Acquisition/Issue of Equity

Rap Group PLC
2 March 2001

                   PROPOSED DISPOSAL OF HARDWARE COMPANIES

                    PROPOSED ACQUISITION OF K3 TECHNOLOGY

                     PROPOSED ACQUISITION OF K3 SOFTWARE

       PROPOSED PLACING AND OPEN OFFER OF 25,651,682 SHARES OF 5P EACH

                               AT 15P PER SHARE

           APPLICATION FOR THE ADMISSION OF THE NEW ORDINARY SHARES

                              TO TRADING ON AIM



Introduction



Further to its preliminary announcement made today RAP Group plc ('RAP' or the
'Company') is pleased to announce that it has entered into conditional
contracts to acquire K3 Business Technology Group Limited ('K3 Technology')
and K3 Business Technology Software Limited ('K3 Software') from Silverslaggan
AB, a Swedish company owned and controlled by Peter Gyllenhammar, who holds
9.3 per cent. of the Existing Ordinary Shares of RAP.  In addition, the
Company has entered a conditional contract to dispose of Anderson and Firmin
Limited, Harwood Hardware Limited and Welpac Hardware Limited ('the Hardware
Companies') to Paddico 226 Limited ('Paddico'), a UK company, owned and
controlled by Peter Gyllenhammar.



K3 Technology is to be acquired for £1,162,000 to be satisfied as to £772,000
either in cash or new ordinary shares on completion, with the balance of £
390,000 being payable in installments over the next 21 months. In addition,
warrants to subscribe for a further six million ordinary shares will be
granted to Silverslaggan.  These warrants are exercisable within three years
of completion at a price of 29p per ordinary share.



K3 Software is to be acquired for £2,580,000 to be satisfied either in cash or
new ordinary shares on completion.  In addition, warrants to subscribe for a
further 12 million ordinary shares will be granted to Silverslaggan.  These
warrants are exercisable within three years of completion at a price of 20p
per ordinary share.



The aggregate consideration for the Acquisitions is £3,742,000, of which £
3,352,000 is payable either in cash or new ordinary shares.  Silverslaggan is
prepared to receive this consideration wholly in new ordinary shares.  Based
on a value of 15p per share, this would result in the issue of 22,346,666 new
ordinary shares and a dilution of approximately 87 per cent. of existing
shareholdings in the Company.  To enable shareholders to avoid this dilution
and to allow the Company to satisfy the consideration in cash, the Company is
proposing to undertake an open offer of 25,651,682 new ordinary shares ('the
Open Offer') at a price of 15p per share ('the Offer Price') to raise up to £
3,847,752.  The Open Offer will be open to qualifying shareholders who will be
entitled to apply for new ordinary shares at the Offer Price in proportion to
their existing shareholdings in the Company.  The first £495,752 of the cash
proceeds will be used to fund the expenses of the proposed transactions and
the working capital requirements of the Enlarged Group.  Thereafter the
proceeds will be applied to satisfying as much as possible of the
consideration for the acquisitions in cash with the balance of the
consideration being satisfied in new ordinary shares.



The Hardware Companies are to be disposed of for a deferred consideration
which will be determined by reference to the net proceeds of the eventual sale
by Paddico of the Hardware Companies and on the assumption that such proceeds
will amount to £1 million. To the extent that the eventual net proceeds are
greater than £1 million RAP will receive £1 million plus 80 per cent. of such
excess; if the eventual net proceeds are less than £1 million RAP will receive
£1 million less 90 per cent. of such shortfall subject to a minimum of £
200,000.  If the proceeds are below £200,000, Paddico has undertaken to make
up the difference between £200,000 and the actual sale proceeds.  The
Directors understand that Paddico intends to sell the Hardware Companies
during the course of the next 12 to 18 months.



Completion of the acquisitions, disposals and the Open Offer is subject to
shareholders approval which will be sought at an Extraordinary General Meeting
of the Company to be held on 26 March 2001.



Applicable Legal and Regulatory Requirements



As, under the AIM Rules, the disposals are indicative of a fundamental change
in the principal activities of RAP, the disposals are subject to shareholders'
approval.



The aggregate size of the acquisitions in comparison with the current size of
the Company means that it is classified by the London Stock Exchange as a '
reverse takeover' under the AIM Rules and is therefore subject to
shareholders' approval.



