Value to shareholders

Smith WH PLC
27 July 2004

                                                                    27 July 2004
                                  WH Smith PLC

                    Plans to deliver value to shareholders

The Board of WH Smith PLC is today providing an update on its plans to deliver
value to shareholders. These involve refocusing the Group on its core retailing
and news distribution activities and implementing plans to improve the
profitability of UK High Street Retail.

Key Highlights:

• Refocused and simplified Group
  -  Exit from US retail business and ASPAC
  -  Proposed sale or demerger of Hodder Headline under way
  -  Strongly performing News Distribution and UK Travel Retail businesses
  -  Opportunity to improve UK High Street Retail performance substantially

• Update on plans currently being implemented for UK High Street Retail
  -  Rebuilding position as Britain's most popular stationer, bookseller and 
     newsagent
  -  Increasing product authority in core categories of stationery, cards, books 
     and magazines
  -  Re-engineering ranges to focus on faster growing and more profitable 
     categories
  -  Substantially improving space utilisation by increasing product density
  -  Refocusing business on needs of customers and stores through improved 
     leadership, clarity of direction and a results driven approach
  -  Achieving cost savings, margin enhancement and better stock control

• Targeted cost savings of £30m p.a. by the financial year ending August 2007

• Return of value to shareholders from divestment of non-core activities
  -  Value to be returned through sale of Hodder Headline and return of net cash 
     proceeds, or demerger of Hodder Headline

• Restructured balance sheet
  -  Proposed new borrowing facilities of up to £120m
  -  Agreement with Trustees to make a payment of £120m and revised annual 
     contributions to the Pension Trust upon the divestment of Hodder Headline

• Proposed Management Investment Plan
  -  Executive Directors and senior managers able to invest a substantial amount 
     of their own money
  -  Matching share awards dependent on demanding performance targets
  -  Remuneration Committee consultation with shareholders and representative 
     bodies
  -  Further aligns shareholder and management interests

• Confirmation that current trading continues to be in line with its 
  expectations

Commenting on the announcement, Kate Swann, Group Chief Executive of WH Smith
PLC, said:

'WHSmith is becoming a substantially simplified and refocused Group,
concentrating on its core retail and news distribution businesses.

'We aim to return the UK High Street Retail business to its role as Britain's
most popular stationer, bookseller and newsagent. The business has unique
strengths through its extensive store portfolio, strong market shares and high
customer footfall. We intend to reinvigorate the business by focusing on our
customers and stores. Our plans encompass improved efficiency through cost
savings and margin enhancement, while rebuilding the competitiveness and depth
of our product ranges.

'The combination of the strong News Distribution and UK Travel Retail
businesses, together with the planned recovery in the UK High Street Retail
business, gives the Board full confidence in the prospects for the Group.'


                                     -Ends-


An interview with Kate Swann, Group Chief Executive of WH Smith PLC, is now
available in video, audio and text on www.whsmithplc.com and www.cantos.com

Enquiries:

WH Smith PLC

Mark Boyle Investor Relations                               [phone]
Louise Evans Media Relations                                [phone]

Brunswick                                                   [phone]
Louise Charlton
Tom Buchanan


                                 WH Smith PLC


                  Plans to deliver value to shareholders


Introduction

The Board of WH Smith PLC is today providing an update on its plans to deliver
value to shareholders. These involve refocusing the Group on its core retailing
and news distribution activities and implementing plans to improve the
profitability of UK High Street Retail.

The Board is committed to generating shareholder value and is confident in the
future of WHSmith. In addition to outlining its plans for UK High Street Retail,
the Board:

-  has announced its intention to sell or demerge Hodder Headline and to return 
   the net cash proceeds to shareholders if Hodder Headline is sold

-  is announcing its intention to put in place a Management Investment Plan to 
   align management and shareholder interests further

The sale or demerger of Hodder Headline, any return of cash to shareholders, and
the Management Investment Plan will be subject to approval by shareholders at an
extraordinary general meeting. The Board will inform shareholders of the date of
the extraordinary meeting in a later announcement.

Core businesses

Following the divestment of Hodder Headline and the exit from the US retail
business and ASPAC, the Group will be significantly simplified and focused on
three core businesses:

-  UK High Street Retail

-  UK Travel Retail

-  News Distribution

The Board believes that UK Travel Retail and News Distribution are strongly
performing businesses with good market positions and excellent cash generation.
The Board further believes that there is considerable potential to improve the
profitability of UK High Street Retail and has confidence that it has the right
management team to implement the recovery plan.

