out a
detailed review of the strategies for each of the businesses and of the group.
From this, we will establish the plan of action to realise the growth
potential of the business. We will make whatever adjustment may be necessary
to the organisation and the resources to achieve it.

We have a good position from which to start this new chapter of Reed
Elsevier's development. We have over £3 billion of sales of highly valued
information in very attractive markets. Our portfolio is of excellent quality,
with brands well regarded by customers and strong market positions. The
migration of information delivery from print formats to electronic is
underway.

Our priority will be to develop our products in tune with our customers'
needs, and our success will be based upon quality products and information
services at appropriate prices. In each of our businesses, we must strike the
right balance between building our services in electronic media and optimising
the performance of our traditional print activities.

The first half has seen some good progress in the business as well as
disappointments. At Elsevier Science, the take up of scientific information
electronically through the ScienceDirect service is going well and the library
market has welcomed a moderation in print journal price increases. At
LEXIS-NEXIS, the priority is to reverse a declining market share position
in US legal information. We are starting to see the benefits of the
acquisition of Matthew Bender and Shepard's particularly through the launch of
new legal research products that combine their editorial and analytical
publishing expertise with the search and delivery systems of LEXIS. There is
much to be done, but the task is in hand. At Cahners, revenue growth has
stalled in difficult markets whilst costs have increased. A rigorous review
has been carried out to realign the cost base and a restructuring plan
announced.

Adjusted pre-tax profits (before exceptional items and amortisation of
goodwill and intangible assets) for the first half of 1999 at £371 million are
11% lower than in the comparative period at constant exchange rates. Adjusted
earnings per share for Reed International are down 10% and for Elsevier down
12% at reported rates.

The first half of 1999 has been adversely affected by the less favourable
market and competitive conditions that we noted in the second half of 1998 and
the flow through of the investments made in the cost base. This expectation
was indicated at the time of the Preliminary Announcement in March. Revenue
growth has, however, been disappointing, particularly at LEXIS-NEXIS and
Cahners, with consequential impact on profit. Revenue development and cost
trends in the business suggest that the second half is unlikely to see growth
in adjusted pre-tax profits over the corresponding prior year period.

The interim dividend for Reed International is unchanged at 4.6p; the
equalised Elsevier interim dividend is Dfl 0.26, a decline of 10%, reflecting
the reduction in the rate of UK tax credit gross up from 20% to 10% earlier in
the year.

Reed Elsevier has been a very successful business and I am sure has a very
successful future ahead of it. There remain issues to be resolved but I
believe we now have the right leadership structure and the financial strength
to tackle them. The goal is growth and, at the time of our results
announcement in March, I expect us to report on our action plan to deliver
this.

Morris Tabaksblat
Chairman

*Crispin Davis is appointed Chief Executive Officer of Reed Elsevier plc and
Reed International P.L.C., and, subject to formal shareholder approval at an
Elsevier NV extraordinary general meeting to be held on 27 August 1999,
Chairman of the Executive Board of Elsevier NV.

Review of operations and financial performance

Review of operations

Year ended                             Six months ended               % change
31 December                            30 June 30 June             at constant
1998    £ million                        1999   1998     % change   currencies
        Turnover
  622   Scientific                        318    305         +4%        +3%
1,154   Professional                      637    532        +20%       +18%
1,387   Business                          741    732         +1%         -
3,163   Continuing operations           1,696  1,569         +8%        +6%
   28   Discontinued operations            -      19
3,191   Total                           1,696  1,588         +7%        +5%

        Adjusted operating profit
  223   Scientific                        120    114         +5%        +4%
  330   Professional                      152    146         +4%        +3%
  260   Business                          136    159        -14%       -15%
  813   Continuing operations             408    419         -3%        -4%
   -    Discontinued operations            -     (1)
  813   Total                             408    418         -2%        -3%

All percentage movements in the following review of operations refer to
constant currency rates using 1998 full year average rates and are stated
before exceptional items and amortisation of goodwill and intangible assets.

