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Reed Elsevier PLC (REL)

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Thursday 28 July, 2011

Reed Elsevier PLC

REED ELSEVIER 2011 INTERIM RESULTS

RNS Number : 2294L
Reed Elsevier PLC
28 July 2011
 



Issued on behalf of Reed Elsevier PLC and Reed Elsevier NV

28 July 2011

 

REED ELSEVIER 2011 INTERIM RESULTS

 

 

First half underlying growth in all businesses

 

Ø Underlying revenue growth +1%, or +3% excluding biennial exhibition cycling

-   Improving performance from large subscription and data businesses

-   Cyclical businesses recovering

Ø Adjusted operating margin +1.3% pts at 26.6%

Ø Return to growth in adjusted earnings per share: +5%

 

Full year outlook reaffirmed

 

 

Reed Elsevier


 

£

 

 

 

 

 

 

 

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 

2011
£m

2010
£m

Change

%


2011
€m

2010

€m

Change

%


Change at
constant
currencies

 

Underlying
growth
rates

Revenue

2,904

2,992

-3%

 

3,340

3,441

-3%

 

-1%

 

+1%

Adjusted operating profit

774

758

+2%

 

890

872

+2%

 

+3%

 

+2%

Adjusted operating margin

26.6%

25.3%

 

 

26.6%

25.3%

 

 

 

 

 

Adjusted profit before tax

662

624

+6%

 

761

718

+6%

 

+6%

 

 

Adjusted operating cash flow

692

743

-7%

 

796

854

-7%

 

-8%

 

 

Adjusted net profit

506

482

+5%

 

582

554

+5%

 

+5%

 

 

Reported net profit

377

316

+19%

 

434

363

+19%

 

+17%

 

 

Net borrowings

3,404

3,848

 

 

3,779

4,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PARENT COMPANIES


Reed Elsevier PLC


Reed Elsevier NV



Six months ended 30 June

 

Six months ended 30 June

 

 

2011

pence

2010

pence

Change

%


2011

2010

Change

%

 

Change at constant currencies

Adjusted earnings per share

22.3p

21.3p

+5%

 

€0.40

€0.38

+5%

 

+5%

Reported earnings per share

15.8p

13.2p

+20%

 

€0.30

€0.25

+20%

 

 

Ordinary dividend per share

5.65p

5.4p

+5%

 

€0.110

€0.109

+1%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted figures are supplemental 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 25 and note 2 to the respective parent company financial information on pages 31 and 36.  

 

Commenting on the results, Anthony Habgood, Chairman of Reed Elsevier, said:

 

"The first half has seen underlying revenue growth in each of our businesses (excluding the net cycling out of biennial exhibitions), good growth in operating margin, and a welcome return to growth in adjusted earnings per share (+5%) and in dividends.  Reported earnings per share were strongly ahead (+20%) and no restructuring charges were taken as exceptional during the period.  The sharp focus on value creation and operational execution should sustain a continued improvement in performance."

 

Reed Elsevier's Chief Executive Officer, Erik Engstrom, commented:

 

"The first half has seen the growth trajectory improve with our large subscription and data revenues strengthening and most of our cyclical businesses recovering.

 

Good growth in global scientific and medical research activity has supported spend on research information and tools.  The risk business with its pipeline of new product innovation is expanding its data and analytics across insurance carriers' workflow.  In our legal businesses new sales continue to grow and our product and content enhancements are resonating well with customers.  Our exhibitions are demonstrating the value of their offering with strong growth in the annual shows and a further acceleration of the new launch programme.  Reed Business Information has returned to underlying revenue growth and delivered its highest margin in recent history, as it continued to focus the portfolio on high growth data services and online marketing, and increased the efficiency in its operations.

 

With positive momentum across our businesses, we continue to expect a gradual improvement in performance."  

 

Ø Elsevier (44% of adjusted operating profit)

 

·  Revenue growth +2% (+2% underlying), adjusted operating profit +5% (+4% underlying), at constant currency

·  Growing research activity supporting science and medical research related spend 

·  Health Sciences: good growth in electronic solutions offset by continuing weakness in European pharmapromotion, print books and US career school enrolments

·  Budget environment mixed; varies considerably by geography and customer

 

Ø LexisNexis Risk Solutions (23% of adjusted operating profit)

 

·  Revenue growth +3% (+4% underlying), adjusted operating profit +5% (+6% underlying), at constant currency

·  Strong growth in insurance data and analytics (+7%) supported by new product pipeline

·  Growth across all of business services, government and screening solutions; varies by market

·  Insurance software licence business -25% (£7m/€8m); carriers postponing enterprise systems purchases

 

Ø LexisNexis Legal & Professional (12% of adjusted operating profit)

 

·  Revenue growth -1% (+1% underlying), adjusted operating profit -4% (-2% underlying), at constant currency

·  Return to underlying revenue growth;  adjusted operating margin flat

·  Legal markets stabilised but recovery in activity levels muted; new sales growing, content and product enhancements resonating

·  Strong growth outside US in online services largely offset by print declines

 

Ø Reed Exhibitions (15% of adjusted operating profit)

 

·  Revenue growth -3% (-4% underlying), adjusted operating profit -7% (-8% underlying), at constant currency

·  Underlying revenues +10% excluding impact of biennial show cycling

·  Strong growth in annual events across all geographies

·  Expanded launch programme with over 40 new launches expected for the full year

 

Ø Reed Business Information (7% of adjusted operating profit)

 

·  Revenue -8% (+2% underlying), adjusted operating profit +32% (+12% underlying), at constant currency

·  Return to underlying revenue growth; adjusted operating margin up 4.7% pts to 15.4%

·  Strong growth in data services and online marketing solutions

·  Leading brands returned to growth in the first half; continuing difficult print advertising markets in other business magazines

 

Ø Strong financial position with good cash generation

 

·  Conversion of adjusted operating profit into cash at 89%

·  Free cash flow of £440m (after restructuring spend) before dividends

·  Net debt at 30 June 2011 £3.4bn ($5.5bn; €3.8bn)

·  Net debt/LTM ebitda: 1.9x (2.4x pensions and lease adjusted)

 

Parent company earnings per share and dividends

 

Ø Adjusted earnings per share +5% to 22.3p for Reed Elsevier PLC and +5% to €0.40 for Reed Elsevier NV; +5% at constant currencies. 

 

Ø Reported earnings per share +20% to 15.8p for Reed Elsevier PLC and +20% to €0.30 for Reed Elsevier NV; no exceptional restructuring charges and lower acquisition related integration costs.

Ø Reed Elsevier PLC interim dividend up +5% at 5.65p; equalised Reed Elsevier NV dividend +1% to €0.110.  (Difference in growth rates in the equalised dividends reflects changes in the euro:sterling exchange rate since prior year dividend announcement date.)

 

Outlook

 

With positive momentum across our businesses and our focus on creating value, we continue to expect a gradual improvement in performance.

 

Ø Elsevier:  Strong demand for research information and electronic tools continues.  The budget environment, however, remains mixed.   Overall, modest revenue growth is expected for the year.

 

Ø LexisNexis Risk Solutions:  The business is positioned well for the future with good growth in data and analytics and new product initiatives continuing across all the businesses.  The software licence business is not expected to improve in the second half. 

 

Ø LexisNexis Legal & Professional:  Growth in legal market activity levels remains muted.  New sales, however, are growing well.  Revenue recovery is expected to continue to be gradual, with adjusted operating margin broadly flat in 2011.

 

Ø Reed Exhibitions:   Continued good growth in annual shows and significant launch activity is expected; however 2011 sees the net cycling out of biennial shows.

 

Ø Reed Business Information:   Data services and online marketing solutions are continuing to grow well.  Leading brands are expected to remain stable but many print advertising markets are still weak. 

  

 

 

 

 

ENQUIRIES:

Sybella Stanley (Investors)

+44 (0)20 7166 5630

Patrick Kerr (Media)

+44 (0)20 7166 5646

 

FORWARD LOOKING STATEMENTS

This Interim Results statement 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 "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: general economic and business conditions; competitive factors in the industries in which Reed Elsevier operates; demand for Reed Elsevier's products and services; exchange rate fluctuations; legislative, fiscal and regulatory developments; political risks; changes in law and legal interpretations affecting Reed Elsevier's intellectual property rights and internet communications; the availability of third party content and data; terrorism, acts of war and pandemics; the impact of technological change; and other risks referenced from time to time in the filings of Reed Elsevier PLC and Reed Elsevier NV with the US Securities and Exchange Commission.

 

 

OPERATING AND FINANCIAL REVIEW

 

OPERATING review

 


 

£

 

 

 

 

 

%

 

%

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 

2011
£m

2010
£m

Change

%


2011
€m

2010

€m

Change

%


Change at
constant
currencies

 

Underlying
growth
rates

Revenue

 

 

 

 

 

 

 

 

 

 

 

Elsevier

961

955

+1%

 

1,105

1,098

+1%

 

+2%

 

+2%

LexisNexis Risk Solutions

452

464

-3%

 

520

534

-3%

 

+3%

 

+4%

LexisNexis Legal & Professional

779

816

-5%

 

896

938

-5%

 

-1%

 

+1%

Reed Exhibitions

368

383

-4%

 

423

441

-4%

 

-3%

 

-4%

Reed Business Information

344

374

-8%

 

396

430

-8%

 

-8%

 

+2%

Total

2,904

2,992

-3%

 

3,340

3,441

-3%

 

-1%

 

+1%

Adjusted operating profit

 

 

 

 

 

 

 

 

 

 

 

Elsevier

343

319

+8%

 

394

367

+8%

 

+5%

 

+4%

LexisNexis Risk Solutions

178

180

-1%

 

205

207

-1%

 

+5%

 

+6%

LexisNexis Legal & Professional

94

100

-6%

 

108

115

-6%

 

-4%

 

-2%

Reed Exhibitions

113

123

-8%

 

130

142

-8%

 

-7%

 

-8%

Reed Business Information

53

40

+33%

 

61

46

+33%

 

+32%

 

+12%

Unallocated items

(7)

(4)

 

 

(8)

(5)

 

 

 

 

 

Total

774

758

+2%

 

890

872

+2%

 

+3%

 

+2%


 

 

 


 

 

 


 

 

 

Adjusted figures are supplemental measures used by management.  Reconciliations between the reported and adjusted figures are set out in note 4 to the combined financial information on page 25.  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 both in the year and prior year.  Constant currency growth rates are based on 2010 full year average and hedge exchange rates.

