REED ELSEVIER PLC > NOTES TO THE FINANCIAL STATEMENTS Contingent liabilities 20 Prior year adjustment 21 Principal joint ventures 22 86 REED ELSEVIER ANNUAL REPORTS & FINANCIAL STATEMENTS 2003 The “E” shares in Reed Elsevier Group plc and Elsevier Reed Finance BV are owned by Reed Elsevier NV. In accordance with UITF38: Accounting for ESOP Trusts issued in December 2003 by the Urgent Issues Task Force of the UK Accounting Standards Board, the Reed Elsevier combined businesses now present the shares in Reed Elsevier PLC and Reed Elsevier NV held by the Reed Elsevier Group plc Employee Benefit Trust as shares held within treasury, which are deducted within combined shareholders’ funds. Previously, such shares were included within the other fixed asset investments of the combined businesses. The consolidated balance sheet as at 31 December 2002 has been restated to reflect Reed Elsevier PLC’s share of the restatement made in the combined financial statements in relation to the presentation of shares held in treasury. Financial instruments disclosures in respect of the borrowings covered by the above guarantees are given in note 22 to the Reed Elsevier combined financial statements. Reed Elsevier PLC’s share of the revenue reserves of the Reed Elsevier combined businesses is £261m (2002: £402m). Company Share Capital Profit premium redemption and loss account reserve reserve Total £m £m £m £m At 1 January 2003 951 4 644 1,599 Profit attributable to ordinary shareholders – – 145 145 Equity dividends paid and proposed – – (152) (152) Issue of ordinary shares, net of expenses 12 – – 12 At 31 December 2003 963 4 637 1,604 Reserves  (continued) 19 There are contingent liabilities in respect of borrowings of the Reed Elsevier Group plc group and Elsevier Reed Finance BV group guaranteed by Reed Elsevier PLC as follows: 2003 2002 £m £m Guaranteed jointly and severally with Reed Elsevier NV 2,692 2,934 The principal joint ventures are: % holding Reed Elsevier Group plc Incorporated and operating in Great Britain £10,000 ordinary “R” shares 100% 1-3 Strand £10,000 ordinary “E” shares – London WC2N 5JR £100,000 7.5% cumulative preference non voting shares 100% Holding company for operating businesses involved in science & medical, legal, educational and business publishing Equivalent to a 50% equity interest Elsevier Reed Finance BV Incorporated in the Netherlands 133 ordinary “R” shares 100% Sara Burgerhartstraat 25 205 ordinary “E” shares – 1055 KV Amsterdam, The Netherlands Holding company for financing businesses Equivalent to a 39% equity interest