Final Results - Part 3

Smith WH PLC
26 October 2000


Part 3


WH SMITH PLC
PRELIMINARY ANNOUNCEMENT
12 MONTHS TO 31 AUGUST 2000

                                                               Page
                                                               
Financial Review and Analysis                                  4
Group Profit and Loss Account                                  14
Group Balance Sheet                                            15
Group Cash Flow Statement                                      16
Consolidated Statement of Total Recognised Gains and Losses    17
Note of Historical Cost Profits                                17
Reconciliation of Movements in Consolidated Shareholders'      17
Funds
Segmental Analysis of Results                                  18
Non-Operating Items in Continuing Operations                   21
Pensions                                                       22
Operating Lease Commitments                                    23
Interest                                                       24
Taxation                                                       24
Dividends                                                      24
Earnings per Share                                             25
Fixed Charges Cover                                            25
Segmental Analysis of Operating Assets Employed                26
Acquisitions and Goodwill                                      27
Goodwill                                                       28
Fixed Assets                                                   29
Working Capital                                                30
Provisions for Liabilities and Charges                         30
Financial Assets and Liabilities                               31
Share Capital                                                  32
Reserves                                                       32
Notes to the Cash Flow Statement                               33
Post Balance Sheet Events                                      33
Basis of Preparation                                           34


WH Smith PLC
Group Profit and Loss Account
For the 12 months to 31 August 2000

                                                                   
£m                                  Note           2000        1999 
                                   
====================================================================
Sales  - Continuing operations                   2,570       2,391 
       - Acquisitions                               14           - 
====================================================================
Total sales                        1             2,584       2,391 
====================================================================
                                                                   
                                                                   
Operating profit                                                   
--------------------------------------------------------------------
       - Continuing                     1          133          120 
operations
       - Acquisitions                   1            2           - 
--------------------------------------------------------------------
Total operating profit                             135         120 
                             
Profit on sale of                       2            1           - 
operation
Amount written off                      2          (2)           - 
investment in own shares
--------------------------------------------------------------------
Profit on ordinary                                 134         120 
activities before interest
and taxation
Interest                                5            6          14 
--------------------------------------------------------------------
Profit on ordinary                                 140         134 
activities before taxation
Tax on profit on ordinary               6         (39)        (38) 
activities
--------------------------------------------------------------------
Profit on ordinary                                 101          96 
activities after taxation
Minority interests                                 (1)           - 
--------------------------------------------------------------------
Profit attributable to                             100          96 
shareholders
Dividends                               7         (48)        (45) 
--------------------------------------------------------------------
Retained earnings                                   52          51 
====================================================================
                                                                   
Earnings per share                      8        40.2p       38.4p 
Diluted Earnings per share              8        40.0p       38.1p 
Adjusted Earnings per                   8        41.3p       38.9p 
share
Dividends per share                     7        19.0p       18.2p 
Fixed charges cover -                   9         1.7x        1.8x 
times
Dividend cover  - times                 7         2.1x        2.1x 
Tax charge                              6        28.0%       28.0% 

WH Smith PLC
Group Balance Sheet
As at 31 August 2000

£m                                   Note       2000          1999
==================================================================
Fixed assets                                                      
Goodwill                               12        222           205
Fixed assets                           13        295           275
------------------------------------------------------------------
Total fixed assets                               517           480
------------------------------------------------------------------
Current assets                                                    
Stock                                  14        216           203
Debtors                                14        160           143
Cash at bank and in                    16        152           174
hand
------------------------------------------------------------------
                                                 528           520
Creditors due within                                              
one year
Debt                                   16        (1)          (39)
Other                                  14      (394)         (368)
------------------------------------------------------------------
                                               (395)         (407)
------------------------------------------------------------------
Net current assets                               133           113
------------------------------------------------------------------
Total assets less                                650           593
current liabilities
------------------------------------------------------------------
Creditors due after                                               
more than one year
Debt                                   16       (28)          (30)
Other                                  14        (4)           (2)
------------------------------------------------------------------
                                                (32)          (32)
Provisions for                         15       (14)          (19)
liabilities and
charges
------------------------------------------------------------------
TOTAL NET ASSETS                                 604           542
==================================================================
Capital and Reserves                                              
Share capital                          17        140           140
Share premium                          18         86            84
Capital redemption                     18        155           155
reserve
Revaluation reserve                    18          8             8
Profit and loss                        18        210           151
account
------------------------------------------------------------------
Equity shareholders'                             599           538
funds
Non equity share                       17          2             2
capital
------------------------------------------------------------------
Shareholders' funds                              601           540
Minority interests                                 3             2
------------------------------------------------------------------
TOTAL EQUITY                                     604           542
==================================================================
                                                                  