Under Rule 9 of the City Code, when any person who, together with persons
acting in concert with him, acquires more than 30 per cent. of the voting
rights conferred by shares in a company, or who holds not less than 30 per
cent. but not more than 50 per cent. of the voting rights conferred by shares
in a company and such person, or any person acting in concert with him,
acquires additional shares which increase his percentage of the voting rights,
then, except with the consent of the Panel, he, and any other person acting in
concert with him, must make a general offer to other shareholders to acquire
the balance of the shares not held by him and his concert parties.  For these
purposes Silverslaggan, in which Peter Gyllenhammar is beneficially
interested, and Peter Gyllenhammar are deemed to be acting in concert.  In
addition, Johan Claesson, who has been closely involved with Silverslaggan and
Mr Gyllenhammar in arranging the acquisitions and disposals, is deemed to be
acting in concert with Silverslaggan.  Following the completion of the
acquisitions, disposals and the Open Offer, the maximum aggregate
shareholdings of the concert party, assuming all of the consideration (except
for the deferred consideration) for the acquisitions is satisfied by way of
new ordinary shares, will be 67.14 per cent. of the enlarged issued share
capital of RAP.  In the absence of any other changes to the Company's share
capital the exercise of the warrants to Silverslaggan will result in a maximum
aggregate shareholding of the concert party of 75.67 per cent. of the issued
share capital of RAP.  The warrants become exercisable after 28 March 2004.



The Panel has agreed, subject to the necessary resolution being passed on a
poll by the independent shareholders at the EGM, to waive any obligation on
the concert party collectively and/or individually to make a general offer
under Rule 9.1(a) of the City Code.



Accordingly, a resolution will be proposed at the EGM, seeking a waiver, by a
vote of independent shareholders on a poll, of any obligation that would
otherwise arise under the City Code upon the concert party collectively and/or
individually to make a general offer for the entire issued share capital of
the Company not already owned by them and by persons connected with them.



Background to and reasons for the Acquisitions



As indicated in its last few public statements, the Company has for some time
been taking steps to develop an e-commerce strategy for its existing business.
In June 2000, Touchline Network Television Limited, a company specialising
in multimedia and e-commerce development, was acquired.  In June 2000 it was
announced that in due course John Griffith, managing director of Intershop
(UK) Limited a supplier of e-commerce software, would join the Board as a
non-executive director and then in July 2000 Andrew Makeham joined the Board
from Kewill Systems plc, a computer software and services company.



In July 2000 the Company became aware that Kewill Systems plc was looking to
dispose of part of its enterprise resource planning ('ERP') software division.
This was seen by the Company as a suitable business around which to develop
an e-commerce solutions business.  For both regulatory and financial reasons,
RAP was not then in a position to make this acquisition.  Not wishing to
forego such an opportunity, the Directors approached two of the Company's
principal shareholders, Johan Claesson and Peter Gyllenhammar, to see if they
could assist.  The outcome of this was that Silverslaggan made the acquisition
from Kewill Systems plc on the understanding that as and when it became
possible, RAP would acquire the business.  Silverslaggan completed the
acquisition in August 2000 through a wholly owned subsidiary, K3 Technology.



In September 2000 the Company became aware that Kewill Systems plc was
disposing of a further part of its ERP software division.  The Company
attempted to acquire this business directly but was unable to satisfy Kewill's
timing requirements.  Silverslaggan again stepped in on the same basis as
before and secured this acquisition in November 2000 through a wholly owned
subsidiary, K3 Software.



The acquisition of K3 Technology and K3 Software represents a fundamental
change in the Company's business from being principally a distributor of
hardware products to being a provider of ERP computer software and support
services.  In addition, it provides opportunities for the development of the
Company into a wider e-commerce solutions business by enhancing and
complementing strengths already in the Group, especially in Touchline.



The Directors believe the acquisitions represent excellent value.  RAP will
acquire K3 Technology and K3 Software for the consideration paid by
Silverslaggan to Kewill Systems plus an amount in respect of post tax profits
accumulated and new capital injected in the period of Silverslaggan's
ownership.  The K3 businesses are well established, profitable and cash
generative.  Combined sales for the year to 31 March 2000 were £9 million, of
which £3.9 million is estimated to be recurring income derived from support
and maintenance contracts renewable annually.



Information on K3 Technology and K3 Software



The principal activity of the K3 businesses is the development, distribution
and maintenance of ERP software systems to small and medium sized
manufacturing companies.  K3 Technology focuses on large systems and has a
retained client base of around 150.  K3 Software supplies smaller systems and
has around 1,500 retained clients.



