RNS Number:5016W
Kewill Systems PLC
28 May 2002

                               KEWILL SYSTEMS PLC



               PROPOSED USD19.0 MILLION DISPOSAL OF ERP DIVISION

                             TO EXACT HOLDING N.V.



            ENHANCES FOCUS ON CORE SUPPLY CHAIN MANAGEMENT DIVISION



Kewill Systems plc (LSE:KWL), the provider of supply chain management software
and solutions, announces that it has agreed to dispose of its Enterprise
Resource Planning (ERP) Division to Exact Holding N.V., the Netherlands based
provider of e-business and ERP software and solutions, for a total cash
consideration of USD19.0 million (GBP13.0 million) on a cash and debt free
basis.  The Disposal will be subject to Kewill shareholder approval.



Summary


-    The Disposal reinforces Kewill's strategic objective to focus on the high 
growth, execution-based supply chain management (SCM) software market.


-    The Disposal will enable increased management focus on the core E-Commerce
(EC) division, leveraging Kewill's traditional strengths and customer base
within order management in Europe and shipping systems in the US.


-    The financial position of Kewill will be enhanced by increasing the
Company's net cash position to approximately GBP22 million on completion of the
Disposal.


-    It is expected that the sale proceeds will be invested in the development
of Kewill's market position in SCM software and solutions which may include
further acquisitions.


-    Completion of the Disposal is conditional upon the approval of Kewill's
shareholders to be sought at an Extraordinary General Meeting.



Commenting on the Disposal, Andy Roberts, Chairman of Kewill, said:



"We are pleased to have successfully concluded our negotiations for the Disposal
of the ERP Division at an attractive valuation.   We believe shareholder value
will be maximised through the Disposal, as the ERP Division is no longer
integral to the Company's long-term strategy.



With this Disposal, we can now focus on supply chain management software - an
area in which we are uniquely specialised and which offers long-term growth
opportunities.  We believe we have a market leading product suite and have
developed, and acquired through Globeflow, improving channels to market in
Europe and the US.



Additionally, the disposal augments Kewill's net cash position and underpins our
growth strategy."


ENQUIRIES:

KEWILL SYSTEMS PLC                                          Tel: 01372 366 528
Bob Malley, Chief Executive Officer
Barbara Moorhouse, Finance Director

LAZARD                                                      Tel: 020 7588 2721
David Cummings

FINANCIAL DYNAMICS                                          Tel: 020 7831 3113
Edward Bridges
Alastair Hetherington



Lazard, which is regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for Kewill and no-one else in connection with
the Disposal and, accordingly, will not be responsible to anyone other than
Kewill for providing the protections afforded to clients of Lazard nor for
providing advice in relation to the Disposal or any matter referred to herein.







                               KEWILL SYSTEMS PLC



               PROPOSED USD19.0 MILLION DISPOSAL OF ERP DIVISION

                             TO EXACT HOLDING N.V.



Introduction



Kewill, the provider of supply chain management software and solutions,
announces that it has conditionally agreed to dispose of its ERP Division to
Exact, the Netherlands based provider of e-business and ERP software and
solutions, for a total cash consideration of USD19.0 million (GBP13.0 million)
on a cash and debt free basis.



In view of the size of the Disposal relative to that of Kewill, completion of
the Disposal is conditional upon the approval of Kewill's shareholders.



Background to and reasons for the Disposal



The Board has concluded that the strategic direction of Kewill is in the
provision of supply chain management (SCM) software in the US and Europe.  The
change to Internet-based technologies has created new opportunities for
customers to realise both service and cost benefits within the management of
supply chain relationships and processes.  Kewill has extended its traditional
strengths and customer base in order management in Europe and shipping systems
in the US into a suite of products for advanced supply chain solutions,
supported by integration services.




Consistent with its strategy in the SCM software market, Kewill has recently
announced the acquisition of certain intellectual property rights and physical
assets of Globeflow.  Globeflow has operations in Germany, Spain and the UK.
This acquisition will allow Kewill to expand its Continental European operations
into Germany and Spain under the "Kewill Solutions Europe" brand and brings
highly complementary software technology.  This increased European presence and
enhanced supply chain product suite will support Kewill's developing
relationships with major customers, including logistics carriers.



Given the relatively limited commercial linkage between the E-Commerce and ERP
divisions of Kewill and the separate management of the two divisions, the Board
has concluded that, whilst there are opportunities to expand the ERP Division
further, the ERP Division is no longer integral to the Company's long-term
strategy and that shareholder value will be maximised through the Disposal.  It
is expected that the sale proceeds will be invested in the development of
Kewill's market position in SCM software which may include further acquisitions.



The Disposal will strengthen significantly the net cash position of Kewill and
will help to improve the Company's future prospects by increasing the focus of
management on the on-going core E-Commerce activities.



Information on the ERP Division



The ERP Division is one of the leading providers of ERP software for small to
mid-size manufacturers.  Based in the USA, the ERP Division provides a scaleable
suite of Microsoft Windows-based manufacturing software solutions under the
JobBOSS, MAX and Alliance/MFG products.