Divestment of Hodder Headline

On 22 June 2004, the Company announced its intention to sell or demerge Hodder
Headline before the end of 2004. WHSmith's publishing business, Hodder Headline
Limited, is one of the UK's largest and most diverse book publishers. The
acquisitions of John Murray (Publishers) Limited and Robert Gibson & Sons
Glasgow, Limited have further strengthened its position in both consumer and
education markets. Hodder Headline has performed strongly under WHSmith
ownership and this performance continues in the current financial year. However,
the Board concluded in 2003 that there was little strategic fit and limited
operational benefits between Hodder Headline and the other businesses within the
Group. Accordingly, the Board had formed the view that this business would be
divested at an appropriate time.

Following the approach from Permira, a number of expressions of interest in the
business were received. The Board believes that a separation of Hodder Headline
from WHSmith will create value for shareholders and will accelerate
opportunities for Hodder Headline. The Company is currently in discussions with
a number of interested parties.

As an alternative to a sale, a demerger would provide existing WHSmith
shareholders with a direct interest in an excellent business and the opportunity
to participate in any further value gains arising from its growth opportunities.

Pension deficit, new borrowing facility and tax rate

Following discussions initiated by the Board, the Board has agreed with the
Trustees of the Pension Trust the terms of revised funding arrangements once
Hodder Headline is divested. The Company will make a single contribution of
£120m to the Pension Trust. Annual contributions will be reduced to
approximately £21m in the first year of a new nine-year pay down period and will
be subject to annual review thereafter. This compares to the £42m contribution
in this financial year as part of the previous twelve-year pay down arrangements
agreed in the autumn of 2003.

The Company has agreed with a consortium of banks to put in place new borrowing 
facilities of up to £120m on divestment of Hodder Headline.

With the planned recovery in the profitability of the UK High Street Retail
business, the reduction in on-going contributions to the Pension Trust, the
lower on-going dividend payments following the reduction in February 2004,
tighter control of working capital and the elimination of recent one-off
exceptional cash charges, the Board anticipates that the Group will be strongly
cash generative in future years enabling a swift pay down of the new borrowings.
In addition, the plans for the recovery of UK High Street Retail do not require
material additional capital expenditure.

Over the next year it is anticipated that the Company will make progress on
settling prior year corporation tax liabilities with the Inland Revenue. As a
result, WHSmith expects that its effective tax rate will be lower than the
prevailing 30% tax rate in future years.

Return of cash

If Hodder Headline is sold the Board intends to return the net cash proceeds to
shareholders. The return of cash would provide liquidity to shareholders in the
short term and shareholders will have the potential for further value generation
through continued ownership in full of the remaining businesses of the Group.

Proposed Management Investment Plan

The Company intends to put in place a Management Investment Plan. This plan will
provide the Executive Directors, members of the senior executive group and other
senior management (comprising approximately 40 people) with the opportunity to
demonstrate their commitment to the future of the Company by investing their own
money to buy Ordinary Shares. A matching award of options over Ordinary Shares
will be granted which will be exercisable provided that certain demanding
corporate performance conditions are met and that the investment is retained
over a period of three years.

The Remuneration Committee of WH Smith PLC will consult with shareholders and
their representative bodies on the details of the proposed Management Investment
Plan. Further details of the Plan will be provided in due course and will be
proposed to shareholders in a general meeting for their approval.

Strategy for News Distribution and UK Travel Retail

News Distribution

News Distribution is a market leading business with an estimated market share of
approximately 35 per cent. in newspapers and magazines. It has provided good
cashflow to the Group with an average cash conversion rate of over 100 per cent.
over the last four years. It had a strong 2004 first half performance and
profitability has been improving; trading profit margins increased from 2.5 per
cent. to 3.0 per cent. between 2001 and 2003. The improved performance is being
driven by cost control, increased efficiencies and improved service. Investments
in systems of approximately £23m since 1998 are providing enhanced customer
service and new revenue opportunities. Contract renewal discussions are
progressing and the key contract with the major magazine distributor, Frontline,
has recently been renewed. Following the Government's announcement that from May
2005 vertical agreements will no longer have the benefit of an exemption from EC
competition law, News Distribution is consulting with its business partners and
the OFT with a view to ensuring that its distribution contracts with publishers
remain effective and in keeping with the relevant legislation.

