Acquisition / Placing

Advanced Medical Solutions Grp PLC
28 March 2002


For Immediate Release:                   28 March 2002


                     Advanced Medical Solutions Group plc

   Proposed acquisition of MedLogic Global Holdings Limited ('MedLogic') and
            related intellectual property rights (the 'Acquisition')

Proposed fundraising (the 'Fundraising') of 47,265,984 new ordinary shares of 5p
each ('New Ordinary Shares') at 8.5p per share (the 'Issue Price') to raise £4.0
                                    million


Proposed capital reorganisation


Transfer from the Official List to AIM


Winsford, Cheshire:  Advanced Medical Solutions ('AMS' or the 'Company') today
announces that it has conditionally agreed to acquire MedLogic, the holding
company of a UK based group specialising in the development and manufacture of
medical grade adhesives for the wound closure market, and related intellectual
property rights for a consideration of US$3.5 million (£2.5 million).


AMS also announces the Fundraising to finance the Acquisition and ongoing
working capital requirements of MedLogic. The Fundraising, consisting of a
placing with venture capital trusts and other investors (the 'VCT Placing') and
a placing subject to clawback by existing shareholders (the 'Placing and Open
Offer'), will raise, in total, £4.0 million. To facilitate the Fundraising, it
is also proposed that a reorganisation of the Company's share capital be
implemented and that the Company's listing be transferred from the Official List
of the UK Listing Authority to the Alternative Investment Market of the London
Stock Exchange ('AIM').


AMS' preliminary audited results for the year ended 31 December 2001 were also
announced this morning and were in line with market expectations.


Highlights:


• Proposed $3.5 million (£2.5 million) acquisition of MedLogic and
related intellectual property rights



• Issue of  47,265,984 New Ordinary Shares at 8.5p per share to raise
£4.0 million


•        Proposed capital reorganisation


•        Transfer from the Official List to AIM


•        Preliminary results announced today in line with market expectations


Commenting on the Acquisition and Fundraising, Dr. Geoffrey Vernon, Chairman of
AMS said:


'Following the strengthening of the underlying business seen over the last few
years, the Board believes that AMS' core woundcare operations have been
developed to a point where it has become appropriate to seek synergistic
external opportunities to accelerate growth and enhance shareholder value. It is
our belief that the Acquisition represents an exciting opportunity for the Group
to develop critical mass as a medical device company.

'Break-even should still be achieved in line with market expectations - indeed
we are confident that the Acquisition should transform the prospects of AMS by
accelerating growth in revenues and earnings beyond what can be achieved by
organic growth alone.  We also hope to benefit from synergies between the two
companies - synergies that will allow AMS to leverage its existing relationships
with its partners whilst using MedLogic's direct sales force to cross sell AMS'
wound dressings.'

For further information please contact:

Advanced Medical Solutions Group plc                                             On 28.03.02:  [phone]

Don Evans, Chief Executive                                                     Thereafter:     [phone]
Mary Tavener, Finance Director
www.admedsol.com

Robert W. Baird Limited                                                                  Tel:  [phone]

Shaun  Dobson

Buchanan Communications                                                                   Tel: [phone]

Nicola How / Fergus Mellon


This announcement has been approved by Robert W. Baird Limited for the purposes
of Section 21 of the Financial Services and Markets Act 2000. Robert W. Baird
Limited, which is regulated by the Financial Services Authority, is acting as
the Company's financial advisor and stock broker in connection with the proposed
Fundraising.


Overview:

AMS has conditionally agreed to acquire the issued share capital of MedLogic,
the holding company of MedLogic Global Limited ('MedLogic Global' and together
with MedLogic the 'MedLogic Group'), a UK based company specialising in the
development and manufacture of medical grade adhesives for the wound closure
market, and associated intellectual property rights ('IPR') from The Travelers
Insurance Company Inc. for a consideration of $3.5 million (£2.5 million). The
consideration is payable as to $3.3 million (£2.3 million) in cash on completion
and by the issue of 1,263,158 new ordinary shares ('the Consideration Shares').
The cash consideration is subject to a retention of $425,000 (£297,828).



