Placing and Open Offer

RNS Number:1790Y
SWP Group PLC
30 April 2004


For Immediate release
30 April 2004

SWP GROUP PLC

PLACING, OPEN OFFER, WAIVER OF MANDATORY OFFER REQUIREMENTS UNDER THE CITY CODE,
CAPITAL REORGANISATION AND SHARE CONSOLIDATION

It was announced today that SWP Group plc ("SWP" or the "Company") intends to
raise up to #4.15 million (up to #3.92 million net of expenses) through a
Placing and an Open Offer. The Company also intends to implement the Capital
Reorganisation and the Share Consolidation.

The net proceeds of the Placing and Open Offer will be used to recapitalise the
Group's balance sheet, reduce the Group's borrowings and to fund future working
capital requirements, which have increased to an unsustainable level.

HIGHLIGHTS

* SWP has conditionally raised up to #4.15 million (up to #3.92 million
  net of expenses) through a Placing and Open Offer at 0.75p per share.
* A minimum of #1,600,257 of the proceeds will be used to reduce bank
  borrowings and fund future working capital requirements.
* The Capital Reorganisation will conditionally reduce the nominal value
  of the Existing Ordinary Shares to enable the Placing and Open Offer.
* The Share Consolidation will conditionally reduce the number of shares
  in issue on the basis of 1 Consolidated Share for every 50 Ordinary Shares 
  held.
* Following the EGM, Robert Muddimer intends to step down as chairman.
  In due course he intends to resign from the Board entirely but will remain as 
  a non-executive director until another suitable independent non-executive 
  director can be found to replace him.
* Following the EGM, Francis Bell will be appointed to the board and
  replace Mr Muddimer as chairman.
* An Extraordinary General Meeting will be held at the offices of
  Addleshaw Goddard at 150 Aldersgate Street, London EC1A 4EJ on 25 May 2004 at
  10.00 a.m.

For further information, please contact:

SWP Group plc                                       Tel: [phone]
Alan Walker, Group Financial Director

KBC Peel Hunt                                       Tel: [phone]
Oliver Scott
David Anderson

                                  SWP GROUP PLC

PLACING, OPEN OFFER, WAIVER OF MANDATORY OFFER REQUIREMENTS UNDER THE CITY CODE,
CAPITAL REORGANISATION AND SHARE CONSOLIDATION

Introduction

It was announced today that the Company intends to raise up to #4.15 million (up
to #3.92 million net of expenses) through a Placing by the Company of
126,666,666 New Ordinary Shares and an Open Offer by KBC Peel Hunt of
426,648,997 New Ordinary Shares at 0.75p per share. The Company also intends to
implement the Capital Reorganisation and the Share Consolidation as described
below. The net proceeds of the Placing and Open Offer will be used to
recapitalise the Group's balance sheet, reduce the Group's borrowings and to
fund future working capital requirements, which have increased to an
unsustainable level. It is essential for the continued survival of the Group
that the Company raises at least #3.04 million under the Placing and Open Offer.
Accordingly, #3.04 million of new funding has been committed to the Company
through a combination of the Placing, the Underwriting Agreement and irrevocable
undertakings received from various individuals to subscribe for their
entitlements under the Open Offer.

SWP has been given advance provisional assurance that the Company is a
qualifying company and that the New Ordinary Shares issued pursuant to the
Placing and Open Offer will be eligible shares for the purposes of the
Enterprise Investment Scheme which affords certain potential tax benefits to
persons subscribing for New Ordinary Shares under the Placing and Open Offer.

Alan Smith, Alan Walker, Francis Bell and David Pett together are acting in
concert for the purposes of the City Code. The Proposals could result in the
Concert Party's combined interest in the voting rights of the Company rising
from 27.01 per cent. to a maximum of 50.22 per cent. Under Rule 9 of the City
Code, such an increase in the Concert Party's aggregate interest would normally
oblige it to make a general offer in cash to all Shareholders to acquire their
interests in the share capital of the Company. However, in this instance, the
Panel has agreed to waive any such obligation if Shareholders (other than
members of the Concert Party) approve such waiver on a poll at the Extraordinary
General Meeting. Without such approval from Shareholders, the Placing and Open
Offer cannot proceed in its present form.

Due to the Issue Price being lower than the current nominal value of Existing
Ordinary Shares, the Company will be unable to effect the Placing and Open Offer
without reducing the nominal value of the Existing Ordinary Shares. The Company
therefore proposes, conditional upon Shareholder approval, to convert and
subdivide each Existing Ordinary Share into one New Ordinary Share and one
hundred and ninety nine Deferred Shares.

The Directors propose to effect the Share Consolidation in order to, inter alia,
reduce the number of shares in issue, to reflect the new circumstances of the
Group and in an attempt to reduce the spread between the market prices quoted
for buying and selling the Existing Ordinary Shares. The Company proposes that,
conditional upon Shareholder approval, every 50 New Ordinary Shares be
consolidated into one Consolidated Share after close of business on 25 May 2004.

