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Reed Elsevier PLC (REL)

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Thursday 25 July, 2013

Reed Elsevier PLC

INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2013

RNS Number : 0977K
Reed Elsevier PLC
25 July 2013
 



Issued on behalf of Reed Elsevier PLC and Reed Elsevier NV

25 July 2013

 

INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2013

 

Reed Elsevier, the global professional information company, reports underlying revenue, operating profit, and earnings growth on track.

 

Financial highlights

Ø Underlying revenue growth +2% (+3% excluding biennial exhibition cycling) to £3,025m/€3,570m

Ø Underlying adjusted operating profit growth +6% to £870m/€1,027m

Ø Adjusted EPS +9% to 26.5p for Reed Elsevier PLC; +4% to €0.48 for Reed Elsevier NV

Ø Interim dividend +11% to 6.65p for Reed Elsevier PLC; +2% to €0.132 for Reed Elsevier NV

Ø Reported EPS -6% to 22.0p for Reed Elsevier PLC; -9% to €0.42 for Reed Elsevier NV

Ø Net debt £3.3bn; 2.1x EBITDA pensions and lease adjusted (1.7x unadjusted)

 

Operational and strategic highlights

Ø Positive underlying growth trends maintained

Ø Continued evolution of business profile through organic development and portfolio reshaping

Ø Electronic and face-to-face 83% of H1 revenue; growing at +5 to +7% underlying

Ø Improved profitability reflects process innovation and portfolio development

Ø £300m of share buybacks completed in H1 2013; further £300m to be deployed in remainder of 2013

 

Commenting on the results, Anthony Habgood, Chairman, said:

 

"Reed Elsevier grew underlying revenue, operating profit and earnings in the first half of 2013, and further strengthened the balance sheet. We are confident that Reed Elsevier remains on track to deliver on its strategic and financial priorities, and we are recommending an +11% increase in the interim dividend for Reed Elsevier PLC and a +2% increase for Reed Elsevier NV, in line with growth in adjusted earnings per share at constant exchange rates."

 

Chief Executive Officer, Erik Engstrom, commented:

 

"In the first half of 2013 we continued to focus on improving our business profile, primarily through organic development. We invested in building out global technology platforms and launching new products and services. We also made a small number of targeted acquisitions which support our organic growth priorities, and disposed of several businesses that no longer fit our strategy."

 

"The operating momentum in our business remains positive as we enter the second half, and although the outlook for the macro environment and its impact on our customer markets remains mixed, we continue to expect full year 2013 to be another year of underlying revenue, profit and earnings growth."

 

"With a strong balance sheet and strong cash flow characteristics, and average acquisition spend comfortably covered by free cash flow, we will take a pragmatic approach to ensuring that the value compounding within the business translates into shareholder value. As a part of this, we intend to increase the scale of this year's share buybacks to a total of £600m, approximately £200m beyond our expected full year gross disposal proceeds."

 

REED ELSEVIER FINANCIAL AND OPERATIONAL HIGHLIGHTS

 

Reed Elsevier continued to make good progress against its strategic and financial priorities in H1 2013.

Revenue of £3,025m/€3,570m; underlying growth +2% (+3% excluding biennial exhibition cycling): The like for like underlying growth rate of +3% reflects continuing print revenue declines and +5 to +7% growth in electronic and face-to-face revenues, which now account for 83% of the total.

Adjusted operating profit £870m/€1,027m; underlying growth +6%: Underlying operating profits improved across Reed Elsevier reflecting a combination of process innovation and portfolio development. Reported operating profit, after amortisation of acquired intangible assets, grew +4% to £684m/+1% to €807m.

Interest and tax: Adjusted net finance costs were £15m/€22m lower at £92m/€109m reflecting the benefits of term debt refinancing initiatives over the last 12 months. The adjusted effective tax rate was essentially unchanged at 23.5%.

Adjusted EPS up +9% to 26.5p for Reed Elsevier PLC, up +4% to €0.48 for Reed Elsevier NV; constant currency growth +7%: Reported EPS growth was -6% to 22.0p for Reed Elsevier PLC, -9% to €0.42 for Reed Elsevier NV, principally reflecting the impact of higher one-off net gains on disposals in the prior year.

Equalised interim dividend up +11% to 6.65p for Reed Elsevier PLC; up +2% to €0.132 for Reed Elsevier NV: The difference in dividend growth rates reflects strengthening of the euro relative to sterling since last year's interim dividend announcement date. The average interim dividend growth rate is in line with adjusted EPS growth at constant currency rates.

Net debt/EBITDA 2.1x adjusted 12 month trailing EBITDA on a pensions and lease adjusted basis (unadjusted 1.7x): Net debt was £3.3bn/€3.9bn on 30 June 2013. Capital expenditure remained at 5% of revenue in the first half and is expected to be similar for the full year. The adjusted operating cash flow conversion rate for the first half was lower at 85% reflecting timing of receivables and payables at the period end which is expected to reverse in the second half. For the full year we continue to expect a cash conversion rate of over 90%, in line with prior years.

Organic development: In H1 2013 we continued to build and roll out global technology platforms, launch new products and services into existing and adjacent segments, and expand our presence in high growth markets.  

Acquisitions & disposals: In H1 2013 we completed a small number of targeted acquisitions of content and data assets across all market segments for a total consideration of £109m. We also disposed of businesses that no longer fit our strategy for a total consideration of £280m. Completed disposals include the pre-employment screening business of Risk Solutions, RBI Australia, RBI France, and a number of other businesses across Reed Elsevier.

Share buybacks: In H1 2013 we deployed £300m on share buybacks, broadly in line with gross disposal proceeds. Based on our strong financial position we expect to deploy a further £300m on buybacks in H2 2013, taking the full year total to £600m, approximately £200m beyond our expected full year gross disposal proceeds.

Full year 2013 OUTLOOK

The outlook for the macro environment, and its impact on our customer markets, remains mixed, and 2013 is a cycling out year for our exhibitions business. However, the operating momentum in our business remains positive as we enter the second half, and we continue to expect full year 2013 to be another year of underlying revenue, profit, and earnings growth.

 

Reed Elsevier FINANCIAL SUMMARY


 

£

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

2013
£m

2012†
£m

Change

 


2013
€m

2012†

€m

Change

 

 

Underlying
growth
rates

 

 

Revenue

3,025

3,053

-1%

 

3,570

3,725

-4%

 

+2%/+3%

*

 

Adjusted operating profit

870

832

+5%

 

1,027

1,015

+1%

 

+6%

 

 

Adjusted operating margin

28.8%

27.3%

 

 

28.8%

27.3%

 

 

 

 

 

Adjusted net finance costs

(92)

(107)

 

 

(109)

(131)

 

 

 

 

 

Adjusted profit before tax

778

725

+7%

 

918

884

+4%

 

 

 

 

Tax

(183)

(171)

 

 

(217)

(208)

 

 

 

 

 

Minority interests

(3)

(2)

 

 

(3)

(3)

 

 

 

 

 

Adjusted net profit

592

552

+7%

 

698

673

+4%

 

 

 

 

Reported net profit

509

552

 

 

601

673

 

 

 

 

 

Net borrowings

3,339

3,318

 

 

3,906

4,114

 

 

 

 

 

*excluding biennial exhibition cycling

 

PARENT COMPANIES


Reed Elsevier PLC


Reed Elsevier NV


 

Six months ended 30 June

 

Six months ended 30 June

 

 

2013

pence

2012†

pence

Change

 


2013

2012†

Change

 

 

Change at constant currencies

Adjusted earnings per share

26.5p

24.3p

+9%

 

€0.48

€0.46

+4%

 

+7%

Reported earnings per share

22.0p

23.4p

-6%

 

€0.42

€0.46

-9%

 

 

Ordinary dividend per share

6.65p

6.00p

+11%

 

€0.132

€0.130

+2%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted and underlying figures are additional performance measures used by management.  Reconciliations between the reported and adjusted figures are set out in note 4 to the combined financial information on page 26.  The reported operating profit figures are set out in note 2 on page 22.  Unless otherwise indicated, all percentage movements in the following commentary refer to performance at constant exchange rates.  Underlying growth rates are calculated at constant currencies, and exclude the results of all acquisitions and disposals made in both the year and prior year and assets held for sale.  Constant currency growth rates are based on 2012 full year average and hedge exchange rates. 

 

Comparative financial information has been restated following the adoption of IAS19 Employee Benefits (revised), see note 1 to the combined financial information on page 21.

 

ENQUIRIES:

 

Colin Tennant (Investors)

+44 (0)20 7166 5751

Paul Abrahams (Media)

+44 (0)20 7166 5724

FORWARD-LOOKING STATEMENTS

This Results Announcement contains forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended.  These statements are subject to a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those currently being anticipated.  The terms "outlook",  "estimate", "project", "plan", "intend", "expect", "should be", "will be", "believe" 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, competitive factors in the industries in which Reed Elsevier operates; demand for Reed Elsevier's products and services; exchange rate fluctuations; general economic and business conditions; legislative, fiscal, tax and regulatory developments and political risks; the availability of third party content and data; breaches of our data security systems and interruptions in our information technology systems; changes in law and legal interpretations affecting Reed Elsevier's intellectual property rights and other risks referenced from time to time in the filings of Reed Elsevier with the US Securities and Exchange Commission.

 

 

 

 

BUSINESS AREA ANALYSIS

 


 

£

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 


2013
£m

2012†
£m

Change

 


2013
€m

2012†

€m

Change

 

 

Underlying
growth
rates

 

Revenue

 

 

 

 

 

 

 

 

 

 

Scientific, Technical & Medical

1,008

978

+3%

 

1,190

1,193

0%

 

+2%

 

Risk Solutions

473

462

+2%

 

558

564

-1%

 

+8%

 

Business Information

286

347

-18%

 

338

423

-20%

 

+3%

 

Legal

773

780

-1%

 

912

952

-4%

 

+1%

 

Exhibitions

485

486

0%

 

572

593

-4%

 

   +1%/+7%

*

 

3,025

3,053

-1%

 

3,570

3,725

-4%

 

+2%/+3%

*

Adjusted operating profit

 

 

 

 

 

 

 

 

 

 

Scientific, Technical & Medical

372

352

+6%

 

439

430

+2%

 

+3%

 

Risk Solutions

212

191

+11%

 

250

233

+7%

 

+11%

 

Business Information

55

63

-12%

 

65

77

-16%

 

+14%

 

Legal

103

100

+3%

 

122

122

0%

 

+5%

 

Exhibitions

151

151

0%

 

178

184

-3%

 

+4%

 

Unallocated items

(23)

(25)

 

 

(27)

(31)

 


 

 

 

870

832

+5%


1,027

1,015

+1%


+6%

 

* excluding biennial exhibition cycling

 

Comparative financial information has been restated following the adoption of IAS19 Employee Benefits (revised), see note 1 to the combined financial information on page 21.

 

 

 

OPERATING AND FINANCIAL REVIEW

 

Operating review

 

Scientific, Technical & Medical

 

 

£

 

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2013
£m

2012
£m

Change

 


2013
€m

2012
€m

Change

 


Change at constant
currencies

 

Underlying growth rates

Revenue

1,008

978

+3%

 

1,190

1,193

0%

 

0%

 

+2%

Adjusted operating profit

372

352

+6%

 

439

430

+2%

 

+2%

 

+3%

Adjusted operating margin

36.9%

35.9%

+1.0% pts

 

36.9%

35.9%

+1.0% pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Business trends have remained broadly unchanged in H1 2013, with good growth in databases & tools and in primary research submissions and usage across all segments. Revenues from print book sales to individuals and pharma promotion continued to decline.

 

Underlying revenues grew +2% and underlying adjusted operating profits grew +3%.

 

In primary research, growth in article submissions and usage remained strong across the scientific, technical and medical segments, and journal quality, as measured by impact factor, continued to improve. Revenue growth was driven by solid subscription renewals and new sales, particularly in emerging markets. "Author pays" or "author's funder pays" article volumes continued to grow strongly from a small base. Good growth in scientific databases & tools and electronic clinical solutions was also supported by strong new sales.

 

Print book sales to individuals and pharma promotion continued to decline reflecting a combination of format migration in education and structural changes in the pharmaceutical industry.

 

The H1 2013 results reflect the impact of portfolio development in 2012 and H1 2013. Disposals included print assets such as Focal Press, Emergency Medical Solutions, the International Medical News Group and some Italian assets. We also supported our organic growth strategy with small targeted acquisitions, including Mendeley, an online reference management and collaboration solution.

 

Full year 2013 outlook: The customer environment remains broadly unchanged on last year, with variations by geography and customer segment. In H2 we expect continued volume growth and strong demand for electronic products and solutions. Overall, the scientific, technical & medical business is on track to deliver modest underlying revenue growth for the full year 2013.