UK Travel Retail

WHSmith has a strong position in the UK travel retail market through its
portfolio of 129 stores, principally in airports and railway stations. The
business has a tailored offering to meet the demands of travelling customers,
which are different from those of the customers of UK High Street Retail, and it
has a separate operating structure and management team. With an average trading
profit margin of 6.8 per cent. between 2001 and 2003 and a strong first half
performance in the current financial year, it also has a robust track record and
is well positioned for future growth. The business strategy is focused on
driving operational efficiency, further developing partnerships with landlords,
improving space and range productivity, and improving customer service.

Strategy for UK High Street Retail

Significant value opportunity

The Board believes that the UK High Street Retail business has significant
strengths and that there is a substantial opportunity to rebuild its
profitability. UK High Street Retail has suffered from a rising cost base,
concurrent with sales and margin pressure. In particular, poor retail
disciplines and execution, an inconsistent product offer and an inadequate
strategic response to competition have, in the Board's view, been largely
responsible for the poor performance. These issues, although challenging, are
addressable.

The management's plan for the revitalisation of UK High Street Retail
encompasses a return to retail basics to improve operational performance and
efficiency in all areas. The business will be refocused on the needs of
customers and stores and cultural change will be driven through improved
leadership, clarity of direction and a results-driven approach. Strategically,
the business will be re-positioned to rebuild authority and specialist positions
in core product categories such as stationery, cards, books and magazines.
Ranges will be re-engineered to faster growing and more profitable segments and
space utilisation will be substantially improved. UK High Street Retail aims to
return to its position as Britain's most popular stationer, bookseller and
newsagent.

The plan for the UK High Street Retail business builds on its extensive store
portfolio, high customer footfall, strong positions in its core markets, and
focuses on cost efficiency, margin optimisation and contribution growth.

Business strengths: stores and customers

UK High Street Retail has some notable strengths. The store portfolio is a
significant asset that is currently under-exploited. The business is present in
85% of the top 500 UK retailing locations with 95% of its stores in prime
locations. The portfolio does not have a long tail of underperforming stores
with 92 per cent. of all stores that have been open for more than twelve months
producing a positive cash contribution to UK High Street Retail central
overheads. With an average size of 5,500 sq. ft., and an average size of 12,000
sq. ft. for the top 100 stores, WHSmith's store sizes compare favourably with
many high street competitors. These attractive locations have significant
customer traffic and the Board believes that approximately 70 per cent. of
adults have visited a WHSmith store in the last twelve months(1). The Board
believes that the difficulty has not been in attracting customers, but in
convincing them to make purchases, which it believes is a function of in-store
execution and product and value propositions.

(1) Source: Based on a survey carried out for the Company by Business
Development Research Consultants for the period January to March 2004

Business strengths: products and markets

UK High Street Retail's core markets - cards, stationery, books and news &
magazines - are large and growing (see table below). Although recently the
business has not taken advantage of its strong position to generate margins
comparable with those of its competitors, WHSmith remains a major player in all
of these categories. The Board believes that greater depth of product range is
the key driver of success in many of these segments and UK High Street Retail
has the right locations and the space available in its stores to enhance its
product offer in key categories.

Cost efficiency programme

Cost control has been an issue in the business, with costs rising faster than
sales in all key areas. Some costs, such as rent and unit labour rates, are
expected to continue to rise, but a programme of cost reduction has been
initiated in three major areas:

-    Head office restructuring (as previously announced by the Company on 2 
     January 2004) is expected to lead to the net reduction of 272 jobs and to 
     reduce costs by £8.5m in the next financial year and £10m per annum by 31
     August 2007. This process is underway and to date 170 people have already 
     left the Company

-    Store staff flexibility and productivity initiatives are expected to save 
     approximately £7m per annum by 31 August 2007 through improved 
     productivity, tighter control and optimised weekly and yearly staff mix. 
     These savings are expected largely to absorb our current expectations for 
     store staff cost inflation over the next three years to 31 August 2007

-    An efficiency initiative is expected to generate a total saving of £13m per 
     annum by 31 August 2007 comprising: marketing, administration, and point of 
     sale savings of £1.5m per annum (whilst increasing advertising 
     effectiveness), logistics cost savings of £1.5m per annum, store cost 
     savings of approximately £5m per annum and general and information systems
     administration savings of approximately £5m per annum

There is an on-going drive to improve efficiency further.