The purpose of this document is to convene an extraordinary general meeting and
to provide you with information on the Placing and Open Offer, the Capital
Reorganisation, the Share Consolidation and the waiver by the Panel of Rule 9 of
the City Code and to seek your approval for these Proposals at the forthcoming
Extraordinary General Meeting. A notice of the requisite Extraordinary General
Meeting is set out at the end of this document.

If Resolutions 1 to 3 are not passed, the Proposals can not be implemented and
the Group will not be able to meet its commitments as they fall due. In such
circumstances, the Directors believe that the Company will be forced either to
sell one or more of its subsidiaries or an administrative receiver may need to
be appointed. Accordingly, the Board believes that the Proposals are essential
to enable the Group to continue trading in its current form.

Background information on the Group

The Group has three operating businesses; Fullflow, Crescent and DRC, details of
which are outlined below.

Fullflow
Fullflow, the Group's largest operating business, is a provider of turnkey
rainwater management systems and is a leading specialist in self-priming
syphonic roof drainage systems. Fullflow, which operates from freehold premises
in Sheffield is now active in continental Europe where it has established
semi-autonomous subsidiaries in Spain and France with their own management
teams, assembly depots and fitting teams.

Plasflow Limited, which operates from freehold premises in Rotheram, fabricates
specialist pipework and fittings for Fullflow in the UK as well as for other
third party companies.

Crescent
The Directors believe that Crescent is the UK leader in the market for spiral
staircases. The company also produces straight, helical and other specialist
steel staircases. The business operates from freehold premises in St Ives, near
Cambridge, and undertakes work for some of the UK's leading contractors,
developers and architects. Crescent offers a complete service covering
architectural and structural design, manufacture, delivery, installation and
supervision.

DRC
DRC operates from freehold premises in Soham and is engaged in the development
and manufacture of specialist polymer sheet materials. Product applications
include reservoir roofs and baffle curtains, floating covers, roof coverings for
portable and conventional buildings, pond and pit linings and tanking to
concrete structures. The company has developed a strategic alliance in relation
to a fireproofing material and is in the process of developing a strategic
alliance for a soundproofing material.

Background to and reasons for the Placing and Open Offer

Since their appointment in January 1999, the Board has completed an extensive
redevelopment and expansion of the Group's activities. The cost of this exercise
together with the Group's continuing losses and capital expenditure incurred at
each of Fullflow, Crescent and DRC has resulted in Group net bank borrowings
increasing to approximately #6,649,000 at 31 December 2003.

In addition, unsecured loans totalling #1,375,000 have been made to the Company
by corporate entities associated with Alan Smith, Alan Walker and Francis Bell,
all of who are members of the Concert Party. Since 31 December 2003, a further
unsecured loan of #100,000 has been made to the Company by these corporate
entities. Unpaid interest totalling #236,000 has accumulated on these
Shareholder Loans as at 31 December 2003. These Shareholder Loans have been made
to the Company on an unsecured basis and on normal commercial terms and are
included in the Group's consolidated balance sheet as at 30 June 2003 under the
heading 'Creditors: amounts falling due within one year'.

The Directors believe that they must recapitalise the Group's balance sheet in
order to be able to retain its banking facilities and to allow it to continue
trading in its current form. In the absence of the Placing and Open Offer, the
Group will not be able to meet its commitments as they fall due and will be
obliged to sell one or more of the Company's subsidiaries. However, in the
current economic climate and in the light of the subsidiaries' recent
performance, the Directors do not believe that they will obtain full value for
any of SWP's businesses. Should insufficient funds be generated from such
disposals, an administrative receiver may need to be appointed.

In order to complete the Placing and Open Offer and reduce the Group's level of
gearing, Shareholders must vote in favour of Resolutions 1 to 3 to be proposed
at the Extraordinary General Meeting.

A minimum of #1,600,257 of the proceeds will be used to reduce bank borrowings
and fund future working capital requirements. If less than #1,830,645 is raised
through the Placing and Open Offer, #1,208,000 of the Shareholder Loans will be
capitalised pursuant to the Underwriting Agreement. Any amounts in excess of
#1,830,645 that are raised through the Placing and Open Offer will be used to
repay up to a maximum of #1,208,000 of Shareholder Loans. The balance of
#267,000 of Shareholder Loans will remain unpaid and carry interest at a rate of
200 basis points over LIBOR per annum. The balance of these Shareholder Loans
together with unpaid interest that has accumulated to date (which will attract
no further interest) will only be repaid as and when the Company has sufficient
funds.

Details of the Placing and Open Offer

The Company intends to raise up to #4,149,865 (up to #3,919,479 net of expenses)
by the issue of 553,315,663 New Ordinary Shares pursuant to the Placing and Open
Offer. Up to 426,648,997 Offer Shares are being offered to Qualifying
Shareholders pursuant to the Open Offer.