In addition, to finance the Acquisition and additional working capital, the
board of AMS (the 'Directors' or the 'Board') announces the VCT Placing and the
Placing and Open Offer to raise approximately £4.0 million by way of the issue
of 47,265,984 New Ordinary Shares at a price of 8.5p per New Ordinary Share.



The Acquisition, the VCT Placing and the Placing and Open Offer are conditional
upon, inter alia, the receipt of provisional assurances from the Inland Revenue
that the shares subject to the VCT Placing ('VCT Shares') will qualify for
investment by Venture Capital Trusts and will be eligible for relief under the
Enterprise Investment Scheme and the passing of certain Resolutions to be
proposed at an extraordinary general meeting of the Company convened for 23
April 2002 ('the EGM').



Pursuant to an agreement ('the Placing and Open Offer Agreement'), Robert W.
Baird Limited ('Baird') has conditionally agreed to place the New Ordinary
Shares with institutional and other investors. The VCT Shares are being placed
firm and the shares placed in the Placing and Open Offer (the 'Open Offer Shares
') are being placed subject to clawback by Qualifying Shareholders under the
Open Offer. The VCT Placing and the Placing and Open Offer have been fully
underwritten by Baird.



As at the close of business on 27 March 2002, the price of an Existing Ordinary
Share, as derived from the Official List, was 9.5p, which is below its nominal
value of 10p. In order to facilitate the VCT Placing and the Placing and Open
Offer, the Board is proposing the Capital Reorganisation, pursuant to which each
Existing Ordinary Share will be sub-divided and converted into one Ordinary
Share of 5p ('Reduced Ordinary Share') and one non-voting deferred share of 5p
('Deferred Share') subject to approval at the EGM. The Capital Reorganisation
will not affect Shareholders' relative rights in the share capital of the
Company.

The Board also considers that, due to the size of the Company and the ability of
AIM companies to attract investment from Venture Capital Trusts, the Company
should move from the Official List and apply for its shares to be admitted to
trading on AIM.  The Company hereby gives notice of the intended cancellation of
the listing of the Existing Ordinary Shares on the Official List and of
admission to trading of the Existing Ordinary Shares on the London Stock
Exchange at the close of business on 29 April 2002. Application has been made to
the London Stock Exchange for the admission of the Reduced Ordinary Shares, the
New Ordinary Shares and the Consideration Shares to trading on AIM.



AMS:



Introduction

The AMS business was established in 1991, primarily to utilise proprietary
polymer technology in the development of a new generation of advanced wound
dressings which addressed the growing acceptance by medical professionals of the
concept of 'moist healing' - keeping a wound moist during the healing process
rather than, as was traditional, exposing it to the air - which has been shown
to reduce scarring and accelerate healing.



AMS has since developed a range of advanced wound dressings designed to manage
wound fluids and maintain optimal levels of moisture to promote healing. The
acquisition of related technologies and the incorporation of a wide range of
materials such as alginate, film, foam, gel and hydrocolloids, has resulted in
AMS' product portfolio covering the full spectrum of wounds, from cuts and
grazes, to heavily exuding and bleeding wounds through to dry wounds such as
burns.



Strategy

Since January 2000, when the current executive management team was formed, the
focus of the AMS Group has been on achieving profitability from its core
woundcare business within existing cash resources and building a solid financial
platform from which to grow a leading medical device company.



As part of this strategy AMS has established strategic partnerships with blue
chip companies, such as Smith & Nephew, 3M, Johnson & Johnson, Novartis and
Coloplast. These partnerships will allow the Company to bring new products and
technology to global markets in a timely fashion. The Directors believe that
these relationships coupled with the Company's manufacturing expertise and
technology pipeline form the basis for future growth and sustainable
profitability for the AMS Group.



The MedLogic Group:



Introduction

MedLogic Global, the trading subsidiary of MedLogic, develops, manufactures and
markets medical grade adhesives and sealants principally for topical wound
closure and wound management.  The wound closure products are designed to
replace or supplement alternative methods of closure such as sutures, staples or
adhesive strips. The sealants are intended to protect skin from infection and
break-down due to friction, shear or the presence of moisture.