Based on the management accounts for the period to 31 March 2000, K3
Technology and K3 Software generated sales of £2.9 million and £6.1 million
and gross profits of £2.3 million and £5.7 million respectively.



Reasons for the Disposals



In August 2000 the Company received an enquiry from a third party to purchase
the Hardware Companies.  Following negotiations, an offer for the Hardware
Companies was received which fell short of the Board's expectation of the
Hardware Companies' value and therefore it was rejected.



The Board believes it is not an ideal time to be selling the Hardware
Companies given their recent loss making record and their current trading
position.  In addition, the Board expects the trading performance of the
Hardware Companies to improve in 2001 which should enhance their sale value.



However, the Board recognises that the Hardware Companies will be non-core
businesses in the Enlarged Group and that they will potentially detract from
the Company's new message to the marketplace.  In addition, although there is
the potential for an improvement in trading, the Board believes that, because
the Hardware Companies are heavily dependent on two major customers, the
associated risks to the Enlarged Group outweigh the benefits of continued
ownership.



By disposing of the Hardware Companies in the manner described the Enlarged
Group will no longer have any operating exposure to the Hardware Companies.
The Enlarged Group's ongoing exposure will be restricted to 90 per cent. of
any shortfall in the eventual net sales proceeds below £1 million.  In order
to help maximise sale value of the Hardware Companies, RAP has entered into a
support agreement whereby it will make Brian Shaw available full-time to
assist Paddico in running the Hardware Companies and whereby RAP will provide
accounting and other support services to the Hardware Companies.



Information on the Hardware Companies



The unaudited turnover and loss before tax for the year ended 31 December 2000
together with the unaudited net assets as at 31 December 2000 for each of the
Hardware Companies are set out below.


Name       Principal activity                               Profit
                                                            before          
                                             Turnover          tax          Net
                                                                         assets
                                              Year to         Year
                                             31/12/00           to        as at
                                                £'000       31/12/00    31/12/00

                                                                          £'000
                                                             £'000
Anderson   Distribution of gloves,                797        (449)          255
and Firmin footwear and garden
Limited    accessories


Harwood    Supply of door furniture to          2,356        (683)          759
Hardware   DIY stores and builders
Limited    merchants


Welpac     Supply of fasteners and                446        (169)          108
Hardware   ironmongery parts to DIY
Limited    stores and builders
           merchants
                                                3,599       (1,301)        1,122



Note:

Between 31 December 1999 and 31 December 2000, inter-company loans of £10.5
million have been eliminated with the Company and other subsidiary
undertakings.



The principal customers of the Hardware Companies are B&Q and Focus Do-It-All.
  In 2000 they together accounted for approximately 79.9 per cent. of total
turnover (1999: 63.5 per cent.).  This dependency is expected to increase in
2001 as the Hardware Companies have recently won new orders which will
increase total volumes supplied to these customers.



Open Offer



The Open Offer is being made by Rowan Dartington on behalf of the Company.
Under the Open Offer, 25,651,682 new ordinary shares are being offered to
qualifying shareholders at 15p per share, payable in full on application, on
the following basis:



1 New Ordinary Share                 for every 1 Existing Ordinary Share



held on the record date, 27 February 2001, and so in proportion for any other
number of existing ordinary shares then held.  Qualifying shareholders may
apply for up to their maximum entitlement of new ordinary shares.  To the
extent to which new ordinary shares are not applied for, Qualifying
Shareholders should note that their entitlements will lapse and new ordinary
shares corresponding to these entitlements will not be issued.



Shareholders should be aware that the Open Offer is not a rights issue and
that new ordinary shares not applied for under the Open Offer will not be sold
in the market for the benefit of those who do not apply under the Open Offer.



Qualifying shareholders wishing to participate in the Open Offer are notified
that it closes at 3 p.m. on 23 March 2001 and that the application form,
together with the remittance for payment in full in respect of the new
ordinary shares applied for, must be returned by that time.  Shareholders
should note that application forms are personal to shareholders and may not be
transferred except to satisfy bona fide market claims.



The Directors have irrevocably undertaken that they will take up their
entitlements amounting in aggregate to 1,066,206 new ordinary shares.  Mr
Gyllenhammar and Mr Claesson have irrecoverably undertaken that they will not
take up their entitlements to 12,098,629 new ordinary shares.  Of these,
188,833 new ordinary shares have been conditionally placed by Rowan
Dartington, as agent for the Company, with certain employees of the Enlarged
Group at the Offer Price. Under these arrangements the Company is accordingly
certain that it will raise not less than £188,255 million, before expenses.



