Proposed Capital Reorganisation & Other News

Ross Group PLC
2 March 2000


             Ross Group PLC ('the Company')
                            
             Proposed Capital Reorganisation
                       followed by
 Proposed Rights Issue of up to 50,233,402 Rights Shares on a basis
 representing 17 Rights Shares for every 2 New Ordinary Shares
                at 5.5p per Rights Share and
       Proposed Purchase of New Preference Shares
                           and
            Proposed Issue of Share Warrants


Introduction

Your  Board  is pleased to have announced today  that  it
proposes  to  raise  approximately  £2,300,000   net   of
expenses by way of a rights issue.

Your  Board also announced today that the holders of  the
Preference Shares have agreed to the elimination  of  the
entire preference share capital of the Company by way  of
the Preference Capital Reorganisation and purchase by the
Company of New Preference Shares.

These proposals are conditional on shareholders' approval
at  an  extraordinary  general  meeting  of  the  Company
('EGM')  and a separate class meeting of the  holders  of
the  Ordinary Shares ('Class Meeting') to be held  on  27
March 2000.

Before  proceeding with the Rights Issue,  the  Company's
Ordinary    Shares   are   to   be   reorganised.    This
reorganisation   will   involve   a   sub-division,   re-
designation  and consolidation of the Company's  Ordinary
Shares  with  the  result that,  for  every  25  existing
ordinary  shares of 5 pence, each shareholder  will  hold
one New Ordinary Share and 25 Deferred Shares, subject to
fractional entitlements as described below.

The  Rights  Issue involves the issue, after the  Capital
Reorganisation, of up to 50,233,402 Rights  Shares  at  a
price of 5.5p per Rights Share on a basis representing 17
Rights Shares for every 2 New Ordinary Shares. The Rights
Issue  has  been fully underwritten by The Alpha  Capital
Limited ('Alpha Capital').

As  Alpha  Capital is an associated company of Escalating
Investments Limited ('EIL') (EIL holds approximately 13.5
per   cent.  of  the  issued  Ordinary  Shares)  and  the
consideration to be paid by the Company to Alpha Capital,
in  respect of such underwriting is more than  the  usual
commercial  underwriting consideration  the  Underwriting
Agreement  has  been deemed a related  party  transaction
under  the  Listing  Rules and is therefore  conditional,
inter  alia, upon the approval of Shareholders (excluding
The  Grande  Holdings Limited ('Grande'), Alpha  Capital,
EIL,  William  Welch,  Paul Binney,  Michael  Binney  and
Adrian Ma ('the Related Parties')), which is to be sought
at the EGM.

In  connection  with  Alpha  Capital  agreeing  to  fully
underwrite the Rights Issue the Company proposes to grant
Alpha Capital certain warrants to subscribe for shares in
the  Company  at the issue price.  The Directors  believe
that  the  grant  of the warrants at the Issue  Price  is
appropriate   because  Alpha  Capital  was  prepared   to
underwrite  the Rights Issue only if such  warrants  were
granted  at  that  price.  Due to  the  fact  that  Alpha
Capital is an associated company of EIL the grant of  the
Share   Warrants   has  been  deemed  a   related   party
transaction  under the Listing Rules of the London  Stock
Exchange  and is therefore conditional, inter alia,  upon
the  approval  of  Shareholders  (excluding  the  Related
Parties), which is to be sought at the EGM.

The  Company  has  also agreed with all  the  holders  of
Preference Shares that the Preference Shares should be re-
organised and subsequently eliminated through:

(i)  the conversion of the Preference Shares into a total
     of  10,909,092  New Ordinary Shares, which  have  an
     aggregate value, at the Issue Price, of £600,000, and
     220,454,540 New Preference Shares; and

(ii) the   purchase  and  cancellation  of  all  the  New
     Preference    Shares   for   an    aggregate    cash
     consideration of £300,000.
     
It is intended that £1,500,000 of the net proceeds of the
Rights  Issue will be used to repay part of  the  Group's
bank indebtedness, which was approximately £4,500,000  at
the year ended 31 December 1999. In addition, and subject
to   this   repayment  being  made,  as   part   of   the
restructuring   of   the  Company's   debt   arrangements
£1,200,000 of the Group's existing bank indebtedness will
be  retired.  The  Group has also  arranged  new  banking
facilities  with  a  single  bank,  subject  to   certain
conditions  some  of  which  can  only  be  satisfied  if
Shareholders approve all the proposals to be voted on  at
the EGM and the Class Meeting.

The  Directors (or, in certain cases, Peter  Mottershead,
Marcus  Evans,  Michael  Jeans  and  David  Powell  ('the
Independent  Directors'))  recommend  that  you  vote  in
favour  of the Resolutions to be proposed at the EGM  and
Class  Meeting. The Preference Shareholders will also  be
entitled  to  attend  and  vote  at  the  EGM  as   their
preferential dividend is more than six months in arrears.

Shareholders  should  note the  statements  made  in  the
section entitled 'Working Capital' below.

Background to and reasons for the Rights Issue

Earlier  this  year, the Board entered  into  discussions
with  various  parties with a view  to  securing  greater
financial  stability for the Company.  These  discussions
resulted  in  a proposal to raise approximately  £800,000
net of expenses by way of a rights issue, underwritten by
the  Group's  Chairman, Marcus Evans, in  addition  to  a
capital reorganisation.

This capital reorganisation and rights issue proposal was
presented  to,  and  rejected  by,  shareholders  at   an
extraordinary general meeting on 3 September 1999.  Since
these  proposals  were  rejected, the  Company  has  been
carefully  considering  other available  options.  On  21
December  1999 the Company announced that it had  reached
agreement   in   principle  with  a  major   shareholder,
controlled by Grande, the Preference Shareholders and the
Company's  bankers to a proposal that would  achieve  the
Company's objective of greater financial stability. Under
the  terms  of  this agreement, Alpha Capital  (a  wholly
owned  subsidiary of Grande) will underwrite a new rights
issue  to  raise £2,300,000 net of expenses. In addition,
Grande procured the issue of the Standby Letter of Credit
to  the Company in the sum of £400,000 under the terms of
the  Letter of Credit Agreement. Details of which are set
out  in  the  document sent to shareholders  today  ('the
Prospectus').