 

Elsevier

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Revenue

 

 

 

 

 

 

 

 

 

 

 

Science & Technology

529

503

+5%

 

608

578

+5%

 

+4%

 

+4%

Health Sciences

432

452

-4%

 

497

520

-4%

 

-1%

 

0%

 

961

955

+1%

 

1,105

1,098

+1%

 

+2%

 

+2%

Adjusted operating profit

343

319

+8%

 

394

367

+8%

 

+5%

 

+4%

Adjusted operating margin

35.6%

33.4%

+2.2pts

 

35.6%

33.4%

+2.2pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Good growth in global scientific and medical research activity has supported spend on research information and tools.  Weakness has continued in European pharma promotion and health print book sales.

 

Revenues and adjusted operating profits increased by 2% and 5% respectively at constant currencies, or 2% and 4% before minor acquisitions and disposals.

 

Science & Technology saw underlying revenue growth of 4%.  Global research activity has continued to grow in line with long term trends.  The scientific research landscape is also being shaped by the increasing inter-disciplinary nature of research and growing cross-border collaboration between institutions.  The funding environment continues to be mixed with significant customer and geographic variations.  Within this context, Elsevier has focused on helping academic customers achieve better research outcomes through insightful information and productivity tools.  The number of customers taking broad content collections continued to increase.  Strong growth was seen in sales of electronic solutions including Scopus and our more recently introduced performance and planning tools in the SciVal suite, which help institutions to manage their research spend.

 

Health Sciences underlying revenues were flat.  Medical research revenue growth strengthened as the trends mirrored those in Science & Technology research.  Demand remains strong for integrated online solutions and other electronic products in clinical reference, clinical decision support, and nursing and health professional education, reflecting the focus on improved healthcare outcomes and increased efficiency as well as format migration.  Print books declined however, reflecting constrained customer budgets, format shift and lower enrolments in US career schools ahead of the introduction of 'gainful employment' legislation affecting student funding.  Clarity on this legislation following government announcements in May is expected to enable career schools to plan more confidently and the education market to gradually recover.  Pharma promotion and other advertising markets stabilised in the US, but there was continued weakness in European markets.

 

Underlying cost growth was 1% reflecting savings in direct costs and tight cost control offsetting business growth and spending on new product and market initiatives.  The adjusted operating margin improved by 2.2 percentage points reflecting a 0.8 percentage point underlying improvement, a 0.3 percentage point benefit from minor disposals and a 1.1 percentage points net benefit of the multi-year subscription currency hedging programme and other currency translation effects.  The reported operating margin, after amortisation of acquired intangible assets, was 31.8%, up 2.4 percentage points.

 

Strong demand for research information and electronic tools is expected to continue.  The budget environment, however, remains mixed.   Overall, modest revenue growth is expected for the year.

 

LexisNexis Risk Solutions

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Revenue

452

464

-3%

 

520

534

-3%


+3%

 

+4%

Adjusted operating profit

178

180

-1%

 

205

207

-1%


+5%

 

+6%

Adjusted operating margin

39.4%

38.8%

+0.6pts

 

39.4%

38.8%

+0.6pts


 

 

 


 

 

 

 

 

 

 

 

 

 

 

Insurance data and analytics grew strongly supported by an active new product pipeline.  Screening solutions and business services grew well, while government solutions saw modest growth reflecting US federal budget constraints.  Sales of insurance software licences declined.

 

LexisNexis Risk Solutions and LexisNexis Legal & Professional, previously combined as one LexisNexis business, have operated as two distinct businesses from 1 January 2011.  Comparative figures and growth rates are presented on a pro forma basis.

 

Revenues and adjusted operating profits were up 3% and 5% respectively at constant currencies, or up 4% and 6% before minor disposals.  

 

Insurance data and analytics grew 7% as US carriers continued to look to improve underwriting economics and process efficiency.  In addition to the intensive use of data and analytics at the point of underwriting, growth was supported by the increasing penetration of new products across other areas of the insurance carrier workflow from marketing to claims.  The insurance software licence business declined 25% (£7m/€8m) as carriers postponed purchasing decisions for enterprise systems.

 

Screening services grew 6% with improved sales effectiveness and increasing penetration of the mid-sized company market in a more subdued hiring environment.  Business and other data services saw growth of 5% with a continued recovery in the financial services and corporate markets and new product introduction.  Government solutions growth of 2% was constrained by US federal budget pressures, although there is increasing interest in products that identify fraud, waste and abuse in state and local welfare programs.

 

In June, LexisNexis Risk Solutions announced an initiative to open source elements of its industry leading HPCC 'big data' technology.  Making the HPCC platform open source will expand the usage applications for the technology, enabling LexisNexis to leverage innovation within the open source community to accelerate the development and capabilities of the platform.

 

Underlying cost growth was 2% reflecting the business growth and continued investment in new product initiatives offset by further cost savings particularly in technology integration.  The adjusted operating profit margin grew 0.6 percentage points to 39.4%.  The reported operating margin, after amortisation of acquired intangible assets and acquisition integration costs, was 21.5%, up 3.2 percentage points.

 

The business is positioned well for the future with good growth in data and analytics and new product initiatives across all the businesses.  The software licence business is not expected to improve in the second half.

 

LexisNexis Legal & Professional

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Revenue

779

816

-5%

 

896

938

-5%

 

-1%

 

+1%

Adjusted operating profit

94

100

-6%

 

108

115

-6%

 

-4%

 

-2%

Adjusted operating margin

12.1%

12.2%

-0.1pts

 

12.1%

12.2%

-0.1pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

LexisNexis Legal & Professional returned to underlying revenue growth in the first half.  Legal markets have stabilised but recovery in activity levels is muted.  In the US, new sales grew and content and product enhancements resonated well with customers.  Outside the US, strong growth in online services was largely offset by continued declines in print product. Adjusted operating margin was flat reflecting the focus on operational efficiency.

 

LexisNexis Risk Solutions and LexisNexis Legal & Professional, previously combined as one LexisNexis business, have operated as two distinct businesses from 1 January 2011.  Comparative figures and growth rates are presented on a pro forma basis.

 

Revenues and adjusted operating profits were lower by 1% and 4% respectively at constant currencies, or up 1% and 2% lower respectively before acquisitions and disposals.

 

In the US, sales to law firms were up 1%.  The legal market remained stable with both employment and activity levels muted.  Nevertheless, new sales were higher, reflecting increased sales penetration, product enhancements and additional jurisdictional content.   Litigation solutions also grew well and good growth was seen in work for the US Patent Office.  Sales to corporate, government and academic markets were flat, with moderated declines in corporate news & business (-7%).   Good progress continued in the development of the next generation of legal products and operational infrastructure.  Lexis Advance for Associates, a segment-specific tool and content set targeted at research intensive lawyers, currently in development, was previewed with many customers.  The combination of the improved user interface on lexis.com, other enhancements including Lexis for Microsoft Office, and the prospect of further Lexis Advance releases are all resonating well with customers.  Searches on lexis.com showed good growth in the first half.

 

Outside the US, sales were up 2%.  Online revenues were up 8% with strong demand for technology enabled content and new workflow tools across all geographies.   This was largely offset by print product declines driven by format migration and continuing cost focus by law firms.  The first half saw some favourable publication phasing.  

 

Underlying cost growth was 1% with increased spending on new product initiatives and sales & marketing mitigated by continuing cost actions.  The adjusted operating profit margin was 0.1 percentage points lower at 12.1%.  The seasonality of the business, with the typically more significant publishing schedule in the second half of the year, gives a lower margin in the first half of the year than in the second half.  The reported operating margin, after amortisation of acquired intangibles and acquisition integration costs, was down 0.5 percentage points at 6.9%.

 

Growth in legal market activity levels remains muted.  New sales, however, are growing well.  Revenue recovery is expected to continue to be gradual, with adjusted operating margin broadly flat in 2011.

 

Reed Exhibitions

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Revenue

368

383

-4%

 

423

441

-4%

 

-3%

 

-4%

Adjusted operating profit

113

123

-8%

 

130

142

-8%

 

-7%

 

-8%

Adjusted operating margin

30.7%

32.1%

-1.4pts

 

30.7%

32.1%

-1.4pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Strong growth was seen in annual events in developed markets and particularly in emerging markets.  Reported growth is impacted by the net cycling out of biennial shows.  New show launch programme accelerated.

 

Revenues and adjusted operating profits were 3% and 7% lower respectively at constant currencies, or 4% and 8% before small acquisitions and disposals. 

 

Underlying revenues, excluding the effects of biennial show cycling, increased by 10% with strong performance at annual shows across the portfolio and significant new launch activity.  In the largest market, Europe, underlying revenues excluding cycling were up 7% with Mipim and MipTV in France performing well.   The US saw strong growth, with underlying revenues excluding cycling up 14%, with JCK, National Hardware and ISC West particularly successful.  Japan saw good growth in the first half with strong performance from the renewable energy and spring IT events.  The Japanese business received many plaudits in government and business circles for not cancelling any shows despite the effects of the March earthquake.  The shows in China, Brazil, Russia and the Middle East delivered very strong growth.  Particular successes were World Future Energy Summit in the Middle East, the Brasilplast plastics show and FEIMAFE machine tools and quality control show in Brazil, and the Sino Corrugated Shanghai packaging show in China.  Satisfaction levels amongst exhibitors and visitors were high across the portfolio.

 

Reed Exhibitions plan to launch more than 40 new events in 2011 with 18 held in the first half.  25 of the 35 shows launched in 2010 are expected to be held again, representing a high level of successful execution of new events.

 

Underlying costs were down 2% reflecting the lower revenue from biennials cycling out partly offset by the significantly increased launch programme, as well as higher spend on building out our technology capabilities.  The adjusted operating margin was 1.4 percentage points lower than first half 2010 at 30.7%.  The adjusted operating margin in the first half is higher than for the year as a whole due to the seasonality of revenue.  The reported operating margin, after amortisation of acquired intangibles and acquisition integration costs, was down 2.1 percentage points to 25.8%.

 

Continued good growth in annual shows and significant new launch activity is expected; however,  2011 sees the net cycling out of biennial shows.

 

Reed Business Information

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Revenue

344

374

-8%

 

396

430

-8%

 

-8%

 

+2%

Adjusted operating profit

53

40

+33%

 

61

46

+33%

 

+32%

 

+12%

Adjusted operating margin

15.4%

10.7%

+4.7pts

 

15.4%

10.7%

+4.7pts

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Reed Business Information returned to underlying revenue growth in the first half as the business focused on data services and online marketing solutions.   Declines in print advertising moderated.  The significant increase in adjusted operating margin reflected portfolio reshaping and increased efficiency.

 

Revenues were down 8% and adjusted operating profits up 32% at constant currencies.  Before acquisitions and disposals, underlying revenues and adjusted operating profits were up 2% and 12% respectively, reflecting the impact of the actions taken to focus on higher growth areas and reshape the cost base.  

