Interim Results - Part 3

Reed International PLC 9 August 2001 PART 3 REED INTERNATIONAL P.L.C. SUMMARY FINANCIAL INFORMATION BASIS OF PREPARATION The Reed International share of the Reed Elsevier combined results has been calculated on the basis of the 52.9% economic interest of the Reed International shareholders in the Reed Elsevier combined businesses, after taking account of results arising in Reed International and its subsidiary undertakings. Reed International's 52.9% economic interest in the net assets of the combined businesses has been shown in the balance sheet as interests in joint ventures, net of the assets and liabilities reported as part of Reed International and its subsidiary undertakings. The interim figures for the six months ended 30 June 2001 and the comparative amounts to 30 June 2000 are unaudited but have been reviewed by the auditors and their report to the Board of Reed International is set out on page 17. The financial information for the year ended 31 December 2000 has been abridged from the financial statements for that year, which have been filed with the UK Registrar of Companies and received an unqualified audit report. CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December Six months ended 30 June 2000 2001 2000 £m £m £m 1,994 Share of turnover of joint 1,077 950 ventures (1) Operating loss (before joint ventures) Share of operating profit of joint ventures: 414 Before amortisation and 230 207 exceptional items (308) Amortisation and exceptional (129) (119) items 105 Operating profit including 101 88 joint ventures 45 Share of non operating 8 35 exceptional items of joint ventures (54) Net interest (including share (15) (23) of joint ventures) 96 Profit on ordinary activities 94 100 before taxation (85) Tax on profit on ordinary (58) (48) activities (2) UK corporation tax (3) (2) (83) Share of tax of joint (55) (46) ventures 11 Profit attributable to 36 52 ordinary shareholders (123) Ordinary dividends paid and (38) (34) proposed (112) Retained (loss)/profit taken (2) 18 to reserves 1.0p Basic earnings per share 2.9p 4.5p 1.0p Diluted earnings per share 2.8p 4.5p 23.3p Adjusted earnings per share 12.7p 12.0p Adjusted earnings per share is based upon the Reed International shareholders' 52.9% economic interest in the adjusted profit attributable of the Reed Elsevier combined businesses. DIVIDENDS The directors of Reed International have declared an interim dividend of 3.1p per ordinary share (2000 interim: 3.1p per ordinary share). In 2000 the full year dividend was 10.0p per ordinary share. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 31 Six months ended 30 June December 2000 2001 2000 £m £m £m 11 Profit attributable to 36 52 ordinary shareholders 60 Exchange translation 20 41 differences 71 Total recognised gains 56 93 and losses for the period CONSOLIDATED CASH FLOW STATEMENT Year ended 31 Six months ended 30 December June 2000 2001 2000 £m £m £m (1) Net cash outflow from (2) - operating activities 97 Dividends received from Reed 87 62 Elsevier plc 4 Returns on investments and 12 - servicing of finance (1) Taxation (1) - - Fixed asset investments (59) - (98) Ordinary dividends paid (87) (62) 1 Cash (outflow)/inflow before (50) - changes in short term investments and financing (431) Decrease/(increase) in short 63 - term investments 430 Financing (13) - 709 Issue of ordinary shares 6 2 (279) Increase in net funding (19) (2) balances to Reed Elsevier plc group - Change in net cash - - On 12 April 2001, Reed Holding BV, a wholly owned subsidiary of Reed International, subscribed for 629,298 R-shares in Elsevier at a cost of £59m, so as to maintain Reed International's 5.8% indirect equity interest in Elsevier. RECONCILIATION OF SHAREHOLDERS' FUNDS Year ended Six mths ended 30 June 31 