The target for these initiatives is to produce total store and central overhead
cost savings of approximately £30m per annum by 31 August 2007, significantly
mitigating inflation in the cost base.

Margin optimisation programme

UK High Street Retail is implementing a number of initiatives to improve the
margins of the business. The Company will seek to leverage its significant
buying scale in books and stationery. In addition, benefits are expected from
further increased Far East sourcing in stationery at significantly enhanced
margins. The promotional stance of the business will be changed with better
pricing control, avoidance of unprofitable promotions, such as at Christmas, and
improved markdown control. A clear pricing strategy is being developed and
promotions on a category-specific basis will be operating from summer 2004. The
business is already benefiting from improved stock management processes,
improved product file accuracy, 'open-to-buy' procedures as well as aligned
incentives and accountability.

In addition, a number of initiatives have been introduced that focus on the key
areas of 'shrink' (costs relating to theft and stock loss). New measures, new
processes and better security are currently being introduced. For the year to 31
August 2003, the worst performing 25% of UK High Street stores were estimated to
be responsible for 38% of all shrink across the entire store portfolio. UK High
Street Retail's aim is to bring shrink costs of these worst performing stores
down to at least the existing average for the entire store portfolio and through
this process to achieve estimated cost savings of around £2m per annum.

Contribution growth programme

The business has in the past driven like-for-like sales growth but often through
promotional activity and without consistent growth in contribution. UK High
Street Retail aims to drive consistent contribution growth, through both a
return to operational retail basics and clear strategic initiatives, designed to
deliver a more competitive and compelling product offer. There are three
operational initiatives delivering the right ranges to our customers, and three
strategic initiatives driving range authority and concentrating more space in
more profitable growing categories. The changes necessary to implement these
initiatives are currently being made.

Contribution growth - operational initiatives

(i)  On-shelf product availability: In-store availability is to be enhanced 
     through supply chain improvements and improvements in store standards. A 
     new target availability of 95 per cent. has been set for the top selling 
     products

(ii) Core products: The top 1,200 book titles are expected to be introduced into 
     stores by August 2004 and the top 200 stationery products are to be in 
     stores by the end of July 2004

(iii)Range: A range review programme is being used to drive product changes, 
     such as the extended filing range currently being rolled out, and to 
     reallocate space to growth sub-categories (e.g. computing accessories)

Contribution growth - strategic initiatives

There is capacity within the current store portfolio to increase display space
and product density substantially in order to improve product range.
Furthermore, in approximately 90 of the largest stores, this increase in display
space will create more space than needed for the largest increased product
range. Before Christmas, we aim to implement initiatives focusing on space
expansion, refocusing of our entertainment offer and trials of extended ranges
in our largest stores. These programmes are planned for the summer, September
and autumn, respectively. In addition, further space initiatives are being
planned for next year and beyond as increasing data on consumer response is
received.

(i)  Summer space expansion initiative: This programme involves planned space 
     expansion through increased product density. Eleven trial stores with 
     increased display space are already operating and the successful aspects of
     these trials are being rolled out to all stores by the end of September 
     2004. The new space will be used to:

     -  increase substantially the card product range, with the average store 
        moving from approximately 1,400 to 3,500 cards

    -  create permanent 'flexible' space in books and stationery to enable the 
       full year-round range to remain available over Christmas and other 
       seasonal ranges to be displayed during the rest of the year

    -  increase the stationery range, particularly an extended filing range

    -  place new 'front of store' bestseller bays in 385 stores to reinforce the 
       books and entertainment offer

(ii) Entertainment initiative: It is difficult for WHSmith to achieve authority 
     across all entertainment categories. Therefore, space is to be shifted 
     towards areas where a competitive position can be achieved. In the short
     term, there will be a re-focusing of space towards the faster growing DVD
     category. Before Christmas, 67 stores are expected to have a destination 
     DVD offer of over 2,600 titles and a further 380 stores are expected to 
     have a near doubling of their DVD range to an average of approximately 
     1,000 titles without any increase in floor space allocation. There will be 
     a simultaneous focus away from lower growth entertainment products with CD 
     singles removed and the number of CD albums and VHS titles reduced 
     (although children's VHS titles will be maintained).

