Acquisition

BT Group PLC
19 December 2003

19 December 2003


NSB Retail Systems PLC                                        BT Group plc


     Sale of NSB's UK Operations to BT and exclusive Distribution Agreement

The Boards of NSB Retail Systems PLC and BT Group plc announce that they have
reached agreement for BT to acquire NSB's principal UK operations for cash
consideration of £17.0 million and to become NSB's exclusive distributor in the
UK and Ireland.


The principal terms of the Transaction are:


  • BT will acquire most of the UK business assets of NSB in a cash deal worth
    £17.0 million.


  • BT will become NSB's exclusive distributor in the UK and Ireland.


  • BT will become NSB's non-exclusive distributor in other territories in
    Europe, the Middle East and Africa.


  • BT will take responsibility for NSB's rights and obligations under its
    existing customer agreements.


  • 148 NSB employees will transfer to BT.


  • NSB and BT will work together in the future to develop new products and
    services for retailers of all sizes.


  • NSB will retain all the rights in its existing and future software.


  • NSB will receive licence and support fees from BT based on BT's sales of
    NSB software.


  • 10% of the consideration (£1.7 million) will be retained to be paid
    contingent on achieving specified transition milestones, and the total
    consideration amount may be adjusted to reflect working capital movements
    prior to closing. An adjustment will be made if the working capital deficit
    is greater than £1.0 million or if there is any working capital surplus.


  • The Transaction is subject to the approval of NSB shareholders at an
    extraordinary general meeting to be held on 5 January 2004. Shareholders
    owning 54.4 per cent. of NSB's shares have irrevocably undertaken to vote in
    favour of the Resolution.


NSB's UK Business provides professional software and systems integration
services to many of the UK's most significant retailers. It supports and
implements an end-to-end product set for its customers, including:


  • Store products - point of sales systems for the processing and
    reconciliation of transactions for both front of store and back office.


  • Enterprise products - business analysis, planning and optimisation tools
    used in retailers' merchandising, planning, sourcing and customer
    relationship management processes.


NSB's UK Business has a strong and long-standing customer base in the UK and
Ireland, including Arcadia, Lloyds Pharmacy, BhS, Oasis, WH Smith, Woolworths,
Brown Thomas, Roches Stores, Monsoon and Austin Reed.


The Board of NSB believes that this new distribution agreement in the UK and
Europe, with a partner as strong and well positioned as BT, provides the
opportunity to expand and better service its retail customers without increasing
its cost base.


The expertise acquired from NSB will be centred in a new BT business unit to be
called BT Expedite. This business will offer dedicated retail capabilities to
support BT's extensive sales teams, ensuring customers benefit from a fully
integrated product and service portfolio.


Building on its strengths in information and communications technology (ICT), BT
in partnership with NSB will be able to offer retail companies an enhanced
portfolio of solutions. As a one-stop-shop for retailers, BT aims to combine its
network, hosting and "Syntegra" systems integration services with NSB's
professional support skills, to meet its customers' strategic system development
demands.


Now one supplier will be able to meet retailers' full ICT needs. BT has a strong
track record in the retail sector and already includes the vast majority of
retail businesses amongst its customers; NSB's unmatched position at the heart
of those retailers' information systems will enable BT to drive this business
forward.


The Transaction will allow NSB to focus its resources on its software
development business and on the continued growth of its North American markets
whilst reviewing the opportunities to appoint other suitably qualified
distributors in support of its global vision. The majority of the cash proceeds
of the Transaction will be used to pay down debt.


The UK Business generated revenues of £11.0 million and earnings before interest
and tax of £3.3 million for the six months to 30 June 2003. Under the terms of
the Distribution Agreement, a material proportion of these earnings would have
been receivable by NSB in respect of royalty payments from software licences,
had the Distribution Agreement been effective during this period. The book value
of the net assets of the UK Business was £1.7 million at 30 June 2003. BT will
enter into a sub-lease with NSB for the principal UK property.


Nikki Beckett, CEO of NSB, said: "We are delighted to be able to strengthen our
position in the important UK market and gain enhanced access to the European
market through this strategic relationship with BT. BT is committed to the
retail sector and to our customers and employees. The consideration from this
transaction will also strengthen our balance sheet, providing NSB with a sound
base from which to grow."


Pierre Danon, Chief Executive of BT Retail, said: "This acquisition demonstrates
BT's commitment to the retail market and to ICT. BTExpedite will enable us to
deliver a broad range of integrated professional and communications services,
tailored specifically for retail customers. BT will now be able to help
retailers transform their business operations, enabling an improved customer
experience and reduced operating costs."


Contacts:


NSB Retail Systems PLC                             0118 930 1522

Nikki Beckett, Chief Executive

Stuart Mitchell, Finance Director


BT Group plc

John Carter                                        020 7356 4523

Mike Jarvis                                        020 7356 6045

or via the BT Newsroom on its 24 hour number,      020 7356 5369


About NSB

NSB is a dedicated supplier of software products and services to the retail
market. NSB helps retailers gain a sustainable competitive advantage in today's
highly competitive markets with the Connected Retailer(R). This comprehensive
portfolio includes innovative solutions, products, and services for every area
of retailing: Planning, Sourcing and Product Development, Merchandising, Store,
Sales Analytics, and CRM, plus Hardware, Professional Services, and Client Care.
They are used by more than 350 of the world's leading retailers to streamline
processes, optimize information, and meet the evolving merchandise and service
expectations of multi-channel shoppers.


About BT

BT is one of Europe's leading providers of telecommunications services. Its
principal activities include local, national and international
telecommunications services, higher-value broadband and internet products and
services, and IT solutions. In the UK, BT serves over 20 million business and
residential customers with more than 29 million exchange lines, as well as
providing network services to other licensed operators.


In the year ended 31 March 2003, BT's turnover was £18,727 million with profit
before taxation of £1,829 million. For more information, visit www.BT.com.





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