With approximately 4,700 customers, the ERP Division distributes its software
solutions through telesales teams as packaged solutions.  Both phone-based
resources and the Internet are used to provide marketing and sales seminars.
The ERP Division also has distributors in Europe, Latin America and Asia that
translate, market, implement and support the ERP Division's products in their
geographical areas.



Revenues are generated from licence, classroom training, on-site implementation
and telephone support contracts.  Additional revenues are derived from
Internet-based services and hosted e-commerce products.



The ERP Division's main facility is in Minneapolis (Minnesota, USA), with
smaller operations in Meredith (New Hampshire, USA), San Francisco and Santa
Barbara (California, USA) and Leicester (UK).  It currently has approximately
197 employees and 13 full-time independent consultants who operate as trainers
and implementers.



In the year ended 31 March 2001, the ERP Division generated an operating profit
(after goodwill amortisation) of approximately GBP1.9 million on turnover
(excluding intercompany turnover) of approximately GBP22.5 million.  As at 31
March 2001, the ERP Division had net assets of approximately GBP8.0 million.




In the year ended 31 March 2002, the ERP Division generated an unaudited
operating loss (after goodwill amortisation) of approximately GBP0.6 million on
turnover (excluding intercompany turnover) of approximately GBP19.7 million.  As
at 31 March 2002, the ERP Division had net assets of approximately GBP7.5
million.



Principal terms and conditions of the Disposal



Pursuant to the Disposal Agreement, Kewill Systems, Inc. (a subsidiary of
Kewill) has agreed to sell to Exact Holding North America, Inc. (a subsidiary of
Exact) the entire issued share capital of Kewill ERP, Inc., a US corporation,
for a total cash consideration of USD19.0 million (GBP13.0 million) on a cash
and debt free basis.  In addition, there will be an adjustment for the net cash
position of the ERP Division as at completion.  Completion of the Disposal is
conditional, inter alia, upon approval by Kewill's shareholders.  An amount of
USD17.1 million (GBP11.7 million) of the purchase price will be payable
immediately on completion of the Disposal, with the balance of USD1.9 million
(GBP1.3 million) to be held in escrow for a period of 12 months to meet any
claims which may be made by Exact Holding North America, Inc. under the
representations and warranties given by Kewill and Kewill Systems, Inc. in
relation to the ERP Division.



Current trading and future prospects of Kewill



In the Company's April trading statement, the Board emphasised:



*          the strong fourth quarter performance indicated a greater degree of
stability in the market;

*          the Globeflow acquisition would bring value in extending Kewill's
product suite and geographic base in Europe; and

*          the increasing recognition of opportunities to improve supply chain
management.



Kewill's preliminary results statement, issued today, includes the following
statement on trading outlook:



"Kewill remains confident that the market for supply chain management software
offers considerable opportunities for growth over the medium-term.  The Company
intends to build on its existing market position to service evolving customer
requirements in this market sector. The disposal of the ERP Division augments
Kewill's net cash and underpins this growth strategy.



The current economic environment is constraining many aspects of corporate IT
investment, including SCM programmes.  This is limiting the speed of customer
adoption and, therefore, the level of growth that can be achieved in the
short-term.  However, the Board believes that SCM software can deliver
fundamental benefits in cost reduction and customer service improvement, which
will be important drivers for change.



In the current financial year 2002/03, the level of any economic recovery is
difficult to predict and trading conditions for the continuing Group remain very
uncertain.  Kewill will seek to work within the constraints imposed by current
market realities to preserve and, where possible, extend its positioning for
future growth in SCM software and solutions.



As a restructured and re-focused business, Kewill is well placed to manage
through the current economic uncertainties, capitalise on opportunities for
growth and benefit from future improvement in commercial sentiment."



Extraordinary General Meeting



A circular convening an Extraordinary General Meeting to approve the Disposal
and giving further information on the Disposal will be posted to shareholders
shortly.





Lazard, which is regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for Kewill and no-one else in connection with
the Disposal and, accordingly, will not be responsible to anyone other than
Kewill for providing the protections afforded to clients of Lazard nor for
providing advice in relation to the Disposal or any matter referred to herein.



In this announcement, the following expressions shall have the following
meanings, unless the context otherwise requires:


"Board"                      the directors of Kewill as at the date of this 
                             announcement


"Continuing Group"           Kewill following the disposal of the ERP Division


"Disposal"                   the proposed disposal of the ERP Division pursuant 
                             to the Disposal Agreement


"Disposal Agreement"         the agreement dated 27 May 2002 between Kewill and 
                             Exact relating to the Disposal


"ERP"                        Enterprise Resource Planning


"ERP Division"               Kewill ERP, Inc., comprising the business and 
                             operations of the ERP division


"Exact"                      Exact Holding N.V.


"Globeflow"                  Globeflow S.A.


"Kewill" or "Company"        Kewill Systems plc


"Lazard"                     Lazard Brothers & Co., Limited



With the exception of the financial results for the ERP Division for the years
ended 31 March 2001 and 2002, the GBP to USD exchange rate used in this
announcement is GBP1 equals USD1.456.





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

END

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