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Based in over 200 locations worldwide, we create authoritative content delivered through market leading brands, enabling our customers to find the essential data, analysis and commentary to support their decisions. ess Our content and solutions are increasingly embedded in the workflows of our customers M making them more effective and Reed Elsevier PCO ional a more valued partner. Boerderij New Scientist EDN eekblad Elsevier W MIPIM Flight Internat Estates Gazette MIPTV Interior Design Furniture Today Accurint The Lancet CounselLink MDConsult PharmaPendium Masson Butterworths EmpowerX JCK Las Vegas HESI SIMA InstantID Chabner’s Language of Medicine File & Serve Mosby’s Nursing Consult InterAction REED BUSINESS INFORMATION Gray’s Anatomy JurisClasseur Netter KnowHow Evolve Lawyers.com ScienceDirect Lexis.com CrossFire Beilstein Total Practice Advantage Engineering Village ICIS REED BUSINESS Embase Martindale-Hubbell Scopus Matthew Bender RiskView ZAP Academic Press QuickLaw Scirus Tolley’s ELSEVIER Cell Total Litigator Tetrahedron Letters Visual Files www.reedelsevier.com Variety M Our business Elsevier is a leading provider of scientific, technical and medical information > and solutions. The Science & Technology division is the world’s largest global academic journal publisher, producing over 200,000 new research articles in some 1,100 journals every year, with ScienceDirect, its flagship electronic product, Elsevier accessed by over 11 million users. The Health Sciences division publishes over 700 journals and 2,000 books and clinical reference works annually and offers an extensive portfolio of online tools in education, practitioner reference and point of care. > www.elsevier.com > For a detailed operating review turn to page 20 > For a detailed description of the business turn to page 82 LexisNexis is a leading provider of legal, tax, regulatory, risk information and > analytics, and business information solutions to professional, corporate and government customers worldwide. LexisNexis provides authoritative content through trusted market leading brands which, enabled by technology, offers LexisNexis online information solutions increasingly integrated within the customer workflow. In risk information and analytics, LexisNexis assists customers in managing risk through identity verification, employment screening and fraud prevention. > www.lexisnexis.com > For a detailed operating review turn to page 22 > For a detailed description of the business turn to page 83 Reed Business is the world’s largest business-to-business publisher and > exhibition organiser. Reed Business Information publishes over 400 trade magazines, directories and newsletters and provides over 200 online communities, job sites, lead generation, data and other online services. Reed Exhibitions Reed organises trade exhibitions and conferences internationally, with over 500 events Business in 38 countries attracting in excess of 90,000 exhibitors and more than six million visitors annually. > www.reedbusiness.com > For a detailed operating review turn to page 24 > For a detailed description of the business turn to page 84 Our strengths Our strategy We hold leadership positions in large Deliver authoritative content through global markets sustained by the leading brands increasing demand for professional Invest in new sources of content to widen information and differentiate the product offering to our customers, expanding into new We deliver authoritative content of the segments and geographic regions highest quality through market leading brands, enabling our professional Drive online solutions customers to find the essential data, Leverage our leadership brands and analysis and commentary to support authoritative proprietary content to their decisions deliver innovative, solutions-orientated products that become embedded in Our content and solutions are customers’ workflows and enable Reed increasingly embedded in our customers’ Elsevier to move up the value chain workflows making them more effective and Reed Elsevier a more valued partner Improve cost efficiency Leverage our scale, skill sets, We generate a large part of our revenues technology, resources and collective from subscriptions and other recurring experience across the business to revenue streams improve cost efficiency Our focus on operational efficiency Reshape and strengthen portfolio allows us to deliver continuous margin Allocate capital and resources, both improvement while funding investment through internal investment and in new products acquisition, to pursue opportunities that accelerate our strategic and The quality of our profits is underpinned business progress by strong cash flow generation We recruit and cultivate the best talent to serve our customers and manage our business with enterprise, professionalism and exceptional commitment Contents 02 Financial highlights 04 Chairman and Chief Executive’s report > 09 Information solutions Overview 19 Divisional summary 20 Elsevier > 22 LexisNexis 24 Reed Business Operating 26 Discontinued operations – Harcourt Education and financial 27 Chief Financial Officer’s report 27 Combined businesses review 34 Parent companies 36 Directors > 38 Corporate responsibility 42 Structure and corporate governance 51 Directors’ remuneration report Governance 76 Report of the Audit Committees 80 Description of business > 86 Resources and investment 88 Principal risks Our 90 Key performance measures business 92 Combined financial statements > 133 Summary combined financial information in euros 147 Reed Elsevier PLC annual report and financial statements Financial 167 Reed Elsevier NV annual report and financial statements 188 Additional information for US investors statements 193 Shareholder information and other 198 Principal operating locations information 8 For further information visit www.reedelsevier.com 02 Financial highlights Financial highlights Reed Elsevier combined businesses – continuing operations % change at 2007 2006 % constant For the year ended 31 December £m £m change currencies Reported figures Revenue 4,584 4,509 +2% +6% Operating profit 888 837 +6% +12% Profit before tax 812 678 +20% +26% Net borrowings 492 2,314 % change at 2007 2006 % constant For the year ended 31 December £m £m change currencies Adjusted figures Operating profit 1,137 1,081 +5% +11% Profit before tax 998 923 +8% +13% Operating cash flow 1,108 1,086 +2% +6% Operating margin 24.8% 24.0% Operating cash flow conversion 97% 100% The results of the Harcourt Education division are presented as discontinued operations and are excluded from revenue, operating profit, profit before tax, operating margin and operating cash flow. The Reed Elsevier combined financial statements are presented in pounds sterling on pages 92 to 131. The primary combined financial statements and selected notes are presented in euros on pages 133 to 146. The Reed Elsevier combined financial statements presented in euros are available on the Reed Elsevier website, www.reedelsevier.com. Parent companies – total operations % change at % constant Reed Elsevier PLC 2007 2006 change currencies Reported earnings per share 49.7p 25.6p +94% Adjusted earnings per share 35.9p 33.6p +7% +12% Dividend per share 18.1p 15.9p +14% % change at % constant Reed Elsevier NV 2007 2006 change currencies Reported earnings per share a1.10 a0.59 +86% Adjusted earnings per share a0.80 a0.76 +5% +12% Dividend per share a0.425 a0.406 +5% The Reed Elsevier combined businesses encompass the businesses of Reed Elsevier Group plc and Elsevier Reed Finance BV, together with their two parent companies, Reed Elsevier PLC and Reed Elsevier NV (the “Reed Elsevier combined businesses”). The results of Reed Elsevier PLC reflect its shareholders’ 52.9% economic interest in the Reed Elsevier combined businesses. The results of Reed Elsevier NV reflect its shareholders’ 50% economic interest in the Reed Elsevier combined businesses. The respective economic interests of the Reed Elsevier PLC and Reed Elsevier NV shareholders take account of Reed Elsevier PLC’s 5.8% interest in Reed Elsevier NV. Adjusted figures are presented as additional performance measures and are stated before amortisation of acquired intangible assets 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