SCIENTIFIC
Scientific segment turnover and operating profits increased by 3% and 4%
respectively. Sales growth at Elsevier Science of 4%, which included a 2%
benefit from acquisitions, was adversely affected by the impact on
subscription renewals of currency movements on library budgets, particularly
in Japan and continental Europe. Operating profits excluding acquisitions
increased by 2%. The medical publishing and communications businesses sales
were flat with some weakness in sponsored communications offset by strong
performances in the UK and France.

The first half saw a successful take up of ScienceDirect, the web-based
scientific database. Over 15% of Elsevier Science's journal subscriptions by
value are now for both the print journals and the ScienceDirect service, and
the figure is set to double over the next year. The combination of Elsevier
Science's content with the accessibility and search and linking tools of
ScienceDirect has driven a significant increase in the usage of Elsevier
Science's information by research scientists.

The launch of ScienceDirect and of other innovative web-based products and
information services enables Elsevier Science to add considerably to the value
it provides to the scientific community, and to build much stronger
relationships with research libraries and scientists. Recognising the
significance of the migration from print to electronic delivery, Elsevier
Science has taken a lead in introducing a new pricing approach that moderates
the impact of movements in currencies so as to give more predictable journal
pricing.

In April Elsevier Science added four first class journals to the Life Sciences
portfolio through the acquisition of Cell Press which will be the platform for
additional journal launches in the molecular biology field.

Scientific
                           Six months ended         % change
                           30 June  30 June         at constant
£ million                     1999     1998         currencies
Turnover
Elsevier Science               267      255             +4%
Medical Business                51       50              -
Total                          318      305             +3%
Operating profit               120      114             +4%
Operating margin              37.7%    37.4%          +0.3pts


PROFESSIONAL
Professional segment turnover and operating profits increased by 18% and 3%
respectively. Excluding the effect of acquisitions, principally Matthew Bender
and the remaining 50% of Shepard's, turnover increased by 4% and operating
profits declined by 10%.

LEXIS-NEXIS, excluding acquisitions, saw 1% turnover growth whilst operating
profits were 17% lower. The reduction in operating margin at LEXIS-NEXIS
reflects the lack of revenue growth and continued investment spend. In the US
legal market, online revenues grew by 2% with a strong performance in the
large law firm market partly offset by weaker revenues in other markets. In
the online business information market, revenues fell by 4% reflecting pricing
pressures across the industry. The print/CD-ROM legal publishing businesses
and the Martindale-Hubbell legal directory business performed satisfactorily.
Shepard's saw some loss of revenues due to heavy promotion and discounting by
a competitor ahead of the expiry in July of its licence to the Shepard's
content.
The first half year saw considerable progress in the integration of Matthew
Bender and Shepard's with LEXIS Law Publishing and the LEXIS online legal
information business. Support functions are being streamlined to yield
efficiencies. The most important aspect, however, of bringing the businesses
together is to significantly enhance our competitive position through unique
content, easier to use interfaces and innovative legal research tools.

A major initiative was the launch in March of the new Shepard's online
citation service and, from July, Shepard's is available exclusively through
LEXIS-NEXIS. Web browser interfaces have been continually improved and
customers are migrating to these easier-to-use formats. Further innovative
legal research products are to be rolled out over the coming months. These
combine the editorial strengths of the analytical publishing businesses with
the online content and delivery systems of LEXIS-NEXIS.

NEXIS is seeing rapid growth in usage of its online business information
services. This is not converting into revenue growth due to pricing pressures
across the industry in a very competitive market. NEXIS is adding further
value and product differentiation through enhanced report compilation and
innovative data linking technology.