 

Risk Solutions

 

 

£

 

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2013
£m

2012
£m

Change

 


2013
€m

2012
€m

Change

 


Change at constant
currencies

 

Underlying growth rates

Revenue

473

462

+2%

 

558

564

-1%


+0%

 

+8%

Adjusted operating profit

212

191

+11%

 

250

233

+7%


+8%

 

+11%

Adjusted operating margin

44.8%

41.3%

+3.5% pts

 

44.8%

41.3%

+3.5% pts


 

 

 


 

 

 

 

 

 

 

 

 

 

 

Positive momentum in underlying revenue growth continued in H1 2013, with all business segments achieving strong growth. Revenue growth was driven by good take up of new products and higher volumes across segments. The improvement in adjusted operating margin largely reflects the impact of portfolio changes, with the rate of investment in new product development maintained.

 

Underlying revenues grew +8% and underlying adjusted operating profits grew +11%.

 

Revenue growth in the insurance segment was driven by volume growth in the core underwriting business, good take up of new products and services across the insurance workflow, and expansion into adjacent market verticals.

 

Business Services growth in H1 reflected strong demand for identity authentication and fraud detection solutions across markets, and some strong but potentially temporary volume effects in financial services.

 

Strong government revenue growth reflected new product sales driving good growth in both federal and state & local markets.

 

The H1 results reflect the impact of portfolio changes during the period, including the disposal of the pre-employment screening business, and some small acquisitions, which together had the effect of reducing reported revenues but increasing the adjusted operating profit margin.

 

Full year 2013 outlook: The long term underlying growth drivers of the Risk Solutions business remain strong across all segments. In the remainder of the year we expect good growth in insurance to continue, although some uncertainty remains in financial services and government markets.

 

 

Business Information

 

 

£

 

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2013
£m

2012
£m

Change

 


2013
€m

2012
€m

Change

 


Change at constant
currencies

 

Underlying growth

 rates

Revenue

286

347

-18%

 

338

423

-20%

 

-19%

 

+3%

Adjusted operating profit

55

63

-12%

 

65

77

-16%

 

-13%

 

+14%

Adjusted operating margin

19.3%

18.2%

+1.1% pts

 

19.3%

18.2%

+1.1% pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Underlying revenue growth improved slightly in H1 2013 reflecting continued good growth in data services, modest growth elsewhere, and portfolio development. Focus on process efficiency, together with the portfolio changes, drove a further improvement in adjusted operating profit margin.

 

Underlying revenues grew +3%, and underlying adjusted operating profits grew +14%.

 

Major Data Services, which now accounts for around 50% of continuing portfolio revenue, achieved strong growth in H1 driven by BankersAccuity and ICIS. US construction data markets remained weak.

 

Leading Brands and Other Business Magazines & Services were stable, despite weak print advertising markets.

 

The 1.1 percentage point improvement in adjusted operating profit margin to 19.3% reflects a combination of process efficiency and the transformation of the business profile through portfolio reshaping.

 

Disposals completed over the last 18 months that have impacted the H1 results include Totaljobs, Variety, Electronics Weekly, Caterer and Hotelkeeper, RBI Australia, RBI Spain, and RBI France.

 

Full year 2013 outlook: We expect continued good growth in Major Data Services, stable Leading Brands, and weak print advertising markets.

 

Legal

 

 

£

 

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2013
£m

2012
£m

Change

 


2013
€m

2012
€m

Change

 


Change at constant
currencies

 

Underlying growth rates

Revenue

773

780

-1%

 

912

952

-4%

 

-3%

 

+1%

Adjusted operating profit

103

100

+3%

 

122

122

0%

 

+2%

 

+5%

Adjusted operating margin

13.4%

12.8%

+0.6% pts

 

13.4%

12.8%

+0.6% pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Underlying revenue trends in H1 2013 have remained similar to 2012, with legal markets in the US and Europe remaining subdued. Electronic revenues, which now account for nearly 80% of the total, showed good growth, largely offset by continued print declines. Good progress was made on the continued roll out of new platforms and products.

 

Underlying revenues grew +1%, and underlying operating profits grew +5%.

 

In the US online research and litigation services grew modestly despite subdued market conditions. The roll out of new product releases continued with 60% of customers active on the New Lexis platform at period end.

 

In our major European markets conditions remain weak, with growth in online solutions largely offset by print declines. Other international markets achieved good growth.

 

The improvement in adjusted operating profit margin reflects our focus on process improvement as well as some initial decommissioning of old infrastructure.

 

The H1 results reflect the impact of portfolio reshaping, including the disposal of the US document retrieval and filing business in late 2012, and other small print assets.

 

Full year 2013 outlook: We will continue the roll out of our new platforms and products in the second half of 2013, and will maintain our focus on process efficiency. Our customer markets remain subdued, however, limiting the scope for growth.

 

 

Exhibitions

 

 

£

 

 

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2013
£m

2012
£m

Change

 


2013
€m

2012
€m

Change

 


Change at constant
currencies

 

Underlying growth

rates

Revenue

485

486

0%

 

572

593

-4%

 

+1%

 

+1%/+7%*

Adjusted operating profit

151

151

0%

 

178

184

-3%

 

+2%

 

+4%

Adjusted operating margin

31.0%

31.1%

-0.1% pts

 

31.0%

31.1%

-0.1% pts

 

 

 

 

* excluding biennial exhibition cycling

 

 

 

 

 

 

 

 

 

 

 

In H1 2013 underlying revenue growth was +7% excluding the effect of biennial show cycling. While growth in Europe was modest, the US, Japan, Brazil and other markets all grew well.

 

Underlying revenues grew +1% (+7% excluding biennial cycling), and underlying adjusted operating profits grew +4%.

 

US shows reported strong growth in visitor numbers and strong revenue growth.

 

In Europe good growth in international events more than offset softness in some domestic continental European events, resulting in modest overall growth.

 

Japan achieved good growth, supported by leadership of the alternative energy sector, and Brazil and China generated strong growth.

 

In H1 2013 we launched 16 new events, primarily in high growth geographies and sectors, including the highly successful launch of World Travel Market Latin America, building on a global franchise.

 

The H1 results reflect the impact of a number of portfolio changes, including the acquisition of Expo Ferretera in Mexico earlier this year, All Energy in Australia, the Agenda portfolio in the US, and the Auto Aftermarket Fair in China during 2012. Disposals include a number of Spanish events as well as several smaller events across geographies.

 

Full year 2013 outlook: We continue to expect growth to be good in the US and Japan, limited in Europe, and strong in other markets. However, 2013 is a cycling out year, reducing underlying revenue growth by 5-6 percentage points for the full year.

 

Financial review

 

Adjusted figures

 


 

£

 

 

 

 

 

 

 

 


Six months ended 30 June


Six months ended 30 June






2013
£m

2012†

£m

Change

%

 

2013
€m

2012†

€m

Change

%

 

Change at constant
currencies

 

Underlying growth rates

Adjusted figures

 

 

 

 

 

 

 

 

 

 

 

Revenue

3,025

3,053

-1%

 

3,570

3,725

-4%

 

-3%

 

+2%/+3%*

Operating profit

870

832

+5%

 

1,027

1,015

+1%

 

+2%

 

+6%

Operating margin

28.8%

27.3%

 

 

28.8%

27.3%

 

 

 

 

 

Profit before tax

778

725

+7%

 

918

884

+4%

 

+5%

 

 

Net profit

592

552

+7%

 

698

673

+4%

 

+5%

 

 

Operating cash flow

739

778

-5%

 

872

949

-8%

 

-7%

 

 

Operating cash flow conversion

85%

94%

 

 

85%

94%

 

 

 

 

 

* excluding biennial exhibition cycling

 

 

 

 

 

 

 

 

 

 

† Comparative financial information has been restated following the adoption of IAS19 Employee Benefits (revised), see note 1 to the combined financial information on page 21. Reed Elsevier uses adjusted figures as additional performance measures. Adjusted figures primarily exclude items related to acquisitions and disposals, and the associated deferred tax movements. Reconciliation between the reported and adjusted figures are set out in note 4 to the combined financial information on page 26.

 

Underlying revenue growth was +2%, or +3% excluding biennial exhibition cycling.  Reported revenue was £3,025m/€3,570m (2012: £3,053m/€3,725m), down -1% expressed in sterling and down -4% in euros.  At constant currencies, revenue was down -3% compared with the prior year first half. 

Underlying adjusted operating profit growth was +6%.  Total adjusted operating profit was £870m/€1,027m (2012: £832m/€1,015m), up +5% expressed in sterling and +1% in euros.  At constant currencies, adjusted operating profits were up +2%. 

Operating costs decreased by -4% at constant currencies, including acquisitions and disposals.  Underlying costs were up +1%, reflecting investment in global technology platforms and launching of new products and services, partly offset by continued improvements in process efficiency. 

The overall adjusted operating margin at 28.8% was 1.5 percentage points higher than in the prior first half.  This included a 0.4 percentage point benefit to margin from portfolio change and a 0.2 percentage point benefit from the Elsevier subscription currency hedging programme. 

Net finance costs were lower at £92m/€109m (2012: £107m/€131m), excluding the pension financing charge. This reflects the benefit of term debt refinancing at lower rates. 

Adjusted profit before tax was £778m/€918m (2012: £725m/€884m), up +7% expressed in sterling and +4% in euros, and up +5% at constant currencies, reflecting the increase in adjusted operating profits and lower interest charges. 

The effective tax rate on adjusted profit before tax at 23.5% was in line with the prior year first half.  The effective tax rate excludes movements in deferred taxation assets and liabilities related to goodwill and acquired intangible assets, and includes the benefit of tax amortisation where available on those items.  Adjusted operating profits and taxation are grossed up for the equity share of taxes in joint ventures.

The application of tax law and practice is subject to some uncertainty and amounts are provided in respect of this. Discussions with tax authorities relating to cross border transactions and other matters are ongoing. Although the outcome of open items cannot be predicted, no significant impact on the financial position of Reed Elsevier is expected.

The adjusted net profit attributable to shareholders of £592m/€698m (2012: £552m/€673m) was up +7% expressed in sterling and up +4% in euros, and up +5% at constant currencies. 

Reported figures

 



£








Six months ended 30 June


Six months ended 30 June




2013
£m

2012†

£m

Change
%


2013
€m

2012†

€m

Change
%

 

Change at constant
currencies

Reported figures




 




 


Operating profit

684

657

+4%

 

807

801

+1%

+2%

Profit before tax

626

647

-  3%

 

739

790

-  6%

- 5%

Net profit

509

552

-8%

 

601

673

-11%

 

10%

             




 






†Comparative financial information has been restated following the adoption of IAS19 Employee Benefits (revised), see note 1 to the combined financial information on page 21.

 

Reported operating profit, after amortisation of acquired intangible assets and acquisition related costs, was £684m/€807m (2012: £657m/€801m).  The increase principally reflects the improved trading performance described in the Operating Review.

The amortisation charge in respect of acquired intangible assets, including the share of amortisation in joint ventures, amounted to £161m/€190m (2012: £166m/€203m).  Acquisition related costs amounted to £21m/€25m (2012: £8m/€10m), including a charge for certain deferred consideration payments required to be expensed under IFRS. 

The reported profit before tax was £626m/€739m (2012: £647m/€790m). 

Reported net finance costs include a charge of £10m/€11m (2012: £6m/€7m) in respect of the defined benefit pension schemes.  Pre-tax disposal gains were £44m/€52m (2012: £103m/€127m) arising largely from the sale of Risk Solutions' pre-employment screening business, offset by a related tax charge of £47m/€55m (2012: tax credit of £33m/€39m).

The reported tax charge was £114m/€135m (2012: £93m/€114m). The reported net profit attributable to the parent companies' shareholders was £509m/€601m (2012: £552m/€673m).

 

Cash flows

 

Adjusted operating cash flow was £739m/€872m (2012: £778m/€949m). The rate of conversion of adjusted operating profits into cash flow in the first half was 85% (2012: 94%), reflecting the timing of receivables and payables at the end of the period.  These timing effects are largely expected to reverse in the second half. 

Capital expenditure included within adjusted operating cash flow was £152m/€179m (2012: £150m/€183m), including £124m/€146m (2012: £121m/€148m) in respect of capitalised development costs included within internally generated intangible assets, with capital expenditure for the year somewhat weighted to the second half.  This reflects the sustained investment in global technology platforms and new products, particularly in the Legal business. Depreciation and the amortisation of capitalised development costs was £127m/€150m (2012: £113m/€138m).

Free cash flow - after interest and taxation - was £483m/€570m (2012: £552m/€673m) before acquisition related spend and cash flows relating to prior year exceptional restructuring programmes.  The decrease compared with the prior first half is after higher taxes paid of £170m/€201m (2012: £126m/€154m), reflecting higher taxable profits, predominantly in the US.