At  the  time of the appointment of the current Board  in
1995  the  bank  debt stood at over £14 million  and  the
Group was experiencing severe cash flow difficulties. The
Group's bankers have been supportive since that time  but
have   set   demanding  targets  to  bring  the   Group's
borrowings  to  a more acceptable level. These  demanding
targets  led  to  a  reduction in the  Group's  borrowing
facilities  during 1998 of £1.6 million.  However,  as  a
result  of  the rejection by Shareholders on 3  September
1999  of  the  then  proposed rights issue,  the  Group's
borrowings  increased by £400,000 during the second  half
of  1999 and stood at approximately £4.5 million  at  the
year end. The Group's borrowing facilities are mainly  in
the  form  of  bank  overdrafts. As is  normal  for  bank
facilities of this type, their terms include repayment on
demand  and regular review. Under the proposals  outlined
in this document, the current Group borrowing facilities,
which  are  provided by a consortium of three banks,  are
expected to be replaced by new borrowing facilities  with
a single bank.

The  steps  taken  to  allow  the  Group  to  reduce  its
borrowings  to  meet  the demanding targets  set  by  the
Group's   banks,   combined  with  a  difficult   trading
environment since the end of 1998, resulted in a  pre-tax
loss  of £874,000 for the six months ended 30 June  1999.
In  the Company's interim statement for this period, made
on  2 September 1999, the Company stated that the outlook
for  the  second  half  of  the  year  was  looking  more
promising.  However,  the general  uncertainty  resulting
from  the rejection of the rights issue proposed  at  the
extraordinary  general meeting held on 3  September  1999
left  the Company unable to reassure external parties  of
its  long-term  future. This has resulted in  significant
market  and financial pressure on the normal business  of
the Group. As a result the Company is expecting to report
a  significant  loss in the second half of 1999.  Further
details  are  set out in 'Current trading and  prospects'
below.

The Board has been reviewing opportunities to improve the
working  capital  position of the  Company  and  the  net
proceeds of the Rights Issue will be applied to:

(i)   reduce bank borrowings by approximately £1,500,000;
(ii)  acquire   all   the  New  Preference   Shares   in
      consideration of the payment of £300,000;
(iii) increase  the  Group's  investment   in   product
      development and marketing; and
(iv)  provide additional working capital.

Board Changes

On 18 February 2000 the Company announced the appointment
of  four  new  Executive Directors, who are  employed  by
members  of  the  Grande Group and  are  members  of  the
Concert  Party  (the  Concert Party being  Grande,  Alpha
Capital, EIL, Paul Binney, William Welch, Michael  Binney
and Adrian Ma). The new Directors are:

Paul Francis Gregory Binney, Executive Director
Mr  Binney, aged 40, is a commerce graduate of Birmingham
University,  England  and a member of  the  Institute  of
Chartered  Accountants  of  England  and  Wales.  He   is
currently  Managing Director of Grande  in  Europe  which
includes Nakamichi Europe Limited. He has also worked for
Digital Equipment and Salomon Smith Barney.

William Borland Welch, Executive Director
Mr Welch, aged 42, is a business graduate and a member of
the Institute of Chartered Accountants of Scotland. He is
currently  Chief Financial Officer for Grande in  Europe.
He  previously worked for Deloitte & Touche  and  Salomon
Smith Barney.

Adrian Chi Chiu Ma, Executive Director
Mr  Ma,  aged  55, graduated from Birmingham  University,
England  with  a  Bachelor of Commerce degree.  He  is  a
member  of  the  Institute  of Chartered  Accountants  in
England  and Wales and a fellow of the Hong Kong  Society
of  Accountants. He has more than 18 years experience  in
the   finance   and  operations  of  the   computer   and
electronics industry. He is an executive director of  the
Grande  Group in charge of the electronics operation  and
he is also a director of Toyo Holdings Limited.



Michael Andrew Barclay Binney, Executive Director
Mr  Binney,  aged  40,  studied accountancy  at  Coventry
University,  England.  He  is  a  fellow  member  of  the
Institute  of Chartered Accountants in England and  Wales
and a fellow of the Hong Kong Society of Accountants.  He
has  extensive experience in manufacturing and operations
of  the consumer and computer electronics industry. He is
the  managing director of the Grande Group's  world  wide
branded  sales and distribution he is also a director  of
Toyo Holdings Limited.

If  the  Resolutions are passed at the EGM and the  Class
Meeting then immediately on Admission (anticipated to  be
the   day  following  the  EGM),  Marcus  Evans  and  the
Company's current non-executive Directors, Michael  Jeans
and  David  Powell,  will resign from the  Board  without
compensation  and Mr Michael Simon will be  appointed  to
the  Board  as  a non-executive director. Michael  Simon,
aged  40,  is an economics graduate of the University  of
Cambridge  and  a  fellow of the Institute  of  Chartered
Accountants  in England and Wales and of the  Association
of   Chartered  Certified  Accountants.  He  is  a   sole
practitioner in public practice.

Ordinary Capital Reorganisation

The  Company has a substantial deficit on its profit  and
loss account, which will prevent it from paying dividends
until that deficit is eliminated.  It is an objective  of
the  Board  to substantially reduce this deficit  at  the
appropriate time through a further restructuring  of  the
Company's capital, and proposals to this effect  will  be
put to shareholders in due course. In order to facilitate
such  a  restructuring and in order to enable the  Rights
Shares to be issued at the Issue Price, the Directors are
proposing to reorganise the ordinary share capital of the
Company before the Rights Issue is implemented. This will
involve the sub-division of each existing ordinary  share
of  5 pence each into one new ordinary share of 0.2 pence
and  one  deferred share of 4.8 pence. Every  twenty-five
ordinary   shares  of  0.2  pence  each  will   then   be
consolidated into one New Ordinary Share of 5 pence.

