The Science & Medical business, now branded Elsevier, has had another very successful year. Strong subscription renewals, growing online sales and a successful medical book publishing programme have delivered revenue growth ahead of the market. The successful integration of the Harcourt STM business and tight cost control has delivered double digit underlying profit growth.

Revenue and adjusted operating profits increased by 29% and 26% respectively at constant exchange rates, or, underlying, by 6% and 11% including the Harcourt STM business on a proforma basis. Both the Science & Technology and Health Sciences divisions saw underlying revenue growth of 6%.

In Science & Technology, this was driven by strong subscription renewals, both for print journals and ScienceDirect, and growing online sales, including newly introduced backfiles and subject collections. Migration to e-only contracts is accelerating, which, whilst generating lower revenue than a combined print and electronic sale, has a positive impact on operational efficiency and provides a good platform for the sale of new electronic services.

In Health Sciences, underlying revenue growth was driven by a successful medical book publishing programme, with strong new publishing and increased demand from the expanding healthcare professions. The online service, MD Consult, saw good growth with a 15% increase in subscribers and expanded content. The Excerpta Medica sponsored communications business serving the pharmaceutical industry also performed well.

The integration of the Harcourt STM businesses within Elsevier is now mostly complete. The annual cost savings target of US$40 million will be exceeded, with close to that amount realised in 2002. More than half of this has been reinvested in new product development.

Operating margins, at 33.1%, are 0.5 percentage points lower than in the prior year, reflecting the inclusion of the lower margin Harcourt STM business for a full year. The underlying margin improvement on a proforma basis was 1.5 percentage points.

The Elsevier business is making good progress against its strategic priorities. We continue to expand our content and make more of it available electronically. During 2002, the number of articles available on the ScienceDirect web service increased from 1.8 million to 3.3 million from new publishing, the progressive loading of backfiles and migration from the IDEAL platform. Additional content came from continued strong publishing in our journals and a very successful medical publishing programme, as well as acquisitions. We acquired Hanley & Belfus, a leading US publisher in the medical student market, and recently established a strong position in Germany through the acquisition of the STM businesses of Holtzbrinck, including Urban & Fischer, a leading medical publisher.

ScienceDirect saw strong growth in the year, with the number of articles downloaded up 70% to 86 million. The percentage of subscribers by value now taking ScienceDirect is 72%, up 6 percentage points in the year with most major customers now taking the service.

The outlook for the Science & Medical business is good. Although academic institutional and corporate budgets are under pressure, Elsevier continues to see strong subscription renewals and is driving increased demand through new content and online services, adding value and productivity to existing customers and widening distribution. Further margin improvement is expected from increasing operational efficiency, particularly in the Health Sciences business.