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## Contingent liabilities 25 

There are contingent liabilities amounting to £77m/ € 109m (2002: £118m/ € 181m) in respect of property lease guarantees, in excess of provided amounts of £26m/ € 37m (2002: £32m/ € 49m), given by Harcourt General, Inc in favour of a former subsidiary (see note 24). 

## Combined shareholders’ funds 26 

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<img src='content_image/100133.jpg'>

Combined share capital excludes the shares of Reed Elsevier NV held by Reed Elsevier PLC. 

Combined reserves include a £4m/ € 6m (2002: £4m/ € 6m) capital redemption reserve following the redemption of non equity shares in Reed Elsevier PLC in 1999. 

At 31 December 2003, shares held in treasury related to the 6,383,333 (2002: 2,840,047) Reed Elsevier PLC ordinary shares and 1,327,777 (2002: 1,554,381) Reed Elsevier NV ordinary shares held by the Reed Elsevier Group plc Employee Benefit Trust (“EBT”). The aggregate market value of these shares at 31 December 2003 was £39m/ € 55m (2002: £27m/ € 41m). The EBT purchases Reed Elsevier PLC and Reed Elsevier NV shares which, at the trustees’ discretion, can be used in respect of the exercise of share options. 

## Prior year adjustment 27 

In accordance with UITF38: Accounting for ESOP Trusts issued in December 2003 by the Urgent Issues Task Force of the UK Accounting Standards Board, shares in Reed Elsevier PLC and Reed Elsevier NV held by the Reed Elsevier Group plc Employee Benefit Trust are now presented as shares held in treasury and deducted within combined shareholders’ funds. Previously, such shares were included within other fixed asset investments. Within the combined cash flow statement, the purchase of such shares is now presented as a financing transaction and not as a purchase of fixed asset investments. The combined balance sheet as at 31 December 2002 and the combined cash flow statement for the year ended 31 December 2002 have been restated accordingly. 