This  will  result in each Shareholder  holding  one  New
Ordinary  Share  of  5 pence and 25 Deferred  Shares  for
every  25  existing ordinary shares of 5 pence  currently
held,  subject  to fractional entitlements  as  described
below.  The New Ordinary Shares will have the same rights
(including  voting and dividend rights) as  the  existing
Ordinary Shares.

Since  certain Shareholders' holdings of Ordinary  Shares
are  not divisible exactly by 25 and fractions of  shares
cannot  be held, fractional entitlements to New  Ordinary
Shares  arising under the Ordinary Capital Reorganisation
will  be  rounded  down  to  the  nearest  whole  number.
Consequently, Shareholders holding less than 25  Ordinary
Shares  will  not be entitled to any New Ordinary  Shares
under  the  Ordinary  Capital Reorganisation.  Fractional
entitlements to New Ordinary Shares resulting  from  this
rounding  down will be aggregated and those  shares  sold
for  the benefit of the relevant Shareholders, save  that
net  proceeds of less than £3.00 otherwise payable  to  a
Shareholder  will  be retained for  the  benefit  of  the
Company.

The  Deferred  Shares  will not be listed.  The  Deferred
Shares will carry minimal rights and will have little  or
no economic value. Further details of the rights attached
to   the   Deferred  Shares  are  set  out  in  'Proposed
alterations to the Articles' below.

Certificates for New Ordinary Shares resulting  from  the
Capital    Reorganisations   will   be   despatched    to
Shareholders on 3 April 2000 and CREST accounts  will  be
credited with shareholders' new entitlements to such  New
Ordinary   Shares   on  28  March  2000.   Any   existing
certificates  for  Ordinary Shares will become  valueless
and should be destroyed following receipt of certificates
for New Ordinary Shares.

Terms and Conditions of the Rights Issue

Subject  to  the  fulfilment of various  conditions,  the
Company  is  proposing to offer up to  50,233,402  Rights
Shares  by  way  of rights to Qualifying Shareholders  at
5.5p  per share payable in full on acceptance. The Rights
Issue  will be made on the basis of 17 Rights Shares  for
every  50 Ordinary Shares held by Qualifying Shareholders
on  the  Record Date, and so in proportion for any  other
number  of Ordinary Shares then held, which is equivalent
to:

17  Rights  Shares for every 2 New Ordinary Shares  after
the Ordinary Capital Reorganisation

and  otherwise on the terms and conditions as set out  in
the  document  sent to shareholders dated  2  March  2000
('the  Prospectus') and the Provisional Allotment Letter.
Shareholders holding less than 25 Ordinary Shares on  the
Record  Date  will  not rank for the  Rights  Issue.  The
entitlements  of  such  persons  to  Rights  Shares,  and
fractional  entitlements to Rights Shares,  will  not  be
allotted   to   Qualifying  Shareholders  but   will   be
aggregated and sold and the net proceeds distributed  for
the  benefit  of  the concerned Shareholders  (save  that
individual  entitlements to proceeds of less  than  £3.00
will be retained by the Company).

The  Rights Shares will, when issued and fully paid, rank
pari  passu  in  all respects with the  then  issued  New
Ordinary  Shares. No dividend is payable to  Shareholders
for the year ended 31 December 1999.

The  Rights  Issue has been fully underwritten  by  Alpha
Capital.

The Rights Issue is conditional, inter alia, on Admission
becoming  effective on or before 28 March 2000  (or  such
later  date  as Alpha Capital and the Company may  agree,
being  not later than 3 May 2000) and on the Underwriting
Agreement becoming unconditional in all respects and  not
having been terminated in accordance with its terms.

Alpha Capital will receive an underwriting commission  in
respect of Rights Shares the subject of the underwriting,
calculated  by  reference to the  Issue  Price  for  each
Rights Share underwritten by it.

Application  has been made to the London  Stock  Exchange
for the New Ordinary Shares (including the Rights Shares)
to  be  admitted  to  the Official List.  For  Qualifying
Shareholders, Provisional Allotment Letters in respect of
Rights  Shares are expected to be despatched on 27  March
2000  and  dealings in the Rights Shares, nil  paid,  are
expected  to  commence at 8.00 a.m.  on  28  March  2000.
Provisional  Allotment  Letters are  not  being  sent  to
certain Overseas Shareholders to whom the Rights Issue is
not being extended, nor to Shareholders holding less than
25  Ordinary  Shares on the Record Date. The  Provisional
Allotment  Letters will show the number of Rights  Shares
provisionally  allotted  to Qualifying  Shareholders  and
certain  instructions regarding acceptance  and  payment,
renunciation,  splitting and registration in  respect  of
the  Rights Shares. The Provisional Allotment Letters are
expected to be be renouncable until 3.00 p.m. on 18 April
2000.

The Concert Party

The  Rights Issue is being underwritten by Alpha  Capital
out of existing cash resources of the Grande Group. Alpha
Capital is an associated company of EIL by virtue of  the
fact  that  both companies are controlled by  Grande.  In
addition  four  of  the Directors, Paul  Binney,  Michael
Binney,  Adrian  Ma and William Welch are  directors  and
employees of companies within the Grande Group,  as  well
as directors of the Company.

Under the terms of the Takeover Code and by the nature of
the proposed rights issue and related transactions, Alpha
Capital,  EIL,  Grande and Paul Binney,  Michael  Binney,
Adrian  Ma  and William Welch are deemed to be acting  in
concert with each other in relation to the Company.

Information  on the Concert Party including, inter  alia,
financial  information and information on their  business
activities   and  shareholdings  is  set   out   in   the
Prospectus.