 

The major data services business grew 10% underlying with strong growth in ICIS, Bankers Almanac and XpertHR, tempered by continued weakness in the US construction markets served by RCD.  The ICIS business was expanded with the increase in January of its interest in CBI China, the market leading petrochemical and energy information service in China of which RBI now has majority ownership.  In June, the acquisition of Ascend Worldwide, one of the principal providers of data, analytics and services to the global aviation industry, was completed.  Ascend will be integrated with RBI's aerospace information and data services business, Flightglobal.

 

The major online marketing solutions businesses were up 7% driven by strong growth in Totaljobs online recruitment services and the Hotfrog web search business.  The leading brands portfolio returned to overall growth of 2% in a more stable environment, while other business magazines and communities saw moderating print advertising declines in many markets which more than offset online growth.  Further disposals were made in the first half including the UK road transport and computing print magazines and the QSS subscription fulfilment business. 

 

Underlying costs were flat reflecting the cost actions taken to streamline the business while the business returned to growth.  Total costs declined 13% at constant rates reflecting the divestment of low-returning assets last year and in the first half.  Accordingly, the adjusted operating margin increased by 4.7 percentage points to 15.4%, the highest level achieved in recent years.  The reported operating margin, after amortisation of acquired intangibles, was up 6.2 percentage points to 9.9%. 

 

Data services and online marketing solutions are continuing to grow well.  Leading brands are expected to remain stable but many print advertising markets are still weak.

 

 

Financial review

 

REED ELSEVIER COMBINED BUSINESSES

 

Reported figures

 

 

 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change
%


2011
€m

2010
€m

Change
%


Change at constant
currencies

 

Underlying growth
rates

Reported figures

 

 

 

 

 

 

 

 

 

 

 

Revenue

2,904

2,992

-3%

 

3,340

3,441

-3%

 

-1%

 

+1%

Operating profit

579

543

+7%

 

666

624

+7%

 

+6%

 

 

Profit before tax

476

412

+16%

 

547

474

+16%

 

+14%

 

 

Net profit

377

316

+19%

 

434

363

+19%

 

+17%

 

 

Net borrowings

3,404

3,848

 

 

3,779

4,694

 

 

 

 

 

 

(The reported figures include amortisation of acquired intangible assets, acquisition related costs, disposals and other non operating items, related tax effects, movements in deferred tax assets and liabilities that are not expected to crystallise in the near term and, in respect of 2010, exceptional restructuring costs. There were no exceptional restructuring charges in 2011.  Adjusted figures that exclude these items are used by Reed Elsevier as additional performance measures and are discussed later below.)

 

Revenue was £2,904m/€3,340m (2010: £2,992m/€3,441m), down 3% expressed in both sterling and euros.  At constant exchange rates, revenue was down 1% compared with the prior first half.  Underlying revenues, ie before acquisitions and disposals, were up 1%, or up 3% excluding the net cycling out of biennial exhibitions.  This compares with underlying revenues up 1% in the prior first half, or down 1% excluding the biennial exhibition effects.  The underlying revenue performance reflects the improved market environment, new product introduction, expanded sales & marketing, and other actions taken to improve the business.  Revenue performance across the business is described in the Operating Review. 

 

Reported operating profit, after amortisation of acquired intangible assets, acquisition related costs and, in respect of 2010, exceptional restructuring costs, was £579m/€666m (2010: £543m/€624m).  The increase reflects the improved trading performance described in the Operating Review and no exceptional restructuring costs.

 

The amortisation charge in respect of acquired intangible assets, including the share of amortisation in joint ventures, amounted to £170m/€195m (2010: £172m/€198m). 

 

Exceptional restructuring costs were nil (2010: £13m/€15m, in respect of the restructuring of RBI).  Acquisition related costs amounted to £18m/€21m (2010: £24m/€28m) principally relating to technology integration within LexisNexis Risk Solutions.  Disposals and other non operating gains were £9m/€10m (2010: £3m/€4m).

 

Net finance costs were £112m/€129m (2010: £134m/€154m), reflecting the benefit of free cash flow and redemption of term debt in 2010, the expiry of interest rate swaps, and currency translation effects. 

 

The reported profit before tax, including amortisation of acquired intangible assets, acquisition related costs, disposals and other non operating items, was £476m/€547m (2010: £412m/€474m).

 

The reported tax charge was £97m/€111m (2010: £94m/€108m). The reported net profit attributable to the parent companies' shareholders was £377m/€434m (2010: £316m/€363m).

 

Adjusted figures

 


 

£

 

 

 

 

 

%

 

%

 

Six months ended 30 June

 

Six months ended 30 June

 

 

 

 


2011
£m

2010
£m

Change

%


2011
€m

2010
€m

Change

%


Change at constant
currencies

 

Underlying growth rates

Adjusted figures

 

 

 

 

 

 

 

 

 

 

 

Operating profit

774

758

+2%

 

890

872

+2%

 

+3%

 

+2%

Operating margin

26.6%

25.3%

+1.3pts

 

26.6%

25.3%

+1.3pts

 

 

 

 

Profit before tax

662

624

+6%

 

761

718

+6%

 

+6%

 

 

Net profit

506

482

+5%

 

582

554

+5%

 

+5%

 

 

Operating cash flow

692

743

-7%

 

796

854

-7%

 

-8%

 

 

Operating cash flow conversion

89%

98%

 

 

89%

98%

 

 

 

 

 

 

(Reed Elsevier uses adjusted figures as additional performance measures.  Reconciliations between the reported and adjusted figures are set out in note 4 to the combined financial information. Comparison at constant exchange rates uses 2010 full year average and hedge exchange rates.  Underlying growth rates are the first half on first half changes at constant currencies, excluding the results of all acquisitions and disposals made both in the year and prior year.)

 

Adjusted operating profit was £774m/€890m (2010: £758m/€872m), up 2% expressed in both sterling and euros.  At constant exchange rates, adjusted operating profits were up 3%.  Underlying adjusted operating profits, ie excluding acquisitions and disposals, were 2% higher.  Profit performance across the business is described in the Operating Review. 

 

Total costs reduced by 2% at constant exchange rates reflecting the sale and closure of low-returning assets and continued tight cost control as the business returned to growth.  Underlying cost growth was 1% and included additional spending on new product development and expanded sales & marketing as markets recover. 

 

The overall adjusted operating margin at 26.6% was 1.3 percentage points higher than in the prior first half, of which 0.7 percentage points reflected the effect of disposals and 0.4 percentage points the beneficial impact on reported growth of the multi-year subscription currency hedging programme and other currency translation effects. 

 

The net pension expense, before the net pension financing credit, was £49m/€56m (2010: £47m/€54m). The net pension financing credit was £17m/€20m (2010: £13m/€15m) reflecting the higher market value of scheme assets at the beginning of the year compared with a year before. The share based and related remuneration charge was £18m/€21m (2010: £8m/€9m).  

 

Adjusted profit before tax was £662m/€761m (2010: £624m/€718m), up 6% against the prior first half when expressed in both sterling and euros, and at constant exchange rates, reflecting the increase in adjusted operating profits and the lower net interest expense.  

 

The effective tax rate on adjusted profit before tax was 23.3% (2010: 22.5%; full year 22.7%) reflecting the geographic mix of the net increase in pre-tax profits.  The effective tax rate on adjusted profit before tax excludes movements in deferred taxation assets and liabilities that are not expected to crystallise in the near term, and includes the benefit of tax amortisation where available on acquired goodwill and intangible assets.  This more closely aligns with cash tax costs over the longer term.  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 provisions are held in respect of this. Issues are raised during the course of regular tax audits and discussions including on the deductibility of interest on cross-border financing are ongoing.  Although the outcome of open items cannot be predicted, no material impact on results is expected from such issues.

 

The adjusted net profit attributable to shareholders of £506m/€582m (2010: £482m/€554m) was up 5% when expressed in both sterling and euros, and at constant exchange rates.

 

Cash flows

 

Adjusted operating cash flow was £692m/€796m (2010: £743m/€854m), down 7% when expressed in both sterling and euros, or down 8% at constant currencies.

 

The rate of conversion of adjusted operating profits into cash flow in the first half was 89% (2010: 98%).  The lower level of cash flow conversion compared with the prior first half reflects higher capital expenditure and some timing differences.  The first half cash flow is somewhat variable reflecting the seasonality of operating cash flows particularly in relation to subscription receipts and exhibition deposits, and the timing of capital spend.  The adjusted operating cash flow for the last 12 months to 30 June 2011 was £1,468m/€1,719m (2010: £1,584m/€1,796m) representing a cash flow conversion rate of 93% (2010: 102%).

 

Capital expenditure included within adjusted operating cash flow was £154m/€177m (2010: £134m/€154m), including £116m/€133m (2010: £101m/€116m) in respect of capitalised development costs included within internally generated intangible assets.  The increase from the prior first half reflects the increased investment in new products and related infrastructure, particularly in the LexisNexis Legal & Professional business.

 

Free cash flow - after interest and taxation - was £486m/€559m (2010: £606m/€697m) before acquisition related spend and cash flows relating to prior year exceptional restructuring programmes.  The decrease compared with the prior first half reflects the lower adjusted operating cash flow and, more significantly, a more usual level of taxes paid at £104m/€120m (2010: £4m/€4m) before taking account of tax relief in respect of acquisition related and exceptional restructuring spend.  The first half of 2010 benefited from tax repayments from prior years. 

 

Payments made in respect of acquisition related costs amounted to £15m/€17m (2010: £23m/€26m), principally in respect of the ChoicePoint integration.  Payments in respect of the prior year exceptional restructuring programmes were £33m/€38m (2010: £45m/€52m), principally relating to severance and vacant property costs.  Net tax paid in the first half was reduced by £2m/€2m (2010: net tax repayments increased by £31m/€35m) in respect of acquisition related and exceptional restructuring spend.

 

Free cash flow before dividends was £440m/€506m (2010: £569m/€654m).  Ordinary dividends paid to shareholders in the first half, being the 2010 final dividends, amounted to £363m/€417m (2010: £356m/€409m).  Free cash flow after dividends was £77m/€89m (2010: £213m/€245m).

 

Spend on acquisitions and investments was £139m/€160m, including debt acquired and deferred consideration on past acquisitions.  An amount of £69m/€79m was capitalised in the year as acquired intangible assets and £92m/€106m as goodwill.   Net cash proceeds from disposals amounted to £19m/€22m.  Tax paid in respect of disposals was nil (2010: £103m/€118m tax repayment).

 

Net proceeds from the exercise of share options were £7m/€8m (2010: £3m/€3m).  No share repurchases were made by the parent companies in the year (2010: nil) and no shares of the parent companies were purchased by the employee benefit trust (2010: nil). 

