Disposal of App Division

Reece PLC
11 January 2001


DISPOSAL OF APP DIVISION - TRADING UPDATE

Further to the announcement made on 8 December 2000, Reece PLC
(the  'Company')  is today posting a circular to  shareholders
convening  an  extraordinary general meeting  to  approve  the
disposal  of  the APP Division (the 'Disposal').  The  meeting
will be held on 29 January 2001.

After  completion  of  the  Disposal,  the  Group's  remaining
business will be the manufacture of ceramic equipment  carried
on   by   a  division  (the  'Ceramic  Division')  of  Service
(Engineers)  PLC,  a subsidiary of the Company.   The  Ceramic
Division  has  experienced difficult trading in the  last  two
completed financial years due to a combination of the strength
of  sterling and the problems in the Far East economies (which
have   represented  a  significant  market  for  the   Ceramic
Division's  products).  However, the Ceramic Division's  order
book has continued to improve in the first half of the current
year  during  which a small operating profit  of  £20,000  was
achieved as reported in the Company's interim statement.  This
represents  a  significant  improvement  over  the  losses  of
£275,000 experienced in the first half of 1999.

Since 30 June 2000, considerable interest has continued to  be
generated by the new range of servo-driven computer controlled
decorating  machines  and  the first  orders  for  the  direct
printing and the decal application machines have already  been
achieved.   Both  the  new  servo-driven  computer  controlled
decorating  machines and the new developments in clay  forming
and  processing  equipment are expected to contribute  to  the
Ceramics  Division's sales in 2001.  The Ceramic  Division  is
currently  working on a major contract due to be completed  in
March  and the level of enquiries for major projects is  at  a
level  not  seen  for  some years. The Ceramic  Division  will
continue  to  be  run  by  its existing  management  from  its
freehold factory in Stoke-on-Trent.

As  reported  in  the Company's interim statement,  since  the
period end the Company has lost on appeal a case brought by HM
Customs  and Excise in respect of duty allegedly underpaid  on
the  importation of bicycles.  The Company's liability amounts
to  £152,000  plus  costs  which are expected  not  to  exceed
£25,000.

Under the sale and purchase agreement relating to the sale  of
the  Cycles  Division approved by shareholders  in  May  2000,
deferred  consideration of £100,000 was due to be  paid  on  5
November  2000 with two further instalments each  of  £125,000
due  on each of 5 May 2001 and 5 November 2001.  The purchaser
of  the  Cycles Division, GW 112 Limited (a company controlled
by Reece's former managing director Mike Norris and his wife),
has  defaulted  on  the instalment due on 5 November  and  the
entire  deferred  consideration of £350,000  is  now  due  and
payable.  The Company remains in talks with GW 112 Limited  on
settlement  of  the amounts due.  A fixed charge  exists  over
2,200,000 Ordinary Shares registered in Mike Norris's name  as
partial security for the deferred consideration.

The  loss of the HM Customs and Excise case, the greater  than
expected  losses  on  the disposal of the Cycles  Division  of
£136,000 included in the interim results and the default  over
payment  of the deferred consideration for the Cycles Division
are  putting the Group's finances under considerable pressure.
The Directors consider that this will be greatly alleviated by
the  receipt  of  the  APP Division sale proceeds,  not  least
through  the  elimination of further trading losses  from  the
division.

These unexpected losses are putting the Group's finances under
considerable  pressure with its bank facilities  almost  fully
utilised  and extended credit being taken from its  suppliers.
If  the  Disposal  does  not complete, it  will  therefore  be
necessary  for the Group to raise further funds from increased
bank  facilities or from the disposal of other assets in order
to  fulfill the major contract expected to complete  in  March
2001  and  to  make general creditor payments in  addition  to
financing   continuing  losses  in  the  APP  Division.    The
Directors  believe that sufficient funding could be raised  in
the  short term through the sale and leaseback of the  Group's
freehold  factory in Stoke-on-Trent but believe  that  raising
the  necessary funding through the disposal of the loss-making
APP Division is commercially preferable.

In  the light of the recent extensive changes to the Board the
Directors   are  currently  reviewing  the  Company's   future
direction  and  strategy.  The outcome  of  this  review  will
dictate the Company's prospects in the medium to long term.