£8m Placing, £8m Acquisition and Change of Name

POLYDOC PLC
28 October 1999
                                
                                
                                
                           POLYDOC PLC
                                
         £8M PLACING, £8M ACQUISITION AND CHANGE OF NAME

PolyDoc  plc  ('PolyDoc'), the Anglo-Dutch  knowledge  management
software  company  has announced a proposed  institutional  share
placing, the terms of the proposed acquisition of AppliedNet Ltd.
('AppliedNet')  and the proposed change of name to  Sopheon  plc.
These  proposals  are subject to the consent of  shareholders  in
Extraordinary General Meeting.

PolyDoc is quoted on AIM in the UK and on the Nieuwe Markt (NMAX)
in the Netherlands.

Key points

* £8  million, before expenses, is being raised through a placing
  of  new  shares  with institutions in the UK.  The  placing  is
  being  arranged  by Durlacher Limited, the technology  and  new
  media investment bank.

* PolyDoc  has agreed to acquire AppliedNet for approximately  £8
  million comprising 6.4 million new ordinary shares in PolyDoc.

  Based  in  Guildford, England, AppliedNet develops and  markets
  software  which harnesses and manages information and corporate
  knowledge.

* PolyDoc  will change its name to Sopheon plc following the  EGM.

* Following  the share placing and acquisition, PolyDocs  market
  capitalisation will be £40.16 million at the placing  price  of
  125p.

* Executive Chairman, Barry Mence stated :

  'The  acquisition  of AppliedNet together with  the  additional
  capital  being  raised will give PolyDoc the critical  mass  to
  accelerate  the  pace  at  which we  develop  and  exploit  the
  rapidly   emerging   market   for  knowledge   management   and
  harvesting together with associated web publishing solutions.'

     Barry  Mence or Richard Maddocks 
     (PolyDoc)                 [phone] today
      -  [e-mail]       0031-20 301 39 00 thereafter
   
     Steve  Liebmann  / Jennie Roberts 
     (Buchanan  Communications) [phone]
     - [e-mail]

                                
                        CHAIRMANS LETTER

It  was  announced today that the Company is proposing  to  issue
6,500,000  New Ordinary Shares, at a price of 125p per share,  to
raise  approximately  £7.55 million after expenses.  The  Placing
Shares   have   been  conditionally  placed  with   institutional
investors. The Company also announced the conditional acquisition
of  the entire issued ordinary share capital of AppliedNet for  a
consideration of 6,402,961 New Ordinary Shares.

I  am  writing  to  explain the reasons for  the  acquisition  of
AppliedNet,  the share capital reorganisation (and  amendment  of
the  Company's articles of association) and the Placing, the  net
proceeds  of which will support the Company in carrying  out  its
plans  for  growth as detailed below. The Company  is  proposing,
immediately  following the acquisition of AppliedNet,  to  change
its  name to Sopheon plc to reflect the new focus of the business
of  the  Enlarged Group. The Acquisition will require the Company
to  reorganise  its current share capital which  will  result  in
ordinary  shares in the capital of the Company having  a  nominal
value  of  5p  rather than 20p as at present. The  share  capital
reorganisation,   amendment   of  the   Company's   articles   of
association, issue of the New Ordinary Shares and the  change  of
name  require  the  approval of Shareholders at an  extraordinary
general  meeting  to be held on 22 November 1999,  at  which  the
necessary resolutions will be proposed.

Current Trading and Outlook for Year

We  announced our interim results for the six months to  30  June
1999  on 24 September 1999. In that period we achieved a turnover
of  £506,000  (1998  :  £440,000) and, as  expected  due  to  our
continued investment in the development of the business,  a  loss
before tax of £616,000 (1998 : £390,000). I stated that with  our
proposed acquisition of AppliedNet, the expected results  of  the
Group's  intensified activities in healthcare  and  manufacturing
and  the  signing of business partnership agreements in  the  UK,
USA,   Netherlands  and  Italy  during  recent  months,  we  were
confident of a fruitful conclusion to the year for PolyDoc.

Healthcare

A  joint  venture  company called Pro-GRAM B.V. ('Pro-GRAM')  has
been  formed  by  three academic hospitals in the Netherlands  to
market,  together  with PolyDoc NV, on an  exclusive  basis,  the
QualiFlow  software and the knowledge created using the  software
to  a broad range of organisations in the healthcare industry  in
Dutch speaking territories.

