RNS Number:0004Q
City Of London Group PLC
22 September 2003

                                                              September 22, 2003

CITY OF LONDON SELLS EMAIL ARCHIVING BUSINESS TO AMERICANS FOR GUARANTEED
US$2.45m PLUS ONWARD SHARE OF ROYALTY STREAM AND EQUITY INTEREST

* Buyer's 'Global 2000' Customer Base And Marketing Strengths Influence Decision

City of London Group announces the sale of the business and assets of its 91p.c
owned email archiving software arm, Rchive-it.com Limited, to American software
company Connected Corporation for guaranteed payments of US$2.45m (#1.5m) and an
ongoing share of royalties. Additionally, Rchive-it will receive equity of
approximately 1p.c. in Connected Corporation, a leading supplier of storage
back-up software, which will use the archiving product to spearhead a marketing
campaign later this year.

The flagged disposal is subject to COLG shareholders' approval because of its
size.   However COLG has received undertakings to vote in favour representing
59p.c. of the share capital.

Connected, which is partly backed by Fidelity Corporation and Baker Capital of
New York, has been named as one of the fastest growing companies in
Massachusetts averaging sales growth of nearly 30p.c. for each of the past three
years, and was ranked as 45th out of America's 500 fastest growing private
companies by Inc. magazine last year.   It will make an upfront payment of
US$700,000 (#428,000) and guaranteed payments from royalties of US$1.75m
(#1.07m) over a four-year period. It will also pay the costs of the business
from signing.

Rchive-it will be entitled to 10p.c. royalty on sales and 5p.c. royalty on
rentals for a period of 5.5 years or until a return of US$5m including the
guaranteed payments (but excluding the US$700,000 initial payment) has been made
from these royalty receipts.    Royalties above US$5m remain uncapped at 5p.c.
on sales and 2.5p.c. on rentals for the balance of the 5.5 year period. COLG
will use initial repayments to reduce bank loans.

John Greenhalgh, COLG chairman said:  "Markets have made it hard to raise money
for a development company even when a product is this good and prospective
corporate customers have been keeping pockets zipped up a little too long.  
Rchive-it's main product, MailStore, requires a high marketing spend and
Connected can give it a big kick-start with an established base of 600 of the
world's largest corporates (Global 2000) as existing customers, as well as
financial clout, in-depth management, and software engineering resources to
complement our excellent development team. This is a merger of talents that
gives a real possibility of a good royalty stream for us as well as a lift in
Connected's stock value before it goes to the public market.    Connected's
patented data reduction technologies minimise data by an average 80p.c and when
combined with the MailStore product make a powerful archiving solution."

COLG has an investment of #2.62m in Rchive-it of which #2.29m is by way of
loans. The balance is in equity representing 75p.c. of the share capital
of Rchive-it on a fully diluted basis following the exercise of options
anticipated after COLG has been fully repaid.   The options are being allocated
to provide further incentive to key management and staff who will be mostly
based in the States.

Connected is planning a multi-million dollar sales and marketing campaign for
North America and Europe and will greatly expand activities for MailStore
through its distribution channels. It will also license the MailStore product
worldwide. 

Total market size for secure email archiving is put at US$10.5bn in
2004 growing to US$12.3bn in 2007, according to respected industry market
researchers - the Radicati Group.  MailStore, which has been designed on open
architecture, addresses a good part of this market.

Present clients in the UK for MailStore email archiving include London
Underground, Northants Police Force, Cotswold District Council, and MacFarlanes,
the City solicitors.

Mailstore's main resellers are Computercenter and CSF in the U.K. and
Intellireach in America.

Further Info:

John Greenhalgh, M.D, City of London Group Plc. Tel: 020-7628-5518; 
070500-39678 (M) 
Peter Doye, Deputy Chairman, City of London Group Plc. Tel: 0207 628 5518

INFORMATION ON CONNECTED CORPORATION

Connected Corporation, based in Framingham, Massachusetts, has become a leading
provider of storage software that automatically protects enterprise PC data
while driving down storage costs. It owns patented data reduction technologies
which minimize data captured, sent and stored by an average 80p.c.  It has
multiple US and international offices, and the company provides its solution to
more than 600 of the world's largest corporations including Boeing, Goodrich,
Deloitte & Touche, Hewlett-Packard, SAP, Schlumberger and Toyota.



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