Reorganisation&Trading Update

Molins PLC
02 July 2004



2  JULY, 2004                                             FOR IMMEDIATE RELEASE


                                        MOLINS PLC

                          RE-ORGANISATION AND TRADING UPDATE

Molins PLC, the international specialist engineering company, announces a
re-organisation of its Tobacco Machinery business worldwide following a review
of the market and operations and a Group trading update.


Sasib S.p.A., which was acquired last August, is in the process of moving to a
new purpose-built building close to its present location.  The leased building
was formally opened on 8 June and the move is expected to be completed by
September.


Following a review of the Sasib Fenix packing machine, designed to pack
cigarettes in hard packs, which has been under development for a number of
years, it has been decided to suspend the development as there are insufficient
market opportunities.  This will result in an increase to purchased goodwill of
£1.4 million in respect of the costs incurred prior to acquisition and an
exceptional charge this year of approximately £1.7 million before tax in respect
of the costs of continued development and trials.  Sasib will continue to
manufacture its highly successful Alfa soft-pack packing machinery for lines
running at 10,000 cigarettes a minute, and the Sasib 6,000 packer for medium
speed applications, together with the related wrapper and case packing
machinery. Engineering development will be focused on maintaining this range at
the forefront of technology.


Manufacture and development of the Pegasus filter distribution system will be
transferred from Richmond, Virginia, to Saunderton and Plzen, Czech Republic.
This is the last remaining manufacturing activity in Richmond. Richmond
continues to offer its specialised repair and overhaul service in addition to
its other service business and North American original equipment and spares
sales functions.  Sasib Corporation of America is in the process of moving into
the Molins Richmond facility.



The Kunming Molins joint venture in China, formed in 1996 with the Chinese State
Tobacco Monopoly Authority and the Yunnan China National Tobacco Corporation,
will close. The joint venture company was formed pursuant to the significant
trading and technology transfer agreements entered into between STMA and Molins.
Its purpose was to provide rebuild capabilities to the Chinese market but, with
the Chinese tobacco industry now subject to significant consolidation and
modernisation, demand for rebuild machinery has declined and this has led to the
collective decision to close the joint venture.



Molins continues to maintain its close and highly valued working relationship
with STMA and is exploring other opportunities for mutual commercial benefit.



It is expected that all the costs of the closure will be met by the joint
venture company without any cash call from Molins.  At 31 December, 2003 Molins'
investment in the joint venture was carried at £1.8 million and this will be
written-off as an exceptional item in the 2004 accounts. The joint venture
company reported a loss attributable to Molins of £0.3 million in 2003.



The spares and service facility in Shanghai is unaffected by the
re-organisation. The service and distribution facilities of Molins Far East in
Singapore are being developed to service the increased levels of business in the
Asia Pacific region.



Molins sro, in Plzen, Czech Republic is being developed further. The business is
becoming increasingly engaged in the building of Mark 9 cigarette making
equipment and other ancillary equipment.  Its capabilities and capacity are
being expanded to increase the range of parts made and the building of machine
modules.  Molins sro is also becoming increasingly involved in the manufacture
of parts and assembly of packaging machines for Molins Packaging Machinery
businesses.



The engineering, sales and marketing activities of Molmac, the group's UK
rebuild business, will be merged with those at Saunderton and the activities
will be focused on the rebuilding and upgrading of Mark 9 cigarette making
machinery and ancillary equipment.



As a result of these changes there will be restructuring of the activities at
Saunderton, with the continued progressive transfer of parts manufacturing to
Plzen.  Saunderton will remain as the centre for parts distribution and the
assembly of the Passim cigarette maker, the PM5 filter maker and the Concord
handling systems.



Molins do Brasil will specialise in the rebuild of Mark 8 cigarette making
machines and Sasib 3000 and 6000 cigarette packing machines for North America as
well as the South American markets.  It will supply a reduced variety and volume
of parts to the remainder of the group.



These changes will result in some 250 redundancies across the Tobacco Machinery
businesses, phased over the next few months, at an estimated cost of around £3.5
million before tax credits and a write down of inventories amounting to
approximately £1.0 million before tax credits.  Both will be taken as an
exceptional charge in the 2004 accounts. These measures are expected to reduce
costs by approximately £5 million a year.



Trading Update



Tobacco Machinery



As stated at the AGM in April, the prospects for this year for the Tobacco
Machinery division have deteriorated significantly.  Sales of Molmac rebuilt
machinery are running ahead of last year but at reduced margins.



The performance of Sasib S.p.A., purchased in August last year, has been
disappointing. Although overall order intake in the first quarter of this year
was encouraging the position has deteriorated in the second quarter.  The levels
of spare parts orders have been weak.





The current focus is to maintain and develop the capabilities of the division
whilst reducing inventories and the cost base to match capacity with anticipated
demand and to respond to continuing price pressures.



Scientific Services



The results from the scientific services businesses, Cerulean and Arista
Laboratories, are expected to be below the levels of the previous year. Cerulean
is still in the product acceptance stage of its new instrumentation range, MC
(2), and this continues to affect the performance of the business.



Arista Laboratories, which has enjoyed significant growth since it was acquired
by Molins in January 2002, has seen a reduction in demand as some of the work it
previously carried out for two major customers has been taken in-house.
Arista's strategy of diversifying its customer base and extending its range of
services has mitigated some of this reduction.



Packaging Machinery



All of the packaging machinery businesses have good order books, ahead of plan
and considerably ahead of last year. The division is trading well, despite the
adverse currency movements and remains on course to deliver profits above last
year.



Excluding re-organisation costs, the Group expects to report an underlying loss
in respect of the first half of the year.  Underlying earnings for the second
half of the year, during the period of the re-organisation of the Tobacco
Machinery division, are expected to be lower than previously indicated,
resulting in a reduction in expected full year underlying earnings.




Enquiries:
Molins PLC                       Peter Byrom                   Tel: [phone]
                                 Chairman
                                 David Cowen

                                 Group Finance Director
Citigate Dewe Rogerson           Margaret George              Tel: [phone]







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