The Reed Elsevier Legal Division, comprising Reed Elsevier's legal businesses
outside the US, saw operating profits up 9% on sales up 14%, including the
benefit of acquisitions made in Austria and Argentina. Underlying profit
growth was 4% on sales up 7%, reflecting the continuing investment in the
production and marketing of electronically delivered information and the
heavier weighting of revenues in the second half. In the UK, Butterworths
Direct, the legal and tax online service, continued its successful expansion.

The Educational Publishing and Tuition businesses had a good first half year
with turnover increasing by 15% and operating profits by 24%. Additional
Government funding for literacy materials and increased market share has
driven revenue growth in the UK and US Schools businesses. The Tuition
activities in the Netherlands and Belgium performed well.

Professional
                           Six months ended         % change
                           30 June  30 June         at constant
£ million                     1999     1998         currencies
Turnover
LEXIS-NEXIS                    418      340            +21%
Reed Elsevier Legal Division   106       94            +14%
Educational and Tuition        113       98            +15%
Total                          637      532            +18%
Operating profit               152      146             +3%
Operating margin              23.9%    27.4%          -3.5pts


BUSINESS
Business segment turnover was unchanged whilst operating profits were 15%
lower. Comparison with the prior first half is adversely affected by less
favourable market conditions, adverse exhibition show cycling and the effect
of earlier cost investments.

Cahners Business Information saw flat revenues, excluding minor acquisitions
and disposals, and operating profits lower by 45%. Certain sectors, such as
Entertainment, performed well but sales growth suffered from weakness in a
number of Cahners' key markets, in particular US Manufacturing and
Electronics, and from lower sales in Travel publishing. The lower operating
profits reflect the flat revenues and the impact of investments made in the
editorial, production and sales infrastructure and new product development.
Although the slowdown in sales growth began in the second half of last year,
the degree to which this has persisted into 1999 was not anticipated. This has
generally been reflected across the US business magazine industry. The cost
base has been carefully reviewed in the light of lower revenue growth and a
restructuring plan announced. This will reduce staffing by approximately 300
employees and result in an exceptional charge in the second half.

The Cahners Travel publishing business is beginning to see the benefits of
reorganisation and reinvestment, with revenue declines slowing and the
increase in costs levelling off.

At Reed Business Information turnover and operating profits were down 3% and
10% respectively. This reflects the drop in advertising demand, particularly
high margin recruitment advertising in the important computing sector. At OAG
Worldwide, good progress has been made in the stabilisation of the business.

Elsevier Business Information increased turnover by 3% and operating profits
by 2%. The advertising markets had a slow start to the year, with weak demand
in a less buoyant economic environment in continental Europe than in the prior
year. The impact of tight cost control was partly offset by additional
development activity.

Reed Exhibition Companies saw turnover increase by 4% whereas operating
profits were lower by 3%. This reflected in particular the cycling out of non-
annual shows which were not held this year including the Asian Aerospace joint
venture. The annual shows saw 7% revenue growth, with a strong performance in
the US. Demand in Asia Pacific continued to be affected by weak economic
conditions.

Business
                           Six months ended         % change
                           30 June  30 June         at constant
£ million                     1999     1998         currencies
Turnover
Cahners Business Information   273      274              -2%
Reed Business Information      175      180              -3%
Elsevier Business Information  109      103              +3%
Exhibitions                    180      171              +4%
Other                            4        4
Total                          741      732               -
Operating profit               136      159             -15%
Operating margin              18.4%    21.7%           -3.3pts


Review of financial performance

ADJUSTED PROFIT AND LOSS
Turnover increased by 8% to £1,696 million for the continuing businesses.
Organic revenue growth, excluding the impact of acquisitions and disposals and
currency translation effects, was 1% reflecting the slowing of sales growth in
several of Reed Elsevier's larger markets.

Adjusted operating profit was down 3% to £408 million for the continuing
businesses, with operating margins down 2.6 percentage points against the
comparative period to 24.1%. Excluding acquisitions and disposals and currency
translation effects, revenue growth was 1% whilst costs increased by 5%. This
increase in costs represented investment in people, products, marketing, IT
and systems.

