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2nd December 2008

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Reed to sell off magazine division

21.02.08 Philip Jones

Reed Elsevier is to sell its £1bn business magazine division, which includes magazines such as Publishers Weekly, Variety and New Scientist. London Book Fair's parent Reed Exhibitions, which is also part of this division, is to be retained. Reed also announced the acquisition of ChoicePoint, a risk management business, and a restructuring plan aimed at delivering a total of £245m of cost savings over the next four years.

Reed said that the precise method of divestment of Reed Business Information would be the subject of review in coming months. Reed said that its advertising revenue model and its inherent cyclicality sat less well with the subscription based information and workflow solutions focus of Reed Elsevier's strategy. In the year to 31st December 2007, RBI had revenues of £906m and adjusted operating profits of £119m—however advertising accounts for approximately 60% of revenues.

The news came at the Anglo-Dutch group unveiled full-year revenues from continuing operations (excluding Harcourt Education) of £4,584m up by 2%. At constant exchange rates, revenue was 6% higher, both including and excluding acquisitions and disposals. Adjusted operating profit from continuing operations, at £1,137m was up 5% expressed in sterling and up 4% in euros. At constant exchange rates, adjusted operating profits were up 11%, or 10% excluding acquisitions and disposals.

The company's LexisNexis business posted adjusted operating profits of £406m, an increase of 7% on 2006's £380m, while Elsevier posted a 3% increase in adjusted operating profit, from £465m to £477m. 

Reed Elsevier's chief executive, Sir Crispin Davis, said: "We have made good progress over the last year. Investment against our online growth and workflow solutions strategy is paying off with good revenue momentum. Together with our cost initiatives, this is driving underlying margin improvement and a strong earnings performance. The decline of the US dollar takes some shine off the earnings performance expressed in sterling and euros, but the strength of the underlying growth is very encouraging with 2007 representing the highest constant currency earnings growth of the last ten years."

He added: "The outlook for Reed Elsevier is very positive. We are well positioned in attractive markets; the momentum in the business is showing through in the good financial performance; and the changes we are making will strengthen the business and accelerate our growth."

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