 

Debt

 

Net borrowings at 30 June 2011 were £3,404m/€3,779m, a decrease of £51m/€264m since 31 December 2010, reflecting currency translation effects on the largely US dollar denominated net debt.  Excluding currency translation effects, net debt increased by £37m/€42m reflecting the seasonally low first half free cash flow and acquisition spend.  Expressed in US dollars, net borrowings at 30 June 2011 were $5,469m, an increase of $82m since 31 December 2010.

 

Gross borrowings after fair value adjustments at 30 June 2011 amounted to £4,324m/€4,800m (31 December 2010: £4,302m/€5,034m).  The fair value of related derivative assets was £136m/€151m (31 December 2010: £105m/€123m).  Cash balances totalled £784m/€870m (31 December 2010: £742m/€868m).

 

As at 30 June 2011, after taking into account interest rate and currency derivatives, a total of 66% of Reed Elsevier's gross borrowings were at fixed rates with a weighted average remaining life of 6.0 years and interest rate of 6.2%. 

 

Net pension obligations, ie pension obligations less pension assets, at 30 June 2011 were £155m/€172m (31 December 2010: £170m/€199m) including a net deficit of £9m/€10m (31 December 2010: deficit of £24m/€28m) in respect of funded schemes.  The reduction in the overall net deficit reflects an increase in the market value of scheme assets in the first half.

 

The ratio of net debt to ebitda (earnings before interest, tax, depreciation and amortisation) as at 30 June 2011 was 1.9x (31 December 2010: 1.9x), and 2.4x (31 December 2010: 2.5x) on a pensions and lease adjusted basis.  Reed Elsevier targets ratios of net debt to ebitda and free cash flow to net debt (on a pensions and lease adjusted basis) over the longer term consistent with a solid investment grade credit rating.

 

Liquidity

 

In May 2011, the first of two one year extension options was exercised on the $2.0bn committed bank facility taking the maturity to June 2014.  This back up facility provides security of funding for $2.0bn of short term debt to June 2014.  After taking account of committed bank facilities and available cash resources, no borrowings mature until 2014.  The strong free cash flow of the business, the available resources and back up facilities, and Reed Elsevier's ability to access debt capital markets are expected to provide sufficient liquidity 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



2011

pence

2010

pence

Change

%


2011

2010

Change

%

 

Reported earnings per share

15.8p

13.2p

+20%

 

€0.30

€0.25

+20%

 

 

Adjusted earnings per share

22.3p

21.3p

+5%

 

€0.40

€0.38

+5%

 

+5%

Ordinary dividend per share

5.65p

5.4p

+5%

 

€0.110

€0.109

+1%

 

 

 

For the parent companies, Reed Elsevier PLC and Reed Elsevier NV, adjusted earnings per share were both up 5% at 22.3p (2010: 21.3p) and €0.40 (2010: €0.38) respectively.  At constant rates of exchange, the adjusted earnings per share of both companies also increased by 5%.

 

The reported earnings per share for Reed Elsevier PLC shareholders was 15.8p (2010: 13.2p) and for Reed Elsevier NV shareholders was €0.30 (2010: €0.25).  The increase reflects the improved trading performance, no exceptional restructuring costs and lower net interest expense.

 

The equalised interim dividends proposed by the respective boards are 5.65p per share for Reed Elsevier PLC and €0.110 per share for Reed Elsevier NV, up 5% and 1% respectively against the prior year interim dividends.  The difference in growth rates in the equalised dividends reflects the strengthening of the euro against sterling since the prior year interim dividend declaration date.

 

Dividend cover, based on adjusted earnings per share for the last 12 months to 30 June 2011 and the aggregate 2011 interim and 2010 final dividends, is 2.2 times (2010: 2.1x) for Reed Elsevier PLC and 1.9 times (2010: 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.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

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 50 to 52 of the Reed Elsevier Annual Reports and Financial Statements 2010.  Risks include: the effect of weaker economic conditions; changes in the acceptability of our products, services and prices by our customers; competitive factors in the industries in which we operate; the impact of new technologies and regulations on our products and services; the failure, interruption or breach of our electronic delivery platforms; the circumvention of our proprietary rights over intellectual property; the disruption or loss of data sources; changes in regulations in relation to paid subscriptions; the failure of third parties to whom we have outsourced activities; changes in the values of pension scheme assets and liabilities; changes to tax laws and the interpretation of tax laws; the failure to generate anticipated benefits from acquisitions and restructuring activities; movements in exchange rates; breaches of generally accepted ethical business standards; our impact on the environment; and legislative, fiscal, regulatory, and political developments.

 

 

COMBINED FINANCIAL INFORMATION

 

Condensed combined income statement

For the six months ended 30 June 2011

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2010
£m

2010
€m



2011
£m

2010
£m


2011
€m

2010
€m

6,055

7,084

 

Revenue

2,904

2,992

 

3,340

3,441

(2,209)

(2,584)

 

Cost of sales

(1,028)

(1,093)

 

(1,182)

(1,257)

3,846

4,500

 

Gross profit

1,876

1,899

 

2,158

2,184

(1,091)

(1,276)

 

Selling and distribution costs

(517)

(543)

 

(595)

(625)

(1,687)

(1,974)

 

Administration and other expenses

(798)

(826)

 

(918)

(950)

1,068

1,250

 

Operating profit before joint ventures

561

530

 

645

609

22

25

 

Share of results of joint ventures

18

13

 

21

15

1,090

1,275

 

Operating profit

579

543

 

666

624

8

9

 

Finance income

9

2

 

10

2

(284)

(332)

 

Finance costs

(121)

(136)

 

(139)

(156)

(276)

(323)

 

Net finance costs

(112)

(134)

 

(129)

(154)

(46)

(54)

 

Disposals and other non operating items

9

3

 

10

4

768

898

 

Profit before tax

476

412

 

547

474

(120)

(140)

 

Taxation

(97)

(94)

 

(111)

(108)

648

758

 

Net profit for the period

379

318

 

436

366

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

642

751

 

Parent companies' shareholders

377

316

 

434

363

6

7

 

Non-controlling interests

2

2

 

2

3

648

758

 

Net profit for the period

379

318

 

436

366

 

 



 

 

 

 

 

Adjusted profit figures are presented in notes 2 and 4 as additional performance measures.

 

Condensed combined statement of comprehensive income

For the six months ended 30 June 2011

 

 

 

 

£

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2010

£m

2010

€m

 

 

2011
£m

2010
£m


2011
€m

2010
€m

648

758

 

Net profit for the period

379

318

 

436

366

 

 

 

 

 

 

 

 

 

94

196

 

Exchange differences on translation of foreign operations

(34)

143

 

(158)

328

(63)

(74)

 

Actuarial losses on defined benefit pension schemes

(7)

(284)

 

(8)

(327)

(58)

(68)

 

Fair value movements on cash flow and net investment hedges

21

(80)

 

24

(92)

46

54

 

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

19

24

 

22

28

29

34

 

Tax recognised directly in equity

(1)

103

 

(1)

119

48

142

 

Other comprehensive (expense)/income for the period

(2)

(94)

 

(121)

56

696

900

 

Total comprehensive income for the period

377

224

 

315

422

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

690

893

 

Parent companies' shareholders

375

222

 

313

419

6

7

 

Non-controlling interests

2

2

 

2

3

696

900

 

Total comprehensive income for the period

377

224

 

315

422

 

 

 

 

 

 

 

 

 

 

Condensed combined statement of cash flows

For the six months ended 30 June 2011

 

 

 

 

 

£

 

 

Year ended

31 December

 

 

Six months ended

30 June

 

Six months ended

30 June

2010

£m

2010

€m

 


2011

£m

2010

£m


2011

€m

2010

€m

 

 

 

Cash flows from operating activities

 

 

 

 

 

1,649

1,929

 

Cash generated from operations

780

790

 

897

909

(295)

(345)

 

Interest paid

(108)

(136)

 

(124)

(156)

8

9

 

Interest received

6

3

 

7

3

(9)

(10)

 

Tax (paid)/repaid

(102)

130

 

(118)

149

1,353

1,583

 

Net cash from operating activities

576

787

 

662

905



 

 

 

 

 

 

 



 

Cash flows from investing activities

 

 

 

 

 

(50)

(58)

 

Acquisitions

(115)

(18)

 

(132)

(21)

 (83)

(97)

 

Purchases of property, plant and equipment

(38)

(33)

 

(44)

(38)

(228)

(267)

 

Expenditure on internally developed intangible assets

(116)

(101)

 

(133)

(116)

(5)

(6)

 

Purchase of investments

(6)

(3)

 

(7)

(3)

7

8

 

Proceeds from disposals of property, plant and equipment

2

3

 

2

3

6

7

 

Net proceeds/(costs) of other disposals

19

(8)

 

22

(9)

24

28

 

Dividends received from joint ventures

16

16

 

19

18

(329)

(385)

 

Net cash used in investing activities

(238)

(144)

 

(273)

(166)



 

 

 

 

 

 

 



 

Cash flows from financing activities

 

 

 

 

 

(483)

(565)

 

Dividends paid to shareholders of the parent companies

(363)

(356)

 

(417)

(409)

(8)

(9)

 

Distributions to non-controlling interests

(3)

(5)

 

(4)

(6)

(143)

(168)

 

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

   commercial paper

88

(104)

 

101

(120)

(394)

(461)

 

Repayment of other loans

(69)

(163)

 

(79)

(187)

(7)

(8)

 

Repayment of finance leases

(1)

(3)

 

(1)

(3)

11

13

 

Proceeds on issue of ordinary shares

7

3

 

8

3

(1,024)

(1,198)

 

Net cash used in financing activities

(341)

(628)

 

(392)

(722)



 

 

 

 

 

 

 

-

-

 

(Decrease)/increase in cash and cash equivalents

(3)

15

 

(3)

17



 

 

 

 

 

 

 



 

Movement in cash and cash equivalents

 

 

 

 

 

734

822

 

At start of period

742

734

 

868

822

-

-

 

(Decrease)/increase in cash and cash equivalents

(3)

15

 

(3)

17

8

46

 

Exchange translation differences

45

(32)

 

5

36

742

868

 

At end of period

784

717

 

870

875


 



 

 

 

 

 

Adjusted operating cash flow figures are presented in note 4 as additional performance measures.

