Open Offer

Ross Group PLC
23 January 2003

Not for release, production or distribution in, into or from the United States,
Canada, Australia, South Africa or Republic of Ireland.



23 JANUARY 2003


                                 ROSS GROUP PLC

                     2 FOR 1 OPEN OFFER AT 2.25P PER SHARE


SUMMARY



The Company is pleased to announce the following:



•        a 2 for 1 Open Offer of 134,104,612 new ordinary shares of 1p each at
2.25p per share to raise up to approximately £3 million;



•        the Grande Group, the major shareholder of the Company has undertaken
to take up their entitlements pursuant to the Open Offer of 64,269,756 Open
Offer shares, representing 48 per cent of the Open Offer shares;



•        grant of a loan facility of up to £1.4 million by the Grande Group; and



•        a capital reorganisation, pursuant to which each existing ordinary
share of 5p each will be split into one new ordinary share of 1p each and one
new deferred share of 4p each



Alain Eman, Deputy Managing Director, said 'we are pleased to announce these
proposals which demonstrate the continued support of our major shareholder, the
Grande Group, and will put Ross Group on a sounder financial footing'



The above summary should be read in conjunction with the full text of the
following announcement.



Enquiries:



Ross Group Plc
Alain Eman, Deputy Managing Director                    Tel: [phone]


Corporate Synergy PLC
Financial Adviser and Sponsor to Ross Group Plc
Justin Lewis, Director                                  Tel: [phone]



Introduction



Ross Group PLC ('the Company' or 'Ross') announces that it is proposing to raise
up to approximately £3 million, before expenses, through a 2 for 1 Open Offer of
134,104,612 new ordinary shares at 2.25p per new ordinary share ('Open Offer').
The Open Offer price of 2.25p represents a discount of approximately 5.5 per
cent. to the mid market closing price of 2.38p on 22 January 2003. The Open
Offer is not being underwritten.



In addition, San Gain Industrial Company Limited, a wholly owned subsidiary of
the Company, has entered into a loan facility pursuant to which Alpha Capital
Group Limited, a wholly owned subsidiary of The Grande Holdings Limited 
('Grande'), has conditionally agreed to lend the Group up to £1.4 million, the 
final amount of which will be determined by the number of Open Offer shares 
subscribed for under the Open Offer ('Loan Facility').



The minimum proceeds of the Open Offer of approximately £1.45 million (assuming
only those shareholders who have given irrevocable undertakings take up their
entitlements) and the Loan Facility of £1.4 million giving net proceeds, on
aggregate, of approximately £2.60 million will be used to reduce the Company's
indebtedness and provide working capital for the Group.



In connection with the Open Offer, the Company is also proposing the following:



•        the Capital Reorganisation by which, inter alia, each of the existing
ordinary shares of 5p each in issue will be divided into one new ordinary share
of 1p and one new deferred share of 4p; and



•        to seek a waiver of certain obligations that would otherwise be placed
on the Concert Party by Rule 9 of the City Code on Takeovers an Mergers.



Corporate Synergy PLC has acted as financial adviser and sponsor to Ross.



Background to and reasons for the Open Offer



In March 2000, the Company raised £2.3 million net of expenses by way of a
rights issue. This rights issue was underwritten by The Alpha Capital Limited ('
Alpha Capital').  The Group's borrowing facilities, which at 31 March 2000 stood
at approximately £5 million, were subsequently reduced.



Since the last quarter of 2001 the directors have been seeking to reduce
unnecessary overheads in order to restore the Group to profitability.



The Group continues to have a weak balance sheet with net liabilities as at 30
June 2002 of approximately £3.4 million.  As at 30 June 2002 the Group had total
borrowings of approximately £4.0 million. This was made up as follows:



•        £1.3 million pursuant to a term loan from the Group's bankers, HSBC
Bank plc, which is subject to a guarantee from Grande and was due for repayment
on 31 December 2002;

•        the HSBC Trade Finance Facility, which is subject to a guarantee from
Grande and renewable annually in April each year; and

•        £1.1 million pursuant to a facility provided by Alpha Capital which is
repayable on demand.



The term loan of £1.3 million from HSBC was due for repayment on 31 December
2002. HSBC has agreed to extend the repayment date until 21 February 2003.  On
completion of the Open Offer the directors intend to repay this loan from the
proceeds of the Open Offer.



The HSBC Trade Finance Facility will remain in place and is guaranteed by
Grande. This is due to be renewed in April 2003 and HSBC have indicated that,
subject to normal review procedures, there is no reason why the facility should
not be continued under normal commercial terms.