In  connection with The Alpha Capital Limited agreeing to
fully  underwrite the Rights Issue, the Company proposes,
subject  to  approval at the EGM and to the  Underwriting
Agreement, to grant Alpha Capital the Share Warrants. The
Share  Warrants  will  only be  capable  of  exercise  if
following  the Rights Issue and the matters  contemplated
in  the  Preference Option Agreement and the Underwriting
Agreement the Concert Party holds in aggregate less  than
29.9  per cent. of the New Ordinary Shares then in issue.
In  such  circumstances it is proposed that Alpha Capital
will be entitled to subscribe at 5.5 pence per share  for
such  number  of New Ordinary Shares as would,  following
such  subscription, result in the Concert Party  and  any
other  member of the Grande Group holding, in  aggregate,
29.9  per cent. of the New Ordinary Share capital of  the
Company  (as enlarged by the subscription for the Warrant
Shares).

Rule 9 of the Takeover Code

Pursuant  to Rule 9 of the Takeover Code, any person,  or
group  of  persons  acting  in  concert,  holding  shares
carrying less than 30 per cent. of the voting rights of a
public  company  may  not normally acquire  shares  which
would  take  his or its holding of shares to a  level  at
which  such holding carries 30 per cent. or more  of  the
voting  rights  of  a  public company  without  making  a
general offer to all equity shareholders in that company.

EIL   is   interested  in  19,948,000  Ordinary   Shares,
representing  13.25 per cent. of the issued voting  share
capital  of the Company (including the Preference  Shares
which currently carry voting rights).

Alpha   Capital  is  obliged  to  subscribe  for  up   to
50,233,402  Rights  Shares pursuant to  the  Underwriting
Agreement in the event that such shares are not otherwise
subscribed  for pursuant to the Rights Issue  and  Grande
has  agreed to procure that Alpha Capital does so. If all
such  Rights  Shares were allotted and  issued  to  Alpha
Capital  in connection with the Rights Issue, then  Alpha
Capital  and  EIL would hold in aggregate 51,031,322  New
Ordinary  Shares,  representing 76.1  per  cent.  of  the
Company's  enlarged  issued  voting  capital  after   the
Capital  Reorganisations, the Rights Issue  and  the  New
Preference Share Purchase.

In  addition, pursuant to the Preference Option Agreement
the  holders  of the Preference Shares have  agreed  with
Grande that:

(i)  Grande  has  an  option, exercisable for  one  month
     after  the Preference Capital Reorganisation becomes
     effective,    to   acquire   from   the   Preference
     Shareholders  up  to 3,636,363 New  Ordinary  Shares
     (representing  one third of the New Ordinary  Shares
     derived  from the Preference Capital Reorganisation)
     at the Issue Price;
(ii) if any of them wish to sell any of the remaining New
     Ordinary Shares derived from the Preference  Capital
     Reorganisation (amounting to a further 7,272,729 New
     Ordinary Shares) during the period of one year after
     the   Preference   Capital  Reorganisation   becomes
     effective,  Grande will have the  right  to  acquire
     those  shares  at  the  then  prevailing  mid-market
     price; and
(iii)they will, for a period of one year after  the
     Preference Capital Reorganisation becomes effective,
     exercise all the voting rights attaching to the  New
     Ordinary Shares held by them which are derived  from
     the  Preference  Capital  Reorganisation,  amounting
     initially  to  10,909,092  New  Ordinary  Shares  in
     aggregate,  in  accordance with  the  directions  of
     Grande.

Accordingly in addition to the maximum aggregate holdings
of  51,031,322 New Ordinary Shares of Alpha  Capital  and
EIL,  on  the  basis set out above, Grande  will  control
voting  rights under the Preference Option  Agreement  in
respect  of  10,909,092 New Ordinary Shares. The  Concert
Party   would   therefore  potentially   have   aggregate
interests  in 61,940,414 New Ordinary Shares representing
92.38  per cent. of the Company's enlarged issued  voting
capital  after  the Capital Reorganisations,  the  Rights
Issue and the New Preference Share Purchase.

In  the event that following the Capital Reorganisations,
the  Rights  Issue  and the matters contemplated  by  the
Preference   Option   Agreement  and   the   Underwriting
Agreement,  the Concert Party has aggregate  holdings  of
less  than 29.9 per cent. of the then issued New Ordinary
Shares  (including those New Ordinary Shares  the  voting
rights   of  which  Grande  controls  pursuant   to   the
Preference Option Agreement) Alpha Capital has  indicated
its  intention  to  exercise its right to  subscribe  for
Warrant  Shares  pursuant  to  the  Warrants  such   that
following  the exercise of such rights the Concert  Party
will  have an aggregate holding of 29.9 per cent. of  the
issued  New  Ordinary Share Capital of  the  Company  (as
enlarged  by the exercise of such Warrant Rights).  Under
the  terms  of the Warrant Instrument Alpha  Capital  may
only  exercise its right to subscribe for Warrant  Shares
at   any  time  during  the  14  day  period  immediately
following the date on which Alpha Capital is obliged,  in
accordance  with  its obligations under the  Underwriting
Agreement,  to subscribe for Rights Shares not  otherwise
taken up under the Rights Issue.

Following the Capital Reorganisations, the Rights  Issue,
the  New Preference Share Purchase and the issue to Alpha
Capital  of the Warrant Shares it is likely that  Grande,
Alpha  Capital and EIL, all members of the Concert Party,
will have in aggregate a controlling shareholding in  the
Company. EIL currently has a shareholding in the  Company
of  19,948,000 Ordinary Shares representing  13.25 per
cent.  of the issued voting share capital of the Company.
Alpha  Capital,  although currently holding  no  Ordinary
Shares,  is underwriting the Rights Issue and,  depending
on  the level of takeup of Rights Shares by the Company's
Shareholders could potentially have a shareholding  after
the  Capital  Reorganisation, the Rights  Issue  and  the
Preference  Share Purchase of over 50 per  cent.  of  the
issued   ordinary  share  capital  of  the  Company.   In
addition, if the Concert Party's aggregate holding of New
Ordinary Shares following the Capital Reorganisation, the
Rights  Issue  and the transactions contemplated  by  the
Preference   Option   Agreement  and   the   Underwriting
Agreement  is less than 29.9 per cent. and Alpha  Capital
exercises  its  right  to subscribe  for  Warrant  Shares
pursuant to the Share Warrants in full, the Concert Party
will following such exercise have an aggregate holding of
29.9  per  cent  of the then issued New Ordinary  Shares.
Grande,  being the ultimate holding company  of  EIL  and
Alpha Capital, would have an interest in the aggregate of
EIL's  and Alpha Capital's shareholdings, as well as  any
New  Ordinary  Shares acquired by holders  of  Preference
Shares  as  described above, and as such  would  also  be
deemed a controlling shareholder.