Net interest expense, at £37 million, was £32 million higher than in the
corresponding half year, principally due to the financing of acquisitions
completed in the second half of 1998. Net interest cover was 11 times.

Adjusted profit before tax, at £371 million, was 10% lower than in the first
half of 1998. Currency translation effects provided a £4 million benefit.

The effective tax rate on adjusted earnings was unchanged at 25.7%. The
adjusted profit attributable to shareholders of £276 million compared to £307
million in the first half of 1998, a decline of 11% at constant exchange
rates.

REPORTED PROFIT AND LOSS
Exceptional items showed a pre-tax charge of £45 million, being costs incurred
in the first half of £35 million (1998: £17 million) in respect of the Year
2000 compliance programme and £10 million (1998: £10 million) on acquisition
related integration. In the first half of 1998, there was an exceptional net
pre-tax gain of £655 million, which included a £692 million profit on sale of
IPC Magazines.

The amortisation charge for goodwill and intangible assets amounted to £181
million, up £42 million reflecting acquisitions made in 1998 and 1999.      

The reported profit before tax, including exceptional items and amortisation
charges, was £145 million which compares with £929 million in the first half
of 1998. The reported profit attributable of £68 million compares with £730
million in the 1998 first half. The significant movements between the periods
mostly relate to the exceptional items.

CASH FLOWS, ACQUISITIONS AND DEBT
Adjusted operating cash flow was £244 million (1998: £311 million). The
substantial majority of annual operating cash flows normally arises in the
second half of the year due, in particular, to the phasing of subscription and
other advance receipts and working capital. The lower operating cash flow
includes the effect of the acceleration of Elsevier Science subscription
receipts from 1999 into 1998 arising from improvements made in annual renewal
processes.

Free cash flow was an outflow of £81 million (1998: £9 million outflow). Due
to the phasing of operating cash flows and the timing of dividend payments,
free cash flow normally arises in the second half of the year. Exceptional net
outflows totalled £5 million (1998: £707 million net inflow).

Spend on acquisitions was £97 million, in respect of which an amount of £82
million was capitalised as acquired goodwill and intangible assets.

Net borrowings at 30 June 1999 were £1,247 million, an increase of £285
million since 31 December 1998, reflecting spend on acquisitions, free cash
outflow and exchange translation effects. The net borrowings represented gross
borrowings of £1,814 million, predominantly in US dollars, largely offset by
cash balances and short term investments totalling £567 million, held
principally in sterling.

REED INTERNATIONAL AND ELSEVIER EARNINGS AND DIVIDENDS
Adjusted earnings per share for Reed International shareholders in the first
half were 12.8p, a decline of 10% compared to the prior first half. Adjusted
earnings per share for Elsevier shareholders were Dfl 0.64, a decline of 12%.
At constant rates of exchange, the adjusted earnings per share of both
companies were 11% lower than in the prior period.

After their share of the exceptional items and the amortisation charge in
respect of goodwill and intangible assets, the reported earnings per share of
Reed International, before tax credit equalisation, and Elsevier were 3.1p
(1998: 33.8p) and Dfl 0.16 (1998: Dfl 1.73) respectively.

The Board of Reed International has declared an interim dividend of 4.6p,
unchanged from the prior year. The Boards of Elsevier, in accordance with the
dividend equalisation arrangements, have declared an interim dividend of Dfl
0.26, 10% lower than in the prior year, reflecting the reduction in the level
of the UK tax credit gross up from 20% to 10% earlier in the year. The
exchange rate applied in the equalisation calculation was Dfl 3.31 to £1 (1998
interim dividend, Dfl 3.31 to £1).