Qualifying Shareholders are being given the opportunity to subscribe for the
Offer Shares under the terms of the Open Offer at a price of 0.75p per New
Ordinary Share, payable in full on application. The pro rata entitlements of
Qualifying Shareholders under the Open Offer is calculated on the following
basis:

5 Offer Shares for every 4 Existing Ordinary Shares

and so in proportion for any other number of Existing Ordinary Shares registered
in the names of Qualifying Shareholders on the Record Date. Entitlement to the
Offer Shares will be rounded down to the nearest whole number. The fractional
entitlements which would otherwise have arisen will not be allotted to
Qualifying Shareholders but will be aggregated and, to the extent required, used
to satisfy excess applications received under the Open Offer.

Qualifying Shareholders may apply for any whole number of Offer Shares, either
less than or in excess of their pro rata entitlement. However, in the case of
applications for Offer Shares in excess of the pro rata entitlement, the total
number of Offer Shares will not be increased in response to such excess
applications.

Excess applications will only be satisfied to the extent that other Qualifying
Shareholders do not apply for their pro rata entitlements in full. Offer Shares
will be allocated in response to excess applications in the absolute discretion
of the Company. Payments due in respect of any Offer Shares applied for will be
rounded up to the nearest whole number in pence.

Undertakings have been given by members of the Concert Party and Robert Muddimer
to subscribe for their full entitlements to 118,486,052 Offer Shares at a total
cost of approximately #888,645 representing 27.8 per cent. of the Offer Shares.

All New Ordinary Shares issued pursuant to the Placing and Open Offer will be
allotted credited as fully paid and will rank pari passu in all respects with
the New Ordinary Shares to be created pursuant to the Capital Reorganisation,
including the right to receive all dividends and other distributions declared or
made after the date of their issue.

The Placing and Open Offer are conditional, inter alia, on the passing of
Resolutions 1 to 3 at the Extraordinary General Meeting, Admission, and the
Underwriting Agreement becoming unconditional in all other respects. It is
expected that Admission will take place in respect of the New Ordinary Shares on
26 May 2004.

The Open Offer is not being made to certain Shareholders (including those
resident in the United States, South Africa, Canada, Australia, Japan and The
Republic of Ireland) and, accordingly, Application Forms are not being sent to
such Shareholders.

Application and payment must be received by no later than 3.00 p.m. on 24 May
2004.

The Underwriting Agreement

Alan Smith, Alan Walker and Francis Bell have underwritten #1,200,000 of the
Open Offer. In addition, members of the Concert Party have undertaken to take up
their pro rata entitlements under the Open Offer representing 115,236,052 Offer
Shares for a total cost of #864,270.39. The subscriptions made by members of the
Concert Party under the Open Offer will not be set off against their
underwriting obligations.

The Underwriters have undertaken to subscribe for the full 160,000,000

In addition, Alan Smith and Alan Walker have agreed to loan the Company up to a
further #100,000 on the same terms as the existing Shareholder Loans if the
minimum proceeds received under the Placing and Open Offer are less than
#3,138,645. A more detailed summary of the Underwriting Agreement is contained
at the end of this announcement.

Contrary to normal market practice, the Underwriters will receive no commissions
or fees under the terms of the Underwriting Agreement.

Consideration for commitments to subscribe for New Ordinary Shares under the
Underwriting Agreement and the Open Offer will initially be satisfied by the
capitalisation of up to a maximum of #1,208,000 of the Shareholder Loans. Any
further amounts required to satisfy the Concert Party's commitments will be
satisfied through cash settlement. To the extent that members of the Concert
Party are not required to subscribe for New Ordinary Shares pursuant to the
Underwriting Agreement, up to a maximum of #1,208,000 will be used to partially
repay the Shareholder Loans.

It is a condition of the Underwriting Agreement that all of the Resolutions to
be proposed at the EGM are passed by independent Shareholders.

The Underwriting Agreement is deemed to be a Related Party Transaction under the
AIM Rules. The Board, excluding Alan Walker and Alan Smith on account of their
interest in the Underwriting Agreement, consider that, having consulted with KBC
Peel Hunt, the terms of the Underwriting Agreement are fair and reasonable
insofar as Shareholders are concerned.

Current trading and prospects

On 30 April 2004, the Company announced its interim results for the six months
ended 31 December 2003.

In the six months ended 31 December 2003, the Group generated an operating loss
before exceptional items of #871,000 (2002: #199,000 operating profit) on
turnover of #7,843,000, which was 16 per cent. lower than in the corresponding
period the previous year. After taking account of non-operating costs of
#234,000 (2002: nil) and net interest costs of #290,000 (2002: #259,000) the
loss before tax amounted to #1,395,000 (2002: #60,000 loss). As at 31 December
2003, the Group had consolidated net liabilities of #1,212,000.

Trading in the third quarter of the current year has continued to be difficult.
Crescent continues to be profitable but at Fullflow and DRC further losses have
been incurred.