Memorandum - Analysis                                             
of net cash (£m)
==================================================================
Cash at bank                                     152           174
Debt less than one                               (1)          (39)
year
Debt greater than one                           (28)          (30)
year
------------------------------------------------------------------
Net cash                                         123           105
==================================================================

WH Smith PLC
Group Cash Flow Statement
For the 12 months to 31 August 2000

£m                                    Note        2000         1999
===================================================================
Cashflow from operating activities      19         163          145
Returns on investment and servicing                  6           14
of finance
Taxation                                          (27)         (37)
                                                                   
Purchase of fixed assets                          (60)         (60)
Disposal of tangible fixed assets                    1            8
Proceeds on sale and leaseback of                    2           46
freehold property
-------------------------------------------------------------------
Cash flow from capital expenditure                (57)          (6)
and financial investment
-------------------------------------------------------------------
                                                                   
Proceeds on disposal of operation                    1            -
Acquisitions - Cash consideration                 (23)        (171)
-------------------------------------------------------------------
Cash flow for acquisitions and                    (22)        (171)
disposals
-------------------------------------------------------------------
Equity dividends paid                             (47)         (55)
                                                                   
-------------------------------------------------------------------
Cash flow before use of liquid                      16        (110)
resources and financing
-------------------------------------------------------------------
                                                                   
Issue of shares                                      2            5
Repurchase of shares                                 -         (24)
Decrease in debt                        16        (40)         (63)
-------------------------------------------------------------------
Cash flow from financing                          (38)         (82)
-------------------------------------------------------------------
Decrease in cash                                  (22)        (192)
===================================================================

Reconciliation of net cash flow to                            
movement in net cash
===================================================================
Net cash at the start of the period                105          266
Decrease in cash in the period                    (22)        (219)
Cash flow from decrease in debt                     40           63
Acquisition - Issue of loan notes                    -         (27)
Debt in subsidiaries acquired                        -          (5)
-------------------------------------------------------------------
Net cash at the end of the period                  123          105
===================================================================

WH Smith PLC

Consolidated Statement of Total Recognised Gains and Losses
For the 12 months to 31 August 2000

£m                                                 2000        1999
 ===================================================================
Profit attributable to                              100          96
shareholders
Currency translation differences                      7         (3)
-------------------------------------------------------------------
Total recognised gains for the                      107          93
financial period
 ===================================================================


Note of Historical Cost Profits
For the 12 months to 31 August 2000

£m                                                 2000        1999
===================================================================
Profit on ordinary activities                       140         134
before taxation
Realisation of property                               -           6
revaluation surplus
-------------------------------------------------------------------
Historical cost profit on ordinary                  140         140
activities before taxation
===================================================================
Historical cost retained earnings                    52          57
===================================================================


Reconciliation of Movements in Consolidated Shareholders' Funds
For the 12 months to 31 August 2000

£m                                             2000      1999
===================================================================
Shareholders' funds at beginning               540       511
of period
Retained earnings                              52        51
Share capital issues                           2         5
Repurchase of shares                           -         (24)
Currency translation differences               7         (3)
-------------------------------------------------------------------
Net additions to shareholders'                 61        29
funds
-------------------------------------------------------------------
Shareholders' funds at end of                  601       540
period
===================================================================


WH Smith PLC
Notes to Preliminary Announcement
For the 12 months to 31 August 2000

1  SEGMENTAL ANALYSIS OF RESULTS

1(a)  Analysis of Retailing Stores and Selling Space


Number of stores    1 Sept Acquir-    Open-   Clos-  31 Aug 
                      1999      ed       ed      ed    2000
============================================================
                                                            
WHSmith High           545       -        4    (20)     529 
Street
Europe Travel          183       -        5     (1)     187 
Retail
------------------------------------------------------------
UK Retailing           728       -        9    (21)     716 
International          422      76       68    (43)     523 
Retailing (note a)
------------------------------------------------------------
Total Retailing      1,150      76       77    (64)   1,239 
Businesses
============================================================
                                                            
                                                            Growth
                                                            in
                                                            Aver-
                                                            age
Retail selling      1 Sept Acquir-    Open-   Clos-  31 Aug Sq ft*
square feet           1999      ed       ed      ed    2000
(000's)
===================================================================
                                                            
WHSmith High         2,965       -       26    (67)   2,924     -1%
Street
Europe Travel          195       -        6     (1)     200      1%
Retail
-------------------------------------------------------------------
UK Retailing         3,160       -       32    (68)   3,124     -1%
International          455      48       67    (37)     533      6%
Retailing (note a)
-------------------------------------------------------------------
Total Retailing      3,615      48       99   (105)   3,657       -
Businesses
===================================================================

*  Growth in average square feet compares the average square feet for
   the 12 month period to 31 August 2000 to the average square feet
   for the 12 month period to 31 August 1999.

a) As at 31 August 2000 International Retailing consisted of 503
   stores in the USA (506,000 sq ft) and 20 in Asia (27,000 sq ft).
   All of the stores acquired were in the USA.