Payments made in respect of acquisition related costs amounted to £16m/€19m (2012: £25m/€30m).  Payments in respect of prior year exceptional restructuring programmes were £4m/€5m (2012: £18m/€22m), principally relating to vacant property costs.  Tax receipts in respect of acquisition related and exceptional restructuring costs were £8m/€10m (2012: £11m/€13m).

Free cash flow before dividends was £471m/€556m (2012: £520m/€634m).  Ordinary dividends paid to shareholders in the first half, being the prior year final dividends, amounted to £395m/€466m (2012: £377m/€460m).  Free cash flow after dividends was £76m/€90m (2012: £143m/€174m).

Cash spend on acquisitions and other investments was £85m/€100m, including deferred consideration of £4m/€5m on past acquisitions. 

Net cash proceeds from disposals in the first half amounted to £226m/€266m, after related separation and transaction costs.  Net cash tax paid in respect of disposals was £22m/€26m (2012: £2m/€2m).

Share repurchases by the parent companies were £300m/€354m (2012: nil). Net proceeds from the exercise of share options were £80m/€94m (2012: £5m/€6m).

 

Debt

 

Net borrowings at 30 June 2013 were £3,339m/€3,906m, an increase of £212m/€60m since 31 December 2012.  The majority of our borrowings are denominated in US dollars and the weakening of sterling and euro against the dollar since the start of the year has resulted in higher net borrowings when translated at period end rates.  Excluding currency translation effects, net borrowings increased by £32m/€38m, with share repurchases and acquisitions substantially funded from free cash flow and divestment proceeds.  Expressed in US dollars, net borrowings at 30 June 2013 were $5,070m, a decrease of $9m since 31 December 2012.

Gross borrowings, including fair value adjustments, at 30 June 2013 amounted to £3,790m/€4,434m (31 December 2012: £3,892m/€4,787m).  The fair value of related derivative financial instruments was £77m/€90m (31 December 2012: £124m/€153m).  Cash balances totalled £374m/€438m (31 December 2012: £641m/€788m).

The effective cost of our gross borrowings was 4.9% in the first half, down from 5.6% for the year ended 31 December 2012.  As at 30 June 2013, after taking into account interest rate and currency derivatives, a total of 60% of Reed Elsevier's gross borrowings were at fixed rates with a weighted average remaining life of 5.8 years. 

Net pension obligations, ie pension obligations less pension assets, at 30 June 2013 were £381m/€446m (31 December 2012: £466m/€573m) including a net deficit of £217m/€254m (31 December 2012: £306m/€376m) in respect of funded schemes.  The reduced deficit reflects an improvement in asset values over the period. 

The ratio of net debt to 12 months trailing EBITDA (adjusted earnings before interest, tax, depreciation and amortisation) as at 30 June 2013 was 2.1x (31 December 2012: 2.2x) on a pensions and lease adjusted basis.  On an unadjusted basis net debt to EBITDA was 1.7x (31 December 2012: 1.7x).  Reed Elsevier aims to operate at credit metrics consistent with a solid investment grade credit rating.

 

Liquidity

 

During July 2013, Reed Elsevier's committed bank facility, maturing in June 2015, was cancelled and replaced with a new $2,000m facility, maturing in July 2018.  This back-up facility provides security of funding for short term debt. 

 

In March 2013, $309m of US dollar denominated fixed rate term debt maturing in January 2019, with a coupon of 8.625%, was exchanged for $389m of the 3.125% term debt due in 2022 and cash.  In June 2013, $282m of Swiss Franc denominated fixed rate term debt due in 2018 was issued at a coupon of 1.0%.

Reed Elsevier has ample liquidity and access to debt capital markets, providing the ability to repay or refinance borrowings as they mature.

 

PARENT COMPANIES

 

 

Reed Elsevier PLC

 

Reed Elsevier NV


Change at
constant
currencies

 

Six months ended 30 June


Six months ended 30 June

 


2013

pence

2012†

pence

Change

%

 

2013

2012†

Change

%

 

Reported earnings per share

22.0p

23.4p

-6%

 

€0.42

€0.46

-9%

 

 

Adjusted earnings per share

26.5p

24.3p

+9%

 

€0.48

€0.46

+4%

 

+7%

Ordinary dividend per share

6.65p

6.00p

+11%

 

€0.132

€0.130

+2%

 

 











Comparative financial information has been restated following the adoption of IAS19 Employee Benefits (revised), see note 1 to the combined financial information on page 21.

 

The reported earnings per share for Reed Elsevier PLC shareholders was 22.0p (2012: 23.4p) and for Reed Elsevier NV shareholders was €0.42 (2012: €0.46) reflecting lower disposal related gains in the first half, partly offset by a one-off deferred tax credit.

Adjusted earnings per share were up +9% at 26.5p (2012: 24.3p) and up +4% at €0.48 (2012: €0.46) for Reed Elsevier PLC and Reed Elsevier NV respectively.  At constant currencies, the adjusted earnings per share of both companies increased by +7%.

The equalised interim dividends declared by the respective boards are 6.65p per share for Reed Elsevier PLC and €0.132 per share for Reed Elsevier NV, up +11% and +2% respectively against the prior year interim dividends. (The difference in growth rates in the equalised interim dividends reflects the strengthening of the euro relative to sterling since the prior year interim dividend announcement date from €1.27:£1 to €1.16:£1.)

Dividend cover, based on adjusted earnings per share for the last 12 months to 30 June 2013, and the aggregate 2012 final and 2013 interim dividends, is 2.2 times (2012: 2.1x) for Reed Elsevier PLC and 2.0 times (2012: 1.9x) for Reed Elsevier NV.  The dividend policy of the parent companies is, subject to currency considerations, to grow dividends broadly in line with adjusted earnings per share whilst maintaining dividend cover (being the number of times the annual dividend is covered by the adjusted earnings per share) of at least two times over the longer term.

In the first half, 22.6m Reed Elsevier PLC shares and 13.1m Reed Elsevier NV shares were repurchased, partially mitigating the earnings per share dilution from divestments. As at 30 June 2013, shares in issue for Reed Elsevier PLC and Reed Elsevier NV respectively amounted to 1,174.0m and 676.1m (excluding R shares).

 

PRINCIPAL RISKS

 

The principal risks facing Reed Elsevier arise from the highly competitive and rapidly changing nature of our markets, the increasingly technological nature of our products and services, the international nature of our operations, legislative, fiscal and regulatory developments, and economic conditions in our markets.  Certain businesses could also be affected by the impact on publicly funded and other customers of changes in funding and by cyclical pressures on advertising and promotional spending or through the availability of alternative free sources of information.

 

The principal risks and uncertainties which could affect the combined businesses for the remainder of the financial year remain unchanged from those set out on pages 58 to 60 of the Reed Elsevier Annual Reports and Financial Statements 2012, and are summarised below:

 

·        Demand for our products and services may be impacted by factors such as the economic environment in the US, Europe and other major economies, and government funding.

·        Our products and services are largely comprised of intellectual property content delivered through a variety of media. We rely on trademark, copyright, patent and other intellectual property laws to establish and protect our proprietary rights in these products and services. There is a risk that our proprietary rights could be challenged, limited, invalidated or circumvented which may impact demand for and pricing of our products and services.

·        A number of our businesses rely extensively upon content and data from external sources. Data is obtained from public records, governmental authorities, customers and other information companies, including competitors. The disruption or loss of data sources, because of changes in the law or because data suppliers decide not to supply them, could adversely affect our products and services if we were unable to arrange for substitute sources in a timely manner or at all.

·        Our scientific, technical & medical (STM) primary publications, like those of most of our competitors, are principally published on a paid subscription basis. There is continuous debate in the government, academic and library communities, which are the principal customers for our STM publications, regarding whether such publications should be funded instead through fees charged to authors and from governmental and other subsidies or made freely available after a period following publication. If these methods of STM publishing are widely adopted or mandated, it could adversely affect our revenue from paid subscription publications.

·        Reed Elsevier's businesses are dependent on the continued acceptance by our customers of our products and services and the value placed on them. Failure to meet evolving customer needs could impact demand for our products and consequently adversely affect our revenue.

·        Our businesses operate in highly competitive markets. These markets continue to change in response to technological innovations, changing legislation, regulatory changes, the entrance of new competitors and other factors.  Failure to anticipate market trends could impact the competitiveness of our products and services and consequently adversely affect our revenue.

·        From time to time we acquire businesses to strengthen our portfolio. If we are unable to generate the anticipated benefits such as revenue growth, synergies and/or cost savings associated with these acquisitions this could adversely affect return on invested capital and financial condition.

·        Our businesses are dependent on electronic platforms and networks, primarily the internet, for delivery of products and services. They could be adversely affected if our electronic delivery platforms and networks experience a significant failure, interruption, or security breach.

·        Our businesses maintain databases and information online, including personal information.  Breaches of our data security or failure to comply with applicable legislation or regulatory or contractual requirements could damage our reputation and expose us to risk of loss or litigation and increased regulation.

·        Our organisational and operational structures have increased dependency on outsourced and offshored functions. Poor performance or failure of third parties to whom we have outsourced activities could adversely affect our business performance, reputation and financial condition.

·        The implementation and execution of our strategies and business plans depend on our ability to recruit, motivate and retain high quality people. We compete globally and across business sectors for talented management and skilled individuals, particularly those with technology and data analytics capabilities. Inability to recruit, motivate or retain such people could adversely affect our business performance.

·        We operate a number of pension schemes around the world. Historically, the largest schemes have been of the defined benefit type in the UK, the US and the Netherlands. The assets and obligations associated with those defined benefit pension schemes are particularly sensitive to changes in the market values of assets and the market related assumptions used to value scheme liabilities.  Adverse changes to inter alia asset values, discount rates or inflation could increase future pension costs and funding requirements.

·        Our businesses operate globally and our earnings are subject to taxation in many differing jurisdictions and at differing rates. We seek to organise our affairs in a tax efficient manner, taking account of the jurisdictions in which we operate. However, tax laws that apply to Reed Elsevier businesses may be amended by the relevant authorities or interpreted differently which could adversely affect our reported results.

·        The Reed Elsevier combined financial statements are expressed in pounds sterling and are subject to movements in exchange rates on the translation of the financial information of businesses whose operational currencies are other than sterling. The US is our most important market and, accordingly, significant fluctuations in the US dollar exchange rate could significantly affect our reported results.

·        Macro economic, political and market conditions may also adversely affect the availability of short and long term funding, volatility of interest rates, currency exchange rates and inflation.

·        As a world leading provider of professional information solutions to the scientific, technical & medical, risk solutions & business information, legal, and exhibitions markets we are expected to adhere to high standards of independence and ethical conduct.  A breach of generally accepted ethical business standards could adversely affect our business performance, reputation and financial condition.

·        Reed Elsevier and its businesses have an impact on the environment, principally through the use of energy and water, waste generation and, in our supply chain, through our paper use and print and production technologies.  Failure to manage our environmental impact could adversely affect our reputation.