Future Prospects
Whilst the Directors cannot pretend that the results for the first six months
are anything other than extremely poor, they believe that the worst is well
behind them.

The various changes which have been implemented at Fullflow have already had a
beneficial effect not only in relation to the size of the overhead but also in
terms of management focus. In March alone order intake is expected to be
approximately #1.8 million and the Directors are confident that progress is
being made. Sales are expected to increase sharply in the summer months and the
slimmed down cost structure should mean that, at the very least, Fullflow makes
a very positive contribution to Group profits.

At Crescent an order book which amounts to more than five months sales should
produce healthy sales levels in the months ahead and the Directors expect DRC to
post an operating profit in the fourth quarter and to make significant progress
thereafter.

Overall therefore the Directors believe that the current year should be viewed
as something of a watershed in the Group's development. Lessons have been
learned and across the Group there is a greater determination than ever before
to produce the sort of results to which the Directors aspire and believe they
are capable of achieving.

Strategy

Essential accreditations to allow the use of Fullflow's systems have now been
achieved in many European countries and the Directors intend to extend these to
other countries throughout the world. In particular, the Directors believe that
the Far East and North America represent potentially large and attractive
markets for Fullflow's systems. It is expected that expansion into these and
other new markets will be effected initially through agency and/or licence
agreements with suitable strategic partners.

Given the opportunities which the Directors believe are available to expand
Fullflow globally, the Directors intend to focus the bulk of the Group's
resources in this area. However, the Directors also consider that both Crescent
and DRC have the potential to grow without the need for any further significant
investment and every effort will be made to create additional shareholder value
by expanding sales at each of these businesses. In the medium to long term it is
possible that the Directors will recommend that either or both of these
operations should be disposed of to allow the Group to direct the whole of its
efforts towards the expansion of Fullflow.

Working capital

In the opinion of the Directors, having made due and careful enquiry, the
working capital available to the Group, after taking into account the facilities
available to it and the net proceeds of the Placing and Open Offer, will be
sufficient for its present requirements, that is for at least twelve months
following Admission.

If the Resolutions are not passed by Shareholders at the Extraordinary General
Meeting and the Proposals are not implemented, the Directors believe that the
Group will not be able to meet its commitments as they fall due and will be
obliged to sell one or more of the Company's subsidiaries.

However, in the current economic climate and in the light of the subsidiaries'
recent performance, the Directors do not believe that they will obtain full
value for any of SWP's businesses. Should insufficient funds be generated from
such disposals, an administrative receiver may need to be appointed.

Venture Capital Trust ("VCT") and Enterprise Investment Scheme ("EIS") status

On the basis of the information provided, the Inland Revenue has given advance
provisional assurance that:
(a) the Company is a qualifying company and that the shares issued pursuant to
the Placing and Open Offer will be eligible shares for the purposes of the EIS;
and
(b) the shares issued pursuant to the Placing and Open Offer can amount to a
"qualifying holding" for VCT purposes.

Further information in relation to taxation is set out in paragraph 8 of Part II
of this document.

It should be noted that although the Company does not presently intend to take
steps which will prevent the reliefs described above from being available, the
Company cannot undertake to conduct its activities in such a way so as to
preserve such tax reliefs. In particular, the Company will not compromise the
future development of its business in order to satisfy the various qualifying
conditions pertaining to such tax reliefs. However, the Directors are not
currently aware of any possible situation which would affect the validity of
these reliefs.

Board changes

Following the EGM, Robert Muddimer intends to step down as chairman. In due
course he intends to resign from the Board entirely but will remain as a
non-executive director until another suitable independent non-executive director
can be found to replace him.

Following the EGM, Francis Bell will be appointed to the board and replace Mr
Muddimer as chairman.

City Code on Takeovers and Mergers

Pursuant to Rule 9 of the City Code, when any person, or group of persons acting
in concert, acquires shares or rights over shares which, when taken together
with shares or rights over shares already held by such person or persons, carry
30 per cent. or more of the voting rights of a company which is subject to the
City Code, such person or persons, except with the consent of the Takeover
Panel, is or are required to make a general offer to all remaining shareholders
in that company to acquire their shares.

Further, when any person, or group of persons acting in concert, holds shares or
rights over shares which carry between 30 per cent. and 50 per cent. of the
voting rights of a company which is subject to the City Code, such person or
persons, except with the consent of the Takeover Panel, may not normally acquire
further shares or rights over shares without making a general offer to all
shareholders in that company to acquire their shares.

A general offer under Rule 9 of the City Code must be in cash and at the highest
price paid within the preceding 12 months for any shares in the Company by the
person required to make the Offer or any person acting in concert with him.