 

Condensed combined statement of financial position

As at 30 June 2011

 

 

 

 

 

£

 

 

Year ended

31 December

 

As at 30 June


As at 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

 

 

 

Non-current assets

 

 


 

 

4,441

5,196

 

Goodwill

4,450

4,579


4,940

5,586

3,457

4,045

 

Intangible assets

3,350

3,679


3,718

4,488

136

159

 

Investments in joint ventures

134

130


149

159

48

56

 

Other investments

54

44


60

54

291

341

 

Property, plant and equipment

286

291


317

355

55

64

 

Net pension assets

35

-


39

-

151

177

 

Deferred tax assets

146

254


162

310

8,579

10,038

 

 

8,455

8,977


9,385

10,952



 

Current assets

 

 


 

 

228

267

 

Inventories and pre-publication costs

221

268


245

327

1,475

1,725

 

Trade and other receivables

1,200

1,190


1,332

1,452

134

157

 

Derivative financial instruments

169

97


188

118

742

868

 

Cash and cash equivalents

784

717


870

875

2,579

3,017

 

 

2,374

2,272


2,635

2,772

-

-

 

Assets held for sale

-

3


-

4

11,158

13,055

 

Total assets

10,829

11,252


12,020

13,728



 

 

 

 


 

 



 

Current liabilities

 

 


 

 

2,584

3,023

 

Trade and other payables

2,308

2,251


2,562

2,746

80

94

 

Derivative financial instruments

46

133


51

162

516

604

 

Borrowings

969

428


1,076

522

646

755

 

Taxation

664

720


737

879

71

83

 

Provisions

50

99


55

121

3,897

4,559

 

 

4,037

3,631


4,481

4,430



 

Non-current liabilities

 

 


 

 

3,786

4,430

 

Borrowings

3,355

4,197


3,724

5,120

1,192

1,395

 

Deferred tax liabilities

1,157

1,292


1,284

1,576

225

263

 

Net pension obligations

190

453


211

553

88

103

 

Provisions

79

58


88

71

5,291

6,191

 

 

4,781

6,000


5,307

7,320

9,188

10,750

 

Total liabilities

8,818

9,631


9,788

11,750

1,970

2,305

 

Net assets

2,011

1,621


2,232

1,978



 

 

 

 


 

 



 

Capital and reserves

 

 


 

 

224

262

 

Combined share capitals

226

222


251

271

2,754

3,222

 

Combined share premiums

2,845

2,675


3,158

3,264

(677)

(792)

 

Combined shares held in treasury

(685)    

(666)    


(760)

(813)

29

229

 

Translation reserve

(55)    

106   


132

315

(387)

(648)

 

Other combined reserves

(351)   

(741)   


(583)

(1,090)

1,943

2,273

 

Combined shareholders' equity

1,980   

1,596  


2,198

1,947

27

32

 

Non-controlling interests

31  

25  


34

31

1,970

2,305

 

Total equity

2,011  

1,621 


2,232

1,978


 

 

 

 

 


 

 

Approved by the boards of Reed Elsevier PLC and Reed Elsevier NV, 27 July 2011.

 

Condensed combined statement of changes in equity

For the six months ended 30 June 2011

 

 

 

 

£

 

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 2011

224

2,754

(677)

29

(387)

1,943

27

1,970

Total comprehensive income for
   the period

-

-

-

(34)

409

375

2

377

Dividends paid

-

-

-

-

(363)

(363)

(3)

(366)

Issue of ordinary shares, net

   of expenses

-

7

-

-

-

7

-

7

Increase in share based

   remuneration reserve

-

-

-

-

18

18

-

18

Settlement of share awards

-

-

8

-

(8)

-

-

-

Acquisitions

-

-

-

-

-

-

6

6

Exchange differences on translation
   of capital and reserves

2

84

(16)

(50)

(20)

-

(1)

(1)

Balance at 30 June 2011

226

2,845

(685)

(55)

(351)

1,980

31

2,011

 

 

 

 

 

 

 

 

 

Balance at 1 January 2010

225

2,807

(698)

(100)

(502)

1,732

27

1,759

Total comprehensive income for
   the period

-

-

-

143

79

222

2

224

Dividends paid

-

-

-

-

(356)

(356)

(5)

(361)

Issue of ordinary shares, net
   of expenses

-

3

-

-

-

3

-

3

Decrease in share based

   remuneration reserve

-

-

-

-

(5)

(5)

-

(5)

Settlement of share awards

-

-

8

-

(8)

-

-

-

Exchange differences on translation
   of capital and reserves

(3)

(135)

24

63

51

-

1

1

Balance at 30 June 2010

222

2,675

(666)

106

(741)

1,596

25

1,621

 

 

 

 

 

 

 

 

 

Balance at 1 January 2010

225

2,807

(698)

(100)

(502)

1,732

27

1,759

Total comprehensive income for
   the year

-

-

-

94

596

690

6

696

Dividends paid

-

-

-

-

(483)

(483)

(8)

(491)

Issue of ordinary shares, net
   of expenses

-

11

-

-

-

11

-

11

Decrease in share based

   remuneration reserve

-

-

-

-

(7)

(7)

-

(7)

Settlement of share awards

-

-

9

-

(9)

-

-

-

Exchange differences on translation
   of capital and reserves

(1)

(64)

12

35

18

-

2

2

Balance at 31 December 2010

224

2,754

(677)

29

(387)

1,943

27

1,970

 

 

 

 

 

 

 

 

 

 

Condensed combined statement of changes in equity

For the six months ended 30 June 2011

 

 

 

 


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 2011

262

3,222

(792)

229

(648)

2,273

32

2,305

Total comprehensive income for
   the period

-

-

-

(158)

471

313

2

315

Dividends paid

-

-

-

-

(417)

(417)

(4)

(421)

Issue of ordinary shares, net
   of expenses

-

8

-

-

-

8

-

8

Increase in share based remuneration reserve

-

-

-

-

21

21

-

21

Settlement of share awards

-

-

9

-

(9)

-

-

-

Acquisitions

-

-

-

-

-

-

7

7

Exchange differences on translation
   of capital and reserves

(11)

(72)

23

61

(1)

-

(3)

(3)

Balance at 30 June 2011

251

3,158

(760)

132

(583)

2,198

34

2,232

 

 

 

 

 

 

 

 

 

Balance at 1 January 2010

252

3,144

(782)

79

(753)

1,940

30

1,970

Total comprehensive income for
   the period

-

-

-

328

91

419

3

422

Dividends paid

-

-

-

-

(409)

(409)

(6)

(415)

Issue of ordinary shares, net
   of expenses

-

3

-

-

-

3

-

3

Decrease in share based remuneration reserve

-

-

-

-

(6)

(6)

-

(6)

Settlement of share awards

-

-

9

-

(9)

-

-

-

Exchange differences on translation
   of capital and reserves

19

117

(40)

(92)

(4)

-

4

4

Balance at 30 June 2010

271

3,264

(813)

315

(1,090)

1,947

31

1,978

 

 

 

 

 

 

 

 

 

Balance at 1 January 2010

252

3,144

(782)

79

(753)

1,940

30

1,970

Total comprehensive income for
   the year

-

-

-

196

697

893

7

900

Dividends paid

-

-

-

-

(565)

(565)

(9)

(574)

Issue of ordinary shares, net
   of expenses

-

13

-

-

-

13

-

13

Decrease in share based remuneration reserve

-

-

-

-

(8)

(8)

-

(8)

Settlement of share awards

-

-

11

-

(11)

-

-

-

Exchange differences on translation
   of capital and reserves

10

65

(21)

(46)

(8)

-

4

4

Balance at 31 December 2010

262

3,222

(792)

229

(648)

2,273

32

2,305

 



 


 




 

 

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 combined financial information has been prepared in accordance with IAS34 - Interim Financial Reporting and the Reed Elsevier accounting policies. The Reed Elsevier 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 in the Reed Elsevier Annual Reports and Financial Statements 2010 on pages 90 to 96. Financial information is presented in both sterling and euros.

 

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 2011.

 

The combined financial information for the six months ended 30 June 2011 and the comparative amounts to 30 June 2010 are unaudited but have been reviewed by the auditors. The combined financial information for the year ended 31 December 2010 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2010, which received an unqualified audit report.

 

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.  In January 2011 LexisNexis was reorganised to operate as two separate divisions, LexisNexis Risk Solutions and LexisNexis Legal & Professional, and in accordance with the requirements of IFRS8 are presented as separate business segments. Comparatives have been restated accordingly on a pro forma basis.

 

Adjusted operating profit is one of the key segmental profit measures used by Reed Elsevier in assessing performance. Adjusted operating profit is defined as operating profit before the amortisation of acquired intangible assets, exceptional restructuring (none in 2011) and acquisition related costs, and is grossed up to exclude the equity share of taxes in joint ventures. Adjusted figures are reconciled to the reported figures in note 4.

 

Revenue

 

Year ended

31 December

 

 

 

£

 

 

 

 

Six months ended 30 June


Six months ended 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m

2011

€m

2010

€m

 

 

 

Business segment

 

 

 

 

 

2,026

2,370

 

Elsevier

961

955

 

1,105

1,098

927

1,085

 

LexisNexis Risk Solutions

452

464

 

520

534

1,691

1,978

 

LexisNexis Legal & Professional

779

816

 

896

938

693

811

 

Reed Exhibitions

368

383

 

423

441

718

840

 

Reed Business Information

344

374

 

396

430

6,055

7,084

 

Total

2,904

2,992

 

3,340

3,441

 

 

 

Geographical origin

 

 

 

 

 

3,213

3,759

 

North America

1,511

1,596

 

1,738

1,836

907

1,061

 

United Kingdom

453

432

 

521

497

620

726

 

The Netherlands

304

316

 

350

363

825

965

 

Rest of Europe

368

409

 

423

470

490

573

 

Rest of world

268

239

 

308

275

6,055

7,084

 

Total

2,904

2,992

 

3,340

3,441

 

 

 

Geographical market

 

 

 

 

 

3,303

3,864

 

North America

1,572

1,635

 

1,808

1,880

490

573

 

United Kingdom

233

238

 

268

274

204

239

 

The Netherlands

96

108

 

111

124

1,131

1,323

 

Rest of Europe

521

554

 

599

637

927

1,085

 

Rest of world

482

457

 

554

526

6,055

7,084

 

Total

2,904

2,992

 

3,340

3,441

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

Year ended

31 December

 

 

 

£

 

 

 

 

Six months ended 30 June


Six months ended 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

 

 

 

Business segment

 

 

 

 

 

724

847

 

Elsevier

343

319

 

394

367

354

414

 

LexisNexis Risk Solutions

178

180

 

205

207

238

279

 

LexisNexis Legal & Professional

94

100

 

108

115

158

185

 

Reed Exhibitions

113

123

 

130

142

89

104

 

Reed Business Information

53

40

 

61

46

1,563

1,829

 

Subtotal

781

762

 

898

877

(34)

(40)

 

Corporate costs

(24)

(17)

 

(28)

(20)

26

30

 

Unallocated net pension financing credit

17

13

 

20

15

1,555

1,819

 

Total

774

758

 

890

872

 

 

 

 

 

 

 

 

 

 

Operating profit

 

Year ended

31 December

 

 

£

 

 

 

Six months ended 30 June

 

Six months ended 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m

 

2011

€m

2010

€m

 

 

 

Business segment

 

 

 

 

 

647

757

 

Elsevier

306

281

 

352

323

165

193

 

LexisNexis Risk Solutions

97

85

 

112

98

159

186

 

LexisNexis Legal & Professional

54

60

 

62

69

127

149

 

Reed Exhibitions

95

107

 

109

123

-

-

 

Reed Business Information

34

14

 

39

16

1,098

1,285

 

Subtotal

586

547

 

674

629

(34)

(40)

 

Corporate costs

(24)

(17)

 

(28)

(20)

26

30

 

Unallocated net pension financing credit

17

13

 

20

15

1,090

1,275

 

Total

579

543

 

666

624

 

 

 

 

 

 

 

 

 

The unallocated net pension financing credit of £17m/€20m (2010: £13m/€15m) comprises the expected return on pension scheme assets of £117m/€135m (2010: £109m/€125m) less interest on pension scheme liabilities of £100m/€115m (2010: £96m/€110m).

