RNS Number:1848T
Systems Integrated Research PLC
12 December 2003

                    Systems Integrated Research plc

                                                               12 December 2003





            Systems Integrated Research plc (the "Company" or "SiR")



                        Acquisition of Packpress Limited

       Placing of Ordinary Shares at 6p per share to raise #2.879 million



SiR announces today that it has conditionally agreed to acquire all the
outstanding issued shares of Packpress. The aggregate consideration for the
Acquisition is #5.3 million of which, #3.26 million will be paid in cash on
completion and #2.04 million will be satisfied by the issue of Consideration
Shares. The cash consideration for the Acquisition and associated costs will be
funded by a Placing at 6p per share to raise #2.879 million and by a shareholder
loan of #1 million.



                                   Key Points



*         Packpress Limited is the holding company of Linetex Computers Limited
("Linetex"), which offers a range of IT services including support, consultancy
and system installation to over 4,500 customer sites across the UK.



*         Linetex has a profitable track record and generates significant levels
of recurring income.



*         The Company is placing 47,988,522 Ordinary Shares at 6p per share to
raise #2.879 million.



*         The Acquisition constitutes a reverse take-over under the AIM rules
and is subject to approval at the Company's EGM to be held on 8 January 2004.



*         The enlarged group is to be renamed SiRViS IT plc and will begin
trading on AIM on 9 January 2004.



This summary should be read in conjunction with the full text of the
announcement below. Copies of the Admission Document are obtainable from today
at the offices of ARM Corporate Finance Limited, 12 Pepper Street, London E14
9RP



 Enquiries:-



Mark Lewis, CEO             Systems Integrated Research plc        01773 820011

John Simpson, 
Nominated Adviser,          ARM Corporate Finance Limited:        020 7512 0191

Shane Dolan, Financial 
Public Relations            Biddicks                              020 7448 1000




An Admission Document containing full details of the proposed acquisition and
other matters has been posted to shareholders.  Copies of the Admission Document
are available from ARM Corporate Finance Limited, 21 Pepper Street, London E14
9RP during normal business hours on any week day from the date hereof up to and
including the date being one month from the date of Admission. Trading on AIM of
the enlarged issued share capital of the Company is expected to commence at
8.00am on 9 January 2004.



                                                                12 December 2003



           Systems Integrated Research plc (the "Company" or  "SiR")



                        Acquisition of Packpress Limited

                           Increase in share capital

       Placing of Ordinary Shares at 6p per share to raise #2.879 million

  Acquisition of redeemable preference shares in SiR Learning Systems Limited

                          Admission to trading on AIM

                        Change of name to SiRViS IT plc

                     Alteration to Articles of Association

                     Reduction of the share premium account



Introduction



SiR announces that the Company has conditionally agreed to acquire all the
outstanding issued shares of Packpress. The aggregate consideration for the
Acquisition is #5.3 million, of which #3.26 million will be paid in cash and
#2.04 million will be satisfied by the issue of Consideration Shares. To fund
the cash consideration of the Acquisition and associated costs the Company is
raising  #2.879 million by way of the Placing and will receive a loan of #1
million from Berg & Berg.



The Acquisition constitutes a reverse take-over under the AIM Rules and, as
such, the Company is obliged to apply to the London Stock Exchange for
re-admission of the Existing Shares and admission of the New Shares to trading
on AIM. As a reverse take-over, the Acquisition requires the approval of
Shareholders and the EGM which is being convened for this and other purposes on
8 January 2004. If the Resolutions are passed, it is expected that dealings in
both the Existing Shares and New Shares will commence on 9 January 2004.



Background to and reasons for the Acquisition



The Directors have for some time been considering how to develop the business of
the Group within the education market whilst providing a platform from which to
expand the business into IT related areas. Discussions have been held with a
number of third parties concerning possible acquisitions.



Linetex offers a range of IT services including support, consultancy and system
installation and is considered by the Directors to offer the prospect of
creating shareholder value in excess of what could be achieved through organic
growth of the Group.