WH Smith PLC
Notes to Preliminary Announcement
For the 12 months to 31 August 2000

1(b)  Segmental Analysis of Sales

                                  Base   Acquisi-      Total        
£m                            Business      tions      Sales        
                                  2000       2000       2000    1999
====================================================================
Retailing (note a)                                                  
WHSmith High Street              1,058          -      1,058   1,033
Europe Travel Retail (note         265          -        265     242
b)
--------------------------------------------------------------------
UK Retailing                     1,323          -      1,323   1,275
Internet Trading                     7          -          7       5
International Retailing            197          7        204     186
(note c)
--------------------------------------------------------------------
Total Retailing Businesses       1,527          7      1,534   1,466
Publishing    - Total              112          7        119      30
Businesses    sales (note
              d)
              - Internal          (14)          -       (14)     (2)
              sales
--------------------------------------------------------------------
Publishing Businesses (note         98          7        105      28
e)
WHSmith News  - Total            1,047          -      1,047     995
Distribution  sales
              - Internal         (102)          -      (102)    (98)
              sales
--------------------------------------------------------------------
WHSmith News Distribution          945          -        945     897
--------------------------------------------------------------------
Total Sales                      2,570         14      2,584   2,391
====================================================================

a)    Comparable sales growth for Retailing Businesses (adjusted for
      selling space) in the year to 31 August 2000 was 5%.
      Comparable sales growth in the period for UK Retailing was 5%
      (consisting of WHSmith High Street; 3% and Europe Travel
      Retail; 8%) and International Retailing; 4% (consisting of USA
      Travel Retail 3% and Asia Travel Retail 5%).
      
b)    Europe Travel Retail includes sales of £6m (1999; £6m)
      generated in continental Europe.
      
c)    International Retailing consists of business operations in the
      USA and Asia.  In the 12 months to 31 August 2000, USA Travel
      Retail generated sales of £192m (1999; £178m) and Asia Travel
      Retail generated sales of £12m (1999; £8m).
      
d)    Sales from acquisitions included in Publishing Businesses
      relate to Wayland Publishing Limited (acquired 7 September
      1999) £7m.  Sales from acquisitions included in International
      Retailing include Hazelwood Enterprises Inc. £6m (acquired 1
      March 2000) and The Benjamin Company £1m (acquired 17 April
      2000).
      
e)    Sales from Publishing Businesses incorporates the sales from
      Hodder Headline plc (acquired in May 1999) and Helicon
      Publishing PLC (acquired in February 1999).  In the post
      acquisition period to 31 August 1999, Hodder Headline plc made
      external sales of £26m and Helicon Publishing PLC made sales of
      £2m.  The performance of these acquisitions in the current year
      is reflected in note 1(d).
      

WH Smith PLC
Notes to Preliminary Announcement
For the 12 months to 31 August 2000

1(c)  Segmental Analysis of Operating Profits


£m                                   Base Acquisi-      Total       
                                 Business    tions  Operating   1999
                                     2000     2000     Profit
                                                         2000
====================================================================
Retailing                                                           
WHSmith High Street                    69        -         69     60
Europe Travel Retail (note a)          17        -         17     14
--------------------------------------------------------------------
UK Retailing                           86        -         86     74
Internet Trading                      (8)        -        (8)    (3)
International Retailing (note b)       11        1         12     13
--------------------------------------------------------------------
Total Retailing Businesses             89        1         90     84
Publishing Businesses (note c)         15        1         16      4
WHSmith News Distribution              38        -         38     39
--------------------------------------------------------------------
Trading profit                        142        2        144    127
Support Costs                        (12)        -       (12)   (12)
Internal Rents (note d)                 3        -          3      5
--------------------------------------------------------------------
Operating profit                      133        2        135    120
====================================================================


a)    Europe Travel Retail includes profits of £1m (1999; £1m)
      generated in continental Europe.
      