 

Share of post-tax results of joint ventures of £18m/€21m (2010: £13m/€15m) included in operating profit comprises £2m/€3m (2010: £2m/€2m) relating to LexisNexis Legal & Professional, £15m/€17m (2010: £11m/€13m) relating to Reed Exhibitions and £1m/€1m (2010: nil) relating to Reed Business Information.

 

Segment assets

 

Year ended

31 December

 

 

£

 

 

 

As at 30 June

 

As at 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m

 

2011

€m

2010

€m

 

 

 

Business segment

 

 

 

 

 

2,871

3,359

 

Elsevier

2,575

2,681

 

2,858

3,271

3,472

4,063

 

LexisNexis Risk Solutions

3,306

3,697

 

3,670

4,510

2,449

2,865

 

LexisNexis Legal & Professional

2,379

2,494

 

2,641

3,043

681

797

 

Reed Exhibitions

716

675

 

795

824

456

533

 

Reed Business Information

567

488

 

629

595

9,929

11,617

 

Subtotal

9,543

10,035

 

10,593

12,243

151

177

 

Taxation

146

254

 

162

310

742

868

 

Cash

784

717

 

870

875

55

64

 

Net pension assets

35

-

 

39

-

-

-

 

Assets held for sale

-

3

 

-

4

281

329

 

Other assets

321

243

 

356

296

11,158

13,055

 

Total

10,829

11,252

 

12,020

13,728

 

 

 

Geographical origin

 

 

 

 

 

7,556

8,840

 

North America

7,293

8,023

 

8,095

9,788

933

1,092

 

United Kingdom

992

831

 

1,101

1,014

854

999

 

The Netherlands

601

732

 

667

893

1,356

1,587

 

Rest of Europe

1,417

1,252

 

1,573

1,528

459

537

 

Rest of world

526

414

 

584

505

11,158

13,055

 

Total

10,829

11,252

 

12,020

13,728

 

 

 

 

 

 

 

 

 

 

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

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

1,068

1,250

 

Operating profit before joint ventures

561

530


645

609

 

 

 

 

 

 


 

 

345

404

 

Amortisation of acquired intangible assets

168

170


193

196

158

185

 

Amortisation of internally developed intangible assets

59

70


68

81

79

92

 

Depreciation of property, plant and equipment

36

41


41

47

(7)

(8)

 

Share based remuneration

18

(5)


21

(6)

575

673

 

Total non cash items

281

276


323

318

6

6

 

Movement in working capital

(62)

(16)


(71)

(18)

1,649

1,929

 

Cash generated from operations

780

790


897

909

 

 

 

 

 

 


 

 

 

Reconciliation of net borrowings

 

Year ended

31 December



 

 

 

 

£

 


 

Six months ended 30 June

2010

£m

 

 

Cash &

cash

equivalents

£m

Borrowings

£m

Related
derivative
financial

instruments

£m

2011

£m

2010

£m

(3,931)

 

At start of period

742

(4,302)

105

(3,455)

(3,931)

 

 

 

 

 

 

 

 

-

 

(Decrease)/increase in cash and cash equivalents

(3)

-

-

(3)

15

544

 

(Increase)/decrease in borrowings

-

(18)

-

(18)

270

544

 

Changes resulting from cash flows

(3)

(18)

-

(21)

285

-

 

Borrowings in acquired businesses

-

(18)

-

(18)

-

(2)

 

Inception of finance leases

-

(3)

-

(3)

-

11

 

Fair value adjustments

-

(28)

33

5

4

(77)

 

Exchange translation differences

45

45

(2)

88

(206)

(3,455)

 

At end of period

784

(4,324)

136

(3,404)

(3,848)

 

 

 




 


Year ended

31 December

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 June

2010

€m

 

 

Cash &

cash

equivalents

€m

Borrowings

€m

Related
derivative
financial

instruments

€m

2011

€m

2010

€m

(4,402)

 

At start of period

868

(5,034)

123

(4,043)

(4,402)

 

 

 

 

 

 

 

 

-

 

(Decrease)/increase in cash and cash equivalents

(3)

-

-

(3)

17

637

 

(Increase)/decrease in borrowings

-

(21)

-

(21)

310

637

 

Changes resulting from cash flows

(3)

(21)

-

(24)

327

-

 

Borrowings in acquired businesses

-

(21)

-

(21)

-

(2)

 

Inception of finance leases

-

(3)

-

(3)

-

13

 

Fair value adjustments

-

(32)

38

6

4

(289)

 

Exchange translation differences

5

311

(10)

306

(623)

(4,043)

 

At end of period

870

(4,800)

151

(3,779)

(4,694)

 

 

 

 

 

 

 

 

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

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m


516

604

 

Within 1 year

969

428


1,076

522

389

455

 

Within 1 to 2 years

719

722


798

881

644

754

 

Within 2 to 3 years

743

727


825

887

825

965

 

Within 3 to 4 years

120

823


133

1,004

188

220

 

Within 4 to 5 years

63

129


70

157

1,740

2,036

 

After 5 years

1,710

1,796


1,898

2,191

3,786

4,430

 

After 1 year

3,355

4,197


3,724

5,120

4,302

5,034

 

Total

4,324

4,625


4,800

5,642


 

 

 

 

 


 

 

Short term bank loans, overdrafts and commercial paper were backed up at 30 June 2011 by a $2,000m (£1,245m/€1,382m) committed bank facility, which was undrawn. This back up facility provides security of funding for $2,000m of short term debt to June 2014.

 

4          Adjusted figures

Reed Elsevier uses adjusted figures as additional performance measures. Adjusted figures are stated before the amortisation of acquired intangible assets, exceptional restructuring (none in 2011) and acquisition related costs, disposal gains and losses and other non operating items, related tax effects and movements in deferred taxation assets and liabilities that are not expected to crystallise in the near term and include the benefit of tax amortisation where available on acquired goodwill and intangible assets. Adjusted operating profit is also grossed up to exclude the equity share of taxes in joint ventures. Exceptional restructuring costs in 2010 relate to the restructuring of the Reed Business Information business. Acquisition related costs relate to acquisition integration and professional and other transaction related fees and adjustments to deferred and contingent consideration. Adjusted operating cash flow is measured after dividends from joint ventures and net capital expenditure but before payments in relation to exceptional restructuring and acquisition related costs. Adjusted figures are derived as follows:

 

Year ended

31 December

 

 

 

£

 

 

 

 

Six months ended 30 June


Six months ended 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

1,090

1,275

 

Operating profit

579

543


666

624

 

 

 

Adjustments:

 

 


 

 

349

408

 

   Amortisation of acquired intangible assets

170

172


195

198

57

67

 

   Exceptional restructuring costs

-

13


-

15

50

58

 

   Acquisition related costs

18

24


21

28

9

11

 

   Reclassification of tax in joint ventures

7

6


8

7

1,555

1,819

 

Adjusted operating profit

774

758


890

872

 

 

 

 

 

 


 

 

768

898

 

Profit before tax

476

412


547

474

 

 

 

Adjustments:

 

 


 

 

349

408

 

   Amortisation of acquired intangible assets

170

172


195

198

57

67

 

   Exceptional restructuring costs

-

13


-

15

50

58

 

   Acquisition related costs

18

24


21

28

9

11

 

   Reclassification of tax in joint ventures

7

6


8

7

46

54

 

   Disposals and other non operating items

(9)

(3)


(10)

(4)

1,279

1,496

 

Adjusted profit before tax

662

624


761

718

 

 

 

 

 

 

 

 

 

642

751

 

Net profit attributable to parent companies' shareholders

377

316

 

434

363

 

 

 

Adjustments (post tax):

 

 

 

 

 

337

394

 

   Amortisation of acquired intangible assets

177

193

 

204

222

37

44

 

   Exceptional restructuring costs

-

9

 

-

10

30

35

 

   Acquisition related costs

12

16

 

14

18

37

43

 

   Disposals and other non operating items

(11)

(3)

 

(13)

(3)

(100)

(117)

 

Deferred tax credits on acquired intangible assets not   expected to crystallise in the near term

(49)

(49)

 

(57)

(56)

983

1,150

 

Adjusted net profit attributable to parent companies' shareholders

506

482

 

582

554

 

 

 

 

 

 

 

 

 

1,649

1,929

 

Cash generated from operations

780

790

 

897

909

24

28

 

Dividends received from joint ventures

16

16

 

19

18

(83)

(97)

 

Purchases of property, plant and equipment

(38)

(33)

 

(44)

(38)

7

8

 

Proceeds from disposals of property, plant and equipment

2

3

 

2

3

(228)

(267)

 

Expenditure on internally developed intangible assets

(116)

(101)

 

(133)

(116)

99

116

 

Payments relating to exceptional restructuring costs

33

45

 

38

52

51

60

 

Payments relating to acquisition related costs

15

23

 

17

26

1,519

1,777

 

Adjusted operating cash flow

692

743

 

796

854

 

 

 

 

 

 

 

 

 

 

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

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

(235)

(263)

 

At start of period

(170)

(235)

 

(199)

(263)

 

(48)

 

(56)

 

Service cost (including curtailment credits of £5m/€6m (2010: £3m/€3m))

(28)

(30)

 

(32)

(35)

(191)

(224)

 

Interest on pension scheme liabilities

(100)

(96)

 

(115)

(110)

217

254

 

Expected return on scheme assets

117

109

 

135

125

(63)

(74)

 

Actuarial losses

(7)

(284)

 

(8)

(327)

154

180

 

Contributions by employer

31

87

 

36

100

(4)

(16)

 

Exchange translation differences

2

(4)

 

11

(43)

(170)

(199)

 

At end of period

(155)

(453)

 

(172)

(553)

 

 

 

 

 

 

 

 

 

The net pension deficit comprises:

 

As at

31 December

 

 

 

£

 

 

 

 

As at 30 June


As at 30 June

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

3,507

4,103

 

Fair value of scheme assets

3,585

3,126

 

3,979

3,814

(3,531)

(4,131)

 

Defined benefit obligations of funded schemes

(3,594)

(3,431)

 

(3,989)

(4,186)

(24)

(28)

 

Net deficit of funded schemes

(9)

(305)

 

(10)

(372)

(146)

(171)

 

Defined benefit obligations of unfunded schemes

(146)

(148)

 

(162)

(181)

(170)

(199)

 

Net deficit

(155)

(453)

 

(172)

(553)

 

 

 

 

 

 

 

 

 

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

2010

£m

2010

€m

 

 

2011

£m

2010

£m


2011

€m

2010

€m

195

219

 

At start of period

159

195

 

186

219

67

78

 

Charged

9

9

 

10

10

(104)

(122)

 

Utilised

(37)

(53)

 

(43)

(61)

1

11

 

Exchange translation differences

(2)

6

 

(10)

24

159

186

 

At end of period

129

157

 

143

192

 

 

 

 

 

 

 

 

 

The amount as at 30 June 2011 comprises property provisions of £100m/€111m (2010: £85m/€104m), relating to sub-lease shortfalls and guarantees given in respect of certain property leases, and restructuring provisions of £29m/€32m (2010: £72m/€88m), principally relating to Reed Business Information.