December 2000 2001 2000 £m £m £m 11 Profit attributable to ordinary shareholders 36 52 (123) Ordinary dividends paid and proposed (38) (34) 708 Issue of ordinary shares, net of expenses 6 2 60 Exchange translation differences 20 41 (28) Equalisation adjustments (3) - 628 Net increase in shareholders' funds 21 61 981 Shareholders' funds at the beginning of the 1,609 981 period 1,609 Shareholders' funds at the end of the period 1,630 1,042 CONSOLIDATED BALANCE SHEET As at 31 December As at 30 June 2000 2001 2000 £m £m £m 801 Fixed asset investment in 818 888 joint ventures 944 Current assets 899 235 513 Debtors 531 235 431 Short term investments 368 - (100) Creditors: amounts falling (51) (45) due within one year 844 Net current assets 848 190 1,645 Total assets less current 1,666 1,078 liabilities (36) Creditors: amounts falling (36) (36) due after more than one year 1,609 Shareholders' funds 1,630 1,042 Approved by the Board of Directors, 8 August 2001. ELSEVIER NV SUMMARY FINANCIAL INFORMATION BASIS OF PREPARATION The results for the six months ended 30 June 2001 reflect Elsevier shareholders' 50% economic interest in the Reed Elsevier combined businesses, accounted for on an equity basis. The interim figures for the six months ended 30 June 2001 and the comparative amounts to 30 June 2000 are unaudited but have been reviewed by the auditors and their report to the Boards of Elsevier is set out on page 17. The financial information for the year ended 31 December 2000 has been abridged from the statutory accounts of Elsevier for that year and the auditors have confirmed that their opinion on those accounts was unqualified. PROFIT AND LOSS ACCOUNT Year ended 31 Six months ended 30 June December 2000 2001 2000 Eurom Eurom Eurom 3,091 Share of turnover of 1,629 1,463 joint ventures (3) Operating loss (before (1) (1) joint ventures) Share of operating profit of joint ventures: 654 Before amortisation 352 323 and exceptional items (479) Amortisation and (195) (184) exceptional items 172 Operating profit 156 138 including joint ventures 70 Share of non operating 12 54 exceptional items of joint ventures (85) Net interest (23) (35) (including share of joint ventures) 157 Profit of ordinary 145 157 activities before taxation (130) Tax on profit on (88) (73) ordinary activities 27 Profit attributable to 57 84 ordinary shareholders (200) Ordinary dividends (64) (55) paid and proposed (173) Retained (loss)/profit (7) 29 taken to reserves Euro0.04 Basic earnings per Euro0.07 Euro0.12 share Euro0.03 Diluted earnings per Euro0.07 Euro0.12 share Euro0.59 Adjusted earnings per Euro0.31 Euro0.30 share Adjusted earnings per share is based upon the Elsevier shareholders' 50% economic interest in the adjusted profit attributable of the Reed Elsevier combined businesses. DIVIDENDS The directors of Elsevier have declared an interim dividend of Euro0.09 per ordinary share (2000 interim: Euro0.09 per ordinary share). In 2000 the full year dividend was Euro0.28 per ordinary share. CASH FLOW STATEMENT Year ended Six months ended 30 June 31 December 2000 2001 2000 Eurom Eurom Eurom (2) Net cash outflow from operating activities (1) - 623 Dividends received from joint ventures 50 623 4 Returns on investments and servicing of finance 25 - 4 Taxation 14 - (533) Fixed asset investments - (533) (160) Ordinary dividends paid (140) (100) (64) Cash outflow before changes in short term (52) (10) investments and financing (952) (Increase)/decrease in short term investments (34) 5 1,016 Financing 86 5 956 Issue of ordinary shares 88 3 (2) Net increase in/(repayment of) debenture loans 1 - 62 (Increase)/decrease in net funding balances to (3) 2 joint ventures - Change in net cash - - On 12 April 2001, Elsevier issued 629,298 R-shares to Reed Holding BV, a wholly owned subsidiary