b)    International Retailing consists of business operations in the
      USA and Asia.  In the 12 months to 31 August 2000, USA Travel
      Retail generated profits of £12m (1999; £13m).  In the 12
      months to 31 August 2000, Asia Travel Retail generated profits
      of £nil (1999; £nil).  Profits from acquisitions included in
      International Retailing include Hazelwood Enterprises Inc. £1m
      (acquired 1 March 2000) and The Benjamin Company £0.1m
      (acquired 17 April 2000).
      
c)    Profits from acquisitions included in Publishing Businesses
      relate to Wayland Publishing Limited £1m (acquired 7 September
      1999). Profits from Publishing Businesses in the 12 months to
      31 August 1999 incorporates Hodder Headline plc £4m (acquired
      in May 1999) and Helicon Publishing PLC £nil (acquired in
      February 1999).  The performance of these acquisitions in the
      current year is reflected in note 1(d).
      
d)    The results for Retailing Businesses are reported after an
      internal arm's length market rent on freehold and long
      leasehold properties owned and occupied by the Company.  The
      internal income generated of £3m (1999; £5m) is shown as a
      separate credit to the profit and loss account giving a nil net
      effect to operating profit. The reduction in internal rents in
      the current year results from the sale and leaseback programme,
      the proceeds of which generated £2m in interest in the current
      year.
      

WH Smith PLC
Notes to Preliminary Announcement
For the 12 months to 31 August 2000

1(d)  Segmental Analysis of Sales and Profits

Businesses acquired in prior year

Publishing Businesses

£m                                                           Proforma
                                                       2000      1999
=====================================================================
Sales                                                                
Hodder Headline  -  Total sales (note a)                110       105
                 -  Internal sales                     (14)      (12)
---------------------------------------------------------------------
                    External sales                       96        93
Helicon Publishing                                        2         2
---------------------------------------------------------------------
Total sales                                              98        95
=====================================================================
                                                                     
Operating profit                                                     
Hodder Headline                                          15        12
Helicon Publishing                                        -         -
---------------------------------------------------------------------
Operating profit                                         15        12
=====================================================================

a)    Proforma comparative financial information in the above table
      for the 12 months to 31 August 1999 is presented as if the
      businesses had been owned for a full 12 months and excludes the
      impact of acquisitions and disposals made by the businesses.
      

2     NON-OPERATING ITEMS IN CONTINUING OPERATIONS

Profit on sale of operation

On 31 May 2000, Hodder Headline plc sold Hodder and Stoughton Southern
Africa (Proprietary) Limited, its publishing business in Southern
Africa, for total proceeds of £0.6m realising a profit before taxation
of £0.7m on the net liabilities held in the Company's balance sheet.

Amount written off investment in own shares

On 3 August 1999, the Company purchased 950,000 of its own ordinary
shares of nominal value of 55.55p each with an aggregate market value
of £6m.  These shares were held for the sole purpose of satisfying
obligations under the Employee Share Schemes and have been carried
under fixed assets in accordance with UITF 17.  At 31 August 2000 the
carrying value of the remaining 858,801 shares in the schemes was
restated to reflect the market value at that date.  This has resulted
in a charge of £2.2m in the Company's profit and loss account.

WH Smith PLC
Notes to Preliminary Announcement
For the 12 months to 31 August 2000

3     PENSIONS

The Company operates a number of pension schemes.  The principal
scheme is a defined benefit scheme, WHSmith Pension Trust.  The
Company also operates a defined contribution scheme, WHSmith Pension
Builder.  The assets of all schemes are held in separate funds
administered by Trustees, which are independent of the Company's
finances.

The principal defined benefit scheme was last formally valued for
financial accounting purposes, in accordance with advice from
professionally qualified actuaries, at 31 March 2000.  This valuation
was made using the market value basis.  The principal long term
assumptions used were: rate of return on investments 6 per cent,
earnings inflation 4.5 per cent, pension increases 2.75 per cent and
price inflation of 2.75 per cent.  The market value of the fund's
assets at this date was approximately £791m and the actuarial value of
the assets was sufficient to cover 129 per cent of the benefits that
had accrued to members after allowing for expected future increases in
wages and salaries.  The surplus of the actuarial value of the assets
over the benefits accrued to members will be taken into account when
determining future employers' contributions.

For the 12 months to 31 August 2000, the regular cost of pensions
under the principal scheme was £14m.  The variation to regular cost,
which is spread over the average remaining lives of current employees,
is estimated at £14m.  The net result is therefore a pension cost of
£nil charged to the profit and loss account in the current year for
this scheme.

The pension cost for the defined contribution scheme and related
supplements charged to the profit and loss account is £2m (1999; £2m).

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