 

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 2011.

 

8          Exchange translation rates

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

 

Year ended

31 December 2010

 

 

Income statement

 

Statement of financial position

Income statement

Statement of financial position

 

 

30 June 2011

30 June 2010


30 June 2011

30 June 2010

1.17

1.17

 

Euro to sterling

1.15

1.15

 

1.11

1.22

1.55

1.56

 

US dollars to sterling

1.62

1.53

 

1.61

1.50

1.32

1.33

 

US dollars to euro

1.41

1.33

 

1.45

1.23

 

 

 

 

 

 

 

 

 

 

 

REED ELSEVIER PLC SUMMARY FINANCIAL INFORMATION

 

Condensed consolidated income statement

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2010

£m

 

 

2011

£m

2010

£m

(2)

 

Administrative expenses

-

-

(13)

 

Effect of tax credit equalisation on distributed earnings

(9)

(9)

342

 

Share of results of joint ventures

198

166

327

 

Operating profit

189

157

1

 

Finance income

1

1

328

 

Profit before tax

190

158

(1)

 

Taxation

-

-

327

 

Net profit attributable to ordinary shareholders

190

158

 

 

 

 

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2010

£m

 

 

2011

£m

2010

£m

327

 

Net profit attributable to ordinary shareholders

190

158

25

 

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

(1)

(50)

352

 

Total comprehensive income for the period

189

108

 

 

 

 


 

Earnings per ordinary share

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2010

pence

 

 

2011

pence

2010

pence

27.3p

 

Basic earnings per share

15.8p

13.2p

27.1p

 

Diluted earnings per share

15.6p

13.1p

 





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 2011

 

Year ended

31 December

 

 

 

£

 

 

Six months ended 30 June

2010

£m

 

 

2011

£m

2010

£m

 

 

 

 

Cash flows from operating activities

 

 

(2)

 

Cash used by operations

-

-

1

 

Interest received

1

1

(3)

 

Tax paid

(1)

(3)

(4)

 

Net cash used in operating activities

-

(2)

 



 

 

 

 

Cash flows from investing activities

 

 

589

 

Dividends received from joint ventures

-

589

(596)

 

Increase in investment in joint ventures

-

(597)

(7)

 

Net cash used in investing activities

-

(8)

 



 

 

 

 

Cash flows from financing activities

 

 

(245)

 

Equity dividends paid

(180)

(180)

9

 

Proceeds on issue of ordinary shares

6

3

247

 

Decrease in net funding balances due from joint ventures

174

187

11

 

Net cash from financing activities

-

10

 



 

 

-

 

Movement in cash and cash equivalents

-

-






 

Condensed consolidated statement of financial position

As at 30 June 2011

 

As at

31 December

 

 

 

£

 

 

As at 30 June

2010

£m

 

 

2011

£m

2010

£m

 

 

Non-current assets

 

 

1,037

 

Investments in joint ventures

1,055

852

1,037

 

Total assets

1,055

852

 

 

Current liabilities

 

 

9

 

Taxation

8

8

9

 

Total liabilities                                                                                                                                   

8

8

1,028

 

Net assets

1,047

844

 

 

Capital and reserves

 

 

180

 

Called up share capital

180

180

1,168

 

Share premium account

1,174

1,162

(312)

 

Shares held in treasury (including in joint ventures)

(308)

(313)

4

 

Capital redemption reserve

4

4

142

 

Translation reserve

124

168

(154)

 

Other reserves

(127)

(357)

1,028

 

Total equity

1,047

844

 

 

 

 

 

Approved by the Board of Directors, 27 July 2011.

 

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2011

 

 

 

 

 

 

 

 

£


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 2011

180

1,168

(312)

4

142

(154)

1,028

Total comprehensive income for the period

-

-

-

-

(18)

207

189

Equity dividends paid

-

-

-

-

-

(180)

(180)

Issue of ordinary shares, net of expenses

-

6

-

-

-

-

6

Share of joint ventures' settlement of share awards

-

-

4

-

-

(4)

-

Share of joint ventures' increase in share based remuneration reserve

-

-

-

 

-

-

10

10

Equalisation adjustments

-

-

-

-

-

(6)

(6)

Balance at 30 June 2011

180

1,174

(308)

4

124

(127)

1,047

 

 

 

 

 

 

 

 

Balance at 1 January 2010

180

1,159

(317)

4

92

(202)

916

Total comprehensive income for the period

-

-

-

-

76

32

108

Equity dividends paid

-

-

-

-

-

(180)

(180)

Issue of ordinary shares, net of expenses

-

3

-

-

-

-

3

Share of joint ventures' settlement of share awards

-

-

4

-

-

(4)

-

Share of joint ventures' decrease in share based remuneration reserve

-

-

-

-

-

(3)

(3)

Balance at 30 June 2010

180

1,162

(313)

4

168

(357)

844

 

 

 

 

 

 

 

 

Balance at 1 January 2010

180

1,159

(317)

4

92

(202)

916

Total comprehensive income for the year

-

-

-

-

50

302

352

Equity dividends paid

-

-

-

-

-

(245)

(245)

Issue of ordinary shares, net of expenses

-

9

-

-

-

-

9

Share of joint ventures' settlement of share awards

-

-

5

-

-

(5)

-

Share of joint ventures' decrease in share based remuneration reserve

-

-

-

-

-

(4)

(4)

Balance at 31 December 2010

180

1,168

(312)

4

142

(154)

1,028

 

Notes to the summary 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.

 

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 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 152 of the Reed Elsevier Annual Reports and Financial Statements 2010.

 

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 2011.

 

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 2011 and the comparative amounts to 30 June 2010 have been reviewed by the auditors but are unaudited. The summary financial information for the year ended 31 December 2010 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2010, which have been filed with the UK Registrar of Companies and received an unqualified audit report.

 

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

2010

£m

2010

pence

 

 

2011

£m

2010

£m

2011

pence

2010

pence

327

27.3p

 

Reported figures

190

158

15.8p

13.2p

13

1.1p

 

Effect of tax credit equalisation on distributed earnings

9

9

0.8p

0.7p

340

28.4p


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

199

167

16.6p

13.9p

180

15.0p

 

Share of adjustments in joint ventures

69

88

5.7p

7.4p

520

43.4p

 

Adjusted figures

268

255

22.3p

21.3p

 

 

 

 

 

 

 

 

3          Dividends

During the six months ended 30 June 2011, the 2010 final dividend of 15.0p per ordinary share was paid at a cost of £180m (2010: 2009 final dividend 15.0p per ordinary share; £180m). On 27 July 2011 an interim dividend of 5.65p per ordinary share (2010: 2010 interim dividend 5.4p per ordinary share) was declared by the directors of Reed Elsevier PLC. The 2011 interim dividend will be paid on the ordinary shares on 26 August 2011, with ex-dividend and record dates of 3 August 2011 and 5 August 2011 respectively. The cost of this dividend of £68m (2010 interim: £65m) 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

2010

 

 

 

 

2011

2010

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

 

 

 

 

1,197.7

 

At start of period

1,249.3

(48.9)

1,200.4

1,197.7

2.0

 

Issue of ordinary shares

1.1

-

1.1

0.6

0.7

 

Net release of shares by employee benefit trust

-

0.6

0.6

0.6

1,200.4

 

At end of period

1,250.4

(48.3)

1,202.1

1,198.9

1,199.1

 

Average number of ordinary shares during the period

 

 

1,201.5

1,198.6

 

 

 

 

 

 

 

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 £3,922m at 30 June 2011 (31 December 2010: £3,924m).

 

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 2011.

 

REED ELSEVIER NV SUMMARY FINANCIAL INFORMATION

 

Condensed consolidated income statement

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2010

€m

 

 

2011

€m

2010

€m

 

 

(2)

 

Administrative expenses

(1)

(1)

367

 

Share of results of joint ventures

211

179


Operating profit

210

178

14


Finance income

9

6

379

 

Profit before tax

219

184

(3)

 

Taxation

(2)

(2)

376

 

Net profit attributable to ordinary shareholders

217

182

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2010

€m

 

 

2011

€m

2010

€m

 

 

376

 

Net profit attributable to ordinary shareholders

217

182

71

 

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

(60)

28

447

 

Total comprehensive income for the period

157

210

 

 

 

 

 

 

Earnings per ordinary share

For the six months ended 30 June 2011

 

Year ended

31 December

 

 

 

 

 

Six months ended 30 June

2010

€m

 

 

2011

2010

€0.51

 

Basic earnings per share

€0.30

€0.25

€0.51

 

Diluted earnings per share

€0.29

€0.25

 

 

 

 

 

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 2011

 

Year ended

31 December




 

 

Six months ended 30 June

2010

€m

 

 

2011

€m

2010

€m

 

 

Cash flows from operating activities

 

 

(1)

 

Cash used by operations

(2)

-

14

 

Interest received

10

7

(4)

 

Tax paid

(2)

(2)

9

 

Net cash from operating activities

6

5

 

 

 

 


 

 

Cash flows from investing activities

 


1,093

 

Dividends received from joint ventures

-

1,093

(719)

 

Increase in investment in joint ventures

-

(718)

374

 

Net cash from investing activities

-

375

 

 

 

 


 

 

Cash flows from financing activities

 


(281)

 

Equity dividends paid

(212)

(205)

2

 

Proceeds on issue of ordinary shares

2

-

(104)

 

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

203

(176)

(383)

 

Net cash used in financing activities

(7)

(381)

 

 

 

 


-

 

Movement in cash and cash equivalents

(1)

(1)

 

 

 

 

 

 

Condensed consolidated statement of financial position

As at 30 June 2011

 

As at

31 December

 

 

 

 

 

As at 30 June

2010

€m

 

 

2011

€m

2010

€m

 

 

Non-current assets

 

 

1,198

 

Investments in joint ventures

1,161

1,038

 

 

Current assets

 


2

 

Amounts due from joint ventures

1

1

3

 

Cash and cash equivalents

2

2

5

 

 

3

3

1,203

 

Total assets

1,164

1,041

 

 

Current liabilities

 


11

 

Payables

10

11

55

 

Taxation

55

56

66

 

Total liabilities

65

67

1,137

 

Net assets

1,099

974

 

 

Capital and reserves

 


54

 

Share capital issued

54

53

2,169

 

Paid-in surplus

2,171

2,168

(433)

 

Shares held in treasury (including in joint ventures)

(423)

(416)

(51)

 

Translation reserve

(135)

(2)

(602)

 

Other reserves

(568)

(829)

1,137

 

Total equity

1,099

974

 

 

 

 

 

Approved by the Combined Board of Directors, 27 July 2011.