Alan Smith, Alan Walker, Francis Bell and David Pett together are deemed to be
acting in concert for the purposes of the City Code. The Concert Party's
aggregate current interest in Existing Ordinary Shares equates to 27.01 per
cent. of the voting rights. After completion of the Proposals, the Concert
Party's interest will increase to a maximum of 49.22 per cent. of the voting
rights attaching to the Company's issued ordinary share capital. In addition,
members of the Concert Party have been granted options to acquire a further
15,000,000 Existing Ordinary Shares at a price of 2p per Existing Ordinary
Share, which will increase the Concert Party's interest to a maximum of 50.22
per cent. of the voting rights attaching to the Company's issued ordinary share
capital after the completion of the Proposals. These options are exercisable at
various times between now and December 2010.

Shareholders should be aware that, following the implementation of the Proposals
and the exercise of their options in full, the Concert Party will own more than
50 per cent. of the Company's then issued share capital.

So long as their shareholding remains above 50 per cent. and they continue to be
treated as acting in concert, the Concert Party will be able to increase their
aggregate shareholding in the Company without incurring any further obligation
under Rule 9 to make a general offer provided that no individual member of the
Concert Party's holding exceeds 30 per cent.

A table showing the respective individual holdings of the members of the Concert
Party on completion of the Proposals and also following the exercise of the
options on the basis set out above is set out below:

        No. of Existing   % of issued    Number of Maximum % of        No. of Maximum % of
        Ordinary Shares share capital Consolidated issued share  Consolidated issued share
                                         Shares on     capital1     Shares on   capita1,2l
                                        Admission1              Admission and
                                                                  exercise of
                                                                   options1,2

Alan         17,432,500         5.11%    1,784,462       11.95%     1,934,462       12.70%
Smith

Alan         10,057,500         2.95%    1,452,587        9.73%     1,602,587       10.52%
Walker

Francis      63,898,842        18.72%    4,075,447       27.30%     4,075,447       26.76%
Bell

David           800,000         0.23%       36,000        0.24%        36,000        0.24%
Pett
             92,188,842        27.01%    7,348,496       49.22%     7,648,496       50.22%

Notes
1. Assuming a minimum of 8,103,053 Consolidated Shares are subscribed under the
Placing and Open Offer

2. Assuming exercise of options by the Concert Party but not by any other
Optionholders

Francis Bell may transfer some of his underwriting commitments to close members
of his family, in which case the shareholdings of these individuals will form
part of Mr Bell's interest as shown above and they would also be deemed to be
members of the Concert Party.

Following completion of the Open Offer, the Concert Party's interest in the
Company's voting rights may rise from 27.01 per cent. up to a maximum of 50.22
per cent. assuming the exercise of all options held by members of the Concert
Party. The potential increase in the Concert Party's aggregate interest in the
Company's voting rights would normally oblige it to make a general offer in cash
to all Shareholders to acquire the Existing Ordinary Shares held by them.
However, in this instance, the Panel has agreed to waive this obligation if
Resolution 3 is passed by Shareholders (other than members of the Concert Party)
on a poll at the Extraordinary General Meeting. To be passed, Resolution 3 will
require the approval of a simple majority of votes cast on that poll. Alan
Smith, Alan Walker, Francis Bell and David Pett have undertaken not to vote on
Resolution 3 at the Extraordinary General Meeting in respect of their aggregate
beneficial holdings of 92,188,842 Existing Ordinary Shares, representing 27.01
per cent. of the Company's existing issued share capital.

Biographical information on Alan Smith, Alan Walker, Francis Bell and David Pett
is as follows:

Alan Graham Smith (aged 53)
Alan Smith was appointed to the Board in December 1998. He graduated from
Glasgow University with an honours degree in Economics and Statistics and
following an initial period of employment at Unilever plc he has worked in the
construction and building products industries for nearly 30 years. In 1981, he
led the management buy-out of timber-frame specialist Prestoplan Homes from its
then owners and during the next eight years succeeded in growing the business by
a factor of more than ten, at which time the company was sold to Cannon Street
Investments plc. Since then he has been involved in a variety of privately owned
businesses, both as an investor and a non-executive Director.

James Alan Fairley Walker (aged 54)
Alan Walker was appointed to the Board in December 1998. He qualified with KPMG
Glasgow as a member of The Institute of Chartered Accountants of Scotland in
1974 and, following a period of time with Price Waterhouse in Paris, has been
engaged in industry and commerce for over twenty years. He specialised in
corporate mergers and acquisitions on behalf of AB Wilhelm Becker of Sweden and
other Swedish multinationals in the UK, continental Europe and North America
where he also attended The Harvard Business School. He is an executive Director
of Inveresk plc and holds a number of non-executive directorships in medium
sized industrial and commercial businesses.

Francis Joseph Bell (aged 71)
Francis Bell founded The Castle View Group in 1964, which now operates both in
the UK and overseas and has an annual turnover of approximately #40 million. The
Castle View Group remains privately owned and provides an extensive range of
catering services to a diverse customer base including staff restaurants,
educational establishments, construction sites and offshore installations.