Pro-GRAM's  first multi-million guilder contract involving  three
(from  a  total  of eight) academic / teaching hospitals  in  the
Netherlands is progressing well. We have continued to deliver our
QualiFlow  software  to  these customers in  the  planned  stages
enabling  them  to  prepare for the important  phase  of  content
production.  We  are  now making the final  deliveries  on  these
contracts and believe all sizes of hospital have the potential to
become customers of both QualiFlow software and content. We  have
had  high level indications from several hospitals, both academic
and  general,  that  they  intend to  contract  for  the  Group's
software  to  enable  them  to share the  content  with  existing
customers.  We hope to sign further business in this area  during
the  current year, as we seek to establish our approach as a form
of standard for the Dutch healthcare industry.

As  a  first  phase to the anticipated larger QualiFlow  software
sale  to the Dutch teaching hospital in Leiden (Lumc), we  regard
the   recent  commitment  in  principle  by  Lumc  to   implement
PolyDoc/Lessenger  software in several of its laboratories  is  a
very  important step forward. Also of significance is an approval
from  AZM  our  teaching hospital customer in Maastricht,  for  a
joint project using our software together with Klinikum Aachen, a
large German teaching hospital.

Lessenger,  our recently acquired supplier of document management
software  to  the healthcare industry, has been fully  integrated
into  the  Group's business. This has started to bring additional
revenue from both its existing fifty Dutch healthcare clients and
new  clients.  In  addition  to our  commitment  to  the  ongoing
development,  enhancement and support of these products,  we  are
also  working  to  ensure that our QualiFlow healthcare  solution
interfaces  with the Lessenger family. This should put  both  the
Group and Pro-GRAM in a strong position to accelerate further our
sales of QualiFlow in the healthcare market.

As  part  of our strategy to develop the Group's business through
business  partnerships,  we  have entered  into  agreements  with
Hiscom in the Netherlands and Marlow Consulting in the UK,  which
are  described  further  in the 'Business  Partnerships'  section
below.  We  are also in discussions in the UK, USA,  Belgium  and
Germany  with  prospective  business  partners  who  have   shown
interest in our QualiFlow healthcare solution.

Manufacturing and Defence

DSM,  the  multi-national chemical manufacturer, went  into  full
production  early  this  year with the latest  version  (3.0)  of
NormFlow,  our  solution for the production  and  maintenance  of
standards for the manufacturing and process industries.  We  have
extended  the  scope and use of the product at DSM  resulting  in
additional revenue on top of ongoing maintenance fees.

We  have  contracted the services of two ex-senior executives  of
the  Baan  Company  to initiate the volume selling  of  this  new
enhanced  NormFlow product as well as marketing our  ResearchFlow
and  StudyFlow  solutions  into  the  manufacturing  and  defence
sectors.  The  marketing of these products is presently  underway
and we expect to see sales starting during the current year.

The  StudyFlow pilot we have been executing at DERA, the  Defence
Evaluation  and  Research Agency related to the  UK  Ministry  of
Defence,  has  been successfully evaluated resulting  in  further
development work being contracted.

Our  plans  for  penetrating  the defence  industry  have  become
closely linked to our manufacturing strategy. This is because our
other    prospective   clients   are   major   defence   industry
manufacturers. One of these manufacturers is at the final  stages
of  evaluating  the implementation and benefits  of  the  Group's
solutions,  and  we  believe  we  will  work  further  with  that
organisation and with DERA in the second half of this year.

Knowledge and Content Management Consultancy Services

Our  new consultancy services group has been established  and  is
focusing  on  generating additional revenue as well  as  bringing
potential  software product customers and business partners  into
the Group  as paying services customers. Initial consultancy work
has  been  contracted with DSM, Oce, DERA, IBM and  KPMG  in  the
first half of this year.

Business Partnerships

Our strategy for expanding the Group's business into volume sales
has   always  been  to  enter  into  business  partnerships  with
established  organisations with strong customer  bases,  once  we
have   established  the  early  customers  in  our  chosen  focus
industries. The Group's initial target markets remain the Benelux
countries, the UK and the US.

In  addition  to the partnership with the hospital joint  venture
company,  Pro-GRAM, covering Benelux, we have put in  place  non-
exclusive agreements with business partners in the UK and the US.
Marlow Consulting in the UK specialises in management consultancy
and  systems  integration,  and they  are  focusing  the  Group's
products on a number of potential customers in the healthcare and
pharmaceutical  industries. Teltech, a  US  knowledge  management
specialist consulting firm, will be focusing on the manufacturing
industry. All three partners have been working closely  with  the
Group's  staff on business opportunities in the Netherlands,  US,
UK  and Germany. As a result of this activity we have received  a
letter  of  intent  from  our first US  pharmaceutical  customer.
Together  with Marlow Consulting, a combination of  software  and
services  will be delivered to Xairo, a new joint venture  formed
by  Elan Corporation and Iomai Corporation. We have also received
information from Teltech regarding their expectation  of  signing
within  the  next few weeks their first US customer  to  use  the
Group's software.