(iii)Large stores initiative: In addition to the summer space expansion, there 
     is also the opportunity to increase display space in our largest 90 stores 
     by an estimated 15%. This will enable the building of an even more 
     compelling product range in core categories. The choice in stationery and
     related services will be broadened (e.g. in frames, computing accessories, 
     arts & crafts etc.) and the product range will be enhanced further in 
     books. The new ranges are expected to be in six trial stores from 
     September/October to assess customer response. The increase in space will 
     also enable us to develop in-store concessions, which enhance the overall 
     proposition. For example, an initial agreement has been reached with a 
     large coffee shop operator for coffee shops in twenty of our largest 
     stores.

Business potential

In the six months to 29 February 2004, the trading profit margin of UK High
Street Retail was 6.3%, 4.7 percentage points lower than during the same period
in 2003. It was also significantly lower than the operating profit margins of a
number of high street competitors over the Christmas 2003/04 period (see table
below).

The majority of key competitors generate attractive margins and, in spite of a
competitive environment and the perceived threat from supermarkets, the Board is
convinced that UK High Street Retail can significantly improve its margins.
                   
                                        
Product           Market size           Market growth     Competitor     Competitor       Competitor profit  
category          2002/03               2002/03                          average 5 year   margin for 6 month
                  (estimated)           (estimated)                      profit margin    reporting period 
                                                                         (1)              covering Christmas  
                                                                                          2003/04(2)               
-----------       -----------           ------------      -----------    --------         -----------                 

Cards              £1.4bn               +4%               Clinton Cards  8.0%             13.9%
                                                                                 
-------           -----------           ------------      --------       -----------      -----------                

Stationery         £1.9bn               +3-4% (3)         Rymans         7.0%             -  
                                       
-------           -----------           ------------      ---------      ---------        ---------               

Books              £2.0bn               +3-5%             Waterstone's   5.6%             9.6%        
                                                                                  
                                                             Ottakar's   4.1%             9.9%
                                                                                                                       
                  -------               -----------       ------------   ---------        -----------   
News and
Magazines          £1.6bn               +1-3% (3)         TM Retail      3.1%(4)          -
--------          -----------           ------------      ---------      ---------        ---------    
                                                 

Notes: (1) Average operating profit margin over the last 5 years, derived from
and calculated using public filings of the relevant competitor
(2) Average operating profit margin over half year reporting period including
Christmas 2003/04, derived from and calculated using public filings of the
relevant competitor
(3) WHSmith internal estimate of market growth
(4) The most recent public filing for TM Retail is for the 2002 fiscal year

Source: Market size and growth data sourced from: Cards - TNS; Stationery - GFK,
Mintel, Ankar, Filofax, NPD Panel, Suppliers, WHSmith internal estimates; Books
- TNS, SWPA, Bookscan; News & Magazines - WHSmith internal estimates

Current trading

The Board confirms that current trading continues to be in line with its
expectations.

Enquiries:

WH Smith PLC
Mark Boyle Investor Relations                               [phone]
Louise Evans Media Relations                                [phone]

Brunswick                                                   [phone]
Louise Charlton
Tom Buchanan


                                  Definitions

The following definitions apply throughout this document unless the context
requires otherwise:

'ASPAC'             the Group's former operations in Hong Kong, Australia, New
                    Zealand and Singapore

'Board'             the board of directors of WH Smith

'Executive          the executive directors of WH Smith
Directors'

'Frontline'         Frontline Limited

'Group'             WH Smith PLC and its subsidiary undertakings

'Hodder Headline'   Hodder Headline Limited and its subsidiary undertakings

'Management         the proposed incentive arrangements for management
Investment Plan'

'News               WH Smith Trading Limited and its subsidiary undertakings
Distribution'

'Ordinary Share'    ordinary shares of 55.55p each in the capital of the
                    Company

'Pension Trust'     the WHSmith Pension Trust

'Trustees'          the trustees of the Pension Trust

'UK High Street     the high street retailing operations of WH Smith Retail
Retail'             Limited and its subsidiary undertakings

'UK Travel          the travel retailing operations of WH Smith Retail Limited
Retail'             and its subsidiary undertakings

'WHSmith' or the    WH Smith PLC and its subsidiary undertakings
'Company'


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