SEH Sep Inds.

RNS Number:6087F
SEP Industrial Holdings PLC
20 June 2001

Embargoed Release: by agreement, 20th June 2001


                 Proposed Acquisition of Integration Limited


  Placing and Open Offer of up to 18,491,354 New Ordinary Shares at 60p per
                                    share

                   Change of name to iRevolution Group plc


                     Adoption of New Share Option Schemes


                             Share Reorganisation


                   Adoption of new Articles of Association


                          Resignations of Directors




Highlights

*        Acquisition of Integration Limited ("Integration") for approximately
         #15.5million, which will be satisfied by the issue of approximately
         25.9million new ordinary shares at the issue price of 60p.

*        SEP Industrial Holdings plc ("SEP" or "the Company") is raising up to
         #9.3 million, net of expenses.

*        Eamus Halpin, managing director of Integration, and Chris Prevett,
         finance director, are to join the board of the enlarged group as chief
         executive and finance director respectively.

*        Significant growth in the business expected over the next few years,
         driven in particular by the expansion projected for the Application    
         Software Provider ("ASP") industry.

*        Change of name from SEP to iRevolution Group plc



Tony Caplin, Chairman of SEP Industrial Holdings plc, commented

"In November 2000 we announced that we were in discussions with Integration
which has the capacity to deliver IT solutions in a high growth market.  I am
pleased to say that negotiations have progressed well and your board believes
that this acquisition will deliver significant shareholder value."



Eamus Halpin, Managing Director of Integration, commented.

"We have been delivering IT solutions to clients since 1992 and our ASP
offering since 1998.  The ASP division has become the major contributor to
group revenues and we look forward to investing further to expand our services
to clients.  SEP offers us the listed board experience which will enable us to
deliver our plans for expansion."



For further information please contact:-
Tony Caplin, Chairman                                 020 7505 2330
SEP Industrial Holdings

Eamus Halpin, Chief Executive                         01895 425800
Integration Limited

Ruari McGirr                                          020 7282 3218
Brown, Shipley & Co. Limited

Adam Reynolds/Takki Sulaiman                          020 7735 9415
Hansard Communications





Introduction

The Board of SEP is pleased to announce that it has agreed, subject to certain
conditions, to acquire the entire issued share capital of Integration.
Integration has been a successful systems integration business since its
inception in 1992, and has recently developed an expanding ASP delivery
platform. It has emerged as one of the pioneers of the rapidly expanding
European ASP market and was voted ASP company of the year at the European ASP
summit held in March 2001. It is forecast that the ASP market in Europe alone
will grow from #266 million in 2001 to #4,884 million in 2005.

The consideration for the Acquisition is approximately #15.5 million, which
will be satisfied by the issue of approximately 25.9 million new ordinary
shares at 60p per share. These consideration shares will represent
approximately 51per cent. of the enlarged share capital, assuming full take up
under the Open Offer.

The Company is raising up to #9.3 million, net of expenses, through the issue
of up to 18,491,354 new ordinary shares at 60 per share by means of a placing
and open offer. These funds, in addition to SEP's cash balances of
approximately #1.4 million, will provide capital to fund the capital
expenditure and staffing costs for the expansion of the enlarged group's
activities.

It is proposed that Eamus Halpin, managing director of Integration, and Chris
Prevett, finance director of Integration, will join the board of the enlarged
group as chief executive and finance director respectively.   Management CV's
are set out below.

Trading in the existing ordinary shares and existing preferred ordinary shares
is expected to recommence on 21 June 2001 following publication of the
prospectus being published today by the Company in connection with the placing
and open offer.

Application has been made to the London Stock Exchange for the ordinary shares
of SEP to be admitted to techMARK.



Background to and reasons for the acquisition

SEP has historically operated as a manufacturer and distributor of industrial
components and fasteners for the engineering industry. Since it entered into
talks with Integration with a view to making the acquisition it has been
carrying out a disposal programme of all of its engineering related
subsidiaries. This programme has now been completed.

The only remaining trading business in the SEP group is Fund Management
Services Limited ("FMS"), a provider of software to the fund management
sector, which was purchased in May 2000. In the period from its acquisition to
30 September 2000, FMS's turnover was #654,000. The board has no current plans
to dispose of this business as it is broadly compatible with the enlarged
group's activities.

The board of SEP has been seeking acquisitions of businesses with strong
growth prospects through the sound commercial exploitation of relatively
established technology. This meant that target businesses would need to have
an existing revenue stream, be well established and have a robust business
model, rather than focusing on unique or partly developed technology.