MedLogic Global Corporation ('MGC'), the parent company of MedLogic, was
established in Colorado Springs, Colorado, United States, in 1991 where the
initial development of the MedLogic Group's product portfolio was undertaken. In
1997, MGC acquired a medical device manufacturing facility in Plymouth, UK and
established the MedLogic Group in the UK.  Subsequently, all of MGC's operations
were consolidated onto the Plymouth site.



MGC no longer has any US based trading operations. Its two key assets, the share
capital of MedLogic, the holding company of MedLogic Global, and the IPR
portfolio relating to the MedLogic Group's business, are being acquired by AMS.



Technology Overview

MGC developed its technology platform and IPR portfolio based on the
optimisation and commercialisation of cyanoacrylate adhesive materials (commonly
known as superglues), specifically n-butyl cyanoacrylate - an advanced version
of the base material offering characteristics more favourable for clinical
applications.



Cyanoacrylates were originally developed in the 1950s and the fundamental
patents covering their use as basic tissue adhesives have already expired. MGC
and MedLogic Global have pursued a strategy of developing special methods of use
and protecting improvements made to the core formulation which enhance its
performance as a wound closure or wound management material. In total, MGC has
76 patents either issued or pending.



For each of its products, MGC and the MedLogic Group has developed a unique and
proprietary formulation of n-butyl cyanoacrylate, plasticisers (for flexibility)
and inhibitors (for setting rate) to deliver a specific end product with
suitable properties for its given application.  The addition of specific
anti-microbial compounds into the formulation of its wound sealant products
without adversely affecting their properties is considered by the Directors to
be a significant technological breakthrough that would enhance the current
product range. MGC and MedLogic Global have a number of patents covering the use
of anti-microbial agents in cyanoacrylates.



In addition, MGC has patented the use of low dose electron beams for the
sterilisation of its formulations. This has advantages over alternative methods
of sterilisation, such as heat or gamma radiation, as it is not as detrimental
to the material properties of the compound, requires the incorporation of fewer
stabilisers, allows for a longer 'shelf life' and is relatively cost effective.
The Directors believe that the patented electron beam sterilisation capability
is an important ongoing competitive advantage for MedLogic Global.



MGC also has a portfolio of hydrogel patents, acquired in 1998, that covers
materials that are influenced by body temperature such that they provide the
potential for the delivery of 'active' ingredients. The Directors believe that
some of these patents, when combined with AMS' own hydrogel technology, could
have significant potential to advance the Enlarged Group's work on 'active'
tissue repair.



The IPR relating to all of the above technology is being acquired by AMS as part
of the Acquisition.



Products and markets

The n-butyl cyanoacrylate technology developed by MGC and MedLogic Global
provides a platform for entry into multiple healthcare markets. Specific
products have been developed to address a number of these markets and a number
of further products are in development. MedLogic Global's current active
portfolio consists of two products:



•  LiquiBand(R) - a tissue adhesive for wound closure.

•  LiquiShield(R) (SuperSkin(R)) - a tissue barrier film for wound
   management.


These products are detailed below:



LiquiBand(R) - Wound closure

The world-wide wound closure market is widely estimated to be approximately
US$3.3 billion (£2.3 billion) at retail prices.



The market consists of four distinct segments:

•       Sutures: the use of needle and thread.

•       Staples: the use of metallic devices to hold the tissue edges together
        during healing.

•       Adhesive strips: the use of small pieces of tape, often 'butterfly'
        shaped.

•       Tissue adhesives: the 'glueing' together of the edges of wounds.



Tissue adhesives are a comparatively recent introduction and currently account
for a relatively small but growing proportion of the market. It is generally
estimated that as much as 40 per cent. of the global suture and staple market
could eventually be accounted for by tissue adhesives and sealants. The
perceived advantages of tissue adhesives over alternative methods include:



•       ease and speed of application;

•       reduced patient trauma (no anaesthetic or needles required);

•       superior wound sealing;

•       reduced infection potential;

•       improved cosmetic outcome; and

•       relatively low total treatment costs.



The Directors believe that tissue adhesives will account for an increasing share
of the wound closure market, replacing adhesive strips, sutures and staples, as
recognition of their competitive advantages within the healthcare environment
increases.



