Reed Elsevier 2008 Interim Results

31 July 2008


  • Strong business momentum and financial performance
  • Restructuring programme on track to deliver further margin improvement
  • Sale of Harcourt Education fully completed; net proceeds of £2.0bn/€2.7bn returned to shareholders
  • Divestment of Reed Business Information in progress
  • Agreed £2.1bn/€2.7bn acquisition of ChoicePoint, Inc. expected to close in H2

Reed Elsevier's Chief Executive Officer, Sir Crispin Davis, commented:

"We have seen a strong performance across our businesses in the first half despite a more challenging economic backdrop and we remain on track to deliver on our goals this year of good revenue growth, meaningful margin improvement and accelerated earnings growth.

We have made good progress in implementing our plans announced in February to accelerate growth: the planned divestment of Reed Business Information is progressing and we are seeing strong buyer interest in the business; the agreed £2.1bn/€2.7bn acquisition of ChoicePoint, Inc. in the fast growing risk information and analytics markets is moving through US regulatory review and is expected to complete in the second half; our major restructuring programme to deliver £245m/€310m of cost savings over the next four years is on track with the initial targeted £15m/€19m of savings to be delivered this year.

Whilst the professional markets we serve are not immune to economic cycle effects, they are more resilient than most. This, together with the changes we are making in the business and the growing demand for our online information and workflow solutions with the customer productivity they provide, gives us confidence in the outlook.”


Adjusted Figures

Continuing Operations (Elsevier, LexisNexis, Reed Exhibitions)

  • Underlying revenue growth +6%, driven by strong growth in online information and workflow solutions; total revenues of £1,970m/€2,541m, up 10%/down 4% respectively in sterling and euros, and up 5% at constant currencies.
  • Adjusted operating margin +180 basis points (underlying +140 basis points), from good revenue growth and ongoing cost initiatives.
  • Underlying adjusted operating profit growth +11%, before amortisation of acquired intangible assets, exceptional restructuring and acquisition integration costs; total adjusted operating profits of £557m/€718m, up 17% and 2% respectively in sterling and euros, and up 12% at constant currencies.
  • Strong cash flow with 94% of adjusted operating profits converted into cash.
  • Movements in average first half exchange rates against the prior first half favourably affect growth rates on translation of results expressed in sterling and adversely affect growth rates expressed in euros.

Total Operations (including Harcourt Education, Reed Business Information)

  • Adjusted earnings per share +35% at constant currencies; at reported rates up 42% to 20.3p for Reed Elsevier PLC and up 25% to €0.40 for Reed Elsevier NV.
  • First half adjusted earnings per share benefit from the effects of Harcourt Education sale: no seasonal first half losses in 2008 and impact of 13.4% share consolidation on return of net proceeds to shareholders. Positive effect largely reverses in second half when the full year profits of Harcourt Education would have been reported.
  • Reed Elsevier PLC interim dividend up 18% to 5.3p; equalised Reed Elsevier NV interim dividend unchanged at €0.114 (difference in growth rates reflects movement in euro:sterling exchange rate since last interim declaration date).

Reported Figures

  • Reported operating profits for the continuing businesses, after amortisation of acquired intangibles and exceptional restructuring and acquisition integration costs, increased by 8% to £401m/down 6% to €517m.
  • Reported earnings per share, including discontinued operations and disposal gains, up 13% to 14.1p/down 7% to €0.28.

The results of the Reed Business Information and Harcourt Education divisions are presented as discontinued operations and are excluded from revenue, reported and adjusted operating profit, adjusted operating margin and adjusted operating cash flow.

Adjusted figures are presented as additional performance measures and are stated before amortisation of acquired intangible assets, exceptional restructuring and acquisition integration costs, and, in respect of earnings, reflect a tax rate that excludes the effect of movements in deferred taxation assets and liabilities that are not expected to crystallise in the near term. Profit and loss on disposals and other non operating items are also excluded from the adjusted figures. Adjustments made to reported operating profit from continuing operations are amortisation of acquired intangible assets (£105m/€135m; 2007 £95m/€141m), exceptional restructuring and acquisition integration costs (£45m/€58m; 2007 £5m/€7m) and reclassification of tax in joint ventures (£6m/€8m; 2007 £4m/€6m). Reconciliations between the reported and adjusted figures are provided in note 6 to the combined financial information and note 1 to the summary financial information of the respective parent companies.

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