of Reed International, for Euro91.3m before capital taxes, so as to maintain Reed International's 5.8% indirect equity interest in Elsevier. RECONCILIATION OF SHAREHOLDERS' FUNDS Year ended 31 6 months ended December 30 June 2000 2001 2000 Eurom Eurom Eurom 27 Profit attributable to 57 84 ordinary shareholders (200) Ordinary dividends paid (64) (55) and proposed 947 Issue of ordinary shares, 97 3 net of expenses 75 Exchange translation 107 32 differences 106 Equalisation adjustments (88) - 955 Net increase of 109 64 shareholders' funds 1,493 Shareholders' funds at 2,448 1,493 the beginning of the period 2,448 Shareholders' funds at 2,557 1,557 the end of the period BALANCE SHEET Year ended 31 December As at 30 June 2000 2001 2000 Eurom Eurom Eurom 1,674 Fixed asset investment in 1,684 1,583 joint ventures Current assets 5 Debtors 5 61 971 Short term investments 1,005 14 976 1,010 75 (154) Creditors: amounts falling due (74) (57) within one year 822 Net current assets 936 18 2,496 Total assets less current 2,620 1,601 liabilities (6) Creditors: amounts falling due (7) (8) after more than one year (42) Provisions (56) (36) 2,448 Shareholders' funds 2,557 1,557 Signed by the Boards of Directors, 8 August 2001 SUMMARY COMBINED FINANCIAL INFORMATION IN US DOLLARS Highlights of the Reed Elsevier combined financial information in US dollars are given below. This is a simple translation into US dollars at stated rates of exchange (see note 2 to the combined financial information) and does not represent a restatement under US GAAP. Profit and loss account Year ended 31 December Six mths ended 30 June 2000 2001 2000 Change US$m US$m US$m % 5,690 Net sales - continuing 2,932 2,818 +4% 1,197 Adjusted operating profit 631 619 +2% 1,042 Adjusted profit before tax 590 551 +7% 772 Adjusted profit attributable 436 408 +7% US$ Adjusted earnings per American US$ US$ Depository Share (ADS) 1.41 Reed International (Each ADS comprises 0.73 0.75 -3% four ordinary shares) 1.09 Elsevier (Each ADS comprises two 0.56 0.58 -3% ordinary shares) Cash flow Year ended 31 December Six months ended 30 June 2000 2001 2000 US$m US$m US$m 1,170 Adjusted operating cash flow 400 480 Balance sheet As at 31 December As at 30 June 2000 2001 2000 US$m US$m US$m Capital employed 6,149 Goodwill and intangible assets 5,723 5,887 848 Other fixed assets 853 755 (714) Trading working capital (480) (538) (207) Other working capital (166) (147) 6,076 Total 5,930 5,957 Funded by: 4,531 Combined shareholders' funds 4,344 2,994 900 Other net liabilities 839 712 645 Net borrowings 747 2,251 6,076 Total 5,930 5,957 SUMMARY OF THE PRINCIPAL DIFFERENCES BETWEEN UK AND DUTCH GAAP AND US GAAP The combined financial information has been prepared in accordance with UK and Dutch GAAP, which differ in certain significant respects from US GAAP. The principal differences that affect net income and combined shareholders' funds relate to the capitalisation and amortisation of goodwill and other intangible assets, pensions and related deferred tax effects and, with effect from the 2001 fiscal year, derivative instruments. A more complete explanation of the accounting policies used by the Reed Elsevier combined businesses and the differences between UK and Dutch GAAP and US GAAP is set out in the Reed Elsevier Annual Reports & Financial Statements 2000. The effects on net income and combined shareholders' funds of material differences between UK and Dutch GAAP and US GAAP are set out below: Year ended 31 Six months Six months ended December ended 30 June 30 June 2000 2000 2001 2000 2001 2000 £m Eurom £m £m Eurom Eurom 33 54 Net income 71 102 114 167 under UK and Dutch GAAP US GAAP adjustments: (78) (128) Amortisation of (35) (46) (56) (75) goodwill and other intangible assets 85 139 Deferred 30 40 48 