LiquiBand(R) is MedLogic Global's disposable, single-use liquid adhesive device
designed to close and seal the epidermal layer of a wide variety of traumatic
and surgical wounds. MedLogic Global obtained a Class 2A device CE mark for
LiquiBand(R) in the European Union in June 1998 and began commercialisation of
the product in 1999, focusing on selling to Accident and Emergency ('A&E') units
in the UK, where it is listed on the Drug Tariff. MedLogic Global has its own
direct sales force to access the A&E market and also plans to distribute via NHS
Logistics, the centralised supplier for the National Health Service. The
LiquiBand(R) product has enjoyed widespread acceptance in the UK A&E unit market
selling into almost 50 per cent. of hospitals.

LiquiBand(R) has three key competitors in the UK: Dermabond (Closure Medical);
Indermil (Tyco); and Histacryl (Braun Aesculap).  The Directors believe that
LiquiBand(R) has a number of competitive advantages over its competitor's
products, in terms of its physical properties and ease of use, and that these
advantages have resulted in a wider acceptance of the LiquiBand(R) product. A
comparative study of Indermil, Dermabond and LiquiBand(R) carried out by the
School of Nursing and Midwifery at the University of Sheffield in October 2000,
concluded that 'the LiquiBand(R) tissue adhesive produced the most consistent
results, scoring higher on most categories when compared with the other tissue
adhesives'.



MedLogic Global has recently commenced the appointment of distributors in
certain European countries to promote and sell LiquiBand(R) in these markets.



The Directors believe that the Dermabond product from Closure Medical (which is
marketed by the Ethicon division of Johnson & Johnson) has by far the major
share of the global tissue adhesives market as it is the only tissue adhesive to
be approved for sale in the USA as of March 2002. The Directors believe that the
successful sales and rapid growth of Dermabond in the USA demonstrate the
potential for the tissue adhesive market and that this success will attract
other major international woundcare players to this segment of the wound closure
market. It is the intention of the Directors to progress the regulatory approval
process required for LiquiBand(R) to enter the US market in due course.



LiquiShield(R) - Wound management

Wound management products range from traditional gauzes and adhesive plasters to
the advanced moist woundcare dressings as currently sold by AMS.  The use of
medical adhesives as a barrier for the protection of skin is a relatively new
concept. LiquiShield(R) is a topical, liquid barrier film that is painted onto
the skin in a very thin layer in order to provide protection against skin damage
caused by friction, shear and/or the presence of moisture which can lead to skin
breakdown, particularly in radiation patients, amputees utilising prosthetic
limbs, stoma patients, bedridden patients, paraplegics, quadraplegics and
individuals with generally compromised skin integrity. LiquiShield(R) has
potential applications in each of these areas.



LiquiShield(R) (original name SuperSkin(R)) was MedLogic Global's first
commercial product. It received FDA clearance for sale in the USA in December
1997 and a CE mark for sales into Europe in April 1998.  While it was renamed
LiquiShield(R) for the US market, it continues to be sold under the name of
SuperSkin(R) in the UK. LiquiShield(R) is sold through distributors in the USA
and Europe, targeted mainly at the nursing home sector. The Directors believe
that the formulation of the Liquishield(R) product provides a number of
competitive advantages.



Future developments

Future developments of the MedLogic Global product range will be aimed at
improving delivery systems to make the products easier to use, enhancing
formulations to achieve specific product properties for new markets and
incorporating anti-microbial agents into the products.



Products currently in development include:

LiquiBand Surgical(R) - a product designed specifically to take the LiquiBand(R)
product into operating theatres and thus expand its potential use within
hospitals. An enhanced formulation of the cyanoacrylate makes this product
suitable for closing surgical incisions in the sterile environment of the
operating theatre. The Directors believe that this product will be ready for
launch in during 2002.