We  are  also  in  detailed discussions with a  small  number  of
software  suppliers  with  substantial  existing  customer  bases
concerning the integration of parts of our software into  theirs,
which  we  believe  have the potential to form  the  start  of  a
significant revenue stream. From these discussions, an  agreement
has  recently been signed with a leading Italian ERP  specialist,
Gruppo  Formula, whereby the Group's software components will  be
integrated into Gruppo Formula's software solutions and  marketed
by  them to their extensive European customer and prospect  base.
We  have also entered into a potentially important agreement with
Hiscom  in  the  Netherlands whereby we  are  to  collaborate  on
medical   knowledge  systems  to  accelerate   progress   towards
electronic  patient  dossiers for the  Dutch  healthcare  market.
Hiscom  is  a  market  leader in the medical  IT  market  in  the
Netherlands, and is increasingly concentrating on new health care
information systems outside its domestic market, in particular in
the UK, Germany and Scandinavia.

Information on AppliedNet

We believe AppliedNet has created a strong market niche since its
creation  in 1985 as consultants and as developers and  marketers
of software which harnesses and manages information and corporate
knowledge.  AppliedNet has built a substantial  client  portfolio
comprising  blue  chip  multinationals,  defence  and  publishing
organisations.    Whilst   the   Acquisition   will    strengthen
significantly   the  Group's  present  systems  integration   and
consulting  capabilities, of particular interest  to  PolyDoc  is
AppliedNet's  recently released Knowledge Agent  software,  which
can infiltrate, gather and disseminate both internal and external
sources of information.

Based  at  its headquarters in Guildford, Surrey, AppliedNet,  in
the  year  to  30 September 1998, had turnover of £1,636,927  and
profit  before  tax  of  £207,960.  It  secured  a  £1.5  million
investment  from the venture capitalist, 3i Group plc ('3i'),  in
March  of  this  year  to develop and commercialise  further  its
software   products   and  services  offerings.   A   significant
proportion  of  the  monies subscribed by  3i  has  already  been
invested  by  AppliedNet  in  the continued  development  of  its
Knowledge Agent software. As a result of this investment, all  of
which  has been written off, AppliedNet's audited accounts to  30
June 1999 show a turnover of £1,229,003 and a loss before tax  of
£697,510 and the unaudited management accounts to 31 August  1999
show  a turnover of £1,669,992 and a loss before tax of £850,501.
At  30 June 1999, AppliedNet had net assets of £971,951. Turnover
for   the   three   months  ended  30  September  1999   averaged
approximately £298,000 per month which shows an encouraging level
of  interest  in  AppliedNet's Knowledge Agent software  and  web
publishing services in the last quarter of its financial year.

Terms of the Acquisition

The Company has conditionally agreed to acquire the entire issued
ordinary share capital of AppliedNet, the consideration for which
is  being satisfied by the issue of the Consideration Shares. The
Consideration Shares will represent 19.93% of the enlarged issued
ordinary share capital of the Company following Admission. At the
Placing   Price,   the  Consideration  Shares   are   valued   at
approximately  £8  million  in  aggregate.  The  Acquisition   is
conditional,  inter alia, on the passing of the  Resolutions,  on
Admission and on the Placing Agreement becoming unconditional.

Assuming  completion of the Acquisition, it is proposed that  the
New  Share Options will be granted. The purpose of the New  Share
Options  is  to  replace existing AppliedNet share  options  with
options over ordinary shares in the capital of the Company. There
are  options outstanding in respect of a total of 22,000 ordinary
shares in the capital of AppliedNet. These will be exchanged  for
options  (on similar terms) in respect of a total of  383,697  5p
Ordinary Shares. The exercise price of the New Share Options will
be  8.6p  per share in respect of 305,217 5p Ordinary Shares  and
87.32p  per share in respect of 78,480 5p Ordinary  Shares  under
option and as a result the Company's existing share capital needs
to be reorganised as described below.

Future Prospects

Following  the  successful integration of our first  acquisition,
Lessenger, and in line with our acquisition strategy, we now move
on  to  the more substantial integration of AppliedNet  into  the
Group.  This is a significant step forward and a major  milestone
in  our business development, and we believe it will provide  the
necessary  critical mass and additional resources to broaden  and
accelerate  sales in the European marketplace, and to assist  the
Group  to  expand faster into the US. Additionally,  AppliedNet's
impressive    UK    client   portfolio,   comprising    blue-chip
multinationals,   defence  and  publishing  organisations,   will
significantly enhance our overall customer base and should  bring
an important revenue stream.