Strategy and prospects



In the UK the ERP software market is expanding at around six per cent. per
annum ('source: AM Research'), whereas  the use of e-commerce linked to ERP in
the manufacturing sector is likely to grow at around 30 per cent. per annum in
the next three years (source: Conquest Publishing), and the use of e-commerce
in general business is set to grow at around 80 per cent. per annum for the
next five years (source: Jupiter Research).



The Company intends to maintain K3's existing customer base of approximately
1,600 ERP software users and to sell to them and new customers updated ERP
software solutions which will typically be internet enabled.



In addition, by combining and enhancing the existing skills of K3 and
Touchline the Directors believe the Enlarged Group is well placed to develop
into a provider of wider e-business solutions to the SME sector.  These
e-business solutions would encompass: strategic consultancy, product
management, database design, e-commerce development, web design, web content,
systems integration, back office systems, IT infrastructure and hosting.  The
Directors intend to develop these skills and solutions in a modular format
that allows customers to acquire them in segments that will be manageable
within their existing business model and yet capable of fitting together to
deliver a complete and coherent e-business solution.  The Directors also
intend to make acquisitions of businesses that will complement this strategy.



Change of name



The Directors believe that, in view of the fundamental change in the nature of
the Company's business, it is appropriate for the Company's name to be
changed.  A special resolution will be proposed at the EGM proposing that the
Company's name be changed to K3 Business Technology Group plc.



Board changes



On Completion Andrew Makeham will become Chief Executive of the Company.
David Bolton and Brian Shaw will remain executive directors.  In addition, on
Completion John Griffith and Johan Claesson will be appointed non-executive
directors of the Company.  Johan Claesson will become Chairman of the Board.



Grant of options



As soon as practicable after completion, the Company intends to grant
Enterprise Management Incentive options under the 2000 Executive Scheme at the
prevailing market price on the date of grant over 2,850,000 ordinary shares
the executive Directors and certain senior employees.  As the Company does not
have a remuneration committee the grant of these options will be subject to
shareholders' approval at the forthcoming EGM.  In view of their interests in
this resolution, the Directors will abstain from voting (and have taken all
reasonable steps to ensure that their associates will abstain from voting) on
this resolution.



Of the options proposed to be granted to the executive Directors, 1,000,000
will be granted to NA Makeham, and 250,000 to DJ Bolton.  A third of the
options granted to N A Makeham and D J Bolton are exercisable at 20p per
Ordinary Share, a third are exercisable at 25p per Ordinary Share and a third
exercisable at 30p per Ordinary Share.



Extraordinary General Meeting



The Extraordinary General Meeting will be held 26 March 2001 for the purposes
of considering resolutions to approve, inter alia, the acquisitions, the
disposals, the Open Offer and to obtain a waiver of any obligations that would
otherwise arise under the City Code upon the concert party described above.



Admission to AIM



Application will be made for the admission of the new ordinary shares to
trading on AIM and it is expected that dealings will commence on 28 March
2001.



Document of shareholders



A circular setting out further details relating to, inter alia, the
acquisitions, the disposals, the Open Offer, the waiver and containing the
notice of Extraordinary General Meeting will be despatched to shareholders
today.  Copies of the circular will be available at the offices of Rowan
Dartington & Co. Limited, Colston Tower, Colston Street, Bristol BS1 4RD.



Recommendation



The Directors, who have been so advised by Rowan Dartington, consider that the
acquisitions and disposals pursuant to the terms of the acquisition agreements
and the disposal agreement are fair and reasonable so far as the shareholders
of the Company are concerned, and that the acquisitions, disposals and the
proposals relating to the Open Offer are in the best interests of the Company
and its shareholders as a whole.



In addition, the Directors, who have been so advised by Rowan Dartington,
consider that the waiver is fair and reasonable so far as the Shareholders of
the Company are concerned, and that it is in the best interests of
shareholders as a whole that the acquisitions and Open Offer be implemented
without triggering an obligation under Rule 9 on the part of the concert party
collectively and/or individually to make a general offer.



Accordingly, the Directors unanimously recommend that you vote in favour of
the resolutions to be proposed at the Extraordinary General Meeting as they
have irrevocably undertaken to do in respect of their own beneficial holdings
which amount, in aggregate, to 1,066,206 existing ordinary shares representing
approximately 4.16 per cent. of the existing ordinary shares.