The Directors consider that together the Group and Linetex can take advantage of
opportunities in the education sector and develop the Enlarged Group through
organic growth.



The opportunity in the education sector is highlighted by the following
statistics: in the UK education marketplace there are over 1.4 million computers
in use in state schools, a statistic which was forecast to exceed 1.6 million
computers by April 2003, (Source: BESA, December 2002); the average number of
computers in state secondary schools is approximately 193, (Source: DfES web
site); and there are about 29,000 state schools, of which approximately 18,000
do not currently have an IT technician on their staff to support and maintain
computer networks and infrastructure (Source: BESA, December  2002).



Government funding for new ICT in UK schools, including matched funding from
LEAs, is expected to rise to #920 million by 2005 / 2006 (Source: DfES web
site). The Directors believe this provides opportunities for increasing sales in
the UK education sector.



Information on the Group



The principal activities of the Group are the design, production and supply of
multimedia educational software, with versions for use in both educational
establishments and the home. The Company supports its software with training,
installation and technical support services.



The business of the Group includes supplying software which enables teachers to
manage effectively learning for individual pupils. Software products are
developed to allow teachers to plan and co-ordinate the implementation of the
curriculum in the classroom. This is achieved by individual learning programmes
and differentiated work plans for students working autonomously.

The Group's products are designed to raise standards primarily in the key skills
areas of literacy and numeracy by introducing multimedia resources for the
curriculum whilst supporting the integration of the Group's software into
classroom activities.



The sales channels for the Group's proprietary software include Government
initiatives, LEAs, Education Action Zones and individual schools. The market for
the Group's products is UK primary, secondary and specialist state schools and
further education colleges. In the UK there are approximately 23,000 primary,
4,500 secondary and specialist, 1,400 special state schools and 550 further
education colleges.



Information on Packpress and Linetex



Background to the business



In 1996, Colin Sales and Hugh Pollock were parties to a management buy-out of
Linetex by Packpress backed by funds managed by Gartmore Investment Limited.
Following this management buy-out, Colin Sales was appointed managing director
and Hugh Pollock was appointed service director.



Since the management buy-out the turnover of Linetex has more than doubled to
#6.5 million in the financial year to 31 October 2002 and all debt and
preference share finance incurred in connection with the management buy-out has
all been repaid.



Linetex headquarters and central operation are based in approximately 9,000
square feet of leasehold premises in Ripley, Surrey. The Directors consider the
premises to be sufficient for the current size of the business. The leases are
due for renewal in December 2005.



The business



With a profitable track record, Linetex offers a range of IT services including
support, consultancy and systems installation to over 4,500 customer sites
across the UK. A feature of the customer revenues at Linetex is that
approximately 80 per cent. are generated from service contracts and provide a
significant level of recurring income. Linetex services can be provided on a
pro-active basis, allowing network problems to be identified at an early stage.



As at 3 September 2003, approximately 59 per cent. by value of the service
contracts with Linetex customers had over one year remaining before review. Of
these, about 40 per cent. had over two years to run before the next review.



Of the revenues attributable to those service contracts approximately 81 per
cent. derive from contracts with software companies and VARs. The Linetex
service enables software companies and VARs to offer customers and potential
customers a comprehensive national IT support service and the potential to
benefit from recurring service revenues.



With pre tax profit margins in excess of those of comparable businesses, a
factor which Linetex attributes to its good relationships with customers,
Linetex is well placed to develop. This is founded upon the depth and breadth of
the technical skills of Linetex' personnel and the overall quality of its
service.



At 31 August 2003, Linetex employed a total of 88 staff of which 49 are field
engineers and technical support staff.



Strategy of the Enlarged Group



The Directors' believe there are opportunities to develop the business of the
Enlarged Group both organically and by acquisition.



