REED ELSEVIER NV > NOTES TO THE FINANCIAL STATEMENTS Other than in respect of the representation of shares held in treasury (see note 20), the adoption of UK GAAP by Reed Elsevier NV had no impact on group shareholders’ funds as at 1 January 2003 or on the group earnings for the year ended 31 December 2003. The adoption of UK GAAP had the effect of reducing parent company shareholders’ funds as at 1 January 2003 by  € 34m and parent company attributable profit for the year ended 31 December 2003 by  € 39m compared to the amounts that would have been reported under Dutch GAAP. Within paid-in surplus, an amount of  € 1,286m (2002:  € 1,283m) is free of tax. Details of shares held in treasury are provided in note 26 to the combined financial statements. A reconciliation between the parent company shareholders’ funds and group shareholders’ funds presented under the gross equity method is provided below: 102 REED ELSEVIER ANNUAL REPORTS & FINANCIAL STATEMENTS 2003 Group and Parent Company Group Parent Company Shares Share capital Paid-in held in issued surplus treasury Reserves Total Reserves Total € m € m € m € m € m € m € m At 1 January 2002 Before prior year adjustment 47 1,438 – 907 2,392 562 2,047 – Prior year adjustment (note 20) – – (14) – (14) – – 47 1,438 (14) 907 2,378 562 2,047 Profit attributable to ordinary shareholders – – – 144 144 152 152 Equity dividends paid and proposed – – – (221) (221) (221) (221) Issue of shares, net of expenses – 22 – – 22 – 22 Increase in shares held in treasury – – (1) – (1) – – Exchange translation differences – – – (303) (303) – – At 1 January 2003 47 1,460 (15) 527 2,019 493 2,000 Before prior year adjustment 47 1,460 – 527 2,034 493 2,000 – Prior year adjustment (note 20) – – (15) – (15) – – Profit attributable to ordinary shareholders – – – 242 242 203 203 Equity dividends paid and proposed – – – (221) (221) (221) (221) Issue of shares, net of expenses – 3 – – 3 – 3 Increase in shares held in treasury – – (13) – (13) – – Equalisation adjustments – – – 8 8 – – Exchange translation differences – – 1 (311) (310) – – At 31 December 2003 47 1,463 (27) 245 1,728 475 1,985 Shareholders' funds 18 2003 2002 € m € m Parent company profit attributable to ordinary shareholders 203 152 Share of profit after tax of joint ventures 239 142 Dividends received from joint ventures (200) (150) Group profit attributable to ordinary shareholders using the gross equity method 242 144 A reconciliation between the parent company profit attributable to ordinary shareholders and the group profit attributable to ordinary shareholders presented under the gross equity method is provided below:  2003 2002 € m € m Parent company shareholders‘ funds 1,985 2,000 Cumulative profit attributable from joint ventures less cumulative dividends received (148) (187) Cumulative currency translation adjustments (204) 107 Cumulative equalisation adjustments and other adjustments 122 114 Shares held in treasury (27) (15) Group shareholders‘ funds using the gross equity method 1,728 2,019