 

combined financial information

 

Condensed combined income statement

For the six months ended 30 June 2013

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated
€m

 

 

2013


£m

2012

Restated
£m

 

2013


€m

2012

Restated
€m

6,116

7,523

 

Revenue

3,025

3,053

 

3,570

3,725

(2,139)

(2,631)

 

Cost of sales

(1,051)

(1,058)

 

(1,241)

(1,291)

3,977

4,892

 

Gross profit

1,974

1,995

 

2,329

2,434

(1,015)

(1,249)

 

Selling and distribution costs

(494)

(554)

 

(583)

(676)

(1,653)

(2,033)

 

Administration and other expenses

(807)

(799)

 

(952)

(975)

1,309

1,610

 

Operating profit before joint ventures

673

642

 

794

783

24

29

 

Share of results of joint ventures

11

15

 

13

18

1,333

1,639

 

Operating profit

684

657

 

807

801

16

20

 

Finance income

9

5

 

11

6

(243)

(299)

 

Finance costs

(111)

(118)

 

(131)

(144)

(227)

(279)

 

Net finance costs

(102)

(113)

 

(120)

(138)

            45

56

 

Disposals and other non operating items

44

103

 

52

127

1,151

1,416

 

Profit before tax

626

647

 

739

790

(102)

(126)

 

Taxation

(114)

(93)

 

(135)

(114)

1,049

1,290

 

Net profit for the period

512

554

 

604

676

 

 

 

Attributable to:

 

 

 

 

 

1,044

1,284

 

Parent companies' shareholders

509

552

 

601

673

5

6

 

Non-controlling interests

3

2

 

3

3

1,049

1,290

 

Net profit for the period

512

554

 

604

676


 

 

 

 

 

 

 

 

 

Condensed combined statement of comprehensive income

For the six months ended 30 June 2013

 

 

 

 

£

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013


£m

2012

Restated
£m

 

2013


€m

2012

Restated
€m

1,049

1,290

 

Net profit for the period

512

554

 

604

676

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

 

(293)

(360)

 

Actuarial gains/(losses) on defined benefit pension schemes

86

(183)

 

101

(223)

96

118

 

Tax on items that will not be reclassified to profit or loss

(33)

57

 

(39)

70

(197)

(242)

 

Total items that will not be reclassified to profit or loss

53

(126)

 

62

(153)

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

 (136)

(102)

 

Exchange differences on translation of foreign operations

174

(38)

 

67

43

11

14

 

Transfer to net profit on disposal of available for sale investments

-

11

 

-

13

70

86

 

Fair value movements on cash flow hedges

(7)

13

 

(8)

16

21

26

 

Transfer to net profit from cash flow hedge reserve (net of tax)

(1)

10

 

(1)

12

(19)

(24)

 

Tax on items that may be reclassified to profit or loss

-

(4)

 

-

(5)

(53)

-

 

Total items that may be reclassified to profit or loss

166

(8)

 

58

79

(250)

(242)

 

Other comprehensive income/(expense) for the period

219

(134)

 

120

(74)

799

1,048

 

Total comprehensive income for the period

731

420

 

724

602

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

794

1,042

 

Parent companies' shareholders

728

418

 

721

599

5

6

 

Non-controlling interests

3

2

 

3

3

799

1,048

 

Total comprehensive income for the period

731

420

 

724

602

 

 

Condensed combined statement of cash flows

For the six months ended 30 June 2013

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

£m

2012

€m



2013

£m

2012

£m

 

2013

€m

2012

€m

 

 

 

Cash flows from operating activities

 

 

 

 

 

1,847

2,272

 

Cash generated from operations

857

862

 

1,011

1,052

(231)

(284)

 

Interest paid

(91)

(106)

 

(107)

(129)

7

9

 

Interest received

5

6

 

6

7

(216)

(266)

 

Tax paid

(184)

(117)

 

(217)

(143)

1,407

1,731

 

Net cash from operating activities

587

645

 

693

787

 

 

 

 

 


 

 


 

 

 

Cash flows from investing activities

 


 

 


(316)

(389)

 

Acquisitions

(78)

(173)

 

(92)

(211)

(70)

(86)

 

Purchases of property, plant and equipment

(28)

 (29)

 

(33)

(35)

(263)

(323)

 

Expenditure on internally developed intangible assets

(124)

(121)

 

(146)

(148)

(7)

(9)

 

Purchase of investments

(7)

-

 

(8)

-

7

9

 

Proceeds from disposals of property, plant and equipment

1

7

 

1

8

153

188

 

Net proceeds from other disposals

226

118

 

266

144

20

25

 

Dividends received from joint ventures

13

16

 

15

20

(476)

(585)

 

Net cash from/(used in) investing activities

3

(182)

 

3

(222)

 

 

 

 

 


 

 


 

 

 

Cash flows from financing activities

 


 

 


(521)

(641)

 

Dividends paid to shareholders of the parent companies

(395)

(377)

 

(466)

(460)

(4)

(5)

 

Distributions to non-controlling interests

(1)

(1)

 

(1)

(1)

(434)

(534)

 

Increase/(decrease) in short term bank loans, overdrafts and

   commercial paper

191

(42)

 

226

(51)

592

728

 

Issuance of other loans

183

-

 

216

-

(437)

(538)

 

Repayment of other loans

(603)

(328)

 

(712)

(400)

(4)

(5)

 

Repayment of finance leases

(5)

(2)

 

(6)

(2)

7

9

 

Disposal of non-controlling interests

-

7

 

-

8

(250)

(308)

 

Repurchase of ordinary shares

(300)

-

 

(354)

-

48

59

 

Proceeds on issue of ordinary shares

80

5

 

94

6

(1,003)

(1,235)

 

Net cash used in financing activities

(850)

(738)

 

(1,003)

(900)

 

 

 

 

 

 

 

 

 

(72)

(89)

 

Decrease in cash and cash equivalents

(260)

(275)

 

(307)

(335)

 

 

 

 

 


 

 


 

 

 

Movement in cash and cash equivalents

 


 

 


726

871

 

At start of period

641

726

 

788

871

(72)

(89)

 

Decrease in cash and cash equivalents

(260)

(275)

 

(307)

(335)

(13)

6

 

Exchange translation differences

(7)

(26)

 

(43)

(9)

641

788

 

At end of period

374

425

 

438

527





 

 

 

 

 

 

 

Condensed combined statement of financial position

As at 30 June 2013

 

 

 

 

 

£

 

 

 

As at 31 December

 

 

As at 30 June

 

As at 30 June

2012

£m

2012

€m

 

 

2013

£m

2012

£m

 

2013

€m

2012

€m

 

 

 

Non-current assets

 

 


 

 

4,545

5,591

 

Goodwill

4,857

4,770


5,683

5,915

3,275

4,028

 

Intangible assets

3,406

3,431


3,985

4,254

100

123

 

Investments in joint ventures

103

95


120

118

79

97

 

Other investments

91

95


106

118

264

325

 

Property, plant and equipment

268

266


314

330

79

97

 

Deferred tax assets

133

43


156

53

138

170

 

Derivative financial instruments

52

104


61

129

8,480

10,431

 

 

8,910

8,804


10,425

10,917


 

 

Current assets

 



 


159

196

 

Inventories and pre-publication costs

166

178


194

221

1,380

1,697

 

Trade and other receivables

1,171

1,129


1,370

1,400

57

70

 

Derivative financial instruments

89

51


104

63

641

788

 

Cash and cash equivalents

374

425


438

527

2,237

2,751

 

 

1,800

1,783


2,106

2,211

297

365

 

Assets held for sale

99

63


116

78

11,014

13,547

 

Total assets

10,809

10,650


12,647

13,206


 

 

 

 



 



 

 

Current liabilities

 



 


2,544

3,129

 

Trade and other payables

2,319

2,269


2,713

2,814

11

14

 

Derivative financial instruments

13

29


15

36

730

898

 

Borrowings

1,020

1,191


1,193

1,477

603

742

 

Taxation

672

689


787

854

30

37

 

Provisions

33

42


39

52

3,918

4,820

 

 

4,057

4,220


4,747

5,233


 

 

Non-current liabilities

 



 


-

-

 

Derivative financial instruments

21

15


25

19

3,162

3,889

 

Borrowings

2,770

2,659


3,241

3,297

919

1,130

 

Deferred tax liabilities

970

957


1,135

1,187

466

573

 

Net pension obligations

381

396


446

491

139

171

 

Provisions

132

102


154

126

4,686

5,763

 

 

4,274

4,129


5,001

5,120

96

118

 

Liabilities associated with assets held for sale

36

31


42

38

8,700

10,701

 

Total liabilities

8,367

8,380


9,790

10,391

2,314

2,846

 

Net assets

2,442

2,270


2,857

2,815


 

 

 

 



 



 

 

Capital and reserves

 



 


223

274

 

Combined share capitals

225

222

 

263

275

2,727

3,354

 

Combined share premiums

2,889

2,674

 

3,380

3,316

(899)

(1,106)

 

Combined shares held in treasury

(1,183)

(646)


(1,384)

(801)

(23)

161

 

Translation reserve

96

84


300

292

252

121

 

Other combined reserves

376

(92)


252

(302)

2,280

2,804

 

Combined shareholders' equity

2,403

2,242

 

2,811

2,780

34

42

 

Non-controlling interests

39

28

 

46

35

2,314

2,846

 

Total equity

2,442

2,270

 

2,857

2,815

 

 

 

 

 

 


 

 

Approved by the boards of Reed Elsevier PLC and Reed Elsevier NV, 24 July 2013.

 

 

Condensed combined statement of changes in equity

For the six months ended 30 June 2013

 

 

 

 

£

 

Combined shareholders' equity

 

 

 

Combined share capitals

Combined share premiums

Combined shares held in treasury

Translation reserve

Other combined reserves

Total

Non-controlling interests

Total

equity

 

£m

£m

£m

£m

£m

£m

£m

£m

Balance at 1 January 2013

223

2,727

(899)

(23)

252

2,280

34

2,314

Total comprehensive income for
   the period

-

-

-

174

554

728

3

731

Dividends paid

-

-

-

-

(395)

(395)

(1)

(396)

Issue of ordinary shares, net

   of expenses

-

80

-

-

-

80

-

80

Repurchase of ordinary shares

-

-

(300)

-

-

(300)

-

(300)

Increase in share based

   remuneration reserve

-

-

-

-

10

10

-

10

Settlement of share awards

-

-

39

-

(39)

-

-

-

Exchange differences on translation
   of capital and reserves

2

82

(23)

(55)

(6)

-

3

3

Balance at 30 June 2013

225

2,889

(1,183)

96

376

2,403

39

2,442

 

 

 

 

 

 

 

 

 

Balance at 1 January 2012

223

2,723

(663)

88

(199)

2,172

25

2,197

Total comprehensive income for
   the period

-

-

-

(38)

456

418

2

420

Dividends paid

-

-

-

-

(377)

(377)

(1)

(378)

Issue of ordinary shares, net
   of expenses

-

5

-

-

-

5

-

5

Increase in share based

   remuneration reserve

-

-

-

-

18

18

-

18

Settlement of share awards

-

-

7

-

(7)

-

-

-

Acquisitions

-

-

-

-

-

-

1

1

Disposal of non-controlling interests

-

-

-

-

6

6

1

7

Exchange differences on translation
   of capital and reserves

(1)

(54)

10

34

11

-

-

-

Balance at 30 June 2012

222

2,674

(646)

84

(92)

2,242

28

2,270

 

 

 

 

 

 

 

 

 

Balance at 1 January 2012

223

2,723

(663)

88

(199)

2,172

25

2,197

Total comprehensive income for

the year

-

-

-

(136)

930

794

5

799

Dividends paid                                       

-

-

-

-

(521)

(521)

(4)

(525)

Issue of ordinary shares, net

of expenses

1

47

-

-

-

48

-

48

Repurchase of ordinary shares

-

-

(250)

-

-

(250)

-

(250)

Increase in share based

remuneration reserve

-

-

-

-

31

31

-

31

Settlement of share awards

-

-

7

-

(7)

-

-

-

Acquisitions

-

-

-

-

-

-

9

9

Disposal of non-controlling interests

-

-

-

-

6

6

1

7

Exchange differences on translation

of capital and reserves

(1)

(43)

7

25

12

-

(2)

(2)

Balance at 31 December 2012

223

2,727

(899)

(23)

252

2,280

34

2,314

 

 

 

 

 

 

 

 

 

 

 

Condensed combined statement of changes in equity

For the six months ended 30 June 2013

 

 

 

 


Combined shareholders' equity

 

 


Combined share capitals

Combined share premiums

Combined shares held in treasury

Translation reserve

Other combined reserves

Total

Non-controlling interests

Total equity

 

€m

€m

€m

€m

€m

€m

€m

€m

Balance at 1 January 2013

274

3,354

(1,106)

161

121

2,804

42

2,846

Total comprehensive income for
   the period

-

-

-

67

654

721

3

724

Dividends paid

-

-

-

-

(466)

(466)

(1)

(467)

Issue of ordinary shares, net
   of expenses

-

94

-

-

-

94

-

94

Repurchase of ordinary shares

-

-

(354)

-

-

(354)

-

(354)

Increase in share based

remuneration reserve

-

-

-

-

12

12

-

12

Settlement of share awards

-

-

46

-

(46)

-

-

-

Exchange differences on translation
   of capital and reserves

(11)

(68)

30

72

(23)

-

2

2

Balance at 30 June 2013

263

3,380

(1,384)

300

252

2,811

46

2,857

 

 

 

 

 

 

 

 

 

Balance at 1 January 2012

268

3,268

(796)

297

(431)

2,606

30

2,636

Total comprehensive income for
   the period

-

-

-

43

556

599

3

602

Dividends paid

-

-

-

-

(460)

(460)

(1)

(461)

Issue of ordinary shares, net
   of expenses

-

6

-

-

-

6

-

6

Increase in share based

remuneration reserve

-

-

-

-

22

22

-

22

Settlement of share awards

-

-

9

-

(9)

-

-

-

Acquisitions

-

-

-

--

-

-

1

1

Disposal of non-controlling interests

-

-

-

-

7

7

1

8

Exchange differences on translation
   of capital and reserves

7

42

(14)

(48)

13

-

1

1

Balance at 30 June 2012

275

3,316

(801)

292

(302)

2,780

35

2,815

 

 

 

 

 

 

 

 

 

Balance at 1 January 2012

268

3,268

(796)

297

(431)

2,606

30

2,636

Total comprehensive income for

the year

-

-

-

(102)

1,144

1,042

6

1,048

Dividends paid

-

-

-

-

(641)

(641)

(5)

(646)

Issue of ordinary shares, net

of expenses

1

58

-

-

-

59

-

59

Repurchase of ordinary shares

-

-

(308)

-

-

(308)

-

(308)

Increase in share based

remuneration reserve

-

-

-

-

38

38

-

38

Settlement of share awards

-

-

9

-

(9)

-

-

-

Acquisitions

-

-

-

-

-

-

11

11

Disposals of non-controlling interests

-

-

-

-

8

8

1

9

Exchange differences on translation

of capital and reserves

5

28

(11)

(34)

12

-

(1)

(1)

Balance at 31 December 2012

274

3,354

(1,106)

161

121

2,804

42

2,846

 

 

 

 

 

 

 

 

 

 

 

notes to the combined financial information

 

1          Basis of preparation

 

The Reed Elsevier condensed combined financial information ("the combined financial information") represents the combined interests of the Reed Elsevier PLC and Reed Elsevier NV shareholders and encompasses the businesses of Reed Elsevier Group plc and Elsevier Reed Finance BV and their respective subsidiaries, associates and joint ventures, together with the two parent companies, Reed Elsevier PLC and Reed Elsevier NV ("Reed Elsevier" or "the combined businesses").