As an established systems integrator with an ASP business, Integration, in the
opinion of the Directors, meets these criteria. The driver of Integration's
business is not new technology. Instead, it exploits established developments
in IT and telecommunications to meet a demonstrable demand from a significant
and growing market. The directors of Integration have chosen to enter into a
transaction with SEP rather than pursue a listing directly because they
believe that they can benefit from the expertise and experience of the SEP
board and from the support of a number of SEP's key shareholders.

As it was announced at the time of suspension of SEP shares, as part of the
discussions leading up to the acquisition, the Company agreed on 29 November
2000 to lend Integration #1 million. In order to facilitate this it undertook
a placing of 10,000,000 shares at 8.75 pence, raising #875,000. At that time
SEP's shares were suspended from trading and therefore the 10,000,000
additional ordinary shares issued were not admitted to listing; an application
for the listing of these shares has been made. We announced on 12 April 2001
that SEP had agreed to make a further loan of #500,000 to Integration subject
to the same terms as the original loan. The principal amount of each loan is
convertible into ordinary shares in Integration if the acquisition does not
take place on the occurrence of certain events, including any transaction
resulting in a third party acquiring a controlling interest in Integration.



Information on Integration

Integration was founded in 1992 by three of its current directors and has
operated for many years as a systems integrator. However, its ASP business now
represents the majority of its revenue.



Integration currently has three divisions, operating in related areas:



*        Systems Integration: The assessment of the clients' IT needs,
analysing and redesigning technology-related processes and systems and the
provision of software and, if required, hardware to meet the clients' core
business requirements.  This has traditionally been the core of Integration's
business activities and has provided most of the business's revenue. Since
1998, Integration has offered ASP as an alternative delivery method for
software.

*        ASP:  The delivery, management and maintenance of applications and IT
services from a central remote data centre to clients and their end-users:
this eliminates the need for each client to have individual copies of a given
piece of software on numerous PCs or servers.   Integration has offered ASP as
an alternative delivery method for software since 1998.  ASP services can be
sold both as part of Integration's own systems integration product and
separately through third parties.  A new division within Integration was
established in November 2000 to market the group's ASP services.

*        Software Distribution: Integration, through its subsidiary, 80-20
Europe Limited, has European distribution rights to the range of knowledge
management and personal productivity tools produced by 80-20 Software Pty
Limited, an Australian software developer.



As of 1 May 2001 Integration had 15 clients with 2,370 individual end-users.
TMP Worldwide Inc. currently represents approximately 29 per cent. of
Integration's total revenues. Since the inception of the ASP business,
Integration has not lost a contracted ASP client.



Terms of the acquisition

SEP has conditionally agreed to acquire all of the issued share capital of
Integration for a consideration of approximately #15.5 million which will be
satisfied by the issue of approximately 25.9 million consideration shares at
the Issue Price which will represent approximately 51per cent. of the enlarged
share capital assuming full take up of the Open Offer. The consideration
shares will be credited as fully paid and will rank, at the time of issue,
pari passu in all respects with the ordinary shares following the share
reorganisation, including the right to receive any dividend declared, made or
paid on the ordinary shares following admission.

The acquisition agreement is conditional inter alia upon approval by SEP
shareholders. Pursuant to the Listing Rules the acquisition is classed as a
reverse takeover on account of its size relative to SEP and must be
conditional upon such approval. In addition, the acquisition is conditional
upon the necessary resolutions of SEP being passed to effect the share
reorganisation and is conditional upon SEP entering into a placing and open
offer agreement which is itself conditional upon admission.



Following the divestment programme entered into by SEP in respect of its
engineering divisions, SEP has had only one trading business as well as its
investment holdings. The transaction will create a trading group of companies,
focussed on the IT sector. SEP will be entering a new market and will be
working towards a high growth rate by developing a business with, what the
Directors believe are strong future prospects.

An Extraordinary General Meeting for the purpose of approving the Acquisition
is to be held on 19 July 2001.  Prior to this meeting, as required by SEP's
existing articles of association, the Company shall be holding a Separate
General Meeting for Preferred Ordinary Shareholders to seek their consent to
the share reorganisation and amendment to SEP's articles of association on 9
July 2001.

Dealings in the existing ordinary shares and the existing preferred ordinary
shares are expected to recommence on 21 June 2001.

Application has been made to the UK Listing Authority for the new ordinary
shares to be listed on the Official List and to the London Stock Exchange for
admisson to trading on their market for listed securities. It is expected that
admission will take place on 20 July 2001.



Share Reorganisation

SEP is taking the opportunity at this time to effect a Share Reorganisation in
order to enable SEP's shares to be quoted at an appropriate market price
following the acquisition and to convert the existing preferred ordinary
shares into ordinary shares in order to simplify the share structure and to
address the existing arrears of dividends currently outstanding on the
existing preferred ordinary shares.