LiquiDrape(R) - a cyanoacrylate sealant designed to replace surgical incise
drapes (sterile films that are applied to the skin prior to surgical incision to
protect the wound from local infection) and enhance infection control at the
site of a surgical incision. Incise drapes are used in procedures where a higher
than normal risk of infection exists and are only used on relatively flat or
uniform skin surfaces, as they are extremely difficult to apply over joints or
variable skin surfaces. LiquiDrape(R), a thin-film, liquid barrier, addresses
this application problem as it is painted onto the operative site after it has
been prepped. This product will be undergoing regulatory approval and the
Directors believe it can be launched into selected European markets by the end
of 2002.



Financial information

The MedLogic Group recorded its first sales in January 1999 and overall sales
have grown significantly since that time. The majority of turnover during the
period was earned from the LiquiBand(R) product as it became more widely
accepted in A&E units in the UK.



In order to establish products in their market places and to rapidly grow sales,
the MedLogic Group sacrificed short-term profitability. Net losses in the
periods to 30 June 1999, 2000 and 2001 were £1.6 million, £1.7 million and £1.0
million respectively. Much of these losses related to the sales and marketing
function and the establishment of the product distribution channels.



Net liabilities as at 30 June 2001 were £4.7 million. The MedLogic Group has
been financed to date by intercompany loans from MGC which are excluded from the
Acquisition. As at 30 June 2001 the balance of these loans was £5.0 million.



The Acquisition:



Principal terms

AMS has conditionally agreed to purchase the entire issued share capital of
MedLogic together with related IPR.



The $3.5 million (£2.5 million) consideration payable by the Company for the
Acquisition is to be satisfied by the payment of $3.3 million (£2.3 million) in
cash and by the issue of the Consideration Shares.



$425,000 (£297,828) of the cash consideration is to be retained in an escrow
account for a period of one year from completion of the Acquisition Agreement to
provide security in the event of certain claims by AMS under the Acquisition
Agreement.



Usual warranties and indemnities for a transaction of this nature have been
given by MGC to AMS, its obligations being guaranteed in this regard by
Travelers.

The Acquisition Agreement is conditional upon, inter alia, the following:



-       Shareholders passing the ordinary resolution to be proposed at the EGM;
        and

-       Admission of the Open Offer Shares and the Consideration Shares to
        trading on AIM.



Background to, and reasons for, the Acquisition and the Fundraising

The Board believes that the AMS Group's core woundcare operations have been
developed to a point where it has become appropriate to seek synergistic
external opportunities to accelerate growth and enhance Shareholder value. In
evaluating selective acquisition opportunities the Board has used the following
criteria:



•       they should be a strong strategic fit with AMS' existing businesses;

•       they should move the AMS Group into higher value products;

•       they should leverage the AMS Group's current capabilities; and

•       they should not delay break-even for the existing AMS businesses.



The Board is of the opinion that the Acquisition satisfies all of the above
criteria and, as such, represents a significant opportunity to develop a larger,
more attractive medical devices group.



The complementary nature of the MedLogic Group's product portfolio and
technologies significantly increases the markets available to the Enlarged Group
and assists in positioning the Enlarged Group into the 'higher end' tissue
repair sector of the wound care market segment. The Directors also believe that
the Acquisition enables the Enlarged Group to:



•       leverage existing distribution channels:

-       utilise AMS' blue-chip partners to offer new outlets for the MedLogic
        product range, and

-       utilise MedLogic's direct sales force in the UK to cross sell AMS' wound
        dressings into A&E units;

•       leverage senior management and overheads in research and development,
sales and marketing, finance and logistics.



The Directors believe that the Acquisition represents an exciting opportunity
for the Enlarged Group to develop critical mass as a medical device company.
They are confident that the Acquisition will not delay the AMS Group achieving
break-even in line with current market expectations and believe that the
Acquisition could transform the prospects of AMS by accelerating growth in
revenues and earnings beyond what can be achieved by organic growth alone.



The Company is proposing to raise £4.0 million by way of the VCT Placing and the
Placing and Open Offer to finance the cash consideration of the Acquisition, the
expenses of the VCT Placing, the Placing and Open Offer, the Capital
Reorganisation and the Acquisition and to provide additional working capital for
the MedLogic Group.