65 taxation 22 36 Pensions 22 7 35 11 - - Derivative 27 - 43 - instruments (2) (3) Other items - 3 - 5 60 98 Net income 115 106 184 173 under US GAAP As at 31 December As at 30 June As at 30 June 2000 2000 2001 2000 2001 2000 £m Eurom £m £m Eurom Eurom 3,041 4,896 Combined 3,081 1,970 5,114 3,113 shareholders' funds under UK and Dutch GAAP US GAAP adjustments: 604 973 Goodwill and 555 581 921 918 other intangible assets (203) (327) Deferred (158) (196) (262) (310) taxation 86 138 Pensions 107 70 178 111 - - Derivative (70) - (116) - instruments 2 3 Other items 2 10 4 16 177 285 Ordinary 78 68 129 107 dividends not declared in the period 3,707 5,968 Combined 3,595 2,503 5,968 3,955 shareholders' funds under US GAAP FINANCIAL DIARY FOR 2001 9 August Announcement of Interim Results for the six months to 30 June 2001 15 August Ordinary shares and ADSs in Reed International P.L.C. and Elsevier NV go ex- dividend for 2001 interim dividends 17 August Record date - Reed International P.L.C. ordinary shares and Reed International P.L.C. and Elsevier NV ADSs 10 September Interim dividends for 2001 paid on Reed International P.L.C. and Elsevier NV ordinary shares 17 September Interim dividends for 2001 paid on Reed International P.L.C. and Elsevier NV ADSs 6 December Trading Update issued in relation to the 2001 financial year FINANCIAL DIARY FOR 2002 21 February Announcement of Preliminary Results for the year ended 31 December 2001 9 April Reed International P.L.C. Annual General Meeting 10 April Elsevier NV Annual General Meeting 8 August Announcement of Interim Results for the six months to 30 June 2002 AUDITORS Deloitte & Touche Hill House, 1 Little New Street London EC4A 3TR, United Kingdom Deloitte & Touche Orlyplein 50 1043 DP Amsterdam, The Netherlands STOCKBROKERS Cazenove & Co. Ltd 12 Tokenhouse Yard London EC2R 7AN, United Kingdom ABN AMRO Bank NV Gustav Mahlerlaan 10 1082 PP Amsterdam, The Netherlands ADR DEPOSITARY Citibank NA 111 Wall Street New York, NY 10043, USA Reed International P.L.C. CUSIP No. 758212872 (Trading Symbol: RUK) Elsevier NV CUSIP No. 290259100 (Trading Symbol: ENL) STOCK EXCHANGE QUOTATIONS Reed International P.L.C. shares and Elsevier NV shares are quoted on the stock exchanges in Amsterdam, London and New York. In addition, Elsevier shares are quoted on the EBS stock exchange in Switzerland and are also traded in the Freiverkehrsmarkt in Frankfurt. Trading on the New York Stock Exchange is in the form of American Depositary Shares (ADSs), evidenced by American Depositary Receipts (ADRs). Each Elsevier ADS represents two Elsevier shares and each Reed International ADS represents four Reed International shares. Enquiries concerning Reed International or Elsevier ADSs should be addressed to Citibank Shareholder Services, PO Box 2502, Jersey City, NJ 07303 2502 or by telephoning +1 877 248 4237 (toll free if dialled from within the United States). This statement is being mailed to shareholders of Reed International P.L.C. on 9 August 2001 and will be available to the shareholders of Elsevier NV upon request. Copies are available to the public from the registered offices of the respective companies. Reed International P.L.C 25 Victoria Street London SW1H 0EX, United Kingdom Tel: +44 (0) 20 7222 8420 Fax: +44 (0) 20 7227 5799 Until 20 August 2001: Elsevier NV Van de Sande Bakhuyzenstraat 4 1061 AG Amsterdam, The Netherlands Tel: +31 (0) 20 515 9341 Fax: +31 (0) 20 618 0325 From 20 August 2001: Elsevier NV Sara Burgerhartstraat 25 1055 KV Amsterdam, The Netherlands Tel: +31 (0) 20 485 2434 Fax: +31 (0) 20 618 0325 A copy of this statement in Dutch will be made available on our website. For further information or contact details, please visit: www.reedelsevier.com

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