As the preferred ordinary shares carry the right to conversion into ordinary
shares, under SEP's articles of association the redesignation of shares as
deferred shares represents a variation to the rights of the preferred ordinary
shareholders. Therefore a Separate General Meeting is required to consent to
the Share Reorganisation.



Change of Name

Following completion of the acquisition, it is proposed that the enlarged
group will change its name to iRevolution Group plc in order to reflect the
focus of its activities going forward.



Annual General Meeting

Shareholders will already have received SEP's report and accounts for the year
ended 30 September 2000.  As the Company is required to hold the Extraordinary
General Meeting for the purposes of the acquisition, the board has also
resolved to call their eighteenth annual general meeting for the same date.




Directors

Directors

Following completion of the acquisition it is proposed that Eamus Halpin be
appointed to the Board of SEP as Group Chief Executive. He has been the
managing director of Integration since its inception in 1992. It is further
proposed that Chris Prevett, who has been finance director of Integration for
five years be appointed to the Board as Finance Director.

 The board of SEP also announces today that Mr W J Aiken and Mr D E Rogers
resigned from the board with effect from 19 June 2001.  The board would like
to thank both directors for their services during what has been a period of
considerable change for the SEP group.

Mr Aiken will be continuing with SEP in a different role.

The board is grateful to Mr Rogers for his contribution and, in particular,
his assistance with the sales of SEP's distribution and manufacturing
businesses that took place and were announced earlier in the year.

Accordingly, following the Acquisition and the AGM, the composition of the
Board will be:



Tony Caplin (Chairman, aged 50)

Tony Caplin was appointed to the Board of SEP as Chairman on 21 July 2000. He
has considerable experience working with public and private companies over the
last twenty years, working in both an executive and non-executive capacity,
specialising in strategic planning and market positioning. He was formerly
managing director of Manchester News Limited, president of Pacific Telesis
European Division, chief executive of First City GB and chief executive of
Hunterprint Plc. Tony is also a non-executive director of several companies.



Eamus Halpin (Proposed Chief Executive Officer, aged 36)

Eamus Halpin was a founding director of Integration Limited in 1992 and will
be the Group Chief Executive Officer of SEP, following the Acquisition. He has
a financial background and has been involved in business process
re-engineering projects throughout most of his 16 years in the IT industry.
His day-to-day responsibilities include both hands-on operational management
as well as steering group business strategy. Prior to joining Integration, he
was a financial systems analyst at Reinhold FM Limited until 1991. His
previous roles include financial systems consultant for Touchstone Computers
and RAM Computers as well as running a small financial and computer
consultancy business in southern Ireland. Eamus is currently a board member of
the ASP Industry Consortium.



Christopher Prevett (Proposed Finance Director, aged 51)

Christopher Prevett joined Price Waterhouse and Co, London in 1973 where he
gained experience of commercial, financial, industrial and technology-based
organisations. He qualified as a chartered accountant with Price Waterhouse in
1977. In 1983, after working as audit manager for Price Waterhouse in Sao
Paulo, Brazil for five years and as controller for Yapra S/C Ltda in Sao
Paulo, Brazil for one year, he became involved in the information technology
sector.. From 1986 until 1991 he was employed by AZKO Chemicals BV Amersfoort,
in the Netherlands. In 1991 he moved to Reinhold Overseas B.V. as European
controller for the information technology holding companies and founded
Integration International Management Services B.V. in 1992. He joined
Integration Limited as Financial Director in 1996.



John Kelly (Non-executive Director, aged 59)

Articled to Price Waterhouse, after graduating from Queen's University,
Belfast in law, John Kelly qualified as a chartered accountant in 1967.
Following two years at Old Broad Street Securities, he moved to Wheatsheaf
Distribution and Trading Limited where he worked as the financial accountant
at their head office. In 1971 he moved to Laurie Milbank, money and
stockbrokers, as a corporate finance executive. In 1978 he joined Brown,
Shipley & Co. Limited. where he became a director of the bank in 1982. He
remained at Brown, Shipley & Co. Limited until 1992. In 1992 he became a
director of Close Brothers Limited continuing in corporate finance. In 1997 he
moved from corporate finance to become a director within the investment
division of Close Brothers Group where his main role is business development,
primarily with the private equity arm.  John is also a non-executive director
of several companies.



For further information please contact:-
Tony Caplin, Chairman                                 020 7505 2330
SEP Industrial Holdings

Eamus Halpin, Chief Executive                         01895 425800
Integration Limited

Ruari McGirr                                          020 7282 3218
Brown, Shipley & Co. Limited

Adam Reynolds/Takki Sulaiman                          020 7735 9415
Hansard Communications

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