We have a strong business, a clear strategy, a well motivated and experienced management team and a relentless commitment to execute against our objectives

PROGRESS ON STRATEGY
It is now three years since we laid out our investment-led strategy for growth. Over this period we have seen a transformation of Reed Elsevier, in its strategic positioning, its financial performance, and in its prospects. This has been delivered by relentless execution against the milestones we laid out in our strategy for growth:

• The business has been reshaped and refocused: four core businesses in attractive long term growth markets; leading global positions in each; strong subscription revenues and reduced advertising exposures; and strong cashflow dynamics.

• Organisational effectiveness has been upgraded: clear responsibilities and accountability; strong management teams; continuous building of depth of talent; a range of initiatives on training and development, values and culture, and internal communication.

• A dramatic step up in product, sales and marketing, and related investment: global leader in online scientific information; online legal information services transformed; significant and persistent share gains in schools education and business to business, and new electronic services; internet revenues now over £1 billion/1.6 billion, beating the original target set three years ago; annual investment spend approaching £300 million/480 million, compared to £80 million/120 million in 1999, and increasing.

• The cost base has been restructured: over £350 million/550 million of annual costs savings realised; continuous focus on improving operational efficiency; a leaner, faster moving, higher quality organisation.

• Global capabilities are being built: in medical publishing and schools education through the acquisition of Harcourt; development of global online platforms in Science and Legal; content and service acquisitions in the US, Europe and Latin America.

Our strategy is working and has stood the test of a most challenging economic environment. Our goal of above market revenue growth focuses each of our businesses on innovation, to drive product superiority and incremental revenue growth. Our continuing investment and focus on organisational effectiveness reinforce this.

In Science & Medical: we expand our content and online functionalities; upsell to our existing customers and widen our distribution to new customers; add new services and redeploy content in new geographies; drive usage and add customer value.

In Legal: we expand our content and online functionalities; customise solutions for individual markets; establish our global online platform; add to our content globally through editorial investment and selective acquisitions; add new information services and tools; drive usage and add customer value.

In Education: we develop market leading textbook programmes and expand our curriculum range; develop electronic learning resources; grow our testing business through organisational development and investment in new classroom based resources and online services; expand geographically where financial returns are attractive; expand our online professional development services.

In Business: we upgrade and develop our titles, exhibitions and services to expand the market and win share; manage yields; expand online services around proven business models; add further subscription services; expand geographically leveraging our brands, content and skills.

Our goal of double digit adjusted earnings growth at constant currencies demands this focus on revenue growth as well as a continuous improvement in operational efficiency.