Organic Growth



In the UK education market there are over 1.4 million computers in use in state
schools. Currently approximately 60 per cent. of UK state schools do not employ
an IT technician. With this deficit of IT support, the Enlarged Group, through
its proposed education services division, will be ideally placed to take
advantage of the opportunity this represents. This education service division
will bring together both the outsourcing skills of Linetex and the experience of
the Group in the education sector.



Following the Placing the significantly improved capital base of the Enlarged
Group will enable Linetex to tender for larger outsourcing IT contracts from new
and existing clients.



Acquisitive Growth



This stronger capital base of the Enlarged Group, together with the ability to
place quoted Ordinary Shares should provide a platform for acquisitive growth
particularly in the light of the fragmented IT support service sector in the UK.
Enhanced operating profit margins for the Enlarged Group should be capable of
being achieved as businesses are acquired.



Reduction of the share premium account



As at 31 May 2003 the Company had a deficit of #3.038 million on its profit and
loss account.  The Company wishes to be in a position to pay dividends on
Ordinary Shares out of future profits. However, by reason of the provisions of
the Companies Act 1985 it would be unable to do so without first eliminating the
deficit. It is therefore proposed that, subject to the approval of the High
Court and the approval of Shareholders at the EGM to be held on 8 January 2004,
the share premium account of the Company be reduced by the sum of #3.038
million. The reserve produced by this reduction, subject to the protection of
creditors, will be available to eliminate the deficit on the Company's profit
and loss account.



While it is envisaged by the board that the conditions for the payment of
dividends will not arise until some time in the foreseeable future, eliminating
the deficit at this time is an important first step and will enable the Company
to pay dividends or fund market purchases as profits become available.



Details of the Placing



The Company is raising #2.879 million, before expenses, by way of the Placing of
47,988,522 Ordinary Shares at 6p per share. The Placing Price represents a
discount of 20 per cent. to the closing mid-market share price as at 10 December
2003 of 7.5p per share. The Placing Shares being issued will represent 44 per
cent. of the Company's enlarged issued share capital as enlarged by the
Proposals.  The Placing Shares will be credited as fully paid in cash and will
rank pari passu in all respects with the Existing Shares.



The Placing is being arranged by J M Finn, the Company's brokers, and ARM
Corporate Finance, the Company's Nominated Advisers and will be conditional,
inter alia, on the passing of the Resolutions, completion of the terms of the
Acquisition Agreement and Admission.



Share Exchange



The Company has conditionally agreed to acquire the outstanding redeemable
preference shares of #1 each held by Berg & Berg in SiR Learning on a cum
dividend basis. The consideration for such acquisition shall be by way of the
issue of a total of 18,678,000 Ordinary Shares at the Placing Price. On this
basis the redeemable preference shares to be so acquired are valued at #1.121
million.



Loan Agreement



Berg & Berg has, pursuant to the terms of an agreement dated 12 December 2003,
agreed to advance #1 million to the Company subject to the benefit of an
existing debenture over the SiR Group. Such advance shall attract interest at
the base rate of Lloyds TSB plc from time to time. The loan, together with
interest thereon, shall be repayable on the earlier of the receipt by SiR of
proceeds from new banking facilities to the Enlarged Group or 31 December 2005.



Related Parties



Pursuant to the AIM Rules the Share Exchange Agreement and Loan Agreement are
related party transactions. Carl Berg, who was during the past twelve months a
director of the Company, controls Berg & Berg a substantial shareholder in the
Company. The Existing Directors, having consulted with ARM Corporate Finance,
consider that the terms of the Share Exchange Agreement are fair and reasonable
in so far as the Shareholders are concerned.



Admission



The Directors have applied for the Existing Shares and the New Shares to be
re-admitted and admitted (as appropriate) to trading on AIM. Dealings in the
Existing Shares and New Shares are expected to commence on 9 January 2004.



Extraordinary General Meeting



The EGM is to be held at the offices of Taylor Wessing, Carmelite, 50 Victoria
Embankment, Blackfriars, London, EC4Y 0DX at noon on 8 January 2004, at which
the Resolutions will be proposed to approve and implement the proposals.


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