 

The directors of Reed Elsevier PLC and Reed Elsevier NV, having made appropriate enquiries, consider that adequate resources exist for the combined businesses to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the combined financial information for the six months ended 30 June 2013.

 

The combined financial information for the six months ended 30 June 2013 and the comparative amounts to 30 June 2012 are unaudited but have been reviewed. The combined financial information for the year ended 31 December 2012 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2012, which received an unqualified audit report.

 

The combined financial information has been prepared in accordance with IAS34 Interim Financial Reporting and the Reed Elsevier accounting policies.  Reed Elsevier accounting policies are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and issued by the International Accounting Standards Board, and are described on pages 98 to 103 of the Reed Elsevier Annual Reports and Financial Statements 2012. Accounting policies and valuation techniques relating to fair value measurements are described on pages 100 and 101 of the Reed Elsevier Annual Reports and Financial Statements 2012. Financial information is presented in both sterling and euros. 

 

Standards and amendments effective for the period

 

IAS19 Employee Benefits. With effect from 1 January 2013, IAS19 Employee Benefits (revised) inter alia changes the methodology used in the calculation of the net pension financing credit or charge in relation to defined benefit pension schemes. Under the revised standard, pension asset returns included within the net pension financing credit or charge are calculated by reference to the discount rate of high quality corporate bonds (being also the discount rate applied in the calculation of pension obligations) and are no longer based on the expected returns on scheme assets. The effect is to reduce the asset returns recognised in the income statement.

 

Adoption of IAS19 (revised) has had no impact on Reed Elsevier's combined statement of financial position and statement of cash flows.  The net pension financing credit or charge is now presented within net finance costs in Reed Elsevier's combined income statement, rather than within operating profit as previously reported.  Given that the revised standard may introduce greater volatility to the income statement, the net pension financing credit or charge has been excluded from the adjusted figures used by Reed Elsevier as additional performance measures.

 

As required under the revised standard, comparative figures have been restated. For the six month period ended 30 June 2012 on a reported basis, operating profits are £13m/€16m lower and net finance costs are £6m/€7m higher than previously reported.  On an adjusted basis, profit before tax is £13m/€16m lower. For the year ended 31 December 2012, operating profits are £25m/€31m lower and net finance costs are £11m/€13m higher than previously reported.  On an adjusted basis, profit before tax is £25m/€30m lower.

 

With effect from 1 January 2013 Reed Elsevier also adopted IFRS10 Consolidated Financial Statements, IFRS11 Joint Arrangements, IFRS12 Disclosure of Interests in Other Entities, and IFRS13 Fair Value Measurement, in addition to amendments to IAS27 Consolidated and Separate Financial Statements and IAS28 Investments in Associates. Adoption of these new accounting standards and amendments has not had a significant impact on Reed Elsevier's accounting policies or reporting. With the exception of IFRS13, these standards and amendments have been early adopted for the purposes of Reed Elsevier's application of IFRS as adopted by the EU.

 

2          Segment analysis

 

Reed Elsevier's reported segments are based on the internal reporting structure and financial information provided to the Chief Executive Officer and Boards.

 

Reed Elsevier is a world leading provider of professional information solutions organised as five business segments: Scientific, Technical & Medical, providing information and tools to help its customers improve scientific and healthcare outcomes; Risk Solutions, providing tools that combine proprietary, public and third-party information with advanced technology and analytics; Business Information, providing data services, information and marketing solutions to business professionals; Legal, providing legal, tax, regulatory news & business information to legal, corporate, government, accounting and academic markets; and Exhibitions, organising exhibitions and conferences.

 

Adjusted operating profit is the key segmental profit measure used by Reed Elsevier in assessing performance. Adjusted operating profit is reconciled to reported figures in note 4.

 

Revenue

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

£m

2012

€m

 

 

2013

£m

2012

£m

 

2013

€m

2012

€m

 

 

 

Business segment

 

 

 

 

 

2,063

2,538

 

Scientific, Technical & Medical

1,008

978

 

1,190

1,193

926

1,139

 

Risk Solutions

473

462

 

558

564

663

815

 

Business Information

286

347

 

338

423

1,610

1,980

 

Legal

773

780

 

912

952

854

1,051

 

Exhibitions

485

486

 

572

593

6,116

7,523

 

Total

3,025

3,053

 

3,570

3,725

 

 

 

Geographical origin

 

 

 

 

 

3,122

3,840

 

North America

1,557

1,553

 

1,837

1,895

966

1,188

 

United Kingdom

476

474

 

562

578

611

752

 

The Netherlands

329

310

 

388

378

788

969

 

Rest of Europe

344

388

 

406

474

629

774

 

Rest of world

319

328

 

377

400

6,116

7,523

 

Total

3,025

3,053

 

3,570

3,725

 

 

 

Geographical market

 

 

 

 

 

3,154

3,879

 

North America

1,552

1,565

 

1,831

1,910

442

544

 

United Kingdom

210

223

 

248

272

165

203

 

The Netherlands

87

83

 

103

101

1,176

1,447

 

Rest of Europe

535

581

 

631

709

1,179

1,450

 

Rest of world

641

601

 

757

733

6,116

7,523

 

Total

3,025

3,053

 

3,570

3,725

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

 

 

 

 

£

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013

 

£m

2012

Restated

£m

 

2013

 

€m

2012

Restated

€m

 

 

 

Business segment

 

 

 

 

 

780

960

 

Scientific, Technical & Medical

372

352

 

439

430

392

482

 

Risk Solutions

212

191

 

250

233

119

146

 

Business Information

55

63

 

65

77

234

288

 

Legal

103

100

 

122

122

210

258

 

Exhibitions

151

151

 

178

184

1,735

2,134

 

Subtotal

893

857

 

1,054

1,046

(47)

(58)

 

Corporate costs

(23)

(25)

 

(27)

(31)

1,688

2,076

 

Total

870

832

 

1,027

1,015

 

Operating profit

 

 

 

 

 

£

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013

 

£m

2012

Restated

£m

 

2013

 

€m

2012

Restated

€m

 

 

 

Business segment

 

 

 

 

 

706

868

 

Scientific, Technical & Medical

333

315

 

393

384

281

346

 

Risk Solutions

160

135

 

189

165

76

93

 

Business Information

37

40

 

43

49

146

180

 

Legal

50

58

 

59

71

171

210

 

Exhibitions

127

134

 

150

163

1,380

1,697

 

Subtotal

707

682

 

834

832

(47)

(58)

 

Corporate costs

(23)

(25)

 

(27)

(31)

1,333

1,639

 

Total

684

657

 

807

801

 

 

 

 

 

 

 

 

 

 

3          Combined statement of cash flows

 

Reconciliation of operating profit before joint ventures to cash generated from operations

 

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013

 

£m

2012

Restated

£m

 

2013

 

€m

2012

Restated

€m

1,309

1,610

 

Operating profit before joint ventures

673

642


794

783

 

 

 

 

 

 


 

 

328

404

 

Amortisation of acquired intangible assets

160

165


189

201

151

186

 

Amortisation of internally developed intangible assets

81

75


96

92

76

93

 

Depreciation of property, plant and equipment

46

38


54

46

31

38

 

Share based remuneration

13

18


15

22

586

721

 

Total non cash items

300

296


354

361

(48)

(59)

 

Increase in working capital

(116)

(76)


(137)

(92)

1,847

2,272

 

Cash generated from operations

857

862


1,011

1,052

 

 

 

 

 

 


 

 

 

Reconciliation of net borrowings

 




£

Year ended

31 December

 

 

 

 

 

Six months ended

30 June

2012

£m

 

 

Cash &

cash

equivalents

£m

Borrowings

£m

Related
derivative
financial

instruments

£m

2013

£m

2012

£m

(3,433)

 

At start of period

641

(3,892)

124

(3,127)

(3,433)

 

 

 

 

 

 

 

 

(72)

 

Decrease in cash and cash equivalents

(260)

-

-

(260)

(275)

283

 

Decrease in borrowings

-

232

-

232

372

-

 

Payments of cash collateral

-

-

2

2

-

211

 

Changes in net borrowings resulting from cash flows

(260)

232

2

(26)

97

(13)

 

Inception of finance leases

-

(8)

-

(8)

(7)

1

 

Fair value and other adjustments to borrowings and related derivatives

 

-

 

56

 

(54)

 

2

(4)

107

 

Exchange translation differences

(7)

(178)

5

(180)

29

(3,127)

 

At end of period

374

(3,790)

77

(3,339)

(3,318)

 

 

 




 


 

 

 

 

 

 

 

 

Year ended

31 December

 

 

 

 

 

Six months ended

30 June

 

2012

€m

 

 

Cash &

cash

equivalents

€m

Borrowings

€m

Related
derivative
financial

instruments

€m

2013

€m

2012

€m

 

(4,119)

 

At start of period

788

(4,787)

153

(3,846)

(4,119)

 

 

 

 

 

 

 

 

 

 

(89)

 

Decrease in cash and cash equivalents

(307)

-

-

(307)

(335)

 

349

 

Decrease in borrowings

-

274

-

274

453

 

-

 

Payments of cash collateral

-

-

2

2

-

 

260

 

Changes in net borrowings resulting from cash flows

(307)

274

2

(31)

118

 

(16)

 

Inception of finance leases

-

(9)

-

(9)

(9)

 

1

 

Fair value and other adjustments to borrowings and related derivatives

-

 

66

 

(64)

 

2

(5)

 

28

 

Exchange translation differences

(43)

22

(1)

(22)

(99)

 

(3,846)

 

At end of period

438

(4,434)

90

(3,906)

(4,114)

 

 

 

 

 

 

 

 

 

 

Net borrowings comprise cash and cash equivalents, loan capital, finance leases, promissory notes, bank and other loans, and those derivative financial instruments that are used to hedge the fair value of fixed rate borrowings.

 

 

Borrowings by year of repayment

 

 

 

 

 

£

 

As at

31 December

 

 

As at 30 June

 

As at 30 June

2012

£m

2012

€m

2013

£m

2012

£m

 

2013

€m

2012

€m

730

898

 

Within 1 year

1,020

1,191


1,193

1,477

650

799

 

Within 1 to 2 years

132

716


154

888

181

223

 

Within 2 to 3 years

69

125


81

155

400

492

 

Within 3 to 4 years

425

64


497

79

359

442

 

Within 4 to 5 years

327

423


383

525

1,572

1,933

 

After 5 years

1,817

1,331


2,126

1,650

3,162

3,889

 

After 1 year

2,770

2,659


3,241

3,297

3,892

4,787

 

Total

3,790

3,850


4,434

4,774

 

 

 

 

 

 


 

 

Short term bank loans, overdrafts and commercial paper were backed up at 30 June 2013 by a $2,000m (£1,317m/€1,541m) committed bank facility, which matured in June 2015 and was undrawn. In July 2013 this facility was cancelled and replaced with a new $2,000m facility, maturing in July 2018. This back up facility provides security of funding for $2,000m of short term debt.