The  Group  is  not  currently a party  to  any  material
transactions  or relationships with any  members  of  the
Concert Party or any associates of any of them other than
trading  relationships on a normal commercial  basis  and
arms  length terms, the provisions of the Standby  Letter
of  Credit,  the Underwriting Agreement and the  proposed
grant  of  the  Share  Warrants.  The  Company  currently
carries  on  its  business independently  of  the  Grande
Group.

Grande has entered into an agreement details of which are
set out in the Prospectus in which Grande has agreed that
the Company shall be at all times capable of carrying  on
its  business independently of the Grande Group and  that
all  transactions and relationships between  the  Company
and  the  Grande Group will be at arms length  and  on  a
normal   commercial  basis.  The  Board  has  adopted   a
resolution  to  the  effect that  any  directors  of  the
Company  appointed  at  the  request  of  or  who  is  an
associate  of  Grande (including all  the  Concert  Party
Directors)  should  not participate  in  any  discussions
relating to nor vote upon any resolution relating to  any
transaction, relationship or dispute with Grande  or  any
subsidiary of Grande or any other associate of Grande and
in  particular  any  dispute arising  from  a  breach  or
alleged  breach by Grande of the agreement  described  in
the Prospectus.

In  the  light of the above resolution and agreement  the
Directors are of the opinion that the Company shall be at
all   times   capable  of  carrying   on   its   business
independently   of  the  Grande  Group   and   that   all
transactions  and relationships between the  Company  and
the  Grande Group will be at arm's length and on a normal
commercial basis.

In  the  event that the Concert Party holds over  75  per
cent.  of  the  Company's enlarged issued ordinary  share
capital  following  the  Rights  Issue  and  the  Capital
Reorganisations,   Grande   has   undertaken   to    make
appropriate  arrangements  for immediately  reducing  the
Concert Party's shareholding to below 75 per cent.

Were the Concert Party to hold more than 50 per cent.  of
the   issued   voting  share  capital  in   the   Company
immediately  following the Rights Issue (in aggregate  or
individually), then Rule 9 of the Takeover Code would not
again  require the Concert Party to make a general  offer
to  all  voting  and equity shareholders in  the  Company
should  the Concert Party increase further its  aggregate
shareholding, unless that increase involved  an  increase
by  an individual member of the Concert Party in its  own
holding  to a level at which it carried 30 per  cent.  or
more of the voting rights of the Company.

The Takeover Panel has agreed, subject to the approval of
Resolution  2  by independent shareholders  voting  on  a
poll,  which for the avoidance of doubt does not  include
members  of  the  Concert Party, to waive any  obligation
that  any  members of the Concert Party  might  otherwise
incur under Rule 9 of the Takeover Code, as a consequence
of  the  subscription by EIL and Alpha Capital for Rights
Shares  in  connection  with the  Rights  Issue  and  the
acquisition by Grande of control of the voting rights  of
the  New  Ordinary  Shares arising as  a  result  of  the
Preference Capital Reorganisation and the acquisition  of
New  Ordinary  Shares pursuant to the  Preference  Option
Agreement  on the basis set out above to make  a  general
offer  for the New Ordinary Shares not already  owned  by
the Concert Party.

Resolution 2 described below will, if passed, provide the
necessary approval.

In  the event that, but for the waiver referred to above,
the underwriting of the Rights Issue by the Concert Party
were  to  give  rise to an obligation to  make  an  offer
pursuant  to  that rule, Grande has informed the  Company
that  its  intentions  would be to continue  the  Group's
existing business activities and to make no major changes
to  the business, including any redeployment of its fixed
assets,  or  the  employment of  its  staff  pending  the
finalisation  of  a  review  of  the  Group's  businesses
following  completion  of the Rights  Issue.  Grande  has
indicated that it is fully supportive of the Company  and
believes  that the proposed Rights Issue is in  the  best
interests of the Shareholders.

Removal of Preference Shares

The Company has a total of 2,750,000 Preference Shares in
issue,  which  were  allotted in  1991  as  part  of  the
consideration for an acquisition. These shares, which are
not  listed  on  the Official List of  the  London  Stock
Exchange,   are  held  by  a  small  number  of   private
individuals and trusts, and no dividend has been paid  on
them  for several years, resulting in accumulated arrears
of dividends on these shares of approximately £577,500 at
31  December  1998. While the dividends on  these  shares
remain  in arrears, no dividends can be paid to  ordinary
shareholders and, because of the arrears of dividend, the
Preference Shares currently carry one vote per  share  at
general meetings of the Company.

The holders of all the Preference Shares have unanimously
agreed   in   writing  that,  subject  to   shareholders'
approval, part of the Preference Shares will be converted
into  New  Ordinary  Shares  and  the  balance  of  their
preference  shareholdings  will  be  purchased   by   the
Company,  on the basis set out in Resolution 3  described
below.

This   resolution  provides  for  the  sub-division   and
redesignation of all the issued Preference Shares into  a
total  of  10,909,092 New Ordinary Shares and 220,454,540
New  Preference Shares. These New Ordinary Shares,  which
will  rank  pari  passu in all respects  with  the  other
issued  New Ordinary Shares save that they will not  rank
for  the Rights Issue, will represent approximately  16.3
per cent. of the issued New Ordinary Shares following the
Rights  Issue.  The  resolution  also  provides  for  the
cancellation of all the Company's authorised but unissued
Preference Shares.