We  believe that the combination of the Group's knowledge capture
and   content  management  software  and  AppliedNet's  knowledge
harvesting  software and web publishing solutions will  create  a
competitive  and  commercial  range  of  solutions  in  the  fast
emerging  knowledge management and e-business marketplaces.  With
our expansion into the US starting to take shape via our business
partnership  agreements and our small team of  senior  executives
led  by Paul Heller, we hope to make an acquisition in the US  in
the year 2000.

On  completion  of  the  Acquisition, James Macfarlane,  managing
director  and founder of AppliedNet, will be appointed a Director
of  the  Company  and  will take on the role  of  Group  Business
Development  Director and Mike Brooke, AppliedNet's non-executive
chairman,  will be appointed as a Non-Executive Director  of  the
Company.  Further  Group  positions  will  be  taken  by   senior
AppliedNet staff including Craig Robinson, as sales and marketing
director, Nigel Folkes, as product development director and  Mike
Robinson, as consultancy services director.

Recent  months have seen several important announcements  in  the
Knowledge Management arena from market leading software companies
such as Microsoft which we believe add substantial credibility to
Knowledge Management software solutions of which the Group  is  a
provider.  We  believe we will benefit because  our  software  is
complementary  to that being brought to the market  by  companies
such  as  Microsoft and also because we integrate the  technology
from  several leading suppliers, including Microsoft and  Oracle,
into our Knowledge Management applications.

1999  has,  so  far,  been  a year of considerable  progress  for
PolyDoc  that to-date has not substantially benefited our revenue
figures.  The  benefits  of  this progress  should  have  a  more
substantial  impact  in  the year 2000 and  beyond  with  revenue
generation  being anticipated in most, if not all, of  the  above
mentioned  areas.  The Directors believe that these  developments
together with the Placing will form the foundation from which  to
move  our  business forward at an enhanced pace,  which  in  turn
should bring interesting opportunities for both Shareholders  and
staff.

New operational structure

Following the Acquisition, there will be changes in several areas
of  operational structure which should, we believe, significantly
enhance  both  the effectiveness and efficiency of  the  Enlarged
Group.

The   Enlarged   Group's  product  development,   software   code
production and testing will be increasingly concentrated  in  the
UK where we believe the availability of highly-skilled technology
resources  at  competitive costs is one of the most plentiful  in
Europe  and  that  AppliedNet already has strong  management  and
expertise  in  place.  This will be supplemented  by  a  smaller,
technology focused team that has started to be established in the
US, giving the Company access and exposure to additional leading-
edge  technology  developments. Product research,  especially  in
linguistics  where  we  believe the  Company  has  established  a
leading competitive edge, will continue to be conducted primarily
from the current centre in the Netherlands.

Marketing  and  communications is an area  where  the  impact  of
campaigns  and  promotional  activities  in  the  marketplace  is
expected  to  be  enhanced by developing strategy  centrally  and
approaching  and then customising the implementation locally  for
each  area.  Also  of importance is the ability in  the  business
partnerships  element  of  the Company's  business  to  centrally
establish    pan-European   and   global    relationships    with
international  partners and subsequently manage and  drive  those
relationships locally in a similar manner.

It   is   intended  that  finance  and  administration  will   be
centralised  and controlled from the UK following the appointment
in  due  course of a Finance Director of the Enlarged  Group  who
will  report directly to me. Given our expansion plans,  we  also
hope  to appoint a Human Resources Manager, based in the  UK,  to
support  the  ongoing management and development of existing  and
future employees.

Use of Proceeds

The  net  proceeds  of  the  issue of the  placing and subscription
amounting  to  approximately £7.55  million,  will  be  used  to  meet 
ongoing financial requirements, principally in the following areas:

1.  the  commercial development of the business in  the  UK,  the
Netherlands and the US;

2.  the integration and further development of the software owned
by the Group  and AppliedNet;

3. to develop further the international business partner network;
and

4. to eliminate borrowings including, if required, the redemption
of the Convertible Loan Stock.

Share Capital Reorganisation

To accommodate the New Share Options as outlined above it will be
necessary  to  reduce the nominal value of the Existing  Ordinary
Shares. It is therefore proposed to reorganise the existing share
capital  of  the Company such that the Existing Ordinary  Shares,
being  the shares of the Company currently in issue, are  divided
and converted into ordinary shares of 5p each and deferred shares
of 15p each. The division and conversion will be on the following
basis:

   one Existing Ordinary Share = one 5p Ordinary Share and one
                         Deferred Share.