 

4          Adjusted figures

Reed Elsevier uses adjusted figures as additional performance measures.  Adjusted operating profit excludes amortisation of acquired intangible assets, acquisition related costs and the share of taxes in joint ventures.  Acquisition related costs relate to acquisition integration, transaction related fees, and those elements of deferred and contingent consideration required to be expensed under IFRS. Adjusted profit before tax also excludes disposal related and other non operating items and the net financing charge or credit on defined benefit pension schemes.  The adjusted tax charge excludes the tax effect of these adjusting items, exceptional tax credits (in 2012 full year only) and movements on deferred tax assets and liabilities related to goodwill and acquired intangible assets.  It includes the benefit of tax amortisation where available on goodwill and acquired intangible assets. Adjusted operating cash flow is measured after net capital expenditure and dividends from joint ventures but before payments in relation to prior year exceptional restructuring programmes and acquisition related costs. Adjusted figures are derived as follows:

 

 

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013

 

£m

2012

Restated

£m

 

2013

 

€m

2012

Restated

€m

1,333

1,639

 

Operating profit

684

657


807

801

 

 

 

Adjustments:

 

 


 

 

329

405

 

   Amortisation of acquired intangible assets

161

166


190

203

21

26

 

   Acquisition related costs

21

8


25

10

5

6

 

   Reclassification of tax in joint ventures

4

1


5

1

1,688

2,076

 

Adjusted operating profit

870

832


1,027

1,015

 

 

 

 

 

 


 

 

1,151

1,416

 

Profit before tax

626

647


739

790

 

 

 

Adjustments:

 

 


 

 

329

405

 

   Amortisation of acquired intangible assets

161

166


190

203

11

14

 

   Net financing cost on defined benefit pension schemes

10

6


11

7

21

26

 

   Acquisition related costs

21

8


25

10

5

6

 

   Reclassification of tax in joint ventures

4

1


5

1

(45)

(56)

 

   Disposals and other non operating items

(44)

(103)


(52)

(127)

1,472

1,811

 

Adjusted profit before tax

778

725


918

884

 

 

 

 

 

 

 

 

 

(102)

(126)

 

Tax charge

(114)

(93)

 

(135)

(114)

 

 

 

Adjustments:

 

 

 

 

 

(77)

(95)

 

   Deferred tax movements on goodwill and acquired 
   intangible assets

(101)

(40)

 

 

(119)

(49)

(3)

(4)

 

   Tax on net financing cost on defined benefit pension 
   schemes

(4)

(2)

 

(4)

(2)

(5)

(6)

 

   Tax on acquisition related costs

(7)

(2)

 

(9)

(3)

(5)

(6)

 

   Reclassification of tax in joint ventures

(4)

(1)

 

(5)

(1)

(58)

(71)

 

   Tax on disposals and other non operating items

47

(33)

 

55

(39)

(96)

(118)

 

  Exceptional prior year tax credit

-

-

 

-

-

(346)

(426)

 

Adjusted tax charge

(183)

(171)

 

(217)

(208)

 

 

 

 

 

 

 

 

 

1,044

1,284

 

Net profit attributable to parent companies' shareholders

509

552

 

601

673

 

 

 

Adjustments (post-tax):

 

 

 

 

 

252

310

 

   Amortisation of acquired intangible assets

60

126

 

71

154

8

10

 

   Net financing cost on defined benefit pension schemes

6

4

 

7

5

16

20

 

   Acquisition related costs

14

6

 

16

7

(103)

(127)

 

   Disposals and other non operating items

3

(136)

 

3

(166)

(96)

(118)

 

  Exceptional prior year tax credit

-

-

 

--

-

1,121

1,379

 

Adjusted net profit attributable to parent companies' shareholders

592

552

 

698

673

 

 

 

 

 

 

 

 

 

 

4          Adjusted figures (continued)

 

 

 

 

 

 

£

 

Year ended

31 December

 

 

Six months ended

30 June

 

  Six months ended

30 June

2012

£m

2012

€m

 

 

2013

£m

2012

£m

 

2013

€m

2012

€m

 

1,847

2,272

 

Cash generated from operations

857

862

 

1,011

1,052

 

20

25

 

Dividends received from joint ventures

13

16

 

15

20

 

(70)

(86)

 

Purchases of property, plant and equipment

(28)

(29)

 

(33)

(35)

 

7

9

 

Proceeds from disposals of property, plant and equipment

1

7

 

1

8

 

(263)

(323)

 

Expenditure on internally developed intangible assets

(124)

(121)

 

(146)

(148)

 

25

30

 

Payments relating to exceptional restructuring costs

4

18

 

5

22

 

37

45

 

Payments relating to acquisition related costs

16

25

 

19

30

 

1,603

1,972

 

Adjusted operating cash flow

739

778

 

872

949

 

 

 

 

 

 

 

 

 

 

 

 

5          Pension schemes

The amount recognised in the statement of financial position in respect of defined benefit pension schemes at the start and end of the period and the movements during the period were as follows:

 

Year ended

31 December

 

 

 

£

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

Restated

£m

2012

Restated

€m

 

 

2013

 

£m

2012

Restated

£m

 

2013

 

€m

2012

Restated

€m

(242)

(290)

 

At start of period

(466)

(242)

 

(573)

(290)

(43)

(53)

 

Service cost (including curtailment credits of £17m/€20m (2012: nil))

(20)

(31)

 

(24)

(38)

(11)

(14)

 

Net financing cost on defined benefit pension schemes

(10)

(6)

 

(11)

(7)

(293)

(360)

 

Actuarial gains/(losses)

86

(183)

 

101

(223)

116

143

 

Contributions by employer

47

64

 

55

78

7

1

 

Exchange translation differences

(18)

2

 

6

(11)

(466)

(573)

 

At end of period

(381)

(396)

 

(446)

(491)

 

 

 

 

 

 

 

 

 

 

The net pension deficit comprises:

 

As at 31 December

 

 

 

£

 

 

   As at 30 June

 

  As at 30 June

2012

£m

2012

€m

 

 

2013

£m

2012

£m

 

2013

€m

2012

€m

3,806

4,682

 

Fair value of scheme assets

3,949

3,734

 

4,620

4,630

(4,112)

(5,058)

 

Defined benefit obligations of funded schemes

(4,166)

(3,968)

 

(4,874)

(4,920)

(306)

(376)

 

Net deficit of funded schemes

(217)

(234)

 

(254)

(290)

(160)

(197)

 

Defined benefit obligations of unfunded schemes

(164)

(162)

 

(192)

(201)

(466)

(573)

 

Net deficit

(381)

(396)

 

(446)

(491)

 

 

 

 

 

 

 

 

 

 

6          Provisions

The amount recognised in the statement of financial position in respect of provisions at the start and end of the period and the movements during the period were as follows:

 

Year ended

31 December

 

 

 

£

 

 

Six months ended

30 June

 

Six months ended

30 June

2012

£m

2012

€m

 

 

2013

£m

2012

£m

 

2013

€m

2012

€m

126

152

 

At start of period

169

126

 

208

152

22

27

 

Transfers

-

-

 

-

-

62

76

 

Charged

-

40

 

-

49

(36)

(45)

 

Utilised

(14)

(21)

 

(17)

(26)

(5)

(2)

 

Exchange translation differences

10

(1)

 

2

3

169

208

 

At end of period

165

144

 

193

178

 

 

 

 

 

 

 

 

 

The amount as at 30 June 2013 comprises property provisions of £163m/€191m (31 December 2012: £164m/€202m), relating to sub-lease shortfalls and guarantees given in respect of certain property leases, and restructuring provisions of £2m/€2m (31 December 2012: £5m/€6m).

 

7          Related party transactions

There have been no significant related party transactions that have had a material impact on the performance or financial position of Reed Elsevier in the six months ended 30 June 2013.

 

8          Exchange translation rates

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

 

Year ended

31 December 2012

 

 

Income statement

 

Statement of financial position

Income statement

Statement of financial position

 

 

30 June 2013

30 June 2012

 

30 June 2013

30 June 2012

1.23

1.23

 

Euro to sterling

1.18

1.22

 

1.17

1.24

1.59

1.62

 

US dollars to sterling

1.54

1.58

 

1.52

1.57

1.29

1.32

 

US dollars to euro

1.31

1.30

 

1.30

1.27

 

 

 

 

 

 

 

 

 

 

 

 

REED ELSEVIER PLC

CONSOLIDATED financial information

 

Condensed consolidated income statement

For the six months ended 30 June 2013

 

 

 

 

£

Year ended

31 December

 

 

Six months ended 30 June

2012

Restated

£m

 

 

2013

 

£m

2012

Restated

£m

(2)

 

Administrative expenses

-

-

(14)

 

Effect of tax credit equalisation on distributed earnings

(10)

(10)

547

 

Share of results of joint ventures

269

291

531

 

Operating profit

259

281

1

 

Finance income

-

1

532

 

Profit before tax

259

282

6

 

Taxation

-

-

538

 

Profit attributable to ordinary shareholders

259

282

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2012

Restated

£m

 

 

2013

 

£m

2012

Restated

£m

538

 

Profit attributable to ordinary shareholders

259

282

(132)

 

Share of joint ventures' other comprehensive income/(expense) for the period

116

(71)

406

 

Total comprehensive income for the period

375

211

 

 

 

 


 

Earnings per ordinary share

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2012

Restated

pence

 

 

2013

 

pence

2012

Restated

pence

44.8p

Basic earnings per share

22.0p

23.4p

44.3p

 

Diluted earnings per share

21.7p

23.2p





Adjusted profit and earnings per share figures are presented in note 2 as additional performance measures.

 

Condensed consolidated statement of cash flows

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

£

 

 

Six months ended 30 June

2012

£m

 

 

2013

£m

2012

£m

 

 

Cash flows from operating activities

 

 

(2)

 

Cash used by operations

-

-

1

 

Interest received

-

1

(2)

 

Tax paid

(1)

(1)

(3)

 

Net cash used in operating activities

(1)

-

 



 

 

 

 

Cash flows from investing activities

 

 

694

 

Dividends received from joint ventures

103

73

694

 

Net cash from investing activities

103

73

 



 

 

 

 

Cash flows from financing activities

 

 

(264)

 

Equity dividends paid

(200)

(191)

(143)

 

Repurchase of ordinary shares

(164)

-

33

 

Proceeds on issue of ordinary shares

36

4

(317)

 

Decrease/(increase) in net funding balances due from joint ventures

226

114

(691)

 

Net cash used in financing activities

(102)

(73)

 



 

 

-

 

Movement in cash and cash equivalents

-

-






 

Condensed consolidated statement of financial position

As at 30 June 2013

 

As at 31 December

 

 

 

£

 

 

As at 30 June

2012

£m

 

 

2013

£m

2012

£m

 

 

Non-current assets

 

 

1,207

 

Investments in joint ventures

1,271

1,194

1,207

 

Total assets

1,271

1,194

 

 

Current liabilities

 

 

1

 

Taxation

-

8

1

 

Total liabilities                                                                                                               

-

8

1,206

 

Net assets

1,271

1,186

 

 

Capital and reserves

 

 

181

 

Called up share capital

181

180

1,208

 

Share premium account

1,244

1,180

(447)

 

Shares held in treasury (including in joint ventures)

(590)

(304)

4

 

Capital redemption reserve

4

4

87

 

Translation reserve

179

139

173

 

Other reserves

253

(13)

1,206

 

Total equity

1,271

1,186

 

 

 

 

 

Approved by the board of directors, 24 July 2013.

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2013

 

 

 

 

 

 

 

 

£


Share capital
£m

Share premium
£m

 Shares held in treasury
£m

Capital redemption reserve
£m

Translation reserve
£m

Other reserves
£m

Total
 equity
£m

Balance at 1 January 2013

181

1,208

(447)

4

87

173

1,206

Total comprehensive income for the period

-

-

-

-

92

283

375

Equity dividends paid

-

-

-

-

-

(200)

(200)

Issue of ordinary shares, net of expenses

-

36

-

-

-

-

36

Repurchase of ordinary shares

-

-

(164)

-

-

-

(164)

Share of joint ventures' increase in share based   remuneration reserve

-

-

-

-

-

5

5

Share of joint ventures' settlement of share awards by the employee benefit trust

-

-

21

-

-

(21)

-

Equalisation adjustments

-

-

-

-

-

13

13

Balance at 30 June 2013

181

1,244

(590)

4

179

253

1,271

 

 

 

 

 

 

 

 

Balance at 1 January 2012

180

1,176

(308)

4

159

(62)

1,149

Total comprehensive income for the period

-

-

-

-

(20)

231

211

Equity dividends paid

-

-

-

-

-

(191)

(191)

Issue of ordinary shares, net of expenses

-

4

-

-

-

-

4

Share of joint ventures' increase in share based

   remuneration reserve

-

-

-

-

-

10

10

Share of joint ventures' settlement of share awards by the employee benefit trust

-

-

4

-

-

(4)

-

Share of joint ventures' disposal of non-controlling

   interests

-

-

-

-

-

3

3

Balance at 30 June 2012

180

1,180

(304)

4

139

(13)

1,186

 

 

 

 

 

 

 

 

Balance at 1 January 2012

180

1,176

(308)

4

159

(62)

1,149

Total comprehensive income for the year

-

-

-

-

(72)

478

406

Equity dividends paid

-

-

-

-

-

(264)

(264)

Issue of ordinary shares, net of expenses

1

32

-

-

-

-

33

Repurchase of ordinary shares

-

-

(143)

-

-

-

(143)

Share of joint ventures' increase in share based remuneration reserve

-

-

-

-

-

16

16

Share of joint ventures' settlement of share awards by the     employee benefit trust

-

-

4

-

-

(4)

-

Share of joint ventures' disposal of non-controlling

interests

-

-

-

-

-

3

3

Equalisation adjustments

-

-

-

-

-

6

6

Balance at 31 December 2012

181

1,208

(447)

4

87

173

1,206

 

Notes to the consolidated financial information

1          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 the 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 statement of financial position as investments in joint ventures, net of the assets and liabilities reported as part of Reed Elsevier PLC and its subsidiary undertakings.