The  holders of the Preference Shares have undertaken  to
the  Company, subject to shareholders' approval, to enter
into an agreement for the purchase by the Company of  all
the   New  Preference  Shares,  representing  the  entire
balance  of  the issued preference share capital  of  the
Company arising from Resolution 3, for an aggregate  cash
consideration  of £300,000. This amount would  be  funded
out  of  the  net  proceeds  of  the  Rights  Issue.  The
agreement  for  the  purchase of all the  New  Preference
Shares  by  the  Company is expected to be  entered  into
immediately following the EGM and Class Meeting, assuming
the necessary Resolutions are passed, and to be completed
on  9  May  2000,  upon receipt by  the  Company  of  the
proceeds of the Rights Issue.

Under  these  arrangements  the  Company  will  have   no
continuing   liability  in  respect  of  the  accumulated
arrears  of preference dividend of approximately £577,500
at  31  December  1998. In addition,  approximately  £1.9
million of the Company's preference share capital will be
transferred to the capital reserves.

Group Strategy

It is anticipated that up to £250,000 of the funds raised
will  be  used  to  increase the  Group's  investment  in
product  development and marketing subject to  sufficient
working capital being available. The investment in  these
two  areas  should result in an improvement in the  long-
term  prospects for the core businesses within the Group.
The  Company continues to divest its non-core  activities
and  in December announced the sale of Giltpack Packaging
Limited  to  a  third  party. The  Company  is  currently
looking  to  sell its interest in GEL (Rhayader)  Limited
and  hopes to make an announcement shortly. The  disposal
of these two businesses will leave the Company focused on
electrical and electronic engineering businesses and  the
Company  intends  to  expand within these  areas  through
organic growth and future acquisition.

It  is  the  Directors' intention to sell  the  Company's
premises  at Totton, Southampton, subject to  agreeing  a
fair  value for the property with a purchaser. A  further
announcement  will  be  made in  due  course  but  it  is
indicative  of  the  Company's  strategy  to  review  its
current   property  portfolio  and  dispose  of   surplus
property  where  deemed  appropriate  and  in  the   best
interests  of  the  Company and its Shareholders.  It  is
proposed  that  in  the  event of Company's  property  at
Totton  being  sold the net proceeds would  be  used,  to
reduce the Group's bank debt at the time.

As  a  result  of  the implementation  of  the  proposals
contained  within this announcement and  the  Prospectus,
although  the Company will not be able to resume  payment
of dividends immediately, the Company will be in a better
position to do so at an earlier stage.

Current trading and prospects

In  the  Company's interim statement for the  six  months
ended  30 June 1999 made on 2 September 1999 the  Company
stated  that the outlook for the second half of the  year
was looking more promising.

However,  the  general  uncertainty  resulting  from  the
rejection   of   the  rights  issue   proposed   at   the
Extraordinary  General Meeting on 3 September  1999  left
the  Company unable to reassure external parties  of  its
long term future. This has resulted in significant market
and  financial  pressure on the normal  business  of  the
Group.  As a result the Company is expecting to report  a
loss  for the twelve months ended 31 December 1999  which
will  be  significant and greater than £3.9 million  loss
before   tax.  Further  details  are  set  out   in   the
Prospectus.

The  Automotive  Division of the Group encountered  major
problems during the last quarter of 1999, as a result  of
the  withdrawal of a distribution contract with  a  major
supplier.  This withdrawal coincided with the resignation
of  the  Managing Director and Finance Director.  Despite
major  efforts  to recover the situation, the  Automotive
Division  has  been  severely damaged  and  is  currently
undergoing a strategic review.

The  Company  expects  to see an improvement  in  trading
performance in 2000 upon satisfactory completion  of  the
proposals described in this document.

Shareholders should note the statements made in  relation
to working capital below.

Working Capital

The  Group  has  announced  that  it  proposes  to  raise
approximately £2,300,000 net of expenses by  way  of  the
Rights Issue.

It is intended that £1,500,000 of the net proceeds of the
Rights Issue and the proposed retirement of £1,200,000 of
the  current bank debt together with funds from  the  new
bank  facilities  will  be used  to  discharge  the  bank
indebtedness with the Group's current bankers.

The  continuance  of the existing bank facilities,  until
the   Rights  Issue  proceeds  have  been  received,   is
dependent  upon  the  extension of  a  letter  of  credit
supporting a guarantee provided by Grande to the  Group's
bankers, which is due to expire on 31 March 2000. Details
of  this guarantee are set out in paragraph 5(b)(iii)  of
section VI.

In  addition to the new bank facilities Grande have  been
requested  to  provide the Group with a  line  of  credit
should  additional working capital be required. To  date,
Grande  have only stated that they would consider  making
available  such additional credit lines, should  they  be
required.   Should they be required and if  time  allows,
this  may  take  the form of a further  fundraising  from
Shareholders. The aforementioned new bank facilities  are
subject  to certain conditions precedent, some  of  which
require  actions by Grande. Whilst Grande have  indicated
their intention to meet the relevant conditions, no  firm
undertakings have yet been provided to the bank.

Subject to the satisfactory outcome of the above matters,
the  Company  is of the opinion that, after  taking  into
account  the net proceeds of the Rights Issue, the  Group
has   sufficient   working  capital   for   its   present
requirements, that is for at least twelve months from the
date of this document.

In the event that:

(i)  Shareholders do not approve the Resolutions, and the
     Rights Issue does not proceed; and/or

(ii) Grande  does not provide the additional credit  line
     should it be necessary; and/or

(iii)Grande does not meet the conditions precedent;
    
and/or

(iv) Grande does not extend the letter of credit.

it  is  likely  that the Group's banks will withdraw  the
Group's banking facilities, in which case the Group would
experience  difficulties 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
     businesses 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 Rights Issue does  not  proceed,
and/or  Grande does not fulfil its undertakings  and  the
above actions are unsuccessful, the Group would be unable
to continue to trade.

Proposed alterations to articles

Proposals to alter the articles of association of the
Company pursuant to Resolution 1 of the EGM are set out
in the Prospectus.

Extraordinary General Meeting and Class Meeting

An  EGM and Class Meeting is to be held at the offices of
Addleshaw Booth & Co at 60 Cannon Street, London EC4N 6NP
at  10.00 a.m. on 27 March 2000 at which four resolutions
will be proposed as follows.