Ross has renegotiated with Alpha Capital that £1.1 million owed to Alpha Capital
pursuant to the facility, which is repayable on demand, will be repaid with the
proceeds of the Open Offer.  To the extent that the proceeds of the Open Offer
are insufficient to repay £1.0 million of the facility to Alpha, the facility
will be repaid by drawing down on the Loan Facility.  The Loan Facility, save in
limited circumstances, is not repayable prior to 20 January 2005.



The directors are therefore proposing the Open Offer to enable the repayment of
the term loan from HSBC and the facility provided by Alpha Capital.  To the
extent that the proceeds of the Open Offer are insufficient the directors intend
to draw down on the Loan Facility.



The Company is of the opinion that the Group does not have sufficient working
capital for its present requirements, that is for at least the next twelve
months from the date of this announcement.  This is a result of the Group
continuing to be dependent upon the support of the Grande Group, both through
the provision of a guarantee to HSBC in respect of the HSBC Trade Finance
Facility and, to the extent it is drawn down, through the Loan Facility and HSBC
agreeing to renew the HSBC Trade Finance Facility in April 2003.



Subject to the Grande Group continuing to provide this support and HSBC agreeing
to renew the HSBC Trade Finance Facility in April 2003, the Company is of the
opinion that after taking into account the Loan Facility and the banking
facilities available to the Group, the Group has sufficient working capital for
its present requirements, that is for at least the next twelve months from the
date of this document.  The directors believe that the Grande Group will
continue to support the Group.



In the event that the Grande Group does not continue to provide this support and
/or HSBC does not agree to renew HSBC Trade Finance Facility in April 2003 it is
likely that the Group would experience difficulty in continuing to trade and the
directors would be required to seek alternative sources of funding.



Actions related to this might include:



(i)                  a sale or sales of businesses and/or assets;

(ii)                the re-organisation and relocation of certain assets in
order to achieve appropriate cost savings, potentially releasing assets for
disposal; and

(iii)               negotiation of alternative sources of finance.



In the event that the actions above are unsuccessful, the Group would be unable
to continue to trade.



However, following the implementation of the proposals, the Group will have
significantly decreased its short term indebtedness, and to the extent this is
replaced by further indebtedness, this further indebtedness will not be due for
repayment until 20 January 2005. The directors believe that this strengthening
of the Group's balance sheet will assist the Group in winning new contracts,
since a concern of many potential customers at present is the weakness of the
Group's balance sheet.



Current trading and prospects



Since 31 December 2001, the Group has enlarged its client base significantly.
GEL Engineering, one of the Group's two main operating businesses, has become
one of the preferred suppliers of engineering projects to a number of aircraft
manufacturers and defence contractors. The Group's other operating business,
Tadmod, a distributor of battery chargers and electrical adaptors, has been able
to deal again with customers lost during previous years and has begun to develop
new markets both in the UK and the EU.



On 26 September 2002, the Company announced its interim results which showed a
loss before tax of £382,000.



Since September, the Group has continued to seek to enlarge its client base,
while at the same time looking to reduce its overheads. In addition, the
directors also continue to seek other profitable areas of business and are
currently in early discussions with a view to establishing a new division
marketing component kits for DVD players and televisions. Whilst current trading
is in line with the directors expectations, the directors are committed to the
continued reduction of unnecessary overheads and are of the opinion that the
repayment of the Company's bank loans and inter-company loans with the proceeds
from the Open Offer and Loan Facility, together with the continued support of
the Grande Group, will significantly enhance the Group's future prospects.



In the event that the Open Offer does not proceed, the Grande Group has
indicated that it will continue to support the Group. Under the terms of the
Loan Facility, funds drawn down under that facility may be used to repay the
HSBC term loan.



The Open Offer



The Company proposes to raise up to approximately £3 million, before expenses,
by the issue of up to 134,104,612 Open Offer Shares pursuant to the Open Offer.
 In order to enable qualifying shareholders to maintain their percentage
interests in the Company the Open Offer shares are being offered to qualifying
shareholders pro rata to their shareholdings at the record date.  The Open Offer
is not being underwritten.



Corporate Synergy PLC, as agent for the Company, will invite qualifying
shareholders to subscribe, on and subject to the terms and conditions set out in
the document and accompanying application form being sent to shareholders today,
for an aggregate of 134,104,612 Open Offer shares on the following basis:



            2 Open Offer shares for every 1 existing ordinary share



held by them and registered in their name on the record date, and so in
proportion for any lesser number of existing ordinary shares then held, at a
price of 2.25p per Open Offer share payable in full on application and free of
all commission and expenses.