 

The directors of Reed Elsevier PLC, having made appropriate enquiries, consider that adequate resources exist for the group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the summary financial information for the six months ended 30 June 2013.

 

The summary financial information does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The interim figures for the six months ended 30 June 2013 and the comparative amounts to 30 June 2012 have been reviewed but are unaudited. The summary financial information for the year ended 31 December 2012 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2012, which have been filed with the UK Registrar of Companies and received an unqualified audit report.

 

The condensed consolidated financial information has been prepared in accordance with IAS34 Interim Financial Reporting and on the basis of the group accounting policies of Reed Elsevier PLC. The Reed Elsevier PLC group accounting policies are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as issued by the International Accounting Standards Board, and are set out on page 158 of the Reed Elsevier Annual Reports and Financial Statements 2012. As described on page 21, the combined businesses adopted IAS19 Employee Benefits (revised) with effect from 1 January 2013. As required under the revised standard, comparative figures have been restated. For the six month period ended 30 June 2012, Reed Elsevier PLC's share of results of joint ventures is £7m lower and basic earnings per share is 0.6p lower than previously reported. On an adjusted basis, earnings per share is 0.4p lower than previously reported.

 

With effect from 1 January 2013, the combined business also adopted various other standards, interpretations and amendments to IFRS, none of which have had a significant impact on Reed Elsevier's accounting policies or reporting.

 

2          Adjusted figures

Adjusted profit and earnings per share figures are used as additional performance measures.  Adjusted earnings per share is based upon the Reed Elsevier PLC shareholders' 52.9% economic interest in the adjusted net profit attributable of the Reed Elsevier combined businesses, which is reconciled to the reported figures in note 4 to the combined financial information.  The adjusted figures are derived as follows:

 

Year ended

31 December

 

 

 

 

 

£

 

 

Six months ended 30 June

Profit attributable

to ordinary shareholders

Basic earnings

per share

 

 

Profit attributable

to ordinary shareholders

Basic earnings

per share

2012

Restated

£m

2012

Restated

pence

 

 

2013

 

£m

2012

Restated

£m

2013

 

pence

2012

Restated

pence

538

44.8p

 

Reported figures

259

282

22.0p

23.4p

14

1.1p

 

Effect of tax credit equalisation on distributed earnings

10

10

0.8p

0.9p

552

45.9p


Profit attributable to ordinary shareholders based on 52.9% economic interest in the Reed Elsevier combined businesses

269

292

22.8p

24.3p

41

3.5p

 

Share of adjustments in joint ventures

44

-

3.7p

        -

593

49.4p

 

Adjusted figures

313

292

26.5p

24.3p

 

 

 

 

 

 

 

 

 

3          Dividends

During the six months ended 30 June 2013, the 2012 final dividend of 17.0p per ordinary share was paid at a cost of £200m (2012: 2011 final dividend 15.9p per ordinary share; £191m). On 24 July 2013 an interim dividend of 6.65p per ordinary share (2012: 2012 interim dividend 6.00p per ordinary share) was declared by the directors of Reed Elsevier PLC. The 2013 interim dividend will be paid on the ordinary shares on 29 August 2013, with ex-dividend and record dates of 7 August 2013 and 9 August 2013 respectively. The cost of this dividend of £78m (2012 interim: £73m) will be recognised when paid.

 

Dividends paid to Reed Elsevier PLC and Reed Elsevier NV shareholders are, other than in special circumstances, 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.

 

4          Share capital and treasury shares

 

Year ended

31 December

 

 

Six months ended 30 June

2012

 

 

 

 

2013

2012

Shares in

 issue net of treasury

shares

(millions)

 

 

Shares in issue

(millions)

Treasury shares

(millions)

Shares in issue net of treasury shares

(millions)

Shares in issue net of treasury shares (millions)

 

 

Number of ordinary shares

 

 

 

 

1,202.6

 

At start of period

1,257.6

(71.0)

1,186.6

1,202.6

6.7

 

Issue of ordinary shares

6.8

-

6.8

0.9

(23.3)

 

Repurchase of ordinary shares

-

(22.6)

(22.6)

--

0.6

 

Net release of shares by the employee benefit trust

-

3.2

3.2

0.6

1,186.6

 

At end of period

1,264.4

(90.4)

1,174.0

1,204.1

1,200.6

 

Weighted average number of equivalent ordinary shares during the period

 

 

 

1,179.9

1,203.7

 

 

 

 

 

 

 

 

5          Contingent liabilities and related party transactions

There are contingent liabilities in respect of borrowings of joint ventures guaranteed jointly and severally by Reed Elsevier PLC and Reed Elsevier NV amounting to £3,608m at 30 June 2013 (31 December 2012: £3,595m).

 

There have been no significant related party transactions that have had a material impact on the performance or financial position of Reed Elsevier PLC in the six months ended 30 June 2013.

 

 

REED ELSEVIER nv

CONSOLIDATED financial information

 

Condensed consolidated income statement

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2012

Restated

€m

 

2013

 

€m

2012

Restated

€m

(2)

 

Administrative expenses

(1)

(1)

638

 

Share of results of joint ventures

299

333

636


Operating profit

298

332

8


Finance income

4

6

644

 

Profit before tax

302

338

(2)

 

Taxation

(1)

(1)

642

 

Profit attributable to shareholders

301

337

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2012

Restated

€m

 

 

2013

 

€m

2012

Restated

€m

642

 

Profit attributable to shareholders

301

337

(121)

 

Share of joint ventures' other comprehensive income/(expense) for the period

60

(37)

521

 

Total comprehensive income for the period

361

300

 

 

 

 

 

 

Earnings per ordinary share

For the six months ended 30 June 2013

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2012

Restated

 

 

2013

 

2012

Restated

€0.87

Basic earnings per share

€0.42

€0.46

€0.87

 

Diluted earnings per share

€0.41

€0.45

 

 

 

 

Adjusted profit and earnings per share figures are presented in note 2 as additional performance measures.

 

 

Condensed consolidated statement of cash flows

For the six months ended 30 June 2013

 

Year ended

 31 December



 

Six months ended 30 June

2012

€m

 

 

2013

€m

2012

€m

 

 

Cash flows from operating activities

 

 

(5)

 

Cash used by operations

(2)

(2)

6

 

Interest received

7

7

(2)

 

Tax paid

(1)

-

(1)

 

Net cash from/(used in) operating activities

4

5

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

754

 

Dividends received from joint ventures

186

138

754

 

Net cash from investing activities

186

138

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

(319)

 

Equity dividends paid

(230)

(228)

(141)

 

Repurchase of shares

(161)

-

18

 

Proceeds on issue of ordinary shares

50

1

(313)

 

Decrease/(increase) in net funding balances due from joint ventures

151

84

(755)

 

Net cash used in financing activities

(190)

(143)

 

 

 

 

 

(2)

 

Movement in cash and cash equivalents

-

-

 

 

 

 

 

 

Condensed consolidated statement of financial position

As at 30 June 2013

 

As at 31 December

 

 

 

 

 

As at 30 June

2012

€m

 

 

2013

€m

2012

€m

 

 

Non-current assets

 

 

1,455

 

Investments in joint ventures

1,461

1,447

 

 

Current assets

 

 

4

 

Amounts due from joint ventures

1

1

1

 

Cash and cash equivalents

1

3

5

 

 

2

4

1,460

 

Total assets

1,463

1,451

 

 

Current liabilities

 

 

7

 

Payables

6

9

51

 

Taxation

51

52

58

 

Total liabilities

57

61

1,402

 

Net assets

1,406

1,390

 

 

Capital and reserves

 

 

54

 

Share capital issued

54

54

2,189

 

Paid-in surplus

2,239

2,172

(571)

 

Shares held in treasury (including in joint ventures)

(704)

(430)

(42)

 

Translation reserve

(13)

30

(228)

 

Other reserves

(170)

(436)

1,402

 

Total equity

1,406

1,390

 

 

 

 

 

Approved by the board of directors, 24 July 2013.

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2013

 

 

 

 

 

 

 


Share

capital

€m

Paid-in surplus

€m

 Shares held In

treasury

€m

Translation reserve

€m

Other reserves

€m

Total

equity

€m

Balance at 1 January 2013

54

2,189

(571)

(42)

(228)

1,402

Total comprehensive income for the period

-

-

-

34

327

361

Equity dividends paid

-

-

-

-

(230)

(230)

Issue of ordinary shares, net of expenses

-

50

-

-

-

50

Repurchase of shares

-

-

(161)

-

-

(161)

Share of joint ventures' increase in share based
   remuneration reserve

-

-

-

-

6

6

Share of joint ventures' settlement of share awards by the                                employee benefit trust

-

-

23

-

(23)

-

Equalisation adjustments

-

-

-

-

(22)

(22)

Exchange translation differences

-

-

5

(5)

-

-

Balance at 30 June 2013

54

2,239

(704)

(13)

(170)

1,406

 

 

 

 

 

 

 

Balance at 1 January 2012

54

2,171

(432)

6

(496)

1,303

Total comprehensive income for the period

-

-

-

21

279

300

Equity dividends paid

-

-

-

-

(228)

(228)

Issue of ordinary shares, net of expenses

-

1

-

-

-

1

Share of joint ventures' increase in share based
   remuneration reserve

-

-

-

-

11

11

Share of joint ventures' settlement of share awards by the    employee benefit trust

-

-

5

-

(5)

-

Share of joint ventures' disposal of non-controlling

    interests

-

-

-

-

3

3

Exchange translation differences

-

-

(3)

3

-

-

Balance at 30 June 2012

54

2,172

(430)

30

(436)

1,390

 

 

 

 

 

 

 

Balance at 1 January 2012

54

2,171

(432)

6

(496)

1,303

Total comprehensive income for the year

-

-

-

(51)

572

521

Equity dividends paid

-

-

-

-

(319)

(319)

Issue of ordinary shares, net of expenses

-

18

-

-

-

18

Repurchase of shares

-

-

(141)

-

-

(141)

Share of joint ventures' increase in share based
   remuneration reserve

-

-

-

-

19

19

Share of joint ventures' settlement of share awards by the                                employee benefit trust

-

-

5

-

(5)

-

Share of joint ventures' disposal of non-controlling

interests

-

-

-

-

4

4

Equalisation adjustments

-

-

-

-

(3)

(3)

Exchange translation differences

-

-

(3)

3

-

-

Balance at 31 December 2012

54

2,189

(571)

(42)

(228)

1,402

 

 

 

 

 

 

 

 

Notes to the consolidated financial information

1          Basis of preparation

The Reed Elsevier NV share of the Reed Elsevier combined results has been calculated on the basis of the 50% economic interest of the Reed Elsevier NV shareholders in the Reed Elsevier combined businesses, after taking account of the results arising in Reed Elsevier NV and its subsidiary undertakings.

 

Reed Elsevier NV's 50% economic interest in the net assets of the combined businesses is shown in the statement of financial position as investments in joint ventures, net of the assets and liabilities reported as part of Reed Elsevier NV and its subsidiary undertakings.

 

The Board of Reed Elsevier NV, having made appropriate enquiries, consider that adequate resources exist for the group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the summary financial information for the six months ended 30 June 2013.

 

The interim figures for the six months ended 30 June 2013 and the comparative amounts to 30 June 2012 have been reviewed but are unaudited. The summary financial information for the year ended 31 December 2012 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2012, which received an unqualified audit report.

 

The summary financial information has been prepared in accordance with IAS34 Interim Financial Reporting and on the basis of the group accounting policies of Reed Elsevier NV. The Reed Elsevier NV group accounting policies are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as issued by the International Accounting Standards Board, and are set out on pages 178 and 179 of the Reed Elsevier Annual Reports and Financial Statements 2012 . As described on page 21, the combined businesses adopted IAS19 Employee Benefits (revised) with effect from 1 January 2013. As required under the revised standard, comparative figures have been restated. For the six month period ended 30 June 2012, Reed Elsevier NV's share of results of joint ventures is €8m lower and basic earnings per share is €0.01 lower than previously reported. On an adjusted basis, earnings per share is €0.01 lower than previously reported.