Resolution  1,  which  will  be  proposed  as  a  special
resolution, will, if passed:

(i)  sub-divide  each  Ordinary Share into  one  deferred
     share  of  4.8p and one ordinary share of  0.2p  and
     consolidate  every 25 such ordinary shares  of  0.2p
     each into one new ordinary share of 5p;
(ii) adopt  new  articles  of  association  of  the
     Company, incorporating the changes described in  the
     Prospectus;
(iii)increase the authorised share capital  of  the
     Company  by £3,565,545.40 to £18,064,545.40  by  the
     creation  of  71,290,908 New  Ordinary  Shares.  The
     increase  will represent a 36.56 per cent.  increase
     in  the  Company's authorised ordinary share capital
     as  compared  to  the Company's authorised  ordinary
     share   capital  immediately  before   the   Capital
     Reorganisations;
(iv) authorise  the Directors for the  purposes  of
     section  80  of the Act to allot relevant securities
     up  to  £2,511,670.10 in connection with the  Rights
     Issue  and otherwise up to £1,117,538.45 in  nominal
     amount  (representing 33.3 per cent. of the enlarged
     issued  ordinary share capital of the Company  after
     the Capital Reorganisations and the Rights Issue but
     before the Warrant Instrument). This authority shall
     expire  on the earlier of 31 December 2000  and  the
     conclusion of the next Annual General Meeting of the
     Company; and
v)   authorise  the Directors to allot equity  securities
     for  cash,  outside  the pre-emption  provisions  of
     section  89  of  the Act, for the  purposes  of  the
     Rights   Issue,  the  entry  into  of  the   Warrant
     Instrument in connection with any other offer by way
     of   rights  in  the  future  and  otherwise  up  to
     £167,630.75   in   nominal  amount  (equivalent   to
     3,352,615   New  Ordinary  Shares  and  representing
     approximately  5  per cent. of the  issued  ordinary
     share capital after the Capital Reorganisations  and
     the Rights Issue but before the Warrant Instrument).

Resolution  2,  which  will be proposed  as  an  ordinary
resolution, will, if passed:

(i)  authorise the acquisition and holding by members  of
     the  Concert  Party of the interests in  the  voting
     share capital of the Company described in Resolution
     2  amounting to 30 per cent. or more of  the  voting
     rights currently exercisable at general meetings  of
     the  Company,  without a requirement for  a  general
     offer  for the Company under Rule 9 of the  Takeover
     Code; and
(ii) approve the Underwriting Agreement.

Resolution  3,  which  will  be  proposed  as  a  special
resolution, will, if passed:

(i)   reorganise the issued Preference Share  Capital  of
      the Company;
(ii)  approve the New Preference Share Purchase;
(iii) cancel the authorised but unissued  Preference
      Shares; and
(iv)  make various further consequential changes  to
      the Articles.

Resolution  4,  which  will be proposed  as  an  ordinary
resolution,  will approve the entry into of  the  Warrant
Instrument and the issue of the Share Warrants.

The  Rights  Issue is conditional, inter alia,  upon  the
passing of these Resolutions.

Following the Capital Reorganisation and the Rights Issue
but  before  the  Warrant Instrument, there  will  remain
authorised but unissued at least 22,947,694 New  Ordinary
Shares (representing approximately 25.5 per cent. of  the
Company's  enlarged authorised ordinary  share  capital).
The Directors have no present intention of issuing any of
such authorised but unissued share capital other than (i)
in connection with options granted under the Share Option
Scheme and (ii) in connection with the Share Warrants.

Shareholders Voting Undertakings

Alpha  Capital and Grande are Related Parties in  respect
of  Resolution  2 and the other members  of  the  Concert
Party  are  associates of those companies in  respect  of
Resolution  2.  Accordingly the Related Parties  and  all
members of the Concert Party will abstain from voting  on
Resolution 2. Also, Alpha Capital is a related  party  in
respect  of  resolution 4 and the other  members  of  the
Concert  Party  are  associates  of  EIL  in  respect  of
Resolution  4.  Accordingly all members  of  the  Concert
Party will abstain from voting on Resolution 4.

EIL,  Noel  Hayes, Simon Hayes, Cheviot  Capital,  Vernon
Burroway and Paul Lawrence, who together hold or  control
43,384,000  Ordinary  Shares in  aggregate,  representing
approximately  29.36  per cent. of  the  issued  Ordinary
Shares, have irrevocably undertaken to vote in favour  of
a  capital reorganisation materially on the terms of that
proposed  by Resolution 1 to be proposed at  the  EGM  in
respect  of those shares. In addition, all the Preference
Shareholders have irrevocably undertaken to exercise  all
the voting rights attaching to those shares, representing
2,750,000   votes  in  aggregate,  in  favour   of   this
Resolution. These undertakings represent a total of 30.65
per  cent.  of  the  votes  that  may  be  cast  on  this
Resolution.  When taken together with similar irrevocable
undertakings  given by the Directors in  respect  of  the
votes  attaching to their aggregate holdings of 6,737,960
Ordinary  Shares,  the  Company has received  irrevocable
undertakings  from shareholders to exercise  a  total  of
52,871,960  votes  in favour of a capital  reorganisation
materially on the terms of that proposed by Resolution 1,
representing approximately 35.13 per cent. of  the  votes
that may be cast on this Resolution.

Noel   Hayes,  Simon  Hayes,  Cheviott  Capital,   Vernon
Burroway and Paul Lawrence, who together hold or  control
23,436,000  Ordinary  Shares in  aggregate,  representing
approximately  15.86  per cent. of  the  issued  Ordinary
Shares, have irrevocably undertaken to vote in favour  of
a  whitewash  for the purposes of Rule 9 of the  Takeover
Code,  and  which  is  included in  Resolution  2  to  be
proposed  at  the  EGM in respect of those  shares.  When
taken  together  with  similar  irrevocable  undertakings
given  by the Directors in respect of the votes attaching
to their aggregate holdings of 6,737,960 Ordinary Shares,
the  Company  has received irrevocable undertakings  from
shareholders to exercise a total of 30,173,960  votes  in
favour  of a whitewash for the purposes of Rule 9 of  the
Takeover  Code,  and which is included in  Resolution  2,
representing approximately 23.11 per cent. of  the  votes
that may be cast on this Resolution.

