Proposed Capital Reduction

Marshalls PLC
18 April 2002

Marshalls plc

PROPOSED CAPITAL REDUCTION

Introduction

The Company announces that it proposes to effect a reduction of share capital in
order to simplify the Company's capital structure by cancelling and repaying its
10% Cumulative Preference Shares at a price of £2.24 per share ('the Capital
Reduction').  The cost to the Company of the cancellation and repayment, before
expenses, will be £2,273,131.84 and will be funded from the Company's existing
bank facilities.

A circular is being posted today to Shareholders providing details of the
Capital Reduction, explaining why the Board considers the proposals are in the
best interests of the Company and the Shareholders as a whole, and to seek the
necessary approvals of Ordinary Shareholders and 10% Cumulative Preference
Shareholders at an Extraordinary General Meeting and Class Meeting of 10%
Cumulative Preference Shareholders to be held on 22nd May 2002, notice of which
is set out at the end of the circular.

Background to and reasons for the Capital Reduction

The 10% Cumulative Preference Shares constitute a very small part of the
Company's total share capital and are in excess of the Company's capital
requirements.  The administrative inconvenience and costs associated with the
10% Cumulative Preference Shares, and maintaining their listing on the Official
List of the UK Listing Authority, are disproportionate to the benefit that the
10% Cumulative Preference Shares provide to the Company.  In addition, in last
year's circular to Marshalls Shareholders dated 18th April 2001, the Company
confirmed that it would put forward buyback proposals to the 10% Cumulative
Preference Shareholders before exercising a general power to make market
purchases of its Ordinary Shares granted at its last Annual General Meeting.  As
a result, in order to simplify the Company's capital structure, the Board
considers it appropriate to cancel and repay all the 10% Cumulative Preference
Shares by way of a reduction of share capital and share premium account approved
by Ordinary Shareholders and 10% Cumulative Preference Shareholders and
confirmed by the Court in accordance with the Companies Act.

The Directors confirm that the Company has no current intention of exercising
any authority to purchase its own Ordinary Shares.  In considering whether or
not to purchase Ordinary Shares under the market purchase authority proposed to
be renewed at the Company's Annual General Meeting on 22nd May 2002, the
Directors will take into account cash resources, the effect on gearing and other
investment opportunities before exercising the authority.  In addition, the
Company will only exercise the authority to make such a purchase in the market
when the Directors consider it is in the best interests of Shareholders
generally to do so and it should result in an increase in earnings per Ordinary
Share.

Terms of the Capital Reduction

If the requisite consents at the Extraordinary General Meeting and the Class
Meeting are obtained, and approval by the Court is obtained, it is proposed
that, in consideration of the cancellation and repayment of their 10% Cumulative
Preference Shares, 10% Cumulative Preference Shareholders will receive £2.24 per
10% Cumulative Preference Share.  The sum of £2.24 per share has been determined
by the Board after taking into account the value of comparable fixed interest
instruments.  This sum is higher than the amount per share to which holders of
10% Cumulative Preference Shares are strictly entitled on a return of capital
under the Company's articles of association (which provide, broadly, for payment
of the greater of the nominal value of £1 and a sum based on the average of
middle market quotations for the six months preceding the relevant date).  In
addition, each 10% Cumulative Preference Shareholder will receive the fixed
dividend accrued and unpaid on those shares to (and including) the date of
repayment.

The cost to the Company of the cancellation and repayment, before expenses, will
be £2,273,131.84 and will be funded from the Company's existing bank facilities.

The excess of the amount repaid to the 10% Cumulative Preference Shareholders
over the nominal value of the 10% Cumulative Preference Shares will be paid out
of a reserve to be created by reducing the Company's share premium account by
£1,258,340.84.  Both the cancellation of the 10% Cumulative Preference Shares
and the reduction of share premium account will be subject to the approval of
the Ordinary Shareholders and the 10% Cumulative Preference Shareholders, the
sanction of the 10% Cumulative Preference Shareholders at a Class Meeting and
the confirmation of the Court.

Procedure for the Capital Reduction

Subject to obtaining the requisite consents at the Extraordinary General Meeting
and the Class Meeting, the Company intends to seek the confirmation of the High
Court for the Capital Reduction, as required by the Companies Act.  Shareholders
will not need to take any further action in this respect.  In seeking the
Court's approval, it will be necessary for the Company to satisfy the Court that
the interests of its creditors are not prejudiced by the Capital Reduction as
required by the Companies Act.  The Company will offer to the Court to provide
such security for the protection of its creditors as the Directors are advised
is necessary.

The proposed Capital Reduction will not become effective until the registration
by the Registrar of Companies of the order of the Court confirming it, which
date will become the Effective Date.  It is not possible to say with certainty
when the registration by the Registrar of Companies of the order of the Court
will occur, but it is expected to be around 13th June 2002.

Recommendation

Your Directors believe that the Capital Reduction to be fair and to be in the
best interests of the Company and Marshalls Shareholders as a whole.

Accordingly the Directors recommend that the Ordinary and 10% Cumulative
Preference Shareholders vote in favour of the resolutions to be proposed at the
Extraordinary General Meeting and the Class Meeting as they intend to do in
respect of their own beneficial holdings.

Definitions

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

'10% Cumulative Preference       holders of 10% Cumulative Preference Shares
Shareholders'

'10% Cumulative Preference       10% cumulative preference shares of £1 each in the share capital of
Shares'                          Marshalls

'Annual General Meeting' or      the annual general meeting to be held at Birkby Grange, Birkby Hall Road,
'AGM'                            Birkby, Huddersfield HD2 2YA on Wednesday 22nd May 2002 at 2.30 p.m., or
                                 any adjournment thereof
'Board' or 'Directors'           the Directors of Marshalls

'Capital Reduction'              the proposed cancellation and repayment of the 10% Cumulative Preference
                                 Shares under the Companies Act as more fully described in this document

'Class Meeting' or 'Class        the separate class meeting of the 10% Cumulative Preference Shareholders
Meeting of 10% Cumulative        to be held at Birkby Grange, Birkby Hall Road, Birkby, Huddersfield HD2
Preference Shareholders'         2YA on Wednesday 22nd May 2002 at 3.15 p.m. (or as soon thereafter as the
                                 Extraordinary General Meeting is concluded or adjourned), or any
                                 adjournment thereof

'Company' or 'Marshalls'         Marshalls plc

'Court'                          the High Court of Justice of England and Wales

'Extraordinary General Meeting'  the extraordinary general meeting to be held at Birkby Grange, Birkby
or 'EGM'                         Hall Road, Birkby, Huddersfield HD2 2YA on Wednesday 22nd May 2002 at
                                 3.00 p.m. (or as soon thereafter as the Annual General Meeting is
                                 concluded or adjourned)

'Shareholders'                   Ordinary Shareholders, Redeemable Cumulative Preference Shareholders and
                                 10% Cumulative Preference Shareholders

'Ordinary Shareholders'          holders of Ordinary Shares

'Ordinary Shares'                ordinary shares of 25p each in the share capital of Marshalls

'Redeemable Cumulative           holders of Redeemable Cumulative Preference Shares
Preference Shareholders'

'Redeemable Cumulative           redeemable cumulative preference shares of 20p each (formerly designated
Preference Shares'               cumulative convertible redeemable preference shares of 20p each) in the
                                 share capital of Marshalls

Enquiries:
Christopher Burnett         Chairman                   Marshalls plc              01422 306400
Ian Burrell                 Finance Director           Marshalls plc              01422 306400
Richard Monro               Group Secretary            Marshalls plc              01422 306400


END



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