David Jonathan Pett (aged 44)
David Pett worked for a firm of Chartered Accountants affiliated to Coopers and
Lybrand for 5 years before moving into industry where he has been engaged for
over 20 years. He has a wide experience in industry and commerce including
working for Swedish multinationals in both the UK and North America.

As potential controllers of the Company, the Concert Party's intentions
following completion of the Open Offer would be to implement the strategy set
out in paragraph 7 above. Save for these stated intentions, the Concert Party
intends to continue the Company'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. The Concert Party has given assurances to the
Company that the existing rights, including any pension rights, of the employees
of the Company will be fully safeguarded.

Capital Reorganisation

Under the Act, a company may not offer shares for subscription at a price which
is less than the nominal value of such shares. The Issue Price, which reflects
the current market price of the Company's shares, is less than the nominal value
of an Existing Ordinary Share and, accordingly, in order to complete the Open
Offer, the Company is obliged to reduce the nominal value of its Existing
Ordinary Shares to an amount which is less than or equal to the Issue Price.

The proposed Capital Reorganisation will reduce the nominal value of the
Existing Ordinary Shares as follows:
(i) each issued ordinary share of 2p will be sub-divided into two hundred new
ordinary shares of 0.01p each and then one hundred and ninety nine of such
ordinary shares of 0.01p will be redesignated into deferred shares of 0.01p;
(ii) each authorised but unissued ordinary share of 2p will be cancelled by the
Company; and
(iii) the Deferred Shares will be purchased by the Company from Shareholders for
an aggregate consideration of 1p.

The sub-division and redesignation of the Existing Ordinary Shares, the
cancellation of the unissued authorised share capital and the purchase by the
Company of the Deferred Shares requires that the requisite proposal be approved
by Shareholders as a special resolution. The proportionate interests of
Shareholders in the Company prior to the Open Offer are not affected by the
proposed creation of the Deferred Shares. The Capital Reorganisation will not
affect the voting or dividend rights or rights on a return of capital for
holders of Existing Ordinary Shares.

The Share Consolidation

The Directors have decided to effect the Share Consolidation as further
described below in order to, inter alia, reduce the number of shares in issue,
to reflect the new circumstances of the Group and in an attempt to reduce the
spread between the market prices quoted for buying and selling the Existing
Ordinary Shares.

The Share Consolidation will require the approval of Shareholders at the
Extraordinary General Meeting and if approved will be carried out after close of
business on 25 May 2004. The Directors are recommending a share consolidation on
the following basis:

           for every 50 New Ordinary Shares held, a Shareholder will
                          receive 1 Consolidated Share

For example if, after the Capital Reorganisation, you held 500 New Ordinary
Shares of 0.01p each, these would be consolidated into 10 Consolidated Shares of
0.5p each. Thus, the number of shares that you hold would have been decreased
and the nominal value increased, such that, disregarding market price movements,
the value of your holding would remain the same.

Any fractional entitlements arising on the Share Consolidation will be dealt
with in accordance with the Company's articles of association and, to the extent
possible, will be aggregated and will be sold in the market and the proceeds of
such sale (less any expenses, including value added tax, thereon) retained for
the benefit of the Company (unless any Shareholder's entitlement exceeds #3.00,
in which case the proceeds will be remitted to the Shareholder concerned). Any
remaining fractions shall be consolidated into one share of a nominal value
equal to the aggregate nominal value of the remaining fractions (which shall be
designated as an 'A' Consolidated Share). Any fractions created by the
consolidation of the authorised but unissued ordinary shares of 0.01p each shall
be consolidated into one share of a nominal value equal to the aggregate nominal
value of the remaining fractions (which shall be consolidated as a 'B'
Consolidated Share) and cancelled in accordance with the Act.

Definitive certificates will be despatched to holders of Consolidated Shares by
3 June 2004. Thereafter certificates in respect of Existing Ordinary Shares will
be invalid and should be destroyed. Pending delivery of definitive certificates
in respect of Consolidated Shares, transfers will be certified against the
register. The CREST accounts of holders of Consolidated Shares in uncertificated
form will be amended prior to the commencement of trading on the day on which
the Share Consolidation becomes effective, which is expected to be 26 May 2004.

Recommendation

The Board considers the Placing and Open Offer and the Capital Reorganisation
are essential to enable the Group to continue trading in its current form and
consequently to be in the best interests of the Company and Shareholders as a
whole. Accordingly the Board unanimously recommends that you vote in favour of
Resolutions 1, 2, 4, 5 and 6 to be proposed at the Extraordinary General
Meeting, as they intend to do in respect of their own beneficial holdings of
30,090,000 Existing Ordinary Shares, representing 8.82 per cent. of the Existing
Ordinary Shares in issue.

The Board (excluding Alan Smith and Alan Walker), having been so advised by KBC
Peel Hunt, considers the waiver of the mandatory offer requirement of Rule 9 of
the City Code to be in the best interests of the Company and Shareholders as a
whole. In providing advice to the Board, KBC Peel Hunt has taken into account
the Board's (excluding Alan Smith and Alan Walker) commercial assessment.