Grande, Alpha Capital and Escalating Investments Limited have irrevocably
undertaken to take up 64,269,756 Open Offer shares, being their aggregate
entitlements pursuant to the Open Offer. Michael Simon, a director, has
irrevocably undertaken to take up 203,640 Open Offer shares, being his
entitlement pursuant to the Open Offer.  The other directors do not own any
shares in the Company.



The Open Offer shares will rank pari passu in all respects with the new ordinary
shares arising from the Capital Reorganisation, including the right to receive
all dividends and other distributions hereafter declared, made or paid.



The Open Offer is conditional, inter alia, upon the passing of both the
resolutions at the extraordinary general meeting; and admission of the issued
share capital of the Company to the Official List.



The latest time and date for application and payment in full for Open Offer
shares under the Open Offer is 3.00 pm on 14 February 2003.



Application has been made to the UK Listing Authority for the new ordinary
shares arising from the Capital Reorganisation and the Open Offer shares issued
pursuant to the Open Offer to be admitted to the Official List and to the London
Stock Exchange plc for the new ordinary shares and Open Offer shares to be
admitted to trading on the London Stock Exchange's market for listed securities.
It is expected that Admission will become effective and that dealings will
commence in the new ordinary shares and the Open Offer shares on 18 February
2003.



The Loan Facility



San Gain Industrial Company Limited ('San Gain'), a wholly owned subsidiary of
the Company, has entered into a conditional loan facility pursuant to which it
can borrow up to £1.4 million from Alpha Capital Group Limited ('ACGL'). The
final amount that may be drawn down under the Loan Facility will be determined
by the aggregate number of Open Offer shares subscribed by qualifying
shareholders (other than Alpha Capital, Grande and Escalating Investments
Limited) under the Open Offer.  The Loan Facility is being granted by ACGL to
San Gain (for which San Gain has agreed to pay an arrangement fee of 1.5 per
cent. and a commitment fee of 1 per cent.) and will be for a term of two years.
Interest will be charged on outstanding sums at LIBOR plus 3 per cent.



Capital Reorganisation



The Company is prevented by the Act from issuing shares at a discount to their
nominal value.



In order to implement the Open Offer, the Company is proposing to sub-divide
each of the existing ordinary shares in issue, which currently have a nominal
value of 5p,into one ordinary share of 1p and one new deferred share of 4p.
Following the Capital Reorganisation, each holder of existing ordinary shares
will, in respect of every existing ordinary share, hold one new ordinary share
and one new deferred share.



Expected timetable of principal events


Record date for the Open Offer                                                      Close of business on 20
                                                                                               January 2003
Latest time and date for splitting application forms (to satisfy bona fide
market claims only)                                                                        12 February 2003

Latest time and date for receipt of application forms and payment in full
under the Open Offer                                                                       14 February 2003

Latest time and date for receipt of forms of proxy for extraordinary general                    10.00 am on
meeting                                                                                    15 February 2003

Extraordinary general meeting                                                                   10.00 am on
                                                                                           17 February 2003
Admission effective and dealings to commence in the new ordinary shares and
the Open Offer shares on Official List                                                     18 February 2003

CREST accounts in respect of the Open Offer shares to be credited by                       18 February 2003

Expected date of despatch of share certificates in respect of the Open Offer
shares                                                                                     25 February 2003



Corporate Synergy PLC which is regulated by The Financial Services Authority, is
acting for Ross Group PLC and no other person in relation to the matters
described in this announcement and accordingly will not be responsible to any
other person for providing the protections afforded to customers of Corporate
Synergy PLC or advising them on these matters.



Neither the New Ordinary Shares nor the Open Offer Shares have been, or will be,
registered under the United States Securities Act of 1933 (as amended), or under
the securities laws of any state of the United States or any province or
territory of Canada, Australia, South Africa or the Republic of Ireland. Subject
to certain exceptions, the New Ordinary Shares or the Open Offer Shares may not,
directly or indirectly, be offered, sold, taken up or delivered in, into or from
the United States, Canada, Australia, South Africa or the Republic of Ireland or
their respective territories or possessions. This announcement does not
constitute an offer to sell or issue or the solicitation of an offer to buy or
subscribe for New Ordinary Shares or Open Offer Shares in any jurisdiction in
which such offer or solicitation is unlawful. Accordingly, copies of the
announcement are not being and must not be mailed or otherwise distributed or
sent in, into or from the United States, Canada, Australia, South Africa or the
Republic of Ireland and persons receiving this announcement (including
custodians, nominees and trustees) must not distribute or send it in, into or
from the United States, Canada, Australia, South Africa or the Republic of
Ireland.




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