DCS Group plc announces the sale of its Transport & Logistics division for a total cash consideration of £10.5 million and the proposed capitalisation of £2.5 million of Barclays Bank PLC debt

In addition to the announcement made today in a separate statement of the interim results of DCS Group plc ("DCS Group") for the six month period ended 30 June 2005, the Board of DCS Group is pleased to announce that it has completed the sale of its Transport & Logistics division ("T&L") to Four Soft BV, a wholly owned subsidiary of Four Soft Limited ("Four Soft"), a company listed on the National and Mumbai stock exchanges in India, for a total cash consideration of £10.5 million (the "Disposal"). Of this consideration, £7.1 million was paid on completion, £1.9 million is payable on the first anniversary of completion and £1.5 million is payable on the second anniversary of completion.

For the avoidance of doubt, there are no conditions which need to be satisfied for these deferred amounts to be paid.  Furthermore, £1.7 million of the first deferred element is guaranteed by ICICI Bank UK Limited with the intention that on the date the first deferred amount is received, a further bank guarantee will be issued to cover £1.0 million of the amount due on the second anniversary of completion. Any deferred amounts not covered by a bank guarantee are secured by parent company guarantees. Stephen Yapp who continues as Chief Executive of DCS Group, will also take up a Non-executive Director position at Four Soft BV for a period of two years.

The net proceeds received at completion will be applied to reduce DCS Group's external bank debt. This is in accordance with DCS Group's stated strategy of implementing appropriate actions to reduce the level of its borrowings.

In addition DCS Group has reached an agreement with Barclays Bank PLC ("Barclays"), for the capitalisation of £2.5 million of current debt which would be converted into DCS ordinary shares at a price of approximately 42.6 pence per share (the "Capitalisation") together with the cancellation of warrants which are currently held by Barclays.

Following the Capitalisation, Barclays will own approximately 19% of the share capital in DCS Group. The Capitalisation is subject to entering into new banking facilities (as summarised below) and to shareholders approving the allotment of the shares and waiver of pre-emption rights over the shares. A circular giving notice of the necessary resolutions to be passed at an Extraordinary General Meeting to be held and recommending the Capitalisation is being issued to shareholders today.

T&L

T&L is based in the UK with operations in the Netherlands, Germany and the United States and provides software systems and related services to logistics companies throughout the world. As at 31 December 2004, T&L had net assets, subject to the Disposal, of approximately £6.9 million and generated an operating profit before goodwill amortisation for the twelve months to 31 December 2004 of £1.0 million.

The Remaining Group

Following the Disposal, DCS Group's continuing operations will comprise those of the Automotive division ("DCS Automotive"), a European leader in the provision of IT business solutions to the automotive retail sector. DCS Automotive has evolved from a supplier of dealer management systems and now specialises in flexible, connective technologies and services designed exclusively for the automotive industry.

Banking Facilities

Barclays have agreed, subject to the Capitalisation being approved by shareholders and to the finalisation of banking documentation, to provide £13.6 million of ongoing bank facilities to DCS Group following the Capitalisation, of which £12.1 million is in the form of a five year term loan and £1.5 million in the form of an overdraft. The DCS Group pro-forma net debt level which adjusts for the effect of the Disposal and the Capitalisation as at 30 June 2005 is £8.3 million. The pro-forma balance sheet as at 30 June 2005 is included within the notes to the interim results for the period ended 30 June 2005 which have also been released today in a separate statement.

Commenting on the Disposal and the Capitalisation, Colin Amies, DCS Group Chairman said,

 "We are delighted to have completed this Disposal with Four Soft which we believe has achieved a fair value for T&L. The proceeds, together with the agreement of Barclays to convert £2.5 million of debt, with shareholder approval, will result in a fundamental improvement in the financial strength of the DCS Group's market leading Automotive division."

Board Changes

Andy Forsyth, currently a director and Chief Technical Officer for DCS group, will become Business Development Director of the continuing business. He will also assist Four Soft with the integration of T&L via a six month consultancy agreement between DCS Group and Four Soft.

Four Soft

Four Soft is an enterprise solutions company, providing software products for the transportation, logistics and supply chain management market place. Additional information about Four Soft is available at www.four-soft.com|.

Enquiries:

Close Brothers Corporate Finance Limited

Tel: +44 (0) 20 7655 3100

Robert Vartevanian, Director 
James Davies, Assistant Director 

Close Brothers Corporate Finance Limited, which is regulated in the United Kingdom by The Financial Services Authority, is acting for DCS Group plc and no one else in relation to the matters described in this announcement and will not be responsible to anyone other than DCS Group plc for providing the protections offered to customers of Close Brothers Corporate Finance Limited, or for providing advice in relation to the contents of this announcement or any transaction or arrangement referred to herein.