Reed Delivers Strong Results And Reaffirms Growth Expectations For 2002

Revenues for 2001 were up 21% to £4,560 million with adjusted pre-tax profits up 23% to £848million. Underlying revenue rose by 3%, overall operating margins were 1% higher at 22%and operating cashflow conversion was strong with operating cash flow at £1,006 million, representing 102% of adjusted operating profits.

Revenues and adjusted operating profits for the science & medical division were up 44% and 34% respectively at constant exchange rates, or 8% and 13% before acquisitions and disposals.

Underlying revenue in the legal division grew to 5% from 3% in 2000 and adjusted operating profits were up 9% compared with a decline of 19% in the previous year. Total revenues and adjusted operating profits were up 7% and 9% respectively at constant exchange rates. Online sales were up 10% compared to 5% in 2000 and 1% in 1999 and overall operating margins were up 0.4 percentage points to 20.1%. Reed said that these have now started to improve as investment levels begin to stabilise and revenue growth picks up.

The education business enjoyed a 12% growth in revenues, building on what Reed described as an ‘outstanding’ year in 2000.

Unsurprisingly, the business division had a difficult year due to the weak economy and repercussions of the 11 September attacks. In exhibitions, underlying revenues and adjusted operating profits grew by 9% and 6% respectively. Electronic revenues, primarily internet based, now account for 27% of revenues at Reed and, the company states, are a key driver of profit growth.

Cost savings initiated in 2000 have “significantly mitigated the impact of lower advertising revenues in 2001 and will help protect margins in [the] Business [division] in 2002”.

The statement concluded by saying that “2002 should again see us meeting our key financial targets of above market revenue growth and double digit earnings per share growth at constant currencies, despite the continuing difficult economic environment…. the overall results for the first half of 2002 are likely to be a little lower than last year due to comparison against a strong first half in 2001 in the Business division. The second half should deliver the expected growth for the year given a less demanding comparison in the Business division and the second half weighting of sales and profit in the Harcourt business.”

“In the last two years major effort has been put into reshaping the business and organisation, and in addressing the fundamentals around product, sales and marketing. We are now well placed to see the full impact of this work in the year ahead, and we have great confidence in Reed Elsevier’s future and further success.”