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2011

 

 

 

 

 

 

 


Share

capital

Paid-in surplus

 Shares held

in treasury

Translation reserve

Other reserves

Total

equity

 

€m

€m

€m

€m

€m

€m

Balance at 1 January 2011

54

2,169

(433)

(51)

(602)

1,137

Total comprehensive income for the period

-

-

-

(79)

236

157

Equity dividends paid

-

-

-

-

(212)

(212)

Issue of ordinary shares, net of expenses

-

2

-

-

-

2

Share of joint ventures' settlement of share awards

-

-

5

-

(5)

-

Share of joint ventures' increase in share based
   remuneration reserve

-

-

-

-

11

11

Equalisation adjustments

-

-

-

-

4

4

Exchange translation differences

-

-

5

(5)

-

-

Balance at 30 June 2011

54

2,171

(423)

(135)

(568)

1,099

 

 

 

 

 

 

 

Balance at 1 January 2010

53

2,168

(434)

(153)

(664)

970

Total comprehensive income for the period

-

-

-

164

46

210

Equity dividends paid

-

-

-

-

(205)

(205)

Share of joint ventures' settlement of share awards

-

-

5

-

(5)

-

Share of joint ventures' decrease in share based
   remuneration reserve

-

-

-

-

(3)

(3)

Equalisation adjustments

-

-

-

-

2

2

Exchange translation differences

-

-

13

(13)

-

-

Balance at 30 June 2010

53

2,168

(416)

(2)

(829)

974

 

 

 

 

 

 

 

Balance at 1 January 2010

53

2,168

(434)

(153)

(664)

970

Total comprehensive income for the year

-

-

-

98

349

447

Equity dividends paid

-

-

-

-

(281)

(281)

Issue of ordinary shares, net of expenses

1

1

-

-

-

2

Share of joint ventures' settlement of share awards

-

-

5

-

(5)

-

Share of joint ventures' decrease in share based
   remuneration reserve

-

-

-

-

(4)

(4)

Equalisation adjustments

-

-

-

-

3

3

Exchange translation differences

-

-

(4)

4

-

-

Balance at 31 December 2010

54

2,169

(433)

(51)

(602)

1,137

 

 

 

 

 

 

 

 

Notes to the summary 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.

 

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 172 and 173 of the Reed Elsevier Annual Reports and Financial Statements 2010.

 

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 Combined 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 2011.

 

The interim figures for the six months ended 30 June 2011 and the comparative amounts to 30 June 2010 have been reviewed by the auditors but are unaudited. The summary financial information for the year ended 31 December 2010 has been abridged from the Reed Elsevier Annual Reports and Financial Statements 2010, which received an unqualified audit report.

 

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

2010

€m

2010

 

 

2011

€m

2010

€m

2011

2010

376

€0.51

 

Reported figures

217

182

€0.30

€0.25

199

€0.27

 

Share of adjustments in joint ventures

74

95

€0.10

€0.13

575

€0.78

 

Adjusted figures

291

277

€0.40

€0.38

 

 

 

 

 

 

 

 

3          Dividends

During the six months ended 30 June 2011, the 2010 final dividend of €0.303 per ordinary share was paid at a cost of €212m (2010: 2009 final dividend €0.293 per ordinary share; €205m). On 27 July 2011 an interim dividend of €0.110 per ordinary share (2010: 2010 interim dividend €0.109 per ordinary share) was declared by the directors of Reed Elsevier NV. The 2011 interim dividend will be paid on the ordinary shares on 26 August 2011, with ex-dividend and record dates of 3 August 2011 and 5 August 2011 respectively. The cost of this dividend of €77m (2010 interim: €76m) 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

2010

 

 

 

 

2011

2010

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

 

 

 

 

691.5

 

At start of period

723.9

(31.7)

692.2

691.5

0.2

 

Issue of ordinary shares

0.2

-

0.2

-

0.5

 

Net release of shares by employee benefit trust

-

0.4

0.4

0.4

692.2

 

At end of period

724.1

(31.3)

692.8

691.9

734.5

 

Average number of equivalent ordinary shares during the period

 

 

735.1

734.4

 

 

 

 

 

 

 

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.

 

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 €4,343m at 30 June 2011 (31 December 2010: €4,591m).

 

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 2011.

 

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 ("US GAAP"), which would be different in some significant respects.

 

Combined income statement

 

Year ended

31 December

 

 

 

$

 

 

Six months ended 30 June

2010

US$m

 

 

2011

US$m

2010

US$m

9,385

 

Revenue

4,704

4,578

1,690

 

Operating profit

938

831

1,190

 

Profit before tax

771

630

995

 

Net profit attributable to parent companies' shareholders

611

483

2,410

 

Adjusted operating profit

1,254

1,160

1,524

 

Adjusted net profit attributable to parent companies' shareholders

820

737

US$

 

Basic earnings per American Depositary Share (ADS)

US$

US$

$1.69

 

   Reed Elsevier PLC (Each ADS comprises four ordinary shares)

$1.02

$0.81

$1.35

 

   Reed Elsevier NV (Each ADS comprises two ordinary shares)

$0.85

$0.67

 

 

Adjusted earnings per American Depositary Share (ADS)

 

 

$2.69

 

   Reed Elsevier PLC (Each ADS comprises four ordinary shares)

$1.45

$1.30

$2.07

 

   Reed Elsevier NV (Each ADS comprises two ordinary shares)

$1.13

$1.01

 

 

 

 

 

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.

 

Combined statement of cash flows

 

Year ended

31 December

 

 

 

$

 

 

Six months ended 30 June

2010

US$m

 

 

2011

US$m

2010

US$m

2,097

 

Net cash from operating activities

933

1,204

(510)

 

Net cash used in investing activities

(386)

(220)

(1,587)

 

Net cash used in financing activities

(552)

(961)

-

 

(Decrease)/increase in cash and cash equivalents

(5)

23

2,354

 

Adjusted operating cash flow

1,121

1,137

 

 

 

 

 

 


Combined statement of financial position

 

As at

31 December



 

$

 

 

As at 30 June

2010

US$m

 

 

2011

US$m

2010

US$m

13,383

 

Non-current assets

13,613

13,466

4,023

 

Current assets

3,822

3,408

-

 

Assets held for sale

-

4

17,406

 

Total assets

17,435

16,878

6,079

 

Current liabilities

6,500

5,446

8,254

 

Non-current liabilities

7,697

9,000

14,333

 

Total liabilities

14,197

14,446

3,073

 

Net assets

3,238

2,432

 

 

 

 

 

 

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 2010 with the exception of Lord Sharman, who retired from the Reed Elsevier PLC Board and Reed Elsevier NV Supervisory Board in April 2011 and Adrian Hennah who was appointed to the Reed Elsevier PLC Board and Reed Elsevier NV Supervisory Board in April 2011.

 

 

By order of the Board of Reed Elsevier PLC

27 July 2011


By order of the Combined Board of Reed Elsevier NV

27 July 2011

 

 

 

 



A J Habgood

Chairman     

M H Armour

Chief Financial Officer


A J Habgood

Chairman of the Supervisory Board and the Combined Board

M H Armour

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 2011 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 2011 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 Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

 

This report is made solely to Reed Elsevier PLC and Reed Elsevier NV in accordance with International Standard on Review Engagements 2410: "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". 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 and Reed Elsevier NV 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 review.

 

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410: "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim 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 review, 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 Auditors

A. Sandler

London

Amsterdam

United Kingdom

The Netherlands

27 July 2011

27 July 2011

 

 

INVESTOR INFORMATION

FINANCIAL CALENDAR

 

2011


 


 

28 July


PLC

NV


Interim results announcement for the six months to 30 June 2011

3 August

 


PLC

NV


Ex-dividend date - 2011 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary
   shares and ADRs

5 August

 


PLC

NV


Record date - 2011 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary shares
   and ADRs

26 August


PLC

NV


Payment date - 2011 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ordinary shares

2 September


PLC

NV


Payment date - 2011 interim dividend, Reed Elsevier PLC and Reed Elsevier NV ADRs

17 November


PLC

NV


Interim management statement issued in relation to the 2011 financial year

2012


 


 

16 February


PLC

NV


Results announcement for the year to 31 December 2011

24 April


PLC

NV


Interim management statement issued in relation to the 2012 financial year

26 July


PLC

NV


Interim results announcement for the six months to 30 June 2012



 


 

 

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

 

 

 


INVESTOR INFORMATION

 

Contacts

Reed Elsevier PLC

1-3 Strand

London WC2N 5JR

United Kingdom

Tel:   +44 (0)20 7930 7077

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



 


Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

United Kingdom

www.shareview.co.uk

 Tel:   0871 384 2960 (calls charged at 8p per minute from a BT landline, other telephony providers' costs may vary)

Tel:  +44 121 415 7047 (non-UK callers)

 

Listing/paying agent

Royal Bank of Scotland N.V.

Gustav Mahlerlaan 10

1082 PP Amsterdam

The Netherlands

Reed Elsevier PLC and Reed Elsevier NV

ADR Depositary

BNY Mellon Shareowner Services

480 Washington Blvd 27th Floor

Jersey City, NJ 07310

USA

www.adrbny.com

email: https://vault.bnymellon.com

Tel:   +1 888 269 2377

         +1 201 680 6825 (outside the US)

 

 

 

 

 

 

For further investor information visit:

www.reedelsevier.com

This announcement is available on the Reed Elsevier website. Copies are available to the public from
the registered offices of the respective companies shown above.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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