The Directors believe that undertaking the VCT Placing and the Placing and Open
Offer will allow AMS to maintain cash headroom for the ongoing development of
the AMS Group's businesses and ensure that the financial integrity of the
Enlarged Group is not compromised. The transfer to AIM and the Capital
Reorganisation are being proposed to facilitate the VCT Placing and the Placing
and Open Offer.



Transfer to AIM

Following consultations with the Company's major Shareholders, the Board has
decided that it is in the best interests of the Company and Shareholders for
trading in the Company's shares to be transferred to AIM.



The AIM Rules require that the Company appoints a nominated adviser and broker
before its Reduced Ordinary Shares are admitted to trading on AIM. Robert W.
Baird Limited has agreed to act as nominated adviser and broker to the Company.



Current trading and prospects

The Company today announced its audited results for the year ended 31 December
2001 which showed good progress towards its goal of achieving profitability
within its existing cash resources.



Since 30 June 2001, the date to which the latest audited financial statements of
MedLogic were prepared, MedLogic Global has experienced further growth in sales
on an annualised basis. The majority of this growth has been generated by
increased sales of the LiquiBand(R) product. The Directors believe that this has
been driven by both an increase in the number of customers, and higher average
volumes per customer as the product has gained wider acceptance and utilisation
for wound closure within UK A&E units.



Gross profits have continued to improve as volumes through the Plymouth facility
have increased. The facility, which is certified to ISO 9001 and EN 46001
standards and is designed to operate in accordance with the US FDA's Quality
System Regulations, has the capacity to allow for further significant sales
growth. In overall terms, gross margin has decreased principally because
monomer, previously manufactured by MGC, is being sourced from third parties.
This has resulted in a loss making distribution contract for LiquiShield(R)
which may require renegotiation.



MedLogic continues to generate losses at the operating level which have
increased its balance sheet debt and required further funding from MGC.



Following the Acquisition, the market available to the Enlarged Group will
increase significantly by the addition of the rapidly expanding tissue adhesive
segment of the wound care market.  This will move the Enlarged Group to higher
value business and re-enforce its image as a tissue repair company rather than a
contract manufacturer of 'dressings'.



AMS' established capability in partnering with blue-chip companies will be
utilised to move the MedLogic product range into global markets. Additionally,
key AMS products used for treating and dressing wounds will be sold into UK A&E
departments by the MedLogic direct sales team.



The Directors believe that these synergies, together with operational
efficiencies in overhead functions, will allow revenue and earnings growth of
the Enlarged Group to be accelerated over and above that of the core AMS
business. As a result, they are optimistic about the Enlarged Group's future
prospects.



Details of the VCT Placing and the Placing and Open Offer

The Company is proposing to raise approximately £4.0 million pursuant to the VCT
Placing and the Placing and Open Offer by the issue of 47,265,984 New Ordinary
Shares at the Issue Price.



Baird, as agent for the Company, has conditionally agreed to place the VCT
Shares and the Open Offer Shares at the Issue Price with institutional and other
investors or failing which itself to subscribe for the New Ordinary Shares. The
Open Offer Shares are subject to clawback to satisfy valid applications by
Qualifying Shareholders under the Open Offer. The VCT Shares have been placed
firm with certain institutional and other investors and venture capital trusts
and are not subject to clawback under the Open Offer.



All of the Directors have irrevocably undertaken to the Company and Baird to
take up their full entitlements of Open Offer Shares under the Open Offer. In
addition to their full entitlements under the Open Offer and subject to
compliance with the provisions of the model code of the Listing Rules, certain
of the Directors also intend to subscribe for an aggregate of 516,410 VCT
Shares.



Baird, as agent for the Company, will make the Open Offer under which Qualifying
Shareholders are being given the opportunity to subscribe for Open Offer Shares
at 8.5 p per share on the following basis:



           8 Open Offer Shares for every 35 Existing ordinary Shares



held by them at the close of business on 22 March 2002 (the 'Record Date') and
so on in proportion for any number of Existing Ordinary Shares then held.
Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders
but, together with Open Offer Shares attributable to those overseas shareholders
that are not eligible to participate in the Open Offer, will be aggregated and
subscribers will be procured for them under the Placing and Open Offer Agreement
and the proceeds will be retained for the benefit of the Company. Qualifying
Shareholders may apply for any number of Open Offer Shares up to their maximum
entitlement, as set out in their Application Form.



