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TWST: Can we begin with a brief historical sketch of Reed Elsevier (London: REL.L) and then just bring us up to date with how the company’s position today?

Mr. Baker: Reed Elsevier was formed in 1993 through a merger of two listed companies – Reed International in the UK on the London Stock Exchange and Elsevier on the Amsterdam Stock Exchange. They were two media conglomerates that had mixed portfolios: some professional publishing, some trade publishing, local newspapers and consumer magazines. The vision was to bring them both together and create a European based but global powerhouse within professional publishing. And what Reed Elsevier did over the subsequent three to four years was sell off all the, consumer magazines, consumer books, and local newspapers and finance the acquisition of professional publishing businesses in legal, scientific, and business to business. They bought Pergamon Press; they bought LexisNexis in the US; and they bought some Business to Business titles . That period basically provided the bones of the portfolio of Reed Elsevier as you see it today. When the company was formed in 93 one of the issues was that they never consolidated the management leadership of the company. So there were two camps, one was clearly a UK camp and one was clearly a Dutch camp. And that manifested itself both in the non-executive and executive structure of the company and obviously those two different sets of individuals had slightly different philosophies. So there was a period of time when Reed Elsevier was better known for its internal cliques than for its external performance. Although there was a lot of M&A and change in the portfolio over that period the organic growth of the company and management of the core business suffered during this time. So over a number of years Reed Elsevier was rather disappointing in terms of its organic growth and its performance and that is what caused a whole change in the management structure about four years ago. Then, in 2000, the company brought in a new chairman who is our current chairman, Morris Tabaksblat. Morris was the ex-chairman of Unilever and he was brought in with the remit of sorting out the management and the non-executive structure of the company and to bring in a single chief executive who would have the power to run the portfolio properly. He did this when he brought in Crispin Davis just over three years ago. Crispin joined us from Aegis, a media buying company, and prior to that Guinness and prior to that Proctor and Gamble. That was September 1999 and it was at that stage that Crispin, myself and various other individuals put together the framework for a revised strategy based on organic growth for Reed Elsevier and that is the strategy we have been pursuing ever since.

TWST: Can you summarize the next 12 -24 months for the company in terms of objectives and goals you have placed on the corporate agenda?

Mr. Baker: The strategy that we set in place in 1999 is a fairly pragmatic one, based on organic growth. It also says that we will continue to pursue mergers and acquisitions really to infill and to bulk out the business. In other words if we want expansion into new geographies or expansion into new markets for additional new services for our clients then we’ll consider extensions through acquisitions but we’re not at the moment seeking substantial portfolio renovation or change through major M&A or anything in that nature. Now three years ago we said the similar thing but at that stage we had three big legs to our portfolio and also a half leg, which was education. We had a strong program of education outside the US but we didn’t have a presence in the US and at that stage we said that what we’d really like to do to make the portfolio whole for Reed Elsevier was to fill that fourth leg and secure a major acquisition in the US, which we were able to do with the Harcourt acquisition about two-and-a-half years ago. The Harcourt acquisition was two pieces: one was education, which gave us this fourth leg; and the second was medical, which really rounded out the science portfolio to give us global leadership in both medical and science. So that was the basis of interest in the Harcourt portfolio. The benefit in having the fourth leg in the portfolio is that it balances the risk by simply having four legs rather than three and it reduces the overall dependency on business that is subject to economic cycles, i.e., advertising and exhibitions. Now we have those four portfolios and the legs are all number one or number two in their sectors and we’re confident that all of those can grow strongly. We aren’t necessarily looking for anything significantly further in terms of a fifth leg or sixth leg because frankly we don’t need it at the moment. If Reed Elsevier continues to perform -- and this is the strategy going forward: to continue the level of investment that we’ve had in new product development, internet development, and marketing and sales development -- then we should be able to continue to grow above market and above competition because our position and our assets. And the sum of the four legs means that Reed Elsevier as a corporate entity will continue to outperform its corporate competitors and thus fulfill the strategy and the delivery for the shareholders.