Accordingly the Board (excluding Alan Smith and Alan Walker), recommends that
you vote in favour of Resolution 3 to be proposed at the Extraordinary General
Meeting, as I intend to do in respect of my own beneficial holding of 2,600,000
Existing Ordinary Shares, representing 0.76 per cent. of the Existing Ordinary
Shares in issue and 1.04 per cent. of the Existing Ordinary Shares in respect of
which votes are capable of being cast in relation to this Resolution at the
Extraordinary General Meeting.

Unless Resolutions 1 to 3 are passed at the Extraordinary General Meeting, the
Group will not be able to meet its commitments as they fall due. In such
circumstances, the Directors believe that the Company will be forced to sell one
or more of its subsidiaries or an administrative receiver may need to be
appointed.

General

The admission document containing details of the Placing, Open Offer, waiver of
mandatory offer requirements under the City Code, Capital Reorganisation and
Share Consolidation and notice of an Extraordinary General Meeting convened for
10.00 a.m. on 25 May 2004 will be posted today together with, in the case of
Qualifying Shareholders, the Application Form.

Copies of the admission document will be made available from the Company's
registered office, 4th Floor, Bedford House, 3 Bedford Street, London WC2E 9HD
and from the offices of KBC Peel Hunt, 111 Old Broad Street, London EC2N 1PH
from the date of this announcement until 26 May 2004.

The Open Offer is not being made to certain Ordinary Shareholders (overseas
Shareholders and any other persons not resident in nor a citizen of, or who are
outside, the UK). Accordingly, any person resident outside of the UK who
receives an Application Form may not treat it as constituting an invitation or
other offer to him to subscribe, apply for or purchase any Offer Shares, nor
should he in any event use such Application Form. In such circumstances, the
Application Form is sent for information only, is confidential and should not be
copied or distributed.

The Directors accept responsibility for the information contained in this
announcement. To the best of the knowledge and belief of the Directors (who have
taken all reasonable care to ensure that such is the case) the information
contained in this announcement is in accordance with the facts and does not omit
anything likely to affect the import of such information.

Expected Timetable of Principal Events

Record Date for the Open Offer                                     28 April 2004
Latest time for splitting Application Forms (to satisfy bona fide  3.00 p.m., 20
market claims only)                                                     May 2004
Latest time for receipt of forms of proxy                         10.00 a.m., 23
                                                                        May 2004
Latest time for receipt of completed Application Forms and         3.00 p.m., 24
payment in full                                                         May 2004
Extraordinary General Meeting                                     10.00 a.m., 25
                                                                        May 2004
Record Date for subdivision of Existing Ordinary Shares              25 May 2004
Record date of Share Consolidation                                   25 May 2004
Admission effective and dealings commence in the Consolidated        26 May 2004
Shares
Crediting of CREST accounts                                          26 May 2004
Definitive share certificates in respect of Offer Shares             3 June 2004
despatched by

The Underwriting Agreement

Under the terms of the Underwriting Agreement, Alan Smith, Alan Walker and
Francis Bell (the "Underwriters") have agreed with the Company to subscribe up
to 160,000,000 Offer Shares which are not taken up by Qualifying Shareholders
under the Open Offer. The Underwriting Agreement covers approximately 37.50 per
cent. of the New Ordinary Shares to be issued pursuant to the Placing and Open
Offer. The Underwriting Agreement provides that any take up of the entitlement
under the Open Offer by Alan Smith, Alan Walker and Francis Bell in their
capacities as Shareholders will be taken in addition to the number of Offer
Shares, if any, which they are required to subscribe pursuant to their
Underwriting commitment.

The obligations of the Underwriters under the Underwriting Agreement are
conditional upon (i) the Resolutions being passed, (ii) Admission occurring by
28 May 2004, and (iii) the Underwriters not having given notice to terminate on
the occurrence of certain specified events.

The Underwriters will agree to subscribe for Offer Shares not taken up under the
Open Offer up to a maximum of 160,000,000 Offer Shares. The proportion of the
Underwriting Shares to be taken up by each of the Underwriters and the maximum
number of Offer Shares which each Underwriter may be required to subscribe under
the terms of the Underwriting Agreement are as follows:

Underwriting                        Proportion of                 Maximum number
                                      Underwriter                of Underwriting
                                           Shares                         Shares

Alan Smith                                 31.25%                     50,000,000
Alan Walker                                31.25%                     50,000,000
Francis Bell                               37.50%                     60,000,000

TOTAL                                                                160,000,000

In addition, if the value of the number of Offer Shares taken up by Shareholders
other than the Directors and the Concert Party in accordance with the terms of
their irrevocable undertakings and the underwriting agreement ("Public
Shareholders") is less than #100,000 Alan Smith and Alan Walker will each agree
to lend to the Company half the amount of the difference between the value of
the shares taken up by the Public Shareholders and #100,000. These loans will be
made on the same terms as the Shareholder Loans and will carry interest at a
rate of 200 basis points over LIBOR per annum.