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



Completed application forms under the Open Offer must be received no later than
3.00 pm on 23 April 2002. The latest time and date for splitting application
forms (to satisfy bona fide market claims only) is 3.00 pm on 19 April 2002.
Application  forms are personal to the Qualifying Shareholders named thereon and
are transferable only to satisfy bona fide market claims.



The Open Offer Shares and the VCT Shares will, when issued, rank pari passu in
all respects with the Reduced Ordinary Shares.



Capital Reorganisation

At the close of business on 27 March 2002, the price of an Existing Ordinary
Share, as derived from the Official List was 9.5p which is below its nominal
value of 10p. Pursuant to the Companies Act, a company is prohibited from
issuing shares at a price below their nominal value and therefore, in order to
facilitate the VCT Placing and the Placing and Open Offer, it is proposed that
the Capital Reorganisation be implemented.



Pursuant to the Capital Reorganisation, each Existing Ordinary Share with a
nominal value of 10p will be subdivided into one Reduced Ordinary Share and one
Deferred Share, each with a nominal value of 5p. Each unissued Existing Ordinary
Shares of 10p will be sub-divided into two Ordinary Shares of 5p each.



Each Reduced Ordinary Share will, after allowing for the effect of the Capital
Reorganisation, carry the same rights including voting, dividend and capital
repayment rights as an Existing Ordinary Share. Each Deferred Share will carry
no voting rights, will not rank for dividends and will only participate on a
winding up of the Company after the sum of £1,000,000 has been paid in respect
of each Reduced Ordinary Share. No listing or quotation on any stock exchange
will be sought for the Deferred Shares and no share certificates will be issued.
The value of a Deferred Share will therefore be minimal and the value of the
Existing Ordinary Shares will be reflected in the Reduced Ordinary Shares. The
Capital Reorganisation will have no effect on the Group's net assets and will
not affect the value of each Shareholder's investment in the Company.



General

A prospectus, to be dated 28 March 2002, (the 'Prospectus') containing details
of inter alia, the Acquisition, the VCT Placing and the Placing and Open Offer
and notice of an Extraordinary General Meeting, convened for 11.00 am on 23
April 2002 to be held at the Blue Cap, 520 Chester Road, Sandway, Northwich,
Chesire, CW8 2DN, will be posted to shareholders later today, together with an
application form for use in connection with the Open Offer and a form of proxy.



Copies of the Prospectus will be available to the public free of charge from the
offices of Robert W. Baird Limited, Mint House, 77 Mansell Street, London E1 8AF
from today until a period of not less than 14 days after the date that dealings
commence in the New Ordinary Shares.



Expected Timetable of Principal Events


                                                                                                            2002

Record Date for the Open Offer                                                     close of business on 22 March

Latest time and date for splitting of Application Forms (to satisfy
bona fide market claims in relation to Existing Ordinary Shares)                           3.00 p.m. on 19 April

Latest time and date for receipt of Forms of Proxy                                        11.00 a.m. on 21 April

Extraordinary General Meeting                                                             11.00 a.m. on 23 April

Latest time and date for receipt of completed Application Forms
and payment in full under the Open Offer                                                   3.00 p.m. on 23 April

Record date for Capital Reorganisation                                                                  29 April

Existing Ordinary Shares de-listed from the Official List                          close of business on 29 April


Dealings in the Reduced Ordinary Shares commence on AIM                                                 30 April

Dealings in the VCT Shares commence on AIM                                                              30 April

CREST stock accounts credited with VCT Shares                                                           30 April

Completion of the Acquisition, dealings in the Open Offer Shares
and the Consideration Shares commence on AIM                                                               1 May

CREST stock accounts credited with Open Offer Shares                                                       1 May

Despatch of definitive share certificates for the Reduced Ordinary Shares,
the VCT Shares and the Open Offer Shares and the Consideration Shares
where applicable                                                                                           7 May



Amounts expressed in US dollars have been translated into Sterling at a rate of
US $1.427 = £1


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