Split decision

What’s happened

GUS group finance director David Tyler will step down from his role when the
company demerges over the next six to 12 months.

The move by the FTSE 100 giant, which operates Argos Retail Group and
business information company Experian, has been on the cards, but some of the
details behind the plans have caused surprise.

The investment community has not reacted keenly to the announcement that the
split will see Experian raising up to £1bn in capital. Tyler said the move would
maintain Experian’s investment grade as it would take on most of GUS’ £2bn debt.

But ratings agency Standard & Poor’s has put the company on watch with a
view to a downgrade, as its analysts warned the group must strengthen its
balance sheet at the time of the demerger to maintain its credit rating,
currently at BBB+.

‘The ratings will remain on CreditWatch until there is certainty concerning
Experian’s capital structure, namely the size of the equity issuance. The
ratings could be affirmed at the current level if a financial profile broadly
similar to GUS’ current expected financial profile is achieved,’ S&P said in
its latest update.

What happens next

The impending loss of Tyler as a FTSE 100 FD will lead to the creation of two
fantastic opportunities for finance professionals on the up.

With the demerged entities expected to list straight back on the LSE, Richard
Ashton will continue to serve as FD of Argos Retail Group and Paul Brooks will
serve as FD at Experian.

But Tyler will not disappear totally from the scene. While he might consider
looking for another big appointment, or building up a non-executive portfolio,
he will continue to serve as a non-exec at Experian.

On top of his new role, Tyler should be paid compensation for his previous
efforts with the group. The latest GUS annual report states that he was paid
nearly £1m, although reports suggest a settlement figure has not been finalised.

John Coombe, former Glaxo CFO and a recently-appointed GUS non-exec, will
serve as a non-exec at ARG.

GUS chairman Sir Victor Blank leaves the group following its demerger – but
he will still hold 225,000 shares worth nearly £2.5m at current prices.

GUS Timeline

1900 Mail order business set up under the name of The
Universal Stores

1930 Name changed to Great Universal Stores Limited

1931 Shares listed on the London Stock Exchange

1955 Burberry acquired

1986 Disposal of severals UK retailers (Times, Homecharm,
Paige ans Thoms)

1996 Experian acquired for $1.7bn (£1bn)

1998 Argos acquired for £1.7bn

2004 GUS strategic review announced Demerger of remaining
interest in Burberry

2006/07 Demerger of Argos Retail Group and Experian planned

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