                    Combined profit and loss statement
For the six months ended 30 June 1999
                                                       Six months ended       
                                                        30 June 1999          
                                        
                                                  Before               
Year ended                                   exceptional  Exceptional
31 December                                    items and    items and      
1998       £ million                        amortisation amortisation  Total

            Turnover
            Including share of turnover in 
 3,271        joint ventures                    1,746          -        1,746
            Less: share of turnover in joint 
   (80)       ventures                            (50)         -          (50)
 3,191      Combined turnover                   1,696          -        1,696 

            Continuing operations before 
 3,163        acquisitions                      1,689          -        1,689 
 -          Acquisitions                            7          -            7 
 3,163      Continuing operations               1,696          -        1,696 
    28      Discontinued operations               -            -          - 
 3,191      Combined turnover                   1,696          -        1,696
(1,092)     Cost of sales                        (583)         -         (583)
 2,099      Gross profit                        1,113          -        1,113 
            Net operating expenses before
              exceptional items and 
(1,304)       amortisation                       (708)         -         (708)
   (79)     Exceptional items                      -          (45)        (45)
            Amortisation of goodwill and 
  (323)       intangible assets                    -         (179)       (179)
            Operating profit before joint 
   393        ventures                            405        (224)        181 

            Continuing operations before 
   394        acquisitions                        403        (220)        183
    -       Acquisitions                            2          (4)         (2)
   394      Continuing operations                 405        (224)        181
    (1)     Discontinued operations                 -           -           - 
            Operating profit before joint
   393        ventures                            405        (224)        181

           Share of operating profit in 
     9       joint ventures                         3          (2)          1 
           Operating profit (including 
   402     joint ventures)                        408        (226)        182 
           Non operating items
   (10)      Continuing - merger expenses           -           -           - 
             Discontinued - net profit on sale 
   692       of businesses                          -           -           - 
          Profit on ordinary activities 
 1,084      before interest                       408       (226)         182
   (40)   Net interest expense                    (37)          -         (37)
          Profit on ordinary activities 
 1,044      before taxation                       371       (226)         145
  (271)   Tax on profit on ordinary activities    (95)        18          (77)
          Profit on ordinary activities after 
   773      taxation                              276       (208)          68
          Minority interests and preference 
    (1)     dividends                              -           -            - 
          Profit attributable to parent
   772      companies' shareholders               276       (208)          68
  (349)   Ordinary dividends paid and proposed                           (107)
          Retained (loss)/profit taken to 
   423      combined reserves                                             (39)


Adjusted figures

Year ended                                                    Six months ended
31 December                                                            30 June
1998           £ million                                                  1999

   773         Adjusted profit before tax                                 371 
               Adjusted profit attributable to parent 
   571           companies' shareholders                                  276 

Adjusted figures exclude exceptional items and amortisation of goodwill and
intangible assets and related tax effects.

                                                      Six months ended        
                                                       30 June 1998           
                                       
Year ended                                     Before       Exceptional  Total
31 December                                    exceptional  items and
1998        £ million                          items and    amortisation      
                                               amortisation
            Turnover
            Including share of turnover in 
 3,271        joint ventures                      1,643        -        1,643
            Less: share of turnover in joint 
   (80)       ventures                              (55)       -          (55)
 3,191      Combined turnover                     1,588        -        1,588

            Continuing operations before 
 3,163        acquisitions                        1,569        -        1,569 
     -      Acquisitions                              -        -            - 
 3,163      Continuing operations                 1,569        -        1,569 
    28      Discontinued operations                  19        -           19
 3,191      Combined turnover                     1,588        -        1,588
(1,092)     Cost of sales                          (512)       -         (512)
 2,099      Gross profit                          1,076        -        1,076
            Net operating expenses before
(1,304)       exceptional items and amortisation   (670)       -         (670)
   (79)     Exceptional items                         -      (27)         (27)
            Amortisation of goodwill and 
  (323)       intangible assets                       -     (134)        (134)
            Operating profit before joint 
   393        ventures                              406     (161)         245