 

With effect from 1 January 2013, the combined business also adopted various other standards, interpretations and amendments to IFRS, none of which have had a significant impact on Reed Elsevier's accounting policies or reporting,

 

2          Adjusted figures

Adjusted profit and earnings per share figures are used as additional performance measures.  Adjusted earnings per share is based upon the Reed Elsevier NV shareholders' 50% economic interest in the adjusted net profit attributable of the Reed Elsevier combined businesses, which is reconciled to the reported figures in note 4 to the combined financial information.  The adjusted figures are derived as follows:

 

Year ended

31 December

 

 

 

 

 

 

 

Six months ended 30 June

Profit attributable

to ordinary shareholders

Basic earnings

per share

 

 

Profit

attributable

to ordinary

shareholders

Basic earnings

per share

2012

Restated

€m

2012

Restated

 

 

2013

 

€m

2012

Restated

€m

2013

 

2012

Restated

642

€0.87

 

Reported figures

301

337

€0.42

€0.46

48

€0.07

 

Share of adjustments in joint ventures

48

-

€0.06

-

690

€0.94

 

Adjusted figures

349

337

€0.48

€0.46

 

 

 

 

 

 

 

 

 

3          Dividends

During the six months ended 30 June 2013, the 2012 final dividend of €0.337 per ordinary share was paid at a cost of €230m (2012: 2011 final dividend €0.326 per ordinary share; €228m). On 24 July 2013 an interim dividend of €0.132 per ordinary share (2012: 2012 interim dividend €0.130 per ordinary share) was declared by the directors of Reed Elsevier NV. The 2013 interim dividend will be paid on the ordinary shares on 29 August 2013, with ex-dividend and record dates of 7 August 2013 and 9 August 2013 respectively. The cost of this dividend of €90m (2012 interim: €91m) will be recognised when paid.

 

Dividends paid to Reed Elsevier PLC and Reed Elsevier NV shareholders are, other than in special circumstances, equalised at the gross level inclusive of the UK tax credit received by certain Reed Elsevier PLC shareholders.

 

4          Share capital and treasury shares

 

Year ended

31 December

 

 

 

Six months ended 30 June

2012

 

 

 

 

 

2013

2012

Ordinary share equivalents

net of

treasury

shares

(millions)

 

 

Ordinary shares in issue

(millions)

 

 

 

 

R shares in issue

(millions)

Treasury shares

(millions)

Ordinary share equivalents

net of

treasury

shares

(millions)

Ordinary share equivalents

net of

treasury

shares

(millions)

 

 

Number of ordinary shares or equivalents

 

 

 

 

 

735.8

 

At start of period

726.0

43.0

(44.2)

724.8

735.8

1.9

 

Issue of ordinary shares

4.9

-

-

4.9

0.1

(13.3)

 

Repurchase of ordinary and R shares

-

-

(13.1)

(13.1)

-

0.4

 

Net release of shares by employee benefit trust

-

-

1.9

1.9

0.3

724.8

 

At end of period

730.9

43.0

(55.4)

718.5

736.2

734.0

 

Weighted average number of equivalent ordinary shares during the period

 

 

 

721.2

735.7

 

 

 

 

 

 

 

 

The average number of equivalent ordinary shares takes into account the R shares in the company held by a subsidiary of Reed Elsevier PLC, which represent a 5.8% indirect interest in the company's share capital.

 

At 30 June 2013 4,240,838 R shares were held by a subsidiary of Reed Elsevier PLC. The R shares are convertible at the election of the holders into ten ordinary shares each and each R share carries an entitlement to cast ten votes. They have otherwise the same rights as the ordinary shares, except that Reed Elsevier NV may pay a lower dividend on the R shares.

 

At 30 June 2013 treasury shares included 62,341 R shares (2012: nil), equivalent to 623,410 Reed Elsevier NV ordinary shares.

 

5          Contingent liabilities and related party transactions

There are contingent liabilities in respect of borrowings of joint ventures guaranteed jointly and severally by Reed Elsevier NV and Reed Elsevier PLC amounting to €4,222m at 30 June 2013 (31 December 2012: €4,422m).

 

There have been no significant related party transactions that have had a material impact on the performance or financial position of Reed Elsevier NV in the six months ended 30 June 2013.

 

 

 

additional information for us investors

 

 

Summary financial information in US dollars

This summary financial information in US dollars is a simple translation of the Reed Elsevier combined financial information into US dollars at the rates of exchange set out in note 8 to the combined financial information.  The financial information provided below is prepared in accordance with accounting principles as used in the preparation of the Reed Elsevier combined financial information.  It does not represent a restatement under US Generally Accepted Accounting Principles, which would be different in some significant respects.

 

Condensed combined income statement

 

Year ended

31 December

 

 

 

$

 

 

Six months ended 30 June

2012

Restated

US$m

 

 

2013

 

US$m

2012

Restated

US$m

9,724

 

Revenue

4,659

4,824

2,119

 

Operating profit

1,053

1,038

1,830

 

Profit before tax

964

1,022

1,660

 

Profit attributable to parent companies' shareholders

784

872

2,684

 

Adjusted operating profit

1,340

1,315

2,340

 

Adjusted profit before tax

1,198

1,146

1,782

 

Adjusted profit attributable to parent companies' shareholders

912

872

US$

 

Basic earnings per American Depositary Share (ADS)

US$

US$

$2.85

 

   Reed Elsevier PLC (Each ADS comprises four ordinary shares)

$1.36

$1.49

$2.25

 

   Reed Elsevier NV (Each ADS comprises two ordinary shares)

$1.10

$1.19

 

 

Adjusted earnings per American Depositary Share (ADS)

 

 

$3.14

 

   Reed Elsevier PLC (Each ADS comprises four ordinary shares)

$1.63

$1.54

$2.43

 

   Reed Elsevier NV (Each ADS comprises two ordinary shares)

$1.25

$1.19

 

 

 

 

 

Adjusted earnings per American Depository Share is based on Reed Elsevier PLC shareholders' 52.9% and Reed Elsevier NV shareholders' 50% respective shares of the adjusted net profit attributable of the Reed Elsevier combined businesses.  Adjusted figures are presented as additional performance measures and are reconciled to the reported figures at their sterling and euro amounts in note 4 to the combined financial information and in note 2 to the summary financial information of the respective parent companies.

 

Condensed combined statement of cash flows

 

Year ended

31 December

 

 

 

$

 

 

Six months ended 30 June

2012

US$m

 

 

2013

US$m

2012

US$m

2,237

 

Net cash from operating activities

904

1,019

(757)

 

Net cash from/(used in) investing activities

5

(288)

(1,594)

 

Net cash used in financing activities

(1,309)

(1,166)

(114)

 

Decrease in cash and cash equivalents

(400)

(435)

2,549

 

Adjusted operating cash flow

1,138

1,229

 

 

 

 

 

 

Condensed combined statement of financial position

 

As at 31 December

 

 

$

 

 

As at 30 June

2012

US$m

 

 

2013

US$m

2012

US$m

13,738

 

Non-current assets

13,543

13,659

3,624

 

Current assets

2,736

2,963

481

 

Assets held for sale

151

99

17,843

 

Total assets

16,430

16,721

6,347

 

Current liabilities

6,167

6,649

7,591

 

Non-current liabilities

6,496

6,459

156

 

Liabilities associated with assets held for sale

55

49

14,094

 

Total liabilities

12,718

13,157

3,749

 

Net assets

3,712

3,564

 

 

 

 

 

 

 

directors' responsibility statement

 

 

The directors confirm that to the best of their knowledge the condensed combined financial information and respective condensed consolidated parent company financial information, which have been prepared in accordance with IAS34 Interim Financial Reporting as adopted  by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the combined businesses and respective parent company groups, and that the interim management report herein includes a fair review of the information required by the United Kingdom Disclosure and Transparency Rules 4.2.7R and 4.2.8R and by section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).

 

At the date of this statement, the directors of Reed Elsevier PLC and Reed Elsevier NV are those listed in the Reed Elsevier Annual Reports and Financial Statements 2012 with the exception of Mark Elliott and David Reid who retired from the Boards of Reed Elsevier PLC and Reed Elsevier NV in April 2013.  Additionally, Dr Wolfhart Hauser joined the Boards of Reed Elsevier PLC and Reed Elsevier NV in April 2013.

 

 

By order of the Board of Reed Elsevier PLC

24 July 2013


By order of the Board of Reed Elsevier NV

24 July 2013

 

 

 

 



A J Habgood

Chairman     

D J Palmer

Chief Financial Officer


A J Habgood

Chairman

D J Palmer

Chief Financial Officer

 

 

 

INDEPENDENT REVIEW REPORT TO REED ELSEVIER PLC AND REED ELSEVIER NV

 

 

Introduction

We have been engaged by the Boards of Reed Elsevier PLC and Reed Elsevier NV to review the combined financial information of Reed Elsevier PLC, Reed Elsevier NV, Reed Elsevier Group plc and Elsevier Reed Finance BV and their respective subsidiaries, associates and joint ventures (together "the Combined Businesses") for the six months ended 30 June 2013 which comprises the condensed combined income statement, condensed combined statement of comprehensive  income, condensed combined statement of cash flows, condensed combined statement of financial position, condensed combined statement of changes in equity and related notes 1 to 8.

 

We have also reviewed the financial information of Reed Elsevier PLC and Reed Elsevier NV for the six months ended 30 June 2013 which comprise, respectively, the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of cash flows, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity and the related notes 1 to 5.

We have read the other information contained in the Reed Elsevier 2013 Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the combined financial information.

 

This report is made solely to Reed Elsevier PLC and Reed Elsevier NV in accordance with ISRE 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (UK and Ireland) and as issued by the IAASB (ISRE "2410"). Our work has been undertaken so that we might state to Reed Elsevier PLC and Reed Elsevier NV those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by applicable law, we do not accept or assume responsibility to anyone other than Reed Elsevier PLC and Reed Elsevier NV for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

The Reed Elsevier Interim Results, including the financial information contained therein, is the responsibility of, and has been approved by, the directors of Reed Elsevier PLC and Reed Elsevier NV. The directors of Reed Elsevier PLC and Reed Elsevier NV are responsible for preparing the Reed Elsevier Interim Results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and Dutch Law. The annual financial statements of Reed Elsevier PLC, Reed Elsevier NV and Reed Elsevier's combined financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The accompanying financial information has been prepared in accordance with International Accounting Standard 34: "Interim Financial Reporting" as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to Reed Elsevier PLC and Reed Elsevier NV a conclusion on the accompanying financial information based on our reviews.

 

Scope of Reviews

We conducted our reviews in accordance with ISRE 2410. A review of accompanying financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34: "Interim Financial Reporting" as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and Dutch Law.

 

Deloitte LLP

Deloitte Accountants BV

Chartered Accountants and Statutory Auditor

A Sandler

London

Amsterdam

United Kingdom

The Netherlands

24 July 2013

24 July 2013

 

 

 

INVESTOR INFORMATION

 

Financial Calendar

 

2013


 


 

25 July


PLC

NV


Interim results announcement for the six months to 30 June 2013

7 August

 


PLC

NV


Ex-dividend date - 2013 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary
   shares and ADRs

9 August

 


PLC

NV


Record date - 2013 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary shares
   and ADRs

29 August


PLC

NV


Payment date - 2013 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary shares

5 September


PLC

NV


Payment date - 2013 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ADRs

7 November


PLC

NV


Interim management statement issued in relation to the 2013 financial year

2014


 


 

27 February


PLC

NV


Results announcement for the year to 31 December 2013

23 April


PLC

NV


Interim management statement issued in relation to the 2014 financial year

24 July


PLC

NV


Interim results announcement for the six months to 30 June 2014



 


 

 

Listings

Reed Elsevier PLC

Reed Elsevier NV

 

 

London Stock Exchange

Euronext Amsterdam

Ordinary shares (REL) - ISIN No. GB00B2B0DG97

Ordinary shares (REN) - ISIN No. NL0006144495

 

 

New York Stock Exchange

New York Stock Exchange

American Depositary Shares (RUK) - CUSIP No. 758205207

American Depositary Shares (ENL) - CUSIP No. 758204200

Each ADR represents four ordinary shares

Each ADR represents two ordinary shares

 

 

Contacts

Reed Elsevier PLC

1-3 Strand

London WC2N 5JR

United Kingdom

Tel:   +44 (0)20 7166 5500

Fax:  +44 (0)20 7166 5799

Reed Elsevier NV

Radarweg 29

1043 NX Amsterdam

The Netherlands

Tel:   +31 (0)20 485 2222

Fax:  +31 (0)20 485 2032

 


 


Auditors

Deloitte LLP

2 New Street Square

London EC4A 3BZ

United Kingdom

 

Deloitte Accountants B.V.

Orlyplein 50

1043 DP Amsterdam

The Netherlands