. Robust financial performance in unprecedented global recession
. Core professional information revenues held up relatively well
. Advertising and promotion markets significantly impacted
. Costs reduced substantially
. Excellent first year profit growth from ChoicePoint acquisition
. Strong cash generation and improved financial position
. Business trends continue in 2010; longer term prospects encouraging

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

“We are pleased that our 2009 results were relatively robust given the depth of the global recession. In addition, during the second half we substantially strengthened our balance sheet both through an equity placing and through good cash generation. In November, Erik Engstrom took over as CEO and, as expected, has hit the ground running. The late cycle nature of some of our markets makes for a tough environment in 2010 but the fundamentals of our businesses are strong, our balance sheet is in good shape and new management is in place with the background, experience and ambition to drive the business forward.”

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

“Our professional information revenues held up relatively well in what was a difficult year for most of our customers. However businesses dependent on our customers’ marketing budgets were hit hard.

In the near term, some of our customer markets remain under pressure but longer term our prospects are encouraging. We have high quality assets in attractive global growth markets and we are focusing each business on its own top priorities in order to capture these growth opportunities. Across Reed Elsevier we are committed to delivering world class information and tools that enable our customers to make critical decisions, enhance productivity and improve outcomes and this is combined with a relentless pursuit of process innovation and cost efficiency. I am convinced that these goals will deliver increased value for our shareholders.”

Robust financial performance in unprecedented global recession

Core professional information revenues held up relatively well

Elsevier (44% of adjusted operating profits)

Revenue growth +4%, adjusted operating profit +9%, at constant currency
Strong growth in electronic clinical reference, clinical decision support and nursing and health professional education; continued weakness in pharma promotion
Solid science journal subscription renewals from 2008 supported 2009 revenue growth

LexisNexis (42% of adjusted operating profits)

Revenue growth +14%, adjusted operating profit +13%, at constant currency, including full year contribution of ChoicePoint acquisition
Core law firm markets flat in US and marginally lower internationally reflecting downturn in legal services industry
US directory listings well behind prior year; corporate, government and academic markets lower
Risk Solutions sees strong growth in Insurance and Government markets but decline in other markets; profits grow strongly
Advertising and promotion markets significantly impacted

Reed Exhibitions (10% of adjusted operating profits)

Revenues -21%, adjusted operating profits -28%, at constant currency
Lower space sales and fewer paying delegates as corporations cut back on marketing spend; net cycling out of biennial exhibitions

Reed Business Information (6% of adjusted operating profits)

Revenues -18%, adjusted operating profits -35%, at constant currency
Advertising markets depressed; subscriptions less impacted; growth in data services
Costs reduced substantially

Significant actions across the cost base including the previously announced restructuring programmes
Underlying costs (i.e. excluding acquisitions and disposals) were 5.4% or £227m lower
Adjusted operating margin flat; 0.8% points lower underlying, despite 6% underlying revenue decline
Excellent first year profit growth from ChoicePoint acquisition

Proforma revenues +1%, adjusted operating profits +44%, at constant currency
Strong revenue growth in Insurance business; declines in employment screening and other markets
Strong growth in profitability driven by Insurance business and significant integration benefits
Strong cash generation and improved financial position

Conversion of adjusted operating profit into cash at 99%
Free cash flow of £1,051m before restructuring spend and dividends
£829m net proceeds of equity placing in July 2009 used to reduce debt
Net debt at 31 December 2009 £3.9bn ($6.3bn; €4.4bn)
Net debt/adjusted ebitda: 2.9x (pensions and lease adjusted) (LTM June 2009: 3.6x)

Parent company earnings per share and dividends

Adjusted earnings per share +3% to 45.9p for Reed Elsevier PLC and -8% to €0.79 for Reed Elsevier NV; -9% at constant currencies

Equity placing in July 2009 has 4% dilutive effect on adjusted earnings per share; further 4% full year effect expected in 2010 (8% in first half)

Reported earnings per share -22% to 17.2p for Reed Elsevier PLC and -27% to €0.32 for Reed Elsevier NV: principally reflects RBI intangible asset and goodwill impairment and higher charges for intangible asset amortisation, exceptional restructuring and acquisition integration

Reed Elsevier PLC final dividend flat at 15.0p; equalised Reed Elsevier NV final dividend +1% to €0.293. Total dividends for 2009 +0.5% to 20.4p for Reed Elsevier PLC and -1% to €0.400 for Reed Elsevier NV. (Difference in growth rates in the equalised dividends reflects changes in the euro:sterling exchange rate since prior year dividend announcement dates)

Outlook
As expected, business trends seen in the second half are continuing in 2010, particularly with regard to late cycle effects in our relatively resilient professional markets. Advertising and promotion and certain other markets, such as employee screening, remain difficult. The rate of revenue decline is, however, expected to slow as comparatives get easier. A modest reduction in adjusted operating margin is expected due to a weak revenue environment and increased investment in legal markets.

Elsevier: Good growth is expected to continue in electronic medical reference, clinical decision support and health professions, although pharma promotion remains weak. Completion of subscription renewals for 2010 is well progressed. Academic budget pressures are continuing. Lower overall revenue growth is expected.

LexisNexis: Trends in US legal and international markets are expected to continue, reflecting pressures on the legal industry and late cycle effects on subscription revenues. Good growth is continuing in the insurance segment in Risk Solutions. Adjusted operating margin is expected to be lower, reflecting a weak revenue environment and increasing product, marketing and infrastructure spend in the legal businesses, partially mitigated by continuing cost actions and the growing profitability of the ChoicePoint business.

Reed Exhibitions: Forward bookings remain cautious with exhibitors committing later. Annual show revenues are expected to be lower. 2010 will see benefit of net cycling in of biennial shows.

Reed Business Information: Current trends are expected to continue with advertising markets remaining difficult, late cycle effects maintaining pressure on print subscriptions and good growth in data services. Revenues are expected to be lower and re-engineering of portfolio and costs will continue.
Late cycle effects are continuing in 2010 and will be particularly severe in the first half which will also see dilution from the July 2009 share placings. We are confident that Reed Elsevier has high quality assets in attractive global growth markets and that the longer term prospects are encouraging.