Reed Elsevier Results 2014 Erik Engstrom, CEO Nick Luff, CFO This - PDF document

Reed Elsevier Results 2014 Erik Engstrom, CEO Nick Luff, CFO This slide is intentionally left blank 2 1

FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. These statements are subject to a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those currently being anticipated. The terms “outlook”, “estimate”, “project”, “plan”, “intend”, “expect”, “should be”, “will be”, “believe”, “trends” and similar expressions identify forward-looking statements. Factors which may cause future outcomes to differ from those foreseen in forward-looking statements include, but are not limited to, competitive factors in the industries in which Reed Elsevier operates; demand for Reed Elsevier’s products and services; exchange rate fluctuations; general economic and business conditions; legislative, fiscal, tax and regulatory developments and political risks; the availability of third party content and data; breaches of our data security systems and interruptions in our information technology systems; changes in law and legal interpretations affecting Reed Elsevier’s intellectual property rights and other risks referenced from time to time in the filings of Reed Elsevier with the US Securities and Exchange Commission. 3 This slide is intentionally left blank 4 2

Erik Engstrom, CEO 5 This slide is intentionally left blank 6 3

Reed Elsevier 2014 progress Continued positive financial performance • – Underlying revenue and profit growth across all major business areas – Further improvement in profitability Further strategic and operational progress • – Continued business transformation, primarily through organic development – Build out of leading platforms, and addition of datasets and analytics • Simplification and modernisation of corporate structure, share listings and corporate entity names – Simplifies corporate structure and improves transparency – Economics unchanged for all shareholders 7 Financial performance Underlying adjusted operating profit growth Underlying revenue growth* +6% +5% +5% +5% +3% +3% +3% +3% 2011 2012 2013 2014 2011 2012 2013 2014 Earnings per share growth Increased return on invested capital Constant currency 12.8% 12.1% 11.7% 11.2% +10% +8% +7% +6% 2011 2012 2013 2014 2011 2012 2013 2014 2012 ROIC restated post IAS19 Employee Benefits (revised) * excluding exhibition cycling effects 8 4

Underlying revenue growth across business areas FY 2014 +7%* Exhibitions +2% Scientific, Technical & Medical +1% Legal Risk & Business Information +6% *excluding exhibition cycling effects 9 9 Underlying adjusted operating profit growth across business areas FY 2014 +9% Exhibitions +6% Legal Scientific, +3% Technical & Medical Risk & Business Information +6% 10 5

Scientific, Technical & Medical Key business trends positive Underlying revenue growth • Research subscription revenue growth around half • percentage point higher than prior year Double digit growth in subscription journal article • submissions and usage Good growth in databases & tools and electronic • reference and education +2% +2% +2% Print book and pharma promotion revenues declined • at a slightly lower rate 2012 2013 2014 74% electronic 2015 outlook : Customer environment largely unchanged with last year’s trends continuing; overall we expect another year of modest underlying revenue growth 11 Risk & Business Information Strong underlying revenue growth driven by volume, Underlying revenue growth • new product rollouts and adjacency expansion Profit growth matched revenue growth, reflecting • ongoing organic initiatives +6% +6% Insurance growth strong: solid demand in US auto, • +5% good take up of new products, adjacency expansion Business Services growth driven by demand for • identity authentication and fraud detection solutions State & local government growth strong; federal • 2012 2013 2014 government new sales improved Major Data Services maintained strong growth • 85% electronic 2015 outlook : Fundamental growth drivers remain strong; we expect underlying revenue growth trends to continue 12 6

Legal Overall revenue trends unchanged; continued Underlying revenue growth • growth in electronic revenues partially offset by print declines US and European markets remain subdued; other • international markets saw good growth New product releases and rollouts continued; • adoption and usage progressing well +1% +1% +1% Around one percentage point of the 270 bp of • margin improvement from organic process innovation and decommissioning; balance largely 2012 2013 2014 from portfolio reshaping 77% electronic 2015 outlook : Trends in major markets unchanged, limiting scope for underlying revenue growth; further improvement in profitability medium term, albeit modest in 2015 following sharp margin increase in 2014 13 Exhibitions Strong underlying revenue and profit growth • Underlying revenue growth* Strong growth in US and Japan • Modest growth in Europe, good growth in • international events; subdued in domestic events +7% +7% +7% China strong in certain sectors, Brazil reflected • economic slowdown; most other markets grew strongly Continued pursuit of growth opportunities; 36 new • launches: several small acquisitions and 2012 2013 2014 investments * Excluding cycling effects 2015 outlook : Strong underlying revenue growth in the US and Japan; modest in Europe; other markets strong albeit slightly below recent years; cycling out effect around 3-4 percentage points of growth 14 7

Reed Elsevier strategic direction: unchanged Where we are going Deliver improved outcomes to professional customers • Combine content & data with analytics & technology in global platforms • Build leading positions in long term global growth markets • Leverage institutional skills, assets and resources across Reed Elsevier • How we are getting there Organic development: Investment in transforming core business; build-out of new products • Portfolio reshaping: Selective acquisitions; selective divestments • Implications for business profile: Improving quality of earnings More predictable revenues • Higher growth profile • Improving returns • 15 Organic development: number one priority Format Preferred formats, electronic and face to face, now 82% of revenue • Print – Transitioning from electronic reference to electronic decision tools Face to Electronic – Adding datasets and analytics, leveraging technology Face Geography Growth strategy across geographies • Rest of – Migration to decision tools driving growth in US and Europe World North America – Continue to build leading positions in long term high growth markets Europe Type Advertising Subscription and transactional revenue now 98% of total • – Transition from advertising and marketing services substantially Transactional Subscription complete 16 8

Portfolio reshaping: supporting organic growth strategy 2014 Selective acquisitions: Focus on data sets, analytics and high growth markets • Including Innovata, Tracesmart, Wunelli, AFG Group, FircoSoft, Moreover Technologies, Health Market Science • 27 acquisitions; total consideration £385m Selective disposals: Further exits from marketing services • Including sale of BuyerZone, eMedia, LexisNexis Poland, Dutch B2B magazine and tuition assets, and partial spin-off of RCD • 17 disposals; total consideration £74m 17 Strategic cash priorities 1. Organic development • Invest to drive underlying revenue growth 2. Portfolio reshaping • Support organic growth strategy with selective acquisitions 3. Dividends • Grow dividends predictably, in line with EPS growth 4. Leverage • Maintain leverage in recent range 5. Buybacks • Use remaining cash to buy back shares; pragmatic approach to ensure that value compounding within the business translates into shareholder value 18 9

Simplification of corporate structure, share listings, and modernisation of corporate entity names Objectives Simplify corporate structure • Increase share price transparency • Modernise corporate entity names • While remaining at least cost/profit neutral for the company, without changing the economic interests of any shareholder, and without affecting any customer facing brand names 19 Simplification of corporate structure 31 December 2014 26 February 2015 Proposed 1 July 2015 Economic 52.9% 47.1% 52.9% 47.1% 52.9% 47.1% interest*: Reed Reed Reed Reed RELX RELX Elsevier Elsevier Elsevier Elsevier 5.8% PLC NV PLC NV PLC NV 50% 50% 52.9% 47.1% Reed Elsevier Group plc RELX Group plc RELX Group plc Elsevier Reed Finance BV *External shareholders’ economic interest in combined business 20 10