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Last Updated: Tuesday, 27 June 2006, 08:45 GMT 09:45 UK
WH Smith plans to split in August
WH Smith store
WH Smith says its stores are trading "satisfactorily"
WH Smith plans to separate its retail chain from its news distribution arm by the end of August.

Both companies will be listed, with the retail business keeping the WH Smith brand and the news distribution arm being renamed Smiths News.

Shareholders will receive a share in each of the two new companies for every existing WH Smith share they own.

Bosses say the split will enable Smiths News to win new business from retailers who previously saw WH Smith as a rival.

Cutting costs

The demerger needs to be approved at shareholder meetings planned for early August.

WH Smith
Trading since 1792
18,790 staff
669 stores selling magazines, newspapers, books, stationery
2005 results*: Sales 1.4bn, profit 47m
* 12 months to 31 August 2005

The management board of the new retail-focused WH Smith will stay the same, with Kate Swann as chief executive, but Mark Cashmore will take over as chief executive of news distribution arm Smiths News.

"With a strong team in place to run Smiths News and the existing management team remaining to run retail as an independent company, both businesses will benefit from increased focus on their respective strategies," said Ms Swann.

As part of the demerger, Smiths News will take on an extra 70m worth of borrowings, of which 50m will be used to reduce the deficit in the WH Smith pension scheme.

Smiths News
Trading since 1850s
4,200 staff
47 distribution centres, 22,000 customers
2005 results*: Sales 1.2bn, profit 33m
* 12 months to 31 August 2005

In a trading statement issued with the announcement, WH Smith said that trading since the middle of April had been "satisfactory", with the retail division making progress in its plans to increase profitability and reduce costs.

In April it announced that, although like-for-like sales had fallen 3% to 1.3bn ($2.3bn) in the six months to the end of March 2006, pre-tax profits had risen 4% to 71m.

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