Save  in  respect of their nominal value, the 5p Ordinary  Shares
will  have  exactly  the  same rights  and  entitlements  as  the
Existing Ordinary Shares.

The  Deferred  Shares will have no rights of  value  attached  to
them.  In  particular, holders of Deferred Shares  will  not,  in
respect  of  such  shares,  have any right  to  vote  at  general
meetings,  receive  a  dividend or participate  in  a  return  of
capital  (whether  on a winding up of the Company  or  otherwise)
unless  all  ordinary shareholders in the capital of the  Company
first  receive  £100,000 in respect of each ordinary  share  that
they hold. The Deferred Shares will not be dealt in on either AIM
or  NMAX  and no share certificates will be issued in respect  of
them. The Company will be entitled to transfer Deferred Shares to
a  nominee  for  a  consideration of 1p per holding  of  Deferred
Shares.

Subject  to  the approval of shareholders in EGM,  the  un-issued
Deferred  Shares  will be cancelled immediately  following  their
creation and  it is expected that the issued Deferred Shares will
be  cancelled or eliminated in due course by way of a share  buy-
back or reduction of share capital.

For  the reasons given in the following section, the New Ordinary
Shares which are being placed are only being offered to a limited
number  of  institutional investors, principally  in  the  United
Kingdom:   they  are  not  being  offered  generally  either   to
Shareholders  or  to  any  persons outside  the  United  Kingdom.
Specifically,  no New Ordinary Shares are or will be  offered  to
persons resident in Holland. As a result, no application is being
made  or  will be made to list the New Ordinary Shares  on  NMAX.
However, for technical reasons, it would not be possible for  the
Company  to issue 5p Ordinary Shares pursuant to the Placing  and
the Acquisition without listing these shares on NMAX. This is the
reason  why  the Company is proposing to create and conditionally
allot a new class of shares, the New Ordinary Shares.

The New Ordinary Shares and the 5p Ordinary Shares will rank pari
passu  and have the same rights save that the New Ordinary Shares
will  automatically  convert into 5p  Ordinary  Shares  prior  to
admission to trading on AIM. This means that following Admission,
there  will  be  just  two classes of shares in  issue,  ordinary
shares  of  5p  each which will be dealt in on AIM  and  deferred
shares  of  15p each which will not. As noted above we expect  to
cancel or eliminate the Deferred Shares in due course leaving the
Company with only 5p Ordinary Shares in issue.

Details of the Placing

The  Company  has  entered into the Placing Agreement  with  Bell
Lawrie Wise Speke and Durlacher which is conditional, inter alia,
on  the passing of the Resolutions, and on completion of the 
Acquisition.

If the Resolutions are passed, it is anticipated that the Placing
Shares will be allotted for cash as soon as practicable after the
EGM.  Save as noted above, the New Ordinary Shares will rank pari
passu  in  all respects with the 5p Ordinary Shares.  Application
has  been  made  to the London Stock Exchange  to  admit  the  5p
Ordinary Shares, into which the New Ordinary Shares will  convert
prior to Admission, to trading on AIM and it is anticipated  that
dealings will commence on 24 November 1999.

As  noted  above,  the New Ordinary Shares will  not  be  offered
generally  to  Shareholders  or  to  the  holders  of  any  other
securities  in  the  Company, whether on a pre-emptive  basis  or
otherwise. The Placing is not therefore an open offer  or  rights
issue and Shareholders will not become entitled to apply for  New
Ordinary Shares through the Placing.

As  stated  above, the New Ordinary Shares will be offered  to  a
limited  number  of  institutional investors principally  in  the
United Kingdom. Your Directors consider that, by restricting  the
number  of placees, the costs of raising the funds are relatively
low  in  comparison with the alternatives of conducting a  rights
issue  or  an open offer with 'clawback' with a larger number  of
placees,  both of which would involve more time and documentation
and, therefore, expense to the Company.

Change of Name

As  outlined above, the newly combined group resulting  from  the
Company's  acquisition of AppliedNet will, we believe,  create  a
new  profile  in the Knowledge Management marketplace.  With  the
forthcoming integration of the individual organisations and their
respective product ranges, the Directors believe that  it  is  an
appropriate  time to drive the Enlarged Group forward  under  the
new  name  of  'Sopheon'  plc. Existing share  certificates  will
remain valid.

Extraordinary General Meeting

An  extraordinary general meeting will be held at the offices  of
edge ellison, 18 Southampton Place, London WC1A 2AJ at 12 noon on
22  November  1999. The Nominated Broker to the Company  is  Bell
Lawrie Wise Speke.

Barry Mence      
Executive Chairman