DEFINITIONS

The following definitions apply throughout this document, unless the context
requires otherwise:

"Act"                    the Companies Act 1985
"Admission"              the admission of the New Ordinary Shares to trading
                         on AIM
"AIM"                    a market operated by the London Stock Exchange
"AIM Rules"              the rules published by the London Stock Exchange
                         relating to AIM
"Application Form"       the application form in respect of the Open Offer
"Board"                  the board of directors of the Company (excluding
                         the Proposed Director)
"Capital Reorganisation" the proposed subdivision, conversion and
                         re-designation of each of the Existing Ordinary
                         Shares in issue, from a nominal value of 2p to
                         0.01p, the cancellation of the authorised but
                         unissued Existing Ordinary Shares and the purchase
                         by the Company of the Deferred Shares
"City Code"              The City Code on Takeovers and Mergers published by
                         The Panel on Takeovers and Mergers
"Company" or "SWP"       SWP Group PLC
"Concert Party"          in the context of the Open Offer, Alan Smith, Alan
                         Walker, Francis Bell and David Pett
"Consolidated Shares"    the new ordinary shares of 5p each in the capital
                         of the Company arising from the Capital
                         Reorganisation and the Share Consolidation
"Crescent"               Crescent of Cambridge Limited
"CREST"                  the system for the paperless settlement of trades
                         in certain securities
"CRESTCo"                CRESTCo Limited, the operator of CREST
"Deferred Shares"        the non-voting deferred shares of 0.01p each in the
                         capital of the Company following the Capital
                         Reorganisation
"Directors"              the directors of the Company and the Proposed
                         Director
"DRC"                    DRC Polymer Products Limited and DRC Distribution
                         Limited
"Existing Ordinary       ordinary shares of 2p each in the capital of the
Shares"                  Company
"Extraordinary General   the extraordinary general meeting of the Company to
Meeting"                 be held at 10.00 a.m. on 25 May 2004
"Fullflow"               Fullflow Group Limited together with its
                         subsidiaries
"Group"                  the Company and its subsidiary undertakings
"Issue Price"            0.75p per New Ordinary Share
"KBC Peel Hunt"          KBC Peel Hunt Ltd
"LIBOR"                  London Interbank Offered
"London Stock Exchange"  London Stock Exchange plc
"New Ordinary Shares"    the new ordinary shares of 0.01p each in the
                         capital of the Company, following the Capital
                         Reorganisation including the Placing Shares and the
                         Offer Shares
"Offer Shares"           the 426,648,997 New Ordinary Shares being issued
                         pursuant to the Open Offer
"Open Offer"             the conditional offer by KBC Peel Hunt to
                         Qualifying Shareholders to subscribe 426,648,997
                         New Ordinary Shares
"Optionholders"          holders of outstanding options granted under the
                         Company's Share Option Scheme
"Overseas Shareholders"  holders of Existing Ordinary Shares with registered
                         addresses outside the UK or who are citizens of,
                         incorporated in, registered in or otherwise resident
                         in, countries outside the UK
"Panel" or "Takeover     the Panel on Takeovers and Mergers
Panel"
"Placing"                the conditional placing by the Company of the
                         Placing Shares
"Placing and Open Offer" together, the Placing and the Open Offer
"Placing Shares"         the 126,666,666 New Ordinary Shares that have been
                         conditionally placed by the Company
"POS Regulations"        the Public Offers of Securities Regulations 1995
"Proposals"              together the Placing, the Open Offer, the Capital
                         Reorganisation, the Share Consolidation and the
                         waiver of mandatory offer requirements under the
                         City Code
"Proposed Director"      Francis Bell, as being proposed to join the board
"Qualifying              holders of Existing Ordinary Shares on the register
Shareholders"            of members of the Company on the Record Date to whom
                         (save as otherwise provided with regard to Overseas
                         Shareholders) the Open Offer is made
"Record Date"            28 April 2004
"Reorganisation Shares"  the new ordinary shares of 0.01p each in the
                         capital of the Company following the Capital
                         Reorganisation, excluding the Placing Shares and
                         the Offer Shares
"Resolutions"            the resolutions to be proposed at the Extraordinary
                         General Meeting
"Share Consolidation"    the proposed consolidation of the Company's entire
                         issued shares capital as enlarged by the Placing and
                         Open Offer into Consolidated Shares
"Shareholders"           holders of Existing Ordinary Shares
"Shareholder Loans"      the #1,475,000 of unsecured loans made by corporate
                         entities associated with Alan Smith, Alan Walker
                         and Francis Bell.
"Share Option Scheme"    the SWP share option schemes
"UK"                     The United Kingdom of Great Britain and Northern
                         Ireland
"Underwriting Agreement" the conditional agreement dated 30 April 2004
                         between the Company (1) Alan Walker, (2) Alan Smith
                         (3) and Francis Bell (4)




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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