EIL,  Noel  Hayes, Simon Hayes, Cheviott Capital,  Vernon
Burroway and Paul Lawrence, who together hold or  control
43,384,000  Ordinary  Shares in  aggregate,  representing
approximately  29.36  per cent. of  the  issued  Ordinary
Shares, have irrevocably undertaken to vote in favour  of
Resolution  3  to be proposed at the EGM  in  respect  of
those   shares.   When   taken  together   with   similar
irrevocable  undertakings  given  by  the  Directors   in
respect   of  the  votes  attaching  to  their  aggregate
holdings  of  6,737,960 Ordinary Shares, the Company  has
received  irrevocable undertakings from  shareholders  to
exercise  a  total  of  50,121,960  votes  in  favour  of
Resolution 3, representing approximately 33.92 per  cent.
of the votes that may be cast on this Resolution.

Recommendation

The  Independent  Directors (who, for  the  avoidance  of
doubt, do not include the Concert Party Directors, having
been  so  advised  by Beeson Gregory, consider  that  the
Rights  Issue,  the Ordinary Capital Reorganisation  (and
the related proposals set out in Resolutions 1, 2 and  4)
and the waiving of any obligation on the Concert Party to
make  a  Rule 9 offer to be in the best interests of  the
Company  and  its  Shareholders  taken  as  a  whole.  In
providing advice to the Independent Directors in relation
to  the waiving of the obligation on the Concert Party to
make  an  offer pursuant to Rule 9 of the Takeover  Code,
Beeson  Gregory  has placed reliance on  the  Independent
Directors' commercial assessments.

The  Independent  Directors (who, for  the  avoidance  of
doubt,  do  not  include  the Concert  Party  Directors),
having  been  so advised by Beeson Gregory, consider  the
entry  into  of the Underwriting Agreement  is  fair  and
reasonable  and in the best interests of the Shareholders
taken   as   a  whole.  Owing  to  the  fact   that   the
consideration to be paid by the Company to Alpha  Capital
(in  respect  of  Alpha Capital underwriting  the  Rights
Issue)  is  more  than the usual commercial  underwriting
consideration   the  entry  into  of   the   Underwriting
Agreement  constitutes  a related party  transaction  and
accordingly   the  Concert  Party  Directors   have   not
participated in the giving of the recommendation  of  the
Independent   Directors  to  approve   the   Underwriting
Agreement.  In addition the Related Parties will  abstain
(and  have  undertaken to take all  reasonable  steps  to
ensure that their associates will abstain) from voting on
Resolution 2.

The  Independent  Directors (who, for  the  avoidance  of
doubt,  do  not  include  the Concert  Party  Directors),
having  been  so advised by Beeson Gregory, consider  the
entry into of the Warrant Instrument and the grant of the
Share  Warrants is fair and reasonable and  in  the  best
interests of the Shareholders taken as a whole. Owing  to
the  fact that EIL is a major shareholder of the  Company
and  Alpha  Capital is an associated company of  EIL  the
entry into of the Warrant Instrument and the grant of the
Share  Warrants are each a related party transaction  and
accordingly   the  Concert  Party  Directors   have   not
participated in the giving of the recommendation  of  the
Independent  Directors to approve the entry into  of  the
Warrant  Instrument and the grant of the Share  Warrants.
In  addition the Related Parties will abstain  (and  have
undertaken  to take all reasonable steps to  ensure  that
their  associates will abstain) from voting on Resolution
4.

Accordingly the Independent Directors (not including  the
Concert Party Directors) recommend you to vote in  favour
of  Resolutions 1, 2 and 4 to be proposed at the EGM  and
Resolution 1 at the Class Meeting, as they intend  to  do
in   respect   of   their  own  beneficial  shareholdings
amounting  to  6,737,960 Ordinary Shares and representing
approximately 4.56 per cent. of the issued ordinary share
capital of the Company.

The  Directors  (including the Concert  Party  Directors)
unanimously   consider   that  the   Preference   Capital
Reorganisation  and  the  New Preference  Share  Purchase
(including the related proposals set out in Resolution 3)
are  in  the  best  interests  of  the  Company  and  its
Shareholders taken as a whole.

The  Directors  (including the Concert  Party  Directors)
unanimously recommend you to vote in favour of Resolution
3 to be proposed at the EGM and Resolution 2 at the Class
Meeting,  as  they intend to do in respect of  their  own
beneficial shareholdings amounting to 6,737,960  Ordinary
Shares  and representing approximately 4.56 per cent.  of
the issued ordinary share capital of the Company.

EXPECTED TIMETABLE OF EVENTS

Record Date for the Rights Issue        Close of business on 20 March
Latest time for receipt of forms of proxy      10.00 a.m. on 25 March
Extraordinary General meeting                  10.00 a.m. on 27 March
Separate  Class Meeting                        10.10 a.m. on 27 March
Despatch of Provisional Allotment Letters                    27 March
Credit CREST accounts from the Capital Reorganisations       28 March
Dealings to commence in the Rights Shares, nil paid, and
other  issued  New  Ordinary  Shares                         28 March
Despatch of definitive certificates for the
Capital Reorganisations                                       3 April
Latest time for splitting Provisional Allotment
Letters, nil paid                               3.00 p.m. on 14 April

Latest time for acceptance and payment in full and
registration  of  renunciation                  3.00 p.m. on 18 April

Dealings  in  the Rights Shares to commence,  fully  paid    19 April
Credit CREST accounts from the Rights Issue                     2 May
Complete purchase of New Preference Shares                      2 May
Despatch of definitive certificates for the Rights Shares       9 May

Enquiries:

Matthew Smallwood   College Hill   020 7457 2020