            Continuing operations before 
   394        acquisitions                          407     (161)         246
     -      Acquisitions                              -        -            -
   394      Continuing operations                   407     (161)         246
    (1)     Discontinued operations                  (1)       -           (1)
            Operating profit before joint                       
   393        ventures                              406     (161)         245
           Share of operating profit in  
     9       joint ventures                          12       (5)           7 
           Operating profit (including 
   402       joint ventures)                        418     (166)         252
           Non operating items
   (10)      Continuing - merger expenses             -      (10)         (10)
             Discontinued - net profit on sale 
   692       of businesses                            -      692          692 
          Profit on ordinary activities 
 1,084       before interest                        418      516          934
   (40)   Net interest expense                       (5)       -           (5)
          Profit on ordinary activities 
 1,044      before taxation                         413      516          929
  (271)   Tax on profit on ordinary activities     (106)     (93)        (199)
          Profit on ordinary activities after 
   773      taxation                                307      423          730
          Minority interests and preference 
    (1)     dividends                                 -        -            - 
          Profit attributable to parent
   772      companies' shareholders                 307      423          730
  (349)   Ordinary dividends paid and proposed                           (110)
          Retained (loss)/profit taken to 
   423      combined reserves                                             620 


Adjusted figures

Year ended                                                    Six months ended
31 December                                                            30 June
1998           £ million                                                  1998

   773         Adjusted profit before tax                                 413 
               Adjusted profit attributable to parent 
   571           companies' shareholders                                  307 

Adjusted figures exclude exceptional items and amortisation of goodwill and
intangible assets and related tax effects.


Combined cash flow statement
For the six months ended 30 June 1999

Year ended                                                Six months ended
31 December                                            30 June         30 June
1998        £ million                                     1999            1998

            Net cash inflow from operating 
   937        activities before exceptional items          309            356
            Payments relating to exceptional items 
  (258)       charged to operating profit                  (67)          (147)
   679      Net cash inflow from operating activities      242            209
    11      Dividends received from joint ventures           2              9
    61      Interest received                               20             32
  (106)     Interest paid                                  (52)           (44)
            Returns on investments and servicing of 
   (45)       finance                                      (32)           (12)
            Taxation (including £62 million (1998: £nil) 
  (144)       exceptional repayments)                        5            (56)
  (151)     Purchase of tangible fixed assets              (71)           (56)
    11      Proceeds from sale of fixed assets               4              2
  (140)     Capital expenditure                            (67)           (54)
(1,232)     Acquisitions                                   (97)          (191)
   (11)     Payments against acquisition provisions          -             (3)
            Exceptional net proceeds from disposal of 
   913        businesses                                     -            864
    (8)     Merger expenses                                  -            (10)
  (338)     Acquisitions and disposals                     (97)           660
            Equity dividends paid to shareholders of the 
  (362)       parent companies                            (236)          (249)
            Cash (outflow)/inflow before changes in short 
  (339)       term investments and financing              (183)           507
    63      Decrease/(increase) in short term investments  143           (698)
   192      Financing                                       49            116
   (84)     Increase/(decrease) in cash                      9            (75)

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.

Reed Elsevier businesses focus on adjusted operating cash flow as the 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 fixed
assets but before exceptional payments and proceeds.

Memorandum reconciliation to adjusted operating cash flow

Year ended                                                 Six months ended
31 December                                            30 June         30 June
1998        £ million                                     1999            1998

   679      Net cash inflow from operating activities      242            209 
    11      Dividends received from joint ventures           2              9
  (151)     Purchase of tangible fixed assets              (71)           (56)
    11      Proceeds from sale of fixed assets               4              2
            Payments relating to exceptional items 
   258        charged to operating profit                   67            147
   808      Adjusted operating cash flow                   244            311 
    99%     Adjusted operating cash flow conversion         60%           74% 
                 

Discontinued operations contributed £10 million to adjusted operating cash
flow in the period to 30 June 1998.


MORE